Insight
Founders shouldn't set pricing because they are too hypercritical of their products
“I think the number one advice I can give is don't let your founder set your pricing. We tend to be terrible at pricing because we always are hypercritical of our own product and don't aren't always aware of how bad the competitors products can be, or at least …”
Opinion
The mid-market is the last white space in HR and payroll software
“Well, I think it's probably the last remaining white space left in the HR payroll benefit space.”
Insight
Core HR and payroll breed multi-billion dollar companies
“Multi-billion dollar companies tend to be created in the core payroll and benefit space because those are the number one and two things that That businesses spend money on.”
Insight
HR software companies must choose their target market size early
“I think you have to do that in this space. The product needs are very different for a small, medium and large business. So you've got to decide really early on what swim lane you're going to get going to be in.”
Disclosure
Namely prioritizes expanding within the mid-market over moving upmarket
“Every year at the end of every year, I asked myself and our team, do we want to go up market or do we want to sell more things to the same, same customer? And we always decided on the latter because we're just so passionate about midsize companies.”
Assertion Supported
Namely surpassed $40M in ARR by early 2018
“Yeah, it's above that. It's above.”
Assertion Supported
Mid-market HR software industry ARR churn tends to be around 20%
“Industry-wide you know, for our segment, churn tends to be around 20% a year. Logo? ARR.”
Disclosure
Namely maintains negative net churn driven by rapid customer expansion
“And in fact, we're, we have negative net churn. So our expansion is growing faster than people coming off the system.”
Disclosure
Seat additions drive Namely's expansion more than product upsells
“Seats. Actually we thought that upsells would be a big driver of that, and there's some element to that, but it's actually people just adding more seats to the product.”
Insight
Customer churn is the ultimate win-loss record for a software business
“Churn really tells you where you're at, ultimately tells you where you're at. So you can do all the customer data you want, right? And you can find out sentiment and all that. But ultimately at the end of the day, churn tells you whether, whether, how you're d…”
Insight
HR and payroll SaaS requires heavy high-touch service support
“Because there's a service component to HR payroll benefits business. The hard part of the business is not necessarily doing any one of these things. It's doing all three of these things well together in a coordinated way with a level of touch that may not be l…”
Insight
A 1-2 year CAC payback is acceptable in payroll due to stickiness
“One to two years is fine because of the stickiness and the, how long people are on a payroll product. Nobody who goes through a payroll implementation wants to do it again anytime soon if they can help it.”
Disclosure
Namely raised a $1M angel round at a $4M pre-money valuation
“I priced it myself. I priced it at a four million dollar pre.”
Assertion Supported
Namely has raised over $157M in total capital as of 2018
“We've raised over a hundred and fifty seven million dollars today.”
Assertion Not checkable as stated
Namely's average ACV is around $40,000 per year
“Our average ACV at this point is around four 40,000 dollars a year, which is a good place to be. It allows salespeople to hit their OTEs.”
Assertion Not checkable as stated
Namely's average customer size is around 200 employees
“Our average customer size is around 200 employees.”
Assertion Supported
Namely reached 1,000 customers by March 2018
“Today we have a thousand customers”
Assertion Supported
Namely processed $7 billion in payroll as of 2018
“And I think we're today processing seven billion dollars of payroll when people hand you one of their, yes.”
Prediction Didn’t hold up
Going public is a realistic midterm business goal for Namely
“And it's one of the reasons why our midterm business goal a realistic midterm business goal would be eventually to be a public company.”
Assertion Not checkable as stated
Namely basically doubled its ARR over the course of 2017
“We basically doubled our ARR this year.”
Assertion Supported
Incumbent competitor ADP has gross margins in the 40% range
“No no, because actually if you look at companies in our sector ADP is in, has gross margins in the forties.”
Assertion Not checkable as stated
Namely's revenue is 100% pure SaaS without professional services
“Yeah, that's all pure SaaS.”
Assertion Not checkable as stated
Namely employs over 400 people nationally
“The, we, the team nationally is over 400 employees, and I think we got a few dozen employees in Austin, and that office is one of our fastest growing.”
Disclosure
Namely targets midsize companies with dozens to thousands of employees
“We're a SaaS company, and we provide HR payroll and benefits software and services to midsize companies. So we focus on companies with anywhere from a couple dozen to a couple thousand employees.”
