SaaS Interviews with CEOs, Startups, Founders
1398 How Limelight Is Shifting to More SaaS Revenue, $5m Currently
23 May 2019
Chapter 1: What is the background of Limelight Health and its founders?
I've had the fortune of meeting a lot of you guys at B2B SaaS conferences all around the world. And one of my favorites is coming up in New York City, June 4th to 5th. That is SaaStock East Coast. Now, it's my favorite and I can say that because I'm getting asked to speak at almost every major SaaS conference because my data set is so large. Nobody has anything like it.
And the reason SaaS Stock is my favorite is because it's the most curated. It's a large group of extremely intelligent individuals.
In fact, many CEOs I've had on the show will be at SaaS Stock East Coast on June 4th through 5th in New York, including many you guys have heard of, like Rajit Thomas, CEO and founder of Sprinklr, Daniel, CEO of Greenhouse, and Stacey Bishop, partner at Scale Venture Partners. So I hope to see you guys there. If you decide to come,
Chapter 2: How does Limelight Health's technology aim to transform the insurance industry?
I will get coffee with you, and I can get you guys a great discount, I think, as well. You can check it out at this link, NathanLatka.com forward slash SaaS Stock East, SaaS, S-A-A-S-T-O-C-K East, and then use code LATKA-20 to get a 20% discount. That's L-A-T-K-A-20, L-A-T-K-A-20. And then shoot me a text if you decide to come so we can get coffee, 703-431-2709. I hope to see you guys there.
Focus on relationships that do pay off in the long run. Founded Limelight back a couple years ago, call it 2014, now has over 300 customers paying on average $1,400 per month, so say $420,000 per month in pure SaaS revenue. That's $5 million per year. That's about 40% of their total revenue. revenue. They raised $11 million to drive that growth. Really incredible growth year over year so far.
Super sticky. Less than 3% gross logo churn per year. Payback periods less than 12 months with a team of 100 people based off all kinds of remote locations all around the place. Again, trying to make insurance and SureTech specifically much easier so that these benefits can be quoted, sold, and renewed more efficiently.
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. Hello, everyone. My guest today is Jason Andrew. He has recognized the early trend for InsurTech back in 2013.
He co-founded Limelight Health to deliver better data integration and sales efficiency for insurance carriers, PEOs, brokers, and others in the employee benefits ecosystem. Limelight's award-winning technology quote pad aims to transform the way health insurance and employee benefits are quoted, sold, and renewed. Jason, are you ready to take us to the top?
Absolutely.
Thanks for taking the time. You bet. All right. What's the business model on this thing? Is it pure play SaaS?
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Chapter 3: What are the revenue streams of Limelight Health?
Okay. Got it. And those enterprise deployments, how are they different than just like, when would a sole broker sign up versus a whole enterprise?
So we started actually selling directly to independent regional brokers and so forth. And that's a part of our business that we still have folks that are using. They sign up. We've got a smaller team that is working with them. So we have them sign up on a pretty much ongoing basis, kind of off the shelf. But most of our focus is on our enterprise business.
And those are longer sales cycles and somewhere between 12 and 16 months in terms of sales cycle.
Help me understand how you're doing this. So team kind of makeup today. What size is the team and how many focused on inside sales?
Only two are on inside sales and everybody else focuses on enterprise.
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Chapter 4: How has Limelight Health achieved its growth in SaaS revenue?
And we're scaling that team. We'll be building more. So we've got partners that help out, whether that's someone like a Salesforce or sales integrators, folks that are like Deloitte, Ernst & Young, and so forth. So we've got a whole bunch of partners that work with us. But our enterprise sales team is where we're building that out.
And what's total team size look like?
We've got 10 people on the sales team, two on inside sales, the rest are all on enterprise.
Sorry, like the total team, including engineering, everything. Oh, we've got about a hundred people today. Okay. A hundred folks call it 10 to 12 on sales, inside sales, something like that. And put all this on a timeline for me. When did you launch the company?
We started in February of 2014. So we're four years into it. Bootstrapped or have you raised? We've done three rounds of funding and we're getting ready to raise another round. So we, uh, we did a series B about 7 million last, uh, last year towards the beginning of 2017.
And how much in the company to date so far?
Uh, just shy of 11 million.
11. Is that all equity or was there debt built in?
Uh, we did about one and a half in, in, uh, in, in a debt round, sorry, two, two million in a debt round in 2015. The rest is equity.
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Chapter 5: What is the current customer base and pricing model for Limelight Health?
Okay. Where are you generally right now in terms of ARR run rate?
Uh, right now with all the bookings for ARR, uh, sorry, with MRR, we're doing about 420,000 a month.
Okay. And just to be clear, that's just the 40% that is pure SAS.
Uh, that's correct.
Okay. Got it. Very cool. How do you layer on the professional services side? Where do you layer that on?
What do you mean in terms of where you later on?
So is it an onboarding fee, right? That's, that's, you know, 50% of the first year ACB and you use that to drive, you know, stickiness and retention.
Yeah, well, you know, look, the insurance industry has got all kinds of legacy systems and all kinds of points where you need to connect to. So in every implementation, we're either connecting to or via API or we're connecting into an existing system or we're doing a configuration to a Salesforce or an existing player. So we've done a lot of those type of connections.
So that's some of it is the setup and the configuration of our product.
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Chapter 6: What challenges does Limelight Health face in the insurance technology space?
Again, if you sign one of these guys up paying you 4,200 bucks per month, how quickly do you like to get paid back? Like under 12 months, 24 months, six months.
Yeah. With the regionals and independents, it's definitely within 12 months.
12 months. Do you require upfront payment or no?
On some of our customers, it depends. On the enterprise deals, yes. On the smaller ones, we have some that prepay two years. Most of our contracts overall are three-year contracts on the enterprise side. And on just the broker regional side, they're 12 or 24 months. And some of those prepay for a couple of years.
Churn's critical in this business. What's your churn and how do you think about it?
Really low. It's pretty sticky. We build on both sides. So it's probably around less than 3% on the brokerage side. We have some churn there, but on the really smaller deals. On the enterprise side, we've had zero churn today. And again, we've been in production for about two and a half years. So we'll see how that trends. But it's a pretty sticky business.
Jason, that's less than 3% of what? Is that gross revenue or gross logo?
Yeah, of a logo. And again, so if you think about 300 brokers or whatnot, we might lose 15 a year, but we're going to gain a whole bunch more. Sure. And those are... So in terms of actual bigger customer logos, we haven't lost any. In terms of the regional independent brokers, we have some that come and go in that sense. But it's a really small portion of our revenue.
Yep. So just to be clear, it's 3% gross logo churn per month or per year?
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