The Exchanges

Q I didn't hear you. I was just saying, now that we understand your sales model in terms of the touch you're putting on these sales, what's your fully weighted customer acquisition cost?

A So at the moment, we're running at just over 4700 dollars on the CAC, um, and that's pretty high based on where we've come from, and that's really down to the fact that when I look at the way I acquire customers, historically, Bright Pearl built its business on inbound, which, as you guys know, is very expensive. We activated partners as a channel eight months ago, once the AOV started getting to a point where it was relevant to the partners we wanted to work with. And I'm just about to launch, uh, an assertive outbound campaign. So identifying my ideal customer pro profile at scale, and then feeding that in, looking for triggers or buying signals automatically, and then figuring that into the sales team. And that's how I'm going to drive down that CAC to the target is to get it to about 18, 1900 dollars, which would be the range for this, uh, for this segment.

AI assessment note: “we're running at just over 4700 dollars on the CAC”

Q So it sounds like you've gone through some sort of motion of churning off smaller ARPU accounts and going enterprise, which is why customer accounts gone down. Walk me through the actual product. What are you upselling enterprise accounts to drive expansion revenue?

A Okay. So selling to larger customers, the exact same product, but it's been conditioned to be able to support much, much larger volumes. So we invested in infrastructure, security, and customer success to be able to handle much higher volume. So in the main, the product is pretty much the same as it was three years ago with some areas of innovation in particular around automation and native connectors to platforms like Shopify. And through that route, we were able to generate a lot more Um, value to the customer and drive AOV over the four-year period I've been here, uh, AOV has gone up 588%, and it's now at 38,000 per year on a per account basis. That's subs only, not implementation.

AI assessment note: “selling to larger customers, the exact same product, but it's been conditioned”

Q Talk to me about full team, full team size today. How many folks?

A Uh, we go, we're at about a hundred, we're at a 112 as of this morning and we, um, we're running that sort of sustainable growth profile. So what I mean by that is, as I said earlier on, we're shooting for 40% our growth this year. Um, and we have a plan to get to about a 180 people by the end of the year. So it's quite, it's quite, uh, uh, an aggressive ramp. The two main areas investment are the go to market teams, but also engineering. Um, and I'm not necessarily building new features out because we've got a very big platform and going deep Uh, and focusing on quality workflow, optimization, automation, and better lowering the cost of integration from other platforms to me. Um, so it's, it's, it's more of an evolution play.

AI assessment note: “we're at a 112 as of this morning”

Q I mean, so is there a path to drive that up? Is it an initiative for 21? How do you get up to like one 10, one 20?

A So over the last three years, we've put in place utility-based pricing, um, which essentially links our customers to number of orders, um, and their gross, um, GMV, gross merchandising volume that they put through the platform. And as they grow, they pay less per unit, but they pay more as they grow. And what we then follow that through was a program of, um, improvements around contracts and then account managers and customer success. And then we put in place the The basics of best practice that would be preached by companies like Gainsight. So really putting in place the checks and balances in a calendar to make sure our teams take past value delivered credit from the customer and then point them towards mid-contract upgrade or upsell to new products. So our DOR is being driven hugely by upgrades in plans because our customers are getting bigger on the platform. And the number that sort of cites that which gives us confidence for the future is In 2019, we processed, um, three billion dollars, uh, of orders through the platform. In 2020, that went up to 4.4 billion dollars. So that's, that gives us lots of headroom. So if you think of our, our, our annual recurring revenue as a percentage of the total GMV through the platform, we've got lots of headroom now to chase through. And more importantly, the contracts are in place. The teams are in place. Customers aren't surprised whe…

AI assessment note: “over the last three years, we've put in place utility-based pricing”

Q All right. Did I get the kind of function of Bright Pearl correct? Why don't you fill in the gaps there and then tell me how you guys make money?

A Yeah, spot on. Um, as you said, we are purpose built for the retail and hotel and wholesale industries. And so alternatively, uh, those markets would typically go to a generic ERP provider like NetSuite or Microsoft. And spend a lot of dollars customizing that platform to their requirements. Whereas when they come to us, we're built solely for that sector, and that's pretty much our USP. As you said on, on the intro in the last 12 months, our customers transacted 1.8 billion dollars worth of invoices to cash on the platform, and when you translate that to our revenue, if I look at say our annual recurring revenue as of this morning, we're like on the first half, so at the end of June, uh, we're at 11.35 million dollars of annual recurring revenue.

AI assessment note: “we're at 11.35 million dollars of annual recurring revenue.”

Q Derek, just, just to be clear, I want to get some other metrics here. So did you come in like with a funding round where you were, did you replace him? What's the company raised to date?

A So the company today has raised forty five million dollars since, since its inception. It's had multiple rounds. When I came in, um, the terms of me joining and what we agreed with the board was we would do a down round and we would level set the business based on a true valuation that we thought was more in keeping with the fact that it had high churn and that's not viable. So we did a down round and I signed up for certain Um, melt milestones and triggers that release some cash. And that was used to fund the transition. And at the end of that journey, we, you know, cleaned up the cap table, made sure that all stakeholders were in a position for equal returns once we scale the business. And that's what we've achieved, um, in the last two years.

AI assessment note: “the company today has raised forty five million dollars since, since its inception.”

Q No, no, no. Everyone, everyone, it's funny in the SaaS world, you'd think because of how many companies there are, there'd be standard metrics, but you know, everyone measures things a little differently. So we're talking the same language. I got it. Um, walk me through more of the backstory. When was the company created? And then I guess you came in in 2016.

A Yeah, the company was created back in 2008. It was incorporated by, incorporated by a guy called Chris Tanner, developer, um, trained developer, got involved in skateboard, set up a business, and then quickly ran in as his business scales. He ran into challenges in the back office on servicing those online channels back in the day. So he had a shop at a warehouse, but then he started selling online and he realized there was no solution out there that would bring together all of those mundane tasks Automate them and give them visibility across the board and create his accounts on the fly. So he set out to build that single solution. So that's point of sale. It's everything on marketplaces. It's their own websites. It's payments, it's warehousing, it's order management, and then through to accounting. So not, not that you want to be entering in all of those data points. You want a system that will just create the accounts as you go, and then feedback to you information on, say, fully landed costs on each product in a channel on a specific currency. So, um, that's what he lent out to do. And he went down the route of self-service. So he figured it was a good idea to make that platform available to companies like himself. He was pretty small at the time. So he really built it for self-service, but unfortunately in doing so, he assigned himself to a segment, which was, you know, mic…

AI assessment note: “the company was created back in 2008... I joined, um, in April, 20 16”

Q Derek, a lot of entrepreneurs listening right now are going, I'd love to do professional services. I'd love to do a setup fee, but my VCs won't let me. They don't like the low margin profile of professional services. You've done it. It's working. What advice do you have for them?

A Well, um, at the end of the day, we're in B to B software. So it's complex by its nature and it's people and software, and you need individuals who've got expertise to bring people along the journey. If you don't, you don't get people up and up and running. And I think the key number that we look at is pre-live and post-live churn. If you don't get professional services right, you see pre-live churn spike, which obviously impacts your universal churn. And then post-live churn, you want to drive down below 10% Uh, and get to sort of four percent and be super sticky. And that's why professional services and the customer success journey host signature is so, so important. So if you look at it in a just individual scope of PS and it's not margin rich, you're actually missing the wider picture. So you've got to think end to end.

AI assessment note: “If you don't get professional services right, you see pre-live churn spike”