Scaling RTA: CEO Josh Turley on culture, clarity, and getting to $14M ARR

0:27Every problem in SaaS is a leadership problem, right? who've been there and done that. They share the ins and outs of how they built their businesses, their operations, their path for securing investment, and more. Our mission with the podcast is to help you, the founder, learn how to scale your SaaS, maintain your well-being, and navigate the complexities of this ever-changing industry. I'm your host, Alex Deema, and together we'll explore the good, the bad, and the ugly in the journey to SaaS success. meetings at events suck we're changing that uh this october we're bringing meetup to sas stock europe the smartest way to network meetup is a one-to-one meetings program that'll deliver over 15 000 pre-scheduled 15 minute conversations with the partners customers peers and investors who can move your business forward no more wasted time no more missed connections just purposeful meetings with exactly who you need to meet.

1:26Register by 22nd September to secure your place at the AI and SaaS industry's largest meetings event. Book now at sasstalk-europe.com slash meetup. This is more than networking. It's making connections that matter. We've got 20 minutes here, and this is a long journey story here. It's very amazing. an unsexy market, very sexy founder, amazing practical founder story, and practical founders build valuable software companies without big VC funding. So there's all kinds of ways to do it, and we're going to hear about his journey today. But you've got some big news in the last month. Let's just start off with the big news here with your$12 million ARR software business, Josh Turley.

2:15Yeah, so we just hit 14 and just closed. It's officially our Series A, but we're so late stage that we just closed a growth equity round. And you say about how much that was? $100 million valuation would be about where we closed. And you took some money off the table? We did de-risk a little bit. So congratulations. A growth equity round. He took big money off the table there. That's a de-risking round, Practical Founder. So let's just start in here. Josh, tell us about your company, RTA. Yeah, so RTA, we're a fleet management company. for government fleets. So we help government fleets, city of, county of, help them track all the maintenance and repairs and total life cycle of their assets.

2:58So it's not an AI tool for sales and marketing that we heard a billion times today. So, and there's a few unusual things. It's an amazing story and it's an unusual story and a very practical story. And he's already won big and keeps, and it's going to keep on going here. Josh, what is so unusual about RTA that you won't hear from any other company here in the building? If I had to pick the one thing, it's probably our fanatical focus on culture. Okay. There's a few culture focused companies here. So what's special about your culture? Like the commitment to it, right? So when I talk about what made us successful, how did we get from zero to two?

3:36And really like the inflection point when I took over was really trying to kind of refound the company. And like we hire, lead and fire to our vision, What's our purpose? What are our core values? What's our mission? But we're not litigious about it, but we're ruthless when it comes to applying the value. Ruthless about culture. Okay, there's one. In the hiring process, it's the same thing, too. Yeah, great. It's much easier to keep crazy out of the building than get it out once it's in. So how did you get into this darn fleet management for state and local government auto and truck fleets and all that sexy stuff?

4:13All right, well, that's definitely unique about us. Okay, there we go. Right. So we're founded in 1979, probably one of the older technology companies in the room. Were you born then? No. Okay. It's older than I am. Yeah, there we go. My grandfather started it, used to run UPS, their entire fleet, saved them a butt ton of money. And we basically took all that, turned it into a software program at the dawn of computing. Yeah. It was a COBOL program for many years. And handed it off to my dad, ran it for 30 years. He passed away, and then I took over in about 2015. So third-generation, family-owned SaaS company, which is probably unique.

4:51Well, it wasn't SaaS back then. It wasn't cloud. There was no such thing as that. And it wasn't recurring revenues. It wasn't mobile. All perpetual license, all up until about 2018. So an old-school software business that you took over when your dad passed, and that was 2015, 16? 2014, yeah. Okay, and was it handed to you? Hell no. Hell no, hell no. Okay, so what does that mean? So we had to plan the transition. When your dad dies suddenly, there's no planning for that transition. So that was something I had to go, and we worked out seller financing with the rest of the family. So you bought the business.

5:24I bought the business from my mom. Very favorable terms, but no, I had to pay for that sucker. Okay. And how big was the business in revenues back then, pre-cloud, pre-everything? In 2016, we were probably doing about$2 million in ARR at the time. And now you're doing$14 million. Okay. So let's talk about the – by the way, congratulations. Josh talked over this business, and it's seven times bigger in AORR terms. Is it mostly AORR? Is there services? Is there non-AORR? There's a little bit on the top, but you're talking maybe a million in services and 1x revenue. Okay. So one of the things here besides that steady compounding increasing growth with a bigger team, which is very exciting, but you had to replatform the software, maybe for the third time in its life or something like that.

6:12But what percentage of your customers and code is the old stuff? And, you know, what percentage of your business is on the new stuff? Yeah, it's not a cloud. All the new customers are all going on a new platform. Yeah. And that's been in the case for the last two years. But the biggest challenge isn't the tech migration. That is a huge challenge. We've been doing that for seven years. It sucks. The hardest thing is actually psychology, is getting your customers to migrate over the new platform. Right. So we've tried to grease those skids as best we can. We're still in the middle of that process.

6:41Probably about 50 % have migrated over. But we are learning a lot along the way, which is you almost have to hold a gun to their head and say, no. We are shutting down the old platform. You must move. If you give them choices, the choice will be do nothing. Well, Dan Martell talked about that earlier about AI here. You've got to put a gun to people's heads and say, got to use these tools and so forth. So when do you think you're going to put a gun to their head and get over the legacy customers? Bill 31, 2026. Okay, there's a goal there. We have an official date. There's no moving that date. Okay.

7:15So how did you grow this business from 2 million ARR to 14 million ARR and close a growth equity round, which means they believe in the continuing compounding and growth with this? Is it just sales outbound knocking on doors and selling harder, emailing harder? No, I'd say there's probably three things, right? So we talk about the replatforming of the technology, showing people the vision. They're buying into where we're going. and so all the new customers like this is it competes so much better than start competitors who are you know they're old they're pe backed you know like one of them's a constellation the layers company which means they're not going anywhere they're just going to milk that forever i love that it's so easy to compete you're never going to re-platform inside a pe right like i can move around them all day long and so part of that is just us innovating yeah the other part was re-platforming the company right so when i talk about the culture is refounding the culture and a commitment to our core values of being homo hungry and smart.

8:10One of my favorite challenges is if you called our office, you could ask the receptionist, what's the mission? What's the purpose? What are the values? They would know it by heart. Every single employee has it committed, right? So getting really clear about what we're all about and that commitment. When we talk about the problems in SaaS, a lot of times we focus on the technology problem. And instead, we need to be thinking about who, not how, right? Dan Sullivan wrote a book on this. And what I have found is that it's so much easier when you get a leadership team that's 100 % aligned to make decisions quickly, to make the right decisions, and to execute flawlessly.

8:43When you get that out of the way, life is just so much easier. It's a lot more fun to go to work, and you don't have to deal with a-holes all day. So that was a huge piece of that. Third piece was something you helped with, you know, SaaS Academy helped us with, which is customer niche focusing. We had to get really clear about who we were serving. When dad was running the company, if it had wheels, we wanted you as a customer. And that's a terrible philosophy. So we had to get really clear about where's our bread buttered? Who do we want to serve? And for us, it was government. And a lot of people don't want to serve government.

9:13Government is notoriously long sales. Isn't that a last-done list for most people in this industry? It's hard. Yeah. It sucks. You know what's amazing about government? My churn right now, my gross logo churn is probably about 95 % retention. We're at 120 % net revenue retention. Yeah. It's because government sticks around the world. Now that's a sexy number. 120 % revenue retention, net revenue retention year over year. And that's what we did. We did a cohort analysis. We realized that trucking logistics, they churned every five years. Yeah. Government, they stick around for 20. And most SaaS companies haven't been around for 20 years to see that data.

9:47But it's one of those things that we can just look at and we can see, wow, this is where we need to focus. So did you have any challenges replatforming, I don't know, your own mindset and thinking, becoming a new CEO and growing up, but replatforming your team to this new vision? They've been around for a long time, friends of your dad, all of that. And then how many of them are still around? And how did you replatform that culture? So in 2014, we had 25 employees. I was one of the youngest tenured people there. I'd been there for 10 years. And of those 25 people, today, four of us still work at the company.

10:23We're at an employee. I think we're hiring employee number 90 right now. So it was a complete osmosis and just replacing and up-leveling. And did that just happen organically, or did you put a gun to people's heads and move faster? Yeah, so I'll do two things there. One was I had a philosophy, which was we just needed to pay for rock star talent, right? Netflix, Reed Hastings, Principal, go out, and we needed to pay more to get the right guys. Well, we went out and paid more, and I ended up with just a bunch of a-holes on the team that were really smart, but I didn't like working with them. Expensive.

10:56So that was my first mistake. Second was, okay, now I know what I'm looking for. Now we're looking for both sides of that coin. But as we go through, I think I totally lost our question. Now, how did you, did you put a gun to the people's head to say, this is the new culture? So I'm talking about the culture, the values. And the gun that I put to everybody's head was we're coming back from COVID 2021. I've been preaching this. Guys, we're going this way. We're on the deck. You know, we're literally on the platform and the train is leaving. You have to get on the train or you have to get off. There's literally another train coming right behind me, five minutes.

11:30And it's probably going somewhere you want to go. But you've got to make a decision. So Friday, staff meeting, I get up in front of everybody and I give everybody 10 % to walk away. I literally print off a live check of their salary, 10 % of their annual earnings to leave. And you're a senior leadership team or you're? The entire company. Right. We were probably about 35 people at the time. And I was ready on Monday that I was going to be the only guy coming in and answering the phones, doing the sales, doing the customer service. I was that committed to the culture. And ever since then, every day at two weeks, we offer people$5 ,000 to quit.

12:01And at 60 days, we offer them another 10 % to quit just to make sure they're totally bought in, which means they go home, they have a check for somewhere between$12 ,000 and$20 ,000 that they have to show their spouse and say, do I want to take this money? Or am I ready to rip up this money? I almost want to like print treasury bills. Like if I could get cash money, that'd be amazing. But no, we print treasury bills. Did Dave, I take you up on that offer? I had one guy. Okay. Right. And since then, I've had three people total take me up on the 60%. And so how specific were you for people to see this?

12:29Meaning this is exactly where we're going and these are exactly our values in the company. This is exactly how we're going to do things. Was it clear or vague? Yeah, 100 % clarity. So your job as a CEO is to create clarity for your team. Number one, right? You've got to build a team, set the vision, deliver results. And when you talk about setting the vision, you have to create clarity, over-communicate clarity, and reinforce clarity. It's all about getting clear, clear, clear. And if something's not working in your business, every problem in SaaS is a leadership problem. It's your job to get clear.

13:02And if something's not working, it's because you weren't clear enough in what needed to happen every time. If there's only one person you can blame for your business sucking in, it's you, unfortunately. And how long did it take you taking over the business in a crisis to be clear about what exactly was going on and where you were taking this thing? Probably about three or four years. Three or four years. Was that a confusing and brutal time? It was brutal. I was a terrible CEO. I had no training. I was like right in the middle. I had just come out of college and I had no idea what I was doing.

13:31I was frustrated all the time. I had to do the work. I had to do a lot of therapy, like figure out what was so triggering. Why was I so mad at my team all the time? Only to realize like, oh no, the problem has been staring me in the face every time I wake up in the morning. It's me. I had to get better. I had to get clearer and we had to get clear about what the expectations were in order to deliver results. So how did you learn that? How did you get clear? How did you come to know you were not good at something and then get good at it? Because you're a very good CEO and attracting a lot of attention.

14:01Avid reader. So I'm a huge reader. All leaders are readers in my mind. One of my first favorite books was John Maxwell. He talked about the law of the lid, that you as a leader are the lid on your organization. And the organization can never outgrow you. So you have a challenge, which is to grow yourself. So I'm a huge practitioner of reading and self-development, joining peer groups. So I've been part of probably five or six different peer groups over the years. Entre Leadership was a big one. Joined Elite Academy out of Infusionsoft. It's been out of there. Those guys were phenomenal. Really helped me set the foundation.

14:35SaaS Academy was an incredible resource for me. Not just from peer groups, but also from just running a SaaS business and teaching me the tactics of how to execute. And then being a part of Practical Founder Peer Group. which by far has been my favorite peer group because of just how involved we are in that program. Well, we have some practical founders here from the peer groups. Let's shout out. Who's here from practical founder peer groups? Say yeah. Do my Dan Martell impersonation there. Yes, yes. Yes, yes. There we go. Great. So let's talk about funding here. You bought this company for not a ton of money in 2016, 17, took over.

15:15you didn't raise money from VCs, but how did you fund it and grow it? So the first source was customer funded. We had to recognize we weren't charging our customers enough. So we looked for upsell opportunities and started expanding our offerings. We flipped everybody from an on-prem license and started charging 3 to 4x for a SaaS-hosted model. So trying to just get more revenue from our customers and getting our value proposition back in line. And the next thing was, you know, as we grew that, we kind of hit a tipping point where it was like, I can go a lot faster if we just had a little bit more fuel in the tank.

15:51But I was definitely of the mindset, I didn't want a board. I didn't want investors. Debt is the most expensive, or not debt, capital is the most expensive form of equity. So I didn't want to raise capital. So I opted to, somebody introduced me to a debt broker and we went out and raised the debt round. Super small. We were probably about eight or nine million in ARR at the time. and we got a total debt facility of$4 million and we only ever used two of it. And so why did you raise debt? What could you see that was worth you going through that process, taking down the money, dealing with the cost of it, interest rates, confidence, and all that kind of stuff to pay it back?

16:28Why did you raise debt? So twofold, I wanted to invest in our go-to-market motion. We sucked at marketing for decades. And I knew that was the case and we needed to invest in our brand. We needed to invest in our presence to show that we could play with the big boys. We were always considered kind of a tier two system. So I had to reinvent the brand. The other thing that I really needed to invest in was the product. We had to get through whatever this re-platform was and get off of the old COBOL platform. Like we're still running COBOL today, which is nuts. I don't know how it's still running, but it still does.

16:59So I knew that we had to invest in the engineers. We had to invest in the product team to get that product built. And this is just feature parity. Yeah. So that was the big thing was just investing in ourselves and really betting on our future and our capability. Did that bet pay off in practical terms? Did it work? Totally. We went from, you know, we were eight or nine in ARR. And with that$2 million, oh, and that was the other thing. I paid off the founder debt. So the seller debt that we use for seller financing got her out of the business completely. So I technically only did this with about a million dollars.

17:28Okay. We took a million, put it in the business, and went from eight or nine in ARR to 14. And that's when we closed our series. Okay, so let's talk about the growth equity round here, the last turn here. A few more minutes. Growth equity at this stage for compounding bootstrapped founders is usually mostly about secondary, because you can only spend so much money if you've been leaning mean the whole time. Can we say how much secondary you took off the table, roughly? I won't. Okay. That's only because I don't want my family calling up and being like, hey, Josh could pay for vacation. Okay. But you got a down payment on the massive value that you've created and you're committed.

18:09Yeah. So the big piece of that was just a little bit of liquidity, de-risk a little bit. No matter what happens with the business now, we're set. I've got eight kids just personally. Okay. Let's repeat that here. It's a little different situation here. I have eight kids at home. So it's not like a dual income, no children kind of a thing. This pie slice is not going a lot of directions. It's going to get divvied up pretty well. But it was enough that I knew that I could take care of my family for basically the rest of my life. So life-changing, but still practical. And who's your growth equity partner here?

18:41We went with Susquehanna Growth Equity. Okay. And a couple of things that really stood out. As you're looking for investors, as you're looking for a partner, I wanted a partner. I wanted somebody that was going to kind of help guide me and turn me into the next level CEO that I needed to be. I was looking for patient capital. So I had just seen a couple of friends go through their own exits and they weren't favorable because the clock had run out on the fund. And Susquehanna invests off of their own balance sheet, so they have no clock. There's no fund terms, nothing. If they want to hold a company for 20 years, they'll do it.

19:12And so I wanted to get to the point that we'll sell when the number is right, when the market is right, and not because, hey, we ran out of time and the investors all want their money back. So that was another big selling point for me. Okay. Have you had your first board meeting and all of the weight and fun of having big investors who paid a price to get a piece of your business here? How's that going so far? It's going pretty good. We haven't had our first board meeting yet. We meet weekly though. So I imagine it's going to be much of the same. We'll see. We're going to see how this is. I know it's going to be very different for me.

19:47It's going to be a little uncomfortable. as a CEO founder, you get to wear one hat that has both titles on it. And now I'm having to take off. I actually have two hats. One is the founder hat and then one is the CEO hat. And having to be a CEO with investors, I know is going to be a different game. So well, and it's a new sport that is totally figureoutable. So congratulations on transforming the old family business, creating a valuable software company, a major growth opportunity in Phoenix for people who are joining the company and continuing to transform the industry that your family has dedicated the business to for all these years.

20:23Let's hear it for Josh Turley of RTA Fleet. Thanks, Josh. Thank you. Thanks for listening to the SaaS Revolution Show. If you enjoyed this episode, please leave a review and follow the show. It helps more SaaS and AI founders to discover the podcast and keeps us bringing you the leaders who are shaping the future of the industry. For more insights and to join the SaskTalk community, head to sasstalk.com.