How Stantive CEO Douglas Girvin grew to $7.5M revenue and 50 customers in 2017.

hello everybody my guest today is Douglas Gervin he's the CEO and founder of stand-up technologies group whose flagship product orchestra CMS is the first and only known enterprise class content management platform but 100% natively on the Salesforce platform Doug are you ready to take it to the top I am absolutely so that can be a blessing and a curse going all in on one platform why'd you decide to take that route a couple of reasons one we you know when we built the product back in 2010 we really saw the emergence of this idea of personalization you know Amazon had taught us about that in 2005 six seven eight we really saw this personalization thing happening in a big way on more of a b2b side so the only way to really personalize a users experience is to have access to all that information about that user so you can tailor the experience they're getting on the web at the time that was number one number two Salesforce we really felt was an emerging powerhouse coming into the enterprise computing space we saw those about seven or eight years ago and really felt that it was the next-generation enterprise computing platform so combining those two along with a really unique way to build applications natively within the platform we thought was a was a real trifecta in terms of the next generation IT service delivery and give me an example of a customer that's using you guys and tell me what they launched with you plus Salesforce sure absolutely a great example would be Astra Zeneca big global pharmaceutical company so they they are dealing with you know ten different languages 40 countries 65,000 employees 20,000 contractors big challenges how do you unify all the communications collaboration across all those employees around the world they like many companies had many disparate systems internally that we're doing that what they were able to do with with orchestra CMS was consolidate all of that information and all the collaboration into a single platform on Orchestra CMS sitting on Salesforce so the platform not only delivers content and facilitates collaboration but the other thing it does is it brings together all the IT applications in that organization that employees need to get their work done so what happens is the employees end up with a single place to go to do all of their work it's a very pleasing environment from a usability perspective it deals with all the linguistic issues across geographies all the compliance issues and best you are Pharma and all of that from a single platform with a highly distributed group of hundreds of authors around the world and is the model a SAS model or pay-as-you-go or what's the model it's all SAS it's all subscription yeah absolutely an orchestra delivers both that internet type of capability as well as the traditional portal as well as public sites so if you think I look at most organizations today they're dealing with you know something different and their public site something different for their portal if they're doing say banking online banking that's a different technology if they're looking inward to their employees that's yet a different technology so we unify all of that and then we surface all that functionality out of Salesforce other platforms in a business driven highly compliant way and Doug what's the average customer paying you per year would you say it really varies widely but if you sort of stuck it in the middle somewhere you know between hundred and fifty and a half a million dollars a year you're very much in the enterprise space absolutely got it so it's fair to say maybe 150 is a minimum 500 is an average and probably have some outliers that are way above that yeah okay give me more the back story here when did you launch the company so the company's been around for a while we still we were our first incarnation was as a partner with Sun Microsystems so we were very heavily into large systems and software early 90s oh wow okay so been around for a while hence the gray hair the product itself we we got on Salesforce as a customer in 2003 when they were very young felt there was a real potential future there built a lot of the things that we did in our business around that at the time and Billy started making the transition into Salesforce development and then about 10 years ago when that was became available sitting on the platform developing for as long as you could be yeah so you launched in 1991 you scaled to where you are obviously today have you bootstrap this or be raised so the we've had two incarnations the first number of years was really around around the Sun Microsystems partnership the product itself was law built in 2009 and launched in 2010 we spun completely away from that partnership and went completely indoor costura CMS at that point so think of us as really seven years old in that respect okay we bootstrap for about half the time and raise some capital for the second half and how much total have you raised so far some around 15 million 15 and why decide to go that route versus continuing a bootstrap part of the challenge we had was that when we launched Orchestra we figured we'd evolved like everybody else you sort of move up the food chain as the product gets more sophisticated within six months of launching the product we were into fortune 100 companies they really loved the idea of that highly personalized experience on Salesforce a lot of them got the vision early it really culminated with us winning a very very large project with let's say a fortune 5 company a nice large we look at multi-million dollar kind of deal or what yeah that sort of area and that was really at the end of what we felt was we could do with bootstrapping is that the challenge is to build to that level of scale its sophistication were to highs we had a raise raise capital and really build out the engineering capability at a time and over the past 10 years what have you grown your customer base - it's somewhere north of about 50 large enterprise customers mostly in the fortune 500 fortune 600 space got it can we put a cap on it can we say between maybe 50 and 75 is that fair yeah okay so that's good and and how are you landing these customers what's your team size today and how much of how many of them are dedicated to sales so we probably had about eight or nine dedicated to sales either from a technology you know sales engineering marketing or pure selling perspective those deals come from a met from a variety of sources some of them come directly to us through the web and other means social etc and some of them come some of the opportunities come to us with our partnership with Salesforce and others are coming to us from referrals in systems integration partner what's your total team size total team size today is about 50/50 ok good so I mean well over 10% of your of your 4 so 8 people focused really on this sales aspect absolutely what does we go forward yeah that's good in terms of unit economics I imagine you know there's one or two things you've got to get a brand new customer to do to make sure they stick what is that over you and what is your retention look like once people hit that that whatever that usage thing is so so what happens is we typically go in and very sophisticated implementations that are sticky by nature so we've got you know one customer who uses us for everything digital there's there are others who uses use us for one or more specific projects but when you're a global internet as an example in the first instance I gave you that's a reasonably sticky situation so the so our retention rate to our turn on a revenue basis has been negative last three years we don't we see probably three or four percent churn in terms of number of customers leaving but in terms of revenue it's negative so a number of the early customers who were smaller tend to drop off if they get acquired or they leave Salesforce otherwise we retain the vast majority so with that being said how do you make sure you don't accidentally lie to yourself about what lifetime value is because you could just tell yourself it's infinite spend as much as we need on track no we we definitely are not trying to spend as much as we can on cacked and we do invest quite heavily in retention one of the things about enterprise as you know is the customers are very sophisticated they've got very strong demands they're evolving very quickly especially in an era of digital transformation so we spent a lot of time and effort making sure those customers continue to be successful with the platform get the most value out of it and that tends to end up with with our presence in those organizations growing so we would never let ourselves into believing that's infinite so that's something we work for so what do you heart in your brain what do you tell yourself like minimum LTV is in terms of dollars well I couldn't tell you in terms of dollars because it varies by customer but I think if you were to look at our average customer length is between five and seven years five and six nine years now so most of our customers are with us that we started with and they continue to stay with us it's great in turn every cohort is different but a way to kind of normalize is to talk about payback period so what do you like to keep your payback period under probably about 12 to 18 months okay good that's where you that's where you are now yeah yeah absolutely interesting and then the so we always have team size 50 folks healthy economics payback 12 to 18 months you imagine you mentioned earlier kind of minimum a CV around 150 grand so we can assume you're spending maybe around that right to acquire that customer if it's 12 to 18 month payback it could be in someone so we do have customers who are smaller and we have customers obviously a lot larger yeah they seem we're around that absolutely it's tough it's tough when you have a wide range and I force you talk about averages but it's helpful yeah well and we've got customers who are small in numbers in terms of employees but huge and reach and then you have the numbers of the customers who you know we have our largest customers over two million employees so that's great where are you guys all based so we're based all over the place our headquarters in terms of engineering support administration's in Kingston Ontario so about a hundred miles north of New York if here in the US we have people in Ottawa Toronto as well and then we have people scattered across the u.s. from East Coast to west coast and then a team in Australia as well yes Canada and Australia what was sorry what was the Australian team there's there's a team in Melbourne in Australia oh god I thought you covered they cover that region do they have a specific through their sales folks or is it development or sale work okay no all development support is here hopefully in Ontario yes interesting okay you know in terms of in terms of size I mean look you've said 50 customers 150 a CV minimum I mean it can do a minimum multiplication there and say what you guys are north of 75 annually currently somewhere around there yeah how do you what's the kind of the next step for you what are you trying to drive towards do you want to get more customers or do you want to go deeper on your current ones and increase wallet share so we're doing a little bit of both give you a lot of both actually so we've been you know from from the standpoint of going deep we've been are we're getting our targeting about 25 percent of our revenue growth coming from existing customers as well as acquiring new and so we see that as something that we're accelerating so we really come out of now because of the demands the customers placed on us early and the large customers we acquired we spent a lot of our time on engineering that's really shifting now more to sales and marketing so when you say what's next it's really all about growth and that growth will come both from existing as well as new what are you grinding right with it what are you going in right now in terms of you here about 40% at the moment pretty accelerates trying to accelerate that into the 50 60 you know over the next 12 to 18 months yeah so yeah I mean yeah I mean it's good right so fo you said 40 percent you over your growth if you're at around you know call it seven five now that means what last year December 2016 you were around somewhere around five million something like that oh my god yeah interesting that's great and dividing that out obviously 2mr our number let's take on from out 410 grand a month up to where you are now somewhere around 625 grand so healthy growth now did you raise capital in between that period or the capital came in before 12 months into the came in before okay got it so we've really been running like that since no that's good so listen whenever I look on a thing and I see funding date was more than 12 months ago you're right now either an acquisition talks to sell or you're raising your next round of capital which one is it we're probably in the site in the latter part of that the goal really is we you know what we feel now is we've got a lot of traction there's a lot of you know a lot of customer acceptance good position in the market you know there's the the market is evolving in our direction we feel so really now it's all about trying to just drive the growth that's pretty we're at alright let's wrap up here Doug with the famous five number one what's your favorite business book Oh favorite business probably guess we could win the heart of my latest won't be the hard thing about hard things yeah that's good my number two is their CEO you're following or studying right now there's a number of them I think you know everybody from Andreessen in the in the the VC world that I follow to any number across you know number of industries I really look for a characteristics those probably you mean you mean Ontario's CEO you really like right now just in the startup space yeah like an undercut a mainstream when everyone knows so well so I think so somebody have a lot of respect for I've known for a while you got any mark Naughton at Irwin CRM yeah so he said we have a partnership with him he's a he's an outstanding outstanding leader I think number three besides your own what's your favorite online tool um Jesus probably I probably spend most of my time in Google Docs yeah numbers oh it sounds boring and mundane but true number four how many hours a sleep to get every night Doug four to six okay and what's your situation married single you have kids married kids older how many kids three oh wow ok and how old are you 56 56 last question take us back 36 years what do you wish your 20 year old self knew Oh 20 years yeah I think you know never underestimate how hard this is to actually get done I think we all walk in with our eyes sort of half open very idealistic but don't raise enough money in the first round so you have to do a second one don't see the growth opportunity as big as it should be entrepreneurship is tough don't underestimate you guys heard you hear from Doug lunched many years ago but really pivoted big time in 2010 when he started and said he know we're gonna take a bet here on Salesforce really scale with them they since launched Orchestra CRM they're currently serving about 50 customers that pay a minimum of call 150 grand a year so they've grown over the past 12 months from about 5 million in ARR to now today December 2017 around the 7.5 million ARR mark healthy healthy economics so churn is almost non-existent super high retention 97% logo retention net negative revenue churn CAC payback period is about 12 to 18 months so healthy they're with their team of 50 folks between US Canada and Australia Doug thanks for taking us to the top thanks very much appreciate your time