SaaS Interviews with CEOs, Startups, Founders
922 SaaS: Is $120m ARR Workfront About to IPO?
01 Feb 2018
Chapter 1: What is the main topic discussed in this episode?
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 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 Alex Schutman, and he's the president and CEO of a company called Workfront. As CEO, he drives Workfront's overall strategy, vision, and execution, ensuring the company is a dedicated partner in helping customers transform the work experience.
Schutman brings over 25 years of experience in all areas of revenue and profit generation for technology organizations with significant experience leading SaaS-based companies. Alex, are you ready to take us to the top?
Chapter 2: How did Alex Schutman get involved with Workfront?
I am. Thanks.
You're welcome. That bio sounds like you came into Workfront as an EIR with a VC-led funding round, not as its founder. Which one are you?
I am not the founder. The founder is Scott Johnson, and he is still the chairman of the board.
Very cool. And then did you come in with a funding round? Were you with a VC firm?
I was not. No, I did not come in through a VC firm. And I did not come in in a funding round. Scott is a guy and And awesome as the chairman of the board.
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Chapter 3: What is Workfront's revenue model and customer base?
And, you know, I think he just decided that the company had some amazing growth in front of it.
And now give us some of your background. You referenced in the bio some other SaaS companies you've been acquainted with or led. Name a few of those.
So I was at a company called Eloqua. That was a marketing automation company that I got to serve as the president, not as the CEO there. And then prior to coming to Workfront, I served as the president of a company called Aptio that recently went public. Once again, there was a founder CEO at Aptio and I served with him. That's Sonny Gupta was the founder CEO at Aptio.
Two great companies. So get us up to speed on Workfront. What's the company do and what's your revenue model? Is it SaaS?
Yeah.
The company is a SaaS company, and we sell an enterprise application platform for people to manage modern work. What we see happen in companies today is there is a lot of complex work that requires collaboration between folks all over the organization, knowledge workers all over the organization, and people just struggle getting their work done, and they don't actually have
a platform that they go to work in. So people that use Workfront, when they go to work, they go to work in Workfront.
Should we think of Workfront more like a sexy version of a Gantt chart online and with a SaaS model or more like a communication tool for teams like Slack?
Actually, the way that you should think about it is if you think about the DNA of work, the DNA of work, any kind of knowledge work that you do, it's got three elements to it.
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Chapter 4: How does Workfront differentiate itself in the SaaS market?
It's got the collaboration that's occurring. It's got the task itself that you're trying to work on. And then it does have the output of work, which is increasingly digital content. And so most companies come at the problem from their native position. If I'm a collaboration vendor, I have collaboration and I try to staple collaboration. task and content to it as an example.
Workfront built the DNA of work into the product. So you come in through the content, you see the task and the collaboration. You come in through the task, you see the collaboration and the content. And it's that integration of those three things that that you would consider the DNA of work that allows us to be successful.
And I want to get your thoughts more on the space where you see it going and how you got, you know, tactically actually how you got involved in the company. Before we do that, though, you mentioned kind of your focus on enterprise. That's usually really nicely reflected in a price point. So just give me an average. What would you say the average customer pays you per year or per month?
The average customer pays us about $40,000 to $45,000 a year. But what we really see is a customer starts with a department, and then they actually start expanding that work to many departments. So most of our larger companies are in you know, 10, 12, 13 different departments with some pretty unique use cases that were not the way that we started.
Chapter 5: What strategies does Workfront use for customer acquisition?
Do you have enough of a sample cohort to know that a $50,000 ACV account will very predictably go to 60 or 70 or double to 100 in year two?
What we know is that if we've actually gone through and used an analytical tool and we look through about 22 different attributes of customers that we had sold to, that might even be like their Alexa score or the number of job openings that they have in marketing or so all these different attributes.
And so what we know is if we sell to a customer that scores well in those set of attributes for us, anywhere between $30,000, $40,000. You know, within a couple of years, they're a customer that's over $100,000 for us.
That's very cool. So I want to understand a process you use to get those attributes so other people listening can replicate it. How did you come up with the attributes?
We actually used a technology and we fed all the customers we had ever sold into, we fed it into that technology and then coming out of that So it was an analytical tool coming out of that exercise that said, boy, here's the attributes that make a lot of sense for you all. And then the other thing that we did is in terms of how we approach the market. is we went into our customer base.
We have 2,844 customers.
Those are paying, right?
Paying customers. We said, forget what we think we built or sold. What did they actually do with our software? And so coming from that, we got to a really good understanding of the five main reasons why people buy our software. So our go-to-market from a target perspective is, Who has scored well in the past and then who has those attributes?
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Chapter 6: How does Workfront measure customer success and retention?
And then who has one of these one or more of these five problems that, you know, after 3000 times, we know we solve really well.
Yep. Now, before we get more of the back story, back story here, Alex, you said twenty eight forty four customers, a lot of enterprise. You mentioned a few minutes ago kind of an ACV of around forty five grand. You guys are doing over one hundred twenty million in ARR at this point.
Yes.
Okay, great. But can we put a cap on that and say less than 200?
Yes.
Very cool. All right, take us more the backstory here. So how did you a CEO who's launching a company is never thinking about the day that they're going to replace themselves, at least not at the beginning. And sometimes it can be contentious. How did you make that transition smooth?
Well, it really wasn't me making it smooth. You know, Scott and the board are phenomenal. And Scott's a good friend of mine. And the great thing about Scott, you know, the thing that you learn about founder-run company, founder-built companies is the core of the company, the company's DNA never goes far from the founder.
You know, and so Scott's a guy with super high integrity, family values, customer focus, technology focus. And, and those things are still true about the company today.
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Chapter 7: What factors influence Workfront's decision to go public?
And so I think when you look at Scott and I, part of it was that we get along really well. And, and also I get along with, uh, the, you know, the major investors. And so that, that made for a super, super smooth transition. And I'll tell you the final, the final thing that really made it, I think a good fit for them.
And for me is the last interview, uh, one of the board members said, look, Alex, um, We've talked about a lot of things, but what do you really believe in? And I said, here's what I believe in. I believe that you can do the right thing and win. And so what that means is that if we're ever faced with a choice where we've got to and I don't by the wrong thing, I don't mean lie, cheat and steal.
That's that's clear boundaries. But look, if we were kind of got to do the wrong thing to get you all the economic outcome that you want, I'm not going to do it. And you should know that right now. And I left the room and board members came in after me, not running after me, but came in after they had their meeting and said, you know what? It was that that last answer.
That's what we want for this company. So I just think there's a deep DNA match between who I am and who the company wanted as the CEO.
And what year was the company launched in again?
The company was launched in 1999, so it's been around for a while. And you joined in which year? I joined 18 months ago.
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Chapter 8: What advice does Alex have for aspiring entrepreneurs?
Okay, so we'll say early or mid-2016. And then mid, okay. And what's team size to date?
We have 849 people.
Based where?
based probably 300 or so in Lehigh, Utah. And then we've got locations around the United States and then in UK. And we've got development operations in Poland and Armenia.
So you mentioned obviously your customer base. How are you how are you signing up new customers? Are there any unique tactics you're using? Are you following a pretty practiced playbook?
We have an enterprise sales team. So we have feet on the street sales team. And once again, the go-to-market is we know the five problems we solve really well. And so we ask our account acquisition team, go find one of these problems because we know we're going to be successful.
And then we surround the customer with an account management and a customer success team and help build up the customer skills in the product. And that's how we end up going department to department. So we may start with a very traditional use case for us around getting visibility into the, you know, the, the kinds of work that are happening in the car. Sorry, go ahead. I'm sorry.
No, I was going to say, and then from there we branch out into some really unique use cases. I was with one of our customers who's a retailer. the other day and I just asked him, I said, what's the coolest thing you're doing right now with Workfront? He goes, Alex, you're not going to believe this. Sometimes we run a local promotion and we'll get the price wrong on the shelf.
It used to be a really big work process for our associates to go fix that price. Today, they walk by the shelf with their smartphone, with their Workfront application on the smartphone. They take a picture and that kicks off an entire work process where somebody else goes and checks uh, on, you know, on the price point. So that's why we, we try to land with these things we know really well.
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