How Artesian CEO Andrew Yates grew to $27.4M revenue and 240 customers in 2024.

this is the top where I interview entrepreneurs to our number one our number two in their industry in terms of revenue or customer base you learnt how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per Tov I haven't expired kids have been on global domination we just bloke on a hundred thousand roll mark and I'm your host Nathan Laska I just finished traveling in Southeast Asia for 41 days and I usually always get sick when I travel and quite frankly eating it's difficult for me it's hard to find a restaurant and I'm spoiled in Austin with my personal chef well I took these little package with me to time 30 of them in my carry-on suitcase they kept me totally healthy with 11 different secret ingredients you can see them at Nathan Lancome /qs I'll tell you more later on in the show that's Nathan lock accom forward gosh juice this is episode 675 coming up tomorrow morning's Mike Wynn joined us they raced thirty million dollars and I asked them a simple question I said Mike will drone deployed be and create and make you the first trillionaire soon in the see what he says good morning everybody my guest this morning is Andrew y8p the CEO and founder of our Tegan and they want to make sellers more effective at engaging with buyers using smart data and new techniques to create the right impact he has been involved in sales and marketing for the past 25 years and is aiming to make a difference people by creating software companies who make a meaningful dent in the universe will cover a bunch of those companies and much much more with anger today Andrew are you ready to take it to the top ready all right so tell us first what is artesian do and how do you make money with the business model so we provide a sales acceleration platform and it's all about providing deep contextual insight on companies and the people inside them with our seasoned you can track every single customer prospect competitor every day spa business opportunities and critically manage your pipeline risk so we help businesses that we we have a phrase which is customer curious businesses and we help those businesses increase their credibility competitiveness and drive customer satisfaction so an ultimately revenue and so I'm a sales person and maybe an SDR one of these companies I'm using our dumping rtz and to basically look at signals in my pipeline to see which of the pipeline I should tackle tomorrow morning based based off interests yeah I mean it might start by addressing you know your your market opportunity pipeline building in a building smart list what we do this a little bit different is we combine thermographic data with real-time contextual intelligence so you know you can you can you can ask artesian to find you a company that fits a certain profile in terms of revenue sales number of employees location market sector but then lay it on top of that you can say that it's that are in the news because they're growing expanding hiring in M&A discussions winning deals signing contracts entering into partnerships whatever it is you you you regard as being a sales trigger we've got some pretty cool natural language processing science that allows us to scan over 10 million sources of structured and unstructured data and hopefully we'll find the killer insight that you need on that company that marketplace or that person awesome Andrea let me wrap up let me let me jump into something here about the market so this is obviously a space I think it's super fragmented we've had some folks on in the space before tell me where you guys are at in terms of first off when did you launch the company and that'll tell us how old it is today so we started providing service around 2010 and just to give you an idea on scale we're at about 30,000 paying subscribers got over a hundred large enterprise customers and companies like Cisco hewlett-packard enterprise now American Express Lloyd's Barclays HSBC as the young KPMG there's quite a broad sector coverage and but one thing that's pretty common about all of those customers is that they are in high-value relationship-oriented sales engagement so launched in 2010 today you're at 30,000 customers with your team size today so it's 60 people a run later shell being around about at 10 15 million dollar range now we're established in the US which expect that to accelerate and grow and that gingers that way around right now sorry that we are right now our that's our goal what you want hit by December 2009 goal for this year yeah got it got it and you know our subscribers are paying anything from ten thousand dollars a year to to over two million dollars annually so our largest contract and we license the software on a per user per month basis contracts are annual and about 68% of our AR our goal for next year or this year that we're in is currently already contracted and so if I used to a minimum so you have use of 30 dozen customers now you give a big range for our pues you said you know between 10 and although it's two million dollars annually if I divide that out and kind of do a monthly and get about $1,000 per month per customer most five times of 30,000 customers is that math right can I get about a 30 well that's not right because it's too high but that comes out to about 30 million in m RR which is wrong so how about after also so after 30,000 we've got we've got we basically had two services in the early days we provided trigger base news as a service on its own and that is a relatively low cost per seat type service that we license in the thousands to large enterprises that company like Barclays Bank with you know 10,000 users in their enterprise and get market news alert every morning push to their blackberry or their iPhone so Angela mutates 30 thousand customers you mean is total businesses or are those seats in all the businesses Bessie's in those businesses it's about a hundred and twenty enterprise customers got it okay so how many enterprise customers that and of those companies they add up to about thirty thirty thousand unique seats that's right okay that makes good sense and what were you well obviously our goal is ten to fifteen million a are by the end of 2017 it's what now March 2017 what'd you do last year until Mr R or sorry last month until M R so that'll be about that'll be about forty percent growth but our on our runway our exit run rate for last year we made a conscious decision around about September or so the last year to take down the cash turn in terms of in terms of investments so we're actually striving towards profitability and cash flow positive acidity which we should hit roundabout maybe this year how bad did that get what was your largest mantra in terms of cash burn we would regularly you know seeing off between three and four hundred thousand dollars a month in the early days we you know we've raised about forty million of equity and debt as a funder and that helps us you know drive growth in the fifty to seventy percent range and organically we can hit thirty to forty percent so we made a decision that we were going to you know just slow down the acceleration a little bit in terms of you know using VC money to drive that growth artificially inseminating that market now it makes good sense if I'm doing the math correctly you've got if your goal is kind of a ten to fifteen million dollar a are run right by the end of 2017 and you want to get a healthy growth rate over last year's numbers I mean I assume you're probably doing around seven hundred K per month right now about it okay got it good so and then again if I divide seven hundred thousand by the by the hundred twenty enterprise customers at start to say the average enterprise is paying about six grand per month but most of our annual contracts that right yeah that's right and they give very I mean our largest largest customer with with you know at the higher end of the tariff scale would be one of the banks in the UK that has about four and a half thousand seats deployed I think I think the thing that makes us a little bit different is and you know our custom extensions running it around about 93% gross and 120 percent of net and we know revenue and ER that revenue or a retention or actual customer number retention and so that the gross number is is the like for like dollar for dollar year-on-year and then the net is plus ourselves okay so what was the gross again sorry 93 and your language will 20 okay got it it's a 93 percent annual retention and 129 and instant is net and you know we also run a Net Promoter Score programs to check in on how and satisfied our customers are and that's running at an average as last government surplus 43 and I was like I was delighted to see that you know we're now we're now number two in their GT proud ranking in terms of most popular sales Intelligence Platform just just behind the guys at discover all yeah Andrew so this is we had the discover org guys on he know he shared with me I'm Henry in that episode that they're doing about five million ish per month in a revenue but they're also very they have kind of a very very much kind of vertical integration right there very sector focused you guys are anything are taking a different approach I mean how do you win this space and the reason I asked that the reason I ask that is because it seems like when I talk to Bart a full-contact Henry discover world I talk to all the clear but everyone seems to buy access to everyone else's data on the back end but no one wants to admit it but they'll eventually admit it and then they say we have our feet right there with us we have to automate partner with we partner with you see um you know what Henry's doing with his business which is interesting you know he's using a team of researchers to build very very deep and very detailed vertical datasets six literally focused in in regions and particularly focused in industries like IT and you know that face is extremely high-value we wouldn't Ames compete with discover rock we're really about what you do next once you defy the company that you need to go after so you know what's the agenda how do you engage how to keep that engagement moving we're different because we use machine based learning to find the smarts rather than a team of researchers which means you know our services ultimately scalable and we also invite the user to divine define their own sales triggers which is the ideal customer engagement point for them and literally every single instance of our TZ and that's being deployed is unique to each subscribing customer and personalized to each individual user so we're able to you know really provide that that kind of subtle road to use in English and an English example that Savile Row tailored suit rather than that kind of you know Hugo Boss and off the shelf at number I love your analogy I guess you a wife won't be sponsoring a show anytime soon after that comma but everybody like we know the key goes exhaust there's a back pedal right there's the back pedal leg all right good stuff Andrew let me ask you a kind of a more interesting tricky question about the space so many people are saying I can't confirm or deny this but many people are saying matter mark might be for sale when I had Danielle Danielle on back last year at nice Mecca calm 4-2 top 3 18 that was episode through 18 she mentioned they're doing about 3.3 million in an annual run rate and they raised about 18 million bucks would you ever consider buying them as a growth strategy and I think I don't about madam market car comment but but I think that market consolidation exercises is is inevitable if you look at the recent acquisition of prevention by by dun & bradstreet I think that's going to create a little bit of a ripple effect if if most of the platform players aren't thinking about this as a strategic element and they go forward strategy and their growth strategy then then you know they they're not thinking about the right things in my opinion so I see a scenario where you know where companies could join forces to give them broader reach and greater debt and and you know a better or rap and customer experience obviously deliver better shareholder value over time are you at means you have a person on your team that's actively looking at potential M&A deals to drive your greatest growth no I mean I you know I I'm a man with many hats so the only person that focuses on that I will dedicate any percentage of their time is is myself and you know I think it's really really important to spend time speaking to other companies that are active in the same space quite often when you get together and you have a conversation face-to-face you realize that you know you're trying to achieve different things in different ways although the words sound very similar in terms of the marketing messages you know the companies can be quite quite different and quite complimentary you raised at least I think publicly bits of my research the last run was an eight million dollar round pug and publicly and in 2015 it sounds like you did maybe a bridge around after that was that a bridge round to that last round you did there was some money that came before the eight million there was a couple couple of million more and there was so there was also some deck or tea so we're sitting around about around about forty million dollars ballot about about 12 million pounds and how much of that you still have in the bank is so we can kind of project run rate and so we we are in a position where we've got adequate cash resources to keep going without any more investment for the next few years it just depends on how how fast we turn up the kind of temperature and at the moment you know we'll be at the cash flow breakeven profitability stabilized by kind of middle of the year and that feels like a good place to be and Andreo so if I deconstruct that you said you're good to go for the next two years any additional capital does that mean if assuming sales stay flat which they won't but soon they stay flat and assume burn also stays the same you've got basically enough to keep keep going for two years awesome that's great Andrew a last few questions here about about customers you have obviously a large cohort of customers so these questions are viable I think talk to me in terms of CAC what are you paying to acquire a new customer so and we're tracking on on a roundabout 1x in year one which I you know I believe is is is world class you know the things that are really important was tracking overall growth cost of acquiring a customer natural and gross churn Net Promoter Score and you know one of our secret weapons is with that we use whilst we might use machines to drive us Mars we use great people to drive adoption so one of the things that's a bit different about artesian is we've got a game affine method inside the platform which measures and guides sella behavior and encourages the best behaviour and it's called a social seller score and it's also generated every 24 hours and we use a combination of what other systems telling you you should be doing and then you know some customer relationship management methods that we borrowed from our friends at Salesforce to really keep that average daily user engagement high we're running at around about 89% average daily user engagement which for a tool set or platform in our spaces is really really high and your does that mean that 30,000 users or 89% of them are using are logging and using it on a daily basis yes absolutely and also we you know when you look at our cz and you'll see you'll see losses a bit of things that you've seen before but never in one place so one of the things we launched till last year was a way that we can build a smart calendar for each user every day so that the smarts get you know also populated into into your calendar that's why we're partnering with with full contacts and others to also provide things like the social profiles of the people you meet in which goes way way beyond what you can find a LinkedIn and circling back to the one X number you gave when I asked you what you pay to acquire a customer I might you know you have one or twenty enterprise customers that on average you know they're paying you call it six grand per month that's how you get your seven hundred grand or our number so it's fair to say when you say one X you're talking about a year payback period which means you're spending about call it 60 70 grand on acquisition yes depending on the segment I mean we've got we've got we've got some small medium business customers but if it's the classic kind of you know 80% of the revenue comes from on the you know larger enterprise customers so you wouldn't be far off okay and what do you assume obviously this is always kind of a back of the napkin thing but what do you soom the lifetime values of one of these 120 enterprise customers so I'm measuring it in years at the moment is tracking at five point two years and how do you track that like give us the equation because this is different for everybody yes so the way I've been taught to track it is to is to look at the average that we are keeping hold of customers so you know we've got we've got banks like Barclays HSBC HSBC just signed another three-year deal that'll be that'll be seven years of continual service and now you know bear in mind our range we can't we can't obviously track beyond the time line that is how long we've been in business so we've seen a really really healthy customer and you know lifetime and then from that depending on the size of the customer in a segment we can calculate the value yeah I mean yeah if you've got an average of five and a half years of lifetime based off the math you just gave you're looking at what about sixty two months and at six grand per month I think that brings lifetime value somewhere around three hundred seventy grand I think I need to hire you and must find out senior your brain knows less than the people around me it was listed I'm traveling or grab coffee one day we'll keep chatting but Andra it look is great I mean first off thanks for being so transparent there's a lot of people that come on and they get so scared but I think the more transparent folks are the more entrepreneur going to learn and that's the whole freaking reason I do this show and I can't you must have listened to episodes before this because you almost knew what I was going to ask brass yeah I mean I think I'm asking just to finish up Nathan you know lots of enterprise class software doesn't get widely used and a dotted and if you ask any any sales leader or marketing leader to be honest about their team performance I think the 8020 rule is alive and kickin you know dayley percent of the value comes from 20% of the people so the 80% that our average you know are the biggest opportunity that we have to make that been in the universe that we talked about right at the beginning and you know we get right into that as a company before I wrap up with your your favorite book and your favorite tool on the famous five quick question here if somebody Salesforce right now offered you 10x you're a are so call it seventy million bucks to buy the company do you sell I'll be interested in talking to them about creating shareholder value of me you know the end of the day 50% of our of our equity is owned by an institution that's invested with an expectation they're going to see returns oh and how many containers you have two co-founders those rivers have got about 50 percent of the business when a third a third a third roughly speaking you gotta gotta cost 15 15 15 ish something like that interesting cool and I assume your CEO than what you have a founder CTO and a founder and operations or something yeah that's right it's a three-legged stool analogy so you know I got a mad scientist II can build it a great guy you can make custom successful and similarly sell things tonight I'm so glad to be back in Austin I just got back from a major tour of Southeast Asia I went to Sydney Bangkok Bali and Japan and you know I always get sick when I travel and this particular trip my gosh 15 different airports 20 different hotels I mean imagine flushing in Airport bathrooms or I was worried about germs and getting all the nutrition I need I mean planning a restauranteur pan if the calls because nothing's in English so it's hard enough to figure out the train system but my point is had a guy named drew Canole on the show who said Nathan if you're concerned about that take these little green packets with you you just mix them once per day with water they'll keep you before healthy get all your nutrients and they'll keep you from getting sick so I took them and guys they worked unbelievably well I got no sickness just mixed with water 1/2 per day it didn't make my water bottles all sticky that's like nice a lot of these mixers to make them sticky but very clean and smooth to the once per day never got sick they've got 11 superfoods and the perfect if you're not traveling we're just on the go from your office to work so you can check them out at Nate's Lancome forward clash juice that's Mathematica comm /qs [Music] commander let's wrap up here with the famous five number one with your favorite business book I love escape velocity by Jeffrey Moore I think it's I think it's the Bible that you should consume as a the CEOs keep you honest is that the same guy that wrote crossing the chasm it absolutely is it's kind of a few releases on from that is it brings in inside s tornado crossing the chasm a whole bunch of other things he did well where they look number two is their CEO your farmer studying today I met a gentleman called ghagra Godfrey Sullivan last December and the guy that was behind Splunk and not one of the founders of spunk but the guy that took it from ten million to a billion dollars probably one of the most inspirational people I've ever met and really did change my perspective and to the extent where I came straight back to the UK and made a number of decisions with the team which which we are now playing out in terms of strategy number three what is your favorite online tool like a QT scheduling yeah I need to check out serially scheduling or job listings he is talking about it yeah I like opps easy and ready I know I'm drinking my cool legs up you know their answer they're cool though that you used to like manage your business like like like a utility based tool that you use every day to keep your team organized or get goals out or anything like that not really just Microsoft Outlook and you know email and the usual kind of personal productivity tools what do you for like analytics tracking inside the company any tools we use a we use a subset called Geckoboard and we also have we also have all of the dashboards in Salesforce wider and we built a beautiful Net Promoter Score we've got a customer scorecard for every single customer that we can track every single day which is which is really really quest for company about size number four Andrew how many hours of sleep are you getting every night eight hours a night Sam that's good and what's your situation married thing we have kids marriage two kids 14 and 11 boy and a girl both are very expensive skills in any case I have to work really really hard and you know it's been a it's been a fabulous journeys my second time around as a founder the first time we've got a marketing automation company that became a free mode at the game Sarah dater you left by the way to your remote us you left by the way of just two years before that big acquisition I hope you still got some of the upside the double did I yeah I did okay okay good all right and how are you Andrew I am 49 years young all right take us home man take it back what is that 29 years what he was your 20 year old self no I wish I knew more about how many and leveraged finance works I think it's a minefield for an entrepreneur and a CEO and if I only knew now what I knew then there you guys have from Andrew Yates you wish to see me more about leverage and the finance industry in general building are teasing already has several successful businesses under his belt but are teasing this founded in 2010 forty million dollars of equity and debt raised today 120 enterprise customers well there were 30,000 seats those customers paying on average six grand per month they're doing about 700 grand in monthly recurring revenue to go to 10 to 15 million in ARR by the end of the year churn super-healthy 93 percent annual retention and then net net a net negative revenue turnabout and that's about 120 percent in terms of revenue expansion year-on-year CAC really healthy to LTV ratio super healthy with average customers sticking around over five years team of 60 again helping you and specifically SDR so get better more qualified leads and most importantly reach out at the right time using a variety of datasets they've brought in their back-end Andrew thank you for taking us to the top Thank You Nathan if you enjoyed Andrew today go back in listener Ameen sigh air yesterday his helping sumo logic has raised 140 million dollars they've now passed 1,300 paying customers and he shares his annual corn revenue with me tune in to find out what it is it would mean the world to me if you guys got any value from this episode if you would go leave a review on iTunes right now and then subscribe you know I hustle like have to get these episodes out every freaking day for you guys and trust me I love it I would do it with no listeners but boy oh boy it makes my day and makes my team's day when we see great reviews and get your feedback so thanks so much okay pal tribe I love giving away free money I feel like folklore giving away cars I have something special for you today how many of you have heard our super sharp guests talk about success they've had with Facebook and Google Ads well all will be you listening right now we have if you're listening you get a hundred dollars in free ad alert here's how you get it eight against thanks for listening it's a free hundred dollars from Google right when you sign up with my website post provider Hostgator go sign up now to get your free money hostgator.com forward slash Nathan again that's hostgator.com forward slash Nathan