How Summitsync CEO John Corrigan grew to $30M revenue and 9K customers in 2019.

hello everybody my guest today is john corgan today's in his 30s and has found maturity with a purpose as both founder and ceo of a company called summit sync he's led the company to be one of the fastest growing enterprise sas companies in the us today the company provides sales enablement and marketing intelligence to drive more meetings for its thousands of clients at the conferences and trade shows that they attend john are you ready to take us to the top i am all right listen i'm a data guy so when you say fastest growing enterprise sas companies in the us today i have to ask you back it up how do you know that yeah so we're we're gaining we are acquiring about 650 to 750 new customers every week um and given who those customers are in the amount of revenue uh that's faster than almost any other sas company out there okay so what's your over the past 12 months what's your ar growth rate uh i'm actually not going to tell you that number but it's uh above 10 million no no great not the growth rate hundred percent year over year a thousand percent year over year fifty ten thousand percent year over year so i think at the beginning of 2018 we had probably 50 customers okay okay yeah let's let's let me take a step back here now for a second tell me about the people not familiar with the company what's the company do yeah so we can tell you where your clients and prospects are going to be at trade shows and conferences and we can automate the setup of in-person meetings for you and then we can connect those back to crm and marketing automation okay so people should think about this like a way to do you know all the sponsor dollars they're putting out this is a way to kind of juice those sponsor dollar results at conferences absolutely it's a way to get more revenue driven meetings at conferences and trade shows without doing a lot of work and it's an extension of your marketing cloud yep okay so give me a general sense i want to go down every customer cohort on average what's the customer paying you for this software uh north of ten thousand dollars a year okay okay north and why would someone pay a hundred thousand versus ten thousand in other words what are your pricing axes just size of just the amount of events they're going to and the size of the team that they're sending okay so it's team size number of events not number of leads though no not number of leads isn't that isn't that the key value metric why is the number of team members they send more important the number of leads they're capturing at the event for us it's about how many accounts they have so it's about seats and number of events versus number of leads number of leads we're not interested in charging you per meeting we're gonna drive that just didn't feel right to us well i guess my question is what if someone has a hundred seats but no leads coming in versus a hundred a hundred leads with one seat one the four wouldn't the ladder be getting more value from your platform by be paying way less their organization would just be failing at that point so it wouldn't they wouldn't be buying our software yeah if you had it's it's not about it's about mapping your current uh crm to where they're going and then us adding to that yeah it's not about us if you have zero people in your uh customer base we can't help you got it okay very good put this on a timeline force when did you launch the company uh late 2015 and where were you at that point kind of in life you just left corporate you just sold your last company where was your head at i had just sold i was a corporate um development guy i just sold that company which company it was called telemetry okay so we sold it to a asian asian conglomerate um so i did that transaction and then we started 17 the guy who's the head of sales at telemetry uh became my co-founder and we started summoning together we started out as a mobile consumer based app uh kind of tinder meets business conferences did that for about you know a year and a half almost two years uh that did we had a lot of users but it just there was no revenue and there's no path to revenue so we went out and we listened to a lot of companies and we iterated from there interesting so that would have taken you up through like 2017 and it sounds like there was a pivot that happened yep interesting um what do you say in terms of total customers today just about 9 000. okay and velocity-wise you said you're adding you said 650 per month yeah and where i mean this is obviously a channel that's you know you're killing it here if you're adding that many on nine thousand where are you getting these customers what's the growth channel so most of it is our direct sales force so we're out calling folks uh doing that ourselves we do we just launched a reseller channel so we have five uh resellers going out there who have a significant number of sales people uh each who are driving a lot of uh leads and demos for us that are converting nicely what's your team size today full time full time 35. and how many of those are focused on kind of the sales machine uh 18. oh well okay fairly significant and this is an ins like what's the playbook they're following an inside sales playbook at account-based marketing playbook account-based marketing playbook okay so they're going they're targeting accounts they're reaching out they're going that way yeah we've been we haven't broken into bdr's sdr's um account managers okay and how many how many bdrs per sdr in parade uh i'm glad i got to think about that so there are six it's about six six it's about one to one right now okay so every sdr in your company is responsible filling up the calendars of one kind of kind of a business development rep and then what happens after the sale the account executive is coming after the sale closes or they're closing the sale they're closing the sale handing it off to uh account management and account management's actually being supported a little bit by a couple product folks right now who we're gonna have to hire some more account managers to get them back to doing product okay and have you done all this bootstrapped or have you raised no we've raised yeah we raised about five million bucks okay why raise why couldn't it sounds like you're growing really fast uh you said fastest you know in the in the country why raise capital yeah so no so we originally we originally had raised uh and then also like we just needed to raise because we went through a lot of product iterations we went through a lot of people um and and the engineers that we have are not cheap so we couldn't have bootstrapped it in that regard we had we had to create a sophisticated enough product to sell yeah and that cost money and that was money we didn't have so we went on raised when was the last round uh last round was last july last year okay so you're fundraising right now or you're in m a talks which one is it yeah we're fundraising okay how much do you want to raise and why how'd you get to that number so probably we'll end up looking at around 20 million bucks okay um and that's just to expand sales and marketing and a couple of key uh adding and building kind of middle management and a middle layer to product and engineering and if you raise this capital on terms that obviously you enjoy what are you telling the potential investors in terms of what this 20 million will allow you to drive to in terms of ar targets um i kind of don't want to tell you that um but it's a significant number so it's going way north of where we are but that's obvious john my question though is people sometimes will raise uh and the ratio between how much they raise and ar they add is sometimes one to one sometimes it's 50 sometimes it's 10 percent i'm trying to get a sense of kind of how aggressive you're being with the capital yeah i think it'll probably be 50 okay so what's 20 million raised do you think you can be efficient enough to drive 10 million bucks a new ar yeah at least uh interesting okay um and then uh and then um take me into some of the other economics related any sas company so churn is critical what's your turn and how do you manage it yeah so right now our churn uh is around six percent uh and how we manage that that's the logo turn per month that is yeah logo turn per month so we typically it comes down to why our customers churning is that they are not going to there they've had some type of economic event or re-budgeting of a conference and trade show budget and they are not going to as many events so they're basically just either winding down or not consuming as much from us we don't necessarily lose them but our annual contract value uh goes down and we continue to to have them as a customer but they're just not paying us as much okay so that six percent is not logo turn it's it's revenue churn per month you still have the logo yeah okay uh six percent revenue churn and are you driving any meaningful so the cohort that signed up a year ago with you six percent of their revenue returns every month are you driving any expansion revenue in that same cohort or no yeah in the in the in the people that have were our customers last year in terms of acv growth yes significantly okay so when you net it all out net revenue retention year over year from that cohort a year ago they're obviously churning six percent every month what are you adding back on top of that uh i actually don't know are you above 100 does your does your expansion more than make up churn revenue yeah oh yeah on that same cohort yeah okay so not including new customer ads correct okay that's great good so now revenue retention above 100 um that's obviously a healthy healthy place to be um walk so i'm gonna i want to back in the numbers here you mentioned um price point did you always have a ten thousand dollar kind of a year price point or did you kind of go down to that or up to that yeah i know we we fussed around with probably 15 different different pricing iterations so right now it's a annual licensing fee plus a consumption-based model on how many trade shows you're going trade shows an event you're going to and how many users you're sending so um usually an entry point is about five thousand dollars and then the consumption base gets you the other five thousand dollars based on utilization and usage for larger companies like an ibm uh it's a different deal we you know waive a annual subscription fee because they're gonna consume so much of the product so the ten thousand number per year you gave me earlier that's not an average across nine thousand that's like what people might grow to after a year they start off at five thousand a year now that's about your first year entry point is about ten thousand so it's about a thousand just under a thousand bucks a month your second year uh depending on the number of conferences and events you're going to if you're expanding your sales team and marketing team the number of people going to that grows fairly significantly yeah yeah and that's for new customer ads today what i'm trying to get a sense of you mentioned you had a lot of different pricing tests you have 9 000 customers today as a result of those tests if you look at the 9 000 you already have today not new customer ads what you have today i assume they're paying something less than ten thousand dollars per year because you had cheaper price points in the past i'm trying to figure out like how cheap how much have you kind of changed and tested yeah so i mean god at one point we were 1500 bucks a month one point it was hey give us you know 25 000. uh so now we've we've we've gone actually down in terms of price over time because it was easier for us to get customers that way drive throughput uh and and continue look at expansion revenue in year two okay so john then the cheapest customers and the ones paying you the least the minimum is 10 grand 10 grand a year yeah okay so i mean i can i can obviously do that math right 9 000 customers paying 10 grand a year divide 10 grand by 12 so it's about 800 bucks a month that would put you at 7.5 million dollars per month in revenue is that accurate somewhere around there okay that doesn't feel right to me with a team size of 35 and 5 million dollars raised yeah about where we are we actually in terms of five million dollars raised we also have a bank line behind that so we do have a pretty large financial facility in terms of equity raise we've raised five million bucks okay but just be clear what you're telling me is you're doing 7.5 million dollars per month right now which means you're doing about 90 million dollars in terms of annual run rate with a team of 35 yeah that's accurate i wouldn't release that publicly but it's we're getting there okay well i'm multiplying this is why i asked a lot of questions about price point and customer count you said a minimum was 10 grand a year and 9 000 customers that would put you at 90 million bucks in terms of run rate today i'm getting well well what we'll do today or this year 2019 okay and what did you do over the last 12 months probably a third of that okay so you did you're closing out the books right now because we're recording this in january of 2019 you're saying last year you closed out about a 30 million run rate yeah okay um you're based on the team of 35 where's everyone based new york and dc okay new york and dc no no no big remote teams no we had a remote team we got rid of them okay um why have you held back on hiring at all or or or you just 35 is good you don't need to hire much more no we've held back on hiring we've had a lot of we've turned a lot of folks uh and we've just not figured out um the best way to hire yeah so that's something we're very much working on so john something doesn't feel right to me here i'll tell you why if you did 30 million bucks last year and you feel like you're gonna do 90 million this year people will not be churning that company you've only raised five million dollars which means there's very little dilution means that the employee equity pool is very valuable something doesn't seem right to me here yeah so i would say in terms of overall support like loeb enterprises who uh were we're partnered with has helped us in terms of staffing so we have 35 people on our payroll love enterprises has 400 other people that are there we use 50 of them uh to help us as well so the team's about if you think about uh employees plus the lobe enterprises folks we've got about 85 people working on the business totally get that but you just said you've had issues keeping people there's been churn i would never leave a company that has gone from 2015 to today a 30 million dollar run rate with plans to triple year over year something doesn't feel right to me either the revenue is lower or i mean something's not right here yeah i would say when we went from so why we turned a lot of folks is yeah and why we haven't been successful in that regard of uh and when i'm talking churning folks i'm talking like hey we turned 10 people last year that's a lot though a company that's growing if yours if you are if you are if these numbers are accurate and and what you're telling me is accurate no one would be leaving the company it's a hyper growth company we had a lot of consumer focused marketers uh and consumer focus folks that were really good people but weren't enterprise folks so that's why uh i think we we miss hired uh talent skill sets um okay let me ask you a different question uh in the 20 million bucks you're going to go out and raise i assume you've already kicked off some of these conversations what in your in your not what you're actually going to get because i'm sure you're in negotiations but in an ideal world if you raise 20 million bucks what valuation would you love to raise that at uh i haven't you know what we're going through that process and i don't have a great answer for you today there well what i'm what i'm actually asking for is your thought process on getting to whatever the number is i care less about what the numbers are more about your thought process yeah i think the thought process is hey why are we raising 20 million bucks like what's the point like what is this money for uh what what does this get you to in terms of milestone is it um why what are you doing with that money and what justifies what's the next milestone you're taking that to i would say is why we're out raising that money sorry not your thought process around why you're raising your thought process around how you get to evaluation uh thought process in terms of how i get to evaluation so obviously some form some discounted against uh revenue and potential profit throughput in terms of how many customers we're adding all of those things is kind of where how i get to it i don't look in the most sophisticated way and i also do rely kind of heavily on um you know our advisors and our board to think about that yeah right now i'm very much focused on hey how do we run the business how do we scale um in terms of raising and all those things i haven't put a ton of thought into uh valuation numbers just yet are you reinvesting kind of aggressively in growth meaning you're operating at about breakeven right now investing kind of everything that goes to the bottom line back into growth yeah okay so if you're operating my my expectation there was that that question was that you're going to say you're extremely profitable with the team of only 35 people if you're doing a 30 million run rate that's almost a north of a million bucks an ar per employee which is 10 times the average across the data that i've captured so where's all that money going if you're making 30 million bucks a year where is that money going yeah so in terms of dollars what goes into it one a ton of money goes into data and processing a ton of money goes back to the 50 other employees or 50 other contractors that we what's the kickback you pay them what's up you pay them a kickback like an affiliate fee so the um yeah so in terms of we do pay an affiliate fee um a lot of data and processing obviously sorry how much is the affiliate fee like 30 50 it's right around 40. okay 40 in perpetuity or just first year acv no it's for the first three years first three years okay okay and then what do you mean data and processing so to do our prediction modeling of where someone is physically going to be we have to acquire lots and lots of data all the time so we're going out and buying lists from folks and we're working with conferences and trade shows to get that data in that information so that's not free to acquire and that's not free to process okay but over the past 12 months what do you think you spent with that 100 grand no god no way more than that okay in the millions okay yeah what kinds of lists are these where you're paying millions of i mean it seems extravagant not millions per list but you're you're basically hey you're acquiring the the list information at the specific trade shows and conferences across 25 thousand to thirty thousand of these things so one list might be twenty two thousand dollars um so you're basically we're building a pool of where people are physically going to be right do i know you're going to see yes do i know you're going to can line do i know you're on the uh national advertising job so we have to build you know the consistency of who went last year and who goes this year is very much where we're spending a lot of money to prove that out and you have to buy that data and that data needs to be accurate so that's where we're spending a ton of money uh on r d and product development of acquiring that data to make sure that it's accurate okay very good look so just to be clear you said you said here 2018 you're wrapped up at about a 30 million dollar run rate which would mean you're doing about 2.5 million bucks a month right now with hopes to grow that 3x over the next 12 months am i understanding you correctly hopefully yeah that's the plan i think sorry am i understanding you correctly in terms of where you're at today and what you want to do yes okay it was about 27 million by the way okay good so still about 2.4 million bucks a month but across 9000 customers and that would mean each customer pays on average about 300 bucks a month not a thousand bucks a month right yeah the cohort now so last year's cohort uh they basically on the trial basis so we're paying about that and then this year that'll be we'll push it up to about a thousand bucks a month that's the new pricing for new customers yeah i know your new pricing is 10 10 grand a year minimum i'm talking about your historical cohort of 9 000 paying customers today 9 000 customers times 278 bucks a month gets you 2.4 million bucks a month right now in revenue or 27 million bucks in ar in terms of run rate yeah that's accurate right around there yes all right very good john let's wrap up with the famous five number one what's your favorite business book uh phil knight shoe dogs great number two is there a ceo you're following or studying right now uh john chambers number three what's your favorite online tool for building the company air table and number four how many hours you sleep to get every night about two come on john two hours of sleep is no one's gonna respect that that's like you're killing yourself no no i get i get about six um last night i got two it was a long night so sorry i'm a little dusty this morning that's okay all right six hours and what's your situation married single kids single okay no kiddos no kiddos you know some people single but they have kids running around they don't know about them you know you always gotta ask so listen my co-founder had a baby in july and uh he's made i always thought that parenthood you know the first kind of six months were really brutal and he's made it look like just the easiest thing ever that's funny all right how old are you i'm 36 36 all right last question what do you wish your 20 year old self knew oh god cool uh calm down guys calm down there you have it summit sync launched first kind of as a consumer model up through 2017 kind of burned cash freaking that out realized that wasn't the play then shifted to more enterprise plans now 9 000 customers paying 200 300 bucks a month doing about 2.4 million bucks a month in revenue closed out at a run rate of about 27 million bucks in terms of ar uh in 2018 hoping to 3x that year over year in 2019 and also potentially raise a 20 million dollar fund they're operating at outbreak even right now 35 people between new york city and dc 6 revenue churn per month but net revenue retention each year above 100 because of expansion john thanks for taking us to the top hey thank you very much