Clate Mask and he has been educating and inspiring entrepreneurs for over a decade. He’s recognized by the small business community as a truly visionary leader. His passion for small business success stems from his personal experience, taking Infusionsoft from a struggling startup to an 8-time Inc. 500 and Inc. 5000 winner. As CEO, he’s leading Infusionsoft on its mission to create and dominate the market of sales and marketing software for small businesses. Under Clate’s leadership, the company has landed 4 rounds of venture capital including a $55M series D led by Bain, with contributions from prior investors including Signal Peak Ventures and Goldman Sachs. He’s also named Ernst and Young Entrepreneur of the Year Finalist, a Top 100 Small Business Influencer by Small Business Trends, and one of the 100 Most Intriguing Entrepreneurs of 2013 by Goldman Sachs.

Famous Five:

Favorite Book? – Crossing the Chasm and The Advantage
What CEO do you follow? – Marc Benioff
Favorite online tool? — Thumbtack
Do you get 8 hours of sleep?— Never
If you could let your 20-year old self, know one thing, what would it be? – Clate wished he knew that business, not law, was the path for him AND that building a team and culture is far more fun than making money.

Time Stamped Show Notes:

01:18 – Nathan introduces Clate to the show
02:28 – When you serve small businesses, make sure you have the right target customers
- 02:35 – There are 27M small businesses
03:02 – “You got to get it right. You got to get the market fit”
03:20 – Infusionsoft focuses on businesses with 2-25 employees but the sweet spot is 2-10 employees
- 03:28 – Average customer pay per month is $250-300
03:54 – “It’s CRM, marketing automation, sales automation, e-commerce on one suite”
04:03 – Majority of Infusionsoft’s revenue is SaaS
04:10 – Infusionsoft’s $3.4B payments processed
04:36 – Infusionsoft created their own payment solution 2 years ago
- 05:04 – It triggers all kinds of Infusionsoft’s automation
05:50 – Infusionsoft started in 2002, as a software company
- 05:56 – Infusionsoft pivoted in 2007 and decided to really go for it
- 06:16 – “We started, like every small business, with no intention to build something big”
06:34 – Clate saw how Salesforce moved upfront quickly and that opened up the opportunity for Infusionsoft
- 06:43 – “Why not be the Quickbooks to sales and marketing software”
06:53 – Infusionsoft’s dark days
- 06:56 – In the first 3 years, every day was a fight for survival
- 07:43 – The second dark day for Infusionsoft was when their product market fit went off and the churn rate went up to a 8% gross monthly customer churn
- 08:08 – Infusionsoft had raised $17M when their churn skyrocketed
- 08:38 – Infusionsoft’s churn rate is usually 2-2.5%
09:15 – Infusionsoft has raised a total of $125M and about half was capital for the business
- 10:00 – “When you create something that’s growing, there’s always a new investor who wants to replace an old investor”
- 10:27 – When the round becomes “over-subscribed”, you have to take a percentage of what you’ve raised and make it available for your existing shareholders to sell some shares
11:09 – Infusionsoft currently has around 600 employees and still continues to grow
11:20 – Infusionsoft has around 135K users
11:30 – Infusionsoft just completed their 10 year adverse completion
11:56 – There are more things coming up for Infusionsoft
12:27 – Average MRR
13:19 – Clate shares why they haven’t gone public
- 13:58 – What happens is private money is easier to raise
- 14:06 – Historically, public valuation was better than private valuation, but that shifted over the years
15:00 – When the market changed in 2014, Clate had decided that it’s better to stay private as long as they could
15:30 – Infusionsoft is currently between $100M – 150M ARR
15:51 – The leverage that Clate pulled to turn their monthly churn
- 16:10 – Infusionsoft is serious about helping small businesses succeed
- 16:22 – The breakage model that results in you having a lot of churn
- 16:45 – Infusionsoft says “no” to thousands of businesses every month
17:06 – The challenge when you serve small businesses is you that have to tweak and adjust to get the LTV-CAC ratio right
- 17:17 – Infusionsoft is currently at $4 LTV for a dollar CAC
- 17:44 – The LTV-CAC ratio is the number that every SaaS business has to manage well
18:15 – It’s better to look at your revenue in unit churn
- 18:42 – The upfront fee was the number one factor for Infusionsoft’s churn moving from 8% to 2%
21:05 – The Famous Five

3 Key Points:

When you serve small businesses, make sure you have the RIGHT target customers and be committed to helping your customers.
Going public requires a deep understanding of how adaptable you can be in an ever changing market.
The LTV-CAC ratio is the number that every SaaS business has to manage well—that’s the trick.

Resources Mentioned:

The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
Organifi – The juice was Nathan’s life saver during his trip in Southeast Asia
Klipfolio – Track your business performance across all departments for FREE
Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
Freshbooks – Nathan doesn’t waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOW

Show Notes provided by Mallard Creatives

637: Reason Infusionsoft Didn't IPO, Passes $100M ARR, $125M Raised, Helping 45,000 SMB's With Marketing and Sales Automation with CEO Clate Mask

SaaS Interviews with CEOs, Startups, Founders