Board Meetings are great ways to finish the week. Wait, let me revise that. Board Meetings are a great way to finish the week when the founders are describing a provocative discussion of the future. I had such a Board Meeting yesterday with UpCounsel, an enterprise marketplace connecting businesses (usually between 10–1000 employees) to high quality independent lawyers to address a wide variety of legal needs such as employment issues, contact negotiations, incorporation and expansion, etc.
Matt Faustman, UpCounsel’s cofounder/CEO, was highlighting interesting behavior by their customers over time. Namely the large amount of ongoing spend from companies who had used UpCounsel. This repeat usage let Matt start each month with a forecast of what percentage of revenue would come from previous customers versus new sales efforts. Without betraying his confidence I think it’s ok to share that for UpCounsel this metric is well over 50% on a monthly basis.
Of course it’s much easier to build an up and to the right graph when you can build off ongoing spend, but unlike a typical SaaS, most marketplaces don’t have a true subscription revenue stream, they just have active customers to draw upon. UpCounsel is still a seed stage company so while they’re in a healthy seven digit GMV runrate, they actually haven’t done much work at all on customer success or reactivation marketing. We’re just starting to see the maturing of early professional marketplaces, especially those involving white collar skills like legal (UpCounsel’s lawyers average 15 years of experience) but it’s possible they have same — or better — repeat spend rates than even the most enthusiastic consumer ones (for context, Etsy’s S-1 noted 78% of their revenue comes from repeat spend).