The Exchanges

Q the last interview to get more context on this question I'm about to ask. Just look up Conga in the iTunes feed. But Matt, you, you came, the company was founded in 2006. You came in later under what conditions were you coming in? Was it kind of a hostile investors weren't going to put in more money unless you came with the deal? I mean, what was that like?

A No, it was really positive. So in 2015, Insight Venture Partners, which by the way, is the largest pure play software investor in the U.S. Um, they have about eighty billion dollars under management. Super smart guys. Um, they talked to the original founders of Conga, the two entrepreneurs, uh, that built the business since, as you mentioned, over the years. This is 2015. And the founders were like, you know, we've been at this a long time. We'd like to, you know, sell a majority share of the company and bring in an investment partner to see if they can grow it to the next level. We've sort of run our playbook and done a good job, but we think the business has lots of upside. So it was a very friendly thing. It was the founders getting some liquidity at the same time, Uh, the investors bringing in a new management team and working capital to see if we could accelerate the growth rate. And that was the investment thesis and it's paid off.

AI assessment note: “No, it was really positive. So in 2015, Insight Venture Partners”

Q spend so little on CAC, the ratios get all funked up and they end up lying to themselves about what LTV to CAC is, right? So, so at what point, like, at what point did you shift from focusing on payback period, how quickly you get your money back, to Overall LTV to CAC ratio, which maybe is bolstered by the fact you have a larger cohort, larger sample size.

A Yeah, it's a really good point. And the other part of that, and I think you're implying it, um, the other part of that is You know, smaller companies, let's say under your example, under a ten million dollar run rate, they've never really tried to scale to reach a bigger percentage of the market. And when they do that, their cat costs can skyrocket and their LTV ratio can plummet. So a lot of them feel good about their, you know, the, the ratio between the cost to acquire a customer and the value of that customer when they're really sort of cherry picking just a few customers here and there and they're small. But if you're trying to get to world-class scale, which in the SaaS business is a hundred million or north of that, um, and you see, like you say, we've got enough cohort data to see our ratios and our costs really holding Uh, that's when you want to, you know, that's when you want to put down the pedal and go faster. And the return on that investment is, is really good. We don't have to worry about how long it takes to get return on investment because we're actually, uh, have the working capital to, to invest.

AI assessment note: “We don't have to worry about how long it takes to get return on investment”

Q So what pricing lever are you using most aggressively to drive the expansion revenue in the same customer?

A Um, It's not so much pricing leverage as it is. Um, customers are really more and more looking to buy a suite of products and not a point solution. So buying point solutions in SAS and Great. Well, we've got, you know, some sort of connector to that product or whatever else. It gets to be burdensome for companies. Companies, if the supplier is really good, if Conga is really good, if they're on top of their game, they like buying more than one product for us that fits into our suite. So our digital document transformation suite, again, multiple products, and they go all the way from managing the data, creating the documents, Negotiating, signing, and managing through the entire life cycle. So, um, that's really what's leading our growth is people try us, they buy a product or two, and then they wind up developing the whole suite with us.

AI assessment note: “It's not so much pricing leverage as it is... customers are really more and more looking to buy a suite”

Q Last question before we wrap up here, assuming you're able to effectively reinvest the 47 you just brought in and you do aggressively, you know, you know, plow past that a hundred million AR bark in Q four this year. Do you file to go public in Q one, 2019?

A Um, you know, we haven't made any public announcements on that, but, um, you know, we're, we're certainly a coveted IPO candidate for, um, you know, I think, uh, you and I talked about it a bit in the past, you know, my experience with DocuSign, et cetera. You know, I'm, I'm one of these CEOs that says you just, you don't go public just to go public. You, you do it for a darn good reason. So our temptation and our, our motivation around the public offering would be, We're in a trusted transaction business. If you trust your data and your documents and your contracts to Conga, that's a, that's a very mission critical trust. And so we would like eventually a public brand behind that. And so, um, nothing, nothing to announce. Uh, I don't have a scoop for you, but You know, it wouldn't be a shock if, if you see the company taking steps toward that in 2019.

AI assessment note: “it wouldn't be a shock if, if you see the company taking steps toward that”

Q mentioned kind of mid-market, and you said you touch enterprise. This is very different depending on who you talk to. They define these categories very differently, and the most effective way I found to define them is talk about like ACVs. So are like the sales people paying you directly, or are companies paying you for a number of seats? And if so, on average, what are they paying annually?

A Yeah, so our customers pay us directly for a number of seats, um, and we have a suite of products, so we have, uh, products again from, you know, data management through document generation through full contract management, all around electronic documents, and depending on the type of seat, you know, our pricing model, because it's a suite of products, it's fairly complicated, but it's easy enough to say that it's a subscription-based Uh, per seat model, uh, and customers contract that and pay us directly, uh, for the amount that they use. So they can start small, they can start with one product, then they can grow into multiple products with larger number of seats. The way we define the market, Nathan, is really, we do it very simply. We, we just follow the Salesforce paradigm since we're one of their top global partners. So in the Salesforce paradigm, uh, They, they say any, any company below 5000, that's the, that's the threshold, so.

AI assessment note: “our customers pay us directly for a number of seats”

Q Okay. And I guess my question is, what are you willing to spend to acquire that customer? In other words, are you healthy with a six month payback?

A Yeah. Yeah. Cost of acquisition. You know, we don't release those numbers, but our customer acquisition cost is Really, really attractive. Um, you know, our board is, and our investors and our shareholders are really trying to get us to go even faster. And in SaaS, you know, what's an interesting relationship, Nathan, I think you've talked about this on, on, on a, on a, on your podcast is there's, there's CAC, customer acquisition costs. There's also LTV, lifetime value. So that's a measure of once you've acquired a customer, what is their lifetime value? And what's super interesting in SAS is not only CAC, but What's the ratio of CAC to LTV? What's the ratio of what does it cost you to acquire customer versus the lifetime value of that customer? And if you look at our metric there, you know, we're, we're, we're off the charts in terms of comparables in the SaaS industry. So we're, we're really going to continue to invest in the business and drive, drive it even further.

AI assessment note: “we don't release those numbers, but our customer acquisition cost is Really, really attractive.”