How Zinc CEO Xiang Li grew to $1.1M revenue and 70 customers in 2018.

however one my guest today is Stacey Epstein she's extensive experience in generating demand fueling growth and building brand name global recognition for technology companies she brings two decades of cloud social and mobile enterprise technology experience to a role and as CEO of zinc before zinc she was chief marketing officer at service Mac's where she helped fuel five consecutive years of triple digit growth leading to a 1.5 billion dollar acquisition by GE in 2017 Stacey are you ready to take us to the top I am but yes I am what what did I scream what did I screw up in the bio well success factors was required by ASAP for three and a half billion service Mac's was acquired by GE for a billion probably not all that relevant okay got it very good well it's helped I understand that yeah I cut off a bunch of your bio because I just did the first 50 words we have a level it's fair to say you have a ton of experience in b2b cess I've been around a long time yeah tell us how tell us about Zink what is Inc doing how do you make money yeah so zinc helps field base or what we called Aeschylus workers get access to real-time knowledge from the rest of the organization and from the systems and the organization so that probably sounds like a lot of jargon to you so let me explain that a little bit more fully if you think of field service technicians like a dish technician who's coming to put a satellite on the top of your house and you can get cable TV or you walk into a hotel and you're talking to a hotel worker or construction worker those are what we call desolace workers there are people that don't sit in an office they don't sit staring at a computer screen like most of at least you and I probably do a good chunk of our day and because of that they're away from their peers their way from the people and the information that they could use to help them do a better job so again think about the dish guy technology probably helps him to get scheduled and and get to the right door at the right time but once he once that door gets opened he could face all kinds of different situations the wirings different how he gets on the roof is different the the the problem that he's fixing is different and without zinc he doesn't have a great way to ask questions or get information from the rest of his company with zinc he can jump on zinc it is an all mode communication app meaning he can do a text a voice a video call he can share his location he can get content he can get alerts from the company in real time he can get access to information that will help him solve the question that he's trying to solve fix the problem faster install the dish faster get the customer up and running faster which is great for him great for the customer and great for the vendor and Stacy what's your guys's revenue model is it a peer play SAS model totally hundred percent SAS we charge by per user per month okay annual contracts that's great and I'm sure again I'm sure you work with a large cohort of customers and you're doing incredible cohort analysis but for the sake of our limited time today what would you say like the average customer is paying you per month oh it really does I mean it can literally vary from 10,000 per month I'll give you annual so anywhere from ten thousand dollars a year annually to close to seven figures per year it just depends yeah customers big and small okay and maybe let's then go away from the per logo basis what do you charge on average per seat I'm sure you probably do volume discounts but are we talking like 10 bucks to see 200 bucks to see 10 to 20 depending on what they want per user per month and depending on probably volume of what they're signing up with right yeah right of course well you know 5,000 technicians it's gonna be a little lower than that if you're doing 50 it's you're playing closer to list price yep now giving a back story here is if ik in the bio saying you're CEO but I didn't see the word founder did you help create the company or were you brought in as CEO well a little bit of both we were born out of another company that was just focused on a work texting app so sort of like what's up for work that was founded by some of the product leads at Yammer and it had been it was a freemium model that had been in business for a couple of years and great product but wasn't really going anywhere on that go to marketing side so together with the board I came in and we basically yeah my Brian no no the board of that company which was called Co tap so we came in and we basically took the assets of that of that company which was co tap and and the great core product built out the product and relaunched it as zinc so I I am the founder of zinc but there was a little bit more story there our products been around a few years longer than I have okay was so win-win did that kind of 2016 okay 2016 is when the co table board have approved the deal to take it private or those assets out well it was never public yeah I mean they were a little startups so we relaunched as zinc in the middle of 2016 okay I shouldn't use take private I should use the word spun out but that was when you spun out those assets pretty much okay okay good and and do those early folks they like the how to sorry how does the Emer connect with coach app because you mentioned the developers came were at Yammer yeah well they they were no longer at Yammer they I mean their backgrounds interesting because they focused on communication they left Yammer after Microsoft acquired Yammer and they founded Cote ah I see make sense it does yeah it does Noah's coat app did you have to deal with a big like a complicated cap table to negotiate this thing do they raise a bunch of capital or no yeah I mean we we recap the company like autos Inc is a brand new company got it okay so 26 the heritage of Co top is just the core product okay very good so 2016 founded you're in San Francisco so I'm gonna assume that you raised capital although I'd love for you to tell me you're doing millions per year bootstrap but what what have you raised we've raised 16 million today okay and why was that important I mean I what point you say we have to raise capital grow this faster I mean we we we kicked off the company with a five million dollar seed round and and you know the the products again we had a core shell of a product which went then we spent a lot of engineering hours to build it into what it is today but we really wanted to pour fuel on the sales and marketing and and you know the co tap was doing a little tiny bit of revenue with a couple of customers but not enough to really fuel the business and get us going so that original 5 million which was emergence capital and CRV and that was really you know what it took to get the company off the ground and hire more employees and and get a bunch of new customers and then in April of last year we raised an official around led by GE Ventures also with participation from her sponsors you can imagine GE has a lot of desk lists field based workers so they were very interested what happen emergency I'm a big fan of Santi and he came on and told me the story about the spin-out from from from TechCrunch of crunchbase did they not do they not follow on in the series a oh yeah they've they've invested in every single ok there so with so j-jason Green is the chairman of our board so emergence is an emergence was also on the board at service max and on the board at success factors so I have a very long history with those guys and I mean they're in my opinion you can't do much better than than having emergence involved with your company including Santi as I say I don't know Jason but I know Santi well and I've been nothing but impressed with him he's a great guy to work with awesome so yeah in the series that you added on G and Hearst and emergence was there as well correct that's great emergence in cr-v were the first round and then they also participated in the second round which was led by GE got it ok let's go away from funding here for a second you have experimented with literally millions of dollars in terms of customer acquisitions across your history yet part of the 5 million was obviously put towards that as well so let's go backwards first what yet today in terms of total customers and I want then I want to go backwards and talk about growth yeah we have about 70 enterprise customers today ok and generally speaking that represents how many employees under those guys are we talking like 10 ok fair to say between but more than a hundred thousand or know between 10k 100k between 10 and 100 ok fair enough good walk me through acquisition again you've done a lot of experiments here so your first 10 customers how did you get them well our first 10 customers were kind of roll ups from that legacy freemium model but I was pretty dead set that nobody's looking for another messaging or communique to put on their phone from a user perspective right like even okay but this one's work based who cares you know I just want to text my buddy I'm not I'm not incentive to put a new app on my phone just for work messaging right so I was pretty convinced out of the gate that freemium wasn't going to be our big play we did have a fair number of customers a handful of customers that were up cells from the freemium model where hey the users loved it but now we want the admin console and the ability to manage the you know have IT be able to get their arms around it and manage it have some of those enterprise features but we shut off freemium probably six months after we launched as Inc and basically said hey you can do a free trial and and we still do pilots today I think you know try it before you buy it has been very successful for us especially because the way we've architected our app is very focused on adoption you can imagine the demographic of a field worker a hospitality worker construction worker these are people that don't use technology all day for their job right they use their hands to fix something or they're talking to a customer so you you can't give them some complicated you know swipe here drop down it's really works better if you're on a computer than your phone because they literally won't adopt it and they will go right back to that unsanctioned risky consumer app so we were very much architected for wide adoption and I think the the free trial you know it's smaller company it's a free trial bigger company it's a formal pilot and they get a real taste of how easy it is to use the fact that the users will adopt it the fact that getting live on the solution can is is very quick maybe we took thousands of technicians live at Dish Network in two weeks so so the time to value has been great but yeah direct sales right we have AES that work the deal what's the total teams I Stacy we have about 30 people okay and how many A's three okay and sdrs race or no SDRs for AES and sales consultants also what's the ratio to STRs to 180 or something different to STRs to the three eight okay interesting and to sales consultants did you did you did you hit a home run on that on your first kind of pro forma you know salesperson onboarding kind of projection or did you have to fiddle with that ratio for a while I mean we're still fiddling you're all right answers you're always fiddling right yeah I mean you know we're still startup we're two years in on this where we're we're constantly and and and this is not a defined market right this is not something that's on PG and E's list to buy right and so so they're they're not searching they're not typing it into their Google browser like we're still in heavy outbound marketing wareness mode and so the dynamics of like lead to up conversion rate and you know all those things are a little different than say when I was at success factors when you know that it was motion formance management it was the new hot thing and everybody every HR person was was searching you know the dynamics of marketing and go to market were just dramatically different but we're pretty heavy outbound at this point I've seen a few examples not a ton Stacey where the try before you buy approach is really burned a few people in terms of their CAC if those trials don't convert at a rate that like make sense for them so for you what what's your would you say your fully weighted CAC is Tom where one of these new seventy logos yeah I mean again we're still pretty early to everything is so different in that and you know at this stage any one deal could be an outlier and could completely change an average right so we don't even fully calculate cat I mean we do it's not a reliable number that I could share because it just depends on so many things I will say and I have been part of companies like service Max and and this is no knock on service max service max is a very sophisticated almost ERP like solution and the processes that it automates are drastically different in every company you go into a trial and you are basically implementing an ERP it is you know to say that oh let's do a 30-day trial like a lot of times people get into the trial and it's like well because it wasn't set up to their exact processes they don't get a good flavor are you that way or not now you're on one flavor we're pretty much one flavor I mean yes hot coat hotels are more used to talking on radios so they might leverage the push-to-talk feature you know a telco or utility might be more reliant on our hotline feature where you can message to a group that you're not in and and get to a team of experts to help you right out of the gate but generally a communication platform is used in generally the same way right like any given user is gonna be sending text receiving text being added to groups you know being on a conference call it's very to use it's easy to implement there's not a lot of we've got a tailor it - got it your process you communicate like most companies do Stacey we're running out of time here but I do want to get in someone con engineer of how you decide whether to experiment with different marketing and sales tests so obviously the CAC number and things like that are still very much fluctuating but when when your account executive or SGR comes as is hey I found a new channel can I test it you've got to use some combination of gut and data to say yes or no on that so are you looking at like a payback period estimate a lifetime value estimating what are you looking at well I will start by saying I am at my core a risk-taker and you know I've worked for the likes of large dalgaard success factors where a lot of our company was built around taking risks and having a lot of them not work but having some of them turn into the big game-changer that moved the needle so and I love people that take initiative so if somebody in my organization comes to me with an idea and and it seems pretty reasonable now I'm not gonna do something crazy that's gonna break the bank but I would say on gut and on 30 years of experience I'm probably pretty likely to say yes in a small scale to anything that might move the needle for us so someone if I was working for you I said hey Stacy look I think I can land this new customer in the contract value if the pilot goes well is gonna be a hundred grand for the year but it's obably gonna take me about 250 grand maybe like get them goin in terms of the professional term is up would you say yes or no I would say I mean that that's 250 K at this stage of a company of a cost is a really high cost about it I I don't think that that I mean I can just tell you right out of the gate that's probably not necessary to goal and some of these big deals we haven't had to do that so that's what I'm trying to get out there like so okay 20k yeah it's like what I just gave you as an example of like more than a two-year payback right around $100,000 a sieve each for two years of semetic but up expecting no expansion so what you're saying is if you could give me like recoup in three months or four months or something like that that's an easy yes for me every time am i hearing you right yes you are okay very good last questions here before we wrap up with the famous five you mentioned 70 enterprise customers you mentioned earlier like minimum a CV is 10 grand up to some hitting six figures I think was your quote so if I multiply seventy times that ten grand minimum it puts you guys at you know 58 60 grand per month right now have you guys broke in a million bucks in AR yet yes we have you have what's the next big revenue target you want to hit before you maybe start thinking about a next round of funding well we're not that far from thinking about the next round of funding probably at the end of this year I'd love to I'd love to be up closer to the five range yeah um I'm not sure we'll get there this year but we have pretty good sight into that for next year well that's good so five maybe is really a stretch goal for this year it does something like a three look more realistic uh-huh that's good very good what's growth right now and I know you're going from year one to year two and doubling a dollar is a hundred percent growth but would you grow out the last twelve months between a hundred and one hundred and fifty okay that's that's good you know we haven't gotten into q4 yet though so that's that's when all the big stuff happens so we we could stand the chance to have a really really big growth year this year that's great percentage-wise yeah yeah that's great and churn last elastic on our was question which turn today negative churn how knick-knacks well we're just about to close a really nice upsell with one of our bigger customers and I can't name I can't name them because they're government related that's okay but how negative seventeen percent okay that's that's really healthy now people would see confused when someone says net negative seventeen percent turn when you calculate this data is that the same as net revenue or attention annually of one hundred seventeen percent yes I believe so I think it always is two but I wasn't to make sure because everyone calculates things different now everyone all right very good Stacy let's wrap up with the famous five number one what's your favorite business book god that's a great question I'm gonna have to say winning by Jack Welch an oldie but goodie all right number two is their CEO you're following or studying right now I mean yes like a million it's hard not it's underground line well it's hard not to it's hard not to follow Elon Musk right now and I've got tons of mixed feelings about him but it's it's hard to not be paying attention to what he's doing right now for better or worse yeah number three what's your favorite online tool for building your business well I'm gonna have to say zinc besides your own you're such a marketer well I was like what do I use the most every day I use my own second most um I mean you know it's it's probably Salesforce okay number four the answer how many hours of sleep to get every night anywhere from four to eight ok pending on how many things are going on and what's your situation married single kiddos I am married and I have two adorable little daughters so I'm trying to raise raised to be leaders there's a six and nine today today was their first day of school oh I love that that's exciting and Stacy do you let me ask me how old you are I am in my late 40s okay we'll say you're in your early 40s and last question ticket take us back to your Twitter I asked that because I want to know take us back to your 20 year old self what he was she knew cash a lot of things I wish I had had thought of this question in advance I mean I don't know I feel like you learn things along the way and you try to apply them along the way I'm not sure I can think of one thing I wish I knew I don't know anything I think that's a good right enjoy the process right make sure you're learning and keep your velocity as high as possible you know from service Max and many are coming success of factors she's seen it she's been there she's done that she's trying it again with a spin out from code tap with some of our technical co-founders in 2016 really communications tool for many different industries especially industries where folks are not in front of a computer every day thank your DISH Network guy or folks out you know on the road every day so today serving over 70 enterprise logos enterprise customers and that makes about 10 between 10 and 100 thousand seats they've passed a million books and revenue hoping to break 3 ashore forests this year with eyes on five million in AR sometime next year the economics make sense net negative revenue of negative 17 percent grown between 150 percent year over year with 16 million dollars raised team of 30 people Stacey thank you for taking us to the top thank you appreciate it