Today’s interview is with Carson Conant, founder and CEO of Chicago-based sales enablement company Mediafly. Their software is used by top Fortune 500 companies including PepsiCo, Miller/Coors, Disney, and Goldman Sachs.
Carson founded the company in 2006, and ever since he’s been leading its growth at a blistering pace. It was ranked four consecutive years in Inc. Magazine’s “5000 Fastest Growing Companies.”
I last spoke with Carson about three months ago. In the meantime, his company has experienced some significant growth, he’s done some amazing things, and I wanted to see what he had to say about it.
Back then, he had about 150 customers paying eight or nine thousand dollars a month. In this interview, he talks about what he did to get that number up to over 250 – which means a lot when you’ve got a self-described “phenomenal” retention rate of over 95 percent.
Part of that was a huge deal he closed to acquire a UK-based company called iPresent. Carson doesn’t shy away from talking about what that acquisition was like for him and the impact it’s had on Mediafly.
He mentions why his company has so many engineers, and whether he thinks his company has the investor backing they need to beat their main rival, Showpad.
This article is based off of my podcast interview with Carson, which you can watch here:
Land-And-Expand Into Thousands of Users
Carson opened right up talking about his acquisition of a UK-based company called iPresent. That gave him a self-serve freemium model that’s pretty unique in the sales enablement space.
Why is that important? Because one of the biggest challenges with sales enablement is that a lot of companies don’t know its value. They know they’ll have to do this at some point, but they’re worried about the deployment, the return, and the usage.
With a freemium model, you could start with five users, out of a total of tens of thousands. Nobody has to spend 18 months looking at the pros and cons before pulling the trigger. You can just roll it out to a handful of people first, then start adding more users later on.
He’d mentioned some competitors, namely Showpad and Seismic. Carson said that this acquisition pushes them up to go toe-to-toe with Showpad on ease-of-use. There’s no big enterprise purchase cycle with a user-by-user product, and so a company can get a feel for how it’s going to start integrating into their own sales workflow.
Then we started talking financials. Last time we spoke, he was doing about a $100,000 ACB on average.
Now, though, it’s half that. He’s using a land-and-expand model and focusing on adding customers quickly, starting from literally four or five and growing in the company as people see the advantages.
He’s got 260 customers at the moment, up from 150 three months ago. A big chunk of that came from the acquisition: roughly two-thirds compared to one-third natural growth.
MediaFly’s customers are mostly SMBs and smaller teams inside big companies – again, because of the easy procurement process, it’s easy to support growth in this direction.
Cash and Debt in Acquisition Talks
I put forward this situation: there’s a company doing five million in ARR that Carson wants to go buy, and the price is ten million dollars.
And he pays for it in cash up front. Using CIBC or any other banking partner, how much could he lever up? How much equity would he have to actually put in?
Carson said he could get to 1x ARR with a combination of CIBC and other banking partners. But the model he’s been looking at is 1/3, 1/3, 1/3, where it’s one third cash up front, one third in stock, and then one third in earnout notes.
However, he’s able to raise 1x his current MediaFly ARR in debt, and that could take him all the way there to the 10m mark.
Diving Into Hard Data
Right now is the beginning of their Series C here, so they raised some additional convertible notes leading into it. They aim to close their series C around the end of 2019 or just the first few months into 2020.
He thinks he’ll do another acquisition next fiscal year (starting in February), maybe even two. The iPresent acquisition started having a great effect on winning deals even before the agreement was even signed, and so he wants to use acquisitions to drive MediaFly’s valuation.
Four months ago he had about 150 customers paying about 8 or 9 thousand dollars a month for about 1.2 million MRR. Now it’s quite a bit more than that, on track to close the year a little shy of 20 million in ARR.
And one of the great things about that is the phenomenal retention. Gross retention was 90 percent last year on a revenue basis, with a net retention of 110 percent. Logo basis was pretty similar, losing just one all of last year. This year, it’s looking more like 95 percent.
Three months ago he was paying 160k to get a customer paying 9k a month, meaning a 19 month payback period. Today that’s similar, a little closer to 12 months in fact. Over a customer’s lifetime (remember: ten year retention) there’s a lot of profit going on.
The biggest acquisition goal is to win logos faster, which already started happening last year.
Since iPresent was based out of the UK, they gained a nice European headquarters and some very talented team members to handle European operations. iPresent didn’t have very much in the way of accounting and SaaS finance, in fact most of their team was technical.
So now MediaFly is too. After the acquisition, where they picked up ten engineers, they have about forty to sixty engineers out of 120 total people on the team. The rest, of course, are commercial. Ten of their sales reps have quotas, and they’re usually quite busy.
At the moment, though, they’re looking to expand hiring drastically. Their goal is winning over clients that are considering Showpad right now, and as they ramp up those efforts, they’ll need to expand their sales team and get more leads.
Aiming High With Jack Walch and Elon Musk
Last time we spoke, Carson’s favorite business book was Jack Welch’s Straight from the Gut. That’s still up there for him, but he’s added Good to Great by Jim Collins to the list. He follows Elon Musk, drives a Tesla, and his indispensable software tool is definitely the G Suite.
He’s 45, married with kids, and sleeps seven hours a night. And if there was one thing he could tell his 20-year-old self, it would be to invest earlier in sales and marketing. Coming from a software background, Carson is a lover of the product and its development. But when it comes time to actually build a company, you need marketing to take you all the way.
I’d certainly call that a phenomenal interview. It’s great to hear what Carson has been doing with his company for the last quarter, and he’s definitely going to take it even further in the future.
If you want more fast-paced, hard-hitting interviews with the best of the best in the SaaS world, you can’t miss my podcast. Check it out on iTunes or Google Play, and if you haven’t already, subscribe to my YouTube channel.