SaaS Interviews with CEOs, Startups, Founders
1Huddle Hits $3.5m in Revenue, 250 Customers, Can He Get $30m Valuation on $10m Series A?
19 Jul 2020
Chapter 1: What year was 1Huddle launched and how many customers do they have?
Okay, 2014 year launch, 111 customers today. You mentioned $50,000 ACV. I mean, if I do the math, that would put you at like 400, 450 grand a month right now in revenue. Is that high?
Yeah, we're a little shy of that because again, we still have some early adopters that are, you know, different price points. You know, we're hovering. Right now, our kind of run rate is between three and a half and four.
Million?
Correct.
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Chapter 2: What is the average contract value for 1Huddle's services?
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Hello everyone, my guest today is Sam Cagliucci. He's a founding sales huddle, a training and development team that is using game technology to help organizations better prepare their people for the workforce.
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Chapter 3: How has 1Huddle's revenue changed since their last appearance?
All right, Sam, are we ready to take us to the top? Let's do it. All right. So just to be clear, help us understand kind of where you fit in the kind of bigger space of HR tech in general.
Yeah. So today, uh, with the way we look at the world is that corporate employees are less prepared than ever before. Companies continue to invest in yesterday's technologies to whether it's onboard or continuously develop or prepare workers. But largely, the skill gap that's present today has shown that those technologies have largely failed.
Our product, we built a game platform that does two things. One, it allows companies to more quickly create content to push out out to users anywhere they are, which we feel LMS products largely miss on. Second, because we're a game platform, we create an environment where usage is not just near 100%, but most of our gameplay happens voluntarily outside of working hours.
And we see that learning management systems are not only torture for workers to interact with, but they're also they take way too long to create at a time when jobs are changing way too fast.
So help me understand what's the average company going to pay you per year to use this technology on their workforce?
Our average contract value today hovers around 50K, but we have pricing as low as 3000 a month and pricing that, you know, surpasses enterprise north of 100.
This is very different than last time we came on back in April 2017. Your average ACV there was around $10,000. So you've really moved upstream, almost 5Xing that.
Yeah, I mean, I think two big things.
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Chapter 4: What challenges does 1Huddle face in the HR tech space?
One, I think we gain more as a startup, we gain more confidence in our sales process. So, you know, asking for more is something that just takes time. And then I think in that process of getting more confident, we also got more confidence selling to larger enterprises.
So I think that one of our biggest opportunities and challenges over the last year has been we just signed Fossil Group, 500 global stores, signed Vineyard Vines. We just launched a global deal with PIMCO. These large enterprise deals have taken up a lot of our time. However, it's also boosted ACV and put us into a sort of totally different stratosphere.
How many customers are you working with now today? About 111 right now. Okay, fair enough. And now have you bootstrapped or did you decide to raise some capital?
So we raised our first round of financing in Q1 of 18, raised about two and a quarter as our seed round. And really the only other financing before that, I mean, we're predominantly bootstrapped, but the only other financing prior to that was accelerators and angels.
Yeah, you had about $400,000 in from accelerators and angels, correct? Yep. Yeah, it's about $2.9 million to the company today so far. Do you regret raising the $2.5 million?
No, I mean, I think that the reality of it is, I think the balance that we have to weigh has to do with how fast can we move, right? And what does our market look like? And it's fair to say that with record low unemployment, And HR tech started to heat up because companies are understanding employee churn is a major problem for them.
I think that the timing where we sat, you know, we grew very responsibly being bootstrapped the way we were. I think that looking at our financing in our last round, it was all about how do we continue to keep our foot on the gas because we were outselling our product a little bit.
Yeah, I mean, that sounds like to me it's code for burn to drive growth, right? So how much are you burning per month right now?
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Chapter 5: How much capital has 1Huddle raised and what is their funding strategy?
About 120.
Is that cool? I mean, are you good with that?
Yeah, again, I think at this stage of where we are, it's fine. I think we're in a position that at any point in time, if we wanted to be breakeven, we could. All of our dollars go towards product development. Our biz dev team is about 18. How many total people? 36. 36.
So what do you mean biz dev is 18? Like marketing, sales?
I would include, so BizDev, marketing, and we only have a few customer success people. And our customer success folks are largely part of the sales process because we're very land and expand as a model. So our customer success team is very intimately involved in our upselling and expansion process.
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Chapter 6: What is 1Huddle's approach to customer acquisition costs?
How many engineers? 18. Okay, got it.
So it's 18, 18.
50, 50.
Yeah.
How many of the 18 are actual quota carrying sales reps?
Seven.
Okay, interesting. Did you make your first hire with that $2.5 million round on the sales side or had you already ramped up some salespeople?
So we had one seller prior to the close of the financing. That financing was twofold. One, let's accelerate engineering. And then number two was build out our sales force. Is it working? I mean, I think that we have a process that we feel very confident in. The process is working. You know, I think that there's always places in any business to optimize.
For us, you know, we're in a category of folks who see workforce training as a nice to have, not always a need to have. So we spent a lot more dollars on the growth side, marketing team, top of funnel, primarily focusing on how do we educate people about the problem that we know is there.
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Chapter 7: How does 1Huddle measure customer churn and retention?
It's tough to be in a space where I see ourselves as creating a category. Um, there are no other game platforms when it comes to workforce development or employee performance. So we battle the status quo, which means our sales team has to do things a little bit differently than other. Uh, if we were creating a CRM company tomorrow, you know, everybody knows the value of CRM.
It's a little bit different.
Yeah. What's churn look like over the past 12 months?
I think we've had, you know, we've been healthy churn about 10%. Okay. Revenue or logo? That's, that is, um, that is, uh, revenue. Okay. A little higher on the logo side, early adopters that were low ACV from back in those days, like when we talked, that probably weren't going to step up, but we learned from, makes up about half of that. The other half has to do with, as a SaaS tool,
We learned really quickly that when you have one key stakeholder that's a champion with your software inside of an enterprise, that's a good thing, but it's not a good thing when they turn over.
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Chapter 8: What are the future plans for 1Huddle regarding funding and growth?
So we learned that we got to get really deep, really fast when we sell into an enterprise. to have multiple stakeholders that know us, have relationships with us, so that God forbid somebody moves up, moves on, the baby doesn't go out with the bathwater, so to speak.
Does your expansion revenue more than make up for the 10% churn? Yeah, we're net negative churn. How negative?
Six, seven points.
Okay, got it. So you've got about 16 points of expansion then for net revenue retention of 106%. Yeah. Yeah. Okay. That's good. What's the expansion? Like what's driving the expansion? Is it number of seats or some other utility metric?
Yeah, so because of the fact that we're doing a lot with frontline workers, a big passion point for us with our product is that the overwhelming majority of 130 million U.S. workforce does not get access to ongoing skill development like other roles inside of the org.
We can't price by user only because you're going to pay $100 a month for a seller, but you're not going to pay $100 a month for maybe the usher or the security guard. So our pricing model has three prongs to it. We're users, so we still have users as one of the metrics. Second is admins. We've built a product where frontline managers can create content.
So in a way, challenging HR's dominance of being the gatekeeper for employee development. So, you know, frontline users.
admins and then the third part is amount number of games in their game library so sometimes we work with a mid-sized brand that doesn't have a large robust library maybe they only have one person in charge of training well in that in that regard we know that expansion is going to be driven by you know just seats but you know we just sold into It's another great example, like Tau Group.
It's the biggest nightclub chain in the world. Tau Group has, they want to launch on day one with every employee, but they only want to launch with one topic area. So for us, now it's more about their library. How many games do they want to be able to handle inside of our platform?
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