A Product Market Fit Show | Startup Podcast for Founders
00:36:55 · Pablo Srugo, Mark Hughes
[00:36:55] S1: to convert all those people to annual contracts or multiyear contracts, which is obviously very important. My next question was around the NRR. You mentioned NRR over a 180%. You talked about going into the office as a great way of onboarding and activation, which is obviously like, it's like the foundation. Like, that's what you need for people to use it, and then therefore to at least renew. But how do you go from a 20 k CV to a 100 k CV? Is this in person motion a key part of that? [00:37:21] S0: We added more features to the product, which also helps. So I think that was one big component, and then we charge based on volume. So, like, more volume through the system leads to higher ACVs. So it was really, like, getting more usage across the board from different teams, but I think as well adding more features and functionality to the product that we could upsell.
00:37:40 · Pablo Srugo
[00:37:40] S1: It's interesting. Right? Like, you think about I mean, adding more features is something that, like, know, who the who's not doing that? Everybody's doing that. But if most founders, I mean, least, when we look at retention, we look at whether it's gross or net, doesn't matter. Failed onboarding is always top of the list. Top of the list in terms of the ones that churned fully, the ones that aren't really growing. It's it's always, oh, yeah. They we just didn't onboard, we didn't you know, within a week or a month or whatever that threshold is for you. So there's something where you're saying it's like, if you invest the time upfront to make sure you get the activation and the onboarding, you're obviously going to build more features. Everybody's gonna do that. It's table stakes. But if you've got 90 of the people that should be using it actually using it and using it often, your odds of them then growing into the rest of those features and lift, not just renewing, but then lifting the ACV, it's like you think about it at the time of renewal, you know, like how can you grow this account? But really, a lot of that is preset at the time of the sale and the onboarding and how much success you got at that stage.
00:38:34 · Mark Hughes
[00:38:34] S0: Yeah. 100%. And, like, if you look at, like, as I mentioned, we signed annual contracts, but all like, we had so many instances of, like, renewing those contracts early mid cycle based on the usage going up. Like, we had overages, and then people are like, hey. Like, can we just lock in this volume now? We're like, yeah. Cool. So, like, we'll just renew the contract early, and now it expires in October next year, not January next year. And so there's a lot of that. And but, yeah, I completely agree what you're saying. It was like because we were working with large companies, it makes sense to onboard them properly, activate them, and then yeah, we're gonna obviously build more features, stay close to them, find out more pain points, more, like, tools in the stack that we can actually replace and grow from there.
00:39:13 · Pablo Srugo
[00:39:13] S1: You raised a $25,000,000 series a last month. How many people were you when you raised that? 12. How this is something else that I find is a a challenge. It's you know, people talk about and I don't know how your raise went, so we'll we'll get into that. But a lot of people talk about you wanna raise using you wanna you wanna have a process. You know, you wanna meet a lot of VCs so you can run a you know, run a process, get the best terms, find the best partner, etcetera. When you're 10 people, 12 people, 15 people, which is normal for series A, and especially when you're so sales focused and you're meeting customers, how did you give it the time to fundraise without pull out and all of a sudden your sales and your onboard, everything starts falling right as you you want it to go up. You know what mean? Like, how did you find that? How did you make that happen?
00:39:55 · Mark Hughes
[00:39:55] S0: Yeah. I think, like, honestly, I was lucky and fortunate that we got a term sheet within six days, so and the process was actually quite quick, but I had, like, done the prep up front. Kinda did the prep over the Christmas break a bit when I had a bit of downtime, and then we went out the race first week of January and just ensured, like, leaned on first round capital to make intros, YC to make intros, had the calendar completely stacked. Like, I'm a big believer in, like, you're either fundraising or not fundraising. There's lot of, like, oh, I'm doing these coffee chats. I'm, like, hopefully, we'll get preempted from this coffee chat and all these it's like, you're fundraising. You're fundraising. So made sure it was, like, very time boxed, done the prep, deck ready to go, spoke to customers ahead of time because, like, at our stage, it's all gonna be down to, like, customer referrals and how happy customers are using the product. So, like, call them all over the Christmas break, be like, hey. Like, do you mind if I put you down as a reference? Gonna go out to try Razor series a. They were all more than happy to do so. So I just had, like, the data room ready in Doc's end. Like, our, like, head of operations and finance, like like, he's a wizard with Excel, something that I'm not the best at. So, like, he was, like, building out all the models, getting the data room ready. We kinda, like, wargamed that piece, worked their first round of their team to get the deck in a good place. They have an, like, amazing team that support there, and then ran customers over the break, and then it was, like, ready to go. Calendar was probably blocked with, like, you know, 12 meetings a day for that first week. So you did
00:41:19 · Pablo Srugo, Mark Hughes
[00:41:19] S1: you still did probably, what, thirty, forty, 50 meetings sort of thing? [00:41:21] S0: Yep. Yeah. And considering, like, follow on meetings and stuff like that, think it was, yeah, about 40 meetings. [00:41:25] S1: And just remind me, we talked about the the million ARR. Like, when when did you hit [00:41:29] S0: a million ARR? The night before demo day at YC, which was That would have been March 25. [00:41:36] S1: Okay. So that's the other thing. Like, you're because the series a bar is only getting higher. I think median series a is, like, 3 and a half million ARR. So that's the other thing. Probably by if you you hit a million a year before, you're probably doing, you know, in that mid, like, 7 figure range or so when you go out through the series a. Perfect, man. Well, listen. I think I think we'll stop it there, dude. Like, we we got we got a lot of meat. Nice. I think if you're a founder listening, there's a lot of things you could take from here and implement tomorrow. So thanks so much, Mark, for sharing your story and, like, walking us through, you know, the details, because the details are the things that everybody knows high level what you're supposed to do. And when it comes down to executing, it's really all about the details. So thank you for sharing that with us. [00:42:14] S0: No worries. Thank you very much for having me. And then, of course, if, like, there's any founders that are listening, you can reach me directly on LinkedIn. Always happy to help.