Sam Jacobs 0:00
You know, we've moved from a period of low interest rates or no interest rates to high interest rates. And what that definitionally means is that the value of $1 today, relative to $1.10 years from now is is much more right a couple years ago, if there's 0% interest rates $1 in 10 years is worth the same, which means that you don't have to worry about profitability, all you have to say is one day we will be profitable and those profits are worth the same as your lack of profits today.
But but that's not the world that we live in the world that we live in right now is focused on building sustainable long term businesses because the cost of money is now no longer free.
Joe Troyer 0:52
everybody, it's Joe Troyer, and welcome to another episode of show me the nuggets. Today we have on Sam Jacobs, who has bootstrapped a business to over $10 million in ARR. Sam is the founder and CEO of pavilion, which is really a community powered learning platform. And I'm really excited to dig in with Sam and learn more about billion, as well as what he's been able to do to really bootstrap his business to over 10 million in ARR. And now getting into what I know a lot of you guys are interested in is potentially one day, you know, taking in some seed money or around for venture capital. So we're gonna get into that as well. So without further ado, Sam, welcome to the show.
Sam Jacobs 1:35
Thanks for having me. I'm excited to be here.
Joe Troyer 1:37
Yeah, super excited to have you. So real quick, I guess high level can you share with us like what is pavilion? And who do you guys serve?
Sam Jacobs 1:46
Yeah, we serve. So pavilion, you mentioned we call it a community powered learning platform, but what we really are is the largest global community for b2b revenue leaders in the world. So we are fundamentally a community of about 10,000. Folks, we focus on b2b Software as a Service, you know, recurring revenue leader
Sam Jacobs 2:07
leaders in the revenue function and in the go to market functions. So our members, our heads of sales has a marketing Head of Customer Success. And CEOs that run these companies. And they pay us a membership fee to be a member. And and then what we try to do is build products and services for them that help them get where they want to go in their career. And so some part of that is training and learning. Some part of that is peer groups just being around and meeting regularly with other people doing the same job. And some part of it is in person events, summits and conferences that we host so that people can sharpen their, you know, iron sharpens iron, so that they can get better at their skills and knowledge and also build their networks and relationships.
Joe Troyer 2:46
That's really awesome. So how do you guys make money? Is there an expansion model in there? Is it flat rate, right for the for the company to come in? And, you know, kind of what you see is what you get or help me understand, you know, kind of how you guys how your revenue model works?
Sam Jacobs 2:59
Yeah, sure, it's, it's pretty straightforward. We charge individual humans monthly or annual membership, to join the executive community. And then there's expansion model, where if you want to bring on members of your team, you can upgrade to a corporate membership. And then you can add, you know, up to as many well really as many people as you want, and what you do when you add them as they get access to some of the resources you're consuming.
Sam Jacobs 3:22
So if you take CRO school Chief Revenue Officer school through pavilion university, you can provision the recordings on behalf of your team, and they can watch them and learn with you as you grow and develop. So it's for leaders that also want to bring on the up and coming executives and rising stars from their teams and give them the same kind of professional development that we're giving them.
Joe Troyer 3:42
Perfect. And when you look at your member base, like who are they what size businesses are they what type of SAS is are they you know, is it for everybody Are you guys really, you know, homed in on one kind of demographic,
Sam Jacobs 3:54
we're pretty focused on venture capital backed b2b software as a service companies from post revenue, meaning, you know, very, very small seed stage to Series C, or D. So, kind of zero to 100 million in revenue. And if we had to be even more specific, up to 50 million in revenue, so early stage companies, where the leaders are new to their roles, where there isn't a playbook that they can readily access, where their boss, meaning the founder or CEO doesn't know how to do their job either.
Sam Jacobs 4:20
And where they need community and support so that they can make sure they don't get fired, so they can help their companies grow. And so they can navigate their careers more effectively. So that's kind of the ideal customer profile. The ICP, as we say is set heads of sales has the marketing has the customer success and founders and CEOs of companies from C to C, Series C, backed by venture capital.
Joe Troyer 4:41
Cool, man. Awesome. Really interesting. excited to dive in there. I guess before we do. Let's take a quick step back, though, and talk to me a little bit about your background. Right. What What were you up to before Pavillion how'd you get involved in this b2b SaaS sales based landscape?
Sam Jacobs 4:57
Well, I you know, I was a You know, I was a customer before I was a founder. So my background is I've been building and running sales organizations with revenue organizations here in New York City for the last 20 years. And a couple of things happened, particularly from 2010 to 2018. And that was that my stint as I became more senior, my tenure kept getting shorter and shorter, while the job itself became more and more complicated.
Sam Jacobs 5:23
And so I started pavilion, as a way of bringing together my friends so that we could network with each other. So we could find new jobs, because we're all getting fired all the time. So that we could get the skills and information and knowledge we needed to be good at our jobs, and so that we could just have a support group. So we started coming together in 2014, we didn't even give it a name, and then I started working on it full time in 2018.
Sam Jacobs 5:43
And things have gone, you know, I've taken off since then we, we did bootstrap the business to about 10 million, before taking on a round of funding a year and a half ago, from Elephant ventures. And that was a $25 million equity investment. And then since then, you know, we've just been trying to grow and serve our members and serve our customers, particularly now. B
Sam Jacobs 6:01
ecause you know, we're in the middle, we're heading into a recession, Salesforce just laid off 10% of the workforce, there's a lot of leaders out there that need help and support and you know, we exist to to provide that for them. That's awesome, man. How do you how do you validate the idea, right, like firsthand, like, you are your own best customer, almost so to speak. Right?
Sam Jacobs 6:19
But how do you make sure, you know, in that period, when you guys were first getting started and formalizing things, you know, what, what did that process look like? Well, it was, you know, I had the benefit of not needing it to be a company because I had other jobs who, you know, had a day job. So this was a side hustle for a long time. And that meant that I didn't need to, I didn't need it to be anything on any timeline.
Sam Jacobs 6:41
So the first thing that happened was I just started emailing people saying, Let's get together for dinner, we had an email distribution, where everybody's in the To line. And then in 2016, I put it all into a Google group so that you couldn't see who the other people were in the two line, I could send one email, then we started sharing emails back and forth and sharing information. 2017. I said, Hey, everybody, I think I'd like to charge for this, are you willing to pay? Everybody said yes, except for two people that later joined January 120 18, started charging 50 bucks a month, 600 bucks a year.
Sam Jacobs 7:10
And we're sort of off to the I mean, again, it wasn't very much money, because it was a side hustle all of 2018, it was just side revenue. And then I really started focusing on it four years ago, you know, in December of 2018, so four plus years ago. So I validated you know, the main thing that helped me validate that the idea was just taking a long time. I've been working on this for three years. And it's not the kind of thing where like, I needed to be anything by any certain time. And that made it really, really organic. And you know, the key critical moment was when it was this free dinner club, basically.
Sam Jacobs 7:40
And I said, Would you all pay? And most people said, Yes. And then from there, we kind of, you know, we tested pricing, we started building products and services and went from there.
Joe Troyer 7:50
That's awesome. So you really built the community first, right? figured out what they needed, what they wanted, how to help them. Right, and it just kept evolving over time. That's great.
Joe Troyer 7:59
You talked a lot. Not a lot. But you've mentioned a couple of times already. The team right at pavilion, can you tell me a little bit about the team when you guys got started? And maybe what the team looks like today?
Sam Jacobs 8:10
Yeah, sure. I mean, the team has, you know, has about 60 people today, it was just me and one other person who's now our head of people, and you seem when we first got going, and she was our head of operations, and it was just the two of us. And again, we were self funded. So I was hiring people as long as it could be profitable, and, and make sense.
Sam Jacobs 8:28
And we could pay for it from a cash flow perspective. And then, you know, and then once we raise money, we started adding more people and, and now we're about 6065. Folks. And, and that's me, you know, we've got all of the traditional kind of go to market functions that a traditional kind of SAS slash recurring revenue business would have, we've got a sales team, we've got a marketing team, we've got a finance team, all of those things, but you know, it looks like a regular company.
Joe Troyer 8:51
Gotcha. Makes perfect sense. And what were like the one or two major levers that you guys pulled from marketing to get you guys from zero, or just off the ground, right to that 10 million a year, revenue point,
Sam Jacobs 9:02
you know, there's all of it was word of mouth, we didn't really do a lot of aggressive marketing. And as a consequence of that. The big insight was that I had everybody put the fact that they were members of pavilion on their LinkedIn profile. And and that was basically word of mouth and kind of FOMO marketing. And so all of these other people would say, what is that?
Sam Jacobs 9:23
I want to join that and all of these people would become interested in pretty soon. You know, everybody was putting it on their LinkedIn profile, because it was a badge of credential realisation. It was a badge of honor. And, and that was really like one of the big growth drivers. Gotcha.
Joe Troyer 9:37
That's awesome. Are the are the dinners and the events and the conferences? Is that still a critical part of the strategy today?
Sam Jacobs 9:44
Yeah, yeah, very much. So you know, the three big pillars of of like the products right, that we sell, we sell three products. We sell learning through pavilion University, which is online, online training and learning that we've developed. We sell in person events, and we sell community unity as a product, basically, a group of people, we call them core groups, there are 100 to 125 people, they meet once a month, they become friends, they develop deeper relationships.
Sam Jacobs 10:09
And those are like the three core ideas that you sign up for when you become a member of Brazilian.
Joe Troyer 10:15
That's awesome. Yeah, I could see how that would work, and how you could really get to understand your customer, and how long term you know, those, those groups can be really, really valuable for you. Yeah, that's really cool.
Sam Jacobs 10:26
And again, the world is changing so rapidly, and it's so volatile, and we as an organization, we only exist on behalf of our members. That's why it's nice that we're not free, right? Our members pay us money, we deliver products and services to them. And some people don't like paying for community, they want it for free. But the benefit when you pay for it, is that you become the customer and we work for you.
Joe Troyer 10:46
Yep, 100%. I mean, it also makes that there's a bar, there's a floor, at least have some type of person that's in the community, they're willing to pay, they're willing to invest. You know, that that stops a lot of people from getting on the program that probably wouldn't add any value in the first place or wouldn't take it very seriously. So I like that it's paid personally.
Sam Jacobs 11:06
Yeah, I mean, I, I think it's better that way to sort of international events, once a month of this person in person. Or you guys do an all virtual how COVID effect events. Yeah, we went from we went from, from doing only doing in person events to being at dinner club all the way to doing 60 to 70 virtual webinars a week.
Sam Jacobs 11:27
Now we're back to in person. So while we're doing about 100, salon style dinners over the course of 2023, we're doing for big summits and conferences, including a CEO Summit in Miami. A week from today, actually, which is where I'll be next week. So yeah, it's a mixture of in person now that COVID has receded COVID Obviously, still a big part of all of our lives. But, you know, we as an organization have decided that we are post COVID. So that's sort of our approach. I like that. I like how you put that.Yeah, it's not gonna determine everything that we do, might determine everything other people do, but enough for us.
Joe Troyer 12:04
Yeah, I'm really curious to get your take, you know, talking post COVID. And today's economic climate, you know, how are you guys advising your CEOs, your your go to market teams, your marketing teams? What are you advising them to do? How are you advising them to think, you know, what's kind of the top of mind for you guys right now, as as you really coach?
Sam Jacobs 12:27
These the SATs, people, top of mind is is is profitability, you know, no, no big surprise, right. The end, there's a bunch of different reasons for that. One of them specifically is that, you know, we've moved from a period of low interest rates, or no interest rates to high interest rates. And what that definitely means is that the value of $1 today, relative to $1.10 years from now is much more right a couple years ago, if there's 0%, interest rates $1 in 10 years is worth the same, which means that you don't have to worry about profitability, all you have to say is one day, we will be profitable.
Sam Jacobs 13:01
And those profits are worth the same as your lack of profits today. But but that's not the world that we live in the world that we live in right now is focused on on building sustainable long term businesses, because the cost of money is now no longer free. And so we are advising our members.
Sam Jacobs 13:16
And I'm inviting myself to focus on efficiency to focus on profitability and to focus on the the, the basically making sure that you know that your sales team on your marketing efforts really do pay for themselves, because there's a lot of companies out there that have been focused on growth at any cost.
Sam Jacobs 13:36
And what that means is they they sold a product before and before they had, you know, a long a sufficient size of renewal data, meaning they sold the product, you can anybody can sell anything, it's whether the customer keeps buying it. And before they had that renewal data in hand, they said, We're going to scale up a big sales team, and those companies are going to be in trouble on the marginal basis, because maybe those deals don't renew the way that they thought they would. And now the sales team isn't quite paying for itself in the way that they thought it might.
Sam Jacobs 14:04
So we're focused on helping people be profitable and efficient in this environment, if the things you know, things change radically, I don't think they're going to, but if they change radically, then you know, our advice will shift accordingly. But yeah, I hate the growth at any cost mindset.
Sam Jacobs 14:18
Unfortunately, I see it way too often dealing with companies helping lots of coaches, consultants, marketers, you know, where they're, they're advised to grow at any cost right on behalf of their client until they're not right, and they don't have the money to back it up. And you know, they haven't figured out their numbers.
Sam Jacobs 14:32
And they they assume that they know what their customer acquisition costs could be they pick a number out of the sky, and then oh, no, you know, customers aren't actually sticking around and the business is either closed or you know, going for another round of funding just to keep marketing, running. You know, it's really refreshing to hear that.You know, it's easy to say hard to do.
Joe Troyer 14:53
Yeah. 100%
Joe Troyer 14:56
Thanks for tuning in and show me the nuggets. If you've been enjoying
Joe Troyer 15:00
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