Spark Real Estate Software Revenue (2024)

hello everyone my guest today is simeon garrett he has uh lived in six countries and over 11 cities having helped sell real estate all over the globe he now runs a company called spark a software platform for development projects with a team of 20 folks based out of vancouver his goal is to change the way new real estate is sold and marketed simeon are you ready to take us to the top i'm ready to go all right so tell us what spark does and what's your revenue model how do you make money yeah so spark guy we sell software to essentially real estate developers and project marketing firms for the sales marketing and management of new development projects so anything primarily in the pre-sale world but that could encompass anything from leasing multi-family or condo but essentially we are a back-end sales management software essentially a sas model business that's you know pays a monthly licensing fee uh for us to manage the entire back-end process of selling those projects and what would you say the average customer is paying you per month uh average customers probably paying us around 100 bucks a month okay so you're i mean that's fairly high you can afford to put a sales person on an account that big yeah okay and i mean so is that what you're doing walk me through you're getting new customers yeah i mean so there's a bunch of different ways that we're actually getting new customers i mean a lot of it we have an inbound from an internal sales team a lot of us you know we're building lead lists we're outbound calling we're we're gathering are sort of our own data um and essentially our our model is very much a timing game so you know it's really about you know finding the developers that have projects that are launching in the appropriate time frame and then from there basically doing proper reach out and uh sort of doing demos accordingly to that and what's the total team size today uh we're just about 20 people now 24 all in vancouver all in vancouver currently uh very good man i'll tell you what something's in the water up there a lot of companies popping up it's a good thing now what's your story before this company what were you working on um so actually i grew up in in asia so i spent most of my life in between sort of china malaysia um and hong kong uh so i kind of you know my family sort of lived there so my whole life i spent there um i moved to vancouver about seven years ago and i got into real estate essentially because i speak mandarin in cantonese and being a white guy at the time it was a it was not a bad spot to be and everybody that was coming to vancouver was essentially coming from china buying homes here and so i kind of got myself into a really interesting niche where i was helping developers like real estate developers in vancouver sell projects overseas so i was you know once every five weeks for about two years i was flying between vancouver to you know beijing shanghai singapore hong kong you name it um setting up events and pre-selling condos to investment buyers in asia that's kind of how i mean before that i've done a bunch of other things but um primarily that was sort of my foray into real estate world was really just because i you know got lucky and spoke another language what year was that when did you launch uh launch spark or spark was founded in 2011 2011. i mean technical 2012 i guess technically would have been our first year okay 2012 and then just be clear before that again you were grinding it out you were actually doing the selling the stuff yourself and you said you know what i hate flying back and forth every five weeks i'm gonna build software that's a little has a little higher margin yeah i mean it was it was also that you know i i realized it was actually really it was a huge frustration point for me so i was actually being given you know stacks and excel spreadsheets and files and all this you know this old archaic legacy software that half the time didn't work i was going over there i would double sell things i would have super you know tons of misinformation um and it wasn't just with one developer you know every single developer and project that i worked with was kind of the same process and i was like this is insane 300 million dollar tower yet you're giving me a stack of papers to fly over and do deals with and pick you know get deposits and i'm flying back and forth and there's so much miscommunication i was like how has nobody built a platform that easier yeah and now what have you scaled to today in terms of total customers paying you uh so we we sort of track our customers in two different ways um so one of them would be project so the number of actual projects that we have on the system so we have just over 600 projects right now um that will be spread across 80 different cities but that would be spread over about 100 different clients per se so i mean sometimes a client is a developer themselves sometimes the client is [Music] involved developers that are clients so it kind of is a depends on how you look at it yeah i mean but if we want to kind of get a general revenue range though can i take 100 times 1100 bucks a month and assume you're doing just north of about 100 grand a month right now uh we're we're in that range yeah we some some months are a little bit higher some ones are a little bit lower uh when i said we sort of our straight sas model we also have sort of a professional services piece that kind of tacks onto that so customizations that are built on top of each individual product um so developer comes to us and says hey we want to sign up we've got five users that's great you're going to pay us 1100 bucks a month on average but you know they might have a 30 40 50 000 customization that sits on top of that so it's a little bit blended uh but i mean on average you could probably say something when you look at just your pure sass business what did you do last month would you say just in that uh just in the pure sass business pure sass yeah yeah so we did we did about 70 000 in pure sass that's great yes you have you have a really nice mix right the project stuff helps with cash flow but you got a nice underlying base every month to work with totally yeah interesting boots dropped over raised capital uh we've raised a bit of money over the last kind of two years so the first three years the company was essentially out of my apartment meeting five other guys you know figuring out what we're eating you have five co-founders well no not not exactly we had a couple people that were part of it initially there's only two of us left yeah okay we kind of like split ways early on and so two of us stuck it out uh my biggest partner cody and myself and then one of our guys actually came back about a year ago so the three of us are now back in the mix um but the original five kind of all dissipated earlier how do you manage kind of the equity structure when you've got two guys that are not with the company anymore where they were one of the original five um i mean we had performance awards and clawback stuff so i mean they left they basically gave up most of their equity we also bought back a bunch of equity from some original guys um you know not that long ago and so we so recouped a lot of that from the earlier guys that's great so what have you raised total to date uh just over two million bucks two million bucks okay and what was that an equity round from outside of investors or debt or what uh it was it was all equity right we don't have any debt all equity okay and then look you said you're about 70 grand a month today and kind of the pure sas business help me understand growth what were you doing about a year ago so if you let's look at so our first our first real year revenue was was 2016 we did about 400 grand um that year uh last year 2017 we did that's a run rate or just cash that was like what we that was what we brought in so total revenue for the year was was 400 grand not necessarily runway i mean about 60 of that would have been okay um i'm looking at it i mean again we can break down the stats but it's changing okay hard to know um 2017 we did just over a million bucks um and 2018 we're kind of on track to do just over two yep yeah okay that makes sense yeah again if you have 70 that's yeah it sounds again right now have a basically a million dollar a year pure play sas model and then there are these 40 50 60 000 kind of one-time projects that make up the other million and that's where you get the chew from totally yeah okay good um what about churn so again just speaking obviously about just the sas side of things what's your turn today and how do you manage that uh we've got less than a one percent turn rate right now so revenue or logo churn uh literature and that's monthly or annually that would be annually yeah okay less than one percent okay i'm shocked by that because i assume once you're done selling a development they don't need you anymore so i mean this is sort of the interesting model and why a lot why we differentiate from a lot of other platforms in this space um so we actually licensed to the company it's not necessarily for the projects they're actually not necessarily paying us a monthly fee for every project but the company is paying us a monthly fee so who's the company like remax uh remax would be maybe an example but it would be more like a large developer like the related group or excel or something like that um for vornado or something totally yeah so they're gonna they're gonna maintain their base account no matter what we're also storing all their historical project data um projects done so you know all their contracts the conveyancing all the purchasers all their demographic data all that historical information is lives inside spark forever so those projects they're always going to keep something live inside the system whether or not that project's actually selling or not um and so it's not necessarily about like you know we have to resell projects all the time they're just adding projects to the existing user base that they already have inside spark and then maybe adding or removing some users as they sort of scale up or down when you look at the levers you have to drive expansion revenue get you know a customer to pay more in year two than they did in year one you know less than one percent gross logo turn annually but are you in net negative revenue churn annually or no uh no we're not okay what what what gets you there so that surprised me a little bit if you have such low kind of logo churn my gut was telling you guys probably were why aren't you net negative revenue turn yet well i mean so they're the way that we i mean again it's kind of an interesting scenario so we're we've like our pricing has changed five times in the last 12 months so when when i'm looking at things from 12 months ago i'm looking at accounts that like now we would never sign a price like that today so it's a little bit difficult sometimes to extrapolate some of those numbers and get like a proper you know growth metric from that um but when we actually look at like the clients internally so we're sort of tracking on a quarterly basis the actual amount of growth like internal client growth that we get um per client right now we're seeing somewhere between like a 15 to 20 client like internal client growth on a quarterly basis and so that means if in q1 they're paying you i'm making this up they're paying you a grand per month you're saying in q2 they'll expand to kind of a great 150 bucks 15 growth yeah we usually look at so we we do all and it's similar to how salesforce would do things we would we'd annualize all of our contracts so they're signing up they're paying me people paying us 1100 bucks a month why do you manage why do you measure on a quarterly basis then uh just for well that's how we track sort of our internal our renewals and stuff so everything from a sales team perspective is looked at i mean again this is something that also shifted we only shipped between annual contracts about a year ago so some of that some of those people are still on monthly but very very few people would actually be on a monthly sort of month-to-month basis with us got it and everybody that we would actually be signing into an annual contract got it talk to me a little bit about cac what are you paying to acquire these customers so i mean we only recently just hired our our first sort of like marketing person and we you know we don't really spend actually at this moment we don't really spend any money actually on like adwords or you know online advertising anything like that so the only way to really determine that would be to take our sales people's times and divide it by the clients that we're bringing in plus sort of the expenses that we use on like trade shows et cetera so i mean it's a it's a very very varied number a lot of our clients actually come directly from referral so you pay kickback sorry you pay kickback we don't pay kickback though okay um i mean the real estate industry i'm not sure how familiar with it is very incestuous in a way where you have like a sales director from one place you know goes to goes to another place and gets poached and go to another place so we've actually been dragged through a lot of different clients just because people have jumped ship yep and that's how we got some of our large clients so we signed one big client and they kind of like dragged us through a bunch of their next career moves um and then from there you get a lot you know people talk a lot you get a lot of referrals that way so i mean our we're actually trying to figure out how to spend money on marketing honestly yeah it's critical it's critical you have to figure it out though because if you can't then there's no way to use other people's money to grow your business you know totally and you know the industry that we're in is a very kind of like older brick and mortar style industry where you have you know you have trade shows that you go to but it's not like these guys are going online and saying hey what's a new i'm going to google sales software for new development real estate you know and if they do it's going to be salesforce that comes up and then they're going to go spend half a million bucks customizing you know and spending two years building something that they're you know at the end of the day not happy with yeah yeah makes good it makes total sense to me let's uh let's wrap up here simeon with the famous five number one what's your favorite business book [Music] um probably the art of war number two is there a ceo you're following or studying right now i'm gonna have to say mark many off number uh number three what's your favorite online tool for building your business right now currently it's to be linkedin okay and uh what's your situation oh sorry actually how many hours of sleep do you get every night depends on the day of the week but i would say you know probably six and a half on average and what's your situation married single kiddos single no kiddos no kids none that you know of right yeah hopefully unless you're right and i'm gonna find them and how old are you i'm 31 31 last question what do you wish your 20 year old self knew i wish my 20 year old self knew uh more about accounting guys there you have it from simon you wish you knew more about accounting grew up you know kind of southeast asia hong kong et cetera et cetera jumped into real estate you know had a big advantage in learning mandarin then used that advantage to basically go over to hong kong preset real estate back in canada which a lot of money was flowing that direction he then said you know what i want higher margin less travel let's launch a piece of software to help with this that's what spark does they sell directly to the development companies development companies then use their platform on a kind of per project basis to sell manage and then hold on to data over the long term which allow them to keep churn very low less than one percent gross logo churn per year they have over 100 customers paying caught a hundred or eleven hundred bucks a month about 110 grand monthly recurring revenue they'll do about two million bucks this year as they combine kind of professional services plus that healthy uh sas revenue stream again that's up for about a million just a year ago with their team of 20 in vancouver simeon thank you for taking us to the top thanks