How does a bootstrapped founder continue to grow at 25% per year even after 15 years and 5000 customers? Adam Sandman, founder and CEO of Inflectra, returned for a second interview with the GetLatka team to share how his SaaS has fared since visiting 18 months ago with a $10m ARR. In this follow-up interview, Sandman revealed what change he made 18 months ago that unlocked incremental growth, where he puts his profits to diversify his wealth, and why he eliminated individual sales quotas from his team.
- $13m ARR, up from $10m 18 months ago
- 25% YoY growth
- 5500 customers, several paying $200,000+ in ACV
- Team of 55 with 20 engineers and 15 sales reps with team quota
- Serving 5,500 customers across multiple industries
“We work with the organizations that keep the world running,” quipped the CEO when Latka asked about their customer base. He explained that Inflectra works with every section of the economy that people rely on daily to get to work, power their houses, and deliver clean water. “We make sure all their IT systems work as they should and anticipate risks that might come as the world evolves,” explained the CEO. He added that the customer base has grown 10% from 5,000 to 5,500 in the last 18 months.
Identifying ICP, USP leads to 25% customer growth
“We are honing in on our ideal customers and our USP at a much deeper level. In the last 18 months, we’ve done a better job of identifying our ideal client; we spent a lot of time and did a lot of work around messaging and messaging development,” revealed Sandman, adding, “What is our client trying to do? Which clients do we resonate with the most? And then putting the most resources into those clients instead of chasing everyone.” Inflectra’s growth is a healthy 25%, although Sandman aspires to hit 30-35%.
Focus on the core, growth from adjacent buying points
Sandman explained that their customer growth is coming from “adjacent buying points” within the same customer, as well as through referrals and partnerships. “We are working with partners that brought us deals then finding more deals, and also working with consultants that move from organization to organization and bring us along with each move,” the CEO clarified. His strategic focus on his core ICP enables Inflectra to better optimize their spend: “We are not spending resources, not prospecting, not spending outside of that core as much as we might have done 18 months ago.”
Narrowing the customer focus by focusing on 5-10 year LTV
Latka queried Sandman to define how his ICP had narrowed, to which the CEO replied, “We work with large defense contractors, biospace, aerospace, and maritime. Large platform companies making big hardware and companies working in the supply chain, manufacturing space, automotive, aerospace, and general manufacturing.” During the process of defining the ICP, Sandman revealed that their goal was to work with clients longer LTV clients: ones they could keep for 5-10 years.
Long-term product alignment, focus on Year 1
Sandman noted their emphasis on onboarding and training: “We found that if customers stay with us a year, they’ll stay for 5–6 years, but if the first 1-2 years are rocky, they will leave.” He then revealed their ICP secret, “We want to find customers that align with the product and not just the product they buy, but the product suites they could upgrade to.” This AHA moment led to the company’s now crystal-clear ICP.
ICP customers all share 2 traits
“We look at the world through these two lenses: our ICP are customers with a degree of compliance needs but also need to be agile. Those clients are trying to move to a digitized future but have these regulations. These are our most qualified clients,” the CEO revealed, adding these examples, “We would proactively target a company in the Life Sciences space trying to launch a relatively new medical device in an agile way. They want to take the market by storm but must get FDA approval in 3–5 years. They can’t just wing it with a spreadsheet or other tools.” Sandman summarized, “We want clients who want to be our customers and will evangelize other customers to us.”
Top customers pay $200,000+ ACV
The founder described their current customer base as a pyramid with $200,000+ customers at the top, typically large defense and aerospace contractors. In the middle, Inflectra serves large biotech, IT, and manufacturing companies that pay $50-70,000 annually. The base of the pyramid is customers who pay $12-15,000 in ACV.
Expanding licenses, upselling the base through 3 specific personas
“We have one product that targets 3 different personas,” explained Sandman, clarifying, “We sell Spyro test to the QA audience first, then upsell Spyro team to the agile engineering dev team who’s using the tool, and then we go up to the PMO that’s managing teams of teams. That’s how we expand a customer from $15,000 to $75,000 ACV.” He added that they offer an automation suite only as an upsell product, “We don’t go in to sell this as a standalone because the cost of sales is much higher. It’s much more complicated, but when you’ve got a qualified client on our primary platform, we can cross-sell that very effectively.”
Eliminated individual sales quotas in favor of team quotas for 15 sales reps
“We found that team collaboration is the key. Our products are complicated, and industries are dispersed, and we’re serving multinational companies. We want to collaborate and don’t want to fight over whose deal it is,” explained Sandman about why he eliminated individual sales quotas and replaced them with team quotas.
Sales cycle extended 60 days this year
Consistent with reports from other sales organizations, Sandman confirmed that their sales cycles have lengthened by 30–60 days this year, from 60 to 90 days: “Legal and procurement are taking incredible amounts of time to close deals. It’s 60 days longer than a year ago,” clarifying, “The stakeholders, the CTO, CIO, or VIP of engineering says yes, and the bureaucracy is taking 60 days longer. It’s hard to move those wheels of bureaucracy.” He concluded, “In these large, regulated industries, it’s much harder to exert pressure because they have a cadence for buying software and validating and doing all the compliance stuff like security, GDPR, and privacy that you can’t accelerate.”
First client closes in Dubai
When he mentioned closing his first client in Dubai, Latka asked him to explain how that worked for him. “Small companies in Dubai, like those with a $10-15,000 ACV, can pay with a credit card. But if you want to work with large enterprise companies or government, you need an office there and a presence there and do more in-person,” shared Sandman.
Still bootstrapped, highest offer at 6-8X multiple
Sandman remains 100% bootstrapped but is open to listening to offers. “The highest offers we’ve gotten are 6-8X. One wanted to be a part of a very vertical approach while others want us to go very horizontal,” shared the CEO. He added that if he were to consider an acquisition, it “would need to be a strategic and cultural alignment. It would have to be someone we all want to work for.” Currently, he has no ESOP in place but plans to create a phantom stock plan if he were to close in on an actual offer. To raise capital without giving up equity consider Founderpath vs. Capchase and these Capchase Reviews.
0-10% annual profit, modest diversity
Sandman shared that this year’s profit will hit roughly 5%, or $500,000. He shared that he predominantly reinvests the profits into the company. When asked how he protects and diversifies his wealth, the founder said, “I have rental real estate, 3 single-family houses, which is a nice cash-generating asset. Lower growth but very safe and gives you that diversification.”
CEO he’s following: Sandman named Sir Richard Branson as the CEO he continues to follow.
Favorite online tool: Instantly.AI is Sandman’s favorite tool right now: “It’s the best of Apollo and Zoominfo and a bunch of other tools. Latka added that he had interviewed the CEO, and company details could be found on the GetLatka site.
Balance: 47-year-old Sandman gets a full 8 hours of sleep per night. He’s married with two kids off to college.
What does he wish he had known at 20? “Don’t worry about what people think of you. Do what you love, and don’t let people tell you you can’t do it,” replied Sandman.