SaaS Interviews with CEOs, Startups, Founders
929 MuleSoft 2.0? Passes $40m in ARR Integration Platform as a Service
08 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 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 George Gallegos.
He is the founder and CEO of a company called Jitterbit. And really what Jitterbit is, is an integration platform as a service. He was the founding member of C3 prior to Jitterbit, a Tom Siebel venture focused on energy and carbon management.
He's also vice president of worldwide sales at Cast Iron Systems, leading global field operations for the integration appliance vendor prior to his acquisition by IBM. George, are you ready to take us to the top?
Yes, sir.
Nice to speak with you. Of course. How do you go from Cast Iron Systems to Platform as a Service?
You know, they're similar. Similar markets. And I was fortunate, like many people in their careers, to have met some wonderful entrepreneurs. Sharm Sasan, Ori Sasan, who had founded Jitterbit. They knew that I knew the market from Cast Iron. They had worked with me in the past at Scopus Systems. And they asked me to come over and essentially take Sharm's job as CEO and scale the business.
So I misspoke. You're not the founder, but you came in as CEO.
I came in, there were five employees in the company. They had a few customers and they asked me to come in and help scale the business.
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Chapter 2: How did George transition from Cast Iron Systems to Jitterbit?
Now, are you actively still deploying that capital or kind of sitting on it? In other words, are you cash flow positive or are you burning cash?
No, we're burning by design. We're growing the business. I mean, the market is growing at a very high pace, 50, 60 percent, depending on who you ask. And we're growing at 70 to 80 percent.
You're talking about revenue year over year?
That's correct. That's correct. So we're still burning, but we've got two years of cash in the bank and our plan is to be cash flow positive and in a position to do an IPO at that time.
When you say two years of cash in the bank, does that mean if the business stays like it is today and your expenses stay the same and revenue stays the same, you can afford to pay everyone and do everything for two years?
That's correct.
That's great. That's a good place to be. And what's the team size today?
We're just shy of 200 folks scattered around the world, headquartered here in Alameda. Where's Alameda? Right between San Francisco and Oakland, a great little island that has got a suburban feel to it.
Okay, very cool. So California and where else?
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Chapter 3: What does Jitterbit offer as an integration platform?
And it was a great opportunity as a first time CEO.
Yeah. How many customers did they have when you joined and what have you grown that to today?
They probably had 50 customers when I joined. We have over 1,000 paying customers, but 50,000 users on our platform.
Okay, and so I guess is there a freemium plan, or how can people use you without paying?
Yes, there is a freemium plan. We have trials as well, but we have about 50,000 customers in the Salesforce ecosystem.
And the goal there was lead generation, get our brand name out, let people get to know us, give them 10% of the value for free, move big amounts of data in and out of Salesforce into flat files, databases, for example, and then entice them with our premium features for a fee, for an annual fee. And we drive business every quarter because of that freemium model.
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1,000 people paying an average contract value of 50 grand puts your AR somewhere around 50 million. Is that generally accurate?
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Chapter 4: How does Jitterbit's revenue model work?
Yeah.
I have to say dream for us.
Monthly though, or annually that, or sorry, monthly or annually for that budget? Annual. Annual. Okay. So call maybe a hundred, 200 grand a month, something like that and paid spent.
Yeah.
Okay, that makes good sense. And then what about churns? Obviously this is critical in a business like a SaaS business. What do you guys have in terms of churn?
It is. So we have good churn compared to our peers in the SaaS world. On an annual basis, about 10% churn.
Logo or revenue?
Both. They're pretty similar. Pretty similar. And I would say our net retention is somewhere around 105% and improving. We've been improving that over the last year.
How do you measure that? Everyone kind of does it differently.
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Chapter 5: What challenges did Jitterbit face in its early years?
Oh, boy. I'm putting you on the spot. Yeah, we're seeing a return in under two years, which is good.
Okay, so is it fair to say with a $50,000 average ACV, you're spending less than $100,000 to acquire them? 100%, absolutely. And how do you build confidence? Lifetime value is always kind of put your finger in the wind and see what happens. How do you build confidence in your LTV to get comfortable spending two years of revenue on acquisition?
Yeah, so first of all, we have a very deep engagement with the customers. In fact, I spent the last three weeks out visiting both clients and prospects. We have a deep customer success program that engages onboarding to frequent calls. So we have a very close relationship, which leads to a productive churn and net retention.
Um, so we know, I mean, I've got customers that have been with us over 10 years. So we know, um, we know the value, we have deep relationships and, uh, and, um, you know, we, we continue to satisfy them. And we're known for that. If you talk to Gartner G2 crowd, they'll tell you Jitterbit is known for keeping its customers happy.
So do you generally kind of assume a lifetime value of 400, 500 grand? I mean, what do you assume it put it at?
Yeah.
10 years. 10 years. Okay. 10 years. Got it. And obviously you're driving expansion revenue year over year. That person that pays you 50 grand on average in year one, what does that typically expand to in year two?
Some customers have quadrupled their spend, but I'd say on average, doubling of spend is fairly typical with some of the clients that have the ability to grow.
Got it. And what, you know, everyone has different metrics that allow them to drive expansion revenue. Sometimes it's seats, sometimes it's additional products, sometimes it's a usage metric. What are your core lever points for that?
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Chapter 6: How much capital has Jitterbit raised and from whom?
Some great lessons in that book. But I like the Elon Musk book, Steve Jobs. I like to read about some of the guys that have done great things.
Number two, is there a CEO you're following or studying right now?
No one that I'm following or studying from these books. I learned a lot about Elon Musk, Steve Jobs. I work closely with Tom Siebel. You know, I learned a lot from Larry Ellison and we've close partnership with Salesforce. So a lot of Mark Benioff's great marketing wizardry. I love to see even my old CEO. I used to work with a cast iron, Ken Comey. I've learned a lot from him.
So I take a little bit from each one and sometimes what not to do from working close with some of these CEOs.
If Larry comes from Oracle and writes you a $500 million check to buy the company, do you sell?
No. At this point, we've got a big growth opportunity and an opportunity to achieve an IPO. So that's the path our investors like to see us on.
Number three, besides your own, what's your favorite online tool?
I actually don't have a favorite. I use a lot, and I always start with Google. I go to Google, and where is this tool? So I'd have to say Google. I always go to Google and figure out where I'm going from there.
Number four, how many hours of sleep do you get every night?
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