SaaS Interviews with CEOs, Startups, Founders
1558 Why This Event Management CEO Believes 25% Of Her $2.5m In Revenue Should Be Professional Services
30 Oct 2019
Chapter 1: What is Hub and how does it serve event planners?
event management platform ceo alley with hub founded in 2012 now today doing about 180 grand per month in revenue that's up doubled year over year so about 90k per month back in november 2017 they have 110 customers paying about a 20 000 acv average on their arr platform they also have to do about work about 10 you know mega conferences every year that maybe pay six figures one time where she helps manage those platforms so additional revenue they're lower margin but additional revenue
Doing all this with about 13 million bucks raised, including 3 million bucks of our own money, 80% annual retention each year, gross 30% expansion. So 110% net revenue retention each year. Pretty good $5,000 CAC on $20,000 ACB is about a five month payback. Economics makes sense. Team of 40 in Washington state and other remote locations.
Again, building out their really event and content platform hub. Hello, everybody. My guest today is Ali Magyar. She is the CEO of a company called Hub and a skilled entrepreneur and technology maven with over 15 years of experience driving successful tech-enabled service companies.
Chapter 2: How does Allie define the business model for Hub?
She's been named a 2017 Portland Business Journal 40 Under 40, a 2017 Top Woman Entrepreneur by Smart Meetings Magazine, and in 2018 was an EY Pacific New York, sorry, Northwest Entrepreneur of the Year finalist. Ali, are you ready to take us to the top? I am glad to be here today. Thanks for having me. You bet. Okay. So tell us about hub. What's the company do and what's the business model?
How do you make money? Sure.
Chapter 3: What percentage of revenue comes from professional services?
Well, hub is essentially software for meeting planners. So we help with all of the backend processes in terms of collecting, managing and marketing data as it pertains to your sessions, your seat speakers, your sponsors, and then also help with a one-to-one connections at meetings and events. Interesting. Okay. And is this all done via like a mobile app or what?
Yeah, no, this is all, it's a cloud-based software. So we are helping the backend users. So if you think about an event that you're producing, you get all of that information, get external teams to sort of vote and grade it, accept it.
So we're the platform that's cloud-based that allows people the collaboration to be able to get work done more quickly and then be able to market that outwards to their attendees with session listings, speaker listings, convincing them to be able to register. Interesting, very good. And walk me through pricing. Is it PurePlay, SaaS? Sure.
Well, in the events industry, SaaS was a word that was sort of unknown. And so we are in an antiquated industry that is slowly starting to convert. So when I started my career in events in early 2000s, fax machines was our biggest mode of technology. So I've seen our industry change quite a bit.
Our business model is a variety of typical SaaS, which is just an ARR contract that allows people all you can eat, you know, come in, manage as many events as you want on our platform. And then we also work with some customers where maybe they only have a single event per year. So typical, you know, same thing as ARR, but they may only be managing one event versus many events.
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Chapter 4: How has Allie's background influenced Hub's development?
Yeah. And maybe they're not on contract. They pay per event, but they pretty much come back every single year for that one event. Correct. Yeah. Interesting. Okay. Um, and I don't want to go down kind of every customer cohort. I'm sure you work with all kinds of customers, but for the people that are paying on the SAS kind of model, annual model on average, what are they paying per year?
Would you say? Sure. Our ACB is roughly around 20,000 right now. Okay. Fair enough. And generally speaking, how many events will that person run? That's paying that much. On average, it's about two to three. Typically, most companies have one really large sort of customer or user conference per year, and then they'll do a few other smaller regional events. Okay, interesting.
And how does that compare to someone that might only want to use you one time for an event?
Chapter 5: What challenges does Hub face in customer retention?
Well, typically if they're using us just one time for an event, it's still an event of very large scale. So there's still, Hub is a good fit for anyone that has 50 or more speakers, sessions, sponsors. So if you have less than that, you really can handle the automation yourself. It's not that complex.
So for us, even if it's one event, the complexity could be, we run some events that for a single event are 25,000 people in a venue with thousands of speakers. So what would they pay for that one, that kind of event? Yeah, an enterprise contract can be in the six figures. So those six figures. Oh, wow. Yeah. Okay. Okay. Interesting. Interesting.
So, I mean, as part of that professional services though, you're doing a lot of consulting work, customization work. Yeah, usually if you're working in the enterprise, you'll end up being a part of an integrated technology stack.
So you've got sort of your SaaS player, your license, and then you'll have professional services on top of that in terms of needing to integrate across their tech stack, you know, meetings to ensure that everything is happening seamlessly for the event. Interesting. I want to learn more about your backstory.
Before we do, though, if you look at your revenue over the past 12 months, what percent would you say was professional services versus true SaaS, true recurring?
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Chapter 6: How does Hub's pricing structure work for different clients?
Sure. Yeah. 25% of our business is in professional services and the 75% is in pure SaaS. So not a pretty healthy ratio there. Put this on a timeline for us. When did you launch? Yeah, well, I originally created the product back in 2012. I was in my previous role as CEO of an agency. So we planned and managed some of the world's largest technology conferences. Any that I would know? Yeah.
We do a lot for Microsoft. Microsoft Ignite is a big conference that I've been involved with from the very beginning. Big, complex user conferences is really my background. I was sick of using spreadsheets and e-mail for everything, and so I decided to build a platform that helped my team be able to scale.
We used the product from 2012 to 2014 inside of our agency, and really built it to help manage the events that we were managing. And then I sort of woke up and said, wait a second, if this is bringing us so much value and I'm seeing this adoption and technology really change and evolve in our industry, I wanted to take that to market. So I bootstrapped the company.
I put a significant amount of money of my own cash into it. How much?
Chapter 7: What strategies does Hub use for customer acquisition?
About $3 million. Okay. How did you spin it out or did you keep it inside the agency? No, we did spend it out. So in 2015, we did our proof of concept. And so we went to market. And in the first year, we ended with 21 paying customers, about 650,000 in revenue. And I realized there definitely was market traction and market adoption.
So at that point, we spun out the company into its own company separate from the services. Okay, interesting. And there's always a challenge when people do that on how do you structure the cap table on the new entity? Do you give the agency a chunk of it? Is it a clean cap table? How did you make that decision? What's your cap table like? Sure.
Well, fortunately for me, I was a single owner of both companies. So it was much less complex because I just split the companies and allowed dynamic events to pass over all of the IP rights and all ownership over to the new entity. Okay.
And when you say you put 3 million of your own money in, is that going back to 2012, even dedicating staff from the agency, you're looking at all their salaries, whatever they put in kind of total to the company?
Chapter 8: What does the future growth look like for Hub?
Um, no, nothing to do with salaries in terms of professional services. This was a core development hiring, um, our go-to-market team in 2015, our original marketing budget. So it basically was everything to get the software off the ground.
I guess what I'm asking, sorry, what I'm asking though, is did you take, would you basically, did you basically use the agency cashflow to fund the new business and that equal a total of 3 million?
Um, so I did use agency cash to be able to fund that $3 million, but there wasn't any expenses for the agency, um, that I would have been receiving professional services for as a part of that 3 million. Totally. No, no, I get that. Yeah. We outsourced our development in the first couple of years before we brought that in house. So it was a pretty expensive thing to get off the ground. Yeah.
And how many customers are you at today? Sure. We're about 125 customers today. That's great. And these are, uh, sorry, actually what I meant to ask there was how many are on the kind of ARR plan, not the one-time event plan. Yeah. The majority of them are on more of our ARR plan versus the one-time event. So about 90% of our customers are on pure ARR. Okay. So call it maybe 110. That's great.
Okay. And I mean, can I multiply that, that 110 times that average ACV you gave me that put you at about 180 grand per month right now, just from that line of business? Yeah. That's fair. Just on that line of business. Yep. And then it sounds like you've got maybe 10 to 12 customers where you're signing kind of six figure deals for one massive event that you're managing. Correct. That's great.
And you said that that typically makes up about 25% of your revenue, right? The professional services. That's great. So yeah, at 180 grand a month, that means you're doing about 2.2 million bucks per year on the SaaS side at another 25% for the one-time stuff, a healthy business you got going. This is, this is kind of cool. How many, how many folks full-time now?
We're about 40 people full time, but we just closed our series B round. So we're hiring up. So we've got about 10 more that will be joining our team over the next 60 days. Oh, that's great. So you put in three at the beginning. How much total have you raised to date? About 10 million to date. Okay. So 7 million series A. Sorry.
So we've done our Series A and our Series B plus the original investment that I did. So total would be $13 million between all of those. Oh, adding in your own. Yeah. So we raised about $3.7 million at our Series A. So we competed and won first place at the Seattle Angel Conference and the Ben Venture Conference, which really kicked us off on our investment path.
And then did our series A as a part of that. So about 3.7 million there. And then we raised the remainder at our series B just a couple of months ago. That's great. Congrats. One of the things that I see a lot of event companies like the struggle with our event apps is exactly what you've articulated with your events. SaaS is hard to make work in an event space because they start and they stop.
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