SaaS Interviews with CEOs, Startups, Founders
1189 Sococo is a Visual Slack doing $240k MRR, 60% yoy Growth
26 Oct 2018
Chapter 1: What is SoCoCo and how does it help distributed teams?
He's been a hired gun for some of these family offices, private equity firms got involved with Sokoko many years ago via a family office or private equity investment. The company, you know, company raised caught 10 million total all in was launched in 2008, helping distributed teams communicate in a way that really not many other people are doing very visual either.
Obviously audio features as well. Um, Today, there are 30 people based between Provo, Oregon, Boston, Europe, and then the rest is a distributed team.
They're serving 300 enterprise customers, paying on average $750 a month, so doing about $220,000, call it, around there per month in revenue, hoping to break $1 million a month by the end of 2019 and hopefully $3 million in AR by the end here of 2018. They're currently growing at about 60% year-over-year, so healthy growth, 92% logo and revenue retention.
Again, CAC payback period about 13 months. 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.
Chapter 2: How does SoCoCo differentiate itself from Slack?
We went from a couple 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. Hello, everybody. My guest today is Mark Kirschbaum.
Chapter 3: What is the pricing model for SoCoCo and how do customers typically engage?
He's a business leader, strategic advisor, and board member to companies in healthcare, software, and information technology. He's retained by investors, founders, and CEOs to build, grow, and turn businesses around that will deliver sustainable and measurable results for investors, employees, and customers. He's been serving as the CEO of his current company, Sokoko, since August 2017.
Mark, are you ready to take us to the top?
I'm ready, Nathan. Good to see you.
All right. So good to see you as well. Let's jump right in here. So tell us first what the product does and how do you make money? Is it pure play SaaS?
Yeah, sure it is. And SoCoco is the online workplace where distributed teams come to work together each day side by side. So consider it a virtual office for distributed teams. And it is a SaaS model on a subscription basis for users that are in the space during a given month for our customers. And it's paid for on a per user basis.
So Mark, people, when they hear the place to work for distributed teams, they're going to think Slack. They're going to think these kinds of tools. Where are you different?
Absolutely, so SoCoCo is actually not just a communication platform with integrated audio video and messaging, which by the way, integrates with Slack and other audio video tools.
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Chapter 4: What are the current growth metrics for SoCoCo?
We are not a pure audio video communication play. What we are is the place, we are the virtual office. So I wish I could share my screen with you and maybe that's an option, but you could see the SoCoCo team actually at work. So I was in a meeting this morning with a colleague in the marketing team who's in London, one who's in Boston,
me sitting here in our Provo, Utah office, and we were all able to come together in one space and be visible to the entire organization. So when you're in SoCoCo and you're seeing the map, it's actually addictive to our users when they see these blinking avatars in a space that is actually the communication of someone speaking to another. I can see that someone's sharing their screen,
I know whether it's okay, and depending on our company protocol, to walk into a space where someone might be or a group of people might be. And you think of all that time that's wasted, Nathan, to start a meeting. Hey, do you know where Nathan is? Is he coming? Oh, I don't know. Maybe he's in another meeting still.
But when you're looking at the Sokoko map and you can see that the leader of the meeting has popped into a room with the sound of the pop, all of a sudden the 20 other people from wherever they are in the world know that that meeting is ready to start and there's absolutely zero wasted time.
This feels like a VR play 10 years from now. We'll jump into that more in a second. 100%, 100%. But first, take me back to pricing real quick. So people are paying on a per seat model per month. What's the average when a new logo signs up?
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Chapter 5: How does the CEO describe the transition of leadership at SoCoCo?
How many seats are they buying on average? And what's that ARPU look like?
Sure. From a land and expand approach, if it's a team, that is getting on board, then you're looking at 50 to 100 users initially in a pilot. And that has grown for our customers into the hundreds. And we actually have customers in the thousands of users who actually are distributed teams around the world who come to work in SoCoCo.
What's the seed price there, Mark?
It's $15 on a per user basis. And then obviously there's an annual discount and a volume discount. Got it.
So if the average start is 50 people paying 15, again, 50 seats paying 15 bucks a seat, it's about 750 bucks a month for a new team joining you.
Correct. But with an annual subscription, it's less.
That's good. Okay, that's good. So what do you do? Like a two months free on an annual subscription, something like that?
So we're doing a one month free trial, a free to paid model. And so we will get them started in this space for 30 days.
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Chapter 6: What challenges did SoCoCo face before the leadership change?
And we'll have our customer success team working with them to make sure that they're using SoCoco appropriately. Could you imagine if they're not understanding how to effectively use the platform, then they might not see and derive enough of the benefit from it. So we have a team dedicated to that.
First year ACB though, it sounds like it's still though healthy north of eight, nine grand. That's correct. Yeah.
Okay.
So why do you like this hired gun role, right? You're, you put in by investors, like why not go back out and do your own thing again?
Well, so in a way, you know, that's kind of what's happened with Sokoko, right? Is I, I was on the board and I was, you know, evaluating the opportunity for Sokoko going forward.
How'd you get on the board? Were you an investor?
So I represent the lead investor as one of my clients, who's the lead investor in Sokoko and has continued to support the company financially.
Is it an EIR thing or VCs and people pay people like you to take board seats?
So it's more I'm working mostly with family offices and private equity firms where they have direct investments in operating companies. And they've asked me to come in and help combination of evaluate, guide, mentor, coach across the board and the leadership to help derive value.
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Chapter 7: What are the future goals and funding plans for SoCoCo?
No, like, you must be firing on all three cylinders. Yeah. Thanks for that. That reputation. Yeah.
Well, I was gonna say, you seem like a nice guy here. You know, you're beautiful, mountainous background, serendipitous. And you say fire people, fire them, fire. No, I'm just kidding.
The last thing, but philosophically, just on that note, Nathan, let me say, the first thing I do in organizations coming in and saying, were people given the tools and training that they needed to succeed? And were they given the right management and guidance?
Yeah.
And in this situation with Syscoco specifically, I believe that when you look at our intellectual property, our unique product positioning with the Syscoco map, which is much more than an asynchronous communication tool and the amazing logos and customers that have stuck with us as we have evolved the product into a more stable platform. It got me to step in and say, you know what?
This is really, really worth the investment of my time. And we have now built out a really strong management team. How many people on the team full time? So full-time we have close to 30 people. Okay.
Between which offices?
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Chapter 8: What personal insights does the CEO share about leadership and patience?
Well, we, we, you know, we, we practice what we preach. So we've got a distributed team. Um, we've got a core team of people here in Provo, Utah, in Eugene, Oregon, um, some people in the Boston area, a couple of people in Europe and the rest are, are distributed.
Okay. And funding wise, how much has the company raised to date?
So the company has been around actually for 10 years and the patents go back to that original filing. So 2008? Yep. Yep. Since 2008 and the company has evolved. So, you know, I more look at, you know, where we're going and where the growth is now, because it really is frankly irrelevant as to how much money historically has gone into the company.
I'm curious though, so you mentioned you represented some of these firms though, like was this, they put in 10 million in a series A, that's when you took a board seat, like before you came in and sort of switching everything up and optimizing, how much had the company raised?
Yeah. So since 2015, 2015 or so, there's been approximately, you know, five to $7 million that has gone into money. And the three years prior to that, there was probably about the same amount of money.
So call it 10 to 14 million and all in something like that.
Yeah. In the current iteration of Sokoko.
Yep. And so what happened? I mean, you're on the board and then there was some change where you said, I got to come in and run this thing. Obviously, there's a current CEO. How did that person go in or out? What was the feeling there?
Yeah, so there was a transition in June. The prior CEO did a great job of bringing our platform up to date from an audio-video perspective. But traditionally, it was a proprietary platform because when you think about it, if you go back to 2008, Sokoko predates the prevalence of audio-video and chat. So it was a completely proprietary platform.
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