R Factor (SocialPort)
Richard Brasser's company, R Factor, was founded in 2000 as a sales and strategy consulting firm. Over time it moved heavily into building software products. In 2009, the team developed the product that became SocialPort, aimed at helping sales teams use social communication to build relationships and generate more sales.
The company was bootstrapped for roughly its first eight years. Early on it built a private enterprise online community product, which it spun out and sold for more than $5 million. The proceeds were reinvested into the company rather than taken out. Brasser said the team saw that large companies with distributed sales teams needed more than the lightweight social tools built for SMBs, and it developed the product with enterprise partners including Microsoft, Oracle, and SAP.
The company raised about $9 million in total, starting with a seed equity round from angel investors and internal funding from co-founders. A later round in 2010 raised $3.25 million. The company was planning a Series A in the seven-to-ten million dollar range.
R Factor chose to go enterprise-first, the opposite of most SaaS companies that start with SMBs. Customers are landed through paid pilots, such as a $40,000 pilot, and then expanded in later phases. Acquisition costs are high on the pilot but fall sharply once accounts expand. The company relies on an inside sales team and an indirect outside sales team and spent nothing on paid marketing in December 2017.
The enterprise focus and land-and-expand model produced large accounts, with eight to ten very large customers making up much of revenue. Monthly gross churn is under 1%. The average starting customer pays about $5,000 per month, but that average is skewed upward by large accounts. The company is also moving downmarket, with channel activations from small accounts paying a few hundred to a few thousand dollars per month.
As of the interview, R Factor had about 18 employees based mainly in Charlotte, North Carolina, with staff in other cities, and about 220 customers. Revenue was described as between $900K and $1.2M per month, and the guest said they were close to $1 million per month. The host described the company as sitting on a rocket ship.
- •Selling to enterprises with large distributed sales forces gave them high contract values that justify high acquisition costs, since pilots expand into much larger seven-figure accounts.
- •Building a product that serves a real gap between heavyweight enterprise needs and lightweight SMB tools created a defensible position with few direct competitors.
- •Their earlier consulting work gave them deep domain knowledge and enterprise relationships, which they turned into co-developed products and early credibility.
- •Integrating directly with CRM systems lets customers measure revenue from social activity, which makes the ROI case easy to defend and keeps churn below 1% monthly.
- •Reinvesting the proceeds from a product sale into the core business let them grow without taking on heavy dilution or debt.
- 1.Pick a segment where buyers have large, distributed teams that existing lightweight tools cannot serve, and design the product for that complexity from the start.
- 2.Land enterprise accounts with a small, paid pilot (for example, around $40,000) that proves measurable results, then expand into larger phases.
- 3.Connect the product to the customer's CRM so you can report exactly how much revenue comes from the activity, making the value easy to justify at renewal.
- 4.Use an inside sales team plus an indirect sales channel rather than paid ads when selling high-value B2B contracts.
- 5.Turn consulting or services work into productized software, and consider spinning off or selling side products to fund the core business.
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