Building a Pre-IPO SaaS Company: Chris Cabrera, CEO of Xactly (Part 6)

Sramana: What are some of the key strategic points today? What needs to be done for you to scale to a $500 million  company?

Chris Cabrera: We need continued solid execution with growth rates exceeding 30%. We are the only pure-play SaaS comp player as well as the experts in comp. We have terabytes of data from our customers, and when we anonymize and aggregate that data, we can find trends and correlations of data which help our customers understand how to incentivize correctly. That is exciting and is the future opportunity for Xactly.

Sramana: When you are doing comps, are you calculating the comps as well?

Chris Cabrera: Yes. We calculate the payments for $6 billion of compensations per year. We know what was sold, when it was sold, what the discounts were, and what the product mixes were. We know the plans that drove the performance as well. It is a true big data opportunity. We have been mining the data for a couple of years now. There are incredible correlations we can provide to our customers. Xactly gives our customers competitive advantages. We make some of that data available to them. The goal is to productize that data, even in a self-help manner, so that they can see what the best practices are in their industries. That data does not exist anywhere else in the world.

Sramana: There are companies like Salary.com and Payscale that provide salary benchmarking data. How do they draw their conclusions?

Chris Cabrera: Those are great companies, and we like those guys a lot. They collect data through surveys and self-reported data. That is an excellent offering. We are not trying to say our data is better; we say that you should use both their data and our data. Self-reported data has value. We also have empirical data based on actual payouts. Together that gives you the full picture.

Sramana: How are you going to price that offering?

Chris Cabrera: We have not finalized that yet. There seems to be incredible demand when we talk to customers. The beautiful thing about SaaS is that we are not trying to make our money back on a single customer.

Sramana: Compensation products that calculate the compensation is a per-seat pricing, whereas only management will look as this data, so that means you have a smaller TAM.

Chris Cabrera: If a company is paying a hundred thousand dollars a year to manage all of the comp, what is it worth to have all of this data and do it right? It is not a $100,000 solution, but it is more than a $5,000 solution. It will pick up margin, but it really provides value in this space. We will give customers insights they cannot buy anywhere else. The TAM argument is true.

Think about the TAM that we have. It is any commission sales team in the world. Our teams are generally 30% of the population. What is happening in the market is that the comp space is changing. People use it outside of sales. We see reports that say that 84% of companies use variable comp in non-quota positions. It is applied to the rank and file employees as well.

This segment is part 6 in the series : Building a Pre-IPO SaaS Company: Chris Cabrera, CEO of Xactly
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