Clate Mask and he has been educating and inspiring entrepreneurs for over a decade. He’s recognized by the small business community as a truly visionary leader. His passion for small business success stems from his personal experience, taking Infusionsoft from a struggling startup to an 8-time Inc. 500 and Inc. 5000 winner. As CEO, he’s leading Infusionsoft on its mission to create and dominate the market of sales and marketing software for small businesses. Under Clate’s leadership, the company has landed 4 rounds of venture capital including a $55M series D led by Bain, with contributions from prior investors including Signal Peak Ventures and Goldman Sachs. He’s also named Ernst and Young Entrepreneur of the Year Finalist, a Top 100 Small Business Influencer by Small Business Trends, and one of the 100 Most Intriguing Entrepreneurs of 2013 by Goldman Sachs.
Famous Five:
- Favorite Book? – Crossing the Chasm and The Advantage
- What CEO do you follow? – Marc Benioff
- Favorite online tool? — Thumbtack
- Do you get 8 hours of sleep?— Never
- If you could let your 20-year old self, know one thing, what would it be? – Clate wished he knew that business, not law, was the path for him AND that building a team and culture is far more fun than making money.
Time Stamped Show Notes:
- 01:18 – Nathan introduces Clate to the show
- 02:28 – When you serve small businesses, make sure you have the right target customers
- 02:35 – There are 27M small businesses
- 03:02 – “You got to get it right. You got to get the market fit”
- 03:20 – Infusionsoft focuses on businesses with 2-25 employees but the sweet spot is 2-10 employees
- 03:28 – Average customer pay per month is $250-300
- 03:54 – “It’s CRM, marketing automation, sales automation, e-commerce on one suite”
- 04:03 – Majority of Infusionsoft’s revenue is SaaS
- 04:10 – Infusionsoft’s $3.4B payments processed
- 04:36 – Infusionsoft created their own payment solution 2 years ago
- 05:04 – It triggers all kinds of Infusionsoft’s automation
- 05:50 – Infusionsoft started in 2002, as a software company
- 05:56 – Infusionsoft pivoted in 2007 and decided to really go for it
- 06:16 – “We started, like every small business, with no intention to build something big”
- 06:34 – Clate saw how Salesforce moved upfront quickly and that opened up the opportunity for Infusionsoft
- 06:43 – “Why not be the Quickbooks to sales and marketing software”
- 06:53 – Infusionsoft’s dark days
- 06:56 – In the first 3 years, every day was a fight for survival
- 07:43 – The second dark day for Infusionsoft was when their product market fit went off and the churn rate went up to a 8% gross monthly customer churn
- 08:08 – Infusionsoft had raised $17M when their churn skyrocketed
- 08:38 – Infusionsoft’s churn rate is usually 2-2.5%
- 09:15 – Infusionsoft has raised a total of $125M and about half was capital for the business
- 10:00 – “When you create something that’s growing, there’s always a new investor who wants to replace an old investor”
- 10:27 – When the round becomes “over-subscribed”, you have to take a percentage of what you’ve raised and make it available for your existing shareholders to sell some shares
- 11:09 – Infusionsoft currently has around 600 employees and still continues to grow
- 11:20 – Infusionsoft has around 135K users
- 11:30 – Infusionsoft just completed their 10 year adverse completion
- 11:56 – There are more things coming up for Infusionsoft
- 12:27 – Average MRR
- 13:19 – Clate shares why they haven’t gone public
- 13:58 – What happens is private money is easier to raise
- 14:06 – Historically, public valuation was better than private valuation, but that shifted over the years
- 15:00 – When the market changed in 2014, Clate had decided that it’s better to stay private as long as they could
- 15:30 – Infusionsoft is currently between $100M – 150M ARR
- 15:51 – The leverage that Clate pulled to turn their monthly churn
- 16:10 – Infusionsoft is serious about helping small businesses succeed
- 16:22 – The breakage model that results in you having a lot of churn
- 16:45 – Infusionsoft says “no” to thousands of businesses every month
- 17:06 – The challenge when you serve small businesses is you that have to tweak and adjust to get the LTV-CAC ratio right
- 17:17 – Infusionsoft is currently at $4 LTV for a dollar CAC
- 17:44 – The LTV-CAC ratio is the number that every SaaS business has to manage well
- 18:15 – It’s better to look at your revenue in unit churn
- 18:42 – The upfront fee was the number one factor for Infusionsoft’s churn moving from 8% to 2%
- 21:05 – The Famous Five
3 Key Points:
- When you serve small businesses, make sure you have the RIGHT target customers and be committed to helping your customers.
- Going public requires a deep understanding of how adaptable you can be in an ever changing market.
- The LTV-CAC ratio is the number that every SaaS business has to manage well—that’s the trick.
Resources Mentioned:
- The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
- Organifi – The juice was Nathan’s life saver during his trip in Southeast Asia
- Klipfolio – Track your business performance across all departments for FREE
- Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
- Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
- Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
- Freshbooks – Nathan doesn’t waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOW
Show Notes provided by Mallard Creatives