Xactlyrevenue, acquisition & funding

hello everyone my guest today is Chris Cabrera he's the CEO of exactly corporation he's a seasoned executive for more than two decades of successful senior management experience of both early stage and public companies he's a noted industry expert in issues relating to sales performance management sales compensation Commission employee engagement and sensitive conversation benchmarking big data and SAS delivery models Chris radiate akin to the top I'm Eric you bet so tell us more about exactly and then I want understand how you got involved with a company it sounds like you might have come in late or after the founder so tell us what the company does first and then we'll get to the other stuff later yeah I'm actually the founder so I started the day right yeah okay and so what do they do so exactly is in the sales performance management space so you think about every company you've ever worked for or sold to there's people in the company that sell their wares whether it be services or widgets or whatever it might be and they pay those people commission and the vast majority of the world today is doing it on Excel and exactly was created to create software to help drive the millions and millions of dollars that people pay and use to pay compensation out to get those reps to sell more stuff or discount less or sell fries with a shake whatever whatever the case might be so of course it's more of a management platform for the X's and O's or an actual deema fide kind of system to increase performance well it's both so you know you can imagine if you're a company and you're paying out millions of dollars and just to give you a sense a small company that's paying 200 salespeople you know you might be talking about a 20 million dollar cost Center for Commission so it's a big dollar amount so management needs all kinds of reporting to understand how those dollars are being used how effectively they're being used clearly you have the whole dangling carrot you know notion so the idea the today's modern day dangling carrot is the cell phone right and so the idea that you can dangle that in front of the rep in real time every day to get them to sell more stuff that there's really a behavioral component to this and for the salespeople themselves the ability to log into Salesforce calm and be seeing the deal they're working on and have a little button that says if I sell this deal this is how much Commission I'm gonna earn yeah you can begin to think about the the ways that you can drive behavior it's so it's a behavioral tool it's a management tool that covers all the boxes and pure SAS model hundred percent says interesting okay so without going down every different customer qohor on average its customer paying you per month on average it's about $30 per rep per month oh good okay so even an even a you know it's new sales team starting out could really get cranked up on you guys absolutely we've got we've got 1400 customers our customers are include companies that have 15 20 reps all the way up to 15,000 or more reps would you say the average is probably weight around 30 reps something like that no I'd say the average is closer to 400 or 500 oh wow ok so so you have a long tail of users but it sounds like you have maybe eighty percent your revenue is made up by teams larger than 100 paying you definitely yeah interesting because we do a lot of we do a lot of big companies you know a LinkedIn salesforce.com you know they these companies pay a hundred percent of their sales forces using our tool and you know many many others you know these are huge we it's a very horizontal app because when you think about com you know we pay high it for example if you walk into a high of anywhere in the world to plan your wedding those wedding planners are paid through exactly we paid bank tellers where you walk in to make a deposit they get you to walk ten feet to a loan agent and they get a spife we pay thousands of people in Australia at the Australian post office because they hang a shingle it says you know we sell and collect stamps and you know mail and to them to us that looks kind of like the sales rep so it's very very broad base top so with 1,400 logos paying you and 400 reps per logo on average I mean I think that comes out to what five hundred sixty thousand seats something like that and at 30 bucks a month I mean that puts you revenue like sixteen point eight million a month is that accurate now you're in the right ballpark yeah I mean we were reasonably public we took the company public in 2015 we then sold it to this about seven eight months ago and you know we were north of a hundred million dollars at that time yeah we don't talk about the revenue now as a private company again but 2016 sorry when G saw the Vista we sold the Vista in 2017 in July okay got anyone north of 100 that play by the way was it a 7.2 ex valuation on multiple on the on air our I don't know the exact multiple but we did fine we're happy they all way it's so funny when you look at this events do when you look at some of their other deals they've done it's for whatever reason it's always a seven point two XA are multiple I don't know if it's intentional or if it's just as totally random and out of the blue okay I actually had heard that so let's let's I want to walk backwards here for a second so what your jewel aunch the company in we founded the company March 1st of 2005 ok 2005 and take me up to 2015 um what were you doing right but in terms of revenue right before you decide to IPO oh boy you know we were probably in the high 60s 70s you know we were a small IPO for that time experience and what did you raise on day one I think we raised about 60 million and after all the bankers got their money and then we'll deserve I think we took home maybe 50 55 million somewhere in that range okay I'm prior to that how do you raise capital and if so how much oh yeah so we had raised 86 million prior to I founded the company and on eight hundred grand of angel money and then we did a a round that year of four million and then just about every year in those early years we were raising money so we did raise four then we raised eight then we raised 12 and then the rounds got bigger or a couple years after that but all and all 86 million puts us on the low end these days I mean yeah we're in hundreds of millions of dollars and they're no bigger than I said it's kind of surprising a little bit scary it is scary there's a little wait I mean we've had these folks on the show that raised two hundred two hundred fifty million it's unbelievable waste well by the way sometimes not even as big as you you were in 2015 so just to summarize you launch an o-5 you grow to about sixty million in 2015 over that time for you to raise about 86 million bucks you raise net after bankruptcy is about 50 million on day one did you hit kind of the market cap you were expecting the share price you were expecting on day one and if so how'd you manage that no we didn't you know we you know I really wanted a $12 coming out price and you know we turn they're giving you one valuation what market cap oh gosh I don't even remember the numbers anymore but you know probably 500 million something like that you know I think if you've ever taken a company public you know you're really beholding to the whims of what's happening during that two-week period that you go public and it wasn't the best week we had I think no remember all the details but you know as we were flying around on the jet you know meeting all these people there was maybe you know seven or eight other IPOs at that during that same time frame and I think three of them ended up pulling and not even going public out so it was a tough one share price so we went out at 8 bucks ok horrible though no no yeah I mean I think you know again not having been through it you know and you're a CEO and this is your baby you founded it you know there's a I can remember having a moment there of like Jesus does I do the wrong thing here but in hindsight it was absolutely the right thing it was great for our investors everybody you know bought in at sold at pretty much 16 so everyone doubled their money and and what I mean bought in a day in sold at 16 that's what the share prices went up to that's what we sold to Vista yeah so you know everyone did very well and I had a lot of really happy investors and of course the people that you know invest in the early rounds were buying at pennies relatively speaking and so you know a lot of people made a lot of money and it was a great wonderful experience so 2015 you're now public you're dealing you know your your day-to-day looks way more administrative than it used to 2016 or going 27 to imagine in 2016 maybe conversation with Vista started why decide to go private and explain the mechanics of that to me in terms of your shareholders in your board well there's a lot of reasons to go public and you know some of them are good and some of them maybe not so good you know I mean I think for me it was a bucket list item founder I wanted to do it and nobody could talk me out of it so you know many CEOs you know I would t talk to would say Chris oh you sure you want to do this it's a nightmare it's a pain in the ass you know you're gonna be living and breathing on Wall Street and you know I kind of didn't really just tuned that out because I just was convinced I wanted to do it so that was a big part of it the second big part of it was you know here in the valley and doing all the VC rounds and even though we hadn't raised tons and tons of money we certainly had a pretty big overhang of preference you know stock preference that the the VCS would get off the top of an acquisition and that always wait sorry did that carry through from your early VC's pre IPO that carried through even when you're republic no no my point is the reason to go public was to eliminate that Oh got it yeah everybody goes to comment and we're all now on the same no liquidation no ratchet clauses no nothing everything goes away and so to me that was it a very important thing for a lot of reasons I mean I just personally I just felt like I never liked the concept of preference I always felt like it was an unfair you know the sort of thing and I wanted to level the playing field and have us all be common and so those those are you know obviously primary reasons to go clearly raising the 55 million was a very important reason to go and it helped us grow the company and build it and so anyway those reasons to go public the reason is to go private were more to do with you know I think Chris is right how old were you when you when you coming public oh boy I was 37 when I started it well I just know 51 right now so I was you know 40 49 49 so somewhere in that range yeah okay so sorry keep going reasons to go private yeah so you know we were experience as a public company we were public for eight quarters we made our numbers every quarter but it was tough and you know I mean you're definitely focusing on a very quarterly cadence and you know everyone says that we all know that I think what was really evident to me was size matters as a public company and you know the better you are the more you can smooth out the bumps and the things that Wall Street doesn't behave well around his bumps and you're gonna have bumps in every business and so this is where size becomes difficult and and we generally compete right now with s AP and IBM right so we're competing with the big boys and you know that makes it difficult because we wanted to do some acquisitions we wanted to grow in different parts of the world we wanted to come out with some new products all those things were very very difficult to accomplish as a relatively small public company and I felt like you know we were kind of operating with one hand tied behind our backs and I and I thought you know when I met the Vista folks it was almost too good to be true because it wasn't I wasn't selling the company right I was really getting a whole new set of investors I was still gonna run the company the management team that wanted to stay was was gonna stay and but it gave us kind of a rich uncle that was going to allow us to go do back positions and do these things and then seven months we've already done two acquisitions which is precisely my point those would have been very difficult to do as a relative small it'd be hard to also explain those in public markets if there are longer-term acquisitions right that's right yeah just it's a whole different mode of thinking business not thinking quarter-to-quarter they don't even want to talk to me you know when I talk when I talk to them about how you're doing this quarter everything is about building the foundation for the future and and building the right type of company and and that was music to my ears yep how did it happen it may reach out to you or were you reached out to them oh you know we have been talking in first touch that first touch first touch was probably a year prior and then didn't hear a thing from do they reach out to you like were they hunting they're looking for do they reach out to you um you know I think we were introduced by a mutual company and you know one thing I've learned about Vista is these guys are super super sharp and they have tentacles everywhere and so there's not many deals that go down that they don't know about yeah and people would be stupid not to bring it to them right because of the company they are so anyway we had an initial conversation and I didn't know much about them and as I learned more and more I became more and more interested and then and then we got to run the company and doing our thing and yes it came together very fast once we once we re engaged I don't remember the exact time frames but it was a matter of weeks really it came together it's great yeah and so you said you're doing over to north of a hundred when you went private obviously information is public we just look at your last earnings call and the price I think was 564 right essentially is what they paid total yeah so so call it four or five maybe six X multiple there now you mentioned you one of reasons you did this is to make acquisitions tell me quickly because we're running out of time but quickly when you look at new acquisitions to make what do you what do you like to buy well we like to buy things that grow our footprint so that are additive to the product base and so the two that we've done the first one was online star which was a territory management product very complementary to the comp space but something we didn't have so it's great to be able to now take a new product like that and go sell it back into our 1,400 customer install base as well as give us something that's a competitive differentiator going forward that's the first example the second example was a company called Barrow Canadian company that we bought last week and they were doing a great job they're kind of a competitor in the ICM space but they really had done so it's ICM stand for instead of compensation management so they were much more in our core business but they have a product two products that we did not have one was something called a SC 606 which is a you know a standard that all these companies public and private need to adopt in the next 12 months and and so we really wanted that technology and they have sales planning technology which really was something as an area that we don't have and currently didn't play in and so those two things were definitely additive they checked off the box to be able to sell back to our install base and to make us differentiate it so as we go to market with our competitors we have something that's very different than anybody else last question before we wrap up with the famous 5 those pro formas that you guys put together for you know the expansion revenue opportunities that cross selling those products generally have they panned out or big you know way higher or way lower well the first one the second one just happened last week so it's way too early to tell the first one has been about seven months we required them this the week after we got acquired and it's been fantastic it's been it's far exceeded our expectations higher our pues more it's more wallet share per of your 1200 logos all that right all that yeah stuff alright let's wrap him here with the famous five number one Chris was last business book that you read um well it's not the last one with my favorite business book is outliers by Malcolm Gladwell I really believe in the whole tipping point concept I know he wrote a tipping point book for two but I liked outliers the best and I believe our market is yet to hit a tipping point so I I just love all that data-driven stuff that he does and then he talks about number two is there a CEO you're following or studying right now um you know I look to a couple different CEOs when I think about that question I you know I'm a big fan of Marc Benioff s-- I love what he's done around philanthropy we as a company adopted the one-one-one pledge that he created right from the get-go so we put 1% of our founding shares into a 501 C 3 so we have it now of pretty big 501c3 so I I definitely give him kudos for that I'm incredibly amazed by Elon Musk I think you know what I take from him is he inspires me to think just enormous like way bigger than III nowhere near doing it the way he does it but it's certainly inspirational and so those two guys are people I follow yeah it was Benioff in the bidding process when you decided to go to X you know go to Vista and if so why didn't you sell the Salesforce oh we can't I was I can't talk about that but we're very very close to to Salesforce they were an investor in the company early if you read my book on Amazon game the plan you can read how they were really the people that caused me to leave my previous company to start this company and Salesforce was our very first customer is today our longest standing customer that's great our number three what's your favorite online tool for building the business favorite online tool I'm big fan of LinkedIn you know we're a great customer of ours and you know we use it extensively throughout the company number four Chris how many always leave to eat every night these days I sleep pretty well you know hasn't always been the case I'm a big-time early riser so it doesn't really matter what time I go to bed I'm up at a.m. how many hours usually though I usually get between 6 & 7 ok that's pretty good and what's your situation married single you have kiddos I do I've been married 20 going on 28 years oh wow my beautiful bride Marla and I have two kids my daughter works at a Alexa works at a Vista company called navette she's in sales Ocoee from USC and I've got a son Cole who is a junior at Boulder barren and how are you Chris how old am i 51 51 our last question what do you wish your 20 year old self knew you know if I could go back and talk to myself you know when I was 20 I wouldn't I would I would tell him just stay the course because I'm pretty happy with the way things turned out I'd probably tell him obviously to to buy Apple but I think probably if anything and you know I would tell him to spend more time with my parents I lost my father about what five years ago and you know that was unexpected and I think you know you can't spend enough time with your with your parents as they get older he would have spent more time with his parents but generally stayed the course launched exactly back in 2005 they've now scaled up to over 1400 customers using them to manage sales plans to kind of gamify the solution for reps so that they understand what all the upside is and really keep them motivated you know more people hit their quotas I imagine if they're using exactly than if they're not they have about 400 reps on average per 1400 of those logos so doing cost somewhere in the 16 million dollar per month range because each seat is about 30 bucks he grew it up to 2015 and about up to about 100 million bucks in annual sales pull and raise about 86 million part of that then took it public raised about 50 net million on day one $8 share price grew it for two years and then realized there were serious advantages to being private reignited a conversation with Vista and I'm sure some other folks as well ultimately sold the Vista at a great exit price of 16 bucks per share or 560 million doing again north of 100 million at that point so healthy exit now focus on acquisitions a longer-term plan and staying focused on growing the business Chris thank you for taking us to the top thanks very much good to talk to you