How Zoominfo CEO Henry Schuck grew to $1.2B revenue and 15K customers in 2024.

founders what's going on you guys know i love in-person events and they are back the recording you're about to hear is from our most recent event where we had hundreds of founders come together share intimate details templates kpis okrs about their business and it was something special something special we'd love to meet you in person if you want to see the next live events we have coming up via our schedule the link will be down below in the description if you're listening on itunes check this out on youtube you'll see the links in the description or you can just google founder path or latka next event we'd love to see you in person in the meantime though enjoy this recording it's a good one whose idea was it to ipo in the middle of a pandemic anyways [Music] [Applause] that's it [Music] zoom info is still founder-led henry chuck is the ceo and started the company while he was in law school by putting 25 000 on his and his co-founders credit cards you know we're investing for the long term i'm focused on building this company into something much larger than it is today our team at zoom info is innovative we're hard working we're always looking to define new possibles and we're just getting started three two one marketing platform zoom info open for trading earlier today the company's ceo henry shuck joins us now remotely from his home outside of portland zoom info helps sellers find their next best customer whether you're a pallet manufacturer in alabama or your fortune 1000 technology company zoom info helps sellers find those companies and find the buyers of those companies we've got zoom info set to go public this friday morning how is the current environment affecting you what advice would you give if another company was out there looking to come to market right now congratulations it's always a big deal let's do this [Music] guys before you eat that guy welcome to founder cops get so guys henry shuck uh we're thrilled to have him with us before you meet him though i just want to say it's incredibly back in person yeah i hope it feels good does it feel good yeah it feels good drink lots of coffee keep your energy high we've got outlets for every person so if you get bored you can just open your computer and look up occasionally and act like you're paying attention and go back to your gmail okay so perfect there's plenty of extra seats on this side of the room if you want to grab one of those um as well um so let's let's get this on the content here um henry's story is really incredible right so many many years ago before uh he was now a publicly traded sas founder uh i i don't know why he responded a cold email to come on the podcast but he did and i was so impressed with how he was building the company how he was doing it but specifically because he was creating multiple opportunities for liquidation before ipo there's some very non-traditional stuff that he sort of did and i'm excited to have him teach us exactly how he did that you bet you bet you san francisco he's a san francisco guy i'm actually in portland but i was in san francisco san francisco is open now huh yes okay all right very cool this is a little bit different attire than like dorm room days this is what i wear to work what i wear to work all right so take us back in the story over the next 25 minutes we're going to really chat about how you got going uh where you are today where you see markets going some of the key things that you were important for your first 10 million in revenue um how you did a big secondary 40 million bucks when you're 27 years old and what a secondary means and now sort of pre-ipo metrics versus post-ipo metrics so we'll have fun that's all expected right yep no surprises yes surprises all right all right so here we go this is dorm room henry dorman 25k in debt was that on student loans i mean i was actually like a hundred and fifty thousand dollars in debt you can't tell by my smile in this picture but i was 150 000 in debt if you count law school undergrad and then when we started the business i put 25 000 on my credit card and my co-founder put 25 000 on his credit card for some reason chase gave us this ridiculous limit it made no sense for a 23 year old uh but that's how we funded the business and and what was the original idea so you guys can follow along on the bottom of this chart and see sort of henry's product launches as they got going but you started in 2007 with with org charts why org charts i had worked for a similar company when i was in college and we grew the company from about 300 000 in revenue as a lifestyle business to 5 million in revenue at 5 million in revenue it was like 4.8 million dollars in ebitda and so there wasn't much of a business there and so i left i went to law school and then we founded like a company that we wanted to actually build a company around and invest inside of uh and so it was it was a lot of it was a replication of that company but done in a more professional scalable way and before we go to the next slide just out of curiosity um stand up in the room if you're currently running you're founder of a software company stand up real quick stand up don't raise your hand stand up stand up stand up stand up okay let's let me stay standing also stand up if you if you own if you're own a little bit of a sas coming you're on the cap table of a sas company now there we go okay so i love how curio we really want to curate this event you guys are all operators you all have upside you're on the cab table you have equity so good that's that's a good view now sit down so henry take us into this deal right explain first what a secondary is how the opportunity came out in 2012 and how you negotiated this loi yeah this was a bad loi for what it's worth uh but uh the business was profitable because we didn't know how to run a bus we didn't have an option otherwise and so you had to build a profitable business because after the 25 000 of chase financing ran out there was no more money to run the business so we ran the business in this really profitable way and then we started getting calls we got on the inc 500 list and then we started getting calls from venture capital firms and private equity firms the private equity firms ended up being the ones most interested in us because we had profitability and that's what they would give a multiple off of and so they have a sense of that real quick how pro what was revenue in in 2012 in 2012 revenue was uh it was probably 20 million and it was like 10 million dollars of profitability yeah and so when the venture capital guys came in they said okay here's what we want to do we want to buy fifty percent of the business what is the seventy percent of the business for thirty-five we got a close-up baby we got a close-up by the loi yeah some portion of the business we want to buy and when we buy that business we'll give you and your co-founder the dollars because the business is profitable so the money doesn't really get dollars what you want to say 40 million bucks was it 40 million dollars yeah so the second highlight down on the left right you can see it specifically says part of this deal is buying kirk and henry co-founders uh 40 million bucks this is sort of right is this yep okay no that's right okay you keep going i know sorry sorry i'm sorry can you guys see it from the tables when you look up so that's that's risky right they can all see it and you can't you're going off memory from and this is ten years later yeah yeah uh so buy the company give us give us cash for in exchange for ownership in the business and then the things you're thinking about here are like do i want to give up control do i not want to give up control do i like these people how is the board going to be set up what do they want to do my biggest mistake during this was they asked me what do you want to do after the investment and in my head it was like well you're going to give me 40 million dollars i could do whatever you want me to do i don't whatever what do you want me to do and so they were like well you know why don't we bring in a ceo we'll bring in a professional ceo and they can run the company and i was like yeah okay you're 27 at the time 20 here i'm yeah 27. yep and if you're going to give me that money great bring in a new ceo i didn't really understand how business worked there wasn't like networks of people like this really back then like jason lemkin was writing some stuff on quora that's it that was the extent of that's a long time ago yeah so uh so then he started introducing me to other ceos and saying like look when when we do the deal we're gonna bring in this professional ceo and i was like yeah okay great luckily this deal fell apart um and i took it we took a year and then kind of rebuilt some of the pieces of the business and had i taken that deal you know i would i don't think i would have ever been a public company ceo well just going back to that for a second you can see the the yellow highlight on the right i believe is the proposed post post cap table deal so you would you'd be down to 10 effectively they they were buying up 90 is that accurate yeah that's right so what were some of the reasons you turned this down obviously that's a big one that's a big one they actually retraded this deal that retrading is like an industry term for hey i gave you an offer and then after diligence i changed the offer on you i gave you a worse offer that's like also if you tell somebody that a firm re-traded you it's really bad for their reputation these guys retraded me right at the end they said oh come down to san francisco have lunch with us so i came down to san francisco and they were like yeah you know there's some things in diligence we didn't like and so we're gonna cut the deal in half and then in a year from now we'll have the right to buy the other half at the same rate as what we're proposing today this is like really nasty and we'll help you figure out how to scale the business it's like what is this guy next course of course they will yeah and then i just said no and round of applause for saying no right to 90 90 delusion all right so let's let's keep going here with a story okay so you say no do you do anything in 2012 cap table wise nothing in 2012 right tickets to what happened in 2014. 2014 uh we decided we would pick the process back up we hired a banker it was a small niche investment bank in in seattle investment banks by the way i didn't know what investment bank was basically it's someone who sells your business for you they build the decks they talk to the private equity and venture capital firms they come to all your meetings they're a broker like a real estate broker but for businesses um so we hired an investment bank in seattle they built sort of the marketing material started talking to private equity firms and then we brought in our first institutional capital a firm called ta associates who bought 50 of the business at a 275 million dollar valuation free or post pre so how much they put in they put in a hundred and ten million and then 80 million of debt okay help us understand just quickly touch on this debt on the back of an equity round was it the svb sort of deals back then or who did you go with on the debt side it was a firm called nxt capital okay so at this site at that point the company's 35 million dollars of revenue it's growing 60 percent and it has 50 ebitda margins so it's very profitable and so when private equity firms do a deal like that they can increase their return if they fund a part of the deal with debt so instead of it all being equity that shares in the upside they do a portion of it in equity and then they do the rest of it in debt that the company has an obligation for and the company pays the debt down but it juices their return because the debt doesn't participate in the upside i'm just reading faces to see if people are following i think they got it they'll follow along all right so between 2014 and 2018 uh you grow the business you grow the business what was revenue in 2018 revenue in 2018 would have been uh like pre we made an acquisition so 2018 was post acquisition so 170 million and so was this loi pre or post the one point five on uh post the ranking acquisition pre the zoom info acquisition okay uh you said post rain camera plus drain king pre zoom info did you know in this ly that you're going to use a bunch of debt to go do the zoom info deal no we didn't know we were going to do the zoom info deal when we got this loi okay so this is the same firm as the other firm who i wasn't going to do business with but i really wanted to frame their offer next to one like a few years later that said 1.5 billion dollars for a much less of a portion of the business and so a few a few years later the private equity private equity firms or venture capital firms who come in they have a hold period they need to get in and out of investments usually within five years and so within five years whatever the business is going to do double triple the value they have to exit either all of the business or a portion of the business within that period of time and so this was you know four years post the investment we had done an m a acquisition so ta made this invest investment at 275 million dollars and now we're four years into the future this offers for 1.5 billion we ended up taking an offer at 2 billion which uh ta ended up selling a portion of what they owned and then holding on to the rest and then the myself my co-founder and then we had an employee pool i should talk about that we have an employee pool of shares all participated alongside that as well this is actually interesting so i had a co-founder my co-founder left in 2015 left the business when he left um he agreed to put 25 of his ownership and i put 15 percent of my ownership into a pot that we set up for employees and so private equity firms are notoriously not great at giving equity down to the last employee so we were able to take this fund of our shares and then give it out to employees so that they would participate in the upside of the business and so every time ta or carlisle or anybody sold the employees also had an opportunity to sell in those transactions as well and so when we were out in 2018 selling a portion of the business so ta could get their returns internally the employees the ta sold 33 at this time the we asked the employees what do you want to do they were like we'll sell 50 at 2 billion valuation the company's worth 20 billion dollars now so it wasn't the best decision um but they so they sold fifty percent of what they owned and people put a lot of money in the in the bank at that you sell any of yours i sold 33 of what i owned at that time at that time so i had and along the way we missed a couple points but along the way touch on where you pulled capital out yeah exactly that's what i was gonna do um so ta makes the acquisition in 2014 and then they do this thing called a recap where they go out and they add additional debt to the business and then dividend that debt out as a return to the shareholders this is a weird thing i didn't know what it was um but we're like a year in the business performed and they said hey we have an opportunity to add another 25 million dollars in debt or 40 i honestly i can't remember and when let's say it was 40. when we put 40 million dollars in debt on the business the business is super profitable so it can continue to support paying that debt down so we're going to put 40 million on we're going to take 20 million dollars as a return and then you guys are also 50 owners so henry and kirk will also take 20 million dollars out of the business at that point too so that's an another capital return that was the only debt recap we did when you do those debt recaps you get like a you get in a room have you ever seen a conference room at an airport i remember like walking through airports and going like who does a conference in an airport like that sounds horrible so you do these conferences in airport debt conferences that's where that's what they're there for uh so you go to an airport conference room and there's like a bunch of debt guys people who work at svb or nxt there's like this group of companies that does kind of like mezzanine debt debt that's kind of weird and takes specialization to understand uh and then you pitch the business to these debt people and then they decide what they would give you and at what rates and so okay so do you take capital out any other time before ipo yes um post the rain king acquisition and before this when you put the two businesses together we made this acquisition of a company that was doing 40 million dollars in revenue and 10 million dollars of profitability we acquired the business and then three months later it was doing 45 million and 35 million dollars of profitability because we optimized and we cut where there was duplication mainly employees it was half of it was employees rain king this is rain king and when we made that acquisition because we had a whole bunch of additional profitability we did another recap of the business like a small 15 million dollars okay that was uh that was the last time we did that and then so then take us through you're now preparing yourself to go after one of your largest competitors you know my big question on this is yeah if i was in your shoes i mean you read a lot of the regulator's reports on sort of going into ipo and and i'm going does henry worry about people blocking this deal because you've because if you listen to all your presentations publicly you always say linkedin's our biggest competitor we compete with linkedin it's linked and it's not zoom info but privately ignore linkedin zoom info was really like about 100 million revenue against your 165 something like that yeah exactly so why did you do this deal and how did you deal with regulation was there any issues of maybe not closing yes so when we did um how disseminated is this this is like going on a public thing this was your interview with me you can see you smiling yes i remember that interview this was your voice in 20 i think something no i mean this the the recording now this will keep we'll keep i don't believe you [Laughter] probably a smart idea don't say anything it's a very big market um when we made the acquisition of rain king we actually you you have to get anti-trust approval and so uh we went and and the regular late the regulators didn't love the ranking acquisition uh because they felt very similar to very similar companies and so we actually went to washington dc we met with a panel of department of justice regulators in the antitrust division and included like lawyers and economists trying to figure out how anti-competitive these two companies coming together would be they stretched it out until the last day of when they would basically deny or approve it they approved it um we put those two companies together and then a year later we acquired zoom info which was another player in the market that process was not as difficult as rainking as ranking yeah wow did that surprise you it did surprise me how did you get that deal done you're buying discover i'm sorry you're buying some info i believe from a private equity firm this is a complicated deal from a debt perspective so what happens here and the company wants to you want to use debt as well as you can if you're a profitable business because and i'll do this point again every time you use debt debt doesn't participate in the upside of the company and so if i take a hundred dollars of debt and it has a five percent interest rate and then for three years my company grows a hundred percent the the debt doesn't get a hundred percent return it gets a 15 return over those three years and the company participates in the upside so uh when we went out to buy zoom info zoom info is an 800 million dollar acquisition just under 800 million and uh and we it took me forever for you to get the freaking number you didn't give that number out yeah i don't think we talked about that we got close though yeah yeah i got pretty cl yeah it's actually like 785 so it's pretty close and so we had to go out and raise raise as much debt as we could as much as the company could handle and at the at these levels of debt you actually have to go to moody's and s p and get them to rate your debt you know like junk rated debt like i didn't know what this was um and you like go to s p and you go to moody's and you do the same pitch and then they decide the rating of your debt and based on the rating of your debt a whole bunch of other people buy the debt at certain rates what happened here was we ran out of debt room like we took as much debt as we possibly could which was how much which was 1.2 billion we needed against how much of profit um at that with the combined business you would have had about a hundred million dollars of profitability so it was like 13 times levered but less than that in the future it's a lot um and um and so but there was no more room so you you could raise debt up to like uh 900 million and then you had a hole you had a 300 million dollar hole in getting the deal done and so carlisle who was who came in in 2018 the carlyle group stepped in and took a thing called preferred equity which is equity that looks like equity but acts like debt jeez it's like i'm a finance guy now disgusting i wasn't gonna talk i wasn't gonna talk about your tie i was listening you described the bankers in the airport conference room going he's trying very hard not to say negative things about these bankers the so it's it's kind of debt but it's it's debt that gets a higher return and that's really hard debt to get especially when you when you put it behind like a billion dollars of other debt but carlisle stepped in and so then we bought zoom info with 1.2 billion dollars of debt um and started operating the business and so 1.2 billion against how much of their revenue what multiple you pay for zoom info uh zoom info is doing 100 million of revenue 105. so that feels expensive at the time 12x yeah i mean what vista's deals are usually like 7.5 7.8 like 9x this was the high price yeah it was a high price and the funny thing funny a year later i had a year earlier i had an opportunity to buy zoom info for 240 million and i passed and that might feel like a bad decision like oh that was dumb he had to pay 800 million dollars one year later it wasn't a bad decision like the business wasn't ready to take on that acquisition and we would have fumbled it a year later we were in a much better place but a private equity firm came in at 240 million dollars that year before and they're happy to hold the investment for four to five years because that's the hold period they had i had to come in a year into that hold and pay them for what they thought they would get four years into the future and so they weren't going to transact with me unless i could tell them like i will pay you now for what you bel what would be a great return three or four years from now heck of a story there uh so sort of moving forward were you do you already know what this one obviously you're gonna ipo when you're doing this minfo deal no you didn't okay no uh i thought we were putting two great private companies together and three months in it went really well the integration went really well the m a was really positive everywhere we thought we had upside we did and more and so is this really exciting time in the business three months into the acquisition the board went hey maybe you should ipo and i went like well i'm kind of putting two companies together right now and so i don't know how i'm gonna find time to set up for ipo but they didn't care so we started the pathway to ipo the business and so talk us through there's sort of pre-ipo henry there's a lot of handwritten there's pre-ipo then there's post ipo talk to us about some of the key metrics you were looking at going into the ipo um so going into the ipo you know we track everything um so we obviously on the on the retention side we're looking at net renewal rate net retention rate upsell dollars we're looking at different products that we sell and how those are being sold we're looking at how products are being adopted across the customer base how they're getting implemented on the new business side we're looking at the top of the lead funny funnel how many leads are we generating how many of those are converting to appointments how many of those are converting to good fit demos and opportunities and how many of those are closing and then we get a daily pacing report which tells us like based on this month we expect to close these dollars and where are we day over day over day over day um and how are we pacing against that target and then any numbers that are off every single day the only unique thing pre to post ipo is that in the in the ipo world in the public company world analysts and investors like the billings number and we never tracked billings internally what is that billing what does that mean billings is basically how much have you sent an invoice out for and so if i sold a deal how however many deals i've been able to send an invoice out for however many dollars i could send an invoice out for that's your billings number wait henry real quick raise your hand if you've ever sent an invoice and it hasn't been paid so can't you just send out a bunch of invoices i mean you can i mean you don't they're actually sold deals you think they're sold how do you control actually like it's not money you have like a bad debt expense that investors understand so some portion of your dollars never get paid and so they can discount against that the problem with billing well the reason why billings became important for our company post ipo is that we weren't we don't release an arr number we don't tell investors what the uh the ar the the arr number is and instead we just tell them the revenue number the revenue number is a lagging indicator right or it's a it's a lagging indicator so if i sell a whole bunch of deals in march only a third of that actually shows up in revenue in that quarter or less if it's at the end of march so revenue is always lagging well billings what i actually sent invoices out for is something that they could get a feel for what you actually sold in the quarter and the problem we went we ipo'd in the middle of the pandemic and one of the things that happened to us was customers wanted more flexible payment terms and so instead of sending annual selling annual upfront subscriptions we started selling like monthly or quarterly well that has a big billings issue right because i'm not sending you a invoice for your whole term i'm sending you a one month invoice or a one quarter input explain why you did that again because everyone here is going wait i thought you'd do annual up front collect cash no cac issues why were you doing this again only because in the middle of the pandemic people wanted more flexible payment terms we had never done that before and so all of a sudden we started doing this thing that complicated the billings number so my first earnings report which i was like really proud of was like hit all our numbers totally crushed it like carrying me out of the room uh the analysts were like don't go on cnbc look like this yeah billings billings billings billings billings billings billings what's up with billings and i was like we don't even we know we don't we don't look at billings now we look at billings [Laughter] you sent me a really funny email because i put out in my newsletter i said like i think this guy it might be an ipo watch list i think if they do it'll be like 5 billion i would go the next morning i get an email from you and it was something i'm paraphrasing here uh it was something like why not 10 or something is that what you said it was something like that yeah it was literally like a one sentence subject line only and he was like why not 10 would be question mark and i wrote back and said well here's my math here's my analysis and of course i'm wrong right so did you expect this on day one well people were telling us at this point that like this was an amazing company and the ipo markets were gonna be really excited about seeing it come out so we expected that the company was gonna go out around eight billion um and but i did we didn't expect i didn't expect it was gonna it was gonna rock it the way that it did the first day and any i mean there are some people in here with 50 to 100 million bucks in revenue that are hiring the cfo that might be thinking about the ipo i mean would you do anything different like is it okay that you under or that you've basically doubled yeah there's gonna you're gonna read articles that say like oh the pop on day one like that just means you like did a bad job of pricing your ipo it's not really true like we had the best advisors the best people around the table on this you don't really want an ipo that doesn't go up on the first day creates like bad issues and moral issues for your team you want a successful ipo and ultimately the the the trick is we didn't sell a hundred percent of the company in the ipo we sold like 10 of the shares in the ipo and that's how all companies are they don't sell the whole company in the ipo like we're publicly traded but most of the shares are privately held so you can do a small amount in the ipo get a kick get a bunch of press and excitement about it and then downstream you sell the rest of the shares at a higher value and so so you go to the ipo you do well by the way we're going to talk about founder dilution uh later on i think tomorrow uh we talked about some sas founders when they went public and how much they still owned of the company and some of these are very small numbers two 2.5 percent you were able to optimize a bit here are you comfortable sharing how much you owned at ipo yeah do you have it uh i can tell you it's not yeah it's like 12 actually yeah what do you do i have the best ones there's like it's the the employee bonus it's complicated but i had two percent somewhere else yeah cool so um talk to us quickly as we wrap up here about zoom info today and what's next yeah so a couple things one if you get to like 10 million dollars of arr you don't have a great cfo you should probably get yourself a great cfo and you're probably thinking because i was you like i got a guy...

hello everyone my guest today is henry schucke is the co-founder and ceo of a company called discoverorg he bootstrapped the company to 25 million bucks in arr and now three acquisitions later he's backed by the carlyle group and ta associates at about 165 million bucks in ar henry are you ready to take us to the top i'm ready dude your people your people are like okay we know henry's going to talk with nathan we're just going to put the ar in the bio so nathan doesn't have to hit henry about it [Laughter] i love it i love it last the last time you came on man let's see it would have been about um almost two years ago and i think at that point you had told me you were doing around 70 and now you're kind of 165. um i want to dive into that in a second but first for new listeners that didn't hear that first episode tell folks what you do so discoverorg is a sales intelligence tool it's actually used by sales reps and marketers to find the companies and the people to sell to when to reach out to them and how to get a hold of them so imagine i'm selling an information security device i know all the chief information security officers i know what projects and initiatives they're working on i know their phone number their mobile phone number their email address and i know all the people around them as well yep so you launched the company back uh i think you told me what would you say 2011 actually i launched the company in 2007. oh okay 2007. and then how long did it take you to get it to 25 bootstraps seven years seven years and is that when you sold or you held onto a little longer than 2014. uh well that's when we took private equity money so depends on your definition of sold but we sold a piece of the business to private equity in 2014. majority uh we sold over 50 okay so that was the start so i have to ask you a question how old were you in in 2014 in 2014 i was 30 29 30. and where so where was looking back now let's see there's another 30 year old listening that boots dropped to 25 million and they've got you know there's so much there's so much it's very frothy around the marketplace they've got a private reform going let us buy 60 you know mainsail partners we'll throw a mainsail under the bus for a second i love those guys but they were my first uh they were my first offer really that's actually hysterical and then two years later i got three times as much as they offered me two years previously good good small company firm say small world okay but so let's say one of my listeners now is getting a deal from mainsail and they're saying hey we want to buy you for like x amount of money i mean what are some like lessons you learned selling the majority of the company kind of i would argue pretty early on um lessons i learned number uh first of all i never found an issue with selling a majority of the company and i sort of viewed the first um i sort of viewed the first transaction like an exit and then once that happened it took a lot of sort of day-to-day pressure off of my shoulders and so i could operate in a better way because it wasn't like all of my money in the company it was like we were partners and so i had taken some chips off the table and i could be a much better operating executive um i think the exciting thing about private equity and my perspective is they've seen companies grow much beyond probably your imagination can see your company growing and so they're sort of behind you pushing you to get to the the next stage and helping you sort of believe the story of the company growing much larger but i think the key there is you have to find a great private equity partner or investor in general and i i think we sort of got lucky um because you meet all these guys and they're like oh it's just like a marriage we're gonna be partners you know we like to let entrepreneurs run their businesses and like half of them are telling the truth and half of them are not the half that are not wanna like do things that the way they wanna do them they have a vision of a ceo that may not be you that they're not gonna tell you in a deal process they're gonna you know there's just a lot of people who are you know selling you a bag of goods and it's sort of hard to tell which ones are which you just have to talk to other founder ceos that they've made investments in yep now that makes good sense okay so 2014 25 million bucks in ar you go in and take a deal sell majority too was that carlisle that was ta oh ta came before okay got it so ta first and then we introduced carlisle to the equation when did that happen so then we operated for almost four years we made a couple of acquisitions had grown pretty significantly and we're sort of at the end of what would be typically a hold period for a private equity firm we're four years into what's typically a five year hold and so ta decided we were going to go to market they were the interesting thing here is ta was like we can sell some portion of discoverorg today we can sell all of it our whole position we could sell half of it we could sell none of it and what they ended up doing was selling about uh 30 of it uh of their holdings because they took carlisle because they saw a much uh bigger future ahead of us as well and so we were a very successful company in their portfolio because you can imagine we were 25 million when they invested and from a runway perspective were probably 120 130 when carlisle came in and so last year that was this year in march okay got it and so you've added what another 35 million bucks in an are over the past couple months that's about right it's a little less than that but yeah so so this to me i look at your space and i really see you duopoly between you guys and zoom info i mean there's a lot of these little like i would call them kind of hacky-ish companies that do like an email scrape there or like something illegal on linkedin over there or like some other you know what i'm talking about how do you differentiate against zoom info and do you really see it right now as a duopoly i don't see it as a duopoly um i actually see there are a ton of companies who have momentum in the space who can spring up in a short period of time i think what you see in this space today is getting access to data has become significantly easier than it was five years ago five years ago if you wanted someone's direct dial phone number we're the only shop in town today there are a variety of different vendors who have a variety of different places that they can go to to get direct phone numbers and mobiles and personal numbers um and we have to like continuously innovate to keep ahead of those folks there are there's you know there's obviously like a long tail of what you might call like mid market and smb companies that play in this space and then there's linkedin and like in our space microsoft is the big player um and so all of us combined have nothing on uh on the size and scope of linkedin and microsoft as a sales solutions provider um and so i view microsoft as the 800 pound gorilla and then there's a whole sort of litany of other providers that are competing against microsoft yeah talk to me about acquisition strategy so you've done three acquisitions when you go out and you do make an acquisition what are you typically buying and what are you looking for yep i'm looking for growing profitable companies that uh that i can make grow faster and more profitably typically um adjacent to what you already do so you can drive arpu expansion across your current base or directly in line with what you do so you're buying a customer base in revenue it's a little it's a little bit of both so uh so one i'm looking i ideally for sort of other really interesting data sets so you're a company that does something really interesting in healthcare and i have a bunch of clients who sell into the healthcare space so i can take that data set and i can sell it to all of my clients you're a company that does something really interesting from a data enrichment perspective we made an investment in a company that does email verification and email validation for two reasons one we could use that to cleanse all of our data in a more uh optimized way and two we think just cleansing data is a core competency of ours that we can start selling to our customers as well so there has to be sort of an overlap where i can take what you're doing that you're really good at that i'm not good at today and then apply it to our 4 500 customers uh uh some way shape or form yeah um i have no insider information here but then good i was gonna say and then the other thing i would say is like most companies don't figure out their go to market motion they're they have like a really interesting product and through sort of just grit they're able to sell it a couple times and build a million dollar ar business or something like that um and so i'm also looking for like bad sales processes because i think we have a really great one and so that we could come in and sort of apply our domain expertise around go to market to a company that hasn't figured out that motion and then really accelerate it can you tell us more about that process your go-to-market strategy why is it different than what most people would expect yeah so i don't know if it's different than most people would expect it's like i think what we're doing is what everybody knows they should be doing it's just really hard to get there and there's like and the road to here is sort of littered with like mistakes and uh wasted money and but so for example we have a pretty dialed in sdr process so we have almost 50 or a little over 50 sdrs they come in they they sit in front of a computer they're they have front spin as a dialer they have outreach and sales loft as email automation tools the data flows from discoverorg into salesforce out to those tools and they come in they have a set of accounts and it tells them like here are the people that you're calling today here's the background on them here's their direct dial phone numbers they're teamed up with count executive hold on henry how many per day typically for the 50 what's the target how many appointments yeah so like for the sdr they're making calls every day there's 50 of them how many uh one of them how many calls are they making a day oh how many calls are they making anywhere from call it 80 to 150. and then sorry keep going yeah the the actual metric that we we look at more closely is how many completed demos are they doing a month and we're looking for that to be more than 20. okay 20 completed demos per month interesting um and then you are going to go into aes at some point when does the ae get involved the ae gets involved after an appointment gets set by an sdr so aes don't do any hunting on their own they're teamed up through with a pot of sbr so you can think like five aes and five sdrs are grouped together um and then the ae gets involved once the appointment is set i see so those 20 target demos per sdr an account executive is on that is giving that demo that's right interesting um the sale the sale closes does the a stay on the account or does it pass to a cs team that's incentivized with expansion it gets passed to a cs team that's incentivized for expansion now that is actually if you pause there sort of if you think about what we just talked about they're very specialized roles right there's an we actually even in sdr it's specialized so we have outbound sdrs we have inbound sdrs and then we have something called swot sdrs so our inbound sdrs if you fill out a form on our website we're going to call you in two to three minutes to try to set that demo um an outbound sbr they have a list of target accounts they use discoverorg data to go set what's you know typically a purely cold call we have a swat sdr where it's somewhere in the middle like someone's come to our website they filled out something and then we've nurtured them to a point where it's warm it's not cold but it's also not inbound and so there's three levels of specialization in the sdr role on the account executive side there's also levels of specialization there are sort of commercial reps who are doing sort of our smb accounts there are regular sort of reps and then there are enterprise reps and so they get those leads get passed based on sort of where those regular is mid-market regular would be mid-market and then when that's done that goes to a csm team so i close a deal it actually goes to a learning and development team that does onboarding and training for our customers they schedule a training and onboarding they give you sort of like all the best practices and they do live trainings with our customers you underwrite that with the setup fee past the customer we don't okay um our business is 100 recurring revenue subscription there's no professional services there's no onboarding or implementation fees it's all recurring 100 recurring and subscription okay so learning in dev team and then at what point does that get handed off to the cs rep after onboarding although the cs rep is sort of riding along the learning and development cycle and how do you def what is the moment where you say yes they're onboarded everybody's been trained interesting okay so so you mean everyone on the company that has purchased they know how to log in they know how to use it they have their usernames they've all been to tr through training interesting and then they and then yes person sort of owns the account from there okay and and so other ceos that are in your ar range that i've asked this question on i haven't gotten the same answer twice which tells me there's a lot of experimentation happening well no it's on this specific thing it's the cs incentive the customer success incentivization right so if they are some of them are quota carrying some of them are not some of them it's a pool of money that then gets distributed at the end based off a team goal some it's not are your cs folks quota carrying they are quota carrying yes interesting individually or as a group individually interesting now individually and as a group so so let's say i'm a i'm a csm that manages accounts that have over a thousand employees my quota from a revenue perspective it's based on revenue so i have a hundred dollars of business that i'm managing my quota as that rep would be to get 115 dollars from my list of accounts in the in the subsequent year so 15 expansion 15 expansion ish if i'm like a small company rep where i'm dealing only with companies with less than 25 employees and by the way we have a long you know almost out of our business is sub 100 employee companies and so if i'm cut out 100 smallest of those um more than 50 of our businesses sub 100 employee companies and if i'm working with the smallest of those so i'm working with the sub 25 employee companies then my quote is different right like i can't i'm not going to get 115 out of smb businesses it's just a different sale my quota there might be 90 so the group all of the sort of small company reps have the same quota and then but they're different quotas for the different groups as you go sort of up the employee ladder what and your most aggressive one is 115 net expansion somewhere between call it 115 and 125. and most the levers those cs folks are pulling to drive expansion it's obviously i assume seat base maybe contact base like tell me about the pricing axes that's that's right just uh and data yeah okay what about um like additional product lines all together um well the way we think about product lines is data so i may come in and say i want to buy access to all of the companies that have over 5000 employees and then that goes really well and so then i say you know what i'd like the rest of your data i'd like it on all companies that are sub 5000 employees but greater than 100 employees it's like okay great we can sell you that data that's a pro product sku that we can sell you and then obviously you have a bunch of different reps who are who are selling to those accounts so then we sell you users and then that data those are the two elements and when you roll the whole your whole business up together net revenue retention year over year i assume you're above 100 percent how far above 100 um it's close to 100. it's about 100. and that's because you have such a big cohort of smbs i have a big i have a big long tail of smb clients yeah i do you get you must get pressure from the private equity go upstream go upstream yeah it's a little bit like i get pressure two ways one um go upstream is great like we have this is the first year we have an enterprise sales team that's that's working on land and expand in a real way but then the second is like look we're gonna we're gonna serve smb clients and so as long as we're doing that we better get good at doing that yeah we can't just go like oh well you know they're smb clients so they don't renew at the same rate it's like no this is something that we can go figure out and so we're doing a lot of innovative stuff with our smb clients like giving them free access to um email and dialing solutions because they tend to be um they tend to be less sophisticated from a from how to engage with people doing more consulting with them having more consultative reps there who understand the smb space like uh you've done a couple interviews with clayton at uh at infusionsoft and i think about that business a lot because i was an smb client of infusionsoft i ran our whole business on infusionsoft until we were about 15 million in revenue and then i was like yeah i should probably graduate to like marketo or pardot and then get salesforce as the underpinning of that whole thing and that sort of happens in the smb business in the smb space you graduate um but we should be working with clients with the same mindset as infusionsoft does in the smb space which is you know grow on make them really successful and you can't just like thumb your nose at the fact that you have a big smb base yeah yeah no totally agree with you there um what do you guys what do you have today in terms of total customers about 4 500. 4 500. okay interesting and then um question on how aggressive you're being with keck you know i recently had um i'm gonna forget his name uh oh adam on ping identity you know vista obviously just kind of owned those guys and they're getting more aggressive with kind of their dollar based cache they're spending like a dollar sorry a dollar twenty to get a dollar of new ar right now are you generally getting more or less aggressive on your payback period um we're getting more aggressive but it's still really profitable it's still like a one to one yeah okay pretty good it's pretty good um and why get more aggressive well well let me let me say it's actually less than one to one which is part of the beauty of the sales model that i that i talked about even with sdrs going one to one to reps and and sort of like the optimization across that go to market layer makes the customer acquisition pro process really efficient and really profitable so just be clear here when you say less than one to one you mean you could spend like 80 cents to get a new dollar of ar that's right yeah is that the number 80 no it's no it's not 80 but it but it's it's it's slightly less than 80. okay good um interesting um walk me through so last question before we wrap up i just raised her out of time uh you let you you let my you let my boy ilya get away i'm sure you looked at data knives it goes to zoom info why didn't you make a move on that i have better technographics than day to night is that what you just told okay i was about to say i'm just going ilia listen like if you think your techno graphics are better then you need to go to henry and get a bidding war going and he's like well yeah but you think your techno stuff's better nathan i lost you i was just saying i'm just saying you have complete confidence your technographics are better than data knives i do okay good stuff let's wrap up here with the famous famous five number one henry what's your favorite business book uh the hard thing about hard things number two is there a ceo you're following or studying i really like dog culture shall we at uber yep number three favorite online tool for building your business besides your own um [Music] great question probably google apps google apps guys so unique henry i tell you what never heard this before all right number number four how many hours of sleep to get every night i get eight hours of sleep every night that's good and what's your situation married single kiddos i'm married and i have a two and a half year old oh that's exciting and how old are you i am 35 35 all right take us home here what do you wish your 20 year old self knew uh oh that's a great question what do i think my what do i wish my 20 year old self knew um to hire the most talented people you can find at all stages of your business hire more talent faster guys there you have it from henry launch discover org back in 2007 grew to about 25 million bucks in arr in 2014 sold a majority to carlisle uh back then and then uh sorry to ta uh and then ta in 2018 and they scale from 25 million bucks in ar up to 130 million bucks in arr ta then brought in carlisle sold about 30 of our holdings there he's still incentivized still growing the company broke down the sales process today as they march past 165 million bucks in arr henry thanks for taking us to the top thanks david