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Mark Chung. He\\u2019s the CEO and co-founder of Verdigris, a Silicon Valley-based internet of things startup focused on smart buildings. Previously, he was a principal engineer for Net Logic, AMD and PA Semi. He graduated with electrical engineering from Stanford University and lives in Sunnyvale, California. When he\\u2019s not building, he\\u2019s spending time with his family.

Famous Five:

• Favorite Book? \\u2013 How the Mighty Fall
• What CEO do you follow? \\u2013 Mark Zuckerberg
• Favorite online tool? \\u2014 Pivotal
• How many hours of sleep do you get?\\u2014 8
• If you could let your 20-year old self, know one thing, what would it be? \\u2013 Mark wished that he\\u2019d be more growth minded and started earlier

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Time Stamped Show Notes:

• 01:07 \\u2013 Nathan introduces Mark to the show
• 02:04 \\u2013 Verdigris is an artificial intelligence company launched in 2012
• 02:10 \\u2013 Verdigris focuses on developing technology for commercial buildings that are managing their energy
• 02:22 \\u2013 One of Verdigris largest customers is Jabil, a large manufacturing firm
  • 02:28 \\u2013 Verdigris sensors on Jabil\\u2019s electric panels collects data from the whole facility
  • 02:40 \\u2013 Verdigris synthesizes the data into simpler and more understandable reports that facilities\\u2019 managers can review
    • 02:49 \\u2013 Then they can understand if they\\u2019re losing money on electricity or potential equipment fail
  • 03:21 \\u2013 Verdigris is a combination of software and hardware
  • 04:05 \\u2013 Verdigris has a hybrid model
    • 04:11 \\u2013 Verdigris charged on the hardware when it gets installed and a recurring fee for the software
    • 04:21 \\u2013 The hardware is the bigger revenue stream
    • 04:47 \\u2013 For a 2-bedroom house, it will cost $1K to install Verdigris
  • 05:23 \\u2013 Each clamp is $50 a piece
  • 05:54 \\u2013 Verdigris has raised a total of $16M
  • 06:05 \\u2013 The first round of funding was in 2012 and Verdigris was launched at the end of 2011
  • 07:11 \\u2013 Because Verdigris has a hardware component that enables the SaaS, it becomes a sticky product
    • 07:29 \\u2013 Churn rate is lower than typical SaaS companies and retention rate is higher
  • 07:46 \\u2013 From a cost standpoint, hardware cost doesn\\u2019t take all of equity capital
  • 07:53 \\u2013 You can also finance the hardware
  • 08:34 \\u2013 Verdigris measures the total amount of electricity measured
    • 08:54 \\u2013 Currently, they\\u2019ve measured a few megawatts\\u2014enough to power a small neighborhood
  • 10:00 \\u2013 For the SaaS side, monthly subscription fee is $50 or $80 per box depending on the level of service
  • 10:40 \\u2013 Verdigris gets their sales directly and holds their data infrastructure
  • 10:47 \\u2013 Verdigris uses Verizon as their back end for all data communication
  • 11:30 \\u2013 Verdigris is focusing on the commercial space first
  • 12:10 \\u2013 Customers pay per month is between $50-80 on data plans
    • 12:28 - $1k a month is near average of what customers pay
  • 12:44 \\u2013 80% of Verdigris\\u2019s customers are paying customers
  • 12:56 \\u2013 Average MRR is around $260K
  • 13:19 \\u2013 Gross customer churn is zero
  • 14:40 \\u2013 Verdigris looks for customers who spend around $10K a month in electricity
  • 14:56 \\u2013 Team size is 30
    • 15:05 \\u2013 90% is engineering
    • 15:15 \\u2013 There are 3 founders
    • 15:23 \\u2013 The founders are all engineers, one being more business minded than the other two
  • 16:02 \\u2013 CAC
    • 16:07 \\u2013 Verdigris doesn\\u2019t do a lot of paid marketing
    • 16:43 \\u2013 Verdigris has spent around $10K in 3 months for ads
  • 16:49 \\u2013 Most people learn about Verdigris through Verizon
    • 17:00 \\u2013 Verizon\\u2019s sales people in the field talk to their Fortune 500 customers selling different IT solutions
    • 17:19 \\u2013 When the customer matches Verdigris\\u2019 customer profile, the sales team tell them about Verdigris
    • 17:50 \\u2013 Verizon found Verdigris
  • 18:26 \\u2013 2017 revenue goal is over $5M which is 4x from last year\\u2019s
  • 20:50 \\u2013 The Famous Five

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3 Key Points:

1. With so many SaaS products available, having a SaaS product that uses proprietary hardware creates a sticky, hard to replace product.
2. Your target market should be curated with your pricing plans.
3. Building a partnership with an already established company is beneficial, especially if you\\u2019re a new one.

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Resources Mentioned:

• The Top Inbox \\u2013 The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
• GetLatka - Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
• Klipfolio \\u2013 Track your business performance across all departments for FREE
• Hotjar \\u2013 Nathan uses Hotjar to track what you\\u2019re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
• Acuity Scheduling \\u2013 Nathan uses Acuity to schedule his podcast interviews and appointments
• Host Gator\\u2013 The site Nathan uses to buy his domain names and hosting for the cheapest price possible
• Audible\\u2013 Nathan uses Audible when he\\u2019s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books

Show Notes provided by Mallard Creatives