SaaS Interviews with CEOs, Startups, Founders
884 SaaS: From Startup to $1b+ IPO, the Coupa Story
25 Dec 2017
Chapter 1: What is the main topic discussed in this episode?
Good morning, everybody. Merry Christmas to those of you that celebrate the great holiday. I am out here in my pajamas and I will keep them on all day. I'm in Loveland, Colorado on my mom's ranch where we are eating way too much cheese candy and are playing way too many games of sequence. I love that game.
But wanted to say thank you to all of you and remind you my gift to you is all the data available. I work so hard to capture from CEOs on the show, B2B SaaS CEOs. Remember, you can get all the data free in a big, beautiful spreadsheet at getlatka.com. That's G-E-T-L-A-T-K-A.com. Go there today and check it out.
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burned. 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 Rob Bernstein.
He's the chief executive officer at Coupa and drives the company's strategy and execution. Over the past two decades, he's got experience in the business software industry coming from Coupa from SuccessFactors, where he ran global product marketing and management as a member of the executive management team. The company scaled from an early startup to a successful public company.
Before that, he directed product management at Siebel Systems, where he helped build Asable ERM into one of the company's fastest-growing product lines. He also did stint in management consulting at McKinsey & Company and spent four years at Accenture, where he focused on global SAP system implementations. All right, Rob, are you ready to take us to the top? Sure.
Well, you've seen your fair share of kind of enterprise SaaS, huh? I have. A couple of decades of it, actually, now, yeah. Couple of decades. All right, tell us about Coupa. What's it doing? What's your business model? How do you make money?
Well, our business model is subscription, as all SaaS companies, and we help organizations optimize the way they spend money.
So we help them with their procurement processes, their invoice processing, their expense reporting, sourcing, inventory management, supplier information management, every way that a company applies IT to help them optimize the way they spend money and effectively save a lot in the process.
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Chapter 2: What is the story behind Coupa's journey from startup to IPO?
Was 2008 the struggle years or what?
Yeah.
No, 2009 was struggle years. It still was a war, right? Yeah, it's always a war. It's execution, right? It's day in, day out execution. So no, it's just different sets of challenges every year. But we feel like we're on our way to doing something pretty special here.
Bootstrapped or raised capital? And if raised, how much?
We've raised the total of, I think now... Uh, I think about 180 and then we did an IPO. Uh, so after the IPO was about 75, we did a secondary, so a few hundred million. And, uh, you know, we've got a couple hundred million in the bank right now too. We still haven't.
There's two kind of points in the company growth. I want to go back to one is the day, the day you decided you're going to take your first round of capital. And the second is the day you decided that you wanted to go public or that that was your best option at that point. So take me back to that first decision. When did you decide you wanted to raise capital and why'd you decide to go that route?
The reality is that with a software as a service business, your sales and marketing costs up front are relatively high, your development costs are relatively high, and you're not getting paid back for a bit. So you can use a capital infusion to get the wheels spinning a bit. And once you do, you have the opportunity to start getting scale.
So we've expanded our margins for virtually every quarter for 34 quarters, both the scripture margin, growth margin. And we've been now cash flow positive for the last trailing 12 months. So we've gotten to a place where now we don't necessarily need capital. But to the point you made about why, you know, so IPO, then you have another event. That's more for marketplace legitimacy.
It helps customers feel much more confident that you're around for the long term. You're not just going to get tucked in somewhere.
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Chapter 3: How does Coupa's subscription business model optimize spending for organizations?
Let's focus just right now on your enterprise accounts when it's more than a $200,000 ACV.
I would much more have them. I would suggest them to focus much more on how sticky their product is because it's I get the point of getting their money back and recovering and the importance of that. But if they churn after three years or four years, eventually you burn anyway. So you're much better thinking about how could I integrate to existing systems?
How could I make the platform sticky and valuable such that the likelihood of churn is very, very low, whether it's year four, five, six, or seven. I think that's how you build a long-term valuable business. I wouldn't be overly worried about, oh, I've got to get the money back within this period.
I
If you believe in your offering and you see the opportunity set in the market, I'd focus more on stickiness and long-term value creation.
In your mid-market cohort, we'll talk about stickiness since that seems like to be a big focus. In your mid-market cohort, what's your logo retention annually?
We don't talk about logo retention either publicly.
What's it definitely above? You can give a big range if you want.
Oh, I mean, obviously above 90, obviously.
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Chapter 4: What factors have contributed to Coupa's revenue growth over time?
And if not, do you think about doing them for growth?
Well, we've done acquisitions. We've done them largely acqui-hires in a couple of places, little technology tuck-ins.
Well, you do everything to some extent for growth, not growth in terms of the revenue that these companies are bringing us because there's not much there, but growth in terms of the value proposition that we're offering so that our customers have something much more meaningful to partner with us around.
Guys, I get asked all the time, Nathan, you host all these interviews, hundreds of them per month. How do you do them efficiently? And guys, the answer is simple. People always agree to my calendar, back-to-back meetings. I batch my interviews to stay very efficient. And the way that I do it is I use a tool called Acuity Scheduling at nathanlatka.com forward slash schedule.
And the reason I use them is very simple. They keep my no show rate very low because they send out reminders about when the interview or the meeting is coming up. And also they make it very easy to schedule time, right? I don't have to go back and forth via email 10,000 times with people I'm trying to meet with. Okay, at nathanlatka.com forward slash schedule. Helps me so much.
And by the way, look, I like have so many meetings. I'm the best at meetings. Okay, I do them back to back. Very, very efficient. You guys know me. many people say I'm the most efficient they've ever seen. Okay. So I use the tool. It's so efficient. And by the way, I got Gavin. I said, Gavin, he's the CEO. I said, I want a great deal for my people.
He said, Nathan, well, most people get a 14 day trial. Isn't that great? I said, no, he's given us a 45 day free trial at Nathan Latka.com forward slash schedule. That's not going to stay up forever. So go get it now. Nathan Latka.com forward slash schedule.
There are some companies that I've talked to in kind of the B2B SaaS space where whether they want to admit it publicly or not, and I won't name names, they see what their PE ratio is and they know they can go buy a company at a revenue multiple that is lower than what the public markets will value the same revenue. You just don't even play those games?
No, that's just ā CFO finance spreadsheet, arbitrage stuff. And we're, we're focused on customer value creation. What can we give them today? And if we don't have certain pieces, we can get there faster than we consider it. Number one on the list of acquisitions is the actual people. Are they into what we're doing and they want to help us get there faster. That's the driver.
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Chapter 5: What challenges did Coupa face during its early years?
And so that was very important. Just awareness, market awareness as well as a standalone platform. So that was the fundamental driver. And that's worked out. I didn't know. First quarter end, I wasn't sure. Now four quarters in, I could tell that that was, that was a wise move for us.
All right. Let's wrap up Rob with the famous five. These are one word answers. Number one, what's your favorite business book?
Favorite business book. I still haven't read it. I've read so many, but I still haven't read it. I'm still open to, I'll be at the airport tomorrow. We'll see what they have.
All right. Number two, is there a CEO you're following or studying?
You know, a lot of them, a lot of them. I mean, all the ones that you'd imagine, right. You know, Steve Jobs around innovation, you know, uh, John Chambers, I've had a chance to meet around growth and sustaining growth in the long term. Just so many. I had a chance to meet a lot in business school, so I follow a lot of folks. Try to get the best out of each one.
Number three, besides your own, is there a favorite online tool that you have, like maybe acuity scheduling?
No, my favorite online tool is email. I think it's highly underrated. I think people avoid it too much. They text each other.
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Chapter 6: What role does capital raising play in Coupa's growth strategy?
They put on other applications. I think it's all you need to communicate with a lot of people very quickly. I like it a lot. Number four, how many hours of sleep do you get every night? Oh, anywhere between two and 10. So if there's too many nights of two, then it becomes 10. And once in a while, there's a 10 in there that really works for me. And what's your situation?
Married, single, you have kids? Married, two boys, 12 and eight.
And how old are you, Rob? I am 44. All right. Good. Hey, happy birthday. Last question. Take us back 24 years. What do you wish your 20-year-old self knew?
probably knew that there's a lot more opportunity in the world that could be explored faster. I probably wouldn't have been as focused on being well-rounded. I probably would have ran out to Silicon Valley earlier.
There you guys have it. Don't focus so much on being well-rounded. There's a lot of opportunity out there. Go for it from Rob. Joined Coupa back many years ago in 2007 or 2009. Can Since the company's raised $180 million, obviously went public, raised a bunch of capital.
They're now, again, helping many of these companies, the largest companies in the world, over 500, really do expense management and helping folks understand inside of companies what to buy, how to buy. It's not really an RFP, Rob, but helping people get best prices for things their employees need and managing all of it in one spot. Thank you so much for taking us to the top. You bet.
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