The Exchanges

Q You're probably doing it in a much better way. It would be very minute to, to tally up all those things. All right. Give us, give us more of your backstory, man. When did you launch the company?

A So we started the company in, I left my job at Cornerstone in late 2012. So that was when I had the idea and it was just me kind of running around trying to make this happen. Um, I met with a startup accelerator in Los Angeles in December of 2012. They're called Amplify LA. Um, so they're down in Venice and I met with them. It was just me and a PowerPoint and I was showing them, walking them through everything and they, they go, you know, this is great. We love your background. We'd love to have more SAS companies in the portfolio, but you need a co-founder and you need a product and a customer before we can even think about giving you money. I was like, okay, that's, that's a very fair point. So I went out and made those three things happen. Um, so fun fact, I met my CTO co-founder Cullen on a founder's dating website where you post a profile of yourself. And so I was scouring through this website to find CTO candidates in LA.

AI assessment note: “I left my job at Cornerstone in late 2012.”

Q Oh man. I love, I was so in love with you and now we're just dead. No more, no more founder matching here. How much have you raised?

A Well, you're really not going to like the answer to that question. We've raised, so we've raised thirty three million dollars, uh, to date and it was the vast majority of it was nine months ago. We did a twenty five million dollar round, um, with our, with series B with insight venture partners. So yeah, we've been, now we've taken on some funding that said, man, it was a grind early on. Like we didn't, um, we ran for, About a year and a half on 50,000 dollars where I wasn't taking any salary. That was 2013 and into 2014. Yeah. So we did the 50 K. So Colin, Mike, my CTO co-founder and I were working on it for all of 2013. Our COO co-founder, Chris, who's also an accountant, he and I went to Syracuse together and actually majored in accounting. He joined in July of 2013, right after we got into Amplify. So he was like, okay, you got 50,000 dollars. I guess that's enough job security for me to join the company.

AI assessment note: “We've raised, so we've raised thirty three million dollars, uh, to date”

Q That's pretty good. That's pretty good. Net negative over return. Yeah. All right. And then last question here on economics. CAC. What are you spending to acquire these guys?

A So, um, I actually don't love the, the CAC metric. Um, I'll tell you. So we're spending about 16,000 dollars. The metric I look at more so is, um, Cost to acquire a dollar of recurring revenue. Cause when you're looking at CAC, you need to understand the ACVs that are coming in the door as well. So I like to boil it down to that one metric. And the target for that is if you're below a dollar, you are a hyper efficient sales organization and you should be spending a lot more money on, on sales and marketing. So we hover anywhere from the way I run the team as we Are always striving to hit a dollar, but knowing that as you're scaling up an organization, you're inherently less efficient. So we'll creep up to a dollar 30 or a dollar 50. Then we'll see efficiency kick in. We'll start to go down towards a dollar again, and then I'll hire more on the sales side with that expected inefficiency kind of baked into growth plans.

AI assessment note: “we're spending about 16,000 dollars.”

Q Yeah. No, no, no, no bars. That's good. All right. So 20 12. And give me a sense of where you were at, like financially in your head. Did you build up a cushion before you quit? So you knew you could take some risk or did you just say I'm quitting with nothing in the bank? I have to make this thing work. Otherwise I'm screwed.

A I had, uh, I had built up a little bit of a cushion. So I had, I'd gotten a very small option grant when I went to cornerstone, which ended up being worth, uh, I'll just tell you numbers, like 25 grand or something to that effect. So I'm like, okay, I've, I've, I've a little bit of money now. So I, yeah, I just jumped ship and quit and wasn't making any, wasn't making anything. I was very fortunate. Uh, my wife is in sales. She was a VP of sales. And so she was making enough to support us as a family while we were going through that. So we were kind of like paycheck to paycheck as we were going through that. And actually she ended up getting crazy stressed out as she started to make more money. And then Flowcast started to do a little bit better. And we were all of a sudden both working all the time. We were both crazy stressed out and, and something had to give. So she actually left her job and then I, and now she's, so we kind of flipped, flipped places there.

AI assessment note: “I had built up a little bit of a cushion.”

Q So just to be clear, the different pricing levers you'll use, a number of seats is obviously one of them. What other kind of utility-based metrics do you use to drive expansion revenue?

A It's, it's really, it's number of seats, and then we have a couple modules that are priced a little separately. Um, so we have, we have kind of your classic tiers of business, enterprise, and then platinum, or whatever we call it. I'm not sure what the name is. Um, which has some, some different feature sets within it. And then there are, there's one outside line item. So that's referred to as close analytics, which is something that, you know, it provides a lot of value for customers after they've been using the application for say three to six months. So we parse that out separately and they buy it as an additional line item. And that's price is a percentage of the contract value. So not necessarily on a per user fee at that point, but pseudo per user fee, if you think about it though.

AI assessment note: “It's, it's really, it's number of seats, and then we have a couple modules”

Q What was the, what was the main growth driver between, but behind that 300% year over year growth? Was it expansion revenue, new customers? What was it?

A A little bit of everything. I mean, it's been, it's been a snowball of, of different concepts. So number one is marketing starting to kick in and making customer acquisition a lot more affordable. Just, we have, we've a bit of a brand. We're kind of known in the community. We're brought into sales cycles proactively now. So not everything's an outbound effort for us. So that just made customer acquisition more affordable upsells into our current client base. We have very minimal churn and most of our customers are expanding and buying more seats and growing. So we upsell from that base. Um, And then also just a better product and increased pricing and, you know, better negotiations with a, with a better product. And so I'd say a combination of more efficient go to market upselling our client base and then better, better pricing and negotiation on the backend.

AI assessment note: “A little bit of everything. I mean, it's been, it's been a snowball”

Q Got it. All right, so tell me more about what it actually does. Can you talk about a customer actually paying you today and how they use it?

A Yeah. So, um, what we'll do is we'll get in touch with the customer. We'll understand their pain points. There are generally three or four really common pain points around the month end close. So those are going to be around challenges with collaborating. So a lack of visibility, um, a lack of understanding where different team members that you're dependent on stand in the process. Um, and then an inability to communicate. There's really no good tools for email or for accounts to communicate today other than email or G chat or whatever. And then some manual work on the backend that's referred to as reconciliations. So the reconciliation process. So those are the pain points we see. We help with all three of those. So we'll onboard a customer. And what we do is our application is built. Um, the foundation of our app is on a folder structure. So it's really where documents get saved and it's organized in a way that accounts already work today. So they take a look at it. They log into the application and navigating. It's a piece of cake. It's how they've already been working historically. So adoption's really, really easy. And then by integrating with those storage providers, like a Dropbox recently had their IPO, right? They're one of our integration partners. We're able to access their Excel workbooks to help automate this reconciliation process. And then on the other side of ou…

AI assessment note: “we integrate with accounting systems like, uh, Oracle and NetSuite”