Adlato Software

Adlato Software was originally founded in 2014, but the company reached an inflection point where the founder's experience couldn't scale the vision further. In mid-2016, a family office investor brought in Mark Murphy, a veteran with over 20 years in technology, to rebuild the platform. Murphy saw the power of the core technology and the massive opportunity in the manufacturing space, particularly as the industry moved toward Industry 4.0 transformation.

Murphy spent his first year rebuilding the platform for scale, moving away from the original early version. "I always feel like we're about a two-year-old company," he explained. "We spent about the first year I was here rebuilding the platform for scale." The key differentiator was leveraging the Unity gaming platform to create rich, visual user experiences and augmented reality capabilities—something virtually no competitor in the manufacturing sales space was doing. This allowed them to transform how companies like Caterpillar sold massive, complex products like bulldozers. Instead of physical catalogs and showrooms, buyers could now visualize products in stunning detail on a visual platform.

The original 2014 launch had left behind some legacy customers at low price points (around $24k ACV), but Murphy's relaunched product in early 2017 targeted much higher ACVs. The company benefited enormously from market timing—the Industry 4.0 movement was creating genuine demand for digital transformation in manufacturing. Rather than expensive outbound sales, Adlato was taking inbound calls: "Right now we're really just inside sales and taking inbound calls for our technology." The sales model was elegant: manufacturers (OEMs) like Caterpillar paid for licenses, then pushed them down to their dealer networks. This created a natural network effect. Murphy described it: "They'll pay for their sales people that it's our tools in the hand of their sales people... they'll pay for the license or push it down to their dealers and their distribution network."

Adlato's unit economics were exceptionally healthy. New customers paid $250k-$500k in first-year ACV, with setup fees running one-to-one with the software cost (roughly $250k in implementation for a $250k software deal). Customer acquisition cost hovered around $90-100k, meaning payback happened almost instantly thanks to setup fees. However, Murphy made a bold decision: "good churn." Rather than servicing legacy customers paying $24k ACV—accounts that consumed disproportionate support time—Adlato actively churned them in favor of higher-fit, higher-revenue accounts. Logo churn reached about 2% monthly, but revenue churn stayed under 1% because the churned customers had such low ARPUs. This was controversial but strategically sound: "We're not spending a lot of customer service time on low revenue customers."

In just one year—from October 2017 to October 2018—Adlato had grown from $1.7M ARR to $5M ARR, growing from $150k/month to $400k/month. With 250 customers and about 1,500-1,600 total seats, the company had raised $12M in non-institutional (family office) capital and employed 45 people, all based in South Carolina. Murphy believed the company could maintain that same percentage growth rate into 2019-2020, driven by category leadership in manufacturing sales enablement. He was exploring a Series A raise in Q1 or Q2 2019, and was open to venture debt to preserve equity. The stickiness came from deep integration: "When a customer commits to moving their product catalog into our visual platform, we are literally selling their bottom line through our platform." Murphy projected opportunities to expand seats deeper into customers' dealer networks as they saw success.