SaaS Interviews with CEOs, Startups, Founders
1237 Why He Gave Up $5m Agency for Customer Data SaaS Play
13 Dec 2018
Chapter 1: What is the background of SaleCycle and its founder?
Launched in 2010, now 180 people all over the place. Again, really focused right now on some specific data points, card abandonment, things like that. But their breadth and their expanse of their data is growing fast. It's powering a much smarter engine. He came from an agency background, grew that to about five million bucks in annual revenue before branched off and did software exclusively.
It's bootstrapped, which I love. They're serving 500 customers, paying on average five grand a month. So doing about 2.5 million per month right now. That's up from about 1.7 just 13 months ago. So 30% year-over-year growth. Really healthy revenue retention year-over-year at 101%. CAC to LTV, super healthy as well.
Chapter 2: How did the transition from agency to SaaS occur?
They get paid back in under six 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. 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.
Chapter 3: What are the revenue metrics for SaleCycle?
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 this morning is Dominic Edmonds.
He's the founder and CEO of a company called Sale Cycle and is focused on utilizing customer data to drive conversions and ROI through behavioral marketing. Dominic, are you ready to take us to the top? Hell yeah. All right. This is a tough, tough space. How is sales cycle winning?
Yeah, we're winning pretty well. I think that helps being one of the early entrants to the space, which means that we've been able to develop our offering together with the view of the market as it's grown itself. So yeah, we went through a blend of our technology features together with service as well. We don't shy away from giving people the best in class.
What percentage of your revenue over the past 12 months was from professional services versus recurring SaaS?
Off the top of my head, you're going to say it's relatively small, given that the professional SaaS piece is what we build on in terms of scalability. But my background in agency means that I understand that when you talk about building relationships, rather than investing in hands-on client support, it allows you for cross-sell, up-sell opportunities. So it's all about building a relationship.
Having somebody who can pick up the phone is really important to us.
So when you say relatively small, I mean, are we talking less than 10% as professional service? Yeah, around about that. Okay. All right. And then tell me about the rest of your model. Is the rest like a pure play SaaS model?
Yeah, absolutely. Yes. So we've been through a number of different pricing models over the eight years it existed. We started out in a pure performance-based pricing model, which was really cool because it allows you to really get ballsy with the market and really talk about what you want to deliver.
But as you mature, you understand that actually you need to build something a little more predictable for those tough CFOs out there.
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Chapter 4: How does SaleCycle retain its customers effectively?
So when I say flat fees, those flat fees means instead of a customer who may go through a period where they're in sale on their, let's say it's a fashion retailer and they're paying us $20,000 a month. And when they're not in sale, they could be paying effectively the equivalent of an average billing. So a flat fee is between those, meaning that over the year, nobody loses out.
I see. Okay. And then generally, just so we can better understand your customers, average contract size in year one is what? Are we talking 10 grand, a million, 100,000?
We do have variance because obviously we work in different sectors as well. On average, though. Yeah, on average, you'd be looking at a monthly MRR, which is technically what we live in. We'd be talking around about $5,000 a month.
Okay, now you launched, let's go back and learn more about your story here. Launched in 2009. Where was your head at at that time? Were you struggling, back against the wall, had to make this work? Did you just sell your last company? Where were you at?
So I came out of agency. So strictly speaking, we started in 2010, February 2010.
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Chapter 5: What is the significance of customer data in behavioral marketing?
February 5th, actually, just passed our eighth birthday. But I came out of an agency role where it was becoming clear to me that clients were approaching us to address abandonment issues on their side because they would list them as they had a high abandonment rate. They didn't. They had an average abandonment rate.
The challenge you faced, Mr. Klein, is the same challenge your competitors are facing. And that really was a crystallization behind Sales cycle could be a singular enterprise level product which can address this issue for a number of customers.
Okay, interesting. So you, and give me a sense of the size of the agency before you started thinking about building software. I mean, were you doing a million bucks a year, a hundred grand?
So we would be doing around five million a year.
Five million. Okay, so it takes some energy and focus to basically slowly shut that down while you ramp SaaS or are they both running in parallel right now?
So I've stepped away from that.
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Chapter 6: How does SaleCycle handle customer acquisition costs?
That business has gone from strength to strength. The interesting thing is the shareholders in that agency are the same shareholders I have in sales cycle, which means my relationship with them has continued. But there's certainly a 12-month transition period where I was wearing both hats.
Interesting. Now, when you talk about shareholders, I start wondering about investment. Have you bootstrapped this thing? Or if not, how much have you raised?
I think we're the definition of bootstrapped, certainly in terms of US terms. So we raised Ā£80,000 of investment to build this.
And nothing on the agency side? You mentioned you have shareholders there. Was that totally bootstrapped as well? Yes, totally bootstrapped. Okay, got it.
No institutional money to date.
That's great. So I love that. And you're based, I think you told me earlier, you're based in Leesburg, Virginia, my hometown, which is great. Where are you based there? What part of the city? In Langsang. Ah, very good. That's a good spot to be in. And what's the team size today?
Our team size in the US is 35, but globally 180.
Okay, and walk me through the breakdown. So where else do you have offices and what do they do?
So offices currently, we still have our headquarters based out the northeast of England. We then have one in downtown Paris, and we've got one in Singapore together with here in the U.S. as well.
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Chapter 7: What are the challenges and strategies regarding churn?
In terms of what they do, I suppose we split the business into regions, as you might expect. So we have the Americas office based here in the U.S., which allows us to win customers, manage those customers, support them, implement them locally. We do exactly the same thing in Paris, exactly the same thing in Singapore, exactly the same thing in the UK.
However, we also have a central division, as it's referred to, which is core technology functions, finance roles like myself, strategic roles, which effectively all of the regions benefit from.
Interesting. Now, you're one of the founders, correct? I'm the founder, yeah. Do you have any other co-founders or just you?
It's just me.
How have you kept yourself sane? Who do you go talk to when you're having a bad day?
My wife, the cats, the children. Realistically, though, I can speak to myself because they have a strong track record themselves of entrepreneurship and investment and seeing journeys like this through to multiple points of exit. So, no, I do rely on those relationships.
I, like you guys, have never been able to find a project management tool that I love. You know, my blog writers like one thing, my developers like one thing, my designers like a different thing, and it's so difficult to get them all on the same page.
So when I had Roy Mann, the CEO of monday.com on the show, I was pleasantly surprised at what he told me regarding his traction and his growth, and I said, maybe I should try this thing. So we now use monday.com. I started with the magazine. We've launched the Latka magazine, solely dedicated to SaaS founders. It's the only magazine focused on SaaS.
And my content writers and my designers worked beautifully together on that project using monday.com for project management. I then said, well, let me give it a real test. Let me see if I can use this for sprints and product cycles with my developers using it as well. And so we did that for Git Latka on our last release. It worked like a charm.
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