SaaS Interviews with CEOs, Startups, Founders
She hit $250k MRR in November for Partnership SaaS, 4000 Customers, approx $90m Valuation
05 Dec 2022
Chapter 1: What is Zomentum and how does it help SaaS companies?
The easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Zomentum doing $35,000 a month a year ago, now doing $250,000 a month with their two-sided network, helping you grow faster with partner programs. They've got over 2,800 partners on one side of their marketplace.
And SaaS companies bring in another 1,200. There's over 4,000 partners on their platform as they look to scale. Again, a two-sided marketplace here. $13 million Series A at a little under $100 million valuation last year. 75 on the team, 38 engineers as she looks to scale with her four-person sales team based at a Bangalore with $300,000 to $500,000 quota target.
Chapter 2: How does Zomentum facilitate partner revenue scaling?
Hey folks, my guest today is Shruti Gadgi. She is the CEO of Zomentum, a revenue platform to help partners and partner programs scale. The platform fuels technology sales over 800 million today. She was an investor investing in Seed and Series A SaaS startups before jumping into the business and was named CRN Women of the Channel 2022.
Zomentum was awarded a great place to work under her leadership. She's now looking to scale. All right, Shruti, ready to take us to the top? Yes, very excited to be here. Very cool. Okay, so how does Zomentum work?
Chapter 3: What is the significance of the two-sided marketplace model?
What does it mean to platform? What does it mean to help people scale partner revenue? Oh, well, partner programs and partner revenue has been a black box for most SaaS companies usually. And the reason it exists is because SaaS companies and partners are trying to go to market together, but they live in their own silos.
What we do as a platform is get both of them together on a single platform where they can come to get deals done, right? Like that's how we look at it. Now, who would you sort of put in your space? I mean, crossbeam comes to mind. Is that the biggest one or who else? Well, crossbeam is step one. It helps you identify what are the opportunities are.
We come after that, that once you've identified the opportunities, how do you work together to drive them to closure? Interesting. Okay. And how do you think about pricing your technology? What's the average customer pay you per month on average? An average customer is a very per partner fee, which is a sliding scale on the SaaS company side.
But we also have a motion where we add partners by ourselves who are paying anywhere between $100 to $200 per month to use the tool. And why would someone maybe pay more than that, $300, $400 a month? What are you upselling against?
Chapter 4: How does pricing work for partners and SaaS companies?
On the partner side, like it's a two-sided network. So we attract both partners on one side and SaaS companies on the other. The partners pay for additional functionality, like the basics of the sales tool that is built for partners is what the price I'm coding for. But beyond that, we do billing reconciliation separately. We do assessments. We help them integrate with a bunch of SaaS vendors.
So all of that is at an additional cost for the partners. And what do the SaaS companies pay or is it free for them? No, the SaaS companies pay for the partners that they manage. Our partners pay us directly. The SaaS companies pay for the connection that you're enabling, right?
Like you're getting these two siloed entities on one platform and that's what they pay for, which is the per partner fee. And of course we do billing reconciliation. But what is that? Shruti, what is the per partner? So what's the average SaaS company pay you per month? It can go as low as $30 per partner per month.
But what's the big... Don't name the company, obviously, but what's your biggest SaaS company customer paying you per year or per month? I'd say around $100K contract. Oh, wow.
Chapter 5: What strategies led to Zomentum's impressive growth?
Okay. So if I'm a SaaS company paying you $100,000 per year, what am I getting? Hundreds of partners? You're getting to manage your partners. So it's a tool to manage your partners and a network that we come with ourselves. So it's a handshake in some sense. Very interesting. Okay, very interesting. Now, before I get more of your backstory and how you launched and grew, help me understand.
So this year, if you look at 100% of your revenue, what percent will come from partners versus SaaS companies? I want to say the SaaS company-led motion is a few quarters old, so fairly new like that. So partner-driven motion is two years old. So I want to say 60% comes from partners today. Okay, wow. But still, 40% from SaaS companies, considering how new it is, is pretty impressive.
Because it's an accelerated way of go to market because every SaaS company adds to the network their own partners, right? Very interesting. Okay. Give me more of your backstory. What year did you launch the company?
Chapter 6: How does Zomentum manage its team and sales structure?
We launched in 2018, later half of 2018. So it's been four years now. Who is we? Do you have co-founders or you're still founder? I have a co-founder for tech and product. I take care of everything business. Very cool. Do you guys just play nice and split 50-50 at the beginning or what? I don't think it's plain nice like that. I think it is a very equitable distribution between us.
And we brought skill sets to the table, which were very complimentary. How did you negotiate that? I mean, this is a very hard thing for a lot of early teams to negotiate. Anything other than 50-50 tends to generate, create some friction. How did you go through that process?
Oh, well, my co-founder, I mean, he's an engineer by background, worked at Twitter, Andrew Brick, but had worked very closely with partner teams. So he had a business sense and very strong on product. He was just a techie by profession, but I think he's a more strong product person. And I think product and business go very hand in hand. And I think of them as an equal distribution.
Chapter 7: What challenges does Zomentum face in the current market?
Only tech may be able to thought very differently. Okay. So you, I mean, it is fair to say you could just put it 50-50 then if you consider both those equal at the beginning. Correct. Which is why we did it, right? Okay, okay. So you did split 50-50. Okay, cool. Now, have you guys, I don't think you have bootstrapped, I think you've raised, but have you bootstrapped or raised capital?
We have raised capital. Yeah. So tell me, fill out the funding story a little bit. First off, when did you do the first round and why was it important for you to get that first round done? Oh, I think like we didn't race immediately. Most of the initial, I wouldn't say like nine months went in customer research. We're not from the industry. It was a very thesis driven startup for us.
I mean, some context is I used to be, I used to work at Excel before this investing in a lot of SaaS companies and we saw this problem and wanted to solve for it, but spend the next six, nine months just figuring out our wedge into the market, right? Like one, it's a two-sided network. So we had to solve for chicken and egg.
Chapter 8: What is the future outlook for Zomentum and its network?
But which side would we solve for? How would we penetrate with such a sharp value prop insight is what we spent time. So we didn't write a single line of code. I want to say at least 12 months into the company, right? Which is just being sure that, hey, we are committed to this. We've figured an entry point. And that's when we raised our initial seat round.
And how much was that for and what year? It was 4 million in seat. And then we raised series A last year. Okay. So 4 million seed. And then I think I can't, I don't want to skip over this. That's really, really, really important. You saw probably a lot of marketplaces at Excel, and then you went in and launched your own. You had to decide what side do you want to go after first?
And what's your mousetrap? What decision did you make? What side did you go after first? We went after the partners first. So SaaS companies on one side, partners on the other for us. So what we, even as a company, very strongly believe in today is that we have to invest in partner success. And if they're successful, that just means they're selling more SaaS.
Means by design, the SaaS company is going to be successful. So we've solved for partner first. Yeah, that makes sense. Okay. So staying on that theme, how many partners pay you at least a dollar per month today? We have around 4,000 partners in the network. And I want to say 70% of them pay us to use the product. How did you get... I mean, that's a huge conversion rate, right?
Even for B2B SaaS centers. How did you get 70% to pay you? I mean, just to be clear, out of 4,000, that'd be like 2,800 are paying per month. And that's the partners that we've acquired. The others are also paid for on behalf of the SaaS companies pay for them. So there is no way to get in free here. Oh, I see. I see. Got it. Got it. Okay. So 2,800 paying an average of 200 bucks a month.
I mean, that's like $560,000 a month right there in revenue, right? Yeah. I mean, there is baggage of pricing where we started very low at 39, increased it to 49, 99, and now we have increased prices. So there's some grandfathering effect there. But I want to say because of compounding, then it's not as high. Yeah. I see. I see.
So moving forward, new partners you're signing up are paying on average $200. But historically, the average was maybe something more like $60, $70, $80, something like that. Yeah, yeah, yeah. Because we respected those prices for them. Of course, which is very nice of you, by the way. I mean, I think it's only fair for them to take a punt on us early on, right? Fair enough, fair enough.
Okay, so 2,800 partners, to fix this math, 2,800 partners paying a lower average per month of like 70 bucks a month is more like $190,000 a month in revenue from that part of the business. Is that more in the range of where you are? Yes, yes. Fair enough. And if that's where you're at today, where were you one year ago so we can sort of understand your growth?
We've scaled 8X in the last 12 months. Okay. So you're going to make me do the math. So $190,000 a month is from partners and partners are 60% of your revenue. So increasing another 40% on top of that means you're doing like- As companies also is only two quarters old. Like the other 40% is a chunk of that is, it's yeah. Okay.
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