How Workboard CEO Deidre Paknad grew Workboard to $88.9M revenue and 50 customers in 2024.

hello everybody my guest today is daydream uh he's the CEO and co-founder of work board has dedicated it has decades of experience leading enterprise and startup teams and is passionate about helping other leaders engage their teams and great achievement she started to lead several companies has twice been recognized by the Smithsonian Institute for innovation and has 16 patents stay-dry' are you ready to take us to the top yeah absolutely all right what is work board well what are you doing how do you make money workforce a software company that helps other organizations align measure and achieve their strategic priorities more quickly more effectively okay so you're selling these kind of HR managers internal team purposes actually not to HR managers right and if you think about an enterprise whether that's a growth company or whether that's a huge enterprise like a Microsoft or IBM the person with the strategic priorities is leading a business unit right we need to grow this much we need to enter these markets we need to drive this top-line growth in this bottom-line margin and profit right and that's not the head of HR that's a head of the business and that's who we're trying to help drive acceleration for interesting okay very good but all b2b SAS absolutely okay and I want to get I want across on a timeline and get more your story before we do that they'll give me a general sense here oh I don't go in every customer cohort but on average what's a customer pay you per month for this would you say should we think we do annual contract rate sort of thing but they're a CV per customer is and it's it's about 125 K we've got really large enterprise like a Sony Samsung Microsoft right Deutsche Telekom and we've got a bunch of growth companies couple hundred people like Trend kite influitive and others so from in the middle of that zone is about 125 kHz v that's great and put all this on a timeline for us when did you launch we actually launched a company about four years ago and we took a and we haven't used a ton of money to get here right and so it was perfect the product for I think of it as the individual contributors right the people who execute it on so strategic priorities and make sure they loved it they got power they got value and then stack on top of that enable the managers especially first time second time managers who aren't really awesome at it to connect the strategic priorities to the work their team doing and then elevate that to strategic priorities going up seven eight nine layers in the organization so we we walked up for two years on products people love to use and then dashboards and alignment executives really really need to have and they put those together right and so we kind of got into revenue generation in 2016 and we've been growing at a pretty healthy clip since 2016 in the revenue okay and so obviously there are two years their pre revenue where you're obviously funding you know development code etc I guess you raised early on how much have you raised to date yes so we raised about twelve million I started the company from inside IBM and excuse me which bought my last company and how many was not that company was PSS systems I was a turnaround CEO there and I let it for seven years and three turnarounds are fun two-year wartime easy congratulations actually he was through two recessions it's so not easy yeah I started in 2003 but come David 60 million bucks and had nothing to go to market way pre-revenue I so pre-revenue oh my gosh yeah yeah had yeah anyway and this is in 2003 right the heart of a depression one or recession one's gonna get up and over that and it end up was an exit that was no down round no recap got to value on on that capital we're able to get everyone their money back out yes I was wow that's incredibly flawed down to come and hold her no you didn't it didn't get that far down the cap table we got a little down yeah well we waste one more round before excess and and we had pretty good pretty good run that's impressive much bigger run inside IBM grew the same business a whole lot more like 10x more but in the running of that business I I encountered this problem we solved in deep pain right which when I left to start this company I was able to go back to my investors in the last company and say hey you guys I got an idea that's we were able to raise a pretty big seed round in 2014 it's like 2.7 five and that took us a couple years right he gave us the time to get product right you know and not rush the let's add salespeople right and then find out we don't have the product right yep or the funnel or the metrics or the SDR to account executive ratios or anything like that right yes that's right very good so over the past I guess two years since you've been post revenue what I've been able to grow your customer base you how many customers today so we have about 50 enterprise customers which I think of it as that kind of scale we just talked about and we're growing revenue three three and a half X a year so we're really kind of a good role we just raise another round a series a fourth quarter of last year I'm building out the management team deepening the sales team and so on so we're we're adding if you will the the capacity to grow at a faster rate now that's great now I mean if I take 50 enterprise folks at the level you just told me 125 you know thousand a CV that would put you at about five hundred twenty grand a month right now on revenue is that about accurate I mean I just want give you credit where credit's do if you're three Xing Yi over here that means just a year ago you were doing about 175 grand a month yes no weird it's been a steep curve anything we had huge growth before I raised the series a and so it was on like shoestring we had fifty percent of our revenues coming from our installed base and we were yeah we were struggling to be honest to as you might say to eat Wesley kill right to deliver what we took down and and it was a hard stretch we even got to a point where Herbie buck we were spending in sales and marketing we're generating almost five in revenue and was that what year last year right so for most of 2017 that was a ratio and that was because our customers were expanding really rapidly right we were the lan and expand play was working where the expansion would happen within the first quarter right and then around what pricing sorry to cut you off around what pricing axes number of seats additional features would you upsell seats right so in our case it's we're gonna start with this part of the business unit and get everybody aligned and then we're gonna add this part of the business unit part of the business unit so it's really users seats right do it so that expansion it was a ton of our growth and a lot of our efficiency right and really helped us figure out two things are important like what do people buy in the first instance and then how do they get happy and a half year over time right we had a really thin team to go make that happen and so when we raise money it could add to the team it was like oops we can kind of breathe now for like two weeks well one in $1 I mean so big so I heard you say is your dollar based CAC was basically 20 cents you spend 20 cents to get a dollar of new ARR for all last year are you now these channels when they're highly profitable the question is diminishing returns over time can you keep spending money in the channel so I've been able to hold that ratio we we're actually not trying to hold quite that aggressive a ratio right well so we really want to spend a buck an urn - yeah that's still pretty good yeah that's still I think an aggressive thing so the the channel the opportunity for work board right is you think about who needs to be aligned on the strategic priorities of a company and executing against them well everybody who works here mm-hmm right if you're not contributing the strategic priorities but get off payroll yeah maybe the whole team and for us it's the whole business unit it's the whole company right and so are the total addressable market for us is enormous yep right and so the so yes there is sort of infinite opportunity like where you think about a sales force it can monetize and solve problems for users and sales and marketing and in services yeah but not for dev and not for finance and not for legal and not for service rate for texts up in our case it's a big footprint so deepening our existing customer base going farther and wider and deeper into those large enterprises and acquiring new customers is is a long run lastly you told me you're driving expansion in the first couple months extrapolate over the first year if your first year a CV is 125 what's your typical first year expansion so the first year the average a CV is sort of where we end up at the end of that first year right so our first site might be for here's a typical infamous clear 50 K first deal in July 200 K ad in September okay got it so that would be four hundred percent kind of expansion in the account I imagine you have net revenue retention then way over 100 percent yes maybe over 250 or 300 percent it probably comes out somewhere like 140 yeah right and it's yeah probably comes that around some 140 some of our large enterprise customers layoffs as many people and that's gonna ask you the other the other layer to that net revenue retention onion is what gross revenue churn is under the expansion so what is that revenue churn typically annually so we don't have logo churn we do have gross revenue churn and those that comes from two places literally layoffs are a real thing right correct sometimes like IBM for example which is a customer and the GM loses his job yeah right and those are the two Biggie's and so part of our expansion mission part of our learning in 2016 really was if we the exposure to you lose the leader the explosion that is high and some part of our we're going to drive a path where we expand within the first quarter leaders exactly within q1 within q1 you've got leader 2 and in q2 you've got leader 3 right and so on when it's tricky for your salesperson because they're thinking I don't want leader one that I closed if you like I'm going around them but really it's your only insurance policy is to have a leader two and a liter three as an internal champion yeah we for sure and so what we there's this peak of euphoria for leader one is on day 21 why we have a really really cool onboarding approach really cool like that leader got value beyond their expectation on day 21 day Daedra you're teasing me what is it what's the magic there so part of things they buy work board because they want higher alignment on the strategic parties they want faster results and we are onboarding process isn't to say here's the tool it's actually facilitating the alignment itself the substantive alignment and capturing that in the tool mm-hmm and so the that's a whole it's like skill and process and way of thinking that companies don't have a lot of skill at they're not very good at it right so we bring in a team of coaches but in a week or two coach teams to real alignment on real results not tasks and activities right and to-do lists but on outcomes will they take that as an onboarding fee faith they will absolutely pay for that on operating right so we have that as a whole other revenue stream some will pay for it as an annualized managed service that's great so I mean this this means that you should then I don't know your khakis but I imagine that professional service upfront set up via probably can recovers most your CAC right it does and it drives that attach rate to leader number two number three and number four because when you get the first leader to euphoria and day 21 he wants to tell all his peers how smart he is and how we got that smart and he becomes an advocate like crazy right and so it's not you're not going around him yep you're helping him actually demonstrate how smart he has been and leading his organization forward so what are you spending to land that $50,000 kind of first leader are our sales cycle right now it's a huge amount of inbound right huge inbound sales cycle is about 60 days super short right so the the cost to acquire through our network we have probably 25% of our opportunity our word-of-mouth right and about 45% of our revenue is install base so the cost to acquire a customer first is moving all over the place right now as I add sales and marketing team to their make so it's wildly variable but it's pretty lean and efficient so back to the right now I'm still at one to about 250 of one buck to 250 in revenue yeah and I'm trying to bring that down I'm trying to spend more and I think that means if you're gonna land a fifty thousand dollar a CV divided by two dollars and fifty cents so you're spending call it a you know 18 19 bucks right or sorry sorry 18,000 or 19 thousand bucks to get a fifty thousand dollar ACB account fully weighted fully weighted yep everything yeah and you probably even out you know you could usually your payback period you would then take that 17 or 18 grand divide it in two first year a CD but you actually probably get paid back pretty instantly if they're paying at onboarding fee up front that's right so because my ACB number didn't include my services number exactly and they're paying the service of fun and the software annual software upfront as well that's great what's the team size today we're about 55 people and where's everone based most the sales and customer marketing and customer success team CTO and support are in Redwood City field sales guys across the u.s. we have dev and some customer success in India we have large customers in India as well yeah very cool it talked to me about so last time you raised I think he said was q4 last year you're now hitting this growth trajectory I mean the usual pattern you see is kind of a raise every year as you scale through the three three you know 3 X 3 X 2 X 2 X 2 X so I mean are you any plans to raise right now we're in the next six months yes so we'll we raised in October we I'm I I'm a pretty conservative not first time or because you have it send it because it's smart person so we probably won't raise until even start the process until next April or May oh very good and there are a bunch of things I want to have in place and perfect and kind of really teed up as we go into that and of course I want to push it out as long as I rationally can yep if a company like a McKinsey comes to you someone that you know it's hired to drive performance right and they say listen you're doing 500 grant let's say you're doing eight million nine million ten million bucks a year right now let's say they offer you 10x at 109 do you sell the company today or no not today money on for 10x it's not the multiple really right because it's a multiple of what you look at where you are and you look at look at where your revenue now so what you believe to be the potential revenue in one year in four years right and it's somewhere between the 1 and the 4 your horizon don't look beyond that don't fool yourself right but in that one or for your horizon I think where do I think revenue is going to be the and what you know if the world implodes where do I think it will be right and then what's that 10x multiple look like yep where do you think you'll be in a year good question don't know the answer don't know it's so much about like this is a Salesforce I've just seated do they hit it out of the park does it take him one quarter to do that does it take him to there's so much variability which is why I'm gonna figure that out and then do the raise right economics yet a pro-forma for a new salesperson is at a six month ramp for three months ramp what's it take them to get to quota right now we're looking at four months my yeah my VP sales crashed in hit q1 like you carried a bag and like I'm gonna understand how to do this I'm gonna be the best dance guy because I can hire and coach the best sales guy he's an experienced guy too right see his first quarter they nailed it right but we're still working on if you can do that with one guy doesn't mean you can do it with four or eight yep and is your ratio in terms of quota you know target relative to what your base comp is is it you know the tip upon a five six axis so your quota is probably 1/2 million in new and new bookings per year that's right right we can keep a ratio of what we what that person cost is what they generate in revenue and so on right yeah well hopefully a multiple of what they cost is very very good day dream up here with the famous five number one what's your favorite business book you know I'm gonna go the tried-and-true the hard thing about her thinks that's a good one number two is there a CEO you're following or studying Satya Nadella know Microsoft good one number two or number three is there a favorite only until you have for growing your business work board of course and after your own growing my business good question how there's so many tools I don't have a number two like my plan my goals my targets and what I need to do to get there and work for like that's the juice for me okay number four how many hours asleep take it every night I'm shining clear six okay and what's the situation married single kiddos are running around I'm married and I have a daughter like young out of that or out of the house she is director of business out seta ecommerce startup in New York very cool that's great and that danger do you mind me asking about how old you are I'm in my 50s very cool last question take us back to your 20 year old self what do you wish that she knew interestingly in my in my 50s I think that the question can go both ways right so I was in my first startup when I was 24 I made my first business pitch to another company and they ended up writing us a ten million dollar check this was like way pre started to buy you were to invest to buy rights to a particular channel in the market that week and so we would drive the marketing they would take a particular they would take mass distribution we take specialty and so my first startup experience was like wild and crazy and super early in my life and it was absolutely fearless right I was I didn't even think of things there was no boundary right like whatever of course we can do it yeah we can climb it yeah for sure we can jump that and I almost think the note goes the other way right in your forties like you want to tell your 20 or 0 sell stuff in your 50s you need to go back and say what does my 20-something self need to tell me today right and what the 27 calls me up and says is go fearless man go fearless you have more to protect now right I mean I can't tell you that I know what that is like but I could kind of myself in your shoes and understand exactly what you think yet so be fearless guys be fearless there you have it from day dree ran a big turnaround company that raised about sixty million bucks you know a couple years in nothing pre-revenue nada she came in turnaround basically got everyone's investors money back which was great then was at IBM for a bit saw a big need to for alignment inside of companies left IBM in 2014 launched work board today serving over 50 enterprise clients that pay on average 125 grand in first year a CV doing about 500 grand 600 grand per month right now in revenue that's up 3x year-over-year net revenue retention incredible economics here 140 percent expansion is really through the roof as they go from leader one to leader - she's willing to spend up to a dollar to acquire new you know two dollars and 50 cents in new revenue they've got a team of 55 folks based between California in the other remote locations de jure thanks for taking us to the top absolutely was a pleasure thanks