SaaS Interviews with CEOs, Startups, Founders
965 Why This $14m ARR Company "Went Public" To Win Marketing Automation Space
16 Mar 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 Rick Carlson.
He's the founder and CEO of Sharpspring on the NASDAQ. That's S-H-S-P. It's a next generation marketing automation platform. In his 20 year career, he's held numerous sales, marketing and product roles for Internet companies and is considered an expert at sales and marketing. Rick, are you ready to take us to the top?
I am. I've had an extra dose of caffeine, so I'm hoping I can keep up with you. Let's get started.
Very good. Tell us, first off, what the company does and what's your revenue model? How do you make money?
Sure. Well, we're a SaaS business. Obviously, we're a marketing automation company. And what makes us kind of unique is that we license our platform to digital marketing agencies. So these are businesses that help other businesses with their sales and marketing. And I think we're the only company in the world, really, that's doing this.
There are certainly companies like HubSpot and Marketo and so forth that are competitors of ours and that are working with agencies. But we've really built our whole business around agencies. It's about 90% of our revenue. And what we do is we license them our platform. They put their clients on the platform and deliver results, generate leads and convert those leads into sales for their clients.
And give us a sense of size. Where are you today in terms of ARR?
Sure. This year, we're somewhere around $13, $14 million. We've been growing about 50%, a little north of 50% on our core business and have been doing that since we started. We don't see any reason why that would slow down.
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Chapter 2: What is SharpSpring and how does it generate revenue?
I'm going to pretend that you used a calculator to come up with that at the top of the top of your head.
That's right. I do a lot of these. I do a lot of these back to back.
All right. Very good.
So just and help us understand. Again, I want to make sure I get growth rate right. So like last month, in other words, you're doing over one point one six million in monthly record revenue, which puts you at a 14 million dollar run rate. What were you at in December of 2016? So about a year ago.
Oh, gosh, you're asking me, you know, off the top of my head. I actually, I don't think I could tell you the number off the top of my head.
But come on, Rick, that's like a good growth rate. Like most CEOs love that kind of stuff. All of them know what they did in revenue a year ago because that's how you get growth.
Yeah, no, that's right. I think we did. We have a little bit of a complex business. We had three different business units at the time. I'm talking about Sharpspring. Uh, right now in sharp spring revenues. And so that's why it's a little, it's not quite off the cuff for me, but we, you know, uh, you know, we were definitely, I'm going to say something like $9 million. Okay.
Um, uh, or, or even a little bit less than that kind of December last year.
Okay. So health, I mean, healthy growth, right? You've added about 5 million over the past 12 months in AR. That's great. Absolutely. What, what have you, so I just want to make sure the, the sharp spring, you said you had three products or those other two things dead now, and it's just sharp spring or those other two things, part of the company.
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Chapter 3: What is the current ARR and growth rate of SharpSpring?
Okay, and you basically saw that as a cat. That's basically your version of VC, except it's beautiful because it's non-dilutive.
Correct. That's exactly right.
And still, besides going public still today, you didn't raise any outside capital up until going public, right? That's right. That's exactly right. So let me ask you this question. So a lot of the CEOs I have on, you know, Ryan from from Qualtrics or the, you know, the SnapLogic guys, you know, they're all doing between 100 and 120 million in ARR.
And that's what they say, Nathan, that's when we really start thinking about do we go public or do we keep raising privately? You went public much earlier, right? I mean, you're public now, but you're doing about 14. And I hate to say only, but relative to other people who have gone public, it's much, much less. Why did you decide to go public with about 14 million in ARR?
Yeah, so we didn't. Actually, the company that acquired us was a very small public company called SMTP. I was not part of that company. They were public. And so we became part of that company, ended up selling that company. And so suddenly Sharp Spring is a small publicly traded company, which comes with some great benefits and a lot of overhead.
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Chapter 4: What challenges did SharpSpring face in its early years?
But it's been a hell of a ride. So it's interesting. But yeah, we didn't go public in the traditional sense, but we are We are public and listed on the NASDAQ and so forth.
One of the things about having a market cap that's, you know, in the 30 million range is where you guys are. I mean, people can, somebody could, if they liked your space and liked your product, really just buy into the company and start actually getting control and making changes. Have you had to deal with anything like that?
Or have you thought about finding a private equity, you know, partner and taking it private?
No, we have a pretty broad we have a pretty broad group of investors right now. And so I think, you know, just looking out there at what's public, there's no there's not many investors, if anybody. I may be the single largest investor at this point. Um, within the company. So nobody owns more than, you know, six, eight, 10% of the, of the company, um, no individual investor.
And so, you know, we're not, uh, necessarily worried about that at all. We certainly get, um, all sorts of interest in the company because of the performance of the company. We're doing pretty darn well out there and, and, uh, uh, a pretty interesting space.
And so, um, we definitely get a lot out of, um, of interest, but it's, it's not, uh, something in the sense of, uh, that we're worried about it from a hostile perspective.
If that was the, uh, I'm just saying, could somebody, so like, I'm, I'm taking this all off your public face.
things here since it's getting a little bit sensitive but like morgan stanley has about 70 730 000 uh shares which is a value about 2.5 million at the current price which is a quite basically equates to 8.6 of the company you according to june 1st 2016 own about 539 000 shares so morgan stanley has more than you and then awm and bard well bard has less but awm has about the same as you i mean if one of these if a company like i'm gonna make this up if a company like vista equity partners which just bought marketo right said you know what we want to go after this company you
couldn't they just start buying the stock at the price that it's at now to get a large chunk of it and then do changes they wanted?
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