How Surefire Local Reached $26M ARR with 75% Growth Using a Transactional Sales Model (Talk by CEO Chris Marentis)

Introduction and Company Overview

Chris Marentis

00:00Please welcome to the stage Chris Marentis with Surefire Local.

00:08Everybody, I hope this talk is gonna probably tie together a lot of the things. It's interesting, every entrepreneur has a story. And this is going tie together a lot of different stories because we've gone through the outsourcing,

00:23how to get culture right, how to get leadership right, all those things. So hopefully you'll get something out of this.

$26M ARR and the Bootstrapped Journey

Chris Marentis

00:31So the next twenty minutes, I'm gonna talk about how we bootstrapped our company from 2010, starting with a managed services company and then evolved to a SaaS company. It allowed us to keep control of the company and have a majority of the company. And right now, we're actually sitting at about 26,000,000 in ARR. In doing that, we had to really think about how we had to change leadership over time and the culture of the company because

00:59it's really different having a managed services leadership group and having a SaaS leadership group. And I learned that the hard way, and I'll share some of those lessons I learned. And then how we thought about capital. We really didn't raise any capital except for myself and a few other folks putting in some money until 2016. You could see where the business took off. This is the reason why Nathan wanted me to talk. You could see that

01:25spike in '21 and '22. But the key thing I'm going talk to you about is what it took to set the company up to be able to do that. Because I tried to do that at different periods of time, and it never worked. And some of the lessons I learned to try to get there. So what we're going to learn today is, or let me tell you about what we do. We're a local marketing cloud for

01:49professional services type companies like contractors, attorneys, home services type companies. So we built really the Adobe Marketing Cloud for the specific use case of local marketing and delivering that at a price point that our customers could afford and in an ease of use that they could they could use it. What we've really become is a big data company, you'll start to see that at the end when we start to put together all the different data sources

02:20and how we use those.

Why Chris Avoided Venture Capital

Chris Marentis

02:24So our story started when I was, I was a CEO of two venture backed companies. I was brought in to help some founding entrepreneurs that needed some adult supervision. And I learned two things that are doing that. Number one, never do that again because you end up not really controlling the destiny of the company. And number two, I realized how venture capital works. And at my stage in my career, in my life, I didn't wanna be

Origins: Managed Services to SaaS

Chris Marentis

02:54the one in 10 that works. Because they're going do is give you a pile of money, and then they're going to tell you go fast, and they want you to either fail fast or keep on piling in more money and take away ownership. And that's the issue that I saw. I started this company with the idea I wanted to create a real business. It started with a book I wrote. And the reason why I wrote that

03:14was in honor of my dad. My dad was an HVAC contractor. And I saw how technology could really change the game and give back control of marketing to these entrepreneurs. And they didn't have to rely on agencies that were not very transparent and not really honest. And then, or knit together a bunch of point solutions. So from that, we started a scaled managed services company because people were asking for help on implementing that plan we put

03:44together, the system we put together. That system is still the DNA of the SaaS platform that we created. It really just automates all those things that we put together in that system. Around 2014, APIs are becoming developed enough that we could actually create that Adobe like cloud that I was talking about. Sketch that out, put in a couple of million dollars, just a few of us, to do that. And then started to test that with our

04:15own customer support people. We called them coaches in those days because we were a managed services company. And what we saw is our gross margins starting to go up because we're able to do a lot of the work in a more automated way, be able to do reporting easier to our customers. And, we saw a lot of benefits to that. So when you scale with technology, it takes human error out and it gives you easier ways

04:38to implement things. Around 2017, we got that software mature enough that we said, let's give this to our customers and let's test the assumption that SMBs will actually use software, not only use the software, but use all the different pieces of the software because we're all in one. We had a lot of different pieces. Will they really get that idea? When we launched it to our customers in 2017, we saw adoption month over month just continue

05:10to go up, and it was going up with all the different pieces of the functionality that we provided to them. We knew we were onto something. We learned a lot from that and then we said, let's launch the next generation of this software and leapfrog from where we thought we were. And we did that in 2019 and it was clearly the best product in the industry. Clearly the best product in the industry. But as we tried

05:35to start to now shift to selling software, my leadership team in sales, in customer support, in marketing, really wasn't able to make that shift with us. And I knew that was super apparent. So in 2020, I, started thinking about new leadership and brought in, someone by the name of Mike Pierce, who had four different scale opportunities, at scale opportunities in selling into the SMB space. And had a really different approach than what I was at that

06:12time, doing. And, the rest is history in terms of our growth.

06:19So what this playbook sort of consists of, and I'm thinking about this word at executive level, is number one, you know, the idea of committing to a process. And that commitment means spending some money on the enablement of that process, only in talent, but also in technology and also in, you know, in, like leadership thinking about how to implement that process. And you might be wrong. Like we were committed to a process before, it was just

06:53the wrong process. And that's why we weren't growing the way we wanted to. Secondly, I knew we had to have a different culture. We were moving to a transaction, more of a transactional sales model. And I'll get into that in a little bit. But that transactional sales model requires super high energy, really granular data at the at the salesman level, so you really know what they're doing, you could train them, support them, understand, you know, and

Shifting from Inbound to Transactional Outbound

Chris Marentis

07:24and be have prediction about what your next month's gonna look like based on the output of what they're doing. And then, you know, next, we really switched from a inbound model. I mean, I I didn't know a whole lot about SaaS, so I read Predictable Revenue like probably most of you guys did in the room and said, gee, I'm going to commit to that model. And I did that for three or four years, and it wasn't

07:48working. That was primarily inbound SDR, multiple steps, advertising a lot in Facebook and our customer acquisition costs were fairly high. We had high ASP, but it still is super high for what we were doing. And then Mike came in and brought in this transactional model that was really outbound first. So today, about 30% of our revenue is from inbound. We're still doing inbound, but outbound creates a predictability of revenue, if you do it right. And you

08:22have the right types of technology, right kinds of management and leadership in that.

KPI-Driven Sales Management

Chris Marentis

08:29So we have we're very, very KPI driven company at this point. I have my KPIs I do weekly with my executive team. But for the sales, leadership, their KPIs look more like this on the outbound side. And it's really around starting with dials, you know, demo sets, you know, dials to demo sets, demo sets, held demos, win rate, MRR. And by really looking at those in a micro level and even more so by team, by vertical

09:04we're going after, it gives you a lot of rich data to help you better understand how your revenue is gonna shape up in the next month or two, but also where you need to spend time and focus with your sales organization. So it's super important that you have the infrastructure to be able to do something like that.

Leadership, Culture, and the Five Pillars

Chris Marentis

09:24So the next section I'm going talk about is about leadership and culture. So when we started this transition and to bring in new, brought in new leadership, you know, in my our philosophy on this is you can't take your new leadership and go into a conference room and, you know, whiteboard, what do we want our culture to be? It's not authentic, and it's not going to be something that's going be bought into by your people. What

09:55we ended up doing is we did a survey of all the people in our company. And we said, we'd like you to describe in words, all the good things you think about the Surefire culture and all the bad things that you think about the Surefire culture.

10:12You know, sort of like, the analogy to this is like when you're on a diet, you don't want to focus on eating. So we didn't want to focus on the bad things. We want everybody focused on, you know, working towards behaviors that are the good parts of our culture. And I'll just walk you through, we ended up, you know, sort of putting all these ideas into five sort of pillars of our culture. One is driven by

10:36purpose. Our purpose is really around helping small business owners create wealth. They're getting ripped off by agencies and they've got their overwhelmed, confused, pissed off most of the time because they really don't understand this new world of marketing. So we wanted to make it super easy for them to understand it and how to be successful in it. And that is our mission. That's our quest. So we're all, you know, the people who come here have that

11:04same purpose. And we make it clear in the interviewing process, all these different things that we expect. The second thing is this idea of keeping it real. Some people call it radical transparency, radical clarity, right? But the idea is to have engagement up and down the company. And that's the way you really create great results, right? If the more people engage, the better results you're going to have. Everyone needs to feel like they're able to have

11:34a not a say, but comment and freely discuss some of the things that we're doing and hopefully add to those things. The next one is connected deliver. You know, in this, you know, a world of distributed workforces and not having an office everybody goes to, it's super important to have people form connections not only within a department, but across functions. So we're really intentional and deliberate through physical events, through technology, acknowledgements, all hands, things like that,

12:07to make sure people feel like they're connected to each other because then they can have those transparent conversations. And then empathy is really key to really win.

12:19Some empathy for the other people in your organization, what they're dealing with helps you better communicate and communicate in a way where it's going to be a positive development between the two people. And then never settle. We're a company that never settles. We are always looking to get better by the evening than we were in the morning. We've done that with our technology. We do that with sales. We do that with everything in the company.

Executive Team Structure and Remote Operations

Chris Marentis

12:50We also align the executive team to be streamlined so that we could be built for speed. So, we have two offices here in The States. We also own and operate a company in Manila, that, does a lot of the help desk support and engineering support for the company. But we've got our president, Mike Pierce, that drives all the customer facing organization. That's the biggest part of the organization that we have. He also runs people operations. That's

13:25probably the most underrated part of our organization I really thought of before. But now looking at it in hindsight, it was the single best decision we made to bring a really strong people operations person, and then you'll see the effect that it had in the company. And then we have CFO and CTO separately with their organizations. And the result of all that is we won Inc. Best Workplaces this year, Glassdoor 4.4, our employee Net Promoter Score

13:56globally is plus 74. We're a remote first model and we have world class benefits that our head of people operations is able to get by having someone just focused on that.

Capital Strategy and Venture Debt

Chris Marentis

14:11The last part of this talk I'm gonna give is about capital. I know, you know, it's a big focus for Nathan here. We're not venture funded, but we do have debt capital that we raised once we thought it was the right time to do it. And that's the key, is understanding the right timing to raise capital because you get yourself in serious trouble raising debt capital too early. So, you know, right now, know, '22, about 18,000,000

14:43in bookings, 19,000,000 in bookings. We'll end this year about 30,000,000 in ARR.

14:51But we really raised our first debt capital in 2016. It was only a million dollars. But that was when, if you remember, we were just about to launch our platform to customers. And we knew we needed to grow our sales force to start to amp up the velocity a little of our platform sales. And it was, really done with a venture bank. So it's fairly, fairly good terms and pretty low cost for what we did. And

15:24you could see we got a little bit of a spike in bookings when we did that. Today, we have $11,500,000 in debt, and that was done in a couple of tranches. The first big tranche of about $4,500,000 was done in 2019 when we launched the second version of our platform. And I knew we had to make a big bet on new leadership, and I needed to get the money to do that or we would still just

75% Growth and the Impact of New Leadership

Chris Marentis

15:56keep growing 25% a year. We're growing now about 75, 80% a year. So that's when we started the Austin office. Now our company has more people in Austin than our headquarters up in the DC Metro market. So the key lesson I'd share with you is you don't want to bet the ranch with debt capital unless you're using that money to grow. To give you a sense is we, I 5x'd the value of my company. So some

16:29people said you're taking that venture debt, it's gonna be really expensive for you, right? I mean, you're paying sometimes all in 17%. But when you think about the valuation in three years of my company and what we've done, it really was super efficient way to do it. The other thing we were able to invest in, you know, we broke things like the last speaker was talking about from Pendo. We so we four x'd our sales in

Building a Sophisticated Infrastructure Stack

Chris Marentis

16:56in really months, four or five months. And you can imagine when you do that and you have a customer success team that's not used to that velocity, you could break a lot of things. So we realized we had to start to get really systems and data, sophistication in our in our company. So we built an infrastructure stack that I think would right now would be one of the most sophisticated in our industry. We have a service

17:22desk that now helps us manage all the cases that come in from our customers, whether it be tickets, phone calls, whatever it might be, and escalate things really quickly and triage them really quickly between our Manila help desk and our U. S. Customer success people. We have omni channel communication for our customers, so they could reach us anytime, anywhere through voice, chat, text, email, and a bot that we launched. We also connected all these systems, including

17:55our marketing cloud with, you know, voice to text, so we get all that data in from all the phone calls we do customers and all the other data. And it's super powerful. I'll show you some examples of that in a second. And then we were able to start a marketplace in our platform where now all of our

18:16service providers, we don't want to be in the service business, are able to hook into this and get the benefit of all this information about our customers as well. I'm not going to walk you through this, but it gives you an idea of the complexity of all the different systems feeding, you know, our platform right now. So we this is why we've become really a big data company. This data is super powerful for our customers to

18:41give them insights about where they could get the best bang for their buck in marketing spend and ROI, but super powerful for us because it creates predictive models of customers that might be ready to churn. We're by the way, we're we're probably not even 50% through implementing all this. It's all stood up and going, but we're not even through implementing all of it. One of the partners I wanna highlight here is a partner called involve.ai, and

Predictive Churn with involve.ai and ChurnZero

Chris Marentis

19:08what they do is they simply ingest all the data that you could give them through APIs. And they've got data scientists that then create really sophisticated models that start to look at predictive churn, like in the next two to three months, and it allows you and your customer success team to really start to get ahead of that, you in effect, I start to feel like I know more about my customers'mindset relative to their relationship with

19:38us than they do or before they do. And it's super cool.

19:44Then we feed that information into an application called ChurnZero. So our customer success people again, narrow that down into ChurnZero, unpack what that customer is doing, and find ways we can get that customer on a happy path. And we can also do automation around that. So we could do pop up messages, emails, you know, in app types of messages in mobile or desk top, so that we start to try to move them to Happy Path and

20:12answer all their questions. So ChurnZero ends up becoming a playbook for our customer success people that helps them get that customer on the Happy Path.

20:24And the results of that have been gross and net retention that's going up and to the right. And we're in a SMB space, which is really tough to get a positive

20:38NRR, but we feel we're on course to get at least a neutral NRR by Q1 next year leveraging all these tools.

20:48And what's really neat about our business is and with all this data now that we've got, we've evolved from a managed services company to now a technology company. We brought different customers on with a different brand promise at different times. So now we're able to sort customers by time period to take a look at how they behave differently. And you could see why they did because of the brand promise they were selling our application at that

New Cohort Retention Results

Chris Marentis

21:22time. But what's really interesting is the new customers, meaning brought on from 2020 forward, those cohorts are doing incredibly well and are at 2.5% gross churn, and we're starting to get towards 1% net churn with those new cohorts. And that's because our velocity is so much higher now, becoming a much bigger piece of our book of business.

Path to Private Equity Exit

Chris Marentis

21:52So to wind up what I talked to you about here is the idea of bootstrapping to retain control of your company. We're at a stage now and we're going to do a private equity deal or strategic. And, you know, that's going to probably be somewhere in the 125,000,000 to $150,000,000 range, and I still own most of the company. So that makes me super happy. So debt could be a really great instrument at the right time to

22:19give you that control and also the better payout when you're done.

Key Lessons: Bootstrap, Culture, and Debt

Chris Marentis

22:25Establishing a strong culture and leadership is critical To be able to enable when you do these pivots or when you do these evolutions of your company, you really need to be able to do that. Have strong leadership. And then raise capital at the right time. And I think debt is a great instrument when you feel comfortable that you could add the kind of add water and it'll grow. That's when debt becomes a big opportunity for you.

22:53Thanks.