Less than a year after his Nathan Latka interview rose as one of 2022’s top episodes, EHS solution Evotix appeared on the GetLatka list of impressive growth SaaS companies. Now, CEO Matthew Elson, who famously paid $1 for his SaaS company, returned to update Evotix’s controlled-growth strategy. The founder covered the source of his 40% YoY growth, what made Evotix so sticky, and how soon it will be breakeven.
- Team of 160, adding 10 in the last 7 months
- $17m ARR, up from $12.4m ARR YAG
- 40% YoY growth for over 5 years
- 115% Net Dollar Retention
How Elson’s $1 purchase reached $17m ARR
As covered in his last Latka interview, Elson acquired his EHS SaaS for just $1. Now Evotix boasts an impressive $17m ARR, with a consistent 40% YoY growth rate. Elson revealed that Evotix’s sweet spot is serving customers with 250 to 10,000 employees. “Our target customers are still managing health and safety needs with a pen and paper or Excel spreadsheet,” explained the CEO. He added, “We are transforming how companies manage health, safety, and risk.”
Employee engagement at the center of the SaaS solution
“Our mobile-first solutions drive employee engagement to deliver a safe, nurturing, compliant workplace,” revealed Elson. He added that with a SaaS instead of a spreadsheet, customers discovered that they received business intelligence as an added benefit to compliance. “You can only get so far with health and safety. By engaging employees with a mobile-first solution, we have now embedded safety at the heart of core operations,” clarified the clever CEO.
Source of 40% YoY growth, 115% Net Dollar Retention
Latka asked Elson to break down the source of the company’s consistent growth. The CEO shared that most of Evotix’s growth resulted from brand-new customers, not customer expansion. He did reveal that the company experiences a 5% gross churn rate, with expansion revenue bringing in over 15%.
Expansion team of 3 plus BDRs drives expansion revenue.
According to Elson, his company’s three customer development managers roll up to the business development team. This team, plus their BDRs, operate separately from the customer success team of 35. As the CEO shared, “Our customer success team [solely focuses] on support, implementation, and solution consultation.” Expansion revenue comes from three main areas: additional seats, new functionality, and new geography.
Customers expand initial purchase
When asked about their new functionality, Elson clarified that most customers make initial module purchases of simple solutions like limiting risks and audits. From there, many customers add functionality through add-on modules focusing on people, training, assets, and contracting.
Largest sector manufacturing at 20%
Elson offered up an example of what makes Evotix’s Learn LMS so effective versus the classic “watch a video, take a quiz” approach. “Let’s say I’m doing an overhaul in a plant. When I’m at the machine, I use a tablet to scan the QR code. Then I watch videos, see diagrams, take a quiz, do a point-of-work risk assessment, do my lockout tag-outs, and go off. How much more engaging and compelling is that approach than the classic LMS,” the CEO asked rhetorically.
7 biggest sectors made sticky
Aside from manufacturing, which represents 20% of Evotix’s revenue, the company has already proven effective in multiple sectors, including:
- Transportation logistics
- Food and beverage
To Elson, the secret is in the stickiness, delivered via mobile at the point of engagement. “We are putting safety at the heart of core operations. Now it’s made it sticky because it’s an operational solution and not just a compliance solution.”
ESG agenda at the core of the capital-efficient SaaS
The CEO believes that companies should support the ESG agenda and maintain accountability to be “good corporate citizens, “creating a safe and healthy environment. “The biggest challenges are about employee engagement. And ensuring the employees are happy, competent, and effective at their jobs,” he summarized.
Controlled monthly cash burn of $100k, breakeven by mid-2023
Elson shared, “We are creating a strong and sustainable business.” He added that the company already has enough runway to ensure that they hit breakeven by the middle of 2023. The company of 160 currently has a net burn of $100,000 per month.
“Technical integration is a diversion”
As Latka queried the CEO about what’s next for Evotix, Elson replied that he is not fundamentally looking at an industry consolidation play. Adding, “Technical integration is a diversion.” He noted that has more interest in modest technical acquisitions in specific tech like image recognition. Finally, although he noted that strong growth SaaS companies are still seeing decent multiples, he has no plans to raise capital.
Favorite Book: Founder and CEO Matthew Elson again named The Hard Thing About Hard Things by Ben Horowitz as his favorite book.
CEO he’s following: Matthew paused when choosing a CEO he’s following. Finally, he said, “No one specific. I look at Elon Musk, but I’m not following his playbook.”
Favorite online tool: As he previously mentioned, Matthew selected 15five as his favorite online tool. “It’s great for employee engagement,” he quipped.
Balance: 57-year-old Matthew sleeps a solid 8 hours per night. He has a partner, a stepdaughter, and a grandchild.
What does he wish he had known at 20? “There’s no need to rush things. You build your experience over time. You keep your eyes open for opportunities. And that’s how it all comes together.”