SaaS Leader Interview: How Dropsuite Scaled Profitably by Focusing on B2B2B
Interview with Charif El-Ansari, CEO of DropSuite
Interview with Charif El-Ansari, CEO of Dropsuite
Adapting to market needs can be the difference between stagnation and exponential growth in the SaaS industry. Charif El-Ansari, CEO of Dropsuite, shares how the company’s pivot to a B2B2B model unlocked new levels of growth and profitability. Dropsuite, a publicly listed SaaS company on the Australian Securities Exchange (ASX), specializes in data backup and protection for small and medium-sized businesses (SMBs). With Annual Recurring Revenue (ARR) nearing $30 million and growing over 30% year-over-year, Dropsuite is a model of how strategic pivots can drive sustainable growth.
From Investor to CEO: Charif El-Ansari’s Entrepreneurial Journey
Who are you? Please tell us a bit about your personal journey.
“I have been the CEO of Dropsuite for the last 11 years. I was an investor in Dropsuite before taking the helm in late 2013. I am married with two teenage daughters. I worked in large US companies in the US and Asia before deciding to jump into startups, a much more meaningful journey if one has the “stomach” for it.”
What is your SaaS and its mission?
“We are in the data protection business. We help tens of thousands of companies (mostly SMBs) to backup their critical data residing in widely used applications like Microsoft 365 and Google Workspace. We have a very simple and prescient mission of helping businesses stay in business. In some instances, if a business is unable to restore their data, the business will shut down. With cyber security threats abound and increased government regulation around data security and privacy, our solution is highly relevant.”
Are you able to share some success metrics?
“The north star business metric is “Profitable ARR” (ARR: Annualized Recurring Revenue. Today we are approaching USD $30 million in ARR, growing at >30%. We are doing so while being profitable and cash flow positive.
From a financial standpoint, Gross Margin (Revenue minus cost of sales) is another very important metric that we track closely. A company can be growing revenue rapidly but if their Gross Margin is low they may never be able to become profitable to pay for their operating expenses (salaries, rent, travel, marketing..)
Other metrics that really matter are churn (are customers leaving you or are they sticky), NPS (net promoter score) and CSAT (customer satisfaction).”
How big is your team? What are your hiring and management recommendations? Do you have specific challenges?
“We are a growing team of 160 in more than 10 countries. The challenge is how to maintain culture and cohesion as we continue to grow a highly diverse team.
It is critical to have a solid interview process while ensuring that culture fit assessment is an integral part of this process.
As the team grows, hiring strong and capable middle managers (e.g. Manager or Director) become more and more important to help (1) keep the company as one cohesive unit and (2) relieve the senior execs (VP and C-level) to spend more time about strategy and the long-term prospects of the company.”
How was the process of finding product-market fit? Did you need pivots?
“Data backup has existed almost since data became digitized. But offering cloud to cloud backup (e.g. backing Microsoft 365) is a much newer concept. We initially struggled with the value proposition. People simply could not understand why they need to backup data that is in the cloud. But ransomware that showed up in force in late 2018/2019 proved that you need that layer of data protection because data, whether on your server/laptop or the cloud, can be held “hostage” through a ransomware attack.
The big pivot was to start selling our solutions via IT Service Providers rather than directly to the SMBs. We “burned our direct-to- SMB ships” and doubled down on the reseller business model. In hindsight, this was a great decision because we started selling to IT savvy personas and we were able to scale the business much better: You need less sales, marketing and support resources when you sell through the reseller channel.”
What was the main challenge you experienced along the way?
“One of our biggest challenges was raising funds. This proved very difficult in 2015-2016. In Singapore, at that time, there was a lot more interest in mobile apps, consumer focused start-ups and marketplaces. B2B/SaaS/Backup was a tough sell to VCs.
We ended up taking a very unusual route to capital: We became a publicly listed company quite early in our journey in Dec 2016. Dropsuite is still listed on Australian Securities Exchange (ASX).”
What was the aha moment that made you unlock growth?
“It was really the decision to take a “B-2-B-2-B” business modeling, enabling IT service providers with the right technology and solutions to then sell our software to SMBs.
The other one is pure luck: the meteoric increase in Cyber threats really propelled the business.”
What are your current challenges? What keeps you awake at night?
“Data Security: As a “data bank” our biggest risk is the risk of a data breach (aka if we get hacked). We are trusted by our thousands of reseller partners and tens of thousands of SMBs to backup and protect their data. Hence, it is very critical that we continue to invest in our company security practices and postures. This includes buying industry leading (and very pricey) security software as well as ensuring we build a “human firewall” through security training, and other process/policy measures.
People: Maintaining good company culture and cohesion as the company grows is always an interesting challenge to deal with. Hiring well, Communications/Change Management and having a strong middle management team continue to be areas of great focus for us.”
What do you do to remain ahead of or different from the competition?
“When you are operating in a large AND growing addressable market with no “winner take all” , focusing on your customer needs and on continuously improving your product and your customer touchpoints are, in my view, more important than worrying about competition.
It is really important to focus and double down on your current strengths rather than trying to address your weaknesses. In other words it is much easier to improve on your strengths vs. making your weakness a strength. (same applies to humans, not just company).
This does NOT mean we don’t study, track and learn from the competitors.”
What advice do you have for other SaaS leaders to grow their platform?
“Focus is very important. I often meet founders who are “all over the place”. Focus, define success and go forward. Pivot only after trying super hard. In startups resources are so limited, so focus in the only way.”