The following interview is a conversation we had with Ethan Ruby, CEO and Co-Founder of SaaSGrid, on our podcast Category Visionaries. You can view the full episode here: $3M Raised to Become the Standard For SaaS Metrics
Ethan Ruby
Yeah, absolutely. Really excited to be here, Brett.
Brett
No problem at all. I’m super excited to have you as well. So I’d love to kick off with learning about your experience at zenefits. Obviously, I’ve read a lot of the media headlines at the time. I heard it was a crazy place, but take us back to 2014 and tell us about your experience at Zenefits.
Ethan Ruby
Yeah, absolutely. Zenefits definitely was a crazy time. So Zenefits was my first job out of college. I did not know what I wanted to do with my career. Wasn’t necessarily looking to join a startup, but ended up with a job offer. So I came out to San Francisco to start. This was right after Zenefits had they, I think when I signed they were a series A company and they raised their series B right before I joined. So I was about the hundredth employee and yeah, it was a wild ride. I think Zenefits was a really awesome business, still is a really awesome product. Its owned by Trinet now, but we grew extremely fast.
Ethan Ruby
So I was about the hundredth employee and in the first year we scaled to something like 1500 employees, brought on tens of thousands of very small businesses onto our HR platform, which really started as a small business insurance platform. And so yeah, I started my career on the operations side, trying to figure out how were going to provide health insurance to these thousands of small businesses that entrusted zenefits with that. And so it was a huge learning experience. You know, I learned how to grow and manage a team extra very early on in my career. I learned a lot about how to build products and how to build teams to service customers. I learned a few things about how to not build products and teams to service customers well.
Ethan Ruby
But yeah, there was certainly a lot of news about the time, about what a wild rider was, which is absolutely true. But overall it was a really amazing startup in a lot of ways, and it was an amazing learning opportunity for me earlier in my career.
Brett
Looks like in 2018, then you switched over and went to adventure side and went over to craft ventures. What has it been like working at craft before you spun out task grade?
Ethan Ruby
Yeah. So another unintended career move that was maybe a theme, at least early on in my career. When I left centerfits, I was looking to join another startup. I loved being at an early stage startup. I wanted to do that again, but I ended up just through a series of connections, Craft Ventures, which at that time was a brand new VC firm focused on SaaS leading season series A rounds for SaaS companies. And so before leaving to work on Saskrit full time, I spent six years basically building out our investment process at SAS at Kraft, meeting with and researching thousands of seed with Series A SaaS companies. And sure, we’ll talk about this a little more, but that was, frankly a lot of the origin of where Saska came from.
Ethan Ruby
My main job at Kraft was to build a process for doing financial diligence on the SaaS company that Kraft was evaluating. And so I got a couple thousand reps, literally over the six years of craft about digging into early stage SaaS companies, looking through their financials, their uses, metrics, all these things, and trying to understand which were on the verge of breaking out. So that’s definitely formative, both in my own growth, but also in how I kind of formulated the idea for Saskatchewan.
Brett
I think everyone listening to this podcast also listens to all in. So they’re all very familiar with Sachs. I don’t know if I have this right, but I think from my understanding, he incubates some companies or craft incubates some companies and then sends them out. Is that what SAS grid was as well? Did it start at Kraft Ventures and he spun it out, or what’s like that origin story and kind of the background there?
Ethan Ruby
Yeah, good question. Happy to talk about that in a little more detail. So, in short, like I mentioned, my job at craft was to help run diligence for mostly series ASaS investments. And obviously, David, Founder and GP at Kraft, was a very close collaborator with me as we looked through those numbers and helped make investment decisions. And so while Kraft has intentionally incubated a few companies, SAS was actually an unintentional incubation. Basically, I had this giant Google sheets template that I was using to due diligence on SaaS companies, and it was basically our internal tool, and we ended up sharing that Google sheet with some of our founders after we invested, and they’re like, oh, this is helpful. This is basically a helpful spreadsheet template. So you’re like, okay, cool.
Ethan Ruby
Well, what if instead of being a spreadsheet template, we hired a few contract developers and turned this into a really simple product? And I’m talking incredibly simple, that you literally, you just upload, you upload an Excel spreadsheet and we pop out a few charts for you. So we did that. And again, it was still basically, it was mostly valuable. It was mostly an internal tool. We had no intention of spending it out, but it ended up proving popular. It was, the craft investment team used it for every deal, and many of our founders did as well. And so at that point, when people started using that really basic MVP regularly, that’s when David and I kind of put our heads together and be like, I bet if we incubated this and actually turned this into a data platform, this could be a real company.
Ethan Ruby
And so about, I would say 18 months ago or so, we set off in that direction. And I’ve been working on basically turning it into a full fledged company ever since.
Brett
What was that transition like for you as you moved from the venture side to being a Founder? What did you learn from that experience and that transition?
Ethan Ruby
That being a Founder is really hard. I think that, again, I talked a little bit about my early career growth. I’ve been at an early stage company. I had experienced the startup life. I then became a VC where I spent literally all day, every day talking to founders. So I would say that I felt at least that I understood startups and being a Founder pretty well, at least as well as you could without actually having done it. But I still got surprised by just the day to day how many things are on a founders plate that they have to take care of. You know, I’m not an engineer, so that means I’m doing literally everything else. I do marketing, I do sales, I do onboarding, I do customer success, I do product, I do hr, I do finance. I have so much more respect.
Ethan Ruby
I did for all the thousands of things that founders have to do and have to make happen in order to be successful. It still surprises me every day. There’s probably a lot of things that I haven’t even encountered yet that I’m going to have to take care of.
Brett
So what’s a typical day look like for you right now?
Ethan Ruby
Right now it’s really all about sales. And so we’ve been lucky. There’s been great organic demand for SAS grid. And so we have a lot of companies coming to us and looking for help, basically saying like, hey, my company’s starting to take off. I have all this data spread across HubSpot, stripe, salesforce, QuickBooks, whatever platform they use. And I need metrics to both pitch investors, but more importantly, to make good decisions about my business. And I’m overwhelmed by this data, don’t know how to solve that. And so we have a lot of those companies coming to us, and I spend most of my day right now talking to those other founders or to those early finance employees about their problems they have and getting them set up on Sanskrit.
Ethan Ruby
So it’s been really rewarding to get to spend this much time with customers and to frankly validate a lot of the reason why we built Sanskrit. People are having the exact pain that we hypothesized that they did, and we’ve been able to solve it, at least for a good subset of early customers. So yeah, that’s been extremely exciting, but that’s been most of my day to day so far. We’re just now bringing on our first full time account executive, and so that’s going to be really exciting as I transition out of being the only frontline salesperson. But honestly, it’s been a really rewarding period for me to really get in deep with our customers.
Brett
Are you worried at all about leaving behind Founder led sales and transitioning that over to someone else?
Ethan Ruby
Absolutely, yeah. I think this is something where having been an investor is a very top of mind. Cause frankly, when I, you know, working with founders as a VC, this is the thing we talked about all the time, like, hey, is hard moving from Founder led sales to running a sales team? So it’s definitely stressful. Cause as a VC is something that we thought about all the time and talk with founders about the time. It’s really hard moving to Founder led sales. But I think our first account executive, he’s a guy I’ve worked with before, I think he’s gonna be amazing. And the good news is I have only been selling SAS grid as a paid product for about four months. But because we spell the startups, we have relatively low acvs and high velocity.
Ethan Ruby
And so we have dozens of paying customers on the platform. And I do feel like I’ve got enough reps that I’ve got to develop a decent system and understanding of what our sales process looks like. And it’s at least half baked enough to start to turn it over to someone with some real sales skills to get going there when it comes to.
Brett
Your market category, how are you thinking about it? Is it a SaaS data platform, SAS metrics platform or something that I didn’t mention there?
Ethan Ruby
Yeah, it’s a combination of those things. So I say very simply, we are a vertical bi tool for SaaS companies. And so in that sense, obviously plenty of bi tools exist, but frankly, not a lot of vertical BI tools exist. And what I mean by that is if you are building out analytics layer from scratch, you typically have to take your systems like Salesforce, stripe, any of these systems you use, you have to put that data in data warehouse, you then have to clean it, you then have to put it into bi tool, you then have to write formulas for your metrics in order to get metrics out. Because we are verticalized, because we focus on SaaS companies, we can do all those pieces for our customers.
Ethan Ruby
So when a handful of clicks you can go from here are my salesforce credentials to here is my ARR and here is my net dollar retention and here is my burn multiple and all these other important SaaS metrics. So we are all the above, but we really are first and foremost the analytics layer for SaaS companies.
Brett
What are the SaaS metrics that matter? I was reading a blog post that you’d written a couple of years ago and I thought it was super valuable, so I’d love to talk through that. What are the ones that matter?
Ethan Ruby
Absolutely. Well, there’s a lot of metrics that matter, as you can tell from that blog post. It certainly goes on and on. But the way that I think about it is I grew metrics into three areas and they really play off one another to create a holistic business. But the first one is growth. Simply put, we all know that startups need to grow fast. When you’re starting from zero, you have to go pretty fast to get the scale. Investors want you to grow fast, you want to grow fast to validate the market, to get ahead of competitors. So your ARR and how fast you’re growing is obviously a major component of that. The second is your retention. Basically, do your customers stick around?
Ethan Ruby
What you want to avoid is the classic, what’s called a leaky bucket situation where sell customers and your growth is great, but ultimately your customers don’t stick around very long. And so basically you get to the point where you scale a little bit and maybe you’re selling a couple hundred thousand dollars a month of new business, but a few hundred thousand dollars a month of existing business is disappearing and you’re not really growing and so a lot of SAS grid is focused around different ways of tracking retention. There are several different methodologies and we have some content on our website, saskrit.com, that goes into them in detail.
Ethan Ruby
But really a huge part of what we do is, number one, breakdown all the different methodologies within SAS grid and then provide the content and support to help you figure out which ones are most applicable for your business and your business model and are going to help you best understand your customer behavior. And if you’re set up well to grow. And then the third big metrics area is around unit economics. And this is really simply how efficiently do you grow and retain your customers? How much money do you have to put in to your machine?
Brett
Right?
Ethan Ruby
SaaS businesses really are a machine. Hypothetically, you put money in to your engineering team, you put money into your sales team, you get money out and sticks around for a long time. Some SaaS companies machines work better than others. So efficiency is all about understanding. Hey, when we put dollars into the machine, when we hire an engineer, when we hire a salesperson, when we do a marketing campaign, what do we get out of it? And ultimately is what we get out of it in terms of growth, in terms of retention, what we need to create a sustainable business. And so there are Saskra tracks, well over 100 metrics now that look at these questions from a lot of different angles.
Ethan Ruby
But really they do boil down to those three areas which are, and if you really understand those three areas, you can understand if you have a healthy business or not.
Brett
This show is brought to you by Front Lines Media podcast production studio that helps B2B founders launch, manage and grow their own podcast. Now, if you’re a Founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do.
Ethan Ruby
You show up and host and we.
Brett
Handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io Slash podcast. Now back today’s episode. How would you describe your marketing philosophy?
Ethan Ruby
Right now? Mostly non existent. We’ve had a big benefit, obviously. David is a big voice at Silicon Valley and a prolific writer on saSs. And our kind of unfair advantage as a company is having him as a Co-Founder, because David is really obviously passionate about SAS, extremely knowledgeable about SAS and loves metrics. And so he loves to talk about Sanskrit. You’ve probably heard it on the all in pod or some other talks he’s done on other podcasts or at Saster. And frankly right now, just by him talking about Sanskrit and why companies need to get smart and disciplined around the metrics. We’ve had a ton of leads and a ton of companies interested in using in safegrid. So it’s made it nice on me. I haven’t had to do a lot of marketing so far.
Brett
When do you think that marketing need is going to kick in? Is that like six months from now or twelve months? Or is that still years away until that becomes like urgent priority for you?
Ethan Ruby
Yeah, it may be a year to gets urgent, but I’m hoping to kind of in the next six months start to think about it. Right. The thing that I’ve proven right now is, okay, right now with me as the only sales rep, I can stay plenty busy. So we’re going to hire a sales rep and I know that he will be plenty busy. So the next question, if we want to continue to grow is okay, how do we add the next two to three sales reps and keep them busy? So at that point, when we hire that cohort and start thinking about that, I will definitely have to shift a lot of my attention to marketing and thinking about how do we reach even a broader audience with our message.
Ethan Ruby
And I think very importantly for us, one thing that has surprised me about task grid is that we obviously started doing would be a compelling platform for early stage startups. But we are also a very compelling platform for later stage startups, for relatively large growth stage. It turns out I’m drowning in data and don’t know what to do with it. Problem doesn’t magically go away as you scale. And so hopefully in the next six months I can start to spend more time doing content and messaging to these larger companies about why they also need a platform like Sanskrit.
Brett
Is that hard trying to balance speaking to both of those very different groups, even though they’re both in SaaS, it seems like something that would resonate with a startup is you’re not going to necessarily resonate with someone from a big organization or a big enterprise. So how are you thinking about that split?
Ethan Ruby
Absolutely. We have two very different Personas. I mean, when I’m talking to seed to sometimes series a companies, I’m normally interfacing with another Founder who knows their business intimately, has a pulse on the kind of investor asks and the fundraising needs of the company, but ultimately isn’t always the most knowledgeable on the SaaS metric side, when I sell to more enterprise customers, I’m interacting mostly with this operations and finance teams, and they obviously have very different needs. They care a lot about process, they care about auditability. They understand these metrics really well, but they’re really focused on how they present them better, how they interpret them better, and how they collaborate across the company better kind of around these numbers. So it is a different set of needs, and I have to put on a different hat.
Ethan Ruby
If I talk to a Founder, I talk a lot about my experience as the Founder of Sanskrit, managing our own metrics. If I’m talking to the finance or biz ops, I go back to my days at biz ops, ad zenefits and all the things that I had to manage there. So I do have to speak with them differently. And to be honest, we’re not at the organizational maturity point where we’ve had to think about in our sales team or in our processes, how we separate those out. But I imagine that we will over time.
Brett
On the topic of metrics, our audience loves to hear about growth and adoption. Are there any numbers and metrics that you can share that highlight some of the growth they’re seeing today?
Ethan Ruby
Yeah, absolutely. So I could share at a high level. So SAS grids, we didn’t sell our first paying customer till October of 2023. So just about four months ago, we had a decent period before then when were purely a free product. So things have gone pretty well. We’ve signed up a couple of dozen customers. In that time. Our average contract value is just shy of $10,000. And so, yeah, the growth has been pretty good. I’ve been pretty happy with how many customers have been interested in SAS grid and yeah, that they’ve been willing to pay for the product. It’s kind of an amazing feeling the first time you’ve been working on a product as a Founder, typically for well over a year.
Ethan Ruby
By that point where someone says, yeah, I will give you money for this product that you created, that’s some pretty incredible feeling. So that’s where we are right now. We have solid, consistent growth, and now our goal is to scale that.
Brett
We’re depressingly already, what, six weeks into 2024. So I’m sure you’ve already long wrapped up your 2024 planning. If you look ahead at the next eleven months or whatever’s left of 2024, what would you say are your top priorities and what’s keeping you up at night?
Ethan Ruby
Well, I will add, we’re only two weeks into what SAS grid calls the sassier, meaning that many SaaS companies have a January 31 year end. So their AE’s aren’t busy trying to close end of year deals over Christmas. And I’ll add that’s an example of a small feature that our users love about SaaS grid is that so many SaaS companies have a January 31 year end and in SaaS grid in one click you can set all your metrics to user January 31 year end, which isn’t something that’s available in most generic platforms. But to answer your actual question, yeah, I have basically at the point now where I have set my high level goals for this next year and there’s a lot that keeps me up at night.
Ethan Ruby
We basically want to ten x the size that we basically want to ten x rar this year, which is a lofty goal but I think is achievable based on the demand that we’re seeing. So there’s two things that outside of the I’ll leave the product side aside for a minute. You know, there are obviously a lot of product milestones that we have to hit our goals, but on the go to market side its going to take ending the year at least a three person sales team to basically hit our ARR goals. And so that means recruiting and training and ramping at least, which is not something we’ve done successfully as a company yet. So that definitely keeps me up at night.
Ethan Ruby
And then on the other side if thats the growth side, to go back to my metrics that matter, on the retention side, we obviously have to keep our existing customers happy, keep shipping new product for them, onboard them onto those new features, hopefully get them to use more features and expand their contracts, which means building out a customer success function. So in short, we have lofty goals for this year. We have to build a real sales and a real customer success team in order to do that. And that’s what I’m most focused on right now.
Brett
What’s been the most important decision that you’ve made to date?
Ethan Ruby
Probably going back a while. I mentioned that we built the initial version of SAS grid with some contractors when we decided we want to turn and into a real company. I actually brought my brother on as my technical Co-Founder. So my brother Teddy was at the time a software engineer at a firm. They had just gone public and we chatted about a long time and to be honest, I was a little on the fence like, yeah, does it make sense to work with my brother? Is he going to be the right person for this role? Are we going to work well together? But he came on as technical Co-Founder about 18 months ago. And hes been amazing. Hes rerun the whole app.
Ethan Ruby
Hes recruited a great engineering team, set a great engineering culture, and it really has set the trajectory for everything we’ve been able to do at Sanskrit. Obviously, we need to have an amazing product in order to be successful and i’ve been really happy where the product is at today.
Brett
What have you learned about fundraising throughout this journey?
Ethan Ruby
Its easier if you don’t really have to do it. So again, there are benefits of being spun out and incubated at craft led or seed round and did the majority of the investment we’ve run on some other high quality angel investors and small funds to help as well. But to be honest, being able to do it directly with people that ive worked with for a long time and really trust a craft was amazing. It made the process really easy and simple and not something I had to stress about.
Brett
Let’s imagine I come to you and I say, Ethan, I have this idea for a SaaS company based on everything you know about the SaaS market, everything you’ve learned building the company, what would be the number one piece of advice that you’d give me?
Ethan Ruby
Ooh, that’s a really good question. So not the most original, but I really think it’s true. I would say, what is your wedge? How are you going to get your early users excited about using your tool right now? There are so many SaaS apps out there. There are just so many SaaS companies. Many of them are very flexible and powerful and many of them could do so many things. I mean, if you take Salesforce for an example, technically, you can build anything that you want on Salesforce if you put enough time and effort into it. However, when you look at the market, the reason why new, successful SaaS companies are created every day is that business users still have a lot of pain points that could be solved with software but aren’t.
Ethan Ruby
And so if you find a really amazing pain point, if you find a business user that’s being absolutely driven crazy by a problem and you could solve it elegantly and get them to pay even a little bit for it, I think you have the basis of being successful. Everything else around how much they pay and how big the market is and all these other things, everything else is secondary. If you could solve that problem, you’re doing better than most.
Brett
Final question for you. Let’s zoom out three to five years into the future. What’s the big picture vision that you’re building here?
Ethan Ruby
Yeah. So right now, SAS grid is the analytics layer for SaaS companies. I want Saskrit to be the all in one operating hub for SaaS companies. And what that means to me is right now, SAS grid does amazing financial analytics on your customers. I think we can really broaden the analytics that we do. So for example, some easy area, not easy, but some big areas where Sasquit can help in an ad. Analytics is into your sales pipeline and your marketing pipeline, and on the other side into your invoicing and receivables system and into your future FP and a models. And we could also supplement with things like product analytics. Once we have this broader range of data in SAS grid, we can transform not just from analytics layer, but into a workflow layer.
Ethan Ruby
Meaning that instead of just telling you what data lives in Salesforce and what data lives in stripe and what data lives in QuickBooks, we can actually help push data between these systems and make sure that they always stay in sync for you. That’s the big vision for SAS grid long term. Not just to be a platform to consume data, but to actually set up the workflows and make your whole business run automatically.
Brett
One other question that I did want to ask about. So the guys from base camp, I’m sure you’re familiar with them, they put out a lot of content. They just put out a piece a while back, kind of said that SAS was dead. I think that was like the statement they’re trying to make. They’re famous for making these kind of bold statements. What’s your response to that? Is SAS dead assass dying?
Ethan Ruby
I couldn’t disagree more. Everyone said AI is killing SaaS. Well, what is AI but a SaaS product? I mean, OpenAI is a SaaS company. They sell software to consumers and businesses in exchange for subscription revenue. This idea that enterprises that businesses are not going to pay for software is silly. Now the business models are evolving for sure. Pricing is changing. We’re moving from a per se model to a lot of usage based models, legacy applications that can adapt. Some of the new AI technologies are going to be left behind. But ultimately AI and everything going on in the market right now is an accelerant for businesses buying more software. And Sasqurid wants to be the platform that can support both the existing SaaS companies as they make this leap into a new AI world.
Ethan Ruby
And the new companies that are going to emerge that are going to be AI native from day one.
Brett
Amazing.
Ethan Ruby
All right, we are up on time.
Brett
So we’ll have to wrap here. If there’s any founders that are listening in, that want to follow along with your journey. Where should they go?
Ethan Ruby
Absolutely. Come join us@sasgrid.com. Dot we’re pretty easy to find. You can explore our product there. You could read our blog where David and I break down these metrics and talk about how to analyze your business. And you can get started on a completely free version of SAS grid. It’s completely free to get started. You can use a lot of our product for free and start to dig into your metrics and start making better decisions.
Brett
Amazing. I love it. Ethan, thanks so much for taking the time. It’s been a lot of fun.
Ethan Ruby
Yeah, thanks, Brett. This has been awesome. Have a good one.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit Frontlines.io podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening and we’ll catch you on the next episode.
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