How Springbig CEO Jeffrey Harris grew to $17.4M revenue and 12K customers in 2024.

hello everyone my guest today is jeffrey harris he's the founder and ceo of spring big a leading provider in cannabis crm and loyalty marketing technology with over 25 million users across the united states and canada he's got over 15 years of marketing sales and management experience uh with an incentive marketing and loyalty marketing field jeffrey you're ready to take to the top let's do it all right cannabis crm i mean why can't crm or why can't cannabis companies just use hubspot sure and actually they do but what we created is a unique sas platform that helps our retail clients in cannabis manage their loyalty program which is something hubspot doesn't offer and then through that loyalty program we create a lot of different segmentation for them that they can leverage for text message marketing which is kind of something else that hubspot doesn't offer interesting okay and when did you launch the business what year so we launched it in 2012 but when we launched it it was originally for small business like pizza shops yogurt shops nail salons hair salons and we decided to pivot to cannabis in early 17. so we're kind of like on spring break 2.0 which kicked off in january of 17. when why the pivot we thought that there would be much better opportunity honestly in cannabis for two reasons one the owner of the yogurt shop is hardly ever in the store so it's hard to get him on the phone to uh him or her on the phone to get a decision and we just saw such great opportunity in cannabis and the competition was a lot lighter so we thought it would be a good vertical so 2015 was the big pivot now what do these candidates companies pay you on average to use the technology so they pay us on average about eighteen thousand dollars a year uh oh wow so this is not cheap this is like an enterprise motion yeah it's enterprise we have some guys that are actually paying 20 30 even 60 thousand dollars a month and we have some paying as low as 450 a month the average is somewhere yes the average is somewhere around 1500 a month across the board that's wild wait can i ask you what don't name them but what's your largest customer pay you per year currently so we just had a client pay up 120 000 for the month and why is that so so you have an incredible ability to have expansion revenue right what are you upselling against so we're upset so what's really upselling is the volume of the text messages that they send out so the larger their database and the more frequent that they send out messages so we charge them a platform a subscription fee for the platform they get x amount of text messages included in that subscription and then when they go over that allotment they pay on an ala carte basis so this particular retailer sent out over 16 million messages in the month of january it was insane holy mackerel when you look at your total mrr today like you did last month what percent is pure sas versus overage fees so about 70 percent of sas and about 30 percent of overage which we actually like that mix well because what it allows us to do is when we see a client of ours going over their subscription fee we could actually use it as a driver to get them to move up to the next subscription and when they do that we also get them to sign for a new 12-month package so it allows us to kind of get them re-upped at the same time that's really smart what and so uh how many customers are you serving today that 850 850 interesting and how many customers we had a year ago 500 interesting where'd the growth come from uh so it comes from you know more and more states are opening up for cannabis so it comes from new markets that are coming in and it also comes from the existing more mature markets like california where you know we continue to just grab more and more share as you know as our brand continues to get more awareness now i mean can i take 850 times 1500 a month right as your average i mean you're doing like what is that 1.3 million a month something like that a little bit more right so um because yeah so a bunch form i wait a little more or a bunch more a bunch more i want to give you credit where credit's due i mean can you run right but a bunch more but you know some clients are just spending so much higher than the average so um we you know we basically have two businesses in one we have an enterprise business for some of these larger clients and then we have what i'll call our bread and butter customer that is anywhere from one to five locations uh so we have actually two businesses in one so it's uh it's kind of interesting to be serving two totally different groups of clients yep yep i mean basically the same technology it's just usage that they use it way more yeah and some of the larger clients will do some custom implementation work for them so it helps them from an operational flow and a compliance flow from that standpoint so we will do some custom work for them uh primarily because we integrate with most of the industry's point of sale so there may be some custom workflow that we do with the point of sale but for the most part the technology so bigger are you doing more than two million a month no not can you hit that this year yeah we will hit that this year we love that now i'll be really impressed if you've done this bootstrapped um no we did actually raise about 20 million there we go i wish we would have bridge strategy i love our partners so any of the investors that are listening today i love you but uh yeah we actually raised three rounds we raised a c an a and then either you can call it an a1 or a b so we raised about 20 million dollars since the end of 17. so we bootstrapped until the end of 17 and then we said you know what let's get some partners in here so break that down for me when was the last round and how much 11 and a half million in august of this past year august 20. 11 and a half okay and uh what was prior to that 5 million in november of 18 and then 2.7 million in november of 17. interesting okay and so and so and this was your baby right you didn't come in as like a fr like a cfo or ceo from a okay got it yeah might be i love that now so i have to ask like the cannabis thread here like now are you just a business guy and you're like cannabis is where i want to go or did you start sort of using this and seeing you know personal improvement performance no i'm i'm a business guy and thought there was a great opportunity in cannabis so um yeah so i mean i am really pro canada i've become very much pro cannabis over the last few years because i see the benefits that cannabis offers a lot of people but at the end of the day when we got into it we got into it from a market opportunity more so than from the social cost for sure yeah yeah i was gonna say the benefit is a 20 million dollar error company uh yeah that's for sure that definitely that's part of the event part of the benefit okay round out your team for me how many folks on the team so we have about 110 people on the team right now how many engineers about 40. so that's a that's a big part of the team um our client success team has about 30. our sales team has about 15. our marketing team has about 10. um then obviously we have some finance and hr people and we have a new business that we launched in the summer of 2020. it's a br it's a business focused on brands versus retailers and we have about 15 people in the brands team as well so is that a business is that an agency model or sas play no so that's actually it's a it's a martech model where brands have the ability to serve up content to retailers that are selling their product and when the retailer grabs that content and includes it in their text message the retailer gets their message at no cost and the brand pays a cpm so it's a way for brands with our 20 now 27 28 million consumers brands have a real need to get directly into the consumer's smartphone to get to the consumer they have a difficult time doing it so we basically have created kind of like a partnership opportunity where the brands where they are sold and the retailers they could serve up content to those retailers retailers grab the content and the quid pro quo is retailers get that message gratis and the brand pays for access to those consumers that they really don't have access to otherwise so what margin do you build in there your cost of the text versus the cpm you're charging the brand that wants to get rex to the retailer so it's about 85 margin that's great so the margin is really good because right now the brands don't have the ability today to get to that consumer there's very few avenues for them to do it and the retailer in our industry owns the consumer so giving brand the ability to really create the content make sure that the messaging of their brand is exactly as they want it retailers like it because they get nicer looking content to serve up to their customers retailers get a little bit of a break brands get you know access to these customers but then the big deal is it drives customers into the retailer so the retailer's really happy because it's leveraging their database to drive purchase activity and store traffic into their store that's fascinating okay this is great really interesting story here so got the team size flushed out of your sales employees the 15. how many carry a quota every one of them they all do what do you set quoted so we set it at we have a dual quota system so we said quota at 10 deals per sales rep per month is the quota um and we don't and we don't penalize them if they don't hit quota they just have an accelerator when they go over quota uh from the standpoint of making more commission on the 11th deal the 12th deal the 13th deal and then each each person has a different quota depending on the territory so for example the person handling california will have a different quota than the person handling missouri as an example so we look at because deals are different right in california there are a lot more what i'll call higher subscription deals than there are in like a missouri or in alaska or places like that so we look at all we look at the state by state configuration to understand what's the appropriate way to handle 10 customers in terms of the sales reps closing per month at your average of 1500 bucks a month times 12 i mean i think that's about 180 thousand dollars a new are closed per month or almost a two million dollar quota per rep that's high it's high now we're not they're not hitting again because it's not a it's kind of like a benchmark not a quota and got it half of our half of our sales team are sdrs right so we have six bdms and we have every bdm has an sdr associated with them so it's not that we have 12 sales people so we have 15 people in the sales department of those six are selling every day six are you know driving demos for those sales people then we obviously have our head of sales and we have some partnership people so it's not all sales people but yes the highest the goal is for the six sales people now some hit it some don't but the goal is that we just hired three new ones so the goal is for all of them to hit so i'm very excited for this next question because i think you might be like top quartile we've done 3000 of these interviews and i bet i mean you have the shot at being this because of what you're talking about pricing but let me ask what's gross revenue trend over the past 12 months gross churn gross revenue churn negative so gross gross gross gross not net gross meaning so tell me what oh oh so what is actually churning on a net on a yes basis ignore expansion revenue on a monthly basis anywhere between a half a percent a half a percent you've got it it was so so now to the yours your first point which is what i wanted to get to is what's your expansion revenue monthly or annually so we run about a negative five percent so about a hundred and five percent that's great yeah okay got it so six percent churn eleven percent expansion gives you about 105 percent net revenue retention or said the inverse is negative five percent uh churn rate which is great correct correct okay so okay but i am a little surprised i thought you'd be much higher because you have such an enterprise emotion it seems like you could take people from five grand a month and get them a 10 grand a month fairly easily with more usage yeah and you can right but i think the what ends up happening is it takes a while for customers to add to their database and you know and we're also believe it or not as as interested as we are in growing our revenue as fast as possible we're also interested in making sure the client relationship and the way the client's using the platform is probably best in class and and most appropriate for them so we will actually go to clients as crazy as it sounds to say hey you're texting too much right because you're not seeing the value from it because at the end of the day i'd much rather have that client for five years and get them to generate a little bit less revenue each year then let them go ahead and go crazy on texting and have more revenue in the short term but then they come back to me and say hey i just spent 22 grand and i'm not seeing the same roi so yeah we kind of look at it each state has its own culture and i'm a real believer in the long game with our customers i really you know you know it's so difficult to get customers that we want to really make sure we take care of them correctly so that they stay with us for a long time yeah what month did you raise 11.5 million last year august interesting okay and so are you i mean are you you probably don't need it now you're probably a lot like castle sitting in the bank but i mean are you thinking you'll raise again this year no yeah so i think you know we're running give or take depending on the month we're running either a little bit in the red or a little bit in the black so we just made an acquisition uh on friday we bought a customer feedback reputation management company oh tell me about that what'd you pay for it uh i can't disclose what we paid for it but it was a it was it was a good deal all around the seller and the buyer felt really comfortable with it at the end of the day it's a canadian-based company that does customer feedback and reputation management in cannabis so we picked up two real assets we picked up some great people in canada which is a big growth market for us that we're focused on in 21 and we also now have a cross-sell upsell opportunity to all of our clients so just think about a post-visit survey to the store where you know we score you know that visit experience based on four or five different metrics and then we give the client a dashboard so they could really understand what customers are telling them about their experience but more importantly if you score a four or five as a consumer you're going to automatically be served up the google review page for that retailer to leave a review so it really drives more reviews which helps the stores from an seo perspective and a number other perspective so it's an it's a really nice fit for what we're doing and most importantly we picked up some great talent that's going to really help us in campus talk to me about growth if you're doing about 1.5 1.6 a month today what were you doing about a year ago do you remember half wow so okay 100 percent of your growth even during covid interesting yes interesting okay and with that growth rate when you raise 11.5 million last year in august what valuation did you raise at a range is fine um about 100 and did that feel fair at the time or you feel like you could have gotten a better deal you know i think you know it felt okay honestly i think it was like but at the end of the day we really wanted the fund that was leading it because we really thought they could add a lot of value to the business and we weren't diluting a lot so i wasn't as concerned about it um and we love the partner it's a company in san diego called tvc capital that's a sas only growth fund so know those guys well heard good things yeah not being a sas guy myself um you know this is my first sas operation i really wanted to surround myself with people that know it better than me so as we scale and as we grow i have people that have seen it before done it before and can basically help me avoid the uh you know the pitfall so i i was happy i was very happy would you ever go buy one of these marketplaces you know leafling's doing very well there's a couple of these others in the space would you ever go buy one of these guys yeah so we talk about you know i talk with leaflink all the time and we chat and you know there's a lot of conversation we're trying to figure out you know the big question obviously 21 is going to be a big year in cannabis with everything that's happened on the macro basis from you know the government perspective and the government changeover which is huge and with what's happening just in terms of you know weed maps going who's going to go public through the nasdaq there's just a ton of things happening in cannabis so there's a lot of moving parts right now so we're trying to figure out you know from a strategic standpoint so bud tender was one we have a couple of other ideas that we're looking at and how do we round out our product offering because we are the leading uh provider in what we do today so we add 30 customers 35 customers a month right now and it's going to go up so we want to figure out ways that we could really add value to the customer things that they need that make sense for us that are natural fit in so yeah so we look we're looking at all that stuff and and we're talking about it and we're trying to develop strategies around really and really interesting stuff okay uh last question before we wrap up cac what are you paying to get a new 18 year contract usually yeah so it's about all in it's a little less than three thousand dollars so we're breaking oh my gosh that's incredible that's incredible very good all right let's wrap up jeffrey with the famous five number one favorite business book uh good to great number two is there a ceo you're following or studying bezos number three an old ceo now we should add but still nonetheless that's 20 good years number three i love it i love what he told me i love what he taught i love what i read about him that he doesn't start a meeting before 10 o'clock so i just like you know there's like interesting stuff about him for sure yeah my kind of guy number three what's your favorite online tool for building a business uh salesforce number four how many hours of sleep to get every night eight and what's your situation married single kids married kids um all my youngest just graduated college in december oh great how many kids total three oh well uh everybody's off the payroll so you know so congratulate me that's exciting that's exciting yeah and and how old are you take us back to when you were 20 what's something you wish you knew back then when i was 20 yep that i wasn't nearly as smart as i thought i was guys spring break spring big a crm for the cannabis industry they were doing about 8.9 million a year caught 13 14 months ago now doing call at 18 19 million year-over-year growth around 200 percent they've got an incredible growth rate uh serving the space they're working with right now about 850 customers up from 500 about a year ago did about 11.5 million dollars in august last year at a healthy valuation called 100 million bucks they look to continue to scale they're making acquisitions they just made a big one uh and staying very close to the industry should they buy more companies maybe there's an ipo in the future we'll see in the meantime jeff thanks for taking us to the top thank you so much really appreciate the time one more thing before you go we have a brand new show 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