How Vtiger CEO Sreenivas Kanumuru grew to $11.6M revenue and 3K customers in 2024.

everyone my guest today is Srinivasan Khanna muru he is the founder of a company called the tiger he is from South India say that many different universities and worked at AT&T for two years in 1995 he joined Tony Thomas shortly after he founded Zoho Corporation and in 2004 he then followed Tony when he launched another startup which transformed to become the tiger in 2007 he's been the CEO of e tiger since 2008 Srinivasan are you ready to take us to the top yes sir so update us everybody I think probably knows oho why did Tony leave Zoho and why did you say I'm gonna ride this Tony guy he's a smart dude oh yeah so Tony and I first met Tony in 1995 when we were working together at AT&T and and then he started as over at that time it was actually called as Advent network management it was a twin net actually so I guess everybody knows Oh from the online SAS as an online SAS player but the roots were back in network management and so Tony started it out and then I I joined him in the first year and then so I think we continued until about 2004 and and Tony actually in his heart he is an engineer and he has been and even today to this day he's still spends about typing movies six to eight hours of his time doing coding and he has been involved in many things so he wanted to hand it over to speed the bamboo who is the CEO of Zoho cop and he wanted to start something a new thing and so that's when I also had each to do something and then I joined him a little later and so that's the maybe I'm going on and on so please catch so what is what is V Tiger and how do you make money yeah so V tiger is actually a SAS based as the arm player and we started out back in 2004 savita I got actually started out as a open source project and into around 10:00 we shifted to the SAS business model and our most of our customer base is SMBs and we actually have a soul and our mission is to really enable and empower people to try and when we say people we are kind of more focused on the front office players in businesses and within SMBC or the people who are working with customers from marketing to sales to support and we are very much focused on those three functions and trying to see how we can really make their basically work more exciting and make it more interesting for them and provide something it does of data and other things the Srinivasan what's the average customer just a tangy promise now we have a good hundred dollars per user okay customer I would say say that again hundred dollars per customer yeah hundred dollars per customer and they can sign up monthly order they have to do annual they can do monthly and we also have an annual okay and then you just gave us some the back story and forgive me you said 2004 or 2014 was your start date 2004 is when we tiger started as open source CRM product and in 2010 we started this as business model so in fact that was the interesting people because we kind of rebooted to the SAS based model from the open source based business model how did you support yourself in terms of like paying a salary and building a team between 2004 and 2014 yeah in fact interestingly within a couple of years we were profitable so early on in the V Tiger we had customers larger customers like Nokia and even when I was open source yeah in fact when it was open source we had customers who are using it on premise and they were engaging with us to customize it and and that was where we were getting big large pieces money to customize it and we had and it was actually working out great and we were profitable and within a couple of years from 2006 onwards it was self-sustained but then we realized about 80% of the work we were doing was kind of going into for that customer and for this customer and what that customer yeah yeah and now what are you today in terms of total customers sorry I did what do you had today in terms of total customers so we are load 3,000 customers okay 3,000 customers and so can I take 3,000 customers times $100 per month you guys are doing about $300,000 per month right now yeah that's accurate and are you going strapped or have you guys raised capital we did not raise any cup bootstrapped congratulations that's exciting thank you thank you it certainly gives a little more freedom and I think we can keep going but I guess there are a lot of companies that are thriving with VC funding and all so this is just a model we chose in help us understand how kind of quickly you're growing currently you're doing three hundred thousand dollars per month in revenue that a year ago late 2016 what were you doing then we would have bought two hundred and twenty thousand bowls per month yes got it that's so that's good growth and walk you know one of the issues companies have in the SMB space is churn what is your charm look like annually annually the cosmos our own annual plan we have about a 10 percent turn but whereas with the customers with monthly plan is when we have a little more chance so we actually see like two to three percent sure okay as a low churn of revenue sharing monthly that's the logos with the three-percent logo churn monthly I see and what are some of it so with a CRM we've had a lot of folks running serums on the show and they all have different things that they know they have to get a new customer to do in the first week to make that customer sticky what do they have to do on vtiger so that you know they get sticky yeah it starts off with the communication channels so the communication channels with their customers like emails getting their emails into the CRM and making sure obviously it starts off with the important contacts and all but then when customers send them emails they they can get them into CRM then we know they are actually starting to use the basic communication channels and I think in the end CRM has probably about four key pieces if it has both marketing sales and support you have marketing campaigns you have opportunities and you have cases for the support help desk system so if you can really get the emails going then then we have other things taken care of and there are other other things like apartment pages so if a salesperson is using a CRM most of the time one of the key things is to make sure sales persons calendar and meetings are all in the CRM and for that we have things like appointment pages in vtiger and so we want them to set up those appointment pages see walk me through how you're driving customer growth what are you spending currently to acquire a customer so right no in fact hours one of the things that is interesting about we do this we have and and it's kind of a weakness also is that we have not really done much of marketing in terms of advertising and also most of our leads come through inbound channel and that's when I say most it's 99% of our leads so we have a very limited everything about overall advertising budget for the last 15 years or maybe 13 years is actually less than $50,000 there will past 12 months less than $50,000 on paid stuff the last 15 years what is your what is your fully weighted cap in other words do you have team members dedicated to onboarding support and sales yes so the sales marketing we have is we have some members in our sales team and we have a few members in our marketing team so so overall I would say I think you're coming to that lifetime versus attack I think we are between 4 & 5 so so basically about 4 is to 1 yeah and what do you soom lifetime value is in terms of dollars on your customers today it's about 200 almost 1,200 yes ok and so that is four times what you're spending on fully weighted kak is that what you just said that's good so you're spending fully weighted about $300 to acquire a $100 per month customer who is worth about $1,200 for you meaning you recover your kak in about three months which is pretty quick that's that's great so why not be more aggressive with kak if you recover the money so quick yeah in fact that is something we have we have been a very engineering driven company and I myself focused most of my time on engineering and now I'm trying to get that help from others of us I kind of brought in product management and we are now starting to bring in product marketing managers for each one of these areas like marketing sales and support areas within the product yeah I think the lot of things that we have not done that we should be doing and we have we just figured that and I think we are little late to that marketing my see a lot of other CRM companies that are doing great in terms of getting leads and all mainly through advertising and ledian programs like webinars and all that and we are not really tap those things yet so so we have been focused on just getting the product that's and that's a good focus real quick why if I take your churn monthly which you said is 3% and I do 1 divided by 0.03 that gives me 33 months that the average customer is gonna stay with you they pay you you said earlier about a hundred per month so 100 times 33 months is about 3,300 bucks in lifetime value you told me you assume lifetime value is less than half that of 1200 why so we have actually with the mix of annual plus the monthly customers and we have annual plants that are geared towards a little more higher so in fact more recently we are seeing larger customers coming into play and we have the average size of the customer is actually growing so so when I actually mentioned that the two to three percent so in fact so the churn could be a little more than three percent I think it's maybe three to four percent monthly so I think the overall lifetime value we are actually seeing that growing with larger customers coming now so the number is a little closer to the 2,000 thing I think if you look at customers that have come in the last one year no but my question is the arguments you just laid out would argue for a higher lifetime value like currently even with four percent monthly churn that means the average customer stays with you for 25 months at a hundred bucks a month that's twenty five hundred bucks in lifetime value you told me though a few minutes ago you assume lifetime value is 1,200 why do you assume it's so little the yeah with the lifetime value we are actually looking at specifically the monthly customers that I mentioned so those I see the three percent is what I can see is the monthly customers monthly plants I'm saying that it is actually three percent so we do see I think a very high return when it comes to monthly it's much percent no no three person is what we see for monthly okay yeah if you have three percent monthly charnel and you divide one divide by 0.03 that gives you a sauce of 33 1 times 100 gives you 30 $300 in lifetime value but you told me it's 1,200 I'm trying to figure out why there's that gap mm-hmm do you multiply that $3,300 times your gross margin to get a gross margin LTV no no run the numbers against I feel there is probably a difference in the annual and monthly plans hey the good news is you're conservative at least you're not saying your ought to be is way higher than what it actually is you'd rather be too low right so that's a good thing once your team size today 102 people where you guys are based in almost all of them and are in Bangalore and we have one person in San Francisco Bangalore very good all right let's wrap up here serving us with the famous five number one with your favorite business book you like the cathedral in the buzzer by Eric Raymond is actually more of a software again cathedral and the bazaar okay always the first word the cathedral oh the cathedral and the bazaar and this is about the business book I like the four disciplines of execution that's nice number two is their CEO your Fowler studying mm not one in particular but I recently heard the Patagonia CEO Eve she not so that I certainly like some of these things but I don't follow one see you in number either way besides Yan is their favorite online so you have I like Flipboard I like NPR one the to listen to a lot of podcasts yeah and hear one's a good one number four how many hours of sleep tear every night are you guilt about six hours and what's your situation married single your kids married with two kids two kids in how are ya I am 45 45 all right sure enough take us home here take us back 25 years what are you we should 20 year old self knew I would say maybe travel more you might meet more people by traveling more there you guys have it from Sherman Oz founder of the tiger with Tony the former CEO of the founder and former CEO of Zoho they've grown the company really on an open-source basis for the first you know many many years the company now it's really SAS they have over 3,000 customers paying $100 per month in December 2016 to about 12 months ago doing 220 grand a month in revenue they've grown that to about 300 grand in monthly revenue so healthy growth they have a churn of just 3% per month which is pretty healthy actually in the SMB space CAC is 300 bucks which they recover in three months and assume lifetime value of 1200 bucks again as their team of 102 people and Banglore build this tool to help folks manage and grow their CRM and their customer relationships faster and more efficiently serving us thank you so much for taking us to the top Thank You Nathan thanks for taking the time I appreciate it [Music]