After working as a consultant and in multiple executive roles, Matt Elson knew how to build a team and grow a business. But he was new to software when he bought an existing B2B SaaS for $1 in 2011. Now, as B2B SaaS Evotix enters its second decade in business and boasts revenue in the double-digit millions, Matt Elson, the savvy CEO, sat down with the GetLatka team to discuss his wild journey. Elson shared how he was able to buy the company for $1, how he fared in the pending lawsuit brought on by a former customer, and what he does to protect company culture when teams grow from 50-150 and beyond.
- Team of 150: 50 sales/marketing with 11 quota carrying sales reps
- 450 customers at $25,000 ACV
- Raised $10m in Series A and B capital
Purpose-led business addressing the 5,000 preventable workplace deaths
CEO Elson describes Evotix as a purpose-led business focused on transforming how companies manage health, safety, and risk. The B2B SaaS helps engage employees to build safe, nurturing, and compliant workplaces. Elson’s passion shows when discussing the 5,000 preventable workplace deaths in Europe and North America. “How can we still kill 5,000 people per year in the workplace?” he asks rhetorically. Elson adds that most fatalities are from well-understood risks that are easily preventable. He worries that “we are not exporting those risks to the least advantaged—through the gig economy and those on insecure contracts.”
450 customers with 2m employees opting in for digital transformation
“If you’re responsible for health and safety, you have a bunch of stuff to do… and lots of companies are still doing it with pen and paper and excel,” explained Elson. The challenge with the old school methods, the CEO noted, is that you can’t learn from data or gain any insights on compliance. Evotix currently serves 450 customers by providing a mobile-first employee engagement tool that embeds safety into the day-to-day. With its easy-to-use, powerful UI, employees can engage in safety activities every day.
Sweet spot: 500-10,000 employees
According to Elson, the B2B SaaS has identified their sweet spot as companies with 500-10,000 employees, although he revealed that their largest customer employs 100,000 people. Elson indicated that Evotix makes sense for larger enterprises in some business verticals.
How Elson acquired the business for $1
After Elson completed an interim chief executive job, he uncovered an opportunity to buy a software company in distress for $1. The 15-year-old company had 200 customers but was being sued by its largest customer representing 1/3 of their revenue. Because the company was owned by a fund near the end of life, the owners needed to dispose of it quickly. Latka, intrigued by the story, suggested that others could search for portfolio companies inside funds nearing end of life to look for assets worth acquiring.
Settling an $11m lawsuit
When Elson purchased She Software for $1 in 2011, the brand had already been through multiple owners since its launch in 1995. Fund Collar Capital Fund, a secondary fund, bought it as a part of a stack of assets from a distressed purchase. The first course of business was to settle the $11m suit filed by the company’s biggest customers. The CEO decided to countersue, sending the case to mediation. As it turns out, their customer took their IP to build their own solution. By facing them down in mediation, Elson ended up walking away with $300,000, which he used to keep the company afloat. Last year, Elson rebranded the company as Evotix.
Growing from 200 customers, $2,000 ARPU.
At the time of purchase, the company had 200 customers with a $2,000 ARPU. Once the lawsuit was settled, Elson could focus his efforts on growing the business. He did so by first identifying their ideal, best customers. The savvy CEO realized that his customer success team was solid at closing small upsells but not more significant expansion deals. By building a more traditional sales team with BDRs and quota-carrying reps, he could employ hunters to expand to other divisions and geographies within existing accounts. This strategic change doubled the number of customers and increased the ACV 12X to $25,000. Evotix first crossed $1m in ARR in 2014.
Efficiently raised $10m of external capital
Between 2018 and 2020, CEO Elson raised $10 in external capital. Evotix closed $6m in Series A funding, taking $3m each in 2018 and 2019, and another $5m in Series B funding in 2020, which the company has yet to burn completely, according to Elson. Although Latka is a massive proponent of bootstrapping, he commented that $10m raised against $14m revenue is capital-efficient.
Was the dilution to less than 50% equity worth it?
As Latka queried Elson if the funding was worth the dilution, as he now sits as the largest shareholder, but just under 50%, Elson quickly replied yes. “We are the leader in the UK and Ireland, but we needed to enter the North American market. You need capital to do that; you don’t do it lightly,” explained Elson. He added that his investors have been fantastic, giving great advice along the way.
Valuation north of $100m
Mercier led the first Series A round at a little more than 15%, putting the company’s valuation at $12m. The second half of the Series A funding came a year later, and the company’s valuation jumped to $25-30m. Frog Capital led the Series B round in 2020 when Evotix was valued at $50-60m. Two years later, the company is valued at north of $100m.
Classic Marketing/Sales function accelerates revenue growth to 43% YOY
CEO Elson credits his classic direct sales and marketing team of 50 with growing the revenue by 43% over the past year. His team of marketing to drive awareness, BDRs to nurture opportunities, and sales reps to close is paying off as the company passed $1.2m in ARR.
Maintaining company culture when managing a team of 150
Elson acknowledges that growing a team from 50 to 150 has its challenges. “It’s hard to know everyone individually,” he laments. To maintain the company culture, Elson travels to meet people. He also holds a Town Hall meeting every two weeks. Latka asked Elson about the Town Hall format. Elson explained that the meetings are only 30 minutes, covering everything from customer success stories, birthdays, and anniversaries to High 5s to call out values. He describes them as employee engagement and temperature checks. He relies on 15five.com to help engage his team. “It’s important to maintain the pulse; it’s the glue that continues to drive business,” explains Elson.
Famous 5
Evotix CEO Matt Elson shared that his favorite business book is currently The Hard Thing About Hard Things by Ben Horowitz. Instead of a CEO, Matt follows Sequoia Capital most closely, noting that they develop great presentations on how to run a business. Matt chose 15five as the company’s most important online tool. Nathan’s new question came next: what are you most curious about or thinking about right now? Matt replied that he’s pondering how to get product and engineering to work more closely together to promote greater product coherence. Matt sleeps a solid 8 hours per night. He is 56, with a partner and one child. At 20, he wishes he had known that “things come in time. You don’t need to hurry. Just be persistent and confident in your abilities, and things will come to you.”
