Steve Benson's leadership journey is a masterclass in resilience, grit, and innovative growth strategies. As the Founder and CEO of Badger Maps, an app for B2B field sales, he has mastered focusing on the ideal customer profile and harnessing the power of offshore talent. 

Join Jim and Steve as they discuss Steve’s bootstrapping journey all the way to up to 5.4 million ARR. 

3 Key Takeaways

• Establish a Dedicated Support Team Separate from Sales: For years, Steve’s sales team handled all customer calls, which was effective for sales inquiries but less so for support issues.  To enhance efficiency and focus, we have now segregated these functions.  While the sales and support teams maintain communication for cohesive operations, this separate allows the sales team to focus exclusively on sales activities, ensuring a more targeted and effective approach. 
• Leveraging Offshore Software Development Talent is Table Stakes for Bootstrapping a Company: In the US, exceptional software engineering talent commands a premium price, justifiably for those prioritizing domestic sourcing.  However, for startups operating without significant external funding or capital, exploring offshore software development partnerships can be a strategic move.  Countries like India, Poland, and Brazil offer a wealth of skilled professionals, providing a diverse array of options for cost-effective and quality development solutions. 
• When Searching For a Loan, Compare Like-For-Like: Some companies offer revenue-based loans. Others offer discount rate loans. And of course there are APR loans. When you’re shopping around, convert every offer to APR so you can compare apples to apples. 

Resources

Steve Benson on LinkedIn: https://www.linkedin.com/in/stevenbenson/ 

Badger Maps: https://www.badgermapping.com/ 

Badger Sales University: https://salesuniversity.badgermapping.com/ (Use the following code for first month free, 2nd month 80% off: STEVE80)

Steves Outside Sales Talk Podcast: https://www.outsidesalestalk.com 

Steve on Instagram: https://www.instagram.com/stevebensonsf/ 

Steve on Twitter/X: https://twitter.com/SteveBenson 

About Our Guest 

Steve Benson is CEO and founder of Badger Maps, the #1 app in the App Store for outside and field salespeople. Steve is also CEO of Badger Sales University. After receiving his MBA from Stanford, Steve joined Google, where he became Google Enterprise's Top Sales Executive globally in 2009.

In 2012 Steve founded Badger Maps for outside and field salespeople to upgrade existing CRMs with mapping, routing, and scheduling. He also hosts the Outside Sales Talk, a podcast specifically for outside salespeople, and is the President of the Sales Hall of Fame.

About The Dirt Podcast 

The Dirt is about getting real with businesses about the true state of their companies and going clear down to the dirt in solving their core needs as a business. Dive deep with your host Jim Barnish as we uncover The Dirt with some of the world's leading brands.

If you love what you are getting out of our show please subscribe.

For more information on how we dig into the dirt check out our other episodes here: https://www.orchid.black/podcast

About Our Company

Orchid Black is a new kind of growth services firm. We partner with tech-forward companies to build smarter, better, game-changing businesses. 

Website: https://www.orchid.black 

LinkedIn: https://www.linkedin.com/company/orchidblack/ 

YouTube: https://www.youtube.com/@OrchidBlack 

All contents of this show are rights of Orchid Black©️ and are not to be used unless authorized by written consent.

All right, Steve, let's dig in. Who is Steve and what is Badger Maps?

So Steve is just a guy. The Padger Maps is a company that we make an application for field salespeople and field service people. So think like a medical device sales rep. What we do is we connect into their CRM or wherever their customer data lives and bring that information into a mapping environment on their phone or on their computer

understand their territory on a map, build routes, build out their schedule, figure out who to focus on given where they're going to be at in the field. And, and basically give them a planning tool and an insight tool into their, uh, into their territory.

Sounds pretty awesome and I got a bunch of questions tied to that but before we go there, you know, how did you, I know you haven't been doing this since you were five, so how did you get into this industry and what led you to start Badger Maps?

Well, my last role in the working world was I was at Google working with Maps and the Maps API. And my background was in field sales, so I understood kind of a lot of the problems that field salespeople have. And this is like 2010, 2011. And I could kind of see where mobile was going.

mobile devices and mapping, we're gonna be able to solve a pretty big problem that field salespeople and field service people have traditionally had. And so I guess I understood the problem well, because I've done it and I understood the kind of where the technology was and where it was going to some degree. Google used to have these posters up everywhere, like what's gonna be possible when the mobile internet's a hundred times faster and...

And so I kind of see where the puck was going. And so that's what kind of brought me to start this company and try to solve the problem that I solved.

Nice. And I know that, you know, Salesforce, for instance, has a version of what you do that sales as FTC specific, right? What is it? Is it just like that? Or, you know, what is, what is it that attracts folks to you versus to them or any other other competition out there?

Mm-hmm.

They're slightly different, but there's a lot of overlap there with what they do. They actually purchased our biggest competitor, and that competitor was just focused on solving this problem for Salesforce. Whereas we're a bit broader, we solve it for Salesforce and also a bunch of the other leading CRMs. So we connect into, I think, seven CRMs now and bring these capabilities to them.

In terms of how we compare directly with them, and it's been interesting competing with them. And it was a, we'll get into this later in the conversation, I know, but we're a bootstrapped company. The competitor they purchased had raised about 70 million dollars over the years. And they kind of, that caused them to go in a whole bunch of different directions rather than just, you know, we kind of went after this one problem for field salespeople.

they were more broadly solving, trying to solve, broadly bringing mapping to Salesforce for lots of things. They've ended, so they're not just a tool for doing the sorts of things that we do for field sales, but they actually kind of went in a different direction. So we compete very well against them. If you have a field sales team that's on Salesforce and you want mapping and routing and to kind of figure out where you're focusing.

as a field for your field sales team or as a field salesperson We do very well against them there but they do a whole bunch of other stuff that we don't do so like if you're designing a territory meaning you've got a hundred sales reps across the country and You want to figure out which one will get which territory and what those territories should be how big should they be which customers will Be in them that sort of thing They have a mapping product that does that so it's a little confusing because it's all

mapping software for sales, but there are actually different problems that salespeople have and that maps are involved in. The other major thing they do, and there's also one other company called GeoPoint that does this pretty well, it's like a mapping analysis of your CRM data on Salesforce. So, you know, helping...

helping your sales operations team or your marketing team figure things out. Like where do we, where should we run these campaigns? Or where, you know, how should we, you know, where should we hire the next salesperson? Like the, those types of like data analysis problems. And we don't do that. We are for the field salesperson in the field or their management team who's managing fields, field salespeople in the field. And then there's a...

A confusing corollary to that, which is field service people who act like salespeople. And what I mean by that is they have to make decisions. Like if you are a trucking company or a field service company that just has to visit this many places, and this is the order you have to do it in, you know, if you have like boxes to deliver or something as a trucking company, there's not, you're not making decisions about who to go see. It's more just like, hey, here's a thousand points that we have to go to and a thousand.

Sure.

10 trucks to do it in over the next week, how do we do that? And they do that as well, we don't do that. So that's a long answer, but that is the mapping market for the Salesforce ecosystem.

And where you guys are really unique, right? And really solving the problem it sounds like is platform agnostic, right? Doesn't matter whether it's Salesforce or whatever it is.

And really focused on the field reps themselves, whether that's medical sales or venture capitalists that are looking to visit a bunch of companies or trucking companies, right? It just, it doesn't, it's, it's focused on solving problems for the field reps. And so what, uh, what's like KPI that you guys, uh, what's like the KPI that really matters to your customers as they're weighing out renewals and, and, you know, things like that with, with Badger maps.

Right. That's correct.

Well, I think the KPI that salespeople care about the most is revenue. What am I selling? And so we're an efficiency tool effectively. So we help you plan and plan your time in the field and focus on the most important people when you're in the field. So that's probably, you know, we, if you're more efficient when you're in the field and you're seeing the more important customers or the strategic customers, and we help you figure that out, you end up selling more, you know, at a most basic level.

if you're planning your day well and planning your time in the field, you're gonna spend less time driving and more time working with customers. So less wasted time and so you sell more. The easiest way you can tell if we're helping you out or not is just to look at your mileage, right? So most salespeople are saving, gathering mileage data because they get paid on it, right? Your company, if you're a salesperson, pays you 50 cents a mile. So everybody kind of tracks how far they're driving.

once you start using us, you end up driving about 20% fewer miles on it. That's the average rep. And so they can get, you can therefore kind of see how much time you're saving and how much, the other big KPI is how many meetings are you getting per week? Oh, that's not a perfect KPI. It's also, are you focused on the right people? Like are you covering the territory as well as you can?

and

but a lot of people do measure their meetings per week and different companies will have different metrics they'll try to keep to kind of calculate coverage and understand how well are we covering the territory, which is tricky depending on the industry. But most people will see their meetings go up on average about two meetings per rep. I think it was 2.1 we calculated, but so when you bring in Badger, you drive 20% less, you get some more meetings and then.

and those meetings are with better people so you're getting better coverage. And overall that makes you sell more, which is the most important KPI for these guys.

Are any of the customers coming to you about any other revenue focused problems that you guys aren't solving for at all? And what I mean by that is you're obviously focused on a buyer of sales leadership, it sounds like. And the value from a user perspective of field sales.

I imagine that you're forming some really good relationships with your customers. And I'm just curious, you know, are they ever coming to you about anything outside of what you would solve for traditionally with badger sales, where you have to tell them, or badger maps, where you have to tell them, no, that's out of our wheelhouse or, you know, sure, we'll solve that for you. And anything that comes to mind?

Yeah, people do come to us for the wrong thing. And it is a relatively confusing space. So the things that they'll come to us and ask us to do that we don't do, the biggest thing is probably design sales territories. And I think there's some confusion in the market.

which we just don't do, right? We don't, if you have a hundred people, we don't help you split the territories up. People can adjust their territories once they're in Badger. So like if you connect us to Salesforce, you can see which rep is in which territory and everything. And you can move the territory, like you can carve off this piece. You know, we have a little lasso tool. You can carve off this piece of the territory and move it into another person's name, which will then be reflected in Salesforce. So because we do a little bit of it and because Salesforce Maps does that,

There's some confusion that we would also do it. You know, it's like, oh, well, you would do everything sales mapping wise for someone when really we just, you know, we're focused on what we're focused on. The other thing that people will ask us to do, so another, there's two, well, there's a bunch of types of salespeople, right? There's retail sales, inside sales, outside sales, outside sales also called field sales.

Sure.

But one confusing thing is that there are, there's different types of field salespeople and a major breakdown is, are you selling to businesses or are you selling to people's houses? And this is big in certain countries and certain areas of the country. So I live in Utah right now. Door-to-door sales is very big here. They'll sell all kinds of things here door-to-door, but like.

think like a solar sales rep, like someone who's selling solar panels for people's houses door to door. And that's also a field sales rep, but that's who also needs a map, obviously they're going down the street and deciding which houses to sell to. But that door to door sales is not really something that we're as well equipped to handle. It's kind of a different type of sales rep that has slightly different problems than someone who's say a medical device sales rep selling lasers to dentists, right?

We help that guy selling lasers to dentists and they're driving around town and selling to the thousand dentists that are in Salt Lake, which is a very different mapping problem than which neighborhood should we go to tomorrow with our six sales reps that are selling solar panels to houses and walk down the street and which houses should we talk to given the angle of the house to the sun? Is this a good house for solar or not? And do they have a big tree blocking their roof because that would make them bad?

Are they renters or buyers? And what's their credit score? These are all, it's all a different type of software than us and the companies that do that are called, one's called Sales Rabbit and one's called Spotio for those door-to-door needs. And we don't do that, but a lot of people will come to us. And I think the lesson that I would impart to people is if you have something similar to you and people come to you confused, don't try this. Some software companies will try to sell those people.

They came to you for a boat and you sell cars and you try to sell them your car. I think it's much better to just say, hey, here's a similar company. Sounds very similar to us, but they actually do a slightly different thing. I'd recommend you check them out. And because it's not good to sell people a car if they're looking for boats. And so you really want to train your sales reps to not try to do that because they're going to churn eventually, even if you sell them.

Because can you use us to do that stuff? Yes. Could you use their stuff to do what we do? Yes. But like it's not as good of a fit because it's kind of optimized for this different use case. And so if you do win the deal, it'll end up churning eventually because people will figure it, figure out, oh, what I actually wanted was this boat over here. Ah, now I've got a car. That's not what I wanted. But anyway, that's the lesson there.

Yeah. So how do you make sure that your salespeople aren't, you know, aren't breaking that philosophy, right? Like, do you do that through compensation? Do you do it through?

general, um, you know, focus from a strategy perspective, like what are, what are the routes that you do to make sure that that doesn't happen in your organization?

Yeah, I mean, the challenges they would get paid either way, I think, is the, and, and the salesperson doesn't really get penalized for churn a year and a half later. The, the CSA does. Right. So, so the, there's your, your, your salesperson's passing this deal to the CSA. The CSAs need to understand like, oh, this isn't the right use case. People needed to transport materials over water and we'd sold them our truck that drives around the water. That's, but what they wanted was a boat to transport stuff over water. And.

So it's really having that alignment and training across the team to be on the lookout for that because, um, and, and pre-sale our CSAs actually get involved in kind of an SC type role. And so kind of, since they're the ones that will end up taking the hit on that, they're, they they're trained to be on the lookout to say, Hey, wait a minute. You're selling vacuum cleaners door to door to people. Well, sounds, are you walking down the street? Sound talking to each house or every third house?

right

based on characteristics, it sounds like you maybe want to look at this product over here and direct them away from us, because even though you could use us for that, it's not the best fit.

Yeah, awesome. So talk to me about a time when, it's called the Dirt, this podcast, right? So I'm going to just go ahead and lean into the brand a little bit. Talk to me about a time when you encountered significant dirt with the revenue team, and by that I mean whether it's sales, marketing, customer success, whatever it might be, in the growth of Badger Maps. Could have been in the early days, could have been yesterday, and how you might have handled that.

uh... that type of dirt how anything anything that anything that isn't clean anything that needed to get your hands dirty could be you know any problem that you experience within the revenue team

What do you mean by dirt exactly? Like a problem or?

Okay, well I think...

that one of the bigger challenges is getting people to stay focused on the ideal customer profile. Shorter sales cycles, bigger deals, greater longevity of the deal. And I think a challenge with software in general is that you can, a lot of times, even though you've made your stuff for one use case, there's a lot of other use cases that it kind of fits with, but if it's not really what you're trying to do,

Okay.

it's often not strategic for you to do it. And you certainly don't want the sales team to get the engineering team or the product team to start building things in this direction that you don't think is as strategic. And it's a great question because we were just talking about it, right? It's, you know, people, there's these adjacent markets to us, you know, the stuff that...

Salesforce Maps and GeoPoint do like the sales analytics. I think they call it geo analytics is their branding of it. You can do a lot of that stuff in our software, but we're really not building the key features that you would need to do it as well as they're doing it. Cause that's the direction they've gone. And we've gone in this direction of field sales.

And then there's same thing with the door to door stuff, right? That we were just talking about. Like it's, it's, it's similar, but it's not quite, it's not the thing that we're really going after. We're really going after this B2B field sales rep and the territory mapping stuff, people are always asking us for those, those capabilities. And, and we have looked to partner with people to bring those capabilities into our product, but often in the end, you're, you know, when we evaluated that, it was like, well, actually, I mean,

We should just, I wouldn't like, they want to kind of be building on our backbone because we're already integrated with all these CRMs. So they want to just bring almost white label their product into ours. But it's like, yeah, maybe that's a good idea, but it's going to really take our eye off the ball to do that. It's better just for them to connect into these CRMs and bring that capability, which is really a different, it's a different piece of software, even though it all has sales mapping in the name, these are different pieces of software. So I think that's,

Right.

keeping your sales team aligned on that ideal customer profile and not chasing revenue that is outside of really what we do is, I think, a challenge. And I've been a part of software organizations in the past, particularly a company called Autonomy that I worked for. And they would just go after anything that had to do with data organization. And a lot of times, it wouldn't be the best fit because

you know, they, there would already be something that was really good at that type of data management, but they'd go after the deal anyway, and it was just very inefficient because you're always, you're always kind of, you know, selling the wrong thing to the wrong place. And that's, that's, it's bad for everybody. It's bad for the customer, it's bad for the company, it's bad for everybody.

maybe too much autonomy in that case then

Yeah, ironic with the name, yeah.

Yeah, a little bit. Yeah. Awesome. Any other problems or dirt that comes to mind in terms of, you know, as you guys evolved things that got, you know, trials, tribulations, obstacles that kind of presented themselves and that you guys have overcome?

Um, one challenge that jumps to mind is, uh, we, we, the sales team used to be kind of the frontline of, um, all the phone calls and, and support tickets type things that today I would call a support ticket, but customers wanting to, wanting to deal with different problems they were having or questions they had, or things they wanted set up the sales team and the customer success team were kind of.

they were really getting gummed up by current customers, questions and needs and customizations that we could set up basically. And the way we've gotten around that is with an in-house support team offshore that receives all the phone calls and the inbound phone calls of that nature.

And the sales team used to really get gummed up with those phone calls, because some of them were new leads, so they would take the calls, but then also, you know, then it happens to be a customer being like, hey, I'm trying to set it up like this, could you help me? And so they ended up doing kind of a lot of, you know, what I would like, what is actually support work. So now all those calls get directed towards the support team, emails, chats, and so we're able to give our customers support in a very timely manner, and not have it gum up the sales end.

and CSA team. So I would definitely recommend that to people, like having a support team that protects your sales team and customer success team, but also is able to assist your customers.

Now that brings up a really good point because I think one of the things that we've talked about in the past, Steve, is how you've been able to leverage offshore talent in a meaningful way on both the development front or support front and the development front, right?

resources, acquiring the talent and fixing, you know, or improving the process to leverage those types of resources.

Yeah, I think this is just table stakes for bootstrapping a company. Like engineering talent is really expensive in America. There's some really big companies with really sweet monopolies on different elements of the tech eco, the tech sphere. And they soak up and dry soak up a lot of engineers and drive up the price, set drive the wages. Um, and then, you know, obviously.

lower multiples that VCs are paying now than a year ago, but, you know, venture capital injects a lot of money into sometimes highly questionable ideas, but those questionable ideas still soak up the engineering talent, right? So, you know, they, they had a hundred, a hundred engineers working on something for, for five years before they were like, Oh, this is never going to sell and close it down, but they, they soaked up the engineers and in the meantime, right? So,

I think offshoring is kind of necessary unless you have access, unless you just have a insanely fast growing idea that's just printing money or you have, unless you've raised a lot of money and you get to spend it on this stuff. But even if you have raised a lot of money, I have an insane idea. I think you're still almost always better off hiring engineers from other places. And the engineering market is tight everywhere, right? But

but it is a lot less expensive and a lot less tight in a lot of other places than, there's nowhere tighter than probably the Bay area, right? But we have offices in Salt Lake. And when I compared scaling the engineering team in Salt Lake, and we were in the Bay area at the time, when I compared scaling it in Salt Lake versus scaling it in another country, it was still a slam dunk to go to the other country.

And my thought when picking a place, and we were looking at a lot of places, and the reason we picked the one we did, you want to go somewhere where companies like Google are never going to open an office. And the trick there is if it doesn't have a direct flight from San Francisco, they're probably not going to open an office there. So you want to be able to, you know, we still have an international airport in the town that we're in.

we, there's no direct flights from San Francisco. You gotta hop through the main city in the country. And so yeah, that's, but there, and there's a lot of, and then of course you want a place where there's lots of good engineers. So, you know, a solid university that prints out a lot, with a solid CS program that prints out engineers. And that's, those are kind of the two major criteria that we looked at. And there are, you know.

hundreds of places that fit this criteria. So, there's a lot of places that are better to scale an engineering team in than the Bay Area. And so many pains I hear from other CEOs. They're like, we just keep losing people and we just keep trying. It's such a, we're always hiring engineers. It's such a pain to keep them. And they barely scale up on the product before they're out the door already. And we don't have any of those problems.

not that we don't have any churn on that team, but it's much, much lower and much less expensive than if you were based in Sunnyvale.

So you're doing that with your engineering team but also on the support side as well, correct?

Yeah, definitely. Yeah, we have a whole team in-house. And I think it's worth the effort to in-house your support team and treat them well. They're a frontline with the customers and so it's worth, I think a lot of people really look to cut costs there and do it as cheaply as possible, but it's worth.

I think it's a place that's worth investing and treating people well and making them long-term employees. I have people on that team that have been there for seven, eight years now. And I think employment in general, people think of as much more short-term than it should be. Like when I started my career, it was, you know, you were joining a company for life basically. And today people kind of think of it as, oh, I'm joining a company. Two years would be a long time.

But there's a lot of value to creating a business and treating people in such a way that they want to stay there for the long haul. Value unlocked on both sides, both on the employee side and the employer side.

the

No, different, totally different places because we're kind of looking for different things. The support team is actually remote. And so, you know, they all work from home and so they're scattered around, around a whole country. But then the engineering team is all, you know, more, more, more of a hybrid role, but they have an office that they spend a lot of time in and so they're all centralized in one place.

Okay. Got it. Got it. You mentioned this term earlier, bootstrapping, which we talk a lot about on this podcast.

You've done the bootstrap route to a pretty significant revenue number. I'm not going to share that here, but it's, uh, it. Well, so it's a five plus.

It's okay. I mean, it's no secret. I mean, I try to make my metrics relatively transparent. So I say I'm enough that my competitors know how big I am anyway. But we're doing like, you know, 5.6 million in ARR.

five plus million AR and you have done that pretty successfully. Have you, have you raised any capital outside of traditional dilutive financing, like not non dilutive financing to help bridge gaps, to help. You know, fuel the fire.

Yeah, absolutely. And that's a great thing for us to talk about. I've done a lot of debt over the years, raising debt and paying back debt back. I probably raised about 6 million over the last 10 years, if you added it all up. And I'd be happy to kind of talk about the gotchas there and what the learnings are.

the lease

Um, so I guess, uh, the first thing is for SAS companies, not everyone understands our business model, right? A lot of the traditional lenders, um, aren't allowed to treat a revenue stream as a asset. So to them, an asset, you know, if there was a restaurant making $5 million a year versus me, they'd rather make a loan to the restaurant cause they've got, you know, glasses and.

tables and the stoves and stuff like that. Maybe, yeah, like they like things that they can, they don't, a bank doesn't wanna take the stove, but they like that the stove's there to take, if that makes sense. Whereas for us, it's like, you know, what are you gonna take my laptop? There's nothing here. They need to have a profit to make a loan, and they need to have hard assets. And so,

Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right. Right.

or at least one or the other to a reasonable degree. So a lot of those traditional lenders that have cheap capital aren't available to us. And so there's kind of these businesses that have stepped in and gone after lending to the SaaS market. And those are probably the ones that you're often gonna be working with, especially when you're smaller. At a certain size, you can do deals with banks and other lenders that are cheaper.

It's relatively expensive capital right now in the debt markets just because the interest rates have crept up and that's reflected in the deals that we can get. But most of my deals in the past have been like mid teens in terms of APR, like the percent that you're paying on an annual basis.

There are some tricky ways that some providers will kind of lay out what the debts actually cost you. They'll put it in terms of...

the amount you pay back. So if they're like, it's like if I loaned you 100 bucks and I was like, hey, you're gonna pay me back $112 over the next year, that's not actually a...

it's presenting it in a different way than, oh, I'm gonna charge you a 12% interest rate, right? Because when you're paying an APR of 12%, you're paying down the debt and you're paying down the principal over time. So halfway through the year, you're actually only paying, you're paying 12% on half the amount of money, right? Ish. But the way the math works out is the APR, you can convert all,

No matter how someone presents a loan, whether they're taking a percent of your revenue, that's another one that's tough to calculate, or presenting it in terms of, they call it a discount rate when they do it. Oh, you're gonna pay us back this much money and we're gonna lend you this much money and you subtract one familiar, that's the discount rate. These are tricky ways to...

to communicate debt, because we kind of think of debt in terms of an APR, like your car payment or your house payment, right? But all the, no matter what it is, you can convert it to, you can convert the debt from whatever way you're presented, you can convert it to an APR. So that's a little tricky. Another thing to look at is the payback term. So a lot of companies,

have kind of come on the scene lending things with a very short payback period, but that's problematic and I would say dangerous because you're creating risk in that. And they say, oh, well, you can just re-up your debt, right? So you're paying us back over six months or a year, but you can always just keep getting more debt to pay your debt, which would be fine, except they're not for sure gonna give you that debt, or maybe it gets a lot more expensive.

And so because your payback period as a software company is probably 18 months or so like, okay, I'm going to borrow 500 grand, I'm going to hire some engineers, and those engineers are going to build some features, and I'm going to sell those. I'm going to sell more of the product because I have those features. Hiring them, spinning them up, getting them actually, the feature is completed. A year and a half is probably

the

as fast as that can possibly happen, right? It's probably more like two, two and a half years. So if your debt payback period, if you owe the money back to the lender in a shorter period than that, you're creating risk because you've kind of outlaid the capital for the investment, the engineers, but you haven't been able to collect the money back to pay off the debt. And so the theory of, well, we'll give you more money to pay off the debt with debt is flawed because what if they don't?

What if you can't get debt? What if the market changes? What if your business doesn't look as good? What if your MRR shrinks for whatever reason and now you can't get that much debt again and then you've killed the company. So there are risks with that short-term debt. And so I would recommend trying to get like a four-year loan and a lot of lenders will give you that. So I wouldn't go with one of the short ones.

So it sounds like don't go with the short ones. Also, make sure to weigh it out in the same terminology. Like if you're used to what an APR or APY is, make sure whatever your options are, you convert it into that APY or APR method, right? So that you can compare options.

Um...

Yeah, absolutely. Yeah, because it's, you know, so one company is giving you a revenue-based loan where they're taking a percentage of your revenue every month and another country company is giving you a discount rate loan and another company is giving you an APR loan. Everything can be converted to APR so you can compare apples to apples. It's harder to, like the revenue-based loans are harder to convert to an APR because you have to project your revenue.

Right. Right.

but I would just recommend to be conservative there. And if things go way better than you expected, then you're paying a really high interest rate loan, but things have gone better than you expected. So it's, what can you do? So sometimes those, I'm not saying those revenue-based loans are always bad because they're hard to calculate because sometimes they do kind of share the risk between you and the lender because if things go really well for you and you have a lot of revenue,

they're getting a great return. But if on the converse, if you grow more slowly than you expect and things are crappy for you, they get a crappy return. So it's, you know, in that respect, it's a little bit like equity, but in that they're getting an adjustable rate return. And, but you're not actually still selling slices of the business like you would to an equity investor.

So which routes or route did you end up choosing as you were weighing out these options?

Over the years I've done early on especially early. I did a revenue-based loan And I think we got our first loan when we were probably doing about 60 K and MRR and And we did that with a company called lighter capital and and they're a great firm they they do straight-line loans and revenue based loans at this point and then we

I switched to a company called Scaleworks. They're called Element Finance these days. And they're also a great lender. They're also a SaaS-focused lender. And they just had slightly cheaper rates at the time. All these guys kind of move their rates around. It's a competitive market, so sometimes you can get better terms or better rates at a different company. And then we eventually switched to a company called Founder Path.

And that's who we have our debt with today. And they're also a SaaS-focused lender. And they do different types of loans as well. They do some straight line, some discount rate. But once again, you can convert it all to the same thing. And a lot of these guys today, the market has kind of moved to where the...

The length of the loan is very negotiable. Some people want to give you a 30-month loan. Some people are fine with 48 months. And also the interest rate is negotiable, obviously. I mean, everything's negotiable. It's debt, right? So yeah, those have been the ones that we've done business with. And there are other great ones floating around out there. And then there's a bunch of bad ones floating around out there, too.

Sure.

What was it that made you choose the debt versus equity or in other words dilutive versus non dilutive funding?

Well, I guess equity, if the company does well, is very expensive. The nice thing is you don't have to pay it back if the company only does okay or does badly. In no case do you have to pay it back, right? But you've sold a chunk of the company. I think a lot of the time SaaS companies and VCs would hate...

that I say this, but a lot of it's a lot of says most SAS companies are not a good fit for VC investment. Obviously, a small slice are the ones that VCs have, you know, a business model that they need. They need, you know, eye popping growth in a short amount of time. And most SAS companies don't get eye popping growth in a short amount of time, even though they're very good businesses, right? You know,

Overnight success in SaaS tends to take 15 years and that's longer than a VC fund. So, and obviously there are fantastic examples of SaaS companies growing super fast and getting to scale in four years, but in most cases it takes longer. So, that's what kind of led me to, we've just never been on kind of

that VC growth curve, right? Of, you know, I'm not sure what exactly their metrics that they're asking for these days are, but they're, it's, you know, they need it to be, depending on the size of their fund, they need any investment to potentially return or almost return the fund with the percentage that they own. And so that's, I've never, I've never believed that this market was gonna support something of,

of that nature in the amount of time that they needed it in. Certainly, if we had raised venture capital in 2012, they would be, that's 11 years ago, they would not be happy with us sitting at 5.5 million. Whereas, because we didn't raise venture capital, we're very happy about sitting at 5.5 million. I mean, sure, would I prefer to be at 150 million now, and that would be the kind of return that they would like. Yeah, of course, that'd be amazing.

I've never seen this as being that kind of eye popping growth.

Yeah. Alright, it was a different path. They would have different expectations on the business. You would have people in the boat with you, which has its benefits, but also their own motivation, which has its...

lack of benefit to say it lightly. So, no, interesting. So if you had one, if you had one takeaway for the, you know, non-dilutive versus dilutivist people are considering, you know, their path, what would that be for other founders?

Yeah.

Well, for starters, you want to be aligned with your investors. So if you're, you know, don't trick VCs into thinking that you are going to be going public in seven years if there's no way that's going to happen. And you know, you know your business better than they do, right? Because you need to be aligned with your investors. They're going to try to drag you in a different direction or, you know, it's, it goes, it's not good to not be on this, not have everybody

in the same boat, so to speak. You need alignment with your investors. So if you don't have that, if you don't have a VC investment, don't bring it to VCs. And I guess the advice on the debt side would be to watch out for the gotchas. There's a lot of terms that can be problematic. They can ask for, they call them covenants, things that you have to do or else you gotta pay the loan back or they can change the rate on the loan.

things like that. So you can't break covenants, right? So they might have a liquidity covenants where they're like, okay, so hey, we're loaning a million dollars, but you always have to have a half million bucks in the bank all the time. So it's like, well, if a half million is the new zero, then that's not really a million dollar loan. You just made me a half million dollar loan, but I'm paying for the full million. So that's a tricky covenant. They might put...

EBITDA covenants or MRR covenants. I was talking with a bank and they wanted me to put a covenant in place. They wanted to have a covenant. I didn't do the deal for this reason. They wanted a covenant in place and they were offering a very attractive rate. But the covenant was that we had to grow at 15% a year. And last year we grew at 30%. So should we grow at 15% every year going forward? Yeah, we should. Except 2020 we grew at negative 8%.

Great.

the

So, you know, there are bad things that can happen that can affect you in the short term. A SaaS business survives, but not if it had a covenant like that with their debt, because it turns out in the bad times when you are with no one wants to give you debt or to refinance your loan, right? Lenders love to lend you an umbrella unless it's raining, you know, so it's a tricky bunch to deal with. Exactly. Yeah.

Sure.

Yeah, and then you're just carrying an umbrella around. Yeah. Right.

You know, you got to really watch out for the things they demand. You know, there's breakup penalties that I've seen where they're like, hey, you have to pay us the interest you have paid us over the entire life of the loan if you try to refinance this out. And almost all these things, the thing to remember is these are all negotiable. You can, you know, I've gotten, I had that, I saw that term and I had them red-line it out. I was like, no, we can leave you and pay off the loan at its.

for the amount that we currently owe. And they did do that. So it's all negotiable.

Awesome, Steve is super, super helpful. Let's close things off with our founder five today. So five quick hit things all about your growth as a founder and as a company.

Uh, first one is, uh, the number one metric or KPI that you are relentlessly focused on. Got it. Got it. All right. A top tip for growth stage founders like yourself.

Um, MRR and I guess it's, it's derivatives, like breaking it up, like upsells, churn, new revenue. Um, but MRR is the, is the number at the top of my screen.

Top tip for, I guess it depends where you're on, what growth stage. I guess if you have product market fit and you've got a bunch of customers, you figured out how to go to market, I guess the...

There's so many things. Yeah, I mean, I guess the founder advice would be this is not a job. Like successfully founding and getting to the growth stage of a meaningful company just takes all the, takes all the air out of you, takes all the bandwidth in your life over the period of time you're doing it. You know, and getting something off the ground from zero to a million is really, really hard.

yet

A million to three million is really, really hard. Getting from three to 10 is really hard. I guess it is easier now, you know, at just about five than it was at, you know, a half million when I was doing every job. But really it takes all your bandwidth from being a good friend, good son, daughter, father, husband or wife, extracurriculars. So I would say, you know.

It takes a lot of bandwidth, so you have to ruthlessly prioritize an account for your time and put it in the places where you do prioritize. Most of your hobbies that you enjoy, you probably don't get to do very much anymore. So you've got to identify the things that really, really matter to you and only do those things and don't expect, don't have the expectation that you're going to have any decent work-life balance, I don't think. I think, you know.

Yeah, nice.

getting the train out of the station is nearly, you know, it's impossible, right? It's impossible to move a train and get it going. But it's not totally impossible because it happens every once in a while. And once that train is in motion, that train becomes pretty unstoppable.

All right. Favorite book or podcast that's helped you to grow as a founder? Great one. It's a great book. Yeah.

Well, great next question because that's where I kind of got impossible to inevitable, which is where I was kind of alluding to in the last question. It's impossible to get this thing going, but once it's going, it's inevitable.

Awesome. Um, all right. Piece of advice that counters traditional wisdom.

Um, I guess traditional, there's a lot of advice and a lot of thoughts that I would have that would, if, if the traditional wisdom is being said by your venture capitalist and they have soaked up a lot of the air in the room in terms of advice, uh, there's a lot, there are a lot of times when the founder, what's best for a founder is not what's best for a VC firm. Like VC firms wants you to pursue a giant idea that can be giant really quickly or something that's, or they, but, but it has a high probability of failure, right? Like they.

they want these really high risk, high reward things, and they would guide you in that direction. Where I would say, you know, a lot of times you can become very successful as a founder, and depending on what you think success is, if success is running a Fortune 500 company, then obviously this isn't great advice. But if your goal is to make enough money that you're well off and create something and solve a real problem and get to lead something,

And with less probability of failure, I would say that you should not go after the huge market, the most competitive spaces. You know, a lot of times those are very, you know, if you're trying to, you know, there was only one company, there was only one or maybe two Instagrams, right? But like they, and they exit fast, they exit for huge money, they're, you know, but there were 20 companies that were basically sharing photos online, right? And...

and most of them just went to zero. A couple of them squeaked through and became like either public or purchased for tons of money like Instagram was. But so bottom line, don't go after the huge market. There are a lot of software companies that become worth 20 or 50 or 100 or 200 million that VCs would consider a loss. There's a lot more of those than there are those rare wins that are high risk.

All right, last one here. What is going to be the title of your autobiography?

I don't know if I'll write an autobiography. I don't know if I'm that interesting. But if I had an autobiography...

Well, the title Grit's already taken, but I would like that one. I don't know. That's a title. I would have to give that some thought. I don't have a great answer for what my credo is, but I would... How about you don't always get work-life balance? That's a good one.

that is a good one yeah that is a good one or grit number two both are good

Yeah, I mean, starting a company is hard. It's very hard. And it's certainly not for everyone. I don't necessarily recommend it to anyone. I think it's, you're probably, most people that could successfully start a company probably would have a better life if they just worked at a medium sized company doing interesting things, but take all the risk off the table and collect. It's not a bad time to be an employee making, you know, 300k a year.

Yeah. Awesome. Well, maybe we'll make that the title.

collecting that, collect that health insurance, pay it on a mortgage. Like that's, it's not a bad time to do that. Ha.

You gotta really want something like this. Well, sorry, what was that?

Not a bad time to do that. Maybe we'll make that the title, not a bad time to do that. Awesome. Steve, you've given a ton to our listeners today. Time for a little bit of self promotion as we close things out. How can those listening help you out?

Yeah, there you go.

Well, I mean, if you know field salespeople, people that go and meet customers face to face in the field or field service people, sometimes they behave in the same way where they have to make choices, prioritize. If you know them, let them know that we exist. I mean, our most of our customers are like, I had no idea this was a thing. This has been a problem for my whole career and I didn't know someone solved this. It's like, yep, there's an app for that. So that's, that's the way they can probably help us. If you know, if you know field salespeople, let them know that.

that we exist.

Excellent. And how can folks get in touch with you?

Well, if they're looking for the product of the company, badgermapping.com, or just search Badger Maps, you'll find us. If you're looking to get in touch with me, LinkedIn is probably the best way. Just look up Steve Benson, Badger Maps. I'm easy to find.

Excellent man. Well, thanks again. Thanks all for listening to the dirt Steve. It's been a pleasure my man and keep keep building keep building. Take care.

Thanks, I appreciate that. Take care.