SaaS Interviews with CEOs, Startups, Founders
QuestionPro Hits $20m Revenue, $5m Cash In Bank, Selling 60% Of Company For $50m Next?
21 Jul 2020
Chapter 1: What is the business model of QuestionPro?
We kind of divide the business between our enterprise and non-enterprise customers. The enterprise is about 800 customers and non-enterprise is about 4,000 customers.
Okay. And when you look at kind of the average price points on both of those, what are they on average, would you say?
So on the enterprise side, it's about 12 to 15K. And then on the non-enterprise side, it's about 450 bucks, I think.
Sorry, 450 per year? Yeah.
Yeah.
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And you'll get interviews three weeks earlier from founders, thinkers, and people I find interesting. Like Eric Wan, 18 months before he took Zoom public.
We got to grow faster. Minimum is 100% over the past several years.
Or bootstrap founders like Vivek of QuestionPro. When I started the company, it was not cool to raise. Or Looker CEO Frank Bean before Google acquired his company for $2.6 billion.
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Chapter 2: How has QuestionPro's customer base evolved over the years?
So if you paid me $1 yesterday, I'm going to try to make $1.30 out of you this year and $1.60 and $2 out of you.
And you said net revenue retention is 110%? Okay, so if that's the case, right, 110% minus 30% expansion, right, that would mean your gross revenue churn is about 20%. That's how you get the 10% net revenue retention number, correct?
Yeah.
Okay, interesting. And most of that revenue churn, is it, I mean, it could be split evenly between both cohorts, right?
What do you mean towards the enterprise?
The enterprise of the SMB?
No, no, this I'm talking about really the enterprise side. The SMB, you know, SMB, we lose a lot more customers. So SMB more likely, it's like, you know, we... No, but Vivek, sorry.
We're talking past each other. Okay. Number of customers does not matter when you're talking about revenue churn.
We divide the business between the revenue, the enterprise business, and then the- I understand that. I get that.
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Chapter 3: What revenue milestones has QuestionPro achieved recently?
The reason we do it that way is simply because the businesses are so distinct. The operating models are extremely distinct. One is a pure, the $5 million on the bottom line, the bottom side is like pure SaaS, kind of like, you know, people come in, buy the product, use a credit card. Whereas 15 million bucks on the top is really around enterprise. Realistically, it's more a hand-to-hand comeback.
We have account managers, customer success people.
So how many people are on the team today, full-time? About 140 people. How many are quota-carrying reps?
So about 40, 35, 40 sales folks.
And how many engineers? again, 40, 40, 45 ish. Fair enough. That's good. So when you take into account those, those quota carrying reps, plus any other kind of acquisition you're doing, what does your fully weighted cost look like to get a new $15,000 a year enterprise customer?
So, yeah, I mean, I think our kind of cat approximately is, and I think our analysis is somewhere in the, in the, in the six to $8,000 range, you know, in terms of getting people into the, into the door. Um, And one of the things, you know, we don't do a ton of kind of outbound, you know, we do a ton of outbound marketing.
We don't do kind of, we have not gone into kind of like hardcore outbound sales right now. So we do a lot of kind of marketing work that brings in traffic. A lot of our work is through SEO and, you know, that's kind of, that has been our driver for our business for a long, long time.
So give me, dive into that for a second. So name like an SEO keyword that performs extremely well for you.
Uh, question types, for example, you know, people are looking for different types of question types. You're number one for survey question types, survey question types. Okay. Yep. Our survey question types itself are survey design within the top 10 for survey design. Maybe, um, these are high traffic words that drive a lot of traffic. Uh, granted a lot of it is not buyer intent.
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Chapter 4: What acquisitions has QuestionPro made to enhance its offerings?
There's tons of deals I'm seeing right now where companies are doing exactly what you're doing, but they're only like when you buy a house, they're only fronting 10% of the equity. So you're going to get, let's see, you could work with a debt firm right now and get, you know, 10X leverage on your 5 million.
So basically 50 million in cash to go to acquisitions on just the five you're holding in the bank and go do this. You're buying revenue streams without using your own money. Would you ever do that?
Uh, good point, actually, to be honest with you, I've not thought about it that way.
Um, cause you know, then you don't have to sell 60% of the company. No shit. I was going to say, I was going to say, this seems obvious to me, but I'm sure you see it.
Yeah. I mean, the debt deals get slightly more complicated so far. We've not, I mean, frankly, even on the peace side, we've not really like dug ourselves into it because we are, you know, we have money, we are making money and we are kind of focused on kind of trying to grow it.
You know, there's a lot of time that we spend on just trying to grow it at, you know, 30% itself that itself is a, you know, a reasonable amount of work that we are, we are working on. Uh, and that's, uh, that is, that is, that is a, that's a fight and a battle that we are, we are fighting already.
So going back to your point, I mean, you do have a point that on the debt side, to be honest with you, on the financing side, we have not thought about it that deeply or that creatively, frankly. And so, I mean, you raise good points, but that's something that probably I should consider, which I haven't considered realistically.
Well, listen, I'll put a big, great deal together for you. I'm not a broker, so you can't pay me any fees, but if I get a deal done for you, I want a big, beautiful, golden money truck in front of my house when it's all done, okay?
Yeah.
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