How WorkBoard Reached 50 Enterprise Customers at $125K ACV with 140% Net Revenue Retention (Interview with CEO and Co-Founder Deidre Paknad)

Introduction and Guest Background

Nathan Latka

00:00Hello, everybody. My guest today is Deidre Paknad. She's the CEO and co founder of WorkBoard, has dedicated... Has decades of experience leading enterprise and startup teams and is passionate about helping other leaders engage their teams in great achievement. She's founded and led several companies, has twice been recognized by the Smithsonian Institute for Innovation and has 16 patents. Deidre, are you ready to take us to the top?

Deidre Paknad

00:22Yeah, absolutely.

What WorkBoard Does and How It Makes Money

Nathan Latka

00:23Alright. What is WorkBoard? What do you do and how do make money?

Deidre Paknad

00:27WorkBoard is a software company that helps other organizations align, measure and achieve their strategic priorities more quickly, more effectively.

Nathan Latka

00:36Okay, so you're selling these kind of HR managers internal team purposes?

Deidre Paknad

00:40Actually 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 and this bottom line margin and profit, right? And that's not the head of HR, that's the head of

01:04the business, right? And that's who we're trying to help drive acceleration for.

Nathan Latka

01:08Interesting. Okay. Very good. But all b to b SaaS.

Deidre Paknad

01:11Absolutely. Yep.

Average Contract Value and Customer Examples

Nathan Latka

01:12Okay. And I wanna get... I wanna put us on a timeline and get more of your story. Before we do that though, give me a general sense here. Well, I don't wanna go on every customer cohort, but on average, what's the customer pay you per month for this, would you say?

Deidre Paknad

01:21Actually we think of... We do annual contracts, so sort of think about their ACV per customer is and it's about 125 ks. We've got really large enterprise like Sony, Samsung, Microsoft, Deutsche Telekom, and we've got a bunch of growth companies, couple 100 people like TrendKite and Fluidiv and others. So from the middle of that zone is about 125 k ACV.

Company Timeline and Path to Revenue

Nathan Latka

01:43That's great. And put all this on a timeline for us, when did you launch?

Deidre Paknad

01:46We 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 against those 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

02:10really awesome at it, to connect the strategic priorities to the work their team's 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 product people love to use, and then dashboards and alignment executives really, really need to have, like put those together. Right? And so we kinda got to revenue generation in 2016, and we've been growing at a pretty healthy clip

02:37since 2016 in the revenue.

Total Funding Raised and Prior Company Story

Nathan Latka

02:39Okay. And so obviously there are two years there pre revenue where you're obviously funding, you know, development code, etcetera. I guess you raised early on. How much have you raised to date?

Deidre Paknad

02:47Yeah. So we raised about 12,000,000. I started the company from inside IBM and... Excuse me, which bought my last company.

Nathan Latka

02:58And... Which company was that?

Deidre Paknad

02:59That company was PSS Systems. I was a turnaround CEO there, and I led it for seven years and...

Nathan Latka

03:05Deidre, turnarounds are fun. So you're a wartime CEO,

Deidre Paknad

03:09You bet. You bet.

Nathan Latka

03:09I love that. Love that.

Deidre Paknad

03:11Feel it back to the bone and do over. Right?

Nathan Latka

03:14That's not easy. Congratulations.

Deidre Paknad

03:16Actually, it was through two recessions. It's so not easy. Yeah. I started in 2003. The company raised $60,000,000 and had nothing to go to market with.

Nathan Latka

03:26Pre revenue?

Deidre Paknad

03:28Oh, so pre revenue.

Nathan Latka

03:29Oh my gosh.

Deidre Paknad

03:30Yeah. Yeah. They had... Yeah. Anyway, and this is in 2003, right, the heart of depression one or recession one, gonna get up and over that, ended up end up with an exit that was no down round, no recap, got to value on on that capital.

Nathan Latka

03:46You're able to get everyone their money back out?

Deidre Paknad

03:48Yes. I was.

Nathan Latka

03:49Wow. That's incredible. Any... Did any flow down to common holders or no? You didn't... It didn't get that far down the cap table?

Deidre Paknad

03:54We got a little down. We got a little... We raised one more round before exit and and we had pretty good pretty good run.

Nathan Latka

04:01Oh, that's impressive.

Deidre Paknad

04:02Like, in a much bigger run inside IBM, grew the same business a whole lot more, like, 10 x 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, guys, I got I got an idea. And so we were able to raise a pretty big seed

04:23round in 2014. It's like 2.75, and that took us a couple years. Right? It gave us the time to get product right.

Nathan Latka

04:23Yep.

Deidre Paknad

04:23And not rush the let's add sales people. Right?

Nathan Latka

04:23Yep.

Deidre Paknad

04:23And then find out we don't have the product right.

Nathan Latka

04:36Yep. Or the funnel or the metrics or the SDR to account executive ratios or anything

Deidre Paknad

04:36Yep.

Nathan Latka

04:36Like that.

Customer Count and Revenue Growth Rate

Deidre Paknad

04:41That's right.

Nathan Latka

04:41Very good. So over the past, I guess, two years since you've been post revenue, what have you been able to grow your customer base to? How many customers today?

Deidre Paknad

04:48So we have about 50 enterprise customers, which I think of it at that kind of scale we just talked about. And we're growing revenue three three and a half x a year, we're really on a kind of a good roll. We just raised another round at series a fourth quarter of last year, building out the management team, deepening the sales team, and so on. So we're adding, if you will, the the capacity to grow at a

05:12faster rate now.

Nathan Latka

05:13That's great. Now, I mean, if I take 50 enterprise folks at the level you just told me, a 125, you know, thousand ACV, that would put you at about $520,000 a month right now on revenue. Is that about accurate?

Deidre Paknad

05:23In the neighborhood. Yes.

Nathan Latka

05:25In the neighborhood. Yeah. And if you're... I mean, I just wanna give you credit where credit's due if you're three x ing year over year. That means just a year ago, you were doing about $175,000 a month.

Deidre Paknad

05:33Yeah. No. We're...

05:36It's been a steep curve. In fact, we had huge growth before I raised the series a, and so it was on, like, shoestring. We had 50% of our revenues coming from our install base, and we were... Yeah. We were struggling, to be honest, to... As you might say, to eat what we kill. Right?

Nathan Latka

05:58Yep.

Deidre Paknad

05:58To deliver what we took down, and and it was a hard stretch. We even got to a point where for every buck we were spending in sales and marketing, we were generating almost 5 in revenue. And...

Nathan Latka

06:08When was that? What year?

Deidre Paknad

06:09Last year. Just before I raised. Right? So for most of 2017, that was a ratio. And that was because our customers were expanding really rapidly. Right? We were... The the land and expand play was working where the expansion would happen within the first quarter. Right?

Nathan Latka

06:25And then it would... Around what pricing? Sorry to cut you off. Around what pricing axes? Number of seats, additional features, what'd you upsell?

Deidre Paknad

06:31Seats. Right? And so in our case, it's... We're gonna start with this part of the business unit and get everybody aligned, then we're gonna add this part of the business unit and and the next part of the business unit. So it's really users seats, right, to it. So that expansion was... That ton of our growth and a lot of our efficiency. Right? And really helped us figure out two things that are important. Like what do people

06:52buy in the first instance and then how do they get happy and happier over time, right? We had a really thin team to go make that happen and so when we raised money and could add to the team it was like, we can kind of breathe now for, like, two weeks. Yeah. And then it was all over again. Right?

Nathan Latka

07:07Yep. Well, one in, $1... I mean, so basically, what I heard you say is your dollar based CAC was basically 20¢. You spend 20¢ 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 have you been able to hold that ratio?

Deidre Paknad

07:26We... We're actually not trying to hold quite that aggressive a ratio. Right? We're... So we really wanna spend a buck and earn two.

Nathan Latka

07:26Yep.

Deidre Paknad

07:26Right?

Nathan Latka

07:32That's still pretty good.

Deidre Paknad

07:34Yeah. That's still, I think, an aggressive thing. So the the channel... The opportunity for for WorkBoard, 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.

Nathan Latka

07:47Mhmm.

Deidre Paknad

07:48Right? If you're not contributing to strategic priorities, get off payroll.

Nathan Latka

07:52Yeah. Right? Should be the whole team.

Deidre Paknad

07:54And for us, it's the whole business unit. It's the whole company. Right?

Nathan Latka

07:54Yep.

Deidre Paknad

07:54And so our the total addressable market for us is enormous.

Nathan Latka

08:03Yep.

Deidre Paknad

08:04Right? And so the... So, yes, there is sort of infinite opportunity, like, where you think about a Salesforce, it can monetize and and solve problems for users in sales, in marketing and in services.

Nathan Latka

08:16Yep.

Deidre Paknad

08:17But not for dev and not for finance and not for legal and not for service rate for tech. In our case, it's a big footprint. So deepening our our existing customer base, going farther and wider and deeper into those large enterprises and acquiring new customers is is a long run. That's right.

Net Revenue Retention and Gross Revenue Churn

Nathan Latka

08:38You told me you're driving expansion in the first couple of months. Extrapolate over the first year. If your first year ACV is one twenty five, what's your typical first year expansion?

Deidre Paknad

08:48So the first year... The average ACV is is sort of where we end up at the end of that first year. Right? So our our first bite might be for... Here's a typical one from this quarter. 50 k first deal in July, 200 k add in September.

Nathan Latka

09:04Okay, got it. So that would be 400% kind of expansion in the account. I imagine you have net revenue retention then way over 100%.

Deidre Paknad

09:13Yep. I sure do.

Nathan Latka

09:14Are you maybe over 250 or 300%?

Deidre Paknad

09:17It probably comes out somewhere like one forty.

Nathan Latka

09:19Yeah.

Deidre Paknad

09:20Right? And it's... Yeah. Probably comes out around some one forty. Some of our large enterprise customers lay off as many people as they...

Nathan Latka

09:27Got it. Okay. So that's what I was gonna ask you. The other the other layer to that net revenue retention onion is what gross revenue churn is under the expansion.

Deidre Paknad

09:27Yeah.

Nathan Latka

09:27So what is that revenue churn typically annually?

Deidre Paknad

09:38So 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? And for companies like IBM, for example, which is a customer. And the GM loses his job.

Nathan Latka

09:54Yeah. Yeah.

Deidre Paknad

09:54Yeah. Right? And those are the two biggies. 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 exposure to that is high. And so part of our we're going to drive a path where we expand within the first quarter.

Nathan Latka

10:11Multiple leaders.

Deidre Paknad

10:13Exactly. Within q one within q one, you've got leader two and in q two, you've got leader three. Right. And so on.

Nathan Latka

10:20Well, it's tricky for your salesperson because they're thinking, I don't want leader one that I closed. I feel like I'm going around them. But really, it's your only insurance policy is to have a leader two and a leader three as an internal champion.

Onboarding Process and Day-21 Value Creation

Deidre Paknad

10:30Yes, we for sure. And so what we there's this peak of euphoria for leader one is on day 21.

Nathan Latka

10:38Why?

Deidre Paknad

10:39We have a really, really cool onboarding approach. Really cool. Like, that leader got value beyond their expectation on day 21.

Nathan Latka

10:49Deidre, you're teasing me. What is it? What's what's the magic there?

Deidre Paknad

10:52So part of the... They buy WorkBoard because they want higher alignment on the strategic priorities. They want faster results. And we... Our 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.

Nathan Latka

10:52Mhmm.

Deidre Paknad

10:52And so the... That's a whole 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

11:20in a team of coaches that 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.

Nathan Latka

11:31Will they pay for that as an onboarding fee?

Deidre Paknad

11:33They they will absolutely pay for that on onboarding fee. Right. So we have that as a whole other revenue stream. Some will pay for it as an annualized managed service.

Nathan Latka

11:41That's great. So, I mean, this this means that you should then I know your CAC is, but I imagine that professional service upfront setup fee probably recovers most of your CAC. Right?

Deidre Paknad

11:49It 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 he got that smart. And he becomes an advocate like crazy. Right? And so he's not... You're not going around him.

Nathan Latka

11:49Yep.

Deidre Paknad

11:49You're helping him actually demonstrate how smart he's been in leading his organization forward.

Sales Cycle, CAC Efficiency and Payback Period

Nathan Latka

12:13So what are you spending to land that $50,000 kind of first leader?

Deidre Paknad

12:17Our sales cycle right now is huge amount of inbound, right? Huge inbound. Sales cycle is about sixty days, super short. Right? So the the cost to acquire through our network, we have probably 25% of our opportunities are word-of-mouth. Right? And about 45% of our revenue is install base. So the cost to acquire a customer versus moving all over the place right now as I add sales and marketing team to the mix, so it's wildly variable. But

12:49it's pretty lean and efficient. So back to the... Right now, I'm still at 1 to about $2.50... $1 to $2.50 in revenue.

Nathan Latka

12:49Yep.

Deidre Paknad

12:49And I'm trying to bring that down. I'm trying to spend more on sales and marketing.

Nathan Latka

13:00That that means if you're gonna land a $50,000 ACV divided by $2.50, so you're spending, call it 8, you know, 18, 19 bucks. Right? Or sorry. Sorry. 18,000 or $19,000 to get a $50,000 ACV account.

Deidre Paknad

13:13And it... Yeah. All Something like that. All in.

Nathan Latka

13:15Fully weighted. Fully weighted.

Deidre Paknad

13:16Yes. Yep. Hedge everything.

Nathan Latka

13:18Yeah. And you probably even out, you know, you could usually your payback period, you would then take that $17,000 or $18,000 divided into first year ACV, but you actually probably get paid back pretty instantly if they're paying that onboarding fee upfront.

Deidre Paknad

13:29That's right. Because my ACV number didn't include my services number.

Nathan Latka

13:32Exactly.

Deidre Paknad

13:33And they're paying the service upfront and the software, annual software upfront as well.

Team Size and Office Locations

Nathan Latka

13:37That's great. What's the team size today?

Deidre Paknad

13:39We are about 55 people.

Nathan Latka

13:41And where's everyone based?

Deidre Paknad

13:43Most of the sales and cost... Marketing and customer success team, CTO and support are in Redwood City. Field sales guys across The US. We have dev and some customer success in India. We have large customers in India as well.

Next Fundraise Timeline

Nathan Latka

14:00Yep. Very cool. Talk to me about... So so last time you raised, I think you said it was q four last You're now hitting this growth trajectory. I mean, usual pattern you see is kind of a raise every year as you scale through the three three, you know, three x three x two x two x two x. So I mean, are you any plans to raise right now or in the next six months?

Deidre Paknad

14:18Yeah. So we'll... We raised in October. We... Yeah. I'm a I'm a pretty conservative, not first timer. Don't spend it because you have it. Spend it because it's smart person. So we probably won't raise until... Even start the process until next April or May.

Nathan Latka

14:35Oh, very good.

Deidre Paknad

14:36And there are a bunch of things I wanna have in place and perfected 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.

Acquisition Offer Hypothetical and Revenue Outlook

Nathan Latka

14:47Yep. If a 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 $500,000. Let's say you're doing 8,000,000, 9,000,000, $10,000,000 a year right now. Let's say they offer you 10 x at a 100,000,000. Do you sell the company today or no?

Deidre Paknad

15:04Not today.

Nathan Latka

15:05Not even for 10 x?

Deidre Paknad

15:06No. So then it's not the multiple really. Right? Because it's a multiple of what? Just look at where you are, and you look at look at where you are in revenue now. Look at what you believe to be the potential revenue in one year, in four years. Right? And it's somewhere between the one and the four year horizon. Don't look beyond that. Don't fool yourself. Right?

Nathan Latka

15:25Yeah.

Deidre Paknad

15:26But in that one or four year horizon, you think, well, where do I think revenue is gonna be then? What what... You know, if the world unfolds, where do I think it will be? Right? And then what's that 10 x multiple look like?

Nathan Latka

15:36Yep. Where do you think you'll be in a year?

Deidre Paknad

15:40Good question. Don't know the answer. Don't know. It's so much about like, does the sales force I've just seeded, do they hit it out of the park? Does it take them a quarter to do that? Does it take them two? So much variability, which is why I'm gonna figure that out and then do the raise. Right?

Sales Team Ramp and Quota Economics

Nathan Latka

15:54Do you have the economics yet? Pro form a for a new salesperson? Is it a six month ramp for three month ramp? What's it take them to hit get to quota?

Deidre Paknad

16:00Right now, we're looking at four months. So my... Yeah. My VP of sales crashed in q one. Like, he'd carried a bag and, like, I'm gonna understand how to do this. I'm gonna be the best sales guy. Right? So I can hire and coach the best sales guy. He's an experienced guy too. Right? He had his first quarter, he nailed it. Right?

Nathan Latka

16:00Yeah.

Deidre Paknad

16:00But we're still working on... Like, if you can do that with one guy,

16:22doesn't mean you can do it with four or eight.

Nathan Latka

16:24Yep. And is your ratio in terms of quota, you know, target relative to what your base comp is? Is it, you know, the typical kind of five, axis? So your quota is probably $12,000,000 in new in new bookings per year?

Deidre Paknad

16:35That's right. Right. We we try and keep a ratio of what we... What that person costs is what they generate in revenue and so on. Right?

Nathan Latka

16:41Yeah. Yeah. Well, hopefully a multiple of what they cost is what they generate.

Famous Five Rapid-Fire Questions

Deidre Paknad

16:44Totally. Yeah. Yeah.

Nathan Latka

16:44Very good, Deidre. Let's wrap up here with the famous five. Number one, what's your favorite business book?

Deidre Paknad

16:53You know, I'm gonna go with the tried and true, the hard thing about hard things.

Nathan Latka

16:57That's a good one.

16:58Number two, is there a CEO you're following or studying?

Deidre Paknad

17:01Satya Nadella.

Nathan Latka

17:02No. Microsoft.

17:03Good one. Number two... Or number three, is there a favorite online tool you have for growing your business?

Deidre Paknad

17:09WorkBoard, of course.

Nathan Latka

17:10And after your own?

Deidre Paknad

17:12Growing my business.

17:16Good question. God, there's so many tools. I don't have a number two. Like, my my plan, my goals, my targets, and what I need to do to get there and WorkBoard, like, that's the juice for me.

Nathan Latka

17:24Okay. Number four, how many hours of sleep do you get every

Deidre Paknad

17:29I try to clear six.

Nathan Latka

17:30Okay. And what's your situation? Married, single, got kiddos running around?

Deidre Paknad

17:34I'm married, and I have a daughter.

Nathan Latka

17:36Like, young out of the... Or out of the house?

Deidre Paknad

17:38She is director of business ops at a ecommerce startup in New York.

Nathan Latka

17:43Very That's great. And, Deidre, do you mind me asking about how old you are?

Deidre Paknad

17:47I'm in my fifties.

Nathan Latka

17:48Very cool. Last question. Take us back to your 20 year old self. What do you wish that she knew?

Deidre Paknad

17:54So

17:56interestingly, in my in my fifties, I think that the question can go both ways. Right? So I was in my first startup when I was 24. I, like, made my first business pitch to another company, and they ended up writing us a $10,000,000 check. This was, like, way pre start up.

Nathan Latka

18:13To to buy you or to invest?

Deidre Paknad

18:16To buy rights to a particular channel in the market that we... 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 I was absolutely fearless. Right? I I didn't even think of... There was no boundary. Right? Like, whatever. Of course we can do it. Yeah, we can climb it. Yeah,

18:39for sure we can jump that. And I almost think the note goes the other way. Right? In your forties, like, wanna tell your 20 year old self stuff. In your fifties, you need to go back and say, what does my 20 self need to tell me today? Right? And what the 20 calls me up and says is, go fearless, man. Go fearless.

Nathan Latka

19:00You have more to protect now. Right? You do.

Deidre Paknad

19:04You do. Right?

Nathan Latka

19:05I feel... 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 that. So be fearless, guys. Be fearless. There you have it from Deidre. Ran a big turnaround. Company had raised about $60,000,000, you know, a couple years in, nothing. Pre revenue. Nada. She came in, turned around, basically got everyone's investors money back, which was great. Then was at IBM

19:25for a bit, saw a big need to... For alignment inside of companies. Left IBM in 2014, launched WorkBoard. Today, serving over 50 enterprise clients that pay on average $125,000 in first year ACV. About $500,000, $600,000 per month right now in revenue. That's up three x year over year. Net revenue retention, incredible economics here, 140%. Expansion is really through the roof as they go from leader one to leader two. She's willing to spend up to a

19:48dollar to acquire new... You know, $2.50 in new revenue. They've a team of 55 folks based between California, India, and other remote locations. Deidre, thanks for taking us to the top.

Deidre Paknad

19:59Absolutely. It was a pleasure. Thanks.