SaaS Interviews with CEOs, Startups, Founders
Founder Hits $13m Revenue with No VC Raised selling SaaS to Defense Firms
14 Nov 2023
Chapter 1: What is the main topic of the podcast episode?
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They serve customers like large defense contractors, supply chain companies, a mix of on-prem and cloud solutions. They'll do a million dollars per month in revenue, up from $830,000 a month just a year ago.
Chapter 2: How did Inflectra achieve $13 million in revenue without VC funding?
So nice growth, serving 5,500 customers. Many customers have several hundred thousand per year, which is great. Nice expansion there. And he's done this all bootstrapped. It was incredible by Adam. He owns 100% of the business. The company will profit, call it 5% this year as he looks to continue to scale. We'll see what happens next.
Hey folks, my guest today is Adam Sandman, who founded Inflectra in 2006. He's been a programmer since the age of 10. Today, he serves as the company's CEO. He's responsible for product strategy, technology, innovation, and business development. He lives in Washington, D.C. with his family. Adam, you ready to take us to the top? Yep, I'm ready.
All right, so Inflectra helps customers deliver quality software. What does that mean?
An engineer would say quality is fitness for purpose. For us, what it means is keeping the world running. That's what our team does every day. That's what our passion is. We work with companies that are in the biospace, utilities, energy companies, literally every sector of the economy that you rely on to get to work every day, to have power in your house, to clean water.
We work with those kind of companies to make sure all of the IT systems they have work as they should and going forward in the future, anticipate risks that might come so that as the world evolves and changes, they're ready to address those risks. So that's what we're here for.
And we spoke back in May of 2022. You told me your biggest customers are large defense contractors and supply chain companies, a mix of on-prem and cloud. Is that still the case?
Yep, that is definitely still the case.
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Chapter 3: What industries does Inflectra serve and what solutions do they offer?
A lot of bio companies, I think, have added into the mix, but definitely a lot of aerospace. When I say a defense, a lot of aerospace companies, but also maritime and large platform companies are making big hardware, as well as companies working in the supply chain manufacturing space. automotive aerospace, but also general manufacturing as well, IoT and those sort of sectors.
Let's sort of fast forward the past 12 to 18 months. I want to talk about sort of how you thought about product. Obviously, we're in a very different economic climate today than we were in May of 2022. Curious how you've changed or pivoted, I guess. But first, have you decided to sort of expand with the current customers you had back a year and a half ago?
You had about 5,000, you told me, or have you focused on expanding into new accounts?
That's a great question. And we've done a bit of both, but a lot of it has been expanding into adjacent buying points in the same customer, as well as referrals and partnerships. So finding, working with partners that brought us deals and finding more deals with them.
And then obviously looking at larger customers and finding adjacent buying points or following referrals where oftentimes people are consultants, they move from organization to organization and they bring us in into those organizations. And that's been a large part of the direct sort of sales as well as the partnership sales.
And then of course, we're still looking for new buying points that fit our ideal target client. One thing I think we've done a better job of in the last 18 months has been defining our ideal client. We spent a lot of work this year on messaging and message development, and our website is still in the midst of that transition if you go to it.
So you'll see it's in an evolving state, but really trying to hone down what is our ideal customer, what is our USP at a much more deep level, not just the technology that sells quality software, but What is our client trying to do? Which clients do we find resonate the most? And then putting our resources into those clients rather than chasing everyone under the sun.
So I think when it comes to the new sales, really honing down, obviously we'll be opportunistic if someone comes to us, but not expending resources and not prospecting and not focusing outside of that core as much as we might have done 18 months ago.
So I'm curious how much you've grown over the past 18 months. And then I want to drive deeper into how you decided what ICP to go after because you had a huge bucket of customers to choose from, right? So what has growth looked like the past 12 to 18 months?
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Chapter 4: How has the customer base evolved over the last 18 months?
If in Europe, you get someone else.
So then your sales team has to be well-educated in all three product lines. They can't be a specialist in one.
That's right. Now, obviously, we do have pre-sales engineers who can augment their knowledge. But yes, they have to know all the products and they have to know at least two or three industries. We're not big enough to have one person per industry as we get bigger. you would expect to be of an industry knowledge as well.
So our salespeople have to be technically smart, know sales, and also understand the industries they serve, which is quite a big ask.
Interesting. When you recruit sales reps, do you recruit them from the specific industry that you want them to then sell to, or do you just go find the best salesperson you can that knows how to hit quota?
Yeah.
uh, we've most of the latter, uh, and then we find the industries that they will fit best with. Um, and, and that seems to work best. Okay. So just be clear. You find great sales reps. Yes. Correct. More about the industry.
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Chapter 5: What strategies did Inflectra use for customer expansion?
Yeah. We're not hiring a bio person. We have somebody who knows these kinds of products is really good, good at communication, good at closing, good at following through. And then they'll learn the industry stuff. I see. How many folks are full time today? Uh, right now about 50, 55, I think. How many carry a quota?
Uh,
We don't carry individual quotas. We have a company quota and everyone's paid salary. We don't do any commissions.
That's one unique feature.
So how many are on the sales team? Uh, 55, including if you exclude customer success and you exclude partnerships, I think it's about 15.
Okay. One, five. And how many are actually writing, writing, pushing code every month? Engineers.
Oh, sorry. Um, team size across both the two platforms. That's five plus five, 15, about 20, 20.
Interesting. So did I hear you? I hear you're doing the math. Did you sort of put five engineers, engineers work on all three products? Or do you put five engineers on product one, five on two, three?
Five is on product one, and there is another 10 on the other core product, and there's another five that do add-ons, extensions, and the... But you let them specialize in that same product. They don't switch between products once in a while. Yes, that's correct. That's correct, 100%. Very interesting. Okay, why no quotas? We found that team collaboration is the key.
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Chapter 6: What is the ideal customer profile for Inflectra?
Very interesting. Last year, you were bootstrapped. Are you still bootstrapped today? We are. We've had many offers. And we've talked to companies. We're not in the market yet.
What's the most interesting offer you got? Don't name the company, but what would they say? Want to buy you for $100 million or what?
There's ones that want to do probably less than that now because the evaluations are down a bit. One is interested in one that wants us to be part of a manufacturing, very, very industry vertical approach. Other ones want us to go very horizontal across all industries. What was the highest offer you got though, Adam, that you rejected?
we honestly we haven't got to a firm firm office so that they're all talking you know 6x 8x i would say but we hadn't been 60 million 80 million yeah yeah yeah okay right exactly so who someone's listening right now they really love you they really want to partner with you or buy or whatever what is the right partner for you what are you looking for
For a partner, it will be a firm that has a service offering, a consulting firm that wants to expand their business, that wants to be able to extend their range of services, and is willing to not just sell a product, but also build an offering at their company around that service.
I see. And you would consider something between an $80 million and $100 million all-cash offer today?
Oh, sorry. When you say partnership, I think you meant to partner with the company to acquire us. Strategic alignment and cultural alignment is number one. And then the other stuff, yes, we can negotiate on equity or cash. I have to say the number one thing is cultural alignment. All the people here would want to work.
It has to be someone that we all want to work for, or at least hand over the company to.
How much equity does the team own today? What's the ESOP pool you've set up? 10%, 15%?
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