Sramana Mitra: Switching gears to the business model, it sounds like it’s a regular SaaS business model. What kind of average deal sizes are you seeing? Are you focused on the large enterprises or is this also mid-market? Where is the target audience?
Greg Besner: The wonderful part of culture and engagement is the diversity of companies and customers. What we’ve learned in the last three years is that leaders care about culture regardless of their company and their industry. We have customers all over the world. We have customers from all industries and sizes. It’s really been amazing and it’s wonderful to see that leaders in all industries care about this topic.
With regards to where we’ve had the most focus, I would say that the mid-market and enterprise have really been our sweet spot. We do work with many smaller companies as well. As you heard me describe our business, the more data, the better. We find that bigger the company, the bigger the complexity.
Sramana Mitra: As a vendor, the bigger companies are more interesting and more lucrative.
Greg Besner: Assuming we have the right unit economics, all sizes can be profitable. The market pulls you in a direction. When we first started, we had a lot of smaller customers. We’ve really been pulled upmarket. Today we have some wonderful Fortune 500 and even Fortune 100 customers. We’re doing some sophisticated work with them.
Sramana Mitra: What is the average deal size then?
Greg Besner: We agree that we won’t disclose some of our key financials.
Sramana Mitra: Give me a range. Are we talking about $10,000 deals? Are we talking about $100,000?
Greg Besner: Our smallest customers are anywhere from $10,000 to $50,000. Mid-market clients are $50,000 to $150,000. We have customers that are approaching a million dollars a year.
Sramana Mitra: Where are you now in terms of evolution? What metrics are you interested in sharing?
Greg Besner: We’re at the seed stage. We’ve raised about $5 million of seed capital including venture capital from our lead investors. Lerer Hippeau Ventures, Founder Collective, and Pritzker Group are our three institutional investors. Then we have angel investors. That’s the capitalization.
Sramana Mitra: That’s the $2.5 million?
Greg Besner: We raised $2.25 million when I first launched. Then we raised $3 million additional in October of 2015. That’s when the institutional investors joined.
Sramana Mitra: How about customers?
Greg Besner: There are two metrics. The number of companies that have used our framework is close to 800 companies. When I say use our framework, we have a partnership with Entrepreneur Magazine where we do an annual Top Company Cultures recognition. We measure their culture score and publish a recognition list. We love that list. It allows us a bigger database of culture engagement metrics for our ongoing customers for them to be able to compare themselves. As to our SaaS recurring revenue customers, we don’t publish that specifically, but I don’t mind saying that we’re approaching 200 customers.
Sramana Mitra: I’m just observing. You are in the middle of a type of business. You have a track record. If you wanted to, you could have raised a lot of venture capital but you have done it with a relatively small amount of capital so far. Is that how you like to build companies? I’ll preface that by saying that that is our bias too. We don’t really like this gratuitous fundraising frenzy. Can you comment on that?
Greg Besner: That’s a good observation. Billions have been invested in this sector. There is a lot of interest in investing. My disposition is to be very capital efficient. As we talked about earlier, living through the crashes, I recognize that capital is not always available to you. It’s not always green pastures. I have a disposition to be very efficient. That forces us to work very smart.
We have reached an inflection point where we will be expanding our business. We want to expand. This year, we will be expanding, which is likely to take more capital. I remember having a town hall meeting and letting the company know that we had passed the milestone of $1 million in revenue. To me it was just an enormous milestone. I remember reading some statistics. I read that 96% of companies in the US are under $1 million in revenue.
To reach that 96th percentile was a really big milestone. I also read that from zero to a million dollars is what they call the impossible stage. You’re helping people through the impossible stage.
Sramana Mitra: Wonderful story. Thank you for your time.