Xactly CEO says Demand from Small Businesses Forced Rapid Expansion

Xactly CEO Chris Cabrera, whose company makes software used to manage sales-force incentives, says demand from his small business clients shows they’re in growth mode.

For San Jose-based Xactly, the good times of its customers complement its own trajectory.

Cabrera said Xactly did well even in the bad economic times of 2008 and 2009. The tight economy spurred customers to seek ways to get more out of their sales people. “Many of our customers were cutting their sales forces at that time,” he said.

Now economic growth is working their favor.

"We're seeing good demand and strong pull from that part of the market and it's one of the fastest growing parts of our business right now,” he said. “The future looks bright" for smaller businesses, he said.

Cabrera said about half of his customers have less than 350 employees. Given that he runs a company with about 300 employees, Cabrera says he has a pretty good handle on how the small business sector is doing.

"We are seeing a lot of our small businesses adding to their sales teams and we consider that to be a pretty good sign for the economy," he said.

The growth of Xactly’s Denver-based small-business unit, from five staffers two years ago to 60 today, reflects some of the tensions confronting all Silicon Valley technology companies seeking to expand.The company looked to Colorado two years ago to build out the business due to competition for talent in the Bay Area.

"It is so hard to find and retain qualified talent here in the Valley," he said.

To capitalize on Xactly’s momentum, the company is branching out to other workforce-incentive products and adding new products, Cabrera said.

"Our roots are in the sales compensation world but we are seeing a larger percentage of our business coming in other types of compensation, like paying truck drivers, bank tellers and all kinds of people we wouldn't even have been thinking about five years ago," Cabrera said.

Xactly will unveil its brand of Big Data intelligence next week at a user conference, when it will begin offering subscription access to industry compensation and sales benchmarks it has developed.

"We've been working behind the scenes for about three years now and we have, safely and securely of course, data on every single thing our customers have sold, what channels they were sold through, the prices, when they hire people, when they fire people," he said.

The information will be presented in an anonymized and aggregated form to protect the identities of specific sources of data from being revealed.

"We have shared it with a few of our customers and they go crazy," Cabrera said. "You can't buy this kind of intelligence anywhere else.”

Xactly has raised a total of $72 million since it launched nine years ago but it has been over three years since its last funding. There was talk of a possible IPO last year, but Cabrera said he is in no hurry now to go public.

"Unlike a lot of our software-as-a-service brethren, we are not burning a lot of cash," he said. "Last year, we were burning very, very low single-digit kinds of millions of dollars. We might do another round at some point or we might go public. I don't know right now because cash isn't an issue.”

"We continue to grow pretty well," he told me. "We're hiring like crazy, adding office space and growing the company in every way possible, which is fun and exciting.”