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Dec 7, 2018 · 18m · top-founders

1231 How He Launched Channel Partnership on Day 1 After Losing Millions

Wayne Johnson · 8m spoken Nathan Latka · 7m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this interview on The Top Entrepreneurs Podcast, host Nathan Latka speaks with Wayne Johnson, co-founder and CEO of RegTech platform Encompass Corporation, exploring how he rebounded from a multi-million-dollar due diligence loss to build an enterprise SaaS company approaching $1 million in monthly recurring revenue.

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 43.7% of the talking time here. How this is scored →

Nathan as informed peer 5.4 Guest teaching 2.0 Guest disagreement 1.2 Nathan pushing back 2.8
05100:0010:003:32–6:33 · Nathan as informed peer 4/10 Origin Story: From Multi-Million Dollar Loss to Channel Launch Latka explores the origin story of Johnson's personal financial loss leading to Encompass Corporation's founding and initial distribution deal. The exchange is cooperative with Johnson recounting his entrepreneurial background.6:33–9:05 · Nathan as informed peer 6/10 Company Scale, Headcount Distribution, and Revenue Growth Latka drills into customer metrics and attempts to calculate monthly revenue run-rate, prompting Johnson to clarify pricing tiers and decline direct historical revenue disclosure. Latka adapts by extracting annual growth figures and exploring channel partner revenue share structures.9:09–12:30 · Nathan as informed peer 6/10 Sponsor Advertisement: Monday.com Project Management Following an ad read for Monday.com, Latka calculates CAC and payback periods by multiplying payback months with minimum contract values. Johnson transparently acknowledges their acquisition costs remain high due to heavy market education requirements.12:30–15:37 · Nathan as informed peer 7/10 Examining Customer Retention and Net Negative Churn Latka pushes for precise definitions around annual gross revenue churn versus monthly logo churn and corrects Johnson's misunderstanding of the industry term net negative churn. Latka then calculates an implied minimum LTV of over $400k based on Johnson's retention timeline.15:37–17:24 · Nathan as informed peer 4/10 Fundraising History and Capital Strategy Johnson details his staged fundraising journey across Australian angel investors and UK family offices before Latka transitions into the standard Famous Five closing questions.3:32–6:33 · Guest teaching 2/10 Origin Story: From Multi-Million Dollar Loss to Channel Launch Latka explores the origin story of Johnson's personal financial loss leading to Encompass Corporation's founding and initial distribution deal. The exchange is cooperative with Johnson recounting his entrepreneurial background.6:33–9:05 · Guest teaching 2/10 Company Scale, Headcount Distribution, and Revenue Growth Latka drills into customer metrics and attempts to calculate monthly revenue run-rate, prompting Johnson to clarify pricing tiers and decline direct historical revenue disclosure. Latka adapts by extracting annual growth figures and exploring channel partner revenue share structures.9:09–12:30 · Guest teaching 2/10 Sponsor Advertisement: Monday.com Project Management Following an ad read for Monday.com, Latka calculates CAC and payback periods by multiplying payback months with minimum contract values. Johnson transparently acknowledges their acquisition costs remain high due to heavy market education requirements.12:30–15:37 · Guest teaching 3/10 Examining Customer Retention and Net Negative Churn Latka pushes for precise definitions around annual gross revenue churn versus monthly logo churn and corrects Johnson's misunderstanding of the industry term net negative churn. Latka then calculates an implied minimum LTV of over $400k based on Johnson's retention timeline.15:37–17:24 · Guest teaching 1/10 Fundraising History and Capital Strategy Johnson details his staged fundraising journey across Australian angel investors and UK family offices before Latka transitions into the standard Famous Five closing questions.3:32–6:33 · Guest disagreement 1/10 Origin Story: From Multi-Million Dollar Loss to Channel Launch Latka explores the origin story of Johnson's personal financial loss leading to Encompass Corporation's founding and initial distribution deal. The exchange is cooperative with Johnson recounting his entrepreneurial background.6:33–9:05 · Guest disagreement 2/10 Company Scale, Headcount Distribution, and Revenue Growth Latka drills into customer metrics and attempts to calculate monthly revenue run-rate, prompting Johnson to clarify pricing tiers and decline direct historical revenue disclosure. Latka adapts by extracting annual growth figures and exploring channel partner revenue share structures.9:09–12:30 · Guest disagreement 1/10 Sponsor Advertisement: Monday.com Project Management Following an ad read for Monday.com, Latka calculates CAC and payback periods by multiplying payback months with minimum contract values. Johnson transparently acknowledges their acquisition costs remain high due to heavy market education requirements.12:30–15:37 · Guest disagreement 1/10 Examining Customer Retention and Net Negative Churn Latka pushes for precise definitions around annual gross revenue churn versus monthly logo churn and corrects Johnson's misunderstanding of the industry term net negative churn. Latka then calculates an implied minimum LTV of over $400k based on Johnson's retention timeline.15:37–17:24 · Guest disagreement 1/10 Fundraising History and Capital Strategy Johnson details his staged fundraising journey across Australian angel investors and UK family offices before Latka transitions into the standard Famous Five closing questions.3:32–6:33 · Nathan pushing back 2/10 Origin Story: From Multi-Million Dollar Loss to Channel Launch Latka explores the origin story of Johnson's personal financial loss leading to Encompass Corporation's founding and initial distribution deal. The exchange is cooperative with Johnson recounting his entrepreneurial background.6:33–9:05 · Nathan pushing back 4/10 Company Scale, Headcount Distribution, and Revenue Growth Latka drills into customer metrics and attempts to calculate monthly revenue run-rate, prompting Johnson to clarify pricing tiers and decline direct historical revenue disclosure. Latka adapts by extracting annual growth figures and exploring channel partner revenue share structures.9:09–12:30 · Nathan pushing back 3/10 Sponsor Advertisement: Monday.com Project Management Following an ad read for Monday.com, Latka calculates CAC and payback periods by multiplying payback months with minimum contract values. Johnson transparently acknowledges their acquisition costs remain high due to heavy market education requirements.12:30–15:37 · Nathan pushing back 4/10 Examining Customer Retention and Net Negative Churn Latka pushes for precise definitions around annual gross revenue churn versus monthly logo churn and corrects Johnson's misunderstanding of the industry term net negative churn. Latka then calculates an implied minimum LTV of over $400k based on Johnson's retention timeline.15:37–17:24 · Nathan pushing back 1/10 Fundraising History and Capital Strategy Johnson details his staged fundraising journey across Australian angel investors and UK family offices before Latka transitions into the standard Famous Five closing questions.

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

0:00 · Nathan 60.1% · guest 39.9%0:00 · Nathan 60.1% · guest 39.9%3:00 · Nathan 18.8% · guest 81.2%3:00 · Nathan 18.8% · guest 81.2%6:00 · Nathan 31.2% · guest 68.8%6:00 · Nathan 31.2% · guest 68.8%9:00 · Nathan 76% · guest 24%9:00 · Nathan 76% · guest 24%12:00 · Nathan 32.9% · guest 67.1%12:00 · Nathan 32.9% · guest 67.1%15:00 · Nathan 42.4% · guest 57.6%15:00 · Nathan 42.4% · guest 57.6%18:00 · Nathan 78.4% · guest 21.6%18:00 · Nathan 78.4% · guest 21.6%
Sharpest disagreement ▶ 7:48 Guest sets boundary on historical revenue disclosure

Johnson clearly declines Latka's request for historical base revenue numbers, stating the company does not disclose revenue figures.

 Hardest push from Nathan ▶ 11:23 Host pushes past vague CAC description

When Johnson gives a vague answer that CAC is 'still too high', Latka interrupts to demand specific payback and acquisition numbers.

 Biggest teaching moment ▶ 14:53 Guest explains deep API stickiness and customer lifetime

Johnson explains the data aggregation architecture and why multi-source API integration locks enterprise banking clients in for seven to eight years.

 Nathan holds their own ▶ 13:39 Host corrects guest on net negative churn definition

Latka demonstrates SaaS domain expertise by correcting Johnson when he mistakenly assumes 'net negative churn' means contracting revenue rather than net expansion.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Origin Story: From Multi-Million Dollar Loss to Channel Launch 4212 Latka explores the origin story of Johnson's personal financial loss leading to Encompass Corporation's founding and initial distribution deal. The exchange is cooperative with Johnson recounting his entrepreneurial background.
Company Scale, Headcount Distribution, and Revenue Growth 6224 Latka drills into customer metrics and attempts to calculate monthly revenue run-rate, prompting Johnson to clarify pricing tiers and decline direct historical revenue disclosure. Latka adapts by extracting annual growth figures and exploring channel partner revenue share structures.
Sponsor Advertisement: Monday.com Project Management 6213 Following an ad read for Monday.com, Latka calculates CAC and payback periods by multiplying payback months with minimum contract values. Johnson transparently acknowledges their acquisition costs remain high due to heavy market education requirements.
Examining Customer Retention and Net Negative Churn 7314 Latka pushes for precise definitions around annual gross revenue churn versus monthly logo churn and corrects Johnson's misunderstanding of the industry term net negative churn. Latka then calculates an implied minimum LTV of over $400k based on Johnson's retention timeline.
Fundraising History and Capital Strategy 4111 Johnson details his staged fundraising journey across Australian angel investors and UK family offices before Latka transitions into the standard Famous Five closing questions.

Statements from this episode (11)

Disclosure
Encompass charges legal clients $5K/mo and financial services up to $150K/mo
“For a midterm legal, legal size company, probably around in US dollars, 5000 a month for the platform ranging up to financial services company starting at 25,000 a month or up to around a 150,000 a month.”
Wayne Johnson Dec 7, 2018 ▶ 2:25
Disclosure
Wayne Johnson lost millions in a property mezzanine deal before founding Encompass
“It was a property investment. It was a sub-division company that we were actually funding, providing some mezzanine finance for, and then found out after we provided the finance that things weren't right, so we decided to take the project over and things got w…”
Wayne Johnson Dec 7, 2018 ▶ 5:12
Disclosure
Encompass scaled early distribution via exclusive Australian revenue-share deal
“We did a revenue share deal on top of the selling, and, you know, that evolved over a period of time, and, ah, we grew our business on the back of that. We changed our pricing model a few times, and, ah, eventually we did a great deal with them where they beco…”
Wayne Johnson Dec 7, 2018 ▶ 6:10
Assertion Not checkable as stated
Encompass has around 250 customers on its platform
“There are around 250 customers currently on the platform.”
Wayne Johnson Dec 7, 2018 ▶ 6:35
Prediction Not checkable as stated
Wayne Johnson projects Encompass will cross $1M monthly revenue in early 2019
“It will be early next year on our current projections.”
Wayne Johnson Dec 7, 2018 ▶ 7:26
Disclosure
Encompass offers 50-50 perpetual revenue splits to key channel partners
“Some of them have significant install base and therefore, you know, it's they're on board and we split the revenue on a fifty-fifty basis.”
Wayne Johnson Dec 7, 2018 ▶ 8:49
Assertion Not checkable as stated
Channel partners drive 10% to 20% of Encompass revenue
“Currently probably less than 10% of that revenue comes through them. However if I add in the their original revenue from our partner in Australia, that deal that I've talked about earlier on, that would probably take it to close to 20%.”
Wayne Johnson Dec 7, 2018 ▶ 10:50
Assertion Not checkable as stated
Encompass has a 15 to 20-month CAC payback period
“Well, I guess we're looking to try and drive that number down at customer acquisition costs so that we recruit their value in the first four months. And we're still well, we're all over 15 to 20 months at this point.”
Wayne Johnson Dec 7, 2018 ▶ 11:31
Assertion Not checkable as stated
Encompass annual gross revenue churn is approximately 3%
“So, it gives us, you know, quite sticky to our churn rate. Is really around three percent. And so it's, it hasn't been a concern for us.”
Wayne Johnson Dec 7, 2018 ▶ 12:52
Opinion
Wayne Johnson: Australia's capital market is much more immature than the US
“Starting in Australia where the market for capital is is a lot more immature, I guess, than what the US market is.”
Wayne Johnson Dec 7, 2018 ▶ 15:45
Disclosure
Encompass has raised just under £20M ($28M) in total capital
“Around just under twenty million pounds. So I guess what's that about twenty eight million US dollars.”
Wayne Johnson Dec 7, 2018 ▶ 16:09
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