Celebrating 15 years since landing his first customer, B2B SaaS Inflectra Founder and CEO Adam Sandman got together with the GetLatka team to share what’s driving business in 2022. The bootstrapped founder revealed Inflectra’s two most significant growth drivers today, how he rewards his team while retaining 100% equity, and what part of the revenue journey has been the most difficult so far for him. Sandman also shared how Inflectra has evolved since 2006.
Adam Sandman has been a programmer since he was 10 years old. Today, he’s a CEO who focuses on product strategy, technological innovation, and business development. His business, Inflectra, launched with the intention of helping SMBs and mid-market companies improve the quality of their software development and testing. At the time, Sandman recognized the market gap, as other organizations solely focused on enterprise solutions.
- 80,000 users
- 5,000 paying customers
- $10,000 average deal size
- Team of 40, with 15-20 engineers
Evolved to serve complex market, 60/40 cloud to on-premise
According to Sandman, after launching as a product for SMBs and mid-market companies to manage their entire software lifecycle, Inflectra evolved into a solution specifically geared to solve more complex software and business challenges for regulated industries. “We are now providing quality, reliability, and compliance in different industries,” explained the CEO. When Latka asked for examples, Sandman rattled off a list that included:
- Large defense contractors, like Northrup Grumman and Lockheed Martin
- Banks
- Insurance companies
- Healthcare systems and hospitals
- Supply chain
- Food retailers
SaaS business still expects 30% on-premise
Going forward, Sandman plans to continue supporting on-premise business; he still considers the revenue SaaS because even the on-premise customers pay via subscription.
Founded in 2006, first customer signed in September 2007
Founder Sandman explained that he started the company in 2006 by beginning to write code. He sees his official launch as 2007 and admits it took 9 months to close the first customer. “Those first 9 months were the most nerve-wracking period of all my 15 years,” revealed Sandman.
ACV ranges from $1,000 to $150,000
Although Sandman described the average deal size as $10,000, he explained that customers pay between $1000 and $150,000 per year to Inflectra for access to their software development and testing solution.
Revenue grows from $8m to just under $10m 1 YAG
According to CEO Sandman, Inflectra’s revenue will fall just short of $10m this year, up from $8m last year. While Latka queried Sandman about what’s contributing to that growth, Sandman lamented reaching the first $1m mark, which the company did in 2011. “The first million is the hardest. You must change everything you do then. As a founder, you go from the brains and builder to manager and coach,” Sandman shared.
Two paths to driving growth
CEO Sandman attributes growth to two factors. First, typical SEO and focus on the online presence. Secondly, the partner channel. “I highly recommend it if you don’t have a huge sales staff. Partners are off the balance sheet salespeople,” explained Sandman. He went on to share that their partners are natural fit freelancers and consultants who use Inflectra to help their clients test and develop their software. “They are already using our tools, and now they can be evangelists for us,” explained the CEO.
SEO spawned from $5,000/month paid AdWords
Sandman approaches SEO a bit differently. He relied on an agency to invest in AdWords paid search. Over time, he translated the keywords that were working into organic content such as blog posts. Eventually, he brought an expert in for technical SEO to optimize it. He now spends $13,000 per month on Adwords as well as SEO. The CEO shared that his best keyword is “requirements traceability.” He explained that “it’s sufficiently longtail, but not the most popular, and it’s kind of obscure.”
SEO and Paid Success with Effective Spend in Austin
As Latka lamented the B2B SaaS founders’ challenges with finding a good SEO agency, Sandman raved about Effective Spend. “You must set your agency up for success by working honestly and transparently. We gathered a lot of research from our paid ads, and we used that for our SEO. We work in partnership with our agency,” Sandman explained. He likes to have the agency develop the framework so company people who know the industry can actually write the content. Sandman’s last piece of advice: “You have to spend at least $5,000 per month on SEO or don’t bother.”
Bootstrapped company would consider an offer of $50-100m
Currently, Sandman reinvests his profits into the company, taking only what he needs to put his two kids through college. He shared that, thankfully, his wife works full-time for the government. “I drive a 2006 Subaru, and I take the bus to work,” noted Sandman. When pressed by Latka, Sandman admitted he would consider an offer of $50-100m, which was 50/50 stock, and that he could work with the investors to grow the business together.
Bonus allocation every 6 months helps retain employees
Founder Sandman noted that there’s a lot of legality in giving away equity in a private company. Instead, he has an excellent cash-based compensation plan and team bonus plan. Each year the leadership team sets a profit target. They divide that number by the number of eligible employees and make an allocation based on role. The number roughly relates to base salary plus tenure, and they give step increases to the bonus pool at reviews. If they hit their number at the end of 6 months, the bonus pays out. At the end of 2021, they fully funded their profit pool and distributed over $500,00 0 to employees, according to Sandman.
Famous Five
Adam Sandman, Founder and CEO of Inflectra, picked Hatching Twitter by Nick Bilton as his favorite recent book. Richard Branson is Adam’s favorite CEO to follow. He chose Canva as the tool he most enjoys, admitting that he loves to “doodle around with it.” Adam, 47, gets a full 8 hours of sleep per night. He is married with two children: one starting and one finishing college. At 20, he wishes he could have told himself, “Don’t worry about the order. You’ll have time for all of it.”
