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Jul 30, 2019 · 22m · top-founders

1466 Sales Demo Tool Passes $3m in ARR, Transitions To Enterprise

Garen Hess · 12m spoken Nathan Latka · 8m spoken
0:00 / 0:00

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In this episode of The Top Entrepreneurs Podcast, host Nathan Latka interviews Consensus founder and CEO Garen Hess to analyze how the automated B2B sales demo platform scaled past $280,000 in monthly recurring revenue while managing an intentional upmarket transition to enterprise clients.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 39.4% of the talking time here. How this is scored →

Nathan as informed peer 4.2 Guest teaching 2.0 Guest disagreement 1.7 Nathan pushing back 2.7
05100:0010:0020:000:00–2:15 · Nathan as informed peer 0/10 Nathan Latka Book Promotion and Amazon Review Highlight Introductory solo segment where Nathan promotes his book, shares a listener review, and previews the core metrics of ConsenSys before the interview begins.2:16–6:59 · Nathan as informed peer 4/10 Introducing Garen Hess and the Focus Versus Diversification Debate Nathan and Garen engage in a brief intellectual debate comparing bridge engineering diversification with Carnegie and Sun Tzu focus doctrines before exploring the software product model.7:00–10:54 · Nathan as informed peer 6/10 Market Evolution, ADP Case Study, and Enterprise Strategy Nathan drills into the ADP contract expansion and shares his barbell pricing theory about the danger zone between micro-SaaS and massive enterprise contracts.10:57–16:13 · Nathan as informed peer 5/10 Sponsor Break for SaaStock West Coast Conference Following the mid-roll conference ad, Nathan pushes Garen to admit that transitioning away from SMB customers means actively dropping them, while Garen educates Nathan on why internal content creation failed.16:13–19:32 · Nathan as informed peer 7/10 Funding Structure, Revenue-Based Financing, and Retention Dynamics Nathan displays deep fluency in non-dilutive capital by defining revenue-based financing mechanics and helps Garen correct his phrasing regarding net revenue retention calculations.19:32–21:53 · Nathan as informed peer 3/10 Team Headcount, Global Distribution, and Acquisition Payback The interview concludes smoothly with quick-fire metric questions regarding team distribution and CAC payback under 12 months, followed by the Famous Five.0:00–2:15 · Guest teaching 0/10 Nathan Latka Book Promotion and Amazon Review Highlight Introductory solo segment where Nathan promotes his book, shares a listener review, and previews the core metrics of ConsenSys before the interview begins.2:16–6:59 · Guest teaching 2/10 Introducing Garen Hess and the Focus Versus Diversification Debate Nathan and Garen engage in a brief intellectual debate comparing bridge engineering diversification with Carnegie and Sun Tzu focus doctrines before exploring the software product model.7:00–10:54 · Guest teaching 3/10 Market Evolution, ADP Case Study, and Enterprise Strategy Nathan drills into the ADP contract expansion and shares his barbell pricing theory about the danger zone between micro-SaaS and massive enterprise contracts.10:57–16:13 · Guest teaching 4/10 Sponsor Break for SaaStock West Coast Conference Following the mid-roll conference ad, Nathan pushes Garen to admit that transitioning away from SMB customers means actively dropping them, while Garen educates Nathan on why internal content creation failed.16:13–19:32 · Guest teaching 2/10 Funding Structure, Revenue-Based Financing, and Retention Dynamics Nathan displays deep fluency in non-dilutive capital by defining revenue-based financing mechanics and helps Garen correct his phrasing regarding net revenue retention calculations.19:32–21:53 · Guest teaching 1/10 Team Headcount, Global Distribution, and Acquisition Payback The interview concludes smoothly with quick-fire metric questions regarding team distribution and CAC payback under 12 months, followed by the Famous Five.0:00–2:15 · Guest disagreement 0/10 Nathan Latka Book Promotion and Amazon Review Highlight Introductory solo segment where Nathan promotes his book, shares a listener review, and previews the core metrics of ConsenSys before the interview begins.2:16–6:59 · Guest disagreement 2/10 Introducing Garen Hess and the Focus Versus Diversification Debate Nathan and Garen engage in a brief intellectual debate comparing bridge engineering diversification with Carnegie and Sun Tzu focus doctrines before exploring the software product model.7:00–10:54 · Guest disagreement 2/10 Market Evolution, ADP Case Study, and Enterprise Strategy Nathan drills into the ADP contract expansion and shares his barbell pricing theory about the danger zone between micro-SaaS and massive enterprise contracts.10:57–16:13 · Guest disagreement 3/10 Sponsor Break for SaaStock West Coast Conference Following the mid-roll conference ad, Nathan pushes Garen to admit that transitioning away from SMB customers means actively dropping them, while Garen educates Nathan on why internal content creation failed.16:13–19:32 · Guest disagreement 2/10 Funding Structure, Revenue-Based Financing, and Retention Dynamics Nathan displays deep fluency in non-dilutive capital by defining revenue-based financing mechanics and helps Garen correct his phrasing regarding net revenue retention calculations.19:32–21:53 · Guest disagreement 1/10 Team Headcount, Global Distribution, and Acquisition Payback The interview concludes smoothly with quick-fire metric questions regarding team distribution and CAC payback under 12 months, followed by the Famous Five.0:00–2:15 · Nathan pushing back 0/10 Nathan Latka Book Promotion and Amazon Review Highlight Introductory solo segment where Nathan promotes his book, shares a listener review, and previews the core metrics of ConsenSys before the interview begins.2:16–6:59 · Nathan pushing back 3/10 Introducing Garen Hess and the Focus Versus Diversification Debate Nathan and Garen engage in a brief intellectual debate comparing bridge engineering diversification with Carnegie and Sun Tzu focus doctrines before exploring the software product model.7:00–10:54 · Nathan pushing back 4/10 Market Evolution, ADP Case Study, and Enterprise Strategy Nathan drills into the ADP contract expansion and shares his barbell pricing theory about the danger zone between micro-SaaS and massive enterprise contracts.10:57–16:13 · Nathan pushing back 4/10 Sponsor Break for SaaStock West Coast Conference Following the mid-roll conference ad, Nathan pushes Garen to admit that transitioning away from SMB customers means actively dropping them, while Garen educates Nathan on why internal content creation failed.16:13–19:32 · Nathan pushing back 4/10 Funding Structure, Revenue-Based Financing, and Retention Dynamics Nathan displays deep fluency in non-dilutive capital by defining revenue-based financing mechanics and helps Garen correct his phrasing regarding net revenue retention calculations.19:32–21:53 · Nathan pushing back 1/10 Team Headcount, Global Distribution, and Acquisition Payback The interview concludes smoothly with quick-fire metric questions regarding team distribution and CAC payback under 12 months, followed by the Famous Five.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 82.9% · guest 17.1%0:00 · Nathan 82.9% · guest 17.1%3:00 · Nathan 17.1% · guest 82.9%3:00 · Nathan 17.1% · guest 82.9%6:00 · Nathan 29.7% · guest 70.3%6:00 · Nathan 29.7% · guest 70.3%9:00 · Nathan 52.6% · guest 47.4%9:00 · Nathan 52.6% · guest 47.4%12:00 · Nathan 30.3% · guest 69.7%12:00 · Nathan 30.3% · guest 69.7%15:00 · Nathan 24.7% · guest 75.3%15:00 · Nathan 24.7% · guest 75.3%18:00 · Nathan 29.5% · guest 70.5%18:00 · Nathan 29.5% · guest 70.5%21:00 · Nathan 51.7% · guest 48.3%21:00 · Nathan 51.7% · guest 48.3%
Sharpest disagreement ▶ 3:24 Pushback against diversification analogy

Garen rejects Nathan's engineering metaphor of avoiding single points of failure, citing Andrew Carnegie and military doctrine on concentration of force.

 Hardest push from Nathan ▶ 14:04 Host cuts through customer churn framing

Nathan interrupts Garen's polite framing to bluntly assert that the company is actively getting rid of lower-tier customers to focus on enterprise.

 Biggest teaching moment ▶ 15:18 The operational failure of managed content creation

Garen explains how their attempt to offer agile content creation failed because clients stalled during script reviews, creating a major onboarding bottleneck.

 Nathan holds their own ▶ 16:57 Defining revenue-based financing mechanics

Nathan demonstrates high financial literacy by precisely breaking down percentage-of-gross-receipts repayment and fixed repayment caps without prompt.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Nathan Latka Book Promotion and Amazon Review Highlight 0000 Introductory solo segment where Nathan promotes his book, shares a listener review, and previews the core metrics of ConsenSys before the interview begins.
Introducing Garen Hess and the Focus Versus Diversification Debate 4223 Nathan and Garen engage in a brief intellectual debate comparing bridge engineering diversification with Carnegie and Sun Tzu focus doctrines before exploring the software product model.
Market Evolution, ADP Case Study, and Enterprise Strategy 6324 Nathan drills into the ADP contract expansion and shares his barbell pricing theory about the danger zone between micro-SaaS and massive enterprise contracts.
Sponsor Break for SaaStock West Coast Conference 5434 Following the mid-roll conference ad, Nathan pushes Garen to admit that transitioning away from SMB customers means actively dropping them, while Garen educates Nathan on why internal content creation failed.
Funding Structure, Revenue-Based Financing, and Retention Dynamics 7224 Nathan displays deep fluency in non-dilutive capital by defining revenue-based financing mechanics and helps Garen correct his phrasing regarding net revenue retention calculations.
Team Headcount, Global Distribution, and Acquisition Payback 3111 The interview concludes smoothly with quick-fire metric questions regarding team distribution and CAC payback under 12 months, followed by the Famous Five.

Statements from this episode (11)

Assertion Not checkable as stated
Consensus average deal size is about $17,000 per year
“Average deal size is about 17,000 dollars a year.”
Garen Hess Jul 30, 2019 ▶ 6:06
Assertion Not checkable as stated
Consensus typically enters accounts with around 25 seats
“We typically get in a lot of companies have about 25 seats. And then they scale up from there.”
Garen Hess Jul 30, 2019 ▶ 6:21
Assertion Not checkable as stated
Hess: ADP split test showed 44% increase in close rates with Consensus
“ADP, when they first came on back in 2014, they started with 80 sales reps and they did the split test for 90 days where they had every rep, every other deal they would use consensus as part of the sales conversation. And sales process. And then they compared …”
Garen Hess Jul 30, 2019 ▶ 7:48
Disclosure
Hess: Consensus enterprise segment grows 50% amid flat overall revenue growth
“Right now we're seeing pretty flat growth because we've been seeing a change in our focus, so we've been focusing mostly on enterprise, and so we've seen a growth rate of about 50% annually in our enterprise, but overall we've been pretty flat just because we'…”
Garen Hess Jul 30, 2019 ▶ 10:03
Insight
Hess: Transitioning from SMB to enterprise is harder than starting over
“Moving from small business to enterprise focus will be as hard or harder as starting your company over. Starting your company in the first place. And it was actually really good advice and I've appreciated that because even though I knew it was going to be cha…”
Garen Hess Jul 30, 2019 ▶ 13:16
Opinion
Hess: Building custom content for clients was a massive mistake
“The problem is the content phase building out Content turned out to be a massive mistake.”
Garen Hess Jul 30, 2019 ▶ 15:20
Assertion Not checkable as stated
Hess: Lack of content is the main reason SMB customers churn
“Six months after they bought the software, They don't have content, and I would say that's the number one reason that the small business accounts are churning because they just struggle to get the content in there.”
Garen Hess Jul 30, 2019 ▶ 16:02
Opinion
Garen Hess recommends Riverside Acceleration Capital over competitors like Lighter Capital
“I would highly recommend them to any entrepreneurs looking around for that out there because I looked at a lot of other firms like lighter capital and others and nothing against the other firms, but these guys have been awesome.”
Garen Hess Jul 30, 2019 ▶ 17:20
Disclosure
Hess: Consensus experiences approximately 28% gross revenue churn
“Yeah, gross revenue churn's been at about 28%.”
Garen Hess Jul 30, 2019 ▶ 18:21
Prediction Not checkable as stated
Hess: Consensus expects enterprise expansion to fully offset churn
“We really expect to be able to make all of that up at some point through expansions because we're starting to have some expansion, you know, very large expansion discussions with some of our enterprise customers.”
Garen Hess Jul 30, 2019 ▶ 19:14
Assertion Not checkable as stated
Consensus spends $14,500 in CAC to acquire a $17,000 ACV customer
“We spend about 14, five.”
Garen Hess Jul 30, 2019 ▶ 19:55
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