SaaS Interviews with CEOs, Startups, Founders
888 SaaS: How To break $480k MRR by Focusing on 1 Vertical
29 Dec 2017
Chapter 1: What is the main topic discussed in this episode?
Good morning, everybody. I wanted to just quickly remind you, if you love B2B SaaS and you're loving all these CEOs I have on, remember, you can get all of their data in a big, beautiful spreadsheet at getlatka.com. That's G-E-T-L-A-T-K-A dot com. So I hope you're enjoying the month. I love December. I love the holidays. And here is our program for today.
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 Jeff McQueen.
He is an Aussie that now finds himself in San Francisco due to his company called Accelo, which he launched about almost nine years ago. We're going to jump into the full story today. Jeff, are you ready to take us to the top? Yeah, let's go. Good. All right. So tell us what Accelo does and what's your business model? How do you make money?
Yeah, no, great question. So Accelo is a platform for running the operations of a service business or team. So, imagine you're an architect, accountant, designer, engineer, consultant, somebody who runs that kind of a service business for other customers, and you've got the fundamental problem that you keep having to do more, technology speeds up the way the business
Technology that's really out of date, like spreadsheets and a litany of things that don't talk to each other. And so what Accelo does is we use the cloud and smart automation to actually make it a lot easier to run that operation, to know fundamentally what happened today. So you've got a hope of knowing what's happening in the future. And we started it together about six years ago.
We got it out into beta and I moved here to the Bay Area while we're still in beta. Who's we? Myself and three co-founders. We all worked together in my last business. We were colleagues running a professional service business. We knew how much it sucked.
Like an agency or something?
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Chapter 2: How does Accelo help service-based businesses streamline operations?
There's certainly a lot of things that we could pull levers on in the future, but they're not really, you know, they're more of a thought bubble at the moment, which has had some preliminary work. What we've realized is that You know, there's just such a massive opportunity. The sector we sell to, professional services.
So, again, those architect, accountant, engineer, designer, consultant type folks. In the U.S. alone, it's more than 20 million people working in that industry. It's the largest employer in the private sector in the U.S. by far. Bigger than health care, bigger than education. It's one in six people. And these poor folks, like the average company size is less than 10.
Only less than 1% of the businesses have more than 500 employees. And so what it means is that the big guys like SAP and Oracle, who kind of came to power by automating and streamlining and trying to give systems to run operations for the big end of town, they've just ignored this massive, massive, massive market.
And what we're doing is we're bringing basically cloud, both from an infrastructure and an economics point of view to bear. so that anyone can afford to and benefit from it.
Yeah, Jeff, no, I get it. So what, have you bootstrapped this or have you decided to raise capital?
We've raised $2 million. We did that in the middle of 2015. And we actually, as we record this, just about to announce a $9 million raise. So that's what's interesting. So 11 all in? 11 all in. And what's interesting about the nine is we raised that in the same quarter we got to profitability.
And we've really been, you know, while that's 11 all in for most of the time, it's, you know, being off just that, you know, a little bit of angel money and then a seed round. So we have followed probably more of the DNA and execution model of a bootstrapper rather than the Silicon Valley funded behemoth.
And what's your team size today? How many full-time people?
Right now, we're at 60 people. One six or six zero? Six zero. About a third of those are in, sorry, half of those are in Australia. And that's where we do our product engineering, design operations. And then we've got the other half here in San Francisco, where we do marketing, sales and client success.
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Chapter 3: What challenges do professional service companies face that Accelo addresses?
We're actually layering in not only all of the sales salaries and the marketing salaries, but also 50% of our success team overhead.
Well, just to be clear, this is your no touch cohort, right? So you're 3,800. There shouldn't be salespeople on that, right?
Oh, sorry to clarify. Well, um, in terms of the eight months payback, we've got a similar number for the no touch as well as the, um, to the, uh, ones that we have AEs involved with. Got it.
Got it. So that 3,800 is fully weighted. You're taking all your sales, all your marketing, plus any paid spend on Google ads, dividing by new customers that month and boom, 3,800 is the number.
Thereabouts. Yep.
Interesting. What percentage of the 60 people that you, or how many of them are in either marketing or sales?
Um, so we've got, I think 12 people in marketing and sales combined. Maybe it's 13.
Okay. Got it. And then, okay. So $3,800 CAC, um, eight months kind of payback period. This is obviously very, uh, how do I say this? It's less math and more art. It's more CEO driven. What do you assume lifetime value is on one of your customers?
It's ridiculous. Um, I was trying to remember the numbers. It's, it's, if it's one over churn, the numbers, uh, trying to have the top of my head, but it's, it's like five, six years. It's crazy. Yeah. It's hard. The number's hard. Like where the system of record for their work. So if you think about it, you've got like a system of record in HubSpot for what you do in marketing.
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Chapter 4: What is the business model of Accelo and how do they generate revenue?
Yeah. Interesting. What are you? So something interesting. I mean, this kind of reminds me of like a base camp, but it sounds like you do a bit more than what base camp does. You're less generic. What is like the one thing you've got to get a new company who signs up to do in the first seven days that will like really directly correlate to their stickiness?
Yeah.
Yeah, there's a few different vectors. Generally, it comes down to connecting the systems they're already using. So what Accelo does that's really special is we'll actually automatically synchronize with their email, their calendar, their address book, their accounting system. So Xero, QuickBooks Online, QuickBooks Desktop, their marketing automation, HubSpot, for example.
So we'll actually sit in the middle as a bus. And what's great about the way that we've approached it, and I sort of got to this at the top of our conversation, where we're about recognizing that the businesses that we help have smart, creative people who, the last thing they want to be doing is filling in 20 spreadsheets, right?
No one got into the business of being an architect to sit there and update Excel or to fill in a reporting system to make a CFO happy. That's right. So we've actually, where we've had so much success that guys who've tried to solve this problem, because this isn't a new problem,
Guys who've tried to solve the problem before and failed have largely been because they expect sort of the mountain to come to them instead of them going to the mountain. And so what we do is we let our users and encourage them to connect to the systems they're already using. And then we become this intelligent automated machine that sits in the middle.
And then they just have to give it a little bit of an update here and update there after the fact. So, for example, we'll automatically fill in somebody's timesheet. Um, and that comes from doing those sorts of connections. So yeah, it's like sign up or write, connect your Google account, connect your office 365 account, connect your exchange account, whichever one of those it is, you do that.
That's key. Um, and it goes from there.
Why'd you decide to do the current, I mean, you said you're profitable. Why did you decide to do the current $9 million round of funding?
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