GE 255: The 1 Thing Rob Nelson Did to Grow His Business Intelligence SaaS Company from 12-110 Employees in 2 Years (podcast) With Rob Nelson

Hi everyone! In today’s episode, I share the mic with Rob Nelson, the CEO of Grow.  Grow is a business intelligence tool made for SMBs.

Tune in to hear about Rob’s early struggles with his first company, how he realized the importance of onboarding, and how they focus on customer feedback for high retention rate. 

Download podcast transcript [PDF] here: The 1 Thing Rob Nelson Did to Grow His Business Intelligence SaaS Company from 12-110 Employees in 2 Years TRANSCRIPT PDF

Time-Stamped Show Notes:

  • [00:38] Before we jump into today’s interview, please leave a review and rating and subscribe to the Growth Everywhere Podcast!
  • [01:38] Rob had a company prior to Grow, where they had all just stumbled into the business.
  • [02:05] They brought in a management consultant that helped them figure out their KPI’s and helped them “move the needle”.
  • [02:15] Through that process, they made the business more data driven.
  • [02:30] From there, the company grew more organically and work became more fun.
  • [02:50] Throughout the process, Rob became frustrated with spreadsheets.
  • [03:22] A bigger company came in and made a good offer, which is when Rob made his exit.
  • [04:12] Hindsight is 20/20 when you leave a company.
  • [04:40] Everyone came up with different metrics in each department to figure out their KPI.
  • [05:00] However, Rob wanted a change from spreadsheets to a real-time scoreboard-like tool.
  • [05:35] Grow is a SaaS subscription model and the cost is $500-600/month to start.
  • [05:45] Once you get to 20 employees, it’s harder to track updates and reports.
  • [06:45] Upon launch, they made it a self-serve type product at $49/month.
  • [07:08] Early customers found it didn’t solve their issues and that they needed more support.
  • [07:30] In order to help their clients be successful, they had to increase the price.
  • [07:45] This allows more customizable options for customers.
  • [08:15] Pricing scales up based on the number of reports they track per customer.
  • [09:27] They raised $1.5 M before launch.
  • [10:55] They knew they had something special, but it was hard to do for $49/customer/month.
  • [11:37] The self-service pricing is $49/month, whereas the greater price is more personalized and comes with white-glove customer support.
  • [12:25] They’ve gone through 2,000 on-boarding sessions with clients, so they have the process down.
  • [12:50] Early on, with the self-service model, they had bad numbers (10% a month).
  • [13:15] After they worked out the kinks, floundered for a full year, they updated a lot of their services and they did a lot better after that.
  • [13:45] They now have 110 employees.
  • [14:30] It took them a minute to realize the importance of on-boarding.
  • [14:54] There is a trend of upping the price to match an actual solution.
  • [15:14] Grow is a great example of this.
  • [15:30] Grow uses a program like Survey Monkey or Ask Nicely that integrates with SalesForce costs $600, but it works better for them as a company.
  • [15:56] It helps Grow’s workflow to have this solution in place.
  • [17:15] Grow has a referral program in place and users get a percentage.
  • [17:47] Rob recommends SalesForce. Grow began using it within the last year and it has enhance their business functionality.
  • [19:18] Rob found their sales people through their first client success worker.
  • [19:51] The client success worker recruited through his network.
  • [20:03] Rob recommends the book The Hard Thing About Hard Things

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Full Transcript of The Episode

Show transcript
Eric Siu: Got it. Okay. How do you guys make money, first and foremost? And, how do you generally charge? What's the standard pricing look like?

Rob Nelson: We're SAS subscription-based model. Our pricing is about $500 or $600 a month, to start. Usually, when you've got 10 employees, you kind of know what's going on, as a CEO, or as the entrepreneur. Once you hit about 20, you've got a team in place, managers, and you're going around asking for updates, asking for reports, asking for more data, and that's where the pain really becomes real for these companies. And, that's where we step in, and where most companies find us is in that 20 employees, or maybe 10 employees if it's eCommerce and you're doing several million in revenue.

Eric Siu: Great. You guys charge $500 to $600 bucks a month, and I remember, in the beginning, when you first launched, maybe it was cheaper. We're talking, maybe, $49 bucks for the dashboard. Or, maybe something around that range? What led to the increase?

Rob Nelson: Oh, man. You know, I remember you caught us early on. Like, right when we launched. We went out with this concept that it should be totally self-serve, $49, and we kinda experimented with that. And, as we launched ... First off, I mean, I built, for about a year, with five engineers. And, we were heads-down on the product, working on the problem. And, then we launched, at $49 bucks a month, and got repeatedly punched in the face by customers saying, "Hey, this is just not enough. I need to do this, I need to do that."
We realized, customers need more support and, to solve the problem of connecting your data ... When everybody uses different stuff, and then everybody wants to see that stuff formatted and look differently, is a lot harder of a problem to solve than we thought. And, it requires more support and more onboarding. So, in order to justify that, and to help our clients be successful, we had to increase the price.
That's right. We start at about $500 or $600 bucks a month, now.

Eric Siu: Got it.

Rob Nelson: And, then, it goes up, and we have this unlimited user model that plays into the brand and our mission, and what we're trying to accomplish is helping these companies become data-driven. And, democratize that data within the company. The thought of a single-user license running Grow in his back cubicle, I hate that idea. We're like, "Hey, we don't care if you're finance, sales, marketing, ops, whatever. Connect to the ops that you use, pull the data back, build the insights, and share them with the team."
We've got this unlimited user model, and pricing scales up based on the number of reports that they're tracking.

Eric Siu: Got it. And, how long did it take you to realize that you needed to change the pricing? I guess, how long, from the time you saw the problems when you first launched, and then when you actually changed the pricing. How long was that?

Rob Nelson: It was about a year.

Eric Siu: Got it.

Rob Nelson: Yeah, it was like this gnarly product market fifth-phase that is brutal. And, it was just a brutal phase. You go through this period of, "Hey, I'm building." I was self-funding this, in this building phase of me and five engineers. And, towards the end when we were getting ready to launch, it was like, "Holy cow. This is gonna take way more capital than I've got the stomach for, and what I'm able to do." At about that point is when we went out and raised some venture capital funding for it, and then had a year of product market fit phase, wandering the wilderness, and running into walls, and trying to figure our way out.

Eric Siu: You raised pre-revenue, right?

Rob Nelson: We raised pre-revenue, yeah. Yeah, we raised pre-revenue, really, pre-product, before we launched. And, we raised a million and a half at that time.

Eric Siu: I love it. The interesting thing, I think, when it comes to pricing is such an important topic that it's not a particularly sexy one, this is a marketing podcast. I just think, it's so important, 'cause you just mentioned the number 49 and, for me, with our SAS product, it's just like, "Okay, there's all these products out there with $49, $99 bucks a month. Should we just cater to that market?" So, we started doing some customer development, and found that people were willing to pay, at least, $300 a month, and that's kind of the minimum, right?
Then, we have contracts out for a couple grand, or so. So, it's just like, when you actually think about it, and you think about the people that you're serving, it actually makes sense to charge more, right? I guess, my question is, when you came up with the $49 a month pricing, where did you pull that number from?

Rob Nelson: Oh, man. I, honestly, don't know. I mean, I think it was just like, "Hey, we're just throwing it out there and seeing what sticks."

Eric Siu: Right.

Rob Nelson: And, then, after running it for several months, reality hits of like, "It's really, really hard to build a business at $49 bucks a month, or $90 bucks." I mean, Dropbox has done it, and a few other companies. But, very few have. And, it's like, "Hey, we want to do something significant. We believe the market's there, we believe these ingredients are there in the company to build something really big and special." But, it's tough to do that at $49 bucks a month.
And, I think what we did right, in this time of product market fit, was always obsessing over the problem. And, "How do we solve this problem?" Versus obsessing over a solution. And, that lead us to, "Hey, we just need some more client success, people to help guide customers through the problem. We need more support around it, so that we can support these customers to a very successful outcome to accomplish what they want with BI. And, that's why we've had to increase the price in order to support it.

Eric Siu: What I'm hearing is, it was more like a self-service thing at $49, and then, now, at least the minimum $500 to $600 a month price point, it's more white glove, almost like a done-for-you, or work-with-you kind of service?

Rob Nelson: Yeah, that's right. We've been really successful with customers, and have had a lot of good feedback with customers going through a high-touch onboarding process. Where it's like, "Hey, this isn't really a tool to just play around with and spin up one or two reports." Usually, our buyers want BI to be a core application in their business. They want to see the real benefits of it. They want to become data-driven.
It's like, "I want to be able to implement it, and have a successful outcome." And, so, we've gone through about two thousand onboarding sessions with clients now to help spin that up, and roll it out successfully.

Eric Siu: Love it. And, I think on-boarding is such an important thing, and I really recommend everyone read up more on on-boarding if you're starting to build any kind of subscription product, or any service, too, because great on-boarding leads to better retention. Did you see anything reflected there in your numbers? Can you share anything about that?

Rob Nelson: Oh, yeah. Yeah. We really had atrocious turn numbers that, early on, on that self-service model, and-

Eric Siu: How bad?

Rob Nelson: It was, probably, over 10% a month.

Eric Siu: Ooh.

Rob Nelson: Yeah, I mean, you just can't build a business off of it. And, I think part of it was hey, we were super early, it was just after the product launched and we were trying to work out the kinks. And, then, we kind of built-in ... What's interesting is, we kind of floundered for a full year, in that phase, right? And, then we did three or four things, all at the same time, in January, two years ago, from this month. So, two years ago, we made a bunch of changes. We built and organized a client's success team, we changed the commission structure, and then added two or three features, and it just exploded and took off.
We were at 12 employees, two years ago, exactly. And, we've got 110 now.

Eric Siu: Wow.

Rob Nelson: So, it's been this fast and furious ride the last 24 months with growth, and it's been a lot of fun.

Eric Siu: That's crazy. I was talking to one of my buddies, he runs a SAS company, too. And, he was saying, "Man, you know, Eric, once we increased our prices, and we added done-for-you, it just became a complete game-changer." And, it sounds like it's the same thing for you, too. I think it's interesting, because, almost ironic, because a lot of people that go into subscription do it to build software, and they don't want to build a services-based business. But, at the end of the day, you're still gonna have to ... Everything is a service, right?

Rob Nelson: That's right. Yeah. Yeah, and I think we're all realizing that, the importance of onboarding, like you mentioned, is that SAS is waking up to that. Like, "Holy cow, the key to make subscription revenue models work is retention. Right?" And, enough support to help these customers be successful. I think there's this trend ... I'm seeing this trend of, in SAS, truing up the price to match an actual solution. And, seeing SNB's pay for a real solution, versus a tool at $29 bucks a month.

Eric Siu: What's an example of that?

Rob Nelson: You know, I think we're one of the examples. And, I'm trying to think of some software ... I mean, I consider us an SNB, right? I'm trying to think of some examples of software that we've purchased. I'll give you an example. I forgot the name of the software, but it's basically a survey. It's like SurveyMonkey, that just integrates with SalesForce, it just works better for our use case. And, that's $600 a month, to collect MPS data, and customer's feedback scores.
But, it does a great job in our workflows, and piping it back into our CRM, and around the automation.

Eric Siu: Is it Asks Nicely?

Rob Nelson: Yeah. Yeah. No, no, not Ask Nicely-

Eric Siu: One of our competitors?

Rob Nelson: Yeah. It's something like that, but it pipes back, "Hey, we could probably accomplish the same thing with SurveyMonkey, it just would be a really painful solution. We wouldn't get the outcome and the results that we were looking for with something else."

Eric Siu: Right.

Rob Nelson: Now, that's not to say SurveyMonkey's not a great tool in certain circumstances. I'm a big fan of them.

Eric Siu: Cool. I'm curious, you talked about adjusting the commissions, and that certainly correlated to how you guys grew by so much in the last 25 months. I'm curious, what were the commissions for your salespeople for customer success in the beginning, and then when you adjusted it, what did the commissions change to?

Rob Nelson: I think the commission amounts didn't change a whole lot. They increased a little bit, but the way we were doing it before, and I think this is a classic newbie mistake that I made, which was, "Hey, you build and book a business, we'll pay that out over time, as the customer pays. So, you get X percent of revenue when we bill the customer every month."

Eric Siu: Hmm, instead of upfront?

Rob Nelson: Instead of upfront. Now, it's like we're doing what is more common of taking the total annual contract value, and paying that upfront. So, they get the full benefit.

Eric Siu: Got it. Cool. Makes sense.

Rob Nelson: It requires more cash, so when we did that we had to go raise another round.

Eric Siu: Got it. Okay. Great. We're working towards wrapping up here. What's one new tool, besides Grow, that you've added in the last year that's added a lot of value to your life? Like, Evernote, for example.

Rob Nelson: Love Evernote, big fan. This sounds kinda generic, but SalesForce.

Eric Siu: In the last year?

Rob Nelson: About a year ago, yeah. We just converted over to SalesForce, and everything pipes in there, and the data is ... I can ask any question, like segment, MPS by industry, by company size, by MRR. Whatever it is, we've got access to the data, it's just a beautiful thing.

Eric Siu: It's interesting, because a lot of people, they start out not using SalesForce, 'cause it has too many bells and whistles. I'm guessing when people are ready to transition into SalesForce, did you hire a SalesForce agency or a consultant to help you pipe it all together?

Rob Nelson: I've done that before, in the past, and I didn't do it this round, because we've had several internal people that came from the sales ops world that were SalesForce programmers. So, we had the internal resources to do it. But, that's right, when I first started Grow, it was like, "Hey, let's get SalesForce going." And, then we go through product market fit, and we're fighting for our lives. It's like, "All right, scrap SalesForce, let's do something free and cheap that everybody loves." And, then, you get some traction, and you want to scale. It's like, "Okay, now go back to SalesForce."

Eric Siu: Makes sense. This is a side-question, actually, a bonus one. You talked about sales ops people, where did you go to find your sales ops people, 'cause those are pretty hard to find.

Rob Nelson: Yeah, it started with our very first client success guy, Ryan Voorhees, and he's built our team and he's been key to our success and growth. He came from that world, and he was our very first client success. So, in a technical product like BI, or if you have a technical product, I think they make phenomenal client success people and leaders. They're system-oriented, or system thinkers. And, then, he's built the team around that. So, he's recruited from guys that he's known, or people he's know from other jobs.

Eric Siu: Got it. Love it. Okay. Well, Rob, what's one must-read book you'd recommend to everyone?

Rob Nelson: Boy, I think ... This is hard. I recommend different books at different stages of an entrepreneur's journey, but I think The Hard Thing About Hard Things is really good, as an overall general book for entrepreneurs.

Eric Siu: Great. Love it. That's our number one recommended book over the last four years that I've been doing this thing.

Rob Nelson: Oh, really? No way.

Eric Siu: Yeah. Okay, Rob, this was great. What's the best way for people to find you online.

Rob Nelson: Grow.com. Yeah, grow.com. Hit us up there, and that's the easiest way to reach us.

Eric Siu: Great. Rob, thanks, so much, for doing this.

Rob Nelson: You bet. Thanks, Eric.

Speaker 2: Thanks for listening to this episode of Growth Everywhere. If you loved what you heard, be sure to head back to growtheverywhere.com for today's show notes, and a ton of additional resources. But, before you go, hit the subscribe button to avoid missing out on next week's value-packed interview. Enjoy the rest of your week, and remember to take action and continue growing.