SaaS Interviews with CEOs, Startups, Founders
1037 Clate Mask on ICON, Infusionsoft IPO, Exit Strategy
27 May 2018
Chapter 1: What is the mission of Infusionsoft under Clate Mask's leadership?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million.
I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. All right, guys. Hello. Good morning, everyone.
I'm here with the CEO of Infusionsoft, Clayt Mask. He's been on the show before. Clayt, thank you for coming on again. Are you ready to take us to the top? You bet. Happy to be here. Thanks, Nathan. You bet. So some context on this one, because it's a little unique. You know, I decided I want to do some more long form content on getlatka.com. And so I said, you know, I like the Vista guys.
I like what they're doing. I put out a piece last week about why I thought it might make perfect sense for Vista Equity to acquire you guys
for you know 960 million dollar offer which is a multiple they tend to like because of some things that i saw happen at infusionsoft like icon being canceled and some other stuff and you did clay what you always do which was on a random linkedin post that had tagged you you gave a response you're out there you're the face so thank you for coming on to talk about the article you bet happy to do it okay so you canceled icon what's going on yeah you bet well i think that i think what you have to understand is where we are in our maturation as a software company
Because the dirty little secret is that most software companies never get profitable. They only focus on top line revenue growth. And as a result, they do some things that make a lot of sense for that stage of the business. We're at a different stage. We've grown to a point where we're not dependent on venture capital. We're not dependent on outside revenues or outside funding sources.
And we've built a profitable growing business that no longer requires that kind of funding. So you have to understand that we're in a little different place, first of all. Second, when you're growing a business, there's a time where you've got to really marshal the fans of your base and you've got to bring everybody together. And there's a lot of cheerleading and rallying that's required. And
Icon was a big part of that. We did that for a decade. And I love Icon. I've always loved Icon. I know you love it. That's why it was so shocking to me. I go, this couldn't have just been Clayt's decision. Well, no, it is. It is my decision along with my team. But here's why.
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Chapter 2: What factors led to the cancellation of the ICON conference?
Well, Salesforce absolutely has a huge app store that a lot of their growth is from. So that carrot now no longer is this for developers. I mean, it's not. I mean, how do you how do you justify all of this kind of going around in your head?
Well, just because there isn't an event doesn't mean there won't be ways for us to grow the ecosystem. We just don't want it to be dependent on that one-time annual event. So I think that some people look at it and say, oh, you're not doing the event, therefore other aspects of what you do are going to go away because they're not at that annual event, which is the focal point of those aspects.
But that's not the case. We'll still stoke the fires in our ecosystem. We'll still do all of those things.
And why not do the conference record the content, which is great in-person content, and use that virtually? I mean, when you tell me the main reason you did it, which I appreciate, by the way, that your budget is coming right out of the small business owner's pocket versus an inbound or Dreamforce where it's a big corporate budget that gets lost in some travel expense somewhere.
I completely get that. But, I mean, there are other ways to do the conference and still give people virtual experience. That wasn't an option for you?
No, it's really not because you still have to put all of that effort and all of the expense into putting on that conference, and you don't have the opportunity to spread it out over the course of the year. So think about it's not just the dollars that they spend to come. It's a one-time pot. Well, that's not really what small businesses need.
We need to help our customers on an ongoing basis, our community, which has been Really growing. You'll see that continue to expand our online community. That was missing for a long time, but over the last few months, we've begun to really build that up. You'll see other virtual regionally to put on more events that are closer to home for individuals.
So it's not like we're cutting the money and then saving it and putting it in our pocket or sending it to our investors or whatever other stories somebody wants to conjure up. It's about creating programs that serve our customers more effectively. One hit wonder, so to speak.
When we talked back in February last year, I said, hey, Clay, what was the decision around, you know, going public versus not going public? You just finished your Everest mission and launched Mars mission, and it's on the wall, that Infusionsoft. And one of the way you responded to that was, Nathan, we raised this capital.
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Chapter 3: What challenges do software companies face in achieving profitability?
You know, now you can kind of go public without going public because there's so much private money out there. Is that still kind of the forecast? You don't need private money anymore, and you're not thinking about an IPO because you have all the liquidity you need?
Well, you know, there's always times where you want more liquidity for different things that you're doing. The key thing is, as a software company grows, again, this is about state. This is about the stage of a software company. And that's why I prefaced everything I'm saying with you got to understand the stage that we're in. A couple of years ago, we made a conscious decision.
It was time for it. And so we did that. And that's over the last two years. We've made that we've made that transition. And I'm going to tell you, Nathan. You will talk to very few software company CEOs who have made this transition. It is a freaking hard thing to do. What is the hardest part? A sole focus of driving top-end revenue growth. And your investors, they want you to do that.
And everybody gets used to that. And yet when you get to a point where you start to approach that $100 million mark, you've got to begin to make an adjustment. We began to make that adjustment a couple of years ago. You know, sometimes that involved decisions with staff. Sometimes that involved strategic decisions in our partner program.
But those are things that you've got to do in order to be a place out there growing and not doing it profitable. It's a very, very small, small percentage that get to a point where they're growing profitably. So. We made that decision. Now, when we made that decision, Nathan, it meant we don't have to go public. We don't have to raise more capital. We don't.
So there may be a reason we want to do it, say, if we're going to acquire a company or if we're going to make a really important product investment in a in an upcoming year or something where we say, you know, we want to raise more capital to do that. But I'm you know, I'm really happy and pleased to tell you we don't have to raise more money.
We're going to raise more money in terms of an IPO or in terms of public money or private money if we want to, because we have strategic things we're trying to do that help drive the mission of the company.
So you're cash flow positive as of today?
Correct.
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Chapter 4: How does Infusionsoft plan to serve small businesses year-round?
Great.
So we're always talking about different. I mean, there's always different things in the works in terms of opportunities to acquire in about one out of 50 workouts.
So, yeah, I want to also give you a chance to address this because it's it's it's more personal to you. And I want to give you a chance to give you a microphone for it. People told me and I unfortunately can't say who, but sources very close to the company. Ex-employees have said when they brought in the CRO. Keith's driving the business.
Clayt is doing what Clayt does best, which is the front face. Do the podcast interview, do the stage, do the interview. Is that the case?
First of all, it's Terry, who's our chief operating officer, not Keith, who's the chief revenue officer. So what they were probably the wires got crossed a little bit. What they're probably saying is Terry, as the chief operating officer, is really driving the day to day of the business. And that's absolutely true. A year ago, I took my role and I broke it into two pieces and I took the public.
I took the more public facing part of CEO and gave him the more internal part of it as CEO. But Terry and I are on the same page. We work together constantly. Terry is a fantastic leader who knows how to drive business, small business software companies at scale. And I love what we're doing. I couldn't be more excited about it. So, no, I'm very involved.
I'm sitting here in my office at Infusionsoft talking to you. I'm also not totally involved in every day-to-day decision like I once was. You're not going to find CEOs of large companies that do that. They're wise and they hire great people and they empower them to go do what you've hired them to do.
And then the CEO takes a step back and does the leadership work on the outside that needs to be done. And I'm having a blast doing that.
Clay, last question. Robert Smith calls you up from Vista and says, Clay, listen, perfect bolt on to Marketo. Let's do a deal. 900 million bucks. You say no.
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