SaaS Interviews with CEOs, Startups, Founders
Transform your business from a EBITA multiple of 4 to a revenue multiple of 5+
20 Jun 2023
Chapter 1: What is the main topic discussed in this episode?
I'm very excited to share this recording with you guys, which happened at our conference, sasopen.com, with over 100 speakers, all founders of B2B SaaS companies. We have a very high bar for what speakers share on stage, so you're going to enjoy this episode where we dive deep into revenue graphs, real tactics, and real growth metrics.
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Thanks, guys. So a really quick background about myself. I am a serial tech entrepreneur, a data geek. I have sold my first company to Bloomberg. I sold my second company to a large education technology company. And I'm now with a company called Code Mantra.
And what I'm hoping to do through this talk track is really give you guys a perspective of how I've gone through this painful journey of pivoting and transitioning a services company to a SaaS company. We're about an 8 million ARR company. We have a long ways to go, but hopefully you get some value out of the journey that we have had and the many missteps we have had along the way as well.
So the theme of today's talk track is going to be around what you see out there, right? It's really, what do we do with strategy? What are some of the missteps and what should you be looking for? How do you go about getting validation in the middle bucket? What do you need to do to achieve scale? And along the way, I'm going to be parlaying a whole bunch of metrics.
I'm going to share a bunch of metrics with you guys. And if there is interest beyond this, I'm happy to have a separate talk track around other data points. All right. But before we get started, here's sort of where we are. You aren't seeing data to the left, which is, by the way, we got into code mantra about late 2014. So this is our revenue chart, as you see.
We ended last year with eight, as I just said. And we're hoping to grow it to ten. We are completely self-financed. We have not raised external capital beyond debt capital. So... There's always the conversation of, hey, do you want to add more gas to the fire? Possibly we're at that stage where we might consider that right now, but we're quite pleased with how we're growing.
We are, by the way, in a space called intelligent document automation. In short, what that fancy buzzword means is we extract contextual data out of complex PDFs. That's what that big buzzword means. But anyway, that's sort of our journey. As you can see, this gray line was pretty much 100% of the company seven years back. And it slowly started coming down to where it is today.
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Chapter 2: How does the guest describe their journey from services to SaaS?
But we weren't able to get repeatable sales motion. And somewhere along the way, you will hit that hurdle around repeatable sales motion if you don't have a large CAGR. That's point one. The second point in team one on strategy validation is GP. Look, and this is very specific to a transition company like us. Look, any SaaS company that you meet, everybody's like, oh, I need 80% GP.
I need 90% GP. All right, great, sexy to look at, and so forth. Look, when you're hustling at the ground floor, 90% GP ain't attainable. OK, let's just be real. So there's always conversations, particularly for a company like us. We started our services business like any services business. We'd be lucky if we got 30% GP. And so for a 30% GP company, 50%, 40% looks sexy.
Not sexy enough for a SaaS company. So to make that pivot takes time. You cannot have that overnight. But on the same note, You've got to have a floor, whatever your floor is. The floor could be 50%. The floor could be 60%. Tell your sales team, your founding team, do not compromise if you're pivoting along the way or even trying at the ground floor, trying to establish some credibility.
Do not compromise on your GP. You've got to have relevant GP to participate. If you don't, then maybe you're in the wrong camp. It indicates something's wrong with where you're playing. Anyway, that's point two on GP. The point three is around R&D. I don't have a slide on it, except that, look, I mean, my CFO and I always have a conversation around, oh, my god, we're spending too much on R&D.
We just had a big failure investing in a learning management system. Look, again, if you're venture-backed, money is cheap and easy, at least until the markets collapsed late last year. Now capital is tight. We all know that, right? You still got to spend on R&D, particularly in your early stages. You've got to spend at least 20-plus percent on R&D.
At least, you've got to figure out a way to do that. That's very, very important, or else you'll get run over. I may be stating the obvious to this crowd. In practice, it's a fight for me every day to get that kind of money.
You know your target market.
You're super clear about it. Now I am. Now I am.
You're speaking to a group.
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