SaaS Interviews with CEOs, Startups, Founders
1340 She Helps Raytheon with Procurement, Passes $1m in ARR with eye on $5m
26 Mar 2019
Chapter 1: What is the main topic discussed in this episode?
Hello, everyone.
Chapter 2: Who is Nicole Verkindt and what does she do?
My guest today is Nicole Verken. She's the founder and CEO of a Canadian technology company called OMX. Previously, she led a high-tech manufacturing business selling to governments around the world. Nicole is on the board of the Canadian Crown Corporation that performs government-to-government contracts between Canada and other countries around the world.
She's a dragon on CBC's next-gen Dragon's Den, which is dedicated to early-stage technology businesses, and joined Gimlet's media show, The Pitch, as the fourth investor in the 2018 season. Nicole, are you ready to take us to the top? I am. All right, good.
So first question first, you have your hand in a lot of media related stuff with your show, with Gimlet's thing, but you're also kind of running your own company. They have to compete from a priority perspective, or if not, how do they feed each other? Yeah, they definitely compete. That is the constant battle is trying to balance those two things.
But with OMX, we sell to government, but mostly big industrial companies, traditional corporations. So the work I do, I'm also on the
board of the canadian chamber of commerce as well so that kind of stuff is really good because we do get we do position ourselves as thought leaders in the space of digitizing traditional businesses and uh it does help our business and it's really good from a from a positioning perspective so give us kind of give us a customer example of what omx you know maybe who you sell to raytheon general dynamics etc walk me through how they use you guys
Yeah. So we do a lot of work in what I call the regulated market. So energy, infrastructure, mining, aerospace defense. And they essentially use us to it's basically CRM for supply chain. And then it's Expedia for supply chain opportunities, so B2B procurement opportunities.
So we aggregate data from SAP, from RFQ to Go, from Bravo Solutions, Jagger, the largest e-procurement solutions, plus our own exclusive ones, and send them out to all the different companies that match by essentially building APIs to a whole bunch of different solutions and different data feeds.
So I would say it's CRM for supply chain, it's Expedia for supply chain, and then one of the big innovative things we do is actually rolling up all the socioeconomic impact data. So we're competing against the KP&Ds of the world who will traditionally manually go out and do this half a million dollar study for a company to say, This is the job creation and the impacts you're having.
And it sounds like a weird esoteric thing that you would need to the average person. But all the companies in our sectors are required to do this reporting back to government. And they have to do it when they go out to bid for new projects, like a new major infrastructure project, for instance. So we're digitizing that whole process. The CRM aspect makes me think pure play SaaS.
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Chapter 3: How does OMX support government and industrial companies?
And then let's just focus. We'll focus a bit here on the SaaS side of things, and then we'll shift to kind of the media stuff you're working on. So 2012, you launched OMX, a big portion. Actually, all of it is SaaS. There's a marketplace model on top of it. Give me a general sense. These companies, I'm sure you have many different cohorts, but on average, what's a customer paying you per month?
Um, the buy side on average is paying about 3,500, not on average. The low end is about 3,500 a month and that's in Canadian dollars. So it'd be more in us. Um, and then on the sell side, it's about 150. Okay. Okay. 150 bucks. So very much you're, you're representing buy side mostly. That's where most of the revenue is coming from. That's right. About 90%. Yep. Okay, great.
And, and bootstrapped or have you raised capital? We just raised a small amount of capital, about a million dollars from friends and family. Um, And we got some government loans that we've paid back. Okay. Once you're on kind of the raised train, it's a whole different ballgame. So why give up, even if it's a little bit, why give up even a little bit of control? Why not keep bootstrapping?
Yeah, exactly. I mean, we thought we were getting on the raised train. I went out to do a significant VC raise. And I just had a lot of challenges with that process.
Chapter 4: What innovative features does OMX provide for supply chain management?
And I mean, you and I spoke earlier about how much I feel the community has changed, especially in Canada in the last eight years. But we had, there wasn't really any early stage venture capital when we were going out.
And so I don't feel that we got on the race train and we tried to, and we did it and we stumbled and we took a little bit of friends and family money and in the grand scheme of things, a million, even that million, we paid back some of it. Was it debt or equity? It was equity, but I'm just saying some of it was structured as convertible that we were able to pay back at our options.
So I feel that we didn't actually get on the race train because I still have control just over 50%. Yep. Did you have co-founders in the business? No, but our CTO came on very early on and he was equipping the company. I see. Okay, great. And what's the team size today? There's about 20 people, and then a group of contractors that work in Europe, India, New York, and Ottawa.
Those full-time folks, are they mainly there in Canada and Toronto? No. Yeah, the 20 that are full-time are all in our office in Toronto. Okay, great. So you're building this tool, you're building this tool 2012. Now, did it take a lot of R&D to get to kind of your first sale? And if so, how many years did you have to go with kind of no revenue?
In other words, how long were you supporting it with no revenue before you closed the deal? That's the thing, right? We went out to raise some real money and we weren't able to. So I said, you know what? We need to release a feature that we can sell immediately. And we were generating revenue within a few months after release. Okay, 2012, that's great.
And then fast forward today, so six years later, how many customers are you working with? Really, let's just focus on buy side. On the buy side, there's about sort of 40 that are significant, 30, 40. So is this, I mean, this is at the price point you're at and at 40, that screams to me kind of enterprise sales model. Is that accurate? You have field reps inside sales team?
Yeah, and some of our deals are a lot bigger than the three grand a month that I indicated. But yeah, the sales cycles are two plus years, which is, you know, that's the big challenge there is that you have to be pricing these things because they are complex sales. They have to be bigger deals.
3,000 in Canadian is about 2,600 USD in terms of kind of your, you said it was a lower end average revenue per customer. That's where it starts. Yeah, it starts at 3,500 a month. And we say that's per program per country. So- If we get a big enterprise client, obviously they're managing supplier data across multiple major complex programs. So if I'm an infrastructure company, one road program.
So I'm basically managing all this data. I'm producing all this real-time reporting on what's going on in the status and all that kind of thing. So it depends on... You know, usually they'll start with one as a beta and then and then grow from there. But the other thing that we had to learn was we were very scared of the word services.
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Chapter 5: How has OMX's SaaS model evolved since its launch?
Nicole, four times seven is 28. Yeah. Is that, did I understand? I want to make sure I understood you correctly. Is that right? Yeah. I just don't know where you got the four from, but yeah. You said you had four, you said you had four inside sales reps. I just said that today. Yeah.
You just, you just, you just said you had four people inside that work these leads that go to the trade shows that close the sales. Yeah. But is that accurate? I might've misheard you. Is that accurate? Yeah, there'd be four people that are definitely, that are involved, yeah. Okay, let's shift away from SaaS for a second. You're sitting on a company that's growing. You own 50% of it.
It's basically bootstrapped. Why now go and say, okay, I'm gonna do Dragon's Den and I'm gonna do the pitch. I'm gonna do these other things. I just really enjoy it. I really, really like it. So Dragon's Den was a two day commitment. It wasn't a big deal, but everyone seems to have made it into one.
So I sat there for two days as somebody who had been in on that side of the equation pitching only three or four years prior. So it was really almost surreal. And I enjoyed just giving them advice on the really early days. And so having them try to think through, get to sales faster, fail fast, all those things that we all know all about now. But I really, really enjoyed it.
It was a really fun process. And then the pitch is the same thing. It's like four days a year. And I love meeting these different startups. And they also really helped me, too, to really think through our model and get some really crazy new ideas sometimes.
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Chapter 6: What challenges did Nicole face while raising capital?
I actually... have received some really neat, innovative ideas on how to improve our platform. Pull one out of your head. I'm just curious. Name one for me. That's top of mind. Well, we had somebody pitch us on Gimlet media who's doing, um, one hour delivery.
And so I thought, you know, why couldn't you, it might not be one hour, but in the B2B space, why couldn't you add a widget that reaches into Uber or some of these other platforms and sort of guarantee some kind of faster delivery for a premium within an RFP? Like why can't you be leveraging what's going on in consumer?
I know it takes way longer to have it trickle down into B2B, but you get lots of neat ideas, lots of stuff in AI, lots of stuff in managing big data, that kind of stuff. Yep. Are you raising capital right now for the software, for OMX? No, no. Are you in acquisition talks with anyone? Are you interested in selling? No.
No, you just want to keep it growing, hit the 5 million mark somewhere next year and just keep scaling. Yeah, we're having a lot of fun too. That's good. All right, Nicole, let's wrap up with the famous five. Number one, what's your favorite business book? Favorite business book? Oh my God. I just read Shoe Dog and I loved it. I don't know if that's my favorite of all time, but I loved it.
Number two, is there a CEO you're following or studying right now? Oh God. I've always loved Steve Jobs. Number four, what's your favorite online tool for building a business? Wait, you missed number three. Sorry. That was number three. Favorite online tool? HubSpot. All right. And number four, how many hours of sleep are you getting every night? How many hours of sleep?
Oh God, between five and seven. Okay, we'll say maybe six on average. And what's your situation? Married, single, kiddos? In a relationship, not married or kids. Okay, that's good. So you have a little bit more freedom than three young ones running around the house, right? Yeah. Good. And do you mind me asking? Go ahead. I have a dog. You have a dog. So a half kid. We'll call it a half kid.
All right, Nicole, last question here. What do you wish your 20-year-old self knew? Oh God, that it takes a long time. Guys, it takes a long time. Be patient. She launched OMX back in 2011, sorry, 2014, really as a tool. 2011. Oh, it was 2011. Okay, good. 2011, 2012, right? First customer in 2012. Get now about 40 customers.
She's really helping on the buy side, its procurement process, specifically with things that are, you know, the Raytheons of the world, the general dynamics of the world. She's helping also then on the data side, doing customer reports for these folks, serving currently about 40 customers that pay a minimum of call it 2,600 USD per month.
So well north of a hundred grand per month in revenue, hoping to scale to about 5 million in terms of an AR run rate in the next year or so. From 2017 to 2018 grew about 40% year over year. She's got a team of 20 folks up there in Canada. I'll tell you what, it's really booming up there. Nicole, thank you for taking us to the top. Thanks.
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