How Cleeng Reached $18M Revenue in 2023 with 35M Accounts and 120% NDR (Interview with CEO Gilles Domartini)

Event context and introduction

Nathan Latka

00:00Quick context. This was recorded March twenty eighth and twenty ninth. So a couple weeks ago at my live event, saasopen.com. We had a thousand software CEOs there. If you missed it, we hope to see at the next one, September fifth and sixth in New York City, saasopen.com. But for now, let's jump into the recording.

Company background and early growth from 2011

Gilles Domartini

00:22>> To give a bit of context of what we've been trying to achieve. So we started in 2011 as an organization. We've been going fairly slow up until twenty eighteen, twenty nineteen, building the product carefully, trying to shape it to serve the client that we want to serve and just cover this in a sec. And then from 2021, started to accelerate, and now we really see the acceleration, so that's in revenue. But of course, to sustain that

Shift to enterprise B2B and team scaling

Gilles Domartini

00:53>> acceleration, and we are focusing on the enterprise B2B space, we were more long tail historically, but now we focus more on the enterprise B2B. We had also to recruit quite some staff. So that's part of the challenges that we were facing, you know, to organize this properly and to continue to manage the engagement of the team and manage the proper throughput of the organization.

Cleeng's specialization and largest clients

Gilles Domartini

01:14>> With very briefly. So Cling, specialized in subscriber retention for video platforms. We work with the likes of well, you see some of the clients here. Our largest client is actually the NFL in The U. S. So you guys here, I'm sure you know. Some are in the telco industry, some are more like traditional broadcasters. So we help sell video subscriptions. We are kind of CRM platform for video subscription, but what we do. We manage about 35,000,000

01:43>> accounts, 5,000,000,000 in gross billing. So we became quite sizable nowadays.

35 million accounts and $5 billion in gross billing

Gilles Domartini

01:50>> And so what are some of these key learnings? And I'm sure you've been hearing some of these learnings in the past day, in the past few hours. Some people are repeating kind of the same, but there are also a few nuances. So I was happy that I could share maybe things that are a bit different. So one thing, it's often a dilemma, especially with investors. Are there investors in that group here? Yeah. Okay. There's a few

02:15>> investors. So investors, especially in the early days, we always look at, what's your time? You know? What's your time? What's your time? And you need to expand very fast, and it needs to be sufficiently large. Otherwise, it's not worth investing. So you have the tendency quite quickly to go maybe a bit too far on what you can target. It's easy to stretch a software, but actually it's hard to stretch the sales and to stretch the experience

02:43>> and marketing and these type of activities. So one thing I think that we've been doing pretty well is to continue to focus very much on our vertical, so the media and entertainment vertical, and not to try other verticals. Often we speak about gaming, for example, it's very similar. At the end, it's subscription type of business. We speak about some form of IoT that will be also fairly similar. But we really refrained from going there, and we

03:09>> doubled down on the vertical that we are in, and I think it was a very good choice.

Learning 1: Stay focused on your vertical

Gilles Domartini

03:17>> The second important learning is adapting your pricing policy. If there's one thing that we've learned over the years is that pricing is never exactly right.

03:33>> We started as a long tail platform. We used to sell licenses at EUR 99 a month. That's how we really started ten years ago. And then we started to charge for certain components. So in our case, we charge per user here. So on top of the license, you would say, how many subscribers do you have? And then you pay a small fee per subscriber. That's the only metric that we use. We use a tiered model. So

04:02>> you commit at a certain level and then you have various tiers. Big benefit of this is that you don't need to renegotiate a contract if your client is over performing. This is always a huge amount of

04:15>> time and a bit of frustration also for the client because it's overperforming. And now it's saying, oh, but I'm paying too much. Let's say you've committed at $100,000 and you achieved $200,000 So of course, you want to recalibrate your fees accordingly. But if you haven't embedded this in your contract, you need to renegotiate the contract. If you work on a tiering base, then it's way easier. You just get to the next tier, and then you don't

04:39>> need to renegotiate anything.

04:42>> Market focus, of course, now we are enterprise sales. We are really like Tier one. And to my surprise, we can continue to claim larger fees for our clients. So even though we work still on a per user basis, since we go after clients with potentially millions of users, you end up with an AR of 1,000,000 or more with certain clients. And of course, when you start to charge €1,000,000 per year as software, you feel like, well,

05:14>> holy shit, we make it.

Learning 2: Adapt your pricing policy

Gilles Domartini

05:17>> You have to adapt your strategy. I'm sure, well, some of you guys may be familiar with so loss leader, basically, you you become extremely aggressive. Scheming, you you try to get the most out out out of all of this. Scorseshelf is that you feel like, okay, I'm gonna be aggressive for a certain time until I penetrate the market, get market share and then I will increase it or premium, which is more the positioning that we have

05:40>> today. If you're okay, I have high margin, I'll try to maintain them while it lasts and then my drop later. And then some other considerations. So I've been sharing a few parameters related to pricing, but I really feel that pricing is important that you constantly optimize it for the target group of users that you want to go after. And it was definitely a key learning from selling $200,000 of ACV to $1,000,000 plus of ACV, of course,

06:10>> it's a very different type of pricing.

06:15>> The third element that was a big learning, and it's been learning I think for the past ten years to be honest. We always neglected a little bit the customer success aspect and the retention aspect. We tend to always chase the new clients and you organize yourself. You spend a lot of effort about acquisition and growth strategies of marketing. You invest in customer success, but you may not invest at the same level of attention as you would

Tiered pricing and avoiding contract renegotiation

Gilles Domartini

06:46>> do

06:48>> for the acquisition part. But you quickly realize that once you get that $5,000,000 to $10,000,000 of revenue, I mean, if you have a leaky bucket, you know, I love this image of the leaky bucket. If you sign $5,000,000 a year, but you lose like two or three every year, I mean, there's no way you can get to $10.15, or 20,000,000. So very important to to invest in customer success to to to structure while that team. It

07:15>> it's maybe the most complex. I've learned that it's maybe the most complex role in an organization. Why is it the most complex role? Because I simulate that a good account manager is like a CEO. You need to know about sales. You need to be able to negotiate with your clients. You need to know very well your product because your client is asking, okay, but how do I use this product? How do I generate the right value

Moving upmarket to $1M ACV

Gilles Domartini

07:37>> from it? You may need to be able to answer some technical questions from these clients once in a while. And you need to, well, sell properly the value propositions, marketing and so on. So very difficult to develop the right profiles there. So start early, in my view, to get the right guys. It's certainly one area where we've been doing good from a net dollar retention, we are 120%, 130%. But from a staffing standpoint, we still have

08:07>> high rotation, and we still struggle a little bit to staff properly that organization.

08:18>> Surprisingly, especially after the the point number three, is that as we as we grew, we we hired a specialist of customer success and customer retention coming from IBM. She's been doing this for very long. And about two years ago, we said, okay, now we need to become customer centric. And you guys are telling you are not enough customer centric. You are product centric. You are, well, to some extent, financial centric and these type of things, but

08:45>> you are not sufficiently customer centric. Well, guess what? By becoming customer centric, we were moving, to my liking at least, way too much as a solution integrator or system integrator type of company. You start to get the account management team coming to you and say, hey. Yeah. But, you know, this client is really looking for that service or they are looking for that kind of extension. It's not exactly what we want. But if we don't do

09:13>> this, we may lose them. So it's very important you start to develop it. And then you are, like, torn in between to feel like, oh, what shall we do? You know? Shall we really pay attention to everything that the client is asking for? Or do we keep our course? Of course, we listen to to their requirements, but we need to adapt a little bit, let's say, our messaging toward that client to say, sure, dear clients, let's

09:35>> work together. Let's figure out a solution. I love the Amazon Web Services work backwards. I don't know if you guys are familiar with the work backward model. So, basically, they ask clients, okay, what do you want us to do? So clients will say, well, I'd love to develop this and this and this. It's okay. Why don't we work together on it? But they really say we develop together that service as part of our product stack. That's

10:02>> And literally how they started the AWS. Right? Some clients were coming to them saying, you have this mega infrastructure that you don't use, expect at Christmas and New Year. Why don't you start to sell it to us, you know, in, I don't know, January and February? And that's how we started to develop AWS. So that was a good model. But it's something to continue to to watch out because especially when you have a client that is

Learning 3: Invest in customer success and retention

Gilles Domartini

10:23>> spending you 1,000,000 a year, to my earlier point, when it starts to say, need this and that, well, you kind of say, sure. You know, we're gonna develop it. So finding that right balance was, was definitely an important learning.

10:44>> The fifth, important learning is,

10:49>> don't listen to the financial, CRMs, and sorry for my, broken English, maybe a French expression. But as you start to grow and accelerate properly, around that stage, we started to get a lot more interest from investors, including our own investors saying, well, yes, but we should bring potentially some more companies to support that development. And luckily, we said, no, okay, we want to stabilize first the organization. We want to continue to grow at a controlled pace

11:25>> so that we make sure that we don't do big mistakes, which is more or less what has been happening here. And actually, the growth has been very good at that level. And because we've been controlling that pace, well, mechanically, we became more profitable. And I feel that we reduced the amount of risk that we could have taken if we would have raised, let's say, 10,000,000 or 20,000,000 of money at that time. At the same time and

11:51>> last year, I was presenting here as well. I don't know, always end up in the finance, what I really I'm not a financier, far from it, but okay, so be it. So last year, how when we raised money, so we raised money in 2018, how we almost killed the company in 2019. This was quite incredible because the investors came in 2018. They say, guys, okay, go invest and we don't give you monies for you to keep

12:20>> that money at the bank. You need to spend it there. And then in 2020, when COVID started, it's not about actually, you guys have been spending like crazy. This is not the right thing to do. Okay. We need to basically fold the company. You know these stories? Okay. Well, good. I'm happy I'm not alone in that case.

Net dollar retention of 120% to 130%

Gilles Domartini

12:42>> So manage this carefully. Take your own decision as a founder. So I'm luckily still a founder. It's certainly more difficult if you've been an appointed CEO. But if you're a founder, I think you have massive leverage with the strategy of the organization. And yes, do what you think is the best for the employees, best for your clients and continue to grow in that model.

13:11>> One that I haven't heard so much actually today, while I'm a big believer in organization optimization. So just to put some context before launching Cling now fourteen years ago, thirteen years ago, I used to work in big organization. I was at Philips. I was at Apple for some time, in the computer space. And I think I've made a bit of a specialization back then in terms of e business team organization and how do you scale an

Learning 4: Balance customer centricity with product focus

Gilles Domartini

13:44>> organization when you are growing like 50100%.

13:48>> I think too often, we assume that, let's say, we design an organization today, a, you tend to assume you design it for today, but actually today is already gone. You know, if if you grow 40%, I mean, already tomorrow it's obsolete what you've been doing today. So you need to design an organization more for like six to twelve months. That's for sure. But also to say to your teams, guys, we may have spent two months. Usually,

14:17>> it's about a two month cycle to optimize like the tech team or the sales team.

14:24>> And then we feel like, okay, well, now we are done for the next three, four years. And then like two years later or two and half years later, come back and say, actually, your organization does a bit of flows. So we need to reorganize it a little bit, you know, to fine tune some elements. I really think that's super important because as you grow in terms of staff, you blurry the roles and responsibilities. So then you

14:50>> start to have a lot of people which are asking, yeah, but you know, used to do this and now there's another guy that is doing kind of the same, who takes the decisions. We we we start to have more people in meetings. So usually when you are a small team, you have like meetings with, three, four people and that's that's perfect. And then you grow the organization, you start to have meetings with like eight, ten, 12

15:13>> people if you like what. So it's it's really surprising. So once you get to that stage, it's it's a sign you need to reorganize. If the meeting goes too big, it's not because, okay, people just want to have more people in meeting. It's because the roles and responsibilities aren't clear. So you you reoptimize a little bit your organization. You clarify the roles and responsibilities so to continue to achieve the the right speed and throughput, not just

15:41>> at the function level. So like tech and marketing and sales, but more at the project level, which tends to be often, you know, intertwined type of organization. You have a sales guy, a PM, a solution engineer and group of developers potentially. So it's very important that they are properly integrated to here.

16:04>> Seven is it might be something that we repeat often, but it's been certainly where I've been spending the most time in the last twenty four months. I was really scared, but as we grow and to put things in perspective between bit of staff that is leaving and the new staff that came in. You saw the graph earlier. So now we are 140 people. About 50% of the organization is new in the last twelve, eighteen months twelve,

16:34>> fourteen months. So one big risk I see is, of course, you know, especially when you bring some new managers. We have a new new CFO, new head of customer success, new CEO. You know, they all bring you know, these are smart people. You know, these are senior people. They are at the management level with with you. So they they themselves bring, you know, their their own learnings and experience, and they try to shift or adapt, you

16:59>> know, some of of your culture, which has some good, of course, sides. But you also don't want to lose what has been, let's say, the historical culture of your organization. So these four pillars here, we built them in 2013, 'fourteen. So really ten years ago, very much at the very beginning of the organization, we were trying to figure out, okay, but what makes us stand out? You know, how do we sell to a new employee who

Learning 5: Control growth pace and avoid over-raising

Gilles Domartini

17:23>> we are? And these are our main, let's say, pillars of the culture. And I've been spending a hell of a time to make sure that we do maintain that culture of well, these values, so that we can continue to grow to the next stage and avoid further mistakes.

17:46>> Eight is a little bit what we are doing here. It's the only conference I do in the year, but I love the opportunity to meet with more CEOs and CFOs and CEOs, guys who went through the similar struggles as I did because it's been a long and painful journey in many dimension. Learned from other industries also. Was speaking about pricing. I was speaking about market focus. Large part of the reorganization on pricing is when we signed

18:19>> Looker, when we signed Salesforce. Now you really go deep as a CEO to understand, okay, but why Salesforce is billing like this? Why Looker is billing like this? Why AWS is being like this? And then you you try to think, What's the correlation between how we do it to how I do it? And where are the gaps? If it succeeded, you know, if they succeeded in that domain, there's certainly ways that also I can learn quite

18:41>> a bit from them. So learn from others, very important, but I guess that's why we are all here together.

Near-death experience after 2018 fundraise

Gilles Domartini

18:49>> The nine is and that's why I didn't follow the template sent by Saisopen and I hope nobody will report me, is avoid boredom. One thing that we see also a little bit related to the culture is that when you move from like fifty, sixty people that we are there at the beginning of the organization, so we really went into battle together, you know, we were in the trenches and, you know, we were fighting and da da

19:12>> da. And then you have a bunch of people which are coming in and then it become a bit more corporate, like, okay, follow the processes. I'm the first one to advocate for that, right? So that's a bit of the dilemma. You advocate to follow standards. And at the same time, you said, no, guys, okay, go outside. And if you need to spend some money to invite some clients, okay, go for it. Don't ask permission for like

19:32>> your free papers to be signed. So very important to, I think, resist the temptation of a form of bureaucratic model as you grow. And again, 100 employees is not like Microsoft size, but it already starts to wait on our capacity to decide effectively.

19:51>> And that's about it. So it's past twenty minutes. I've been sharing the nine key learnings, but I'm happy to take also a few questions if you guys have.

Nathan Latka

20:02Yes. Thanks, Jill. Give Jill a hand, please.

20:09What quick question before we bring Jeff on stage. Any questions? No. I'm good. I'll grab Jill after. Alright. Thanks, Jill. Appreciate it. Thank you. Hey,

20:23folks. If we haven't met yet, my name is Nathan Latka. I launched and sold my first software company back in 2015 and went on to write a book about it, which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies. Thank you so much for that. After the book, I launched this show and one went on to create founderpath.com. I raised a large fund to do non dilutive deals with B2B software founders. So far,

20:50we've invested in over 400 software founders totaling $150,000,000 Here in 2024, we're doing three to four new deals per week. So if you're looking for capital and don't wanna give up equity, go sign up at founderpath.com for free to get your offer.