SaaS Interviews with CEOs, Startups, Founders
1517 How $165M ARR DiscoverOrg Sales Operation Works
19 Sep 2019
Chapter 1: How did DiscoverOrg grow from $25M to $165M ARR?
Launched Discover Org back in 2007, grew to about 25 million bucks in ARR in 2014, sold a majority to Carlyle back then, and then, sorry, to TA. And then TA in 2018, they scaled from 25 million bucks in ARR up to 130 million bucks in ARR. TA then brought in Carlyle, sold about 30% of our holdings there.
He's still incentivized, still growing the company, broke down the sales process today as they marched past 165 million bucks in ARR. Hello, everyone. My guest today is Henry Shuck. He's the co-founder and CEO of a company called Discover Org.
He bootstrapped the company to $25 million in ARR, and now three acquisitions later, he's backed by the Carlyle Group and TA Associates at about $165 million in ARR. Henry, are you ready to take us to the top?
Chapter 2: What role did private equity play in DiscoverOrg's growth?
I'm ready. Dude, your people are like, okay, we know Henry is going to talk with Nathan. We're just going to put the ARR in the bio so Nathan doesn't have to hit Henry about it. I love it. I love it. Last time you came on, man, let's see, it would have been about almost two years ago. And I think at that point you had told me you were doing around 70 and now you're at kind of 165.
I want to dive into that in a second. But first, for new listeners that didn't hear that first episode, tell folks what you do. So Discover.org is a sales intelligence tool. It's actually used by sales reps and marketers to find the companies and the people to sell to, when to reach out to them, and how to get a hold of them. So imagine I'm selling an information security device.
I know all the chief information security officers. I know what projects and initiatives they're working on. I know their phone number, their mobile phone number, their email address, and I know all the people around them as well. Yep. So you launched the company back, I think you told me, what would you say, 2011? Actually, I launched the company in 2007. Oh, okay, 2007.
And then how long did it take you to get it to 25 bootstraps? Seven years. Seven years. And is that when you sold or you held on to it a little longer than 2014? Well, that's when we took private equity money. So it depends on your definition of sold, but we sold a piece of the business to private equity in 2014. Majority? We sold over 50%. Okay. So that was the start.
So I have to ask you a question. How old were you in 2014? In 2014, I was...
30 29 30 and where so where was looking back now let's say there's another 30 year old listening that bootstrapped to 25 million and they've got you know there's so much there's so much it's very frothy right on the marketplace they've got a private equity firm going let us buy 60 you know main sale partners we'll throw main sale under the bus for a second i love those guys but they were my first uh they were my first offer really that's hysterical and then two years later i got three times as much as they offered me two years previously
Good, good, small company firm. I was going to say small world. Okay. But so let's say one of my listeners now is getting a deal from main sale and they're saying, Hey, we want to buy you for like X amount of money. I mean, what are some like lessons you learned selling a majority of the company kind of, I would argue pretty early on. Um, lessons I learned.
Number, uh, first of all, I never found an issue with selling a majority of the company. And I sort of viewed the first, uh, I sort of viewed the first transaction like an exit. And then once that happened, it took a lot of sort of day-to-day pressure off of my shoulders. And so I could operate in a better way because it wasn't like all of my money in the company. It was like we were partners.
And so I had taken some chips off the table and I could be a much better operating executive. I think the exciting thing about private equity in my perspective is they've seen companies grow much beyond probably your imagination can see your company growing.
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Chapter 3: What is DiscoverOrg and how does it help sales teams?
The half that are not want to do things the way they want to do them. They have a vision of a CEO that may not be you, that they're not going to tell you in a deal process. There's just a lot of people who are selling you a bag of goods. And it's sort of hard to tell which ones are which you just have to talk to other founder CEOs that they've made investments in. Yep. No, that makes good sense.
Okay. So 2014, 25 million bucks in AR, you go ahead and take a deal, sell majority to, was that Carlisle? That was TA. Oh, TA came before. Okay. Got it. So TA first, and then introduce Carlisle to the equation. When did that happen? So then we operated for almost four years. We made a couple of acquisitions, um, had grown pretty significantly and we're sort of at the end of,
what would be typically a hold period for a private equity firm. We're four years into what's typically a five-year hold. And so TA decided we were going to go to market. The interesting thing here is TA was like, we can sell some portion of Discover Org today. We can sell all of it, our whole position. We could sell half of it. We could sell none of it.
And what they ended up doing was selling about 30% of it. of their holdings because they took Carlisle because they saw a much bigger future ahead of us as well. And so we were a very successful company in their portfolio because you can imagine we were 25 million when they invested. And from a runway perspective, we're probably 120, 130 when Carlisle came in.
And so- That would have been last year? That was this year in March. Okay. Okay, got it. And so you've added what, another 35 million bucks in ARR over the past couple months? That's about right. It's a little less than that, but yeah. So this, to me, I look at your space and I really see a duopoly between you guys and ZoomInfo.
I mean, there's a lot of these little like, I would call them kind of hacky-ish companies that do like an email scrape there or like something illegal on LinkedIn over there or like some other, you know what I'm talking about. How do you differentiate against ZoomInfo and do you really see it right now as a duopoly? I don't see it as a duopoly.
I actually see there are a ton of companies who have momentum in this space, who can spring up in a short period of time. I think what you see in this space today is getting access to data has become significantly easier than it was five years ago. Five years ago, if you wanted someone's direct dial phone number, we're the only shop in town.
Today, there are a variety of different vendors who have a variety of different places that they can go to to get direct phone numbers and mobiles and personal numbers. And we have to continuously innovate to keep ahead of those folks. There's obviously a long tail of what you might call mid-market and SMB companies that play in this space. And then there's LinkedIn.
And in our space, Microsoft is the big player. And so all of us combined... have nothing on the size and scope of LinkedIn and Microsoft as a sales solutions provider. And so I view Microsoft as the 800 pound gorilla. And then there's a whole sort of litany of other providers that are competing against Microsoft. Yeah. Talk to me about acquisition strategy. So you've done three acquisitions.
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Chapter 4: What lessons did Henry Shuck learn from selling a majority of his company?
And then, sorry, I cut you off. Keep going. Yeah, the actual metric that we look at more closely is how many completed demos are they doing a month? And we're looking for that to be more than 20. Okay, 20 completed demos per month. Interesting. And then you are going to go into AEs at some point. When does the AE get involved? The AE gets involved after an appointment gets set by an SDR.
So AEs don't do any hunting on their own. They're teamed up with a pod of SDRs. So you can think like five AEs and five SDRs. are grouped together. And then the AE gets involved once the appointment is set. I see. So those 20 target demos per SDR, an account executive is giving that demo. That's right. Interesting. The sale closes.
Does the AE stay on the account or does it get passed to a CS team that's incentivized with expansion? It gets passed to a CS team that's incentivized for expansion. Now that is actually, if you pause there, sort of, if you think about what we just talked about, they're very specialized roles, right? We actually, even in SDRs, specialize.
So we have outbound SDRs, we have inbound SDRs, and then we have something called SWAT SDRs. So our inbound SDRs, if you fill out a form on our website, we're going to call you in two to three minutes to try to set that demo. An outbound SDR, they have a list of target accounts. They use Discover.org data to go set what's typically a purely cold call.
We have a SWAT SDR where it's somewhere in the middle, like someone's come to our website, they filled out something, And then we've nurtured them to a point where it's warm, it's not cold, but it's also not inbound. And so there's three levels of specialization in the SDR role. On the account executive side, there's also levels of specialization.
There are sort of commercial reps who are doing sort of our SMB accounts. There are regular sort of reps, and then there are enterprise reps. And so those leads get passed based on sort of where those- Regular is mid-market? Regular would be mid-market. And then when that's done, that goes to a CSM team. So I close a deal.
It actually goes to a learning and development team that does onboarding and training for our customers. They schedule a training and onboarding. They give you sort of like all the best practices and they do live trainings with our customers. Do you underwrite that with a setup fee passed to the customer? We don't. Okay. Our business is 100% recurring revenue subscription.
There's no professional services. There's no onboarding or implementation fees. It's all 100% recurring in subscription. Okay, so learning and dev team. And then at what point does that get handed off to the CS rep? After onboarding, although the CS rep is sort of riding along the learning and development cycle. And how do you, what is the moment where you say, yes, they're onboarded?
Everybody's been trained. Interesting. Okay, so you mean everyone on the company that is purchased, they know how to log in, they know how to use it? They have their usernames, they've all been through training. And then a CES person sort of owns the account from there.
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