Apr 12, 2017 · 24m · top-founders
EP 627: SmartSheet $70M Raised, $80M ARR, Helping 65,000 Customers with Project Management with CEO Mark Mader
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The Top, host Nathan Latka interviews Smartsheet CEO Mark Mader to explore how the enterprise collaboration platform scaled to an $80 million ARR run rate with 65,000 paying customers and high capital efficiency.
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 51.1% of the talking time here. How this is scored →
Nathan as informed peer 4.6 Guest teaching 2.7 Guest disagreement 1.7 Nathan pushing back 2.3
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 7:25 Rejection of down-market characterization
Mark firmly pushes back on Nathan's assertion that Smartsheet achieved product-market fit by moving down market, clarifying that they entered a new market entirely.
Hardest push from Nathan ▶ 17:39 Pushing for M&A admissionNathan aggressively jokes and presses Mark to reveal undisclosed acquisition discussions with Marc Benioff.
Biggest teaching moment ▶ 15:03 Masterclass on unit cohort attribution over averagesMark explains why relying on blended average LTV and CAC can bankrupt or starve a SaaS business, detailing discrete channel attribution instead.
Nathan holds their own ▶ 8:33 Benchmarking revenue efficiency against SaaS datasetNathan computes Smartsheet's $166,000 ARR per employee on the spot and compares it directly against metrics from his database of over 300 SaaS interviews.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Episode Overview and Upcoming Guest Preview | 6 | 3 | 1 | 2 | Nathan quickly runs the math on Smartsheet's MRR and ARR run rate using Mark's customer count and average revenue figures. Mark clarifies that Smartsheet spans diverse enterprise processes rather than just basic task management like Trello. | |
| High-Velocity Growth and Path to $100M ARR | 5 | 4 | 3 | 3 | Nathan characterizes Smartsheet's turnaround as going down market and lowering ARPUs. Mark corrects Nathan's framing, noting that they did not move down market but rather found the right market entry point with self-directed software. | |
| Funding History, Capital Efficiency, and Team Scaling | 6 | 2 | 1 | 2 | Nathan evaluates Smartsheet's capital efficiency by calculating ARR per employee and comparing their runway against other SaaS benchmark data. Mark explains that Smartsheet burns low single digits and maintains the option to turn profitable quickly. | |
| Customer Acquisition Channels and Ecosystem Integration Strategy | 5 | 3 | 2 | 3 | Nathan probes into churn and acquisition channels, while Mark keeps specific ad spend proprietary. Mark clarifies that their enterprise cohort experiences less than 1% annual unit churn and that free collaborator usage drives 30% expansion growth. | |
| Granular Unit Economics, Attribution Tracking, and CAC Measurement | 6 | 5 | 3 | 3 | When Nathan asks about average LTV and CAC assumptions, Mark rejects blended averages as dangerous and educates Nathan on analyzing discreet multi-touch attribution cohorts. Nathan acknowledges the pitfalls of averages and probes fully loaded CAC models. | |
| Capital Runway, Future Capital Plans, and M&A Banter | 4 | 2 | 2 | 3 | Nathan attempts to playfully fish for breaking M&A news regarding a Salesforce acquisition, which Mark deflects before answering the standard Famous Five questions. | |
| Executive Summary and Recap of Smartsheet Metrics | 0 | 0 | 0 | 0 | Nathan delivers a rapid solo summary of Smartsheet's ARR run rate, founding story, churn metrics, and balance sheet efficiency. |
Statements from this episode (14)
Smartsheet Serves 65,000 Paying Brands Averaging $1,000 in ARR
“We serve about 65,000 distinct brands today on a paid basis. On average, each one of those, Nathan, provide about a thousand bucks a year ARR, but the diversity is huge. It goes all the way from 200 bucks a year to 1.65 million a year.”
Smartsheet Is an $80M ARR Business Growing Over 60% Annually
“We're about an eighty million dollar business today on a deal basis, and we're a super grower in the last, our category over the last five years is north of, well north of 60% a year.”
Mader Predicts Smartsheet Will Hit $100M ARR by Mid-2017
“So we're going to hit triple digit ARR here come mid year in 2017.”
Smartsheet Stayed Under $1M ARR for Years After 2005 Founding
“2005 company was formed, first customer subscribed fall of 2006, and the revenue for a number of years, as we thought we had the magic bullet but didn't, was under a million dollars in ARR for a number of years.”
60% of Smartsheet's New ARR Comes From Unassisted Sales
“Customers, 60% of our new AR that comes in is unassisted in nature. That means a human being is not speaking with the prospect.”
Smartsheet's $80M ARR Exceeds Its $70M Total Capital Raised
“So far, it's one of the more efficient, if not one of the most efficient SaaS companies out there, where we've raised 70, we still have a lot on the balance sheet, and we have ARR that exceeds the total amount raised.”
Smartsheet Will Grow Headcount From 480 to 730 in 2017
“We're at 480 people. We'll grow to about 730 this year, adding a lot of folks in the customer success and sales realm.”
Smartsheet Adds Tens of Millions in ARR Burning Low Single Digits
“No, our investment model right now is not, but you know, we're adding tens of millions of ARR a year burning low single digits.”
Smartsheet Generates Over 1,000 Product Trials per Month
“We get well north of a thousand trials a month and it is really distributed Nathan across across SEO partner marketplaces like the office three 65 ecosystem, Google apps marketplace or G suite marketplace.”
Smartsheet Annual Unit Churn Is Under 1% for Accounts Over $5K
“We really report on the customers who are engaged with us in sort of an over 5000 dollar a year ARR, which is not a particularly high number, and that unit churn is less than one percent on a unit basis.”
Half of Smartsheet Expansion Revenue Occurs Without Human Sales Reps
“There's also half of our expansion that happens without a human being being involved.”
Mader: Blended Averages for CAC and LTV Lead to Destructive Spending
“I see too many businesses look at averages and averages can either completely turn you upside down or completely leave you under investing. So we never look at the average. We always look at the discreet item markets.”
Mader: Businesses Must Assign Fully Loaded CAC to SEO Content Campaigns
“Very often people say, is there, you can only assign CAC to something on which you're spending money, like an advertising campaign, but you should also do the same thing on your SEO campaigns. Who's actually writing the content.”