How We Acquired 60+ Enterprise Customers For Our Niche CRM

So the short story for lead smart technologies is we're A

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CRM, Customer Relationship Management

and Customer Intelligence Platform

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specifically for a vertical market.

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That's called wholesale distribution.

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Upendra Varma: Hello everyone.

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Welcome to the B2B SaaS podcast.

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I'm your host Upendra Varma and

today we have Tom Burton with us.

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Tom here is the co founder and CEO of a

company called LeadSmart Technologies.

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Hey Tom, welcome to the show.

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Tom Burton: Welcome.

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Great to be here.

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Thank you.

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Upendra Varma: All right, Tom,

so let's try to understand what

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lead smart tech does and you know,

how, why customers pay you and

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Tom Burton: Yeah.

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So the short story for lead smart

technologies is we're A CRM,

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Customer Relationship Management

and Customer Intelligence Platform

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specifically for a vertical market.

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That's called wholesale distribution.

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So people that manufacture products,

and then the companies that sell

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those manufacture project products,

there's a bit of an ecosystem there,

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and we're focused entirely on that

video on that vertical and everything

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in our product is aligned towards

supporting those those customers.

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Upendra Varma: God, right.

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So just talk a bit about the history here.

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Right.

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So like, I mean, I know CRM is

such an age old space, right?

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So how did you end up, you know,

picking this particular vertical, right.

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And you know, just talk

about that story there.

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Tom Burton: No, that's a,

that's a great question.

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So my co founder in the company has

spent 35 years in this industry.

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So he was a manufacturer.

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He was a manufacturer's rep, which are

salespeople that work with manufacturers.

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He worked for a distributor.

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So he suffered through a lot of

the challenges that we have been

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addressing with lead smart and.

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You know, the market has been pretty

underserved with technology solutions.

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So they really haven't had

solutions that are geared to that

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market that makes sense for them.

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So a lot of manual, you know,

the, our biggest competitor, as

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we say, is Excel and email, right?

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That's what, what people use there.

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So he really saw an opportunity here.

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I have a longstanding tech background

and built multiple software companies.

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He said, this is a bit of a blue ocean.

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We need to help this market.

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And so that's how we kind of

jumped in and, and have been

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doing this for the last few years.

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Upendra Varma: God, right.

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And just talk about your

customer base today.

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Right.

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So I'm understanding these are all,

you know, wholesale distributors,

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but just give us a sense of how

many total paying businesses do

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you have on your platform today?

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Tom Burton: Oh, we got quite a few

and they range from manufacturers.

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So again, we have kind of three, you know,

entities that exist in this ecosystem.

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You have manufacturers that are

the companies that make industrial

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products, like the headphones you have

on or our microphones or whatever.

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You have manufacturers reps that tend

to work for different manufacturers and

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help to get their products to market.

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And then you have the actual distributor.

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Where in the B2B world, companies don't

go necessarily to Best Buy to buy things.

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They go through a B2B

distributor, whatever.

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So we have actually, uh, customers in

all three of those different areas,

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um, and are growing pretty rapidly

growing, you know, close to a hundred

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percent a year and probably will

be much faster as we go forward.

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We're really seeing that, um, while

the vertical has been underserved with

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technology, they're really understanding

the importance of catching up quickly.

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And, you know, the whole AI thing and

all of that has really caused them to

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have a bit of a wake up call and it's

like, okay, we got to really move faster.

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And so it's great.

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We're happy to support that.

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Upendra Varma: Got it.

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So I'm saying, Tom, how, how many

customers are we talking here?

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Is it 100, 000, 10, 000?

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Just, just

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Tom Burton: No, no, uh, 50, 60 currently.

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Upendra Varma: Got it.

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And, and what are these, like,

are these enterprising deals?

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Are we talking about 10, 000 deals?

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100, 000 deals?

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Like how big are these deals?

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Tom Burton: Yeah.

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So our average contact value right now

reigns around 35, 000 of ARR average,

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but we're, we, we see that increasing.

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Again, as more and more companies get

on board, a lot of these distributors

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are very large, very large sales

teams, hundreds of people, you

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know, so lots of opportunity to

increase that average contract value.

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Upendra Varma: Got it.

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Yeah.

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That makes a lot of sense.

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Right.

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I just want to move on to

your go to market motion.

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Right.

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So like how you, how, like where

you're finding all of these leads.

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I know you've got a vertical and

you understand how your ideal

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customer looks like, but what are

the channels that you're using to

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reach out to this potential leads?

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What's

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Tom Burton: so another good question.

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So, so a couple of things.

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So it's a little bit of a

complex go to market motion.

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It's not like, oh, we went and

hired a bunch of, you know, BDRs and

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we're starting to smile and dial.

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First of all, what we spent quite

a bit of time is developing really

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strong relationships with buying

groups and associations in that

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industry, because this industry

is very relationship oriented.

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And they rely on the advice and

opinion of their buying groups and

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the associations that they're part

of to determine how they should

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navigate in the technological world.

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So, we have a pretty strong

endorsed partnership with affiliated

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distributors, which is probably the

largest buying group in the area

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partnership with net plus alliance.

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We have a partnership of, uh, with ISA,

which is a large association in there.

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So we put, we spent some time to

really build those relationships

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and build that credibility.

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Then our go to market is a bit

traditional in a sense that, you

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know, we're using, you know, basically

reaching out to companies, you know,

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doing traditional marketing demand,

uh, you know, creating demand and so

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forth with them about what's there.

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But then we're now kind of, because

there's this ecosystem, as I just talked

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about it, the manufacturers, the reps

and the distributors, we're seeing a

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lot of referrals starting to happen.

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So a distributor buys our

product and then they go to

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their manufacturer and say, Hey.

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It'd be great if you could

also be on lead smart.

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So we're starting to see a bit of

a flywheel effect occurring because

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of the ecosystem that exists here.

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And that was our part of

our original strategy.

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It's taken longer to kind of see

that momentum get going than we

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would have expected, but we're

starting to see that happen.

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And then it's turbo charged by

those relationships with the, with

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the buying groups and associations.

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Upendra Varma: Got it.

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So, so I'm just trying to

understand this a bit more, right?

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I'm hearing two things here, referrals

from your existing ones, right?

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And obviously your credibility with,

with, with all of these partnerships,

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helping you to close those deals.

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But how exactly are you reaching them?

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Is it cold calling or is it cold emails?

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Like what's, what's really been

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Tom Burton: No, like we'll do a lot of, we

do a lot of joint webinars with, um, with

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the buying groups and the associations.

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We do our own webinar and funny enough,

we also, which may have been our, her

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best, our best Martian is we created

a, our own live show and podcast.

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It's called around the horn

and wholesale distribution.

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And we did, we started that about a

year ago, my co founder and I, and we

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honestly didn't expect much out of it.

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We, we create a newsletter that we send

out every Friday and then we basically.

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Go live and discuss it.

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And it's really taken off and we've

reached a lot of prospects and

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built a lot of credibility that way.

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And, and, you know, again, that's

creating demand and building trust.

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And, um, as a result of that, that's

also been a really good way of reaching

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this, this market that again is built

on relationships and credibility.

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Upendra Varma: Got it.

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Right.

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So now let's, let's

move a bit bottom here.

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Right?

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So what, like talk about

the sales cycle here, right?

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When somebody Things that.

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Okay.

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This looks an interesting product, right?

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How do you convert them

to a paying customer?

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Right.

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What's the sales like look like,

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Tom Burton: yeah.

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So again, it kind of starts

with that discovery call.

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And then we go in, I guess, I don't

like to use the word demo, but it's

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more of sort of a multi step mini

training, if you will, on what are the

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capabilities of, of the technology,

because for a lot of these companies,

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they don't know what's possible.

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So we take them through that.

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Usually that's multiple two or three

sessions that then, you know, leads

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to generally some followup questions

and then a proposal and then obviously

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a close, probably the obvious

question is how long does that take?

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Um, that can take anywhere

from a year to a week.

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I mean, we've had everything

and everything in between.

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So it really depends upon the company.

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You know, do they have an impending

event or something that's really

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driving them to get going?

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So there's a lot of variables.

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So we know that some are

going to take a long time.

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Some are going to happen shorter.

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So the key is just kind

of have a good pipeline.

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Upendra Varma: And then the customers

that we're talking about, right?

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Are these, you know, somebody

who's, are you literally competing

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against Excel sheets, for example,

or are you sort of, you know,

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replacing it with an existing CRM?

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Late?

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So what's, what's that look like?

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Tom Burton: Yeah.

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So, I mean, there are some companies

that have some existing CRM, but I

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would say it's probably less than And

a lot of the times it's like, I mean,

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it's, it could be going back to like

act and goldmine, you know, some of

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these CRMs that from 25 years ago,

um, or they have some old, you know,

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technology that they've built in house.

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But I would say that 75 to 80 percent

of who we're talking to, they run their

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sales organization on spreadsheets.

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Or, you know, white Microsoft

office or whatever the case may be.

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So, yeah, that's the, and the challenge is

not so much that they're, that they like

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that technology is just to change, right.

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It's a change.

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It's different.

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You know, these are not

high tech people per se.

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Um, so we have to focus a lot on the

importance of how do we get adoption?

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How do we get people to use it and feel

like they're getting value out of it?

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When these are not people

that are just looking for the

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latest piece of technology.

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Upendra Varma: Yeah.

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So, so I believe you also have to

solve this problem of educating

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the people themselves, like, Hey,

you need a tool as opposed to

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them already understanding that.

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Okay.

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Here's a tool we need.

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Right.

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So it's like, is it more

about education in your case?

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Okay.

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You showing them, because I

mean, they're going to resist it.

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Right.

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So it's, it's going to

change a lot of things here.

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Switching would have been much easier.

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Tom Burton: Yeah, no.

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And that's where the podcast and the

show has really helped, you know, it's a

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safe way for people to get educated and

the webinars and, you know, not just up.

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Right.

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There's a lot of industry people

right now, the associations, the

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buying groups, a lot of their focus

is helping to educate these companies

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because they got to move, right.

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They're going to be irrelevant if

they don't really start moving.

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So, but yeah, it's, it's a lot

of education and then getting

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them comfortable that this isn't

going to be really disruptive.

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And isn't going to set them

backwards, but move them forward.

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Upendra Varma: It's a talk about, you

know, your retention as such, right?

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I mean, it's been a couple

of years at least, right?

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And I see you've got a

bunch of customers, right?

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Do you see any churn?

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And how are you able to sort of

expand an account that you've landed?

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Just talk about those.

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Tom Burton: So we're

really excited and proud.

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We had no churn last year, so we've had

no churn really in a year and a half.

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Um, and there's two reasons for that.

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One is.

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We very, very, we spend a lot of time

on that onboarding and the client

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success so that we get the adoption and

we start to see return on investment.

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And I'll give you an example.

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We have, you know, 1 customer that

came on earlier this year and has

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seen a 25 percent increase in sales.

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That they believe is mostly attributable

to moving on is the way they say it is.

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It's a sales team, same sales team

as we had before doing a lot of the

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same stuff, but having a lot of more

capabilities than what they did before.

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So, you know, it doesn't take much

for people to kind of go, wow.

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All right.

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How did we live without this?

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And then, you know, we take care of them

and that's the other really nice thing

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about this market is because they're not

ultra techie, they're very loyal, right?

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They're not looking to switch to

the next shiny object or the next.

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You know, cool thing that comes out.

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So once they come in, they're very loyal.

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And if you're loyal back to them, they'll,

you know, we've had, we have customers

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now that have been on four years going

on five years, that kind of stuff.

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So I don't see churn being

a big, big issue for us.

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Um, in fact, I see our net revenue

retention is going to be very high

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compared to the industry because

it's a very loyal, uh, you know, and

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it's not an easy thing that they're

going to want to replace every week.

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Upendra Varma: So do you have

folks in your team, right?

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Customer success team who are

specifically focused on, you know,

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getting the customers, you know,

you derive value and increase the

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NRR, like net revenue retention.

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Tom Burton: Yeah.

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So we have a client, we do pretty much

that happens through client success.

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So once the customer, you know,

comes on board, we have a, we, we

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take them through what we call a

smart start, which is the onboarding.

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But one of the things that's quite

unique with us, it's not like when

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we're done, it's like, okay, we'll

call support or send us an email.

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If you have a problem, we

continue to support them.

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As a consultant, we call

it our concierge program.

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So they can, you know, reach out and

schedule time and say, Hey, we want

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to build some new reports or we want

to do something new and we'll do that.

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We provide that at no extra cost as

them parting, starting to be there.

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So that's our client success.

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And oftentimes that leads to them going,

Hey, we want to add more users or more

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capabilities, or there's another division

or, you know, whatever the case may be,

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and because they're succeeding, right.

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It's like success is

the only way to really.

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You know, drive the NRR game.

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Upendra Varma: Got it.

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All right.

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So Tom, I just want to want you to sort

of recall your zero to one journey, right?

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So how did you get those

first five customers, right?

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So where did you find them?

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How did you knew them, right?

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How did you manage to convert them?

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Just talk about that story.

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Thank you.

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Tom Burton: the first five customers

really came because of my co founders,

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uh, relationships in the industry.

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So he reached out to people that

he knew had worked with before.

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Right.

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So I will call them sort of

like the friends and family.

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Type of customer.

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Um, but what was good about,

again, people are well connected.

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And so we use those as a platform

to kind of springboard to get to

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the next layer and the next layer.

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But yeah, I would say the most of

them came from the friends and family

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relationship that my co founder had Kevin.

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Upendra Varma: Talk

about your team, right?

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So how many folks do you have, do you

have on your team and what do they do?

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Tom Burton: Yeah.

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So, uh, there's probably close

to 20, 25 people on the team.

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Um, depending upon, you know,

some different, we have some

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different contractors we work with.

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Uh, I would say, you know,

client success is probably a

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third of the team that's there.

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We have an engineering team as well.

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Um, we're a bit unique is that

we're built, our product is built

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on the Salesforce cloud platform.

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So rather than building on AWS or some

other cloud platform, we worked out

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an arrangement with Salesforce that

allows us to build on their platform.

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Everybody buys from us.

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They don't buy anything from Salesforce,

but, um, it gives us really a really,

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really top notch, you know, high

performing cloud platform for us to build,

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build on top of, which is, you know,

arguably the most secure and the most high

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performance cloud platform in the world.

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So we have an engineering team.

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Sales, I would say we're probably

broken down pretty much 40% sales

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and marketing, four 40%, uh, client

success, and then 20% engineering.

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And obviously some, you know, g

and a and stuff like that in there.

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Upendra Varma: Got it.

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Uh, that makes a lot of sense, right?

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So, and like, I'm assuming you must have

raised funds to build your company so far.

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It's have you raised any

external funding so far?

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Tom Burton: Well, we've, well, we

ha we, me, myself, and my partner

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have invested a fair amount into it.

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Um, we have inve, we have raised

some small amounts of, uh,

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convertible debt, literally less

than a hundred thousand dollars.

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So small amounts.

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Upendra Varma: it's bootstrap then, right?

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I mean, if you're putting in your

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Tom Burton: Yeah.

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It's bootstrapped.

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It's bootstrapped.

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And we're looking now because we're

getting to that point where, you

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know, in the early stages, right.

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Investors all like, well, talk to me

when you get to a million ARR, talk to

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me, you know, and we're like, you know,

we can fight this or we can just kind of

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literally bootstrap our way to that point

and then get a place where we're at a

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foundation where we can get quality, high

quality investors kind of picking shoes.

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We're getting to that point right now.

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Um, we've also used

revenue based financing.

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So we've worked with, you know,

companies that, uh, lighter capital that

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help you basically, you know, offset

your revenue because we have good,

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strong, recurring revenue with that.

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It's, it doesn't necessarily, um,

you know, cause you to take, to

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take it big time growth, but it

helps, you know, add more cashflow,

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the equation and give you more

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Upendra Varma: So, so Tom, why race?

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No.

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I mean, if you've already, you

know, bootstrap managed to bootstrap

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and build, you know, build such

a good company so far, right?

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So why not just keep

on doing that forever?

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What's the vision here?

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Tom Burton: Yeah, there's

a, there's a huge market.

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So in the U S alone, there's over 300, 000

distributors and 200, 000 manufacturers.

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I mean, and the majority of

these companies do not have any

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sort of technology that we do.

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So there's a gigantic market

and we're literally just

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scratching the surface of that.

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And so, you know, our vision is my

co founder Kevin says his vision is.

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Right.

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There is no serious talk of CRM

and customer intelligence and these

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companies without lead smart coming

to the, and I think that's a really,

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really good vision and goal that we

should be shooting for because we are.

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I believe we are the leader right

now in this industry of having

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that industry specific solution.

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And that can really help them drive sales.

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So, yeah, we're going to have to,

if we're going to really get to that

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next level, we're going to need more

capital than what we're, we're doing on

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Upendra Varma: And then how does

the competitive landscape look

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like in this particular niche?

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Tom Burton: Yeah.

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So, I mean, there's, you know, what we

call the more traditional CRM vendors,

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there's the Salesforce and Microsoft

dynamics and those types of things,

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but we rarely see them, actually.

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We rarely see them there.

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There's a couple of other

vertical solutions that have

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been around for a while.

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So they're a bit older

technology, if you will.

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We see some of those, but, um, no,

it's not, it's not a hyper competitive

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red ocean that you see potentially in

other CRMs, you know, where you're,

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where you have, you know, pipe drive

and HubSpot and Salesforce and monday.

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com and all of these people vying

for that business, because the needs

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for this business or this vertical

are very specific and those sort of.

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One size fits all CRMs don't

really work well for them.

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So.

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Upendra Varma: Makes sense.

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Tom Burton: I do expect more

competition coming in here, right?

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Anytime there's an opportunity,

there's going to be more competition.

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Upendra Varma: They're

going to follow you.

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Definitely.

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Tom Burton: That's right.

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Upendra Varma: All right, Tom.

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Thanks for taking the time to talk to me.

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Hope you scale your company

to much, much greater heights.

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Tom Burton: No, great questions.

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Thank you.