SaaS Scaling Secrets
The SaaS Scaling Secrets podcast reveals the strategies and insights behind scaling B2B SaaS companies to new heights. Dan Balcauski, founder of Product Tranquility, leads conversations with successful SaaS CEOs, exploring their challenges, triumphs, and the secrets that propelled their businesses to the next level.
SaaS Scaling Secrets
Achieving Revenue Growth with Limited Capital with Billy Marshall, CEO of Servicetrade
In this episode, our host, Dan Balcauski, sits down with the CEO of Servicetrade, Billy Marshall. Get ready to dive into the world of software scaling and learn about the fascinating journey of Servicetrade, a company that serves the fire and life safety and mechanical trades industries. Billy shares his insights on the importance of support, the challenges of transitioning to new business models, and the significance of capital efficiency.
Guest Bio
Billy Marshall, the CEO of ServiceTrade, is not just an accomplished CEO; he's also the author of two intriguing books, "The Digital Wrap" and "Money for Nothing," exploring technology's transformative power in service contracting. With Servicetrade, he has achieved what many in Silicon Valley consider nearly impossible: scaling beyond $10 million in revenue while raising only $6 million in capital.
Guest Links
Servicetrade
Billy on LinkedIn
Hello, and welcome to SaaS Scaling Secrets, the podcast that dives into the trenches with leaders of the best scale up B2B SaaS companies. I'm your host, Dan Balcauski, founder of Product Tranquility. Today, I'm thrilled to interview Billy Marshall, the CEO of Servicetrade. Billy is not just an accomplished CEO, he's also the author of two intriguing books, The Digital Rap and Money for Nothing, exploring technologies, transformative power, and service contracting. With Servicetrade, he has achieved what many in Silicon Valley consider nearly impossible, scaling beyond 10 million in revenue while raising only 6 million in capital. Join me as we delve into Billy's remarkable journey, get the inside scoop of how he's defied conventional scaling wisdom And discusses unique strategies to scale Servicetrade in a capital efficient way. Let's dive in. Welcome, Billy, to SaaS Scaling Secrets.
Billy Marshall:Thanks, Dan. Thanks for inviting me. It's good to be here.
Dan Balcauski:Well, I'm very excited for our conversation and really appreciate your time today. For the people in the audience who are not intimately familiar with you or your journey, can you just briefly introduce yourself and tell us a little bit about your journey in the SaaS world?
Billy Marshall:my journey in the SaaS world actually started with infrastructure software. So I was a, early employee at Red Hat and, was running the product team when we were in the middle of the hype cycle of 1998, 1999. And, everyone was asking the question, how do you scale? A free software company, given the interesting constraints imposed by the GPL and the ability for folks to distribute that technology on the other side of your distribution of it to them. And, running the product group, it kind of fell on my team's shoulders to figure out, given all the hype that we had, given that we had, in fact, I think the company went public in august of, 99, we were sorting through what was the scalable revenue model going to be. And so my team went and did the research with our existing customers and Lo and behold, found a perfect correlation between the number of years someone had used Linux and how valuable they found the maintenance stream. So, the longer you had used it, the more you valued having a curated access to the maintenance. So, the soundbite was, Red Hat sells support. Well, maybe support in the large, but what Red Hat was really selling was engineering. And so my team declared our business model is that we will sell a subscription to the maintenance stream. And that was new in software. Salesforce was brand new in in 99 timeframe had not taken hold big time yet. it was coming, but it was very small company. In fact, I was quoted as a customer of Salesforce and one of their early press releases, in, like, April, May of 2000, I was there when the subscription model for software was born in large scale, because Red Hat, of course, went on to be a huge success, was acquired for, I think, 34 billion by IBM a few years ago. but I was there when it was born, and because I sort of understood it and I birthed it as the leader of the product management group, I then went on to become the leader of the sales group for Red Hat. Because I had to teach everybody how to sell a subscription to an enterprise customer. So that was my intro, my two minutes of fame in the SaaS world.
Dan Balcauski:That is amazing. We have a true pioneer of the SaaS industry on our hands today. I'm very interested. So you said this. You're there in, late nineties, obviously, we're in the middle of dot com mania, right? you do this analysis as a product leader and you said that you declared. this subscription was the way to go. I'm curious what the reaction was. Like, as you mentioned, the context, that was new, that was different. Did your CEO and C suite team all look at you like you had two heads? Or like, what you talking about?
Billy Marshall:Actually, no, the board, in fact, Kevin Harvey from Benchmark, Bill Kaiser. From Greylock. Matthew Szulik was the CEO I was in the board meeting when I declared this and they said, perfect. Go do it that's perfect. Go do it. they were the head of the cheering section. perfect. That's a perfect idea. Go do that. And then we had, of course, to implement it, right, which was not easy. Now, the customers were extremely skeptical, right? They're like, we want to buy a 10 pack of support, right? And so I got promoted to run sales. So I'm calling on the CTO of Citigroup. I'm calling on, the CTO of Morgan Stanley. all these were early customers. I'm calling on the CTO of Goldman Sachs. so I'm in the room when all this is going on and some of them got it. Right? When we said, look, if I'm selling you support, and support as you define it is, if you've got an issue, call me, and I'll help you, then I am incented to ship you a bunch of buggy crap, so that you have to call me all the time so I can have revenue. We're not doing that. What we're doing is we're shipping you a curated maintenance stream, such that you can have confidence that you can buy the hardware that you want to buy, so that you can have confidence that you can buy the applications you want to buy, because we're curating the underlying infrastructure such that those things land gracefully in your infrastructure. And, my favorite Term was that they said, describe the business model. I say, well, we're selling you a reliable future because the last thing you want to do is to wake up with all this open source and discover that your enterprise architecture has become an interesting collection of science projects. So why don't you let me sell you a curated maintenance stream and you'll pay me. According to how much of it you're using across your infrastructure. And they happily agreed, right? And generally at first it was a fight because the terms and conditions were weird and everything else. but eventually they all rolled over and said, yeah, we're happy to be in business with you selling us. something that we can rely upon for our future to be able to continue to buy the hardware and the applications we want to buy.
Dan Balcauski:That's so interesting. so full support in the boardroom and then in the implementation with customers end up getting some of the resistance. I am curious, going back to, like, it is great that you had, such vaunted, investors and board members, just be like, yes, absolutely go do this. I don't know, as you think about what went well in that process, because I imagine there's, you know, CEOs who have not had sort of their grand initiative gets so well greenlit, as you think about either that experience or other experiences, you've had since of like, what was it that really helped you tell that story such that you've got such good support, from that group?
Billy Marshall:Well, we had the data. perfectly correlated with our research that the customers that had used our technology the longest the highest importance rating around the simple access to the maintenance releases. that Red Hat did. They were called RPMs, Red Hat Package Manager. So having a high quality pipeline of that was perfect. If you hadn't, if you'd only used Linux for a year, you didn't care. If you it for five years in 1998, 1999, you cared deeply about it. And so, I mean, you couldn't have seen a more straight line to a business It was so obvious. That by the time five years gets here, when people have been using it for five years, right, when we're a mature organization, they're going to value this thing that we did because that's what the data says.
Dan Balcauski:So there's so many points of this conversation or this topic that I love. So there's obviously bringing, data and a solid story that shows how customers value the product. And then how you, the value communication on the customer side in terms of. Helping them understand. I love this idea of them wanting to pay for a 10 pack of support, and helping them understand that's actually not aligned with the value that they're actually trying to get. It creates a misaligned incentive because, I spend a lot of my time in the pricing and packaging world. And that's one of the beauties, I believe, of the subscription models. It really does align the incentives of the, buyer and the vendor, in making sure that, Hey, we're both in this together at a continuous stream of delivered value, and aligning the payments, to that over time, and, we're all going to be better off. you did say that you also took hold of sales though. you were on the product side and then you got asked to sort of lead the sales organization. What lessons did you learn as you were trying to. Turn a sales organization into this new sort of business model. The reason I'm asking is because obviously this is, may seem like ancient history, but I think there's many companies that are also going through a similar transition today. We hear a lot about, for example, the transition to hybrid or usage based pricing, And so that does have effects on, things like sales incentives, right? It's like, okay, well, I'm not closing that. big subscript, what we had the transition in a perpetual license world from, a perpetual license transaction, getting 90 percent of the customer LTV at one shot versus subscription, which strung that out, which now you have like a model like Snowflake or Datadog with, pure consumption based, that. Usage, money may not come in for 6, 12, 24 months. You don't know. Right. But has all sorts of impacts on how salespeople are incentivized. So were the things that you learned from like helping to focus lead in a sales organization as you're transitioning those models
Billy Marshall:I think that having, a committed leader that really understands the Outcome the customer is looking for and can have that very aggressive conversation with them in order for the salespeople to watch it and then copy it. That's what worked for us, right? Because I went on all these calls and I, and people went with me and some people got there and some people didn't. Right. And the ones that didn't, we weeded out very quickly and the ones that could get there, right, ended up being extremely effective. so I would say, you've got to be able to show the sales team that somebody can do this. Show them that it can be done at scale. So, so get, whether that's a first working prototype of a, of the first great salesperson, whether that's, in my case, the head of sales at Red Hat, somebody has to show everybody that this can be done and then they'll follow. so I think that was the biggest lesson that we had there was prove it and they'll follow you. And, of course, Red Hat didn't have a pipeline problem, didn't have a demand problem. We had the exact opposite. We had the whole world clawing our eyes out to talk to us about what this technology may do. And what we had to do was we had to qualify extremely aggressively. About who we would actually be willing to spend time with, because there were a lot of cases, like, we had one huge fortune of 100 companies say, we just got audited by Microsoft, and now we hate them, and we want to switch everything to Linux. And I said, yeah, too bad none of your applications will run. No, we're going to buy, and it was a grocery store chain, we're going to buy Linux the way we buy beef. We're going to do a reverse auction, and you're going to show up, and we're like, we're not coming, none of your applications will work. There's no point in buying operating systems because your applications won't work. And so, I mean, we had to not talk to people who had money because there was no path for them to be successful.
Dan Balcauski:Well, I think that's a situation. A lot of heads of sales would love to have that problem, but also I heard, really being clear on both the value present and using that to qualify well, as well as having a pattern of demonstrating expertise back to the rest of the organization and taking a, maybe it's a pilot, Rep or group of reps to kind of demonstrate, Hey, this is, can be done and actually you could be very successful doing it. versus kind of throwing everyone into the wolves all at once. I really love that. Well, we've been talking a little bit about ancient history, here in the late nineties. how did you go from that to finding yourself with the helm of Servicetrade?
Billy Marshall:Well, the short story is I got fired. from my next two startups I joined, and so I had to figure it out. It was, so I started a company leaving Red Hat with the former CTO of Red Hat, and it didn't work out, and I got shown the door, and and then I went to a Sequoia Capital backed company, and that, that lasted all of eight weeks, and I got shown the door, and And I said, well, I got three kids in private school, and I'm not leaving North Carolina, you better figure it out. And, so, I had to make my own rain, and I was approached by a entrepreneur who had a contracting business and said, I understand from people in the triangle that you know something about scaling a software business. And I think that we've got some interesting technology here that's really powering our business. Do you think there's a product there? And I said, well, first we've got to ask, is there a market there? And, it turns out that there were, that contractors had been underserved by software vendors, and there wasn't a single modern vendor serving this market at all. And said, well, that's a lot of white space, because nobody's taking care of this market segment. So, how do you want to do this, right? And he said, well, why don't you join my contracting company and build a team inside of here to take what we have done and, redo it. as a product for the market, but you can do it under the cover of our income statement or our balance sheet. and then we'll sell this contracting company and spin out the technology that you built into a new company and you can run the new company. I was like, that's exactly the way I would do it as well. So let's go.
Dan Balcauski:Well, that is fantastic. And the, so real quickly for those, the audience who are listening, but aren't familiar with Servicetrade, can you just briefly introduce Servicetrade and what its mission is?
Billy Marshall:Yeah. Great. So Servicetrade is a Application Company, and we sell applications to commercial contractors in the fire and life safety and the mechanical trades. Well, what does that mean? Well, inside of... Every commercial building in North America, most parts of the world, there is a fire alarm system and there is a fire sprinkler system and there's a set of fire extinguishers and inside of every kitchen, commercial kitchen, whether that's a restaurant or whether that's a commissary unit or whatever, there is a set of fire suppression systems as well and all those systems have to be maintained. According to a strict set of fire and life safety codes and inside of every commercial building and every industrial center, there's also a set of, heating and cooling and plumbing equipment that has to be maintained in order to preserve the quality of the water and the quality of the environment that the people, working in those facilities, live in for a big portion of their day. Of course, there's also residential, but we don't do residential, right? We only do commercial. And so the contractors that take care of all that equipment, the sprinkler systems, the alarm systems, the suppression systems, the HVAC units, the chillers, the boilers, all that stuff has to be taken care of, and we provide them with applications to help them run their business.
Dan Balcauski:And this was, the, when you were talking about the origin story of this entrepreneur, they were serving that similar,
Billy Marshall:They were a contractor, yes.
Dan Balcauski:Got it. Well, and you mentioned as well that, as you were talking about, your navigation from, the back, the late nineties until, today that. Yeah, you are based out in North Carolina around the Research Triangle. It was far shot. Oh, I don't know if you could get, maybe Miami would be farther from Silicon Valley, but how has that affected your company? It's obviously a very different sort of origin story. It's not the 20 year old, Stanford, undergrad dropout who's just coding in his dorm room decides to start a company. it's very different origin story, but also I think imagine culturally building a company out in Durham, North Carolina. How has that affected how Servicetrade is built and grown and your culture.
Billy Marshall:That's a great question. if you look at the cost of living in San Francisco, it's a lot cheaper here. It's a lot cheaper even than the cost of living in Boston. Now, it's not incredibly cheap. and there's a lot to be offered here with, in the Research Triangle Park with all the sort of, the state government is here. there's life sciences here, there's technology here, there's Duke, NC State, UNC, NC Central, there's a lot of universities here. So there's a reasonably diversified sort of high quality of life opportunity here at a reasonable price relative to other places. and so, in places like San Francisco, a lot of the folks that choose to work there, either the wage rate, Tends to be very high or they need a pretty large slug of equity and you've got to have a moon shot for it to be worthwhile.
Dan Balcauski:Mmm.
Billy Marshall:here, all those things are moderated. you don't have to pass out as much equity. you don't have to pass out as much cash. You don't have to have a moon shot for people to have notched a significant and so everything is moderated a little bit in terms of, the way that you can build a business. you don't have to, you don't have to aim for a moonshot. you can build a high quality business without a ton of capital and without, passing out a ton of equity. in order, and without everyone feeling like the moment that they don't see a moonshot that they gotta bail out. So, and we've had extraordinary retention here. I think our five year probably is running on the order of, 90 percent employee retention for Voluntary retention. Of course, we've moved some people along that didn't work out or didn't fit. But in terms of voluntary, I think our five years is just north of 90%. And I think probably the average is around 78%.
Dan Balcauski:that is ridiculous. 90 percent voluntary employee retention. so props to you and the company and culture you built where it's having people stick around is so prized. I think one of the other things, so you mentioned sort of this idea of, Burn that you have, in Silicon Valley and the San Francisco Bay Area. I've actually heard very similar stories. I'm based in Austin, Texas, and actually Austin had a similar narrative, although now I don't know how cost effective it is. It's still cheaper than the Bay Area. The parity is getting closer. I am curious though, because I mentioned in our intro that, you were incredibly. Capital efficient. And I think still continue to be going significantly past 10 million in revenue with a limited amount of capital. And I think one of the things that's really interesting for both myself and listeners is that we've. Definitely shifted a macro economically from a growth at all costs to all of a sudden, people are very concerned about what's a CAC payback period and what's our burn ratio and how many months of runway do we have left? and you see less headlines about, a new unicorn getting minted every week from, higher and higher ratcheting valuations. I'm curious about your philosophy about how you use capital and how you were thinking about growing Servicetrade in a capital efficient way? Is there anything that particularly inspired that approach from the way you view the world?
Billy Marshall:Well, inspired might be the wrong term. I would say, necessity is the mother of invention. in the early, in my prior company, we had come out of Red Hat and, the head of sales and the CTO joining up and we had plenty of capital thrown at us and we wasted it. I raised 25 million in the last startup, and it ended up being a bust. and so there's a lot of lessons there. But, the fact that I had raised that type of money, I said, Well, let's go get some software professionals involved in this new venture. So in 2013 timeframe, my co founder and I started making the rounds, and we were on Sand Hill Road, we were visiting the Winter Street Mafia up in Boston, and, everybody turned up their nose at us. They're like, this is weird, you started in a contracting company, who, what's a contractor anyway? Right. I mean, this is weird. and nobody was interested. And so, we said, well, we'll have to do it the old fashioned way. And, so we had a win with the, we sold the contracting company and that put some money in everybody's pocket. And so everybody reached in their pocket and said, okay, we're going to put some money in this business. And, we had enough to get it off the ground. and we had enough to get our first. 30 customers in the first year. In the second year, we sold 70 customers. And, in that second year, the end of the second year, some of those customers had, that we sold had, private backers that were well known, high wealth people. And, I asked one of the customers who was a, was running a great business. I said, Do you like your backers? He goes, yeah, I mean, good group of people. I said, do you think they'd have any interest in backing this company? He said, oh, really? You're looking for capital? He said, well, we're, we're backed by a debt fund, so the debt fund's not interested, but the individuals who fund the debt fund would be interested, right? one of them was like Will Thorndike, who's the founder of Housatonic Capital. so we had a group of angels that stepped in and, led a Series A where we converted all the money that we'd prior put in. and they happen to be our customer, or they happen to be led by our customer. And so, and then we allowed a couple of other customers in, right? So we said, Hey, if we're going to do this, we'll let some other folks in. So basically we were customer funded, not only with their revenue, but also from their personal balance sheets. and then of course they became great references because they were shareholders. so, so it all kind of worked out. that, that was able to carry us to a place where we began attracting. We skipped over the whole venture stage and went straight into the growth capital stage. so we attracted growth capital when we were about a 7 million company and Frontier. my, my angel said, okay, we can't really help you much anymore. You're a six, 7 million company. we're not professionals at this. It's probably time for you to get some professional help and take the risk off of us. And at that point we had tons of interested people. and we chose Frontier as our partner and that's worked out very well as our first partner in this space. they were down in Charlotte, so they were close. Richard, the founder of Frontier, and I grew up about 40 miles away from each other, in the same area of South Carolina. And we hit it off, and our banker said, yeah, they're good people, and you fit their zone, and if you, and they can be trusted. And, so, they capitalized the company with the first institutional capital in June of 2020.
Dan Balcauski:There's so many threads in that storyline that I just absolutely love. So I think, the first thing is... I've heard the term customer led growth, but I've never heard that tactic before of getting actual capital investment on the revenue and the, I guess the balance sheet, side of the, the equations from your customers that also turned into, say, motivated customer testimonials. that is fantastic. I love
Billy Marshall:Well, and just to put an exclamation mark on it, when they did come in with that Series A, one of the disclosures we had to make was that the two founders had 100, 000 of credit card debt, and unpaid expenses that needed to be paid, upon the closing of the Series A, so we were doing all those things, right? We were doing everything to minimize the amount of, primary capital required to run the business, including not taking pay for a couple of months as the two founders and not submitting our expenses for multiple months.
Dan Balcauski:Mmm. The other thread I really liked in your experience that you had seen, piles of venture capital, just, get incinerated, the capital is no guarantee of success, and, what was that fault? Or what was the problem with that business? We'll leave to another side. But I think, in terms of. Lessons that, we could draw now. you just told a nice story of finding the guys of Frontier and really it sounded like you were, the business was in a good position to be at choice of the kind of partner you selected. but I also imagine that you were at a point, if you're taking growth equity, there's some amount of profitability there. You might've been in a position where you didn't. Didn't necessarily need to. And I think, maybe, you could be like, okay, more capital doesn't necessarily equal more success, right? we could, add rocket fuel, you could blow up on a launch pad, right? so how do you think about that given your experience where you've seen sort of capital, get wasted and like, as you're thinking of as a leader of like taking additional capital, how do you think about that and any advice you have for other leaders who are like, okay. maybe you're running a near cashflow, break even business or profitable business and like, maybe they're, you're getting, interest from, maybe some of these growth equity firms. How do you think about like, okay, what am I going to use this money for? do I take the money now while it's attractive and stashed away for a rainy day, and take a low dilution or do I wait until I need it?
Billy Marshall:it's a great point. In this particular case, we actually had 800, 000 on the balance sheet from the PPP money, and we were going to use that year, I don't know, I mean, we could have gone on indefinitely with structure that we had, right? have gone on indefinitely. And, for us, it was a point of validation. It's like, look, we need some more software professionals around the boardroom table. I did have one software professional at the boardroom table, which was Mike Christinziano, who is a gentleman who's a friend of mine who ran strategy and M& A for Citrix for 15 years. he had executed on 40 deals at Citrix where he had bought, and sold, software companies. And so, Mike was a great mentor and helper in, in being around the table in this company. But the other folks I had around the table had no software experience. They were just owners of the business because they had recruited me to their old business. interestingly, like all of us were from South Carolina. What are the odds of that anyway? and so, and they were nervous. They're like, Hey, this thing has, it's off the ground. We don't want to squander a chance. we would like a proof point that we built something interesting. Give us a proof point and the surest proof point in the world. Is somebody dropping capital into the business? And most of the capital we took in that first round was secondary. It was payout to those investors. we, it wasn't a lot of primary capital cause we didn't need a lot of primary capital. and so it was payout to those investors and, they wanted a proof point and that's how I got them a proof point. Yeah. What we've done is interesting. And so, having Frontier step up and help us with the business was a great proof point that we'd done something useful and valuable because a professional software investor was valuing the business.
Dan Balcauski:I love that. And, it reminds me, there was a conversation I had on this podcast actually with Paroon Chadha, who's the CEO of Onboard. And he told a story where he was sitting at a, we talked, most of our conversation was about board governance and, selecting, board members at different stages of the journey and, how, he had kind of done this. Hey, we're trying to get to a hundred million in ARR. There's no one sitting around this boardroom table who scaled a software business to a hundred million ARR, that quickly sort of turned the, tenor of the conversation. Right. and so I heard, the proof point, but also like, Hey, like, we've got a lot of great smart people here, but maybe, people who have sort of been there, done that. And, on the, with other software businesses, it would be helpful, additional perspectives to not just the capital itself.
Billy Marshall:yeah, it sends a signal to the market, right? It, but it also gets to people around your boardroom table that can help you. and my group had run their, they were done, right? they couldn't help me anymore.
Dan Balcauski:So I do want to ask about, so obviously Servicetrade has gone through, quite a, different stages of scaling and growth. I understand that now you're a multi product company that could be a big. Milestone or dislocation point in a lot of areas, right? It's like, you've now got, an attach and a cross sell motion, for existing or new customers, you have additional pricing and packaging. You've got to split your engineering. you obviously have to educate the market, maybe refining your positioning. Was there any specific challenges that you had as you went through that motion and lessons learned of making that transition that you might be able to share.
Billy Marshall:Yeah. So, so, first things first, right? Ben Nye is a friend of mine and Ben Nye used to run the software investment group for Bain Capital on the infrastructure software side. And I visited with Ben when I told you I was making these tours up and down Sand Hill Road and, Winter Street up in Boston. And, I was sitting with Ben and he said, what's your ACV? I said, well, I think we're. Currently, we're sitting at around 1, 500 to 2, 000, if you exclude one really big contract that we had that was part of our formation. He goes, well, that's your problem. He said, that's going to be very difficult to scale, da da da da. Now, what I didn't do was say, okay, next week, our ACV needs to be... 12, 000 or whatever that's not what happened, right? But over time today, our ACV is 23, 000. So over time we did indeed evolve into a place where our most successful customers were buying a lot more from us. And our average new deal size has become larger and larger because A, we're raising prices as we proved. our value to the market, and B, we were adding products as our customers ask us to do more for them. But the secret to that in the first place was us. declaring that we will be valuable to a limited market. we are very targeted in who we sell. so we took cam out of the equation immediately we said, look, going to focus in on a select type and group of folks, and we're going to solve. Hard problems for them. And we are going to ignore like what Gartner says the market looks like. We don't care. We don't care. Our customers don't read Gartner anyway, right. So we don't care what they say about TAM. What we care about is that we can identify 30, 000 customers in North America that we could sell to and that's plenty. and so we got out of the nuttiness of identify a 10 billion TAM because then you do all sorts of irrational, stupid things where you're trying to maximize your TAM, but you're not valuable to anybody. and so we're extremely valuable. So our customers pay us an average of 5X. What they spend on their accounting system in their business. And most people call the accounting system the ERP or whatever, right? But they spend, on average, 5x. And that includes when they're buying something like NetSuite or Intact or something that might be viewed as a reasonably high value, ERP application. They spend 5x on us. And so I think the big lesson for us was that, we didn't think about multi product, we didn't think about whatever we thought about market focus, be extremely focused on solving hard problems for someone who has a good business and our customers have a great business, right? They're making plenty of money. And so they've got plenty of money to spend with us to perpetuate that model.
Dan Balcauski:I love that reframe of, because I could definitely see that playing out in a bunch of other businesses, right? Because you're trying to chase TAM. You're trying to say, okay, how thinly can I spread the butter I got over or how much bread let's, oh, well, okay, let's put it over here now. and it loses its impact. You lose your focus. And instead this focus on, ACV and like, how could we sort of improve that because we're going to serve the customers that we're serving better. you mentioned you're improving your value over time. walk me through that conversation. so you realize you have this conversation with the, with your investor, your board members, and you're saying, okay, well our ACVs here. And so, okay, we want to focus ICP. tightly, right? We don't want to get too far over our skis, but there's certain people that aren't a good fit. how did you think about, that journey from, where you were to, when you said 23, 000
Billy Marshall:Yeah, great question. And I'll actually sort of give you another story. At the same time I was having that conversation with Ben, I was having a conversation with my unprofessional board. Mike wasn't on the board yet, right? And I had one member of the board and then the others agreed. They said, we want you every quarter to come in and demonstrate to us that you have built pipeline. In five new verticals, right? You should be calling horse farriers. You should be calling painters. You should be anybody that we wanted you to demonstrate. And I was like, okay, and took a note. And then we left the meeting and I grabbed my business partner. I said, that's insanity. We're not doing it. He goes, but you just told the board, I don't care. He said, well, how are we going to get away with it? We're going to hit numbers. We're going to hit numbers, right? And they'll stop talking about that because that we will die. If we do that is stupidity. So we're not doing it. We're just going to go hit numbers. And so sometimes you've got to find a way to lead through a tricky, sticky situation, that, might seem like it's not paying attention to good governance, but these people weren't software people, but they were my shareholders, and I had to deal with them. And so we just went out and hit numbers, and we got very focused. but then I was getting advice from another investor who was an angel locally, a guy by the name of Bruce Boehm. He's a retired U. S. venture partners out of Silicon Valley. He's well known in the triangle as a venture investor and his favorite saying is that small companies typically will die of indigestion before they die of starvation. and so we decided that we weren't going to die of indigestion. If we were going to die, we were going to die of starvation and we were going to be very important. To a smaller number of folks. And so it just focused our feature development. It focused our go to market motion. It focused our conversation with the market. It. It improved our win rates, it improved our retention, so it did everything that you wanted to do. By ignoring TAM, by ignoring my board, and by focusing on great business fundamentals, ultimately, it, those customers pulled us into new products that they would be willing to buy because they said, you've got to solve this problem for us too.
Dan Balcauski:Oh my God. Well, there's so much I love about that. cause that story surprised me. I'm really glad you told it because I think it's, it was very easy to hear the profitable growth into growth equity arc and then think. Well, the, he doesn't have the standard, you know, VC on the board, tell them, but it's the exact same story here. It's like, Oh, you got to expand. You got to sell to everyone. Look, I'm sure there's plenty of good advisors. I'm not, painting anyone with, too negative of a brush, but I think, no matter where you find it or where it's coming from, I definitely, agree with the sentiment of, your results will ultimately be what you're judged by. and then focusing on your core customer, what they value is incredibly important. Well, you are definitely a person. I feel like I can sit back with an iced tea and just hear you tell stories all day, but we will have to start wrapping things up, just to be, kind to you and our audience. A couple of, questions I'd love to just finish on a couple of lightning round questions. Are you up for it?
Billy Marshall:Sure, shoot.
Dan Balcauski:Awesome. Awesome. Well, Billy, nobody of any success gets there on their own. We all have help along the way. Has there been a close mentor or other leader that's really helped you on your journey?
Billy Marshall:Well, my business partner, Brian Smithwick, here, the CTO, being the hardest working guy I have ever met and the most trustworthy guy, right? So, I could not have done, nothing gets done by one person of any significance. And so, without Brian and his experience and his, his willingness to solve problems. technically and alongside me, it's been extraordinary and also just to have somebody to, cry with, right? To have somebody that you can confide in, was huge. So that's probably number one. and then probably, I mentioned Mike Cristinziano being on my board. Having him be the consciousness of an extraordinary software investor, investment type, while also being a technologist and everything else, was a huge win for us. And then I also mentioned Bruce Boehm, who was here local that I would sit down with about once every quarter and just kind of go over the business and go over the things I was facing. All three of those folks were extremely instrumental to this thing being sort of where it is today.
Dan Balcauski:If I had to give you a billboard and you could put any advice on there for other CEOs trying to scale their B to B SaaS companies, what would you put on the billboard?
Billy Marshall:Focus. Focus. You're not going to do 10 things, so do 2. Focus. Focus on your market. Focus. we talked about, Tam, I've given some entrepreneurs some very practical advice that said, Can you identify 500 companies that should be buying your product? And can you identify contacts at that company that you can reach? There's your start.
Dan Balcauski:Mmm.
Billy Marshall:your start. 500. Figure it out. 500. It shouldn't be 10, and it shouldn't be 5, 000. So somewhere between 200 and 800 is probably the right number. Go to work.
Dan Balcauski:Mmm. I love that advice. It's so practical and pragmatic and it gives you, there's so much learning that happens from even just sorting through that 500, starting to have those conversations. So I feel if you just do that exercise in the abstract, you end up with these. Questionable persona artifacts that don't really describe any actual human. And, but like with that, you have very tangible conversations that you can start to have. I love that advice.
Billy Marshall:I'll give you one more. Do not believe that it should be glamorous getting out of the chute. I tell people all the time, I was the trade show mule. I ended up doing training in this strip mall, rundown thing outside of Pittsburgh with a company that's not our customer anymore, but at that time they were a customer and we needed to get through it. They had a dog in the room, a Dachshund, and they had four people gathered around a monitor with me. running through the product, the dog started farting, it stunk, right? and I, so do not think it's glamorous. It is not glamorous. Building a business is not glamorous. That is not what you're in it for. You're in it, you're in it to figure out how you're going to get to the next milestone.
Dan Balcauski:All right. Dachshund farts is going to become new part of my vocabulary from here out. I love
Billy Marshall:and the owner of the dog goes. Sammy, did you do that again? And I'm like, oh my God, it is, where is, Alan Funt with Candid Camera somewhere? Somebody's got to be trolling me. But that was my life.
Dan Balcauski:oh man. the glamorous life of an entrepreneur with the dachshund farts. Oh, fantastic. Billy, this has been fantastic for, listeners. If they want to learn more about you, Servicetrade, anywhere on the worldwide web, we can point them to.
Billy Marshall:LinkedIn, I'm easy to find. you search Billy Marshall, or if you just search Billy Marshall on Google, you're going to, I'm going to be the top hit. and you can find me there and you can find me on LinkedIn. I'm a big believer in the value of LinkedIn and connecting with the professionals there, so I'm happy to hear from you.
Dan Balcauski:Excellent. Well, we will include links to Billy's LinkedIn in the show notes. Everyone that wraps up this episode of SaaS Scaling Secrets. A massive thank you to Billy for sharing his journey, insights, and invaluable tips. For our listeners, if you found this conversation as enlightening as I did, remember to subscribe so you don't miss out on future episodes. Until next time, keep innovating, growing, and pushing the boundaries of what's possible.
