Software as a service

Um, and I felt, I kind of found myself disenchanted with that life.

Um, I had an opportunity to, to go to a smaller company, a SaaS company, also in the HR, you know, business.

Uh, didn't really enjoy that.

It was a, a very challenging environment.

Um, I was able to get, uh, in the negotiation, get, uh, quite a bit of cash, you know, set aside and left in the business, um, to help cover some of that liability, right? So it is one of the unique things about a business of my size that I acquired and, and the deal structure was we ended up at close, you know, we had a, a fairly sizable amount of cash in the bank, um, without having to really over-equitize, you know, the business and give up too much, too much equity.

Let's unpack a couple of things there.

Just to be clear for the audience, Rob, the, the memberships, basically that amounts to something like a, an annual payment, kinda like a SaaS business.

The customer pays an a- an annual fee upfront, and so that money is collected.

Who am I? My name is Connor Lewis.

I've been doing video since I was 16, but more importantly, I've been doing SaaS video since I was 20.

I worked at an HR tech company called The Predictive Index, led a video team there, figured out what worked in video, and then kind of branched off on my own when I was 26.

Now I'm 30, and I know way too much about software video.

Yeah, okay.

Taking that to the grave.

Okay, well, today, your sweet spot is B2B videos like SaaS company ads.

What kind of clients are hiring you guys?

Well, the way that you cannot turn a profit is if you're constantly investing in growth.

Especially in the SaaS world.

SaaS is software as a service.

They call it the SaaS ramp of death.

And so if it costs you...

I'm just going to make numbers up.

And often that fair or that conference, three of them were able to, I was able to sign a contract with them.

And me coming from like B2B SaaS, like very long sales cycles.

Of course, ticket size was also much higher.

It took me six months a year for a first deal to close.

That's true.

Can you maybe explain how it works? Does the client's marketing team has to operate something on their side or they just like pay for like a result or an outcome on your side?

That's actually an interesting point because we repositioned, I think around one month or two months from just being a SaaS dashboard to an AI visibility company, which means that we just don't give a dashboard where you show a lot and you give analytics, you show prompts and questions that people are asking, you give recommendations, you give a lot of analytics, integrations, even an AI agent that does things.

But what we realized is these clients, they're not satisfied 100% because you don't solve their problem.

$7.4 billion, up 121% year over year.

And in the bottom middle, cloud applications, their SaaS, that includes Oracle Healthcare that used to be Cerner that they acquired back in 2022.

It is a much slower growth rate, but still up 10% year over year as the company continues to migrate more of those customers off of old licensing and into the cloud.

So it is open AI that continues to drive the bulk of this business right now of that infrastructure.

Very cool product, very cool app, very cool founders.

And I think one of the things that I took away from that from a business perspective was that the traditional SaaS model is terrible for people that need to do work that has real value attached to the decisions.

Like, you can get away with it with social media because it doesn't really matter if, like, Facebook works or doesn't.

Like, it literally doesn't matter.

But they put obsessive attention in managing churn.

And what they saw was that the best way to manage churn was in 30 days, the first 30 days, to hit your P0 issue.

So that time to value, if you can get that inside of 30 days for the SaaS product.

That was like that sweet spot.

Welcome to another episode of SaaS Stories.

Today, I'm joined by Rick Beaton, CEO and founder of Elevate Labs, all the way in Denver, Colorado.

Welcome, Rick.

We've got Cambridge PhD, 20 years advising Fortune 500 boards and CEOs, and now you're building an AI company in San Francisco, which seems like the trendy thing to do in the moment.

It's quite the journey.

I'm curious, how did someone with such a deep research background end up in the world of SaaS? Take me through the beginnings and your whole journey up to this point, please.

Oh gosh, that's a naughty tale.

It's a tough one.

I mean, does this sort of raise all sorts of question marks about how these companies are going to be able to continue financing themselves?

Yeah, it would be difficult because the story actually would be difficult because Antwerp actually would not like SaaS company.

They still need a lot of CapEx to carry on on development.

So they actually is a cash burning company even after they are reporting profits because the capex actually would be very large.

And it reduces risk for the institution, right? When you have legacy platforms, whether it is applications, hardware, One small thing could lead to giant disruptions to the institution.

So moving to a platform, which Workday is a SaaS-based platform, so it's software as a service.

We don't host it on campus.

It's in the cloud.