Tom Burton, Co-founder of LeadSmart Technologies talks about how he's reinventing CRM for the wholesale distribution space, where Excel sheets rule and cutting-edge tech is sparse.
What to expect:
Join us for a deep dive into the world of niche tech solutions, as Tom Burton paints a vivid picture of LeadSmart’s journey, challenges, and their vision for the future.
You can watch this episode on youtube below,
https://youtu.be/hOz7Wgaa_y8
So the short story for lead smart technologies is we're A
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:CRM, Customer Relationship Management
and Customer Intelligence Platform
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:specifically for a vertical market.
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:That's called wholesale distribution.
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:Upendra Varma: Hello everyone.
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:Welcome to the B2B SaaS podcast.
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:I'm your host Upendra Varma and
today we have Tom Burton with us.
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:Tom here is the co founder and CEO of a
company called LeadSmart Technologies.
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:Hey Tom, welcome to the show.
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:Tom Burton: Welcome.
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:Great to be here.
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:Thank you.
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:Upendra Varma: All right, Tom,
so let's try to understand what
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:lead smart tech does and you know,
how, why customers pay you and
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:Tom Burton: Yeah.
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:So the short story for lead smart
technologies is we're A CRM,
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:Customer Relationship Management
and Customer Intelligence Platform
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:specifically for a vertical market.
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:That's called wholesale distribution.
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:So people that manufacture products,
and then the companies that sell
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:those manufacture project products,
there's a bit of an ecosystem there,
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:and we're focused entirely on that
video on that vertical and everything
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:in our product is aligned towards
supporting those those customers.
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:Upendra Varma: God, right.
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:So just talk a bit about the history here.
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:Right.
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:So like, I mean, I know CRM is
such an age old space, right?
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:So how did you end up, you know,
picking this particular vertical, right.
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:And you know, just talk
about that story there.
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:Tom Burton: No, that's a,
that's a great question.
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:So my co founder in the company has
spent 35 years in this industry.
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:So he was a manufacturer.
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:He was a manufacturer's rep, which are
salespeople that work with manufacturers.
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:He worked for a distributor.
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:So he suffered through a lot of
the challenges that we have been
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:addressing with lead smart and.
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:You know, the market has been pretty
underserved with technology solutions.
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:So they really haven't had
solutions that are geared to that
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:market that makes sense for them.
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:So a lot of manual, you know,
the, our biggest competitor, as
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:we say, is Excel and email, right?
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:That's what, what people use there.
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:So he really saw an opportunity here.
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:I have a longstanding tech background
and built multiple software companies.
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:He said, this is a bit of a blue ocean.
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:We need to help this market.
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:And so that's how we kind of
jumped in and, and have been
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:doing this for the last few years.
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:Upendra Varma: God, right.
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:And just talk about your
customer base today.
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:Right.
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:So I'm understanding these are all,
you know, wholesale distributors,
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:but just give us a sense of how
many total paying businesses do
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:you have on your platform today?
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:Tom Burton: Oh, we got quite a few
and they range from manufacturers.
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:So again, we have kind of three, you know,
entities that exist in this ecosystem.
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:You have manufacturers that are
the companies that make industrial
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:products, like the headphones you have
on or our microphones or whatever.
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:You have manufacturers reps that tend
to work for different manufacturers and
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:help to get their products to market.
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:And then you have the actual distributor.
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:Where in the B2B world, companies don't
go necessarily to Best Buy to buy things.
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:They go through a B2B
distributor, whatever.
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:So we have actually, uh, customers in
all three of those different areas,
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:um, and are growing pretty rapidly
growing, you know, close to a hundred
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:percent a year and probably will
be much faster as we go forward.
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:We're really seeing that, um, while
the vertical has been underserved with
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:technology, they're really understanding
the importance of catching up quickly.
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:And, you know, the whole AI thing and
all of that has really caused them to
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:have a bit of a wake up call and it's
like, okay, we got to really move faster.
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:And so it's great.
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:We're happy to support that.
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:Upendra Varma: Got it.
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:So I'm saying, Tom, how, how many
customers are we talking here?
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:Is it 100, 000, 10, 000?
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:Just, just
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:Tom Burton: No, no, uh, 50, 60 currently.
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:Upendra Varma: Got it.
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:And, and what are these, like,
are these enterprising deals?
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:Are we talking about 10, 000 deals?
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:100, 000 deals?
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:Like how big are these deals?
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:Tom Burton: Yeah.
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:So our average contact value right now
reigns around 35, 000 of ARR average,
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:but we're, we, we see that increasing.
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:Again, as more and more companies get
on board, a lot of these distributors
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:are very large, very large sales
teams, hundreds of people, you
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:know, so lots of opportunity to
increase that average contract value.
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:Upendra Varma: Got it.
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:Yeah.
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:That makes a lot of sense.
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:Right.
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:I just want to move on to
your go to market motion.
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:Right.
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:So like how you, how, like where
you're finding all of these leads.
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:I know you've got a vertical and
you understand how your ideal
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:customer looks like, but what are
the channels that you're using to
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:reach out to this potential leads?
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:What's
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:Tom Burton: so another good question.
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:So, so a couple of things.
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:So it's a little bit of a
complex go to market motion.
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:It's not like, oh, we went and
hired a bunch of, you know, BDRs and
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:we're starting to smile and dial.
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:First of all, what we spent quite
a bit of time is developing really
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:strong relationships with buying
groups and associations in that
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:industry, because this industry
is very relationship oriented.
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:And they rely on the advice and
opinion of their buying groups and
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:the associations that they're part
of to determine how they should
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:navigate in the technological world.
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:So, we have a pretty strong
endorsed partnership with affiliated
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:distributors, which is probably the
largest buying group in the area
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:partnership with net plus alliance.
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:We have a partnership of, uh, with ISA,
which is a large association in there.
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:So we put, we spent some time to
really build those relationships
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:and build that credibility.
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:Then our go to market is a bit
traditional in a sense that, you
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:know, we're using, you know, basically
reaching out to companies, you know,
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:doing traditional marketing demand,
uh, you know, creating demand and so
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:forth with them about what's there.
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:But then we're now kind of, because
there's this ecosystem, as I just talked
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:about it, the manufacturers, the reps
and the distributors, we're seeing a
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:lot of referrals starting to happen.
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:So a distributor buys our
product and then they go to
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:their manufacturer and say, Hey.
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:It'd be great if you could
also be on lead smart.
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:So we're starting to see a bit of
a flywheel effect occurring because
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:of the ecosystem that exists here.
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:And that was our part of
our original strategy.
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:It's taken longer to kind of see
that momentum get going than we
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:would have expected, but we're
starting to see that happen.
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:And then it's turbo charged by
those relationships with the, with
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:the buying groups and associations.
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:Upendra Varma: Got it.
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:So, so I'm just trying to
understand this a bit more, right?
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:I'm hearing two things here, referrals
from your existing ones, right?
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:And obviously your credibility with,
with, with all of these partnerships,
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:helping you to close those deals.
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:But how exactly are you reaching them?
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:Is it cold calling or is it cold emails?
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:Like what's, what's really been
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:Tom Burton: No, like we'll do a lot of, we
do a lot of joint webinars with, um, with
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:the buying groups and the associations.
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:We do our own webinar and funny enough,
we also, which may have been our, her
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:best, our best Martian is we created
a, our own live show and podcast.
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:It's called around the horn
and wholesale distribution.
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:And we did, we started that about a
year ago, my co founder and I, and we
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:honestly didn't expect much out of it.
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:We, we create a newsletter that we send
out every Friday and then we basically.
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:Go live and discuss it.
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:And it's really taken off and we've
reached a lot of prospects and
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:built a lot of credibility that way.
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:And, and, you know, again, that's
creating demand and building trust.
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:And, um, as a result of that, that's
also been a really good way of reaching
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:this, this market that again is built
on relationships and credibility.
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:Upendra Varma: Got it.
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:Right.
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:So now let's, let's
move a bit bottom here.
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:Right?
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:So what, like talk about
the sales cycle here, right?
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:When somebody Things that.
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:Okay.
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:This looks an interesting product, right?
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:How do you convert them
to a paying customer?
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:Right.
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:What's the sales like look like,
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:Tom Burton: yeah.
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:So again, it kind of starts
with that discovery call.
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:And then we go in, I guess, I don't
like to use the word demo, but it's
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:more of sort of a multi step mini
training, if you will, on what are the
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:capabilities of, of the technology,
because for a lot of these companies,
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:they don't know what's possible.
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:So we take them through that.
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:Usually that's multiple two or three
sessions that then, you know, leads
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:to generally some followup questions
and then a proposal and then obviously
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:a close, probably the obvious
question is how long does that take?
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:Um, that can take anywhere
from a year to a week.
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:I mean, we've had everything
and everything in between.
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:So it really depends upon the company.
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:You know, do they have an impending
event or something that's really
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:driving them to get going?
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:So there's a lot of variables.
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:So we know that some are
going to take a long time.
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:Some are going to happen shorter.
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:So the key is just kind
of have a good pipeline.
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:Upendra Varma: And then the customers
that we're talking about, right?
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:Are these, you know, somebody
who's, are you literally competing
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:against Excel sheets, for example,
or are you sort of, you know,
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:replacing it with an existing CRM?
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:Late?
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:So what's, what's that look like?
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:Tom Burton: Yeah.
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:So, I mean, there are some companies
that have some existing CRM, but I
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:would say it's probably less than And
a lot of the times it's like, I mean,
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:it's, it could be going back to like
act and goldmine, you know, some of
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:these CRMs that from 25 years ago,
um, or they have some old, you know,
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:technology that they've built in house.
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:But I would say that 75 to 80 percent
of who we're talking to, they run their
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:sales organization on spreadsheets.
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:Or, you know, white Microsoft
office or whatever the case may be.
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:So, yeah, that's the, and the challenge is
not so much that they're, that they like
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:that technology is just to change, right.
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:It's a change.
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:It's different.
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:You know, these are not
high tech people per se.
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:Um, so we have to focus a lot on the
importance of how do we get adoption?
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:How do we get people to use it and feel
like they're getting value out of it?
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:When these are not people
that are just looking for the
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:latest piece of technology.
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:Upendra Varma: Yeah.
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:So, so I believe you also have to
solve this problem of educating
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:the people themselves, like, Hey,
you need a tool as opposed to
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:them already understanding that.
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:Okay.
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:Here's a tool we need.
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:Right.
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:So it's like, is it more
about education in your case?
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:Okay.
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:You showing them, because I
mean, they're going to resist it.
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:Right.
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:So it's, it's going to
change a lot of things here.
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:Switching would have been much easier.
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:Tom Burton: Yeah, no.
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:And that's where the podcast and the
show has really helped, you know, it's a
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:safe way for people to get educated and
the webinars and, you know, not just up.
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:Right.
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:There's a lot of industry people
right now, the associations, the
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:buying groups, a lot of their focus
is helping to educate these companies
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:because they got to move, right.
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:They're going to be irrelevant if
they don't really start moving.
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:So, but yeah, it's, it's a lot
of education and then getting
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:them comfortable that this isn't
going to be really disruptive.
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:And isn't going to set them
backwards, but move them forward.
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:Upendra Varma: It's a talk about, you
know, your retention as such, right?
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:I mean, it's been a couple
of years at least, right?
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:And I see you've got a
bunch of customers, right?
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:Do you see any churn?
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:And how are you able to sort of
expand an account that you've landed?
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:Just talk about those.
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:Tom Burton: So we're
really excited and proud.
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:We had no churn last year, so we've had
no churn really in a year and a half.
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:Um, and there's two reasons for that.
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:One is.
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:We very, very, we spend a lot of time
on that onboarding and the client
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:success so that we get the adoption and
we start to see return on investment.
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:And I'll give you an example.
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:We have, you know, 1 customer that
came on earlier this year and has
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:seen a 25 percent increase in sales.
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:That they believe is mostly attributable
to moving on is the way they say it is.
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:It's a sales team, same sales team
as we had before doing a lot of the
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:same stuff, but having a lot of more
capabilities than what they did before.
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:So, you know, it doesn't take much
for people to kind of go, wow.
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:All right.
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:How did we live without this?
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:And then, you know, we take care of them
and that's the other really nice thing
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:about this market is because they're not
ultra techie, they're very loyal, right?
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:They're not looking to switch to
the next shiny object or the next.
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:You know, cool thing that comes out.
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:So once they come in, they're very loyal.
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:And if you're loyal back to them, they'll,
you know, we've had, we have customers
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:now that have been on four years going
on five years, that kind of stuff.
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:So I don't see churn being
a big, big issue for us.
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:Um, in fact, I see our net revenue
retention is going to be very high
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:compared to the industry because
it's a very loyal, uh, you know, and
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:it's not an easy thing that they're
going to want to replace every week.
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:Upendra Varma: So do you have
folks in your team, right?
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:Customer success team who are
specifically focused on, you know,
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:getting the customers, you know,
you derive value and increase the
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:NRR, like net revenue retention.
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:Tom Burton: Yeah.
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:So we have a client, we do pretty much
that happens through client success.
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:So once the customer, you know,
comes on board, we have a, we, we
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:take them through what we call a
smart start, which is the onboarding.
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:But one of the things that's quite
unique with us, it's not like when
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:we're done, it's like, okay, we'll
call support or send us an email.
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:If you have a problem, we
continue to support them.
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:As a consultant, we call
it our concierge program.
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:So they can, you know, reach out and
schedule time and say, Hey, we want
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:to build some new reports or we want
to do something new and we'll do that.
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:We provide that at no extra cost as
them parting, starting to be there.
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:So that's our client success.
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:And oftentimes that leads to them going,
Hey, we want to add more users or more
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:capabilities, or there's another division
or, you know, whatever the case may be,
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:and because they're succeeding, right.
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:It's like success is
the only way to really.
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:You know, drive the NRR game.
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:Upendra Varma: Got it.
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:All right.
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:So Tom, I just want to want you to sort
of recall your zero to one journey, right?
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:So how did you get those
first five customers, right?
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:So where did you find them?
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:How did you knew them, right?
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:How did you manage to convert them?
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:Just talk about that story.
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:Thank you.
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:Tom Burton: the first five customers
really came because of my co founders,
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:uh, relationships in the industry.
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:So he reached out to people that
he knew had worked with before.
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:Right.
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:So I will call them sort of
like the friends and family.
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:Type of customer.
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:Um, but what was good about,
again, people are well connected.
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:And so we use those as a platform
to kind of springboard to get to
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:the next layer and the next layer.
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:But yeah, I would say the most of
them came from the friends and family
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:relationship that my co founder had Kevin.
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:Upendra Varma: Talk
about your team, right?
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:So how many folks do you have, do you
have on your team and what do they do?
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:Tom Burton: Yeah.
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:So, uh, there's probably close
to 20, 25 people on the team.
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:Um, depending upon, you know,
some different, we have some
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:different contractors we work with.
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:Uh, I would say, you know,
client success is probably a
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:third of the team that's there.
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:We have an engineering team as well.
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:Um, we're a bit unique is that
we're built, our product is built
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:on the Salesforce cloud platform.
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:So rather than building on AWS or some
other cloud platform, we worked out
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:an arrangement with Salesforce that
allows us to build on their platform.
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:Everybody buys from us.
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:They don't buy anything from Salesforce,
but, um, it gives us really a really,
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:really top notch, you know, high
performing cloud platform for us to build,
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:build on top of, which is, you know,
arguably the most secure and the most high
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:performance cloud platform in the world.
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:So we have an engineering team.
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:Sales, I would say we're probably
broken down pretty much 40% sales
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:and marketing, four 40%, uh, client
success, and then 20% engineering.
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:And obviously some, you know, g
and a and stuff like that in there.
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:Upendra Varma: Got it.
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:Uh, that makes a lot of sense, right?
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:So, and like, I'm assuming you must have
raised funds to build your company so far.
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:It's have you raised any
external funding so far?
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:Tom Burton: Well, we've, well, we
ha we, me, myself, and my partner
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:have invested a fair amount into it.
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:Um, we have inve, we have raised
some small amounts of, uh,
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:convertible debt, literally less
than a hundred thousand dollars.
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:So small amounts.
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:Upendra Varma: it's bootstrap then, right?
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:I mean, if you're putting in your
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:Tom Burton: Yeah.
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:It's bootstrapped.
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:It's bootstrapped.
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:And we're looking now because we're
getting to that point where, you
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:know, in the early stages, right.
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:Investors all like, well, talk to me
when you get to a million ARR, talk to
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:me, you know, and we're like, you know,
we can fight this or we can just kind of
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:literally bootstrap our way to that point
and then get a place where we're at a
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:foundation where we can get quality, high
quality investors kind of picking shoes.
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:We're getting to that point right now.
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:Um, we've also used
revenue based financing.
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:So we've worked with, you know,
companies that, uh, lighter capital that
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:help you basically, you know, offset
your revenue because we have good,
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:strong, recurring revenue with that.
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:It's, it doesn't necessarily, um,
you know, cause you to take, to
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:take it big time growth, but it
helps, you know, add more cashflow,
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:the equation and give you more
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:Upendra Varma: So, so Tom, why race?
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:No.
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:I mean, if you've already, you
know, bootstrap managed to bootstrap
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:and build, you know, build such
a good company so far, right?
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:So why not just keep
on doing that forever?
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:What's the vision here?
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:Tom Burton: Yeah, there's
a, there's a huge market.
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:So in the U S alone, there's over 300, 000
distributors and 200, 000 manufacturers.
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:I mean, and the majority of
these companies do not have any
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:sort of technology that we do.
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:So there's a gigantic market
and we're literally just
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:scratching the surface of that.
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:And so, you know, our vision is my
co founder Kevin says his vision is.
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:Right.
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:There is no serious talk of CRM
and customer intelligence and these
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:companies without lead smart coming
to the, and I think that's a really,
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:really good vision and goal that we
should be shooting for because we are.
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:I believe we are the leader right
now in this industry of having
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:that industry specific solution.
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:And that can really help them drive sales.
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:So, yeah, we're going to have to,
if we're going to really get to that
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:next level, we're going to need more
capital than what we're, we're doing on
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:Upendra Varma: And then how does
the competitive landscape look
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:like in this particular niche?
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:Tom Burton: Yeah.
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:So, I mean, there's, you know, what we
call the more traditional CRM vendors,
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:there's the Salesforce and Microsoft
dynamics and those types of things,
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:but we rarely see them, actually.
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:We rarely see them there.
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:There's a couple of other
vertical solutions that have
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:been around for a while.
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:So they're a bit older
technology, if you will.
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:We see some of those, but, um, no,
it's not, it's not a hyper competitive
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:red ocean that you see potentially in
other CRMs, you know, where you're,
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:where you have, you know, pipe drive
and HubSpot and Salesforce and monday.
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:com and all of these people vying
for that business, because the needs
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:for this business or this vertical
are very specific and those sort of.
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:One size fits all CRMs don't
really work well for them.
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:So.
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:Upendra Varma: Makes sense.
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:Tom Burton: I do expect more
competition coming in here, right?
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:Anytime there's an opportunity,
there's going to be more competition.
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:Upendra Varma: They're
going to follow you.
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:Definitely.
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:Tom Burton: That's right.
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:Upendra Varma: All right, Tom.
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:Thanks for taking the time to talk to me.
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:Hope you scale your company
to much, much greater heights.
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:Tom Burton: No, great questions.
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:Thank you.