Watch James Isilay of Cognism exclusively on Founderpath. In “Acquisition Master: How we hit $30m Revenue,” explore the practical strategies covered in…
Featuring James Isilay · Published September 1, 2022
James Isilay explains how Cognism used international hiring, a sales team, and an acquisition to add a product-led element to the business. He also discusses managing stakeholder expectations around valuations and transaction timing.
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“actually we're all end of August we're at 37 million AER uh our Revenue growth has really been a mix of probably about 50 uh from marketing and 50 from our outbound sales team and I'll talk more about that um as we as we go through the talk so the next 20 minutes I'm gonna I'm gonna cover a lot of topics uh I'm gonna just cover really key points and and I think some of the key lessons from cognizant's growth Journey um first of all we're going to talk about the growth from zero to 30 million”
“was a disaster and so really our key lesson here is really to build an in-house team and to really keep the talent and train the talent internally and to really pair that Talent with great mentors um from from companies that are scaling above you and that's really you know been The Key to Our Success here this is our organic traffic and this is really driven from our create demand strategies so uh currently we're about 260 K of value”
“competition I mean at the heart of any m a transaction or acquisition is really that narrative that story that you're trying to bind everybody together with and this was the narrative that that I built and I I took and talked to Alan about in the team which really was the common Vision that then helped the transaction go ahead and which was the The Vision that was shared with the board I think it's super important that right at the beginning of the transaction if you're leading that m a transaction that you have a narrative that you have a really well defined narrative about when these two”
“um I mean one of the big lessons going through another m a transaction at the moment is at this stage is really to understand is the founder ready to sell like this is where you can really drag out a lot of the issues and and um really find out like who at the uh where the other company of the doubts and and then you've got as the drive of the transaction it's my job to to to kind of challenge those doubts and Tackle them in the letter of intent to get everybody comfortable with the transaction so um again”
“um you know we've we've had a great we created an amazing um uh way of capturing of growing with this capture demand and creating demand strategies and splitting those out and really putting resources in both I mean that in terms of create demand really that's like a year uh payoff but again as you see now like we have double the number amount of organic traffic than our nearest competitor so again it's really paid off and the Investments really paid off um in terms of why do m a uh or”
my name is James Isley I'm the CEO and founder of a company called cognizant cognizant is a B2B sales intelligence provider we help companies find their next best customer and first I'd really like to fight Frank um Nathan um for inviting me to speak I met Nathan at a SAS stock in 2019 and we were part of a group a a event called SAS society and Nathan um hosted the uh the table and he gave me one of the things that I um things that Nathan gave me at that talk
was a piece of advice about managing my board and he he urged me to like use my board and to actually drive value from my board before that my board had really been um just Alex as a reporting exercise a place where I reported my figures and after that advice I really made my board um helped to help really plug the gaps that we had in terms of expertise and one of those people was Phil garlic who's head of corporate development as Zoom info and um Phil garlic really
helps us to do the transactions and to do the Acquisitions particularly Casper that's saved me at least a million dollars in fees from Bankers so and that should help pay for like his magazine for uh for a for a while so thank you Nathan for that advice it's small bits of advice that can really help accelerate your growth um and and so that's why these events are so key uh so this is the story of the revenue growth from cognizant um so as you can see we've had very um consistent Revenue growth right now
actually we're all end of August we're at 37 million AER uh our Revenue growth has really been a mix of probably about 50 uh from marketing and 50 from our outbound sales team and I'll talk more about that um as we as we go through the talk so the next 20 minutes I'm gonna I'm gonna cover a lot of topics uh I'm gonna just cover really key points and and I think some of the key lessons from cognizant's growth Journey um first of all we're going to talk about the growth from zero to 30 million
um the three kind of I think strengths of cognizant one is our hiring of international developers another one is our growth um how we kind of split marketing between capture demand strategies and creating demand strategies then I'm going to look at the m a wide umna I love doing m a um I personally yeah I don't use any Bankers we have the expertise on the board from Phil garlic who used to be a head of corporate development Zoom info and I personally Drive the transactions and I really enjoy that
and then there's a there's a we've provided an asset which is our lesser of intent for Casper the template for that uh which which is on the uh one of the Assets in on the uh the the drive uh and then we just talk about why we did the m a in terms of how it improves our um go to market motion and also about the challenges of driving the m a transaction in terms of uh getting to the valuation and structuring the deal so first of all International developers
so my I found my CTO on using upwork um so I'm actually a software developer well that's my background but I would say I was a pretty terrible coder and so I knew that the first Gap that I needed to plug was actually a good uh good head of development I I found my so my ctOS from Croatia uh we we hired most of our developers who are actually based in Croatia in Macedonia we've actually got the average cost of Engineers down to 32k and after the Casper acquisition what we found is that
most of their developers were hired in Morocco and Tunisia now we're actually building a new office in um Tunisia where the actual average cost of the engineers is around 16k so one of the key things that I would you know ask people to look at is looking at International talent and hiring uh globally and for us that's that's really been um one of the the big advantages we've had one of the other key lessons is really to actually build offices in those locations so actually we have a office in Croatia
in in zadar and we have an office in um Scopia in Macedonia and we're now building a new office in sfax in Tunisia um what that really helps to do is really build culture um and and really helps you to retain that Talent what we've found is that when we've actually had developers that have just work from home that they're not they're far less sticky so that's one of my key lessons and one of the I think the strengths of cognizance growth the next kind of one of the key things that I think we've done really right is around capture demand so so we have a
fantastic marketing team Aleister corsi is our CMO I'd really urge you to follow her on LinkedIn that she provides some fantastic content and guidance um you know this is the the way that you know I suppose the world should be seen is that um the model that we have in our head is that about three percent of uh anybody in the market is really looking for Solutions at any one point of time and 97 are actually um not not buyers but need to be warmed up
so the typical capture demand strategy is really you know SEO Google ads LinkedIn you're bidding on the keywords that that our users are looking for so for us it's B2B data and also bidding on uh competitive keywords our key lesson here was we tried to Outsource this I you know initially tried to Outsource today um before building a team and really didn't get much success you know using agencies and recently again we tried to Outsource this to try and get cost efficiencies and found that really that
was a disaster and so really our key lesson here is really to build an in-house team and to really keep the talent and train the talent internally and to really pair that Talent with great mentors um from from companies that are scaling above you and that's really you know been The Key to Our Success here this is our organic traffic and this is really driven from our create demand strategies so uh currently we're about 260 K of value
um of of um from our organic traffic that's about twice the value you know using you know tools like hrefs there's about twice the value of our nearest competitor and really hear what we've done um to really drive that and something we did differently this year is we hired a subject matter expert so Ryan uh Risa who who does this cold calling um we actually used him to build a community this this year and that's really works well for us and created like a really good set of differentiated
content so again and one of the other things that we've done here is hire uh like content creator like content creators in in low-cost countries have a lot of marketing staff in South Africa which has been a great location for for hiring in terms of marketing um content and this has really helped us to create differentiated content and to to again like have double the traffic than our competitors uh our nearest competitor that's that's a little bit above above us in size
um jumping into section two I'm just going to go through the the I'm gonna really dive into the acquisition uh why you know cognizant's uh growth and story and then caspers so Casper was a company that we acquired in France it was more people uh it was more going after um I would say like that individual user that's buying uh data on a credit card uh so also just look at that kind of whole you know why plg and and then um you know how that helps us expand our Market
so again this is just cognizant's Revenue again cognizant is really more about a direct we have a direct sales team um so so we we really have um High sales touch points um we our average ACV is is you know from 15K and above um and you know we we we don't have a really any sort of a freemium version It's how we built the company you know we we we were VC funded and uh
and and so you know that gave us the resources to kind of really at a very early stage build that sales team um Casper was actually a bootstrap company it's really plg driven so so you know they have a freemium version their average ACV starts at really 500 and goes up to two thousand dollars so it's a really a very different uh model to Cognizant this is the combined revenue um really the the the vision that I had
when going after inquiring uh Casper was to kind of fix an issue that cognizant where when we were actually acquiring those kind of micro and SMB businesses at 15K packages we really had very poor retention of them and what we saw when we looked into Casper was for that same type of audience they had on annual contracts they had about 110 plus net retention whereas you know we were around about the 60 level so so really what it we showed was that that pricing and how
they developed their products we hadn't really created the the best customer experience of the best customer Journey but by combining the two companies together we could create this this perfect customer experience where we could take customers that that um starting on a far smaller package that could self-serve and didn't need all the cell support and then move them along to the higher ACP ACV packages as um as as they grew so that was really the vision and what we wanted to build coming together and that should create
like the perfect like highest most accelerated uh customer Journey um so this is what Alan to Allen's was the founder of Casper um and this was what he said about it Casper is a very good plg data provider but what we're lacking commercial power to address larger deals cognizant has one of the strongest sales forces in our industry and the combination of two will allow us to achieve great things with cognizant knowledge because cognizance knowledge and resources Casper can become one of the most powerful plg data providers in Europe and smash the
competition I mean at the heart of any m a transaction or acquisition is really that narrative that story that you're trying to bind everybody together with and this was the narrative that that I built and I I took and talked to Alan about in the team which really was the common Vision that then helped the transaction go ahead and which was the The Vision that was shared with the board I think it's super important that right at the beginning of the transaction if you're leading that m a transaction that you have a narrative that you have a really well defined narrative about when these two
organizations come together how are you then going to be a superpower uh so so this these are the the different skills that come together Casper was really a plg motion um they had created a far more simple product that was really aimed at those individuals that are putting and buying purchasing on a credit card cognizant is really an organization that um is telling people who are buying at the org level and so they have all Global authority to buy and we're really having more features to actually sell at the to
help benefit those org level buyers and because you've got far more sale touch points to be able to sell that org level solution you have to speak to more buyers of course the ACV has to be higher together we can create that kind of like perfected Journey where individuals can come in and initially start on their credit card and as they grow and expand then we can sell them the benefits of moving to an org level solution when they're ready for that that we're ready for that change
this is how the transaction took place um and the kind of order and and why so back in September 2021 I was approached by one of my sales people that we had started to see Casper in our deals now I hadn't heard of Casper before and they just added a UK sales rep and so they started to appear in ideals um so I reached out on to um LinkedIn um it was basic as that and and managed to get hold of the CTO and then the CTO
put me in touch with the CEO we had a quick Zoom call and then what I immediately did was fly over to Paris um with that Vision that I uh talked about um because at that time we really felt that we were missing that plg element we had tried to build it internally but but that hadn't worked out so so I really felt at that point we really needed to acquire that plg expertise and really have a part of our organization that was really good at plg and where we could concentrate that skill
so I engaged with the cat with um Casper sold them that Vision then in November we um created the letter of intent so Phil garlic um who has that expertise so again we didn't need to use a bank which is great and I'd really um urge that um if you're doing M A it's like you can do this yourself you don't need a banker and you can save millions of dollars in fees um like it isn't that complicated to do that and I really feel that it's super important for you as a Founder to drive
the transaction because it will help the success in terms of the relationships you build for the for the Post merger um the the for the Post merger um success for that to be successful and so um we did the letter of intent the letter of intent which again I've providing the resources is a really important step I mean that that that's really you negotiate that that's where you build you ground expectations uh and so it's a really key step to get that
right and to get all the expectations set correctly between the company acquiring your own board and your own staff at the same time we did uh due diligence in uh technical Financial due diligence in January 2022 and kicked off the legal process and then the transaction completed in March 2022. so it was it was fairly quick I mean Casper is actually a fairly small organization it was 14 people again I threw a lot of personal time into it to make sure that it happened quickly and also did lots of trips to Paris which
was no bad thing and to make sure that that um that I built the relationships with the Casper team uh in terms of yeah so so the next section I'm just going to um have a quick look at the LOI um the the structure of the deal and and what we learned so in terms of the letter of intent um you can you know have a look at that that in on the desk and if you've got any questions like please connect to me afterwards and I'm happy to explain anything or go into anything in more depth
um I mean one of the big lessons going through another m a transaction at the moment is at this stage is really to understand is the founder ready to sell like this is where you can really drag out a lot of the issues and and um really find out like who at the uh where the other company of the doubts and and then you've got as the drive of the transaction it's my job to to to kind of challenge those doubts and Tackle them in the letter of intent to get everybody comfortable with the transaction so um again
this part of the process is really about building relationships and closing off doubts um and um another big another big area here is jurisdiction issues so Casper was a French company um there's a lot of uh negative noise about France as a country to do business in well so far we're having a very good experience um here we did have one problem around tax on the on Equity so so it was actually more
um tax efficient to do a pure cash transaction and so that's ultimately how we structured the deal uh so the deal structure here so so of course the big debating point is valuation and we've just gone through a period in time where valuations have been Sky High and when actually we started this transaction you know there were deals being done in the VC community in our space where multiples were like like 40 times Revenue um so of course that wasn't going to fly
with our board and so you know one of the um things that I really had to do was really um find that common ground on valuation between the founders and my board which is you know we're we're VC funded so I've got a lot of VCS to kind of debate valuation with that um one of the like methods and tactics that there that are used in terms of negotiation is really you know talk about valuation multiples um that are higher on the the current uh
AR and then with the board talk about the multiple um at the close of the transaction so you can talk about a low multiple so so that was just one tactic so that I could actually um like meet everybody's expectation um it's just really about talking about the same thing at different periods of time um that would again help to find agreement um in terms of the way that we structured it um because we didn't do Equity um we we actually built an out structure so
um so those are the cash payments at different milestones and that's worked really well as well um in terms of incentivizing just in the same way as Equity we did our the first time we actually did an acquisition we did an acquisition in 2020 with a company called maltastic that was most like majority Equity uh and and I haven't really seen any difference between doing it with Equity or doing it on this own out structure um and actually from from our perspective because we did this cash and not Equity it's really cheaper if you think about it from from our perspective
as a fast Growth Company uh and actually the the the other party preferred cash um I think everybody always prefers cash um generally um so um and yeah and this the the overall that um structuring the deal with this um and communicating on the on the um the multiple in in different ways to the to the acquiring company into our board really helped to get everybody on board for the transaction
um so so I guess to summarize and I've gone pretty quickly through that um the the what I've covered over there is really you know the keys to our growth is really for cognizant has really been um us um being International like hiring International developers like for us to grow faster in the future like I'm gonna find new locations again right now we're looking at North Africa because it's really untapped and there's great talent there
um you know we've we've had a great we created an amazing um uh way of capturing of growing with this capture demand and creating demand strategies and splitting those out and really putting resources in both I mean that in terms of create demand really that's like a year uh payoff but again as you see now like we have double the number amount of organic traffic than our nearest competitor so again it's really paid off and the Investments really paid off um in terms of why do m a uh or
inorganic growth is is um really beneficial it's really beneficial to plug the gaps that you might have in your own skills in your own team it really does also help to stop competition um and and um you know that that that's been a key for I think that's um Casper would have been a big problem overall if they've grown in the US market is independent um and of course adding product capabilities and in terms of the m a uh a book um hopefully you can all dive into that
real uh letter of intent and that'll give you a great template um to to think about deals um if you have any questions on that please you know happy to answer them um you know it's it again we've now got this new go to market motion which which is fantastic right now we're using Casper to enter new markets so we're about to kick off Spain um so the aim is that for us going forward is that we'll go into new markets with a plg motion once we get a certain amount of traction then we'll set up the direct sales teams to sell deals at a higher ACV when we've
got once we're in key accounts uh that you know that for me is extremely exciting and and it means we can grow at a faster Pace uh and in terms of valuation um again in terms of negotiating um yeah that's that's um you know the key there is really to um be able to like look at the expected to discuss the expectations of the company you're going to acquire and look at the expectations of the uh of your
board and then find ways to discuss the evaluation in different ways to make everybody happy which is easy to do if you just use time as one it was one of those methods to um to to to set people's expectation in the right place so that's um Sophie thank you again for letting me present Nathan um and yeah um and if you have any questions please contact me connect to me on LinkedIn I'm happy to answer any anything in more depth [Applause] [Music]
