How Zinc Reached 70 Enterprise Customers and 100%+ Growth Serving Deskless Workers (Interview with CEO Stacey Epstein)

Introduction and Stacey's Background

Nathan Latka

00:02Hello, everyone. 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 her role as CEO of Zinc. Before Zinc, she was chief marketing officer at ServiceMax, where she helped fuel five consecutive years of triple digit growth leading to a $1,500,000,000 acquisition by GE in 2017. Stacey, are you ready to take us

00:29to the top?

Stacey Epstein

00:31I am. Yes, I am. Sorry.

Nathan Latka

00:34Did I screw up in the bio?

Stacey Epstein

00:37Well, SuccessFactors was acquired by SAP for 3,500,000,000. ServiceMax was acquired by GE for 1,000,000,000. Probably not all that relevant.

Nathan Latka

00:47Okay. Got it. Very good. Well, it's helpful to understand that. Yeah. I cut off a bunch of your bio because I just did the first 50 words. We have a lot. It's cool. It's fair to say you have a ton of experience in B2B sales.

Stacey Epstein

00:55I've been around a long time.

What Zinc Does for Deskless Workers

Nathan Latka

00:57Tell us about Zinc. What is Zinc doing? How do you make money?

Stacey Epstein

01:01Yeah. So Zinc helps field base or what we call deskless workers get access to real time knowledge from the rest of the organization and from the systems in 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

01:30TV, or you walk into a hotel and you're talking to a hotel worker or a construction worker, those are what we call deskless workers. They're 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, they're away from the people and the information that they could use to help

01:53them do a better job. So again, think about the dish guy, technology probably helps him to get scheduled and get to the right door at the right time. But once that door gets opened, he could face all kinds of different situations. The wiring's different, how he gets on the roof is different, 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

02:22his 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

02:47is great for him, great for the customer and great for the vendor.

Revenue Model and Pricing

Nathan Latka

02:51And Stacey, what's your guys' revenue model? Is it a pure play SaaS model?

Stacey Epstein

02:55Totally. A 100% SaaS. We charge by per user per month.

Nathan Latka

02:55Okay.

Stacey Epstein

02:55Annual contracts.

Nathan Latka

03:00That'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?

Stacey Epstein

03:11Oh, it really does. I mean, it can literally vary from 10,000 per month. I'll give you annual. So anywhere from $10,000 a year annually to close to 7 figures per year annually.

Nathan Latka

03:25It just depends. Okay.

Stacey Epstein

03:26Customers big and small.

Nathan Latka

03:28Okay. And maybe let's then go away from the per logo basis. What what do you charge on average per seat? I'm sure you probably do volume discounts, but are we talking like $10 a seat, a $100 a seat?

Stacey Epstein

03:3710 to 20, depending on what they want per user per month.

Nathan Latka

03:41And depending on probably volume of what they're signing up with. Right?

Stacey Epstein

03:44Yeah. Right. Of course. Like, 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.

Founding Story: From Cotap to Zinc

Nathan Latka

03:52Yep. Now give me the backstory here. You were very specific 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?

Stacey Epstein

04:01Well, 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 WhatsApp 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 years and great product, but wasn't really going anywhere on the go to marketing side. So together with the board, I came in

04:29and we basically acquired... No, no, no. The board of that company, which was called Cotap. So we came in and we basically took the assets of that, of that company, which was Cotap and, and the great core product, built out the product and relaunched it as Zinc. So I am the founder of Zinc, but there was a little bit more of a story there. Our product's been around a few years longer than I have.

Nathan Latka

04:55Okay. So when did that kind of 2016? Okay. 2016 is when the Cotap board have approved the deal to take it private. Are those assets out?

Stacey Epstein

05:05Well, it was never public. Yeah. I mean, they were a little startup. So we relaunched as Zinc in the middle of twenty sixteen.

Nathan Latka

05:12Okay. I shouldn't use take private. I should use the word spun out, but that was when you spun out those assets.

Stacey Epstein

05:17Pretty much. Yes.

Nathan Latka

05:18Okay. Good. And and did those early folks... How did... Sorry. How does Yammer connect with Cotap? Because you mentioned the developers came were at Yammer.

Stacey Epstein

05:25Yeah. Well, they they were no longer at Yammer. They... The... I mean, their background's interesting because they focused on communication. They left Yammer after Microsoft acquired Yammer and they founded Cotap.

05:37See. Does that make sense?

Nathan Latka

05:38It does. Yeah. It does.

05:39Now was Cotap, did you have to deal with a big, like a complicated cap table to negotiate this thing? Did they raise a bunch of capital or no?

Stacey Epstein

05:46Yeah, I mean, we recapped the company. Zinc is a brand new company.

Nathan Latka

05:50Got it. Okay. So twenty sixteen.

Stacey Epstein

05:52The heritage of Cotap is just the core product.

Nathan Latka

05:55Okay. Very good. So twenty sixteen founded, you're in San Francisco, 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 have you raised?

Funding History and Investors

Stacey Epstein

06:06We've raised 16,000,000 today.

Nathan Latka

06:08Okay. And why was that important? I mean, at what point did you say we have to raise capital to grow this faster?

Stacey Epstein

06:13I mean, kicked off the company with a $5,000,000 seed round. And the product, again, we had a core shell of a product, which 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 the Cotap 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.

06:43So that original 5,000,000, which was Emergence Capital and CRV, and that was really what it took to get the company off the ground and hire more employees and get a bunch of new customers. And then in April of last year, we raised an official A round led by GE Ventures, also with participation from Hearst Ventures. You can imagine GE has a lot of deskless field based workers. So they were very interested

07:13in

Nathan Latka

07:13What happened to Emergence?

Stacey Epstein

07:14Doing it, Zinc.

Nathan Latka

07:15Big I'm fan of Sansi, and they... He came on and told me the story about the spinout from from from TechCrunch of Crunchbase. Did not follow on in the Series A?

Stacey Epstein

07:23Oh, yeah. They've invested in every single... They're still with us. So Jason Green is the chairman of our board. Emergence is... And was also on the board at ServiceMax and on the board at SuccessFactors. 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 having Emergence involved with your company, including Santi.

Nathan Latka

07:47I was gonna say, 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.

Stacey Epstein

07:52He's awesome.

Nathan Latka

07:52So you add in the series that you added on GE and Hearst and Emergence was there as well?

Stacey Epstein

07:57Correct.

Nathan Latka

07:57That's great.

Stacey Epstein

07:57So Emergence and CRV were the first round and then they also participated in the second round which was led by GE.

Customer Count

Nathan Latka

08:05Got it. Okay 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. Part of the 5,000,000 was obviously put towards that as well. So let's go backwards first. What are you at today in terms of total customers? And I want then I wanna go backwards and talk about growth.

Stacey Epstein

08:21Yeah. We have about 70 enterprise customers today.

Nathan Latka

08:24Okay. And generally speaking, that represents how many employees under those guys? We talking like tens mean, of of Okay. Fair to say between more than a 100,000 or no? Between 10 ks and a 100 ks?

Stacey Epstein

08:35Between 10 and a 100.

First Customers, Freemium Shutdown and Pilots

Nathan Latka

08:37Okay, fair enough. Good. Walk me through acquisition. Again, you've done a lot of experiments here. So your first 10 customers, how'd you get them?

Stacey Epstein

08:43Well, 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 communication app 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 wanna text my buddy. I'm not incented to go put a new app on my phone just for work messaging, right? So I was pretty convinced

09:11out 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 upsells from the freemium model where, hey, the users loved it, but now we want the admin console and the ability to have IT be able to get their arms around it and manage it, have some of those enterprise features. But we shut off freemium mium probably six months after we launched

09:41as Zinc and basically said, Hey, you can do a free trial. And we still do pilots today. I think, 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, a construction worker. These are people that don't use technology all day for their job, right? They use their hands to fix something

10:09or they're talking to a customer. So you can't give them some complicated swipe here, drop down, it 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 that the free trial, it's smaller company, it's a free trial, bigger company, it's a formal pilot. And they get a

10:41real taste of how easy it is to use, the fact that the users will adopt it, the fact that getting live on the solution is very quick. I mean, we took thousands of technicians live at Dish Network in two weeks.

10:57So the time to value has been great. But yeah, direct sales, right? We have AEs that work the deal.

Sales Team Structure and Outbound Motion

Nathan Latka

11:02What's the total team size, Stacey?

Stacey Epstein

11:04We have about 30 people.

Nathan Latka

11:06Okay. And how many AEs?

Stacey Epstein

11:08Three.

Nathan Latka

11:09Okay. And SDRs for AEs or no?

Stacey Epstein

11:12SDRs for AEs and sales consultants also.

Nathan Latka

11:16What's the ratio? Two SDRs to one AE or something different?

Stacey Epstein

11:18Two SDRs to the three AEs.

Nathan Latka

11:21Okay. Interesting.

Stacey Epstein

11:22And two sales consultants.

Nathan Latka

11:23Did you hit a home run on that on your first kind of pro forma salesperson onboarding kind of projection? Or did you have to fiddle with that ratio for awhile?

Stacey Epstein

11:32I mean, we're still fiddling.

Nathan Latka

11:34The right answer is you're always fiddling, right?

Stacey Epstein

11:36Yeah, mean, we're still a startup. We're two years in on this. We're constantly, and this is not a defined market, right? This is not something that's on PG&E's list to buy, right? And so they're not searching, they're not typing it into their Google browser. We're still in heavy outbound market awareness mode. And so the dynamics of like lead-to-opp conversion rate and all those things are a little different than say when I was

12:08at SuccessFactors when it was it performance was the new hot thing and everybody, every HR person was searching. You know, the dynamics of of marketing and go to market were just dramatically different, but we're pretty heavy outbound at this point.

Nathan Latka

12:25I've seen a few examples, not a ton, Stacey, where the try before you buy approach has really burned a few people in terms of their CAC if those trials don't convert at a rate that makes sense for them. So for you, what would you say your fully weighted CAC is to onboard one of these new 70 logos?

Stacey Epstein

12:39Yeah, mean, again, we're still pretty early to everything is so different.

12:45At this stage, any one deal could be an outlier and could completely change an average, right? So we don't even fully calculate CAC. 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 ServiceMax, and this is no knock on ServiceMax. ServiceMax is a very sophisticated, almost ERP like solution. And the processes that it automates are

13:15drastically 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 thirty 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 of it.

Nathan Latka

13:33Are you that way or not?

Stacey Epstein

13:33No.

Nathan Latka

13:33You're one flavor.

Stacey Epstein

13:37We're pretty much one flavor. I mean, yes, hotels are more used to talking on radios, so they might leverage the push to talk feature.

13:50A telco or utility might be more reliant on our hotline feature where you can message to a group that you're not in 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 texts, receiving texts, being added to groups, being on a conference call, it's very to use. It's easy to implement. There's

14:17not a lot of, we've got to tailor it to your process. You communicate like most companies do.

Nathan Latka

14:23Stacey, we're running out of time here, but I do want to get in some inclination here of how you decide whether to experiment with different marketing and sales tests. Obviously the CAC number and things like that are still very much fluctuating, but when your account executive or SDR comes and says, 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.

14:43So are you looking at like a payback period estimate, a lifetime value estimate? What are you looking at?

Stacey Epstein

14:48Well, I will start by saying I am at my core a risk taker. And, you know, I've worked for the likes of Lars Dahlgaard at SuccessFactors, 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. And I love people that take initiative. So if somebody in my organization comes to me with an idea

15:16and 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 thirty years of experience, I'm probably pretty likely to say yes at a small scale to anything that might move the needle for us.

Nathan Latka

15:34So if I was working for you and I said, Hey, Stacey, look, I think I can land this new customer. The contract value, if the pilot goes well, is gonna be $100,000 for the year, but it's probably gonna take me about $200 to $250 grand to get them going in terms of the professional service, would you say yes or no?

Stacey Epstein

15:47I would say. I mean, that's $250K at this stage of a company of a cost is a really high cost. I don't think that, I mean, I can just tell you right out of the gate. That's probably not necessary to go land some of these big deals. We haven't had to do that.

Nathan Latka

16:04That's what I'm trying to get at there. 20 ks? Yeah. 20 So what I just gave you was an example of more than a two year payback, right? On $100,000 ACV for two years expecting no expansion. So what you're saying is if you could give me recoup in three months or four months or something like that, that's an easy yes for me every time. Am I hearing you

Stacey Epstein

16:04Yes,

16:25you are.

Growth Rate and Revenue Milestones

Nathan Latka

16:26Okay, very good. Last questions here before we wrap up with the famous five. You mentioned 70 enterprise customers. You mentioned earlier, like minimum ACV is $10K up to some hitting 6 figures, I think was your quote. So if I multiply 70 times that $10K minimum, it puts you guys at, you know, $58 to $60 grand per month right now. Have you guys broken a million bucks in ARR yet?

Stacey Epstein

16:46Yes, we have.

Nathan Latka

16:47You have? When... What's the next big revenue target you wanna hit before you maybe start thinking about the next round of funding?

Stacey Epstein

16:52Well, 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.

Nathan Latka

16:52Yep.

Stacey Epstein

16:52I'm not sure we'll get there this year, but we have pretty good sight into that for next year.

Nathan Latka

17:08Well, that's good. So five maybe is really a stretch goal for this year. It does something like a three look more realistic. 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 100% growth, but what'd you grow out the last twelve months?

Stacey Epstein

17:25Between a 100 and a 150.

Nathan Latka

17:27Okay. That's good.

Stacey Epstein

17:28You know, we haven't gotten Q4 yet, though. So that's that's when all the big stuff happens. We we could stand the chance to have a really a really big growth year this year.

Nathan Latka

17:37That's great.

Stacey Epstein

17:37Percentage wise. Yeah.

Churn and Net Revenue Retention

Nathan Latka

17:38Yeah. That's great. And churn. Last last second on our question. What's churn today?

Stacey Epstein

17:42Negative churn.

Nathan Latka

17:43How negative?

Stacey Epstein

17:45Well, we're just about to close a really nice upsell with one of our bigger customers. I can't name them because they're government related.

Nathan Latka

17:54That's okay. How negative?

Stacey Epstein

17:5617%.

Nathan Latka

17:57Okay. That's really healthy. Now people always get confused when someone says net negative 17% churn. When you calculate this data, is that the same as net revenue retention annually of 117%?

Stacey Epstein

18:14Yes. I believe so.

Nathan Latka

18:16I think it always is too, but I always wanna make sure because everyone calculates things differently.

Stacey Epstein

18:18I know. Everyone does it differently.

Famous Five: Books, Tools and Personal Life

Nathan Latka

18:20Alright. Very good, Stacey. Let's wrap up with the famous five. Number one, what's your favorite business book?

Stacey Epstein

18:26God, that's a great question. I'm gonna have to say Winning by Jack Welch, an oldie but goodie.

Nathan Latka

18:34All right. Number two, is there a CEO you're following or studying right now?

Stacey Epstein

18:39I mean, yes, like a million. Hard not to Elon right

18:50now. 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.

18:57Yeah.

Nathan Latka

18:58Number three, what's your favorite online tool for building your business?

Stacey Epstein

19:02Well, I'm gonna have to say Zinc.

Nathan Latka

19:04Besides your own.

19:05You're such a marketer.

19:07Your own.

Stacey Epstein

19:08I was like, what do I use the most every day? Of course, I use my own tool every day.

Nathan Latka

19:12Second most.

Stacey Epstein

19:13I mean, you know, it's it's probably Salesforce.

Nathan Latka

19:17Okay.

19:18Number four.

19:19How many

19:20hours of sleep do you get every night?

Stacey Epstein

19:23Anywhere from four to eight, depending on how many things are going on.

Nathan Latka

19:28And what's your situation, married, single, kiddos?

Stacey Epstein

19:31I am married and I have two adorable little daughters that I'm trying to raise to be leaders. They're six and nine. Today was their first day of school.

Nathan Latka

19:40Oh, I love that. That's exciting. And Stacey, do you mind me asking how old you are?

Stacey Epstein

19:44I am in my late forties.

Nathan Latka

19:47Okay, we'll say you're in your early forties. And last question,

19:52asked that because I want to know, take us back to your 20 year old self. What do you wish she knew?

Stacey Epstein

19:59Gosh, a lot of things. I wish I had thought of this question in advance.

20:06I 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.

Nathan Latka

20:19Guys, I think that's a good one. I think that's a good one. Enjoy the process, right? Make sure you're learning and keep your learning as high as possible. From ServiceMax to many other companies' SuccessFactors, she's seen it. She's been there. She's done that. She's trying it again with a spinout from Cotap with some of our technical co founders in 2016. Really a communications tool for many different industries, especially industries where folks are not in front of

20:41the computer every day. Think you're DISH Network guy or folks out on the road every day. Today, serving over 70 enterprise logos, enterprise customers, and that makes it about between 10,000 and 100,000 seats. They've passed a million bucks in revenue, hoping to break 3 ish or 4 ish this year with eyes on 5,000,000 in ARR sometime next year. The economics make sense. Net negative revenue share of negative 17%, between 100 and 150% year over year with $16,000,000 raised. Team of

21:0630 people. Stacey, thank you for taking us to the top.

Stacey Epstein

21:09Thank you. Appreciate it.