SaaS Interviews with CEOs, Startups, Founders
1108 Minneapolis Sales Tech: "We're past $30m in ARR, will raise this year"
06 Aug 2018
Chapter 1: What inspired Orrin to launch Modus and how did it start?
Relax, believe in yourself. He launched the company back in 2015, raised capital around the same time as they've scaled. Again, focused on helping you jump in, analyze the data, especially on the sales side of things. They've got multiple different business models. We talked mainly today about the PeerPlay SaaS one, which has super healthy economics.
They're serving over 130 logos, over 80,000 seats at 35 bucks a seat. Just that stream north of 2.8%. million a month, growing over 40% year over year, less than 10% logo churn annually with their team of 24 folks out there in Minneapolis. 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.
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Chapter 2: What business model does Modus primarily operate under?
are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Oren Broberg, and he's a serial entrepreneur passionate about applying technology to helping salespeople be more successful and engaged with their customers.
Chapter 3: How many customers and seats does Modus currently serve?
His current role leading Modus, a B2B sales enablement technology, builds on his professional history in sales leadership, learning, and recruiting software. He describes himself as collaborative, focused, and driven. Oren, are you ready to take us to the top?
Of course.
All right. So quickly, distinction is good. Is Modus your baby? You're the founder or you are brought in as the CEO? I'm a co-founder. Okay, good. You're a co-founder. When did the company launch?
Well, the company launched officially in July of 2013, although the product, our core product app, Data Room, started within a media production house a couple years before that.
Interesting. Okay, so I want to quickly understand what the company does and what your revenue model is. Why don't we start there?
Well, we're a B2B sales software enablement company. We are a subscription-based, or you could say it's a horizontal app, From the pricing standpoint, we have professional services that we add to the product to make it more configurable for our larger enterprise clients.
So if you've been to our website, you know that we work with large global manufacturers, and everybody has sort of their unique little twist on how they want to execute their sales enablement strategy.
Yep. So just to be clear, can we think of this almost like a big storage container for all the PowerPoints and all the sales material, whatever the location is, the places, whoever the sales rep is, and they can essentially quickly search this data room you set up for them for the sales piece of material they need on the spot in the moment?
Yeah, that's accurate. That's sort of a, we call it the table stakes for companies like ours in this space. It would be like a level one type of application for our platform. There's other levels that make it more interactive. We integrate. The real power is when we integrate with existing systems. So we're really part of a marketing technology stack.
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Chapter 4: What funding strategies did Modus initially use?
That's all we get into a little confidential stuff.
Yeah, that's okay. Let me ask it differently just to understand how you manage money. So how quickly do you like to recover your capital once you put it out? What's your payback period on these new accounts? Or is there a number you like to optimize for?
Less than 12 months.
Less than 12. Okay, great. And you're hitting that or that's your goal?
We're hitting that.
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Chapter 5: How much capital did Modus raise and what are the growth plans?
Okay, good. Took us a while to get there though. Why? It took us a while to get there. Of course, when you're expanding sales and marketing, I'm going to get to your profitability is going to take a dip for a while. And you're going to take about 12 months to recover.
Yep. Now if your average deal size is a 400 seats at 35 bucks a pop, right? That's like 14 grand a month or 168 a year. So if your payback's less than 12 months, you're spending less than 160 grand to acquire these customers. That's fair to say, right? Okay.
And, and walk me through, I mean, are you doing any direct paid stuff or is it really you just let your inside sales team close deals come into you naturally for through organic channels?
It's a real blend. Um, we have inside outside salespeople.
So if you're wondering where our leads come from, most of our leads come from, uh, going to trade shows and making appointments ahead of time and walking the floors. We are getting good inbound leads. Um, but that's not enough to grow.
Yep. And then, and then help me understand with less than 10% logo churn and your gross margin and everything that's just shared with me, 120 grand, especially when first year revenue on a 400 seat deal could be 160 grand, 120 grand and LTV seems really, really low. Am I missing something math wise there?
Let me see if I can explain this. Um, I can't really explain that right now off the top of my head. Let's move on to the next one.
Okay. Is that because it's something you don't want to talk about or it's just because it's too complex to talk about in a simple way?
Actually, I haven't thought it through that way, to be honest with you.
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