SaaS Interviews with CEOs, Startups, Founders
Brightpearl $33m Raised, $105m Valuation, $18m Revenue, Targeting $25m by EOY
25 Feb 2021
Chapter 1: What is Brightpearl's current revenue and customer growth?
We're at $18 million in R. We're at just over 850 customers, but I'll explain why we've got less customers now. And we're clipping along at about 40% R growth per annum. And we expect to be at 25 this year.
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My guest today is Derek O'Carroll. He's building Bright Pearl, which he joined three years ago. He took on the biggest risk any CEO could take, a turnaround, and not a pretty turnaround, a big turnaround.
Since taking the helm as CEO, he's led the retail operations platform from stagnant growth to more than $12 million in revenue, nearly 1,400 customers worldwide, and managing more than $3 billion in orders. Derek, you ready to take us to the top?
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Chapter 2: How has Derek O'Carroll transformed Brightpearl since joining?
Is it an initiative for 21? How do you get up to like 110, 120?
So over the last three years, we've put in place utility-based pricing. which essentially links our customers to number of orders and their gross GMV, gross merchandising volume that they put through the platform. And as they grow, they pay less per unit, but they pay more as they grow.
And what we then follow that through was a program of improvements around contracts and then account managers and customer success. And then we put in place the basics of best practice that would be preached by companies like Gainsight. So really putting in place
the checks and balances in a calendar to make sure our teams take past value delivered credit from the customer and then point them towards mid-contract upgrade or upsell to new products. So our DOR is being driven hugely by upgrades in plans because our customers are getting bigger on the platform.
And the number that sort of cites that, which gives us confidence for the future is in 2019, we processed, um, $3 billion of orders through the platform. In 2020, that went up to $4.4 billion. So that gives us lots of headroom. So if you think of RRR, annual recurring revenue, as a percentage of the total GMV through the platform, we've got lots of headroom now to chase through.
And more importantly, the contracts are in place, the teams are in place. Customers aren't surprised when you let them know, hey, congratulations, you've grown. Here's your new plan.
That takes a lot of work. It does. It does. On a weighted average across the full customer base and $4.4 billion of GMB processed last year, about what percent of that do you take?
We take, at the moment, I think we're at, well, we're at the moment, we're 0.7, 0.8%, I believe. I haven't actually looked at that, but yeah, it's about 0.7, 0.8. It's a moving feast. And we've obviously got to take into account discount clawback as well when you're getting into the first year and the deals that are done by salespeople there. But I think we're at about 0.7, 0.8%.
Sorry, that's probably a bad question I asked you because it's hard to sort of calculate that average. You have some people paying more, some people paying less based off volume. So a better question might have been in 2020, when you look at your total revenue, what percent came from the flat SaaS fee versus the GMB percent?
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Chapter 3: What strategies are used to upsell enterprise accounts?
Interested to see that transformation in the market in the last year. Derek, let's go back to those CS folks and how you're thinking about expansion. Are you putting quota targets to CS reps?
Yes. So they have two buckets. They have in the territory that they run or the named accounts that they run. We have CS reps split into two. We have technical account managers that are all around adoption. And then we have account managers that are all about contract renewal, negotiation, pass value delivered. So they're the two roles.
And both of them have a commission plan, which is based on churn because they've got a goal of getting, you know, retention goal and then a dollar retained revenue figure to get to. So we give them two bucket plans and then we allow them with management to navigate the nuances that occur on a per account basis. But they don't. They don't have a hard number to get to.
We haven't done that because I tried that in the past and it resulted in some behaviors that were not opportune. Yeah, the CS rep focusing too much on selling, basically. Correct. And then they make decisions over the short term and it's not a good outcome for lifetime value.
Yeah. Okay, let's go back to the folks that do carry a quota. I'm sure you have account executives. How many quota carrying reps do you have?
We have currently now eight account reps of which... four are new. And our RAM time for each new rep is six months, you know, by design, because that's how complex the product is. Yeah, but we've got eight at the moment, I would say six are fully ramped, because we just just hired to literally in the last two, two months. Six are deployed in the US based in Austin, Texas, and two are in the UK.
Average ACV, so annual contract value per month that we expect from each individual head is 75k minimum. So that's their sort of floor. So that's about 900,000 a new AR added per year if they're effective at fully ramped. About that, but when you look at the fully loaded cost of each AE, we're running at about 580.
When you take in count your BDO or your cost of pipeline and you look at all of the people that you need to feed a new AE because we run a territory model, we're stretching for 1.2, although we want everyone to hit the plan and go back to their spouse and celebrate success. So we've got it at 900. But 1.2 is where we want to get to.
Because our margin is an area of improvement as a business now that we're going through this phase. And we're looking for three to four points improvement margin in the next 18 months. And that's one of the levers that we'll be pulling and more robust discounting control and all of the tightening that you would expect once you get product market fit.
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Chapter 4: How does Brightpearl measure average order value (AOV)?
because obviously that's a very, very healthy contributor of leads. And then each AE has to go out there and develop their own leads through their own territory. We have a territory model in place, which we're expanding. And then you've got other costs that are associated with each AE. So it's really an allocation model from other departments in. And it just gives us...
We do that because all territories are not equal. So I might have sort of West Coast in the US, California, that the drag along costs there for the AE sort of support with the opportunity that's in market support a much higher quota, although we leave it at 900, but we expect a lot more. Whereas if I go to other places in the US or other places in the UK, they're not as rich.
So we're looking for a different type of unit economic profile from those regions. So we might put in less experienced AEs into the newer, more emerging territories.
Talk to me about full team size today. How many folks?
We're at 112 as of this morning, and we're running a sort of sustainable growth profile. So what I mean by that is, as I said earlier on, we're shooting for 40% our growth this year. And we have a plan to get to about 180 people by the end of the year. So it's quite an aggressive ramp. The two main areas of investment are the go-to-market teams, but also engineering.
And I'm not necessarily building new features out because we've got a very big platform and going deep.
and focusing on quality workflow optimization automation and better lowering the cost of integration from other platforms to me um so it's it's it's more of an evolution play now talking about capital before we wrap up here i think you guys did a 23 million dollar round in december is that right 33 million dollars yeah 33 yeah so what's that mean fully raised all in how much of the company raised
We've raised 71, I think, in total since the company was started in 2008. But since my tenure, I essentially relaunched the business in 2017. That brings us to 39 million. That's the way I look at it. When we hit the reset button. And then, yeah, so of the 33 million, last year we reached break-even profiles. We weren't burning any cash, which was a big... Oh, congrats.
It's huge.
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Chapter 5: What role do professional services play in customer success?
So I've got that filter. I've got about 12 candidates, and we're just going through them, looking for value. and deploying that capital in a way that keeps my new investors happy.
That's great. And when you raised 33 million bucks back in December, what valuation did you raise at?
Pre-money 105.
When I joined the company, it was worth eight. So I hope you carved out a nice equity slug for yourself when you joined.
I did. It was a distressed asset at the time and I put a little bit of money in. But yeah, I did two things. I got a chunk for myself and I made sure there was a chunk for the team, the future team. So the first hundred employees are very well represented. And I'm just on a podcast. No, I don't want to. Thank you very much. Sorry about that.
No, you're good. This is great. Healthy valuation, put your own money in, took care of your team. You're doing all the right stuff, Derek. Let's wrap up here with the famous five. Number one, favorite business book.
Um, I don't have one at the moment. I'm sorry. I would say one thing. I've really got a lot out of Mark Carney's, uh, wreath lectures on, uh, BBC podcasts, or, you know, if you just look up wreath, uh, the wreath lectures, Mark Carney, who's the ex bank of England's governor.
Uh, read lectures. Let's check that out. Number two, is there a CEO you're following or studying?
Uh, Frank Slotman of snowflake. Um, because he's European, he's older than me.
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Chapter 6: How does Brightpearl achieve high net dollar retention?
So I'm sorry. I know that's a boring answer, but it's zoom. You're good.
Number four, how many hours of sleep do you get every night?
I'm eight to nine. Love that. And what's your situation, Derek?
Married, single kids?
Married, two kids. One's a teenager, 14. The other one's 12. And they're loving lockdown. Not. And how old are you? I'm 52. 52. Last question.
What's something you wish you knew when you were 20?
Oh, my God. I would have loved to have really understood at depth the engineering world and in particular how to get visibility and understand efficiency levels within engineering. I'd love you to do a show about engineering. Not the business side of the house. I'd love someone to do the other side of the house and really drill in to the nuances around engineering and the tech stack.
That would be super valuable. Well, watch this, Derek. Guys, if you're listening right now and you're an engineer, I'm not the right host for that show because I don't have the right questions to ask. But if you're listening right now and you're an engineer and you're also entertaining, like me, right? And you're fun, like me, you're good looking, like, no, I'm just kidding.
I'll pay you a grand a month to launch this podcast. Reach out. I'll pay you a grand a month to launch this podcast for folks like Derek. In the meantime, guys, there you have it. Bright Pearl up to $18 million in terms of run rate growing nicely. $5.4.4 billion in GMB through the platform last year. They continue to scale their team of 112 people.
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