SaaS Interviews with CEOs, Startups, Founders
1405 How ClickDimensions is using Microsoft Ecosytem To Drive to $40m in ARR
30 May 2019
Chapter 1: What is the main topic discussed in this episode?
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,
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.
In May 2016, Excel KKR purchased and took private click dimensions. Mike then came in as CEO. He says he wishes he would just start earlier, reflecting every single week to really systematize any learnings or mistakes from that week. Today, they're scaling quickly, over 3,600 paying customers, about to break 40 million bucks in ARR, growing 36% year over year between 2017 and 2018. 18.
15% logo churn per year assumes essentially a lifetime value of about six years. Healthy LTV to CAC ratio of seven and payback period less than 12 months there. A team of 190 people based in the US and other remote locations. Company founded in 2010.
Again, really playing in the Microsoft ecosystem, helping over 600 of these kind of agencies, consultants, people on board, folks onto the system at all. And again, our technology is helping them win those deals, paying a 21% kickback on that. 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 Mike Dickerson. He's the Chief Executive Officer of Click Dimensions, the leading marketing automation solution for Microsoft Dynamics 365.
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Chapter 2: How has ClickDimensions scaled to 40 million in ARR?
What is your CAC today? What are you spending to acquire a new customer? Fully weighted. I'll tell you what our LTV to CAC ratio is because I'd rather think about our exact numbers, but we're operating at about a 7X, which is pretty darn good. Yeah, no, that's great. Now, let me ask you a different question that will kind of help me understand about how aggressive you're being.
How aggressive are you being with payback period? Are you happy to wait 24 months or you want to be 12 months or six months or less? Yeah, so, you know, I'm sort of like standard SaaS businesses to be, you know, under 12 months, 12 months or less, if you can do it, we're a good bit less than that.
And, you know, one of the things that's, that's really unique about this channel model that these guys built that would be very hard to replicate and very, if you were looking at a business plan that said, Hey, I'm going to build a business that has 650 active partners. That's how many partners we've done at least one deal with in the past year to build that from scratch would seem, you know,
What does that mean, Mike? Sorry, partners. I thought you had one big one, which was Dynamics. No, there are 7,000 Microsoft Dynamics partners who sell Dynamics, install Dynamics, configure it, migrate data, all of that kind of stuff. So those are essentially our sales force. And of those 650 did at least one deal with us in the last 12 months.
Of those 650, 60% of them have 10 consultants or less. So this is a real long tail phenomenon that these guys built up and would be hard to replicate. What's the kickback there? Are you paying like 30% of ARR or something like that? How do you incentivize these guys? Yeah, so also interesting. Normal SaaS, you know, sort of commissions can range.
And then Microsoft World, 16% to 20% can range up, you know, 40% and higher in other places. But the real beauty of this model was... Let's take a typical deal. Say it's 75 seats of Microsoft Dynamics.
My numbers may be a little bit off, but that might be $120,000 of Microsoft subscriptions, probably $120,000 of implementation fees, and maybe $10,000 of click dimension software on which that partner might make a 21% margin. So what's the deal?
Well, the thing is that $10,000 was the fuel accelerant that helped them win that much larger deal, including the $120,000 of services, which is really their main business. So there's no kickback? No, there is a kickback. It's 21%. But the point is that 21% of $10,000 is... pales in comparison to the fact that they actually won a $250,000 deal.
Yeah, they used your feature set to win the deal in the first place. They used the feature set, yes. But more importantly than that, they used our sell with sales motion. So our sales force is expert in marketing automation, digital marketing, and Microsoft Dynamics. Most of the Dynamics partners are really strong in IT and in implementing CRM. They are not marketing people.
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Chapter 3: What is ClickDimensions and how does it operate within the Microsoft ecosystem?
Yeah, a little less than that. I think we're, I think we'll end up this year just under $11,000 in average revenue per account. Yeah, no, that's great. Now, you know what I'm about to do here? You didn't give me the CAC number earlier, but you told me it was a kind of a seven ratio.
And if you got a six months, six year, sorry, LTV multiplied by that $925 per month price point, kind of back in and assuming you're willing to spend, call it seven or eight grand to acquire these customers on a $70,000 LTV. Is that accurate? Pretty damn close. Where will you spend that money besides incentivizing partners with that 21% fee? Do you do any direct paid stuff or conferences or?
Yeah, we do. But I'll tell you, we put more and more and more, you know, the bulk into the channel. Our sale at the moment really comes, and we win a disproportionate amount when somebody is in the early process of deciding to go to Microsoft Dynamics.
We win a lot more in the front than if somebody's implemented Dynamics and it's, you know, two years after they've been live and they decide they want to upgrade their marketing automation. Yep.
our win rates aren't quite as high there so what we're really doing is trying to help uh our partners drive more new dynamics um activity that pulls us along and so it's a very different model than say what a hub spot or a marketo uh or an act on would do yep now did excel kkr recruit you after they acquired it or were you already at the firm and you said i want to jump in that company after you buy it now excel kkr brought me in brought you in and what were you doing before
I was at a New York Stock Exchange company that did collaboration that we had just taken private in 2015. So I did one year after being part of the management team that took that company private and then got the chance to go back to really my roots, which were not only digital marketing, but in the more of the growth phase, you know, venture capital kind of growth phase.
So this has been a lot of fun for me to switch from going with, you know, I had great customers before like Bank of America and Citibank and SAP and Apple to now get back to, you know, regular small businesses that are fighting every day to compete with big brands. And it's, you know, there's definitely more of a personal dimension and a human dimension to the business that I'm in now.
Let's wrap up here quickly.
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Chapter 4: What unique distribution model does ClickDimensions employ?
Team size, how many people? Yeah, so we have just under 200 folks, including full-time contractors. Okay. And we operate, we're in the US in three cities and we're in the Hague outside of Amsterdam. And we're in Tel Aviv where most of our R&D is. And we opened up an office in Christchurch, New Zealand. We do business in 61 different countries right now. Wow, very good, Mike.
All right, let's wrap up here with the famous five. Number one, what's your favorite business book? I think I would say probably good to great. Number two, is there a CEO you're following or studying right now? Satya Nadella. Probably expected there. And that's one for two reasons. Honestly, I love studying CEOs, spend a lot of time studying Jack Welch's, you know, a lot of different folks.
What he's doing, the transformation that he's doing at Microsoft makes what Lou Gerstner did at IBM, you know,
pale in comparison I was gonna say what he did at IBM was pretty amazing so you get the point yeah favorite online tool Evernote number four how many hours of sleep do you get every night sleep yeah I get about get about seven hours that's not bad and what's your situation Mike married single kiddos married with three kids three wow you got a full house and how old are you
I just turned double nickel. What is that, 50? 55. Oh, very good. All right, take us home here. What do you wish your 20-year-old self knew? What I wish my 20-year-old self knew. I think I wish that I knew how powerful it was to take enough time on a regular basis, like weekly, to sit back and, you know, systematically reflect. What did you learn this week? And what are you going to do about it?
And, you know, more specifically, how to, you know, organize that reflection so that you're asking a set of questions and seeing what you learn. The cumulative effect of that is huge. And I wish I'd started doing that 30 years ago. In May 2016, Excel KKR purchased and took private click dimensions. Mike then came in as CEO.
He says he wishes he would just started earlier, reflecting every single week to really systematize any learnings or mistakes from that week. Today, they're scaling quickly, over 3,600 paying customers, about to break 40 million bucks in ARR, growing 36% year over year between 2017 and 2018, 15% Logo churn per year assumes essentially a lifetime value of about six years.
Healthy elevated CAC ratio of seven and payback period less than 12 months there. A team of 190 people based in the U.S. and other remote locations. Company founded in 2010. Again, really playing in the Microsoft ecosystem, helping over 600 of these kind of agencies, consultants, people on board, folks onto the system at all.
And again, our technology is helping them win those deals, paying a 21% kickback on that. Mike, thank you for taking us to the top. Thanks, Nathan.
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