Switchautomation Revenue & Funding (2024)

hello everyone today my guest is Deb NOLA she's the dynamic CEO and co-founder of switch automation a smart building software company specializing in building performance optimization with 20 plus years of experience in real estate technology and sustainability she's passionate about helping enterprises leverage net generate next-generation facilities management technology to execute more efficient business operations Deb are you ready to take us to the top how are you Deb good ok tell us about the company what do you guys do and what's your revenue model how do you make money sure so we are in the world of transitioning buildings from the old world of disconnected assets disconnected darlin disconnected systems into a whole new digitized world so it's about connected building smarter buildings because not only not all buildings are smart but we're aiming to make them smarter so if you look at the way real estate being managed for the last 20 or 30 years it's like 1980s out there all that information is in it's locked up inside buildings that people are making decisions without access to good quality data and that's the problem and give me example of a company using you right now just so we can put a face to this problem so we're working with we work so we work with any company that has a lot of buildings because they all have the same problem and it doesn't matter when you're a commercial real estate owner or a property manager like Cushman & Wakefield or a services company like an engineering services company or a tenant or a retail portfolio it actually doesn't really matter if you've got lots of buildings you've got all different hardware and you've got lots of different service providers and you've got lots of different systems and you have no single source of the truth mm-hmm okay so at we work when you talk about data tied to those buildings what kind of day I mean are we talking like a see usage Tjader are we talking like some kind of electronic check-in data what are you talking about everything so we work cares about they care about the tenant tenant or the occupant and the occupant experience and that's about how hot or cold the spaces are how that space is being utilized what's the feedback from the tenant what's the lighting levels like but also they care about the cost of maintaining those buildings so there's there's a two-sided equation there one is how do I run my buildings at the cheapest but the second one is how do I provide the best possible user experience is this is the pure place sass model or are you installing some kind of physical piece of hardware to measure things like temperature and light we we have an IOT gateway so IOT stands for Internet of Things so we connect it on on-premise systems like smart thermostats lighting system sensors but our model is not to sell any of that it's to connect with what people already have connected but in the case of we work a very important darzee is just their ticketing system because that gives them insight into buildings where they have problems and they've got lots of complaints interesting in terms of a it's too crowded here yeah yeah or it's it's always hot yeah and you know and so that particular suite might be you know in the southwest corner of the building and so that means different ventilation or different temperature controls to say the other areas of the building what is the number one device you're connecting to is like a nest thermostat it's actually very difficult to connect to a nest so we can add - generally speaking we would start with building management systems so really large building management systems that run all of the heating and cooling in a building most of those systems are moving to open protocols like bacnet so we would connect to those types of systems but we can also connect to individual sensors for example we're working with a company called monitor that does everything from door opening and closing - you know sensors in every seat and best so that you can see which which which seats in which desks are being utilized interesting ok revenue model this is a pure place ask company yes we we whereas a service based on number of buildings number of data points and the size of those buildings and give me an average I don't good on every customer cohort but on average what's a customer pay you per month this is for a large portfolio of buildings we we don't tend to do single buildings so we do you know but that is if you look at all your paying customers you would say 10 grand is a is an accurate reflection of the average yeah that's a good minimum yeah yeah okay very good that helps me understand more kind of your any very much in the enterprise space your team problems and really looking at how we now migrate because we're in a growth stage now we just finished our Series A round how much have you raised we raised six million in total but we just closed a series I ran out of three point eight okay was that priced equity or debt that priced equity got it and do you mind me asking did you do that and bolt was that what you just moved to Denver did you raise from you know Brad Feld or Cohen or one of those guys and they made you move no but we actually end up doing a flip up which is what you call when you re headquarter into the US were an Australian founded company but when our headquartered in the US but we ended up getting a lead investor out of Australia so interesting okay very good so so you've raised capital when did you launch the company this the platform launched in 2012 when we came to the US and 2013 okay so yeah and then fast forward to today so over the past six years how many customers are now using you we don't have a huge number of customers but they have an enormous number of buildings so we've got platform a small number of customers and we're really in growth mode now and migrating from a direct sales model into partnering model so who are the companies that want to take this platform to their customers so these could be companies that are servicing buildings or it could be we're actually about to do a seven city tour with a global distributor called annex oh yeah by the way I wouldn't expect that you'd have a high number of customers because of what you just articulated right you're in the enterprise space so you will have a low number high touch but they represent thousands of buildings so what is that customer number are we talking like for customers or 10 or what more than 20 ok most of our customers are in the US but we do have quite a number of buildings because we started in Australia number in Australia New Zealand with some big customers up in Canada we've got a partner in Israel with a partner Belgium yeah I know it makes sense look if you have 9,000 buildings across a minimum of 20 customers I mean these are like 450 building deals you're selling on average these are big deals yeah yep and then if I take 20 customers again you said between 20 and 30 bucks say 20 at your minimum price of 10 grand a month I mean you guys are north of 200 grand per month at this point correct correct what when do you think you break like you know half a million a month or what's your next big revenue milestone next year because because of the stage that the company's in now we've kind of gone through rehab quartering into the u.s. we've gone through our whole fundraising we are really expanding our sales team now in Denver we've got a really experienced engineering services team who are helping our customers to get maximum value out of the platform so I would expect to see that the growth of our company would really ramp over the next two years and what has the growth been over the prior twelve months so if you're doing about 200 grand or a little north of that today what were you doing about a year ago you know I'm here okay that's good so call I'm gonna be 140 grand a month in revenue about a year ago is that about right and where's most that growth coming from is it expanding more buildings across the same starbase are bringing new customers on all together yeah that's really fantastic question so all of our sales are fairly long lead time you know long conversations every customer starts with a proof of concept so it's a land and expand kind of sales model so we will do a 10 building proof of concept and then we will expand that that customer so all their customers are in expansion mode we've got at least four customers that are just coming to the end of their proof of concept stage so they're in expansion mode and then we've got two big banks that are about to start a proof-of-concept mode churn is critical in this kind of business even if you don't have logo churn you might have revenue churn of people you know decrease the amount of buildings on your platform or vice versa what is your turn today we've had things we change mostly things that we wouldn't take as a sale today so you know in the early days you take every sell so we took a lot of single buildings and it's very hard for us to add value to a single building a single building will have a building manager they can wander around they can talk to the tenants they know what the problems are and so it's harder for us to add value in that situation whereas if you're a customer that's got you know a thousand retail stores across the u.s. you literally cannot keep your eye on what's going on across that retail portfolio and unless you have access to good analytics so let me ask you a different question right so annually what is net revenue retention it spread sounds like it's probably over a hundred I'm curious by how much that's okay do you know so when you take the revenue you lost and you add back all the revenue you gained from that same customer base it do you know if it's over a hundred or not you're not sure okay um tell me about your team how many teammates we have 45 in total a substantial software development team so we started in Australia and our team our software engineering is all still driven out of our Sydney office engineering team is more than 20 persons and in the Denver office here we've got 15 people on the team mostly Building Performance people so energy engineers data scientists mechanical engineers that style person controls a lot of skills and controls and we also have a marketing team yeah and we're about to really grow our sales teams cash or partial positive yet or no oh yeah I sort of say if you have 45 employees and you assume an average salary of 60 grand which might be on the low side that's 225 grand a month just indirect headstone expense and you're doing call it 200 top lines or you're burning right now growing yeah yeah there are good witches which is made sense why I raised last question here on unit economics what are you spending to acquire these new customers fully fully weighted yeah and how much time did that typically take it's anywhere between six and nine months okay and then payback period wiser you know do you try and aim for a 12-month payback period or less we're looking at three-year contracts and we would hope to have a payback over that that first year okay so twelve months yeah very good let's uh let's wrap up here dub with the famous five number one what's your favorite business book number two is there a CEO you're following or studying right now number three with your favorite online tool for building your business Microsoft Ames Microsoft teams a new one there very good number four how many hours of sleep are you getting every night seven eight okay that's pretty good in what's your situation married single kiddos I am happily married 31 years congratulations I have four sons who are in their early 20s that's great and do you mind me asking Deb how old you are I'm 55 55 I love that and last question take us back to your 20 year old self what do you wish that she knew [Music] no no it's not it's not what you would change do differently just something you wish you knew back then I think the thing that I always tell people is that you can't plan and you can't plan your life you're going to get amazing opportunities that cross your path and it's whether you choose those opportunities or not that will take you on your journey and sometimes those those opportunities you turn them down and sometimes you say yes and those opportunities can be you know overwhelmingly good yeah guys you can't plan your life pay attention to the new opportunities coming at you every day from Deb founded switch automation back in many years ago 2012 that sense has grown to a team of about 45 people again supporting and helping these you know owners of hundreds and hundreds of buildings understand things like temperature changes or air flows or which seats are being used they currently serve 20 enterprise customers that span over 9,000 buildings doing about 200 grand per month right now in revenue that's up about 30-40 percent year over a year when they were doing about 140 grand per month in July of 2017 she just closed another round of funding so six million into the company to date economics wise willing to spend up to 150 grand to acquire new customer targeting a payback period of about 12 months as she looks to expand and grow Deb thank you so much for taking us to the top hey