SaaS Interviews with CEOs, Startups, Founders
He Exited his CRM, Now Car Software Hits $40m Run Rate
05 Sep 2021
Chapter 1: What is the current revenue run rate for Derive Systems?
This year, we're on track to be about a $55 million company. And that split is still going to be the same of 75-25 this year.
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Hey folks, my guest today is John O'Shull. He's the CEO of Derivate Systems. Now, he may look familiar because he's been on the show many times with a different company, SwiftPage. We'll get that story in a second. He's now focused again on VQ efficiency for engine calibration. Slight difference, slight difference from SwiftPage. John, are you ready to take us to the top? I'm ready, man.
Good to see you. So how do you go from SwiftPage to engine calibration? It's, you know, the underlying factor there is technology, right? So whether it's CRM or auto tech, you know, it's all, it's all the bits and bytes, you know, for sure. But yeah, no, I mean, we were script page for a long time and really, really had a lot of fun growing, growing that business. We,
Sold that off to SFW Capital in mid-2018. I stayed on as CEO for about a year and a half to help with the transition. We put Steve Oriola in the seat there. And then I transitioned over to the board officially at the end of 2019. And because I just can't sit still, Nathan, I had to do something else.
I ran into a private equity firm called Global Environment Funds, GEF, and they had derived systems. And they somehow convinced me to come on board. And as we were talking earlier, My first day on the gig, March the 16th, 2020. And if everybody remembers that, that's when we said, hey, everybody lock ourselves in a room for three weeks and we'll flatten the curve.
So I walked in the door and I said, hey, I'm John. Everybody go home. Let's unpack this story here real quick. So 2018, you sold SwiftPage. Now, were you running SwiftPage on behalf of a private equity firm or did you own a majority of that business?
Um, we, we were running, uh, yes, we were running that on, on behalf of a private equity firm, a couple, a couple of firms, uh, Excel KKR, Jump Capital, uh, were, were the main players in, uh, in SwiftPage at that time. And so just to close out that story, what did you guys sell it for to SFW?
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Chapter 2: How did John O'Shull transition from SwiftPage to Derive Systems?
Yeah. So John, you're super active in the Colorado sort of startup ecosystem. Is that how you came across GEF? How'd they find you? You know, they found me. Yes. I mean, I'm connected with the startup world for sure. I'm connected with a ton of private equity firms. And it's a very incestual kind of group.
You know, one firm will be talking to another firm and say, hey, you need to talk to this, you know, to this guy, etc. And that's how I ran into into GEF. So they, why do they make a connection and say, well, this XCRM and sales automation guy will be a great thing to put on derived systems. How did that connection happen? You know, it's about leadership, quite frankly.
You know, if you look at derived systems, derived systems have been around for a long time. So it's not a startup. It actually, GEF launched this in 2013. It was a combination of a couple of different companies coming together. So I'll give you that story here in a second. But you know, it had gotten to a point where it had lost its way.
And, you know, what I'm known for is a leader that comes in, rapidly understands what's going on, rapidly understands what needs to be done to fix it. And then more importantly, rapidly putting in place a plan to grow it and increase value. And so, you know, that's how they came across me. And they said, you know, are you up to the challenge? And I said, Oh my God, absolutely.
This, this is a, this a lot of fun, but you want me to give you the 32nd history on, on the drive? Well, let's talk about the product though quickly first, because you have three product lines that this SCT product, a thing called bully dog and then derive VQ. Just, I guess who first, who is the buyer? Who is buying this stuff? So let me, let me give you a quick lay of the land drive.
Think of the drive as a company. with two business units and three brands. Our two business units are the enthusiast business unit. So that's any car enthusiast. So if you've got a Mustang or a Jeep or a pickup truck, et cetera, and you want to tune it and get more power out of it, et cetera, that's what's called a car enthusiast. And so that's one business unit.
And then the other business unit is the enterprise business unit, which is more corporate fleets and fleet management, etc. And then, as you mentioned, the three brands, SCT. What's an example of a corporate like McDonald's delivering like trucks? You could do that. But, you know, one of our largest customers is Comcast, right? They have 26,000 vehicles in their fleet.
You probably see them driving all around the Xfinity little vans and pickup trucks, you know, etc., Verizon is another one, Safe Flight. You know, we can kind of think about that. Amazon's got huge. So how would they use your product? They're using it to get better gas mileage or better route plan or what?
So in the enterprise space, the VQ platform, the brand VQ platform has three applications that hang off of it. VQ efficiency, which is one that we're getting the most traction in the market right now, VQ telematics, and then VQ safety. So let me talk about VQ efficiency. And what we do there is we actually tune the engine to get the maximum fuel efficiency and the maximum carbon reduction.
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Chapter 3: What are the main product lines offered by Derive Systems?
Number four, how many hours of sleep do you get every night? I get seven hours of sleep. That's a great situation. Married, single kid? Married, four kids, five grandkids. Wow. And how old are you, John? 59.
Chapter 4: Who are the primary customers for Derive Systems' products?
Take us back. Someone you wish you knew when you were 20. When I was 20 years old, I wish that I would have been more like the Bill Gates. When I was 20 years old, it was 1982. So you probably weren't even born back then. Nope. But, you know, I wish I would be more like an entrepreneur. I was I was actually a sophomore in college.
I was I was quarterback of the football team and I was thinking I was going in the NFL. But then I really said, no, I got to go into corporate America. I wish I would have went more entrepreneurial back then. Guys, there you have it.
He sold SwiftPage to SFW Capital mid-2018, sat on the board in 2019, then got bored and ended up getting in sync with a new private equity firm who owned a company called Derive Systems. That was GEF. He's now running Derive Systems, a business that did about $40 million in revenue last year, 75% on their... consumer business, another 25% on their enterprise side.
Enterprise growing very quickly, though. They sell hardware, but then really what they do is they then upsell software that enables you to get better engine performance. Speedometer, Comcast can make sure their trucks don't drive faster than 10 miles per hour in certain zones. They're scaling quickly with 50 enterprise customers and over $5 million in MRR, hoping by the end of the year this year.
John, thanks for taking us to the top. Thanks, Nathan. Good to see you again, bud. Thanks, man. Take care.
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