How SmartSuite CEO Jon Darbyshire grew SmartSuite to $3M revenue and 400 customers in 2024.

founders what's going on you guys know i love in-person events and they are back the recording you're about to hear is from our most recent event where we had hundreds of founders come together share intimate details templates kpis okrs about their business and it was something special something special we'd love to meet you in person if you want to see the next live events we have coming up via our schedule the link will be down below in the description if you're listening on itunes check this out on youtube you'll see the links in the description or you can just google founder path or latka next event we'd love to see you in person in the meantime though enjoy this recording it's a good one so we're going to focus today really based on nathan's request on on kind of a journey and let me get this slide figure this out real quick here we go kind of a three-part story from being an operator building a company becoming a leader in the space selling that company kind of transitioning to an advisor investor where i then invested through either directly or through some venture groups and about 400 companies set on the boards of lots of companies beyonce got bored with that and wanted to move back into the operator space kind of with the next journey which is a pretty typical story for a lot of founders that are probably in this room that once you're an operator it's hard not to be an operator and i also found that i wasn't a great advisor i was an okay advisor but i always wanted to actually do the work and the founders don't like that like they want you to advise stay out of their business i wanted to actually get in and do some of the work that was there so to kind of kick things off we're going to start with the story of a company called archer technologies archer was a company that i founded in 2001 i'm going to share just some basics of the company with the products and the revenue to set the stage and then we'll jump into kind of lessons learned things that we did right and then things we didn't do so good that i would would have changed that's there so from a growth perspective uh what's interesting about archer was that we were profitable in the first year of doing business and i'll share with you how we did that in just a minute it was a very different market back in 2000 2001 there wasn't a lot of funding that was available 911 it just happened things began to kind of shut down so we really had to focus on we were bootstrapped as well through year eight we really had to focus on customers and revenue and how we could hire employees and you'll kind of see the growth rate here through the last year when we sold the company we're around 33 million excuse me in revenue as a company we focused on uh seven core products i'll share the idea in just a minute but the overall idea was to help manage security and compliance processes in the same way that a business would manage accounts payable accounts receivable hr those types of processes and organizations we had seven core solutions that we eventually had in the company each of those solutions were priced at fifty thousand dollars a pop an average customer for us was around four hundred grand with some add-ons uh that were there okay and i'll tell you the story and how we sold that in a minute which is interesting as well so here's kind of the basics of the story so my background prior to founding archer was i had the opportunity to build the global cyber security practice at ernst young and i had the chance to travel the world we had about 1500 consultants in that practice i meet with customers to understand how they're managing security in the organization mainly from an aspect of things were going online they had online stores online banking was coming on and they needed us to help them understand how do we secure those systems so that we can stay online so the opportunity was for archer was to take that service that we've been providing at ernst young and turn that back into a product that we could sell and manage as a process and organization the challenge that we had was that it hadn't been done before and as a small startup with the big idea how do you approach people with a new way of thinking about how to manage security and organization right at the same time archer was bootstrapped from day one um we didn't take funding until year eight which i'll share some of that in just a minute um from you so we didn't have a lot of capital i put in i think 750 000 to start the company to kind of get things kicked off the market focus for the organization uh started with financial services moved into telco moved into healthcare moved into technology at the end of the day i think we had 76 of the fortune 100 where customers after like the first six years of the company so mainly enterprise level accounts an average customer would have 80 to 100 000 users of our product inside of the organization renewal rates were pretty interesting over nine years 97.6 renewal rate so we only lost three customers in nine years two of those customers were because of acquisitions by another customer uh that had them one of those was lehman brothers that went out of business that was there so we found that things were very sticky that was there we sold the product as a sas offering but sas wasn't really around in 2001 so we approached eds which was our first customer with an idea and said hey we can come in and solve this problem for you we're going to treat it as a process and oh by the way you're going to pace the same amount of money every year and they said well how much money is that and i said eight hundred thousand dollars and they came back and said we'll pay you 1.1 million dollars and i'll share why they said that in just a minute so they became our very first customer before we ever wrote a line of code so i went to eds with a little three and a half inch diskette for those of you that remember diskettes had an html version that basically was a powerpoint that showed all the different screens on how things would would look and at the end of that presentation they stood up and said we need your product how soon could you have it developed if we move forward with you and i'm like oh my god like i don't have a developer we haven't written a line of code so i just shared it with them i was just up front and said hey here's where we're at it's an idea i've got everything documented we need to go build it it's there and i'll share a little bit more in just in a minute about that um the next thing that we did i told you in year eight um we raised capital for the first time uh in the organization not because we needed cash you saw from the prior screen that we were we had a pretty good cash flow in the business it allowed me to take some money off the table as a founder and it really opened up to stop thinking about money every day you know every day i would come in the office and the first thing i would look at is the bank balance just to make sure that we were in a good position to pay everybody that was on the team but it freed me from that and it allowed us to really grow the business in the last 9 months to 12 months after that investment from bain and if you go out into one of my breakout sessions after this i'm happy to share more information about what was so valuable with the bain relationship that we had and then what happened after the bain investment was that in year bain came in in year eight and about seven months later we were started getting approached by outside organizations about partnerships acquisitions we weren't planning on selling the company at that time but it just happened pretty quick so we went from bain came in and invested i think it was a 70 million dollar pre it allowed me to take some money off the table they bought about 20 of the company they allowed the employees to cash out a portion of their stock options at that time so it was it was kind of a good event for everybody looking back it wasn't a great event because then we sold the company for 200 million dollars nine months later that was in there which the employees would have kind of hung on to those options some of them so as nathan was saying when we when we found out that we needed to kind of start a process and people were looking at us bain capital came in and said look we need to hire an investment banker we need to create a deck we really need to go after this to make sure that we get the best price for the company you have an offer in hand but the minute that they know you have a deck an investment banker and that you hire the best of the best they're not going to retrade that value with you right it's only going to go up from that point forward so it allowed us to send this deck out not to the world we were pretty selective i think we sent it out to about seven organizations that we thought would have interest back in in this space three of them responded um only one of them was super serious and that was emc and they wanted to do the deal in four weeks in one month which was unheard of uh emc i don't know if if you emc has eventually sold to dell a couple of years ago but they had 43 000 employees i don't remember their revenue but we were their 51st acquisition so they were a company that grew by acquisition they...