How 1Huddle Hit $3.5m in ARR from $1.4m in the Last Full Calendar Year (4 Key Takeaways)
Disclaimer: This is an independent review of Nathan Latka’s insightful interview with Sam Caucci (CEO, 1Huddle) on The Top Entrepreneurs podcast.
Welcome to my corner of the internet where I write reviews of the most informative and downloaded growth podcasts in the world.
Startup founders, growth product managers, product marketing managers, and anyone interested in growth will find this review very useful (do well to share after reading).
Listening to podcasts is a perfect mix of entertainment and education for me.
During my regular morning walks, my headset is always blaring captivating episodes that help to position my mindset for the day.
I never get bored. So, It’s the same routine when I’m in a public place, on my evening walks, and/or when I’m asleep.
Now, you may want to call it ‘addiction’.
However, it’s my golden way of staying informed, motivated, and focused on my big and scary goals.
Further down, you’ll find 4 key takeaways from 1Huddle’s journey of more than doubling ARR from $1.4m-1.5m in the last full calendar year to $3.5m-4m.
To help you make the most out of this episode, I have included a ‘Definition of Terms’ section that will help you to better understand the key metrics and concepts discussed in this episode.
You’ll also find recommended links that further explain the strategies and tactics that helped 1Huddle to achieve healthy growth.
To listen to this interview, use the links that have been provided at the end of this review.
Meet Nathan Latka (Host, The Top Entrepreneur Podcast)
Nathan Latka was CEO and Founder at Heyo where his team grew the customer base to 10k and revenue to $5m before it was acquired by Votigo in 2016.
Nathan is principal at The Latka Agency and interviews CEOs of the world’s top companies such as Eric Yuan, the CEO and Founder of Zoom, and Frank Bien of Looker (acquired by Google for $2.6b).
On The Top Entrepreneurs podcast, CEOs share revenue data, the equity they own, cash burn, growth levers, and more.
Although some CEOs aren’t comfortable with Nathan’s style of quizzing and handling data, many others are fine with his approach and have referred The Top Entrepreneurs to their own investors.
He recently launched Founderpath which is helping software founders to get capital up to $10k-$1m in under 72 hours without selling equity.
To know more about Nathan’s experience and journey so far, read this article by Michael Stelzner, the founder, and CEO of Social Media Examiner.
Meet Sam Caucci (CEO, 1Huddle)
Sam Caucci is the Founder of 1Huddle — a workforce training platform that uses gamification to help organizations onboard and increase employee performance.
He is the author of the #1 Amazon Bestseller — Not Our Job: How College has Destroyed a Generation of Workers and How to Fix it and has been featured on CNN, Forbes, The Huffington Post, The Wall Street Journal, Fox News, and more.
While occupying a leadership position at Life Time Fitness, Sam drove the company’s expansion into the New Jersey and New York market.
He also managed sales and negotiation for the Perfect Competition team that handled training for over 2,500 professional athletes across the NBA, MLS, NFL, MLB, and NHL.
Sam has been so involved with sports that he hardly goes for a session without using a sports analogy (except for this episode).
Five Things You Never Knew About Sam Caucci
- At the time of recording this episode, Sam was 34 years and married with an amazing daughter (2.5 years old) who is at a stage where “she says why to everything”.
- Sam sleeps for 4–5hours in the week and gets 10 hours of sleep on weekends.
- Sam’s favorite business book at the time of recording this episode was Antifragile: Things That Gain from Disorder.
- Sam admires coaching talent — Nick Saven, who is constantly involved with managers and players year in, year out, and still keeps the brand and team at a high level.
- Copper CRM is Sam’s most favorite online tool for building 1Huddle.
Let’s Dive In
1Huddle is a mobile gaming platform that is helping companies to onboard new employees and improves overall performance with quick-burst games that can be played anywhere and anytime.
According to Sam, the skill gap that is present today shows that companies continue to invest in yesterday’s technology to onboard or continuously develop workers.
To him, corporate employees are less prepared than ever before.
However, 1Huddle does two key things:
- 1Huddle allows companies to quickly create content and push out to users anywhere in the world — a major feature that regular learning management systems (LMS) miss out on.
- 1Huddle has created an environment where usage is near 100%. Moreover, when using regular training software, employees forget 70% of what they learn within three days.
Key Figures and Metrics
Disclaimer: These numbers were given by Sam Caucci during his interview with Nathan Latka on The Top Entrepreneur podcast.
Raised Capital: $400k from accelerators, angels, and $2.5m seed round in Q1 of 2018 (raised an additional $5m Series A earlier this year).
Number of Customers: 111
Average Contract Value (ACV): $50k
Monthly Recurring Revenue (MRR): $290k
Annual Run Rate: $3.5m-$4m
Revenue Churn: 10%
Monthly Burn Rate: $120k
At the time of recording this episode, the 1Huddle team was made up of 36 people.
Business Development, Marketing, and Customer Success: 11
Quota Carrying Sales People: 7
4 Key Takeaways from 1Huddle’s Healthy Growth
1. Gain Confidence and Go After Bigger Clients
1Huddle saw a 5x growth in average contract value from $10k in 2017 to $50k.
According to Sam, 1Huddle was able to gain more confidence in their sales process with larger enterprises and overall as a startup.
A few weeks ago, 1Huddle entered into another strategic enterprise partnership with the New Jersey Reentry Corporation (NJRC) to create customized interactive games that will provide critical and analytical skills for members.
However, asking for more takes time.
To sell to large enterprises, startups must have a great product, be ready to scale fast, and manage heavy workloads.
When selling to enterprise customers, Sam recommends that you go really deep and fast to have multiple stakeholders who can be champions of your software product inside the enterprise.
In the case that one stakeholder moves on, “the baby doesn’t go out with the bathwater”.
2. Invest in Product Development and Customer Education
When a startup begins to make revenue and pursue growth, investing in product development is highly essential.
Sam strongly believes in the product and has no regrets about raising capital so far.
Companies now understand that employee churn is a critical problem. So, Sam is fine with burning $120k per month into product development, growth, and marketing.
No wonder, 1Huddle manages a customer list that includes Amazon audible, ESPN, Hyundai, Novartis, Golden State Warriors, Los Angeles Rams, and more.
1Huddle is in a category where there are no other gaming platforms for workforce development and performance.
As such, the team heavily invests in top-of-funnel content to educate people about the problem they are solving.
3. Cold Outreach is Not Dead
It’s easy to assume that people wouldn’t open your cold emails because they might not know much about your product and the pain points it solves.
However, 75% of top executives are willing to make appointments on a cold call or email. It all depends on how you reach out and sell your service.
With top customers across different verticals, 1Huddle acquired 90% of their leads via cold outreach in the last full calendar year.
To help you run highly converting cold outreaches, use the additional resources in the ‘Recommended Links’ section below.
4. Expansion Revenue Influences Growth
According to Mark Cranney, “while new clients are great, the best place to sell something is where you’ve already sold something.”
Although startups primarily focus on acquisition in the beginning, attention must be given to retention and expansion in order to lower acquisition costs, scale, and grow.
Sam strongly understands this fact. Moreover, at the time of recording this episode, 1Huddle had a net negative churn with 25% of newly booked ARR arising from upsells and expansion.
20%-30% expansion revenue is a great benchmark. However, the higher the percentage, the better.
Definition of Terms
Annual Run Rate
Annual run rate is a metric that can be easily used to forecast annual earnings. It’s a quick method that predicts annual revenue based on revenue from a shorter period.
With the assumption that everything stays the same — no acquisition, no expansion, no churn, you can easily project annual revenue based on current monthly revenue.
If your revenue for August was $50,000, you can easily multiply by 12 to project your run rate as $600,000.
Although it’s an easy way to forecast annual revenue, this metric is quite simplistic — it includes one-time payments and doesn’t objectively account for churn or growth.
Annual Recurring Revenue
Annual recurring revenue is a critical metric that shows how much recurring revenue you can generate, based on subscriptions every year.
It doesn’t matter if you sell your software product (service) to different customers with varying pricing tiers, terms, and contract lengths.
Annual recurring revenue can be used to show an accurate value of overall recurring subscriptions for a one-year period.
It’s a stable metric that doesn’t include one-time payments and measures a company’s continued success and growth.
Annual Contract Value
Annual contract value shows the worth of an average customer contract in one year.
It measures the value of a customer by normalizing recurring revenue and one-time payments to a yearly figure.
However, some companies may not include one-time fees into their annual contract value.
When you compare your annual contract value to other metrics, you gain valuable insights and measure performance in other key areas.
For example, if annual contract value increases with lesser customer acquisition costs, net-revenue churn would be greatly improved.
Customer Acquisition Cost
Customer acquisition cost is the total sales and marketing cost needed to acquire a new customer.
It goes beyond advertising costs and includes the salary of salespeople and marketers, etc.
It’s a defining metric that measures the profitability of your business by showing the difference between what a customer pays for your service and what is spent to attract that new customer.
You can determine your customer acquisition cost by dividing acquisition costs for new customers by the number of new customers acquired within a certain period.
To yield profit and become profitable, you must be determined to lower acquisition costs as you scale.
Expansion revenue is the additional revenue (including non-subscription revenue) that can be generated from existing customers.
Expansion revenue is a critical metric for growth because it’s easier and cost-effective to ask for more money from an existing happy customer, than a new customer who barely knows your product.
Improving expansion revenue typically involves up-selling larger plans and/or even cross-selling additional features and functionality.
Logo churn is also known as customer churn, subscription churn, or account churn.
It measures the percentage of customers who cancel or discontinue their subscription during a particular period.
Logo churn provides insight into how satisfied the customers are with your product.
To drive long-term growth, you need to be able to minimize the churn of existing customers and pursue expansion.
Moreover, the cost of retaining an existing customer is almost always lower than acquiring a new one.
Monthly Burn Rate
Burn rate is a measure of negative cash flow.
It’s used to track the monthly amount (cash reserve or balance) that a company spends to finance overhead before generating positive cash flow.
Burn rate is highly important and has a long-term effect because it shows how long a company can survive on its cash runway.
However, If your company’s earnings are more than its spending, burn rate becomes negligible and is zero.
Monthly Recurring Revenue
Monthly recurring revenue is a predictable and consistent metric that measures the average value for a company’s recurring monthly revenue.
It’s critical for growth tracking and forecasting because it accounts for month-to-month differences in revenue.
Revenue churn is a metric that is used to measure the rate at which monthly recurring revenue is lost when customers cancel or don’t renew subscriptions.
Unlike logo churn that only measures the number of churned customers, revenue churn tracks lost recurring revenue across different pricing tiers, terms, or contracts for customers.
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