How Astronomer Went From Zero to a $600K ARR Run Rate in 2016 (Interview with Co-Founder and CEO Ry Walker)

Nathan Latka

00:00This is the top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn 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 talk.

Ry Walker

00:18>> 5 and 6,000,000.

Nathan Latka

00:19He is hell bent on global domination. We just broke our 100,000 unit soul mark. And I'm your host, Nathan Latka. Many of you who I've met in person have seen my unbelievable dashboards that I built. You know, I'm an analytics like crazy person. I love the data, and I love presenting the data in beautiful dashboards that my team can use on their mobile devices, their phones, and TVs throughout the office. Now the way I do this

00:44without having to hire a big development team is at nathanlatka.com/analytics. It's using a company called Klipfolio, and I'll tell you more later on the show how I use them. It's nathanlatka.com/analytics. Alright, guys. I talked about this earlier, but I schedule, like, so many meetings that would blow your mind. I mean, all my podcast interviews. Right? Hundreds of entrepreneurs I talk to monthly. I schedule, and you know what? I do it so efficiently. I get them all

01:10to agree to my calendar. So all the calls are back to back to back. That means I'm not switching in between tasks all day long. I get them to batch so that can be very efficient. It's so critical. And I use a tool called Acuity Scheduling to do this at nathanlatka.com/schedule. It eliminates the back and forth between me and people I'm trying to meet with. It makes it very simple. And most importantly, they help me keep

01:35my no show rate very low because they send out reminders, helps you look very professional. So go to nathanlatka.com/schedule to sign up, and you get a great deal. You know, you guys know this. I hit people hard. I make great deals. And, Gavin, the CEO, has given us a great deal. If you sign up like normal people, okay, on their website, you only get a fourteen day free trial. If you use my link, nathan latka dot

01:58com forward slash schedule, you get forty five days free. Okay? It's the best. It's free. Go to nathanlatka.com/schedule right now to sign up, and I'll see you there. Nathan Latka here. This episode, six eighteen. Coming up tomorrow morning, we learn from Paul Trippett, 37 year old father of one and CEO of SmartBeat, which has raised $250,000 and is now onboarding its first customers to help brick and mortar locations track customers more accurately. How's he do it

02:28from a technology perspective? Tune in to find out.

Introduction and What Astronomer Does

Nathan Latka

02:33Good morning, everybody. My name is Nathan Latka, and our guest today is Ry Walker. He's the cofounder and CEO of astronomer.io, a big data infrastructure company headquartered in Cincinnati, Ohio. Astronomer is an AngelPad batch number nine company and has raised $2,000,000 from the likes of 500 Startups, CincyTech, Router Ventures, and SocialStarts. Their mission is to connect and centralize data, making it super simple for anyone from business users to data

02:59scientists to quickly create and monitor all of their data pipelines. Ry, are you ready to take us to the top?

Ry Walker

03:06>> I sure am.

Nathan Latka

03:07Very good. That was a mouthful. What a big problem. What's what's astronomer do?

Ry Walker

03:12>> Oh, so you didn't understand any of that. Damn it. No. No. We're we're basically helping companies, figure out how to use data to benefit their business. We work with later stage startups. We work with some big companies too, and really everyone's struggling. And well, there's an opportunity. I'd say no one's really struggling, but everyone wants to figure out how to use data to make their business better. There are a lot of great products, you know, that

03:37>> have merged over the past few years, well, I think like Mixpanel, there's Amplitude in the web analytics space, Google Analytics is obviously pretty dominant. But with the rise of data science, a lot of companies are trying to get ahold of their raw data so they can do more interesting things with it. And so that's really where we come into play to help them get the raw data from all these SaaS silos or inside companies. Oftentimes

04:03>> there's a lot of different databases where data resides and the data scientists need it all to be together to do their work.

Nathan Latka

04:10Guys, Ry has one of my favorite websites I think I've ever seen. It's like it's got it looks like a piece of art. It's got, like, machines, humans, and then this big powerful machine in the background and kind of gray saturated scale. It feels like something DaVinci put together. Yes. Tell us how you make money. What's your business model?

Business Model and Pricing

Ry Walker

04:32>> Yeah. So we're a subscription business. So we actually call it data engineering as a service is kind of the current offering. So we're building a platform out, but while we're building the platform out, we're basically doing this work on behalf of customers. So it's sort of a cross between a services company and a software company at the moment. And so we basically offer access to our team and our technology for one flat price, you know, $6,000

04:56>> a month if you want it to run on in our shared cloud or $10,000 a month if you want us to put up a private instance of the platform so that your data, so that your work is all separated from other, companies. Companies,

Nathan Latka

05:08healthcare companies might choose.

Ry Walker

05:10>> Yep. Yep. Yep. So we just have our first few, we call it, you know, private cloud, edition. Customers are just going live now. It's kind of a pain because you start to deal with HIPAA and all the regulations, but you have to get to that some point if you wanna be a big company. So,

Nathan Latka

05:28okay, good. So give us more of the of the history. What year did you launch the company in?

Company History and the Collision Conference Pivot

Ry Walker

05:33>> We launched the company in May 2015. We were actually at the Collision conference in Los Angeles, or I'm sorry, in Las Vegas and decided to pivot it after the first day of the conference. Well, we had a booth and people were coming up and talking to us and we didn't like our company. It was the first time we really got out of the building and talked to a lot of people at once about what we were

05:56>> doing and realized it was kind of funny. I mean, we just realized like we didn't quite have the passion for the problem, and decided to step down to a different problem. So we were building an analytics company similar to what Mixpanel and, you know, some of those sort of tools do and realize like our biggest problem was, getting companies to send us the data to to run these analysis. And, and just recognize like every other, you

06:20>> know, every other company like us must be having the same problem. So let's go down and work on that problem instead.

Nathan Latka

06:25This is the number one pro I mean, you see this a ton in the business analytics and dashboard space. I'm talking about Klipfolio, grow.com, DataHero, dasher. They're number all of them, the number one issue is the onboarding and actually getting users to connect data streams. If they can get them to do that lifetime value almost always increases by 10 X.

Ry Walker

06:43>> Yeah. Yeah. And so, yeah, so that's, you know, we're trying to help the companies get more competent at that so that they can use those tools like I mentioned, but also, you know, work with it internally a lot of times Yeah.

Nathan Latka

06:56As I don't understand. So what did you pivot from? That was what you were. What are you now? How'd you pivot from that?

Ry Walker

07:03>> So what we were was a company that wanted you to send your data to us, your click stream data, you know, like user clicking on your website sort of data. So that's what we needed in order for our product to make sense. And we were just doing like cohort, retention analysis and how, you know, showing how cohorts revenue grow and all, you know, that cool stuff. We could get customers to say, yes, we can get them

07:25>> to give us money and took us usually like four to six weeks of nagging to get the data. So we basically decided like, let's help these companies get data to services like the one we had. And that's a bigger, more global problem.

Nathan Latka

07:37Interesting. Okay. So now kind of your customer cohorts are in marketing analytics, manufacturing, IoT, insurance, higher ed health care, ecommerce, and ad targeting. Yeah. Interesting. Yeah.

Ry Walker

07:46>> I think that's good. Yeah. Was that on our website?

Nathan Latka

07:49No. I'm just quick.

Ry Walker

07:51>> Okay. Good. Yeah. It's like yeah. That's I was like, shit. I think I was wondering if our marketing team got the new page up because we are trying to summarize a lot of stuff. That's Yeah. That's exactly it.

Nathan Latka

07:59And Well, I

AngelPad Accelerator and Upmarket Pivot

Ry Walker

08:00>> I mentioned, like, another really important pivot we did was when we went through AngelPad, which is a top accelerator. Our our The guy who runs that Tomas

Nathan Latka

08:07Wait, right. What's the model? What do they put in and for what percentage?

Ry Walker

08:12>> They get 7% common and a tiny bin. They put like a 50 in on a four ks pre note. So essentially they get seven percent plus a little bit extra.

Nathan Latka

08:25You mean 4,000,000 pre note?

Ry Walker

08:26>> Yeah. 4,000,000 Yes.

Nathan Latka

08:30Got it. 7%, 4,000,000 cap. Put in 50 ks, imagine 6% interest on some discount.

Ry Walker

08:37>> Yeah, no, it's a SAFE note. It's pretty, yeah, it's very fair. Yeah, so good deal and great mentorship. And the big thing we like when we went into that accelerator, we were thinking, customers will give us like, we'll do freemium, maybe we'll get a $100 a month from some of these companies. And he kinda like knocked our plan off the table and said, go after big companies. So during that accelerator, we ended up deciding to pivot

09:00>> towards helping big companies with a similar problem. It turns out like the big companies actually have the same sort of challenge that the smaller companies do getting tool data to analytics except their tools are different. You know, they're trying get data from SAP and get it into Oracle and, know, various big system type stuff. And so yeah, so we basically that's when we decided to stop really focusing on startups that didn't have much money and What

09:24>> was your That's how we start ramping revenue.

2015 and 2016 Revenue

Nathan Latka

09:26So Ry, if you go back and look at 2015, what was your first year revenue? Do you remember?

09:31Zero. Okay, it was zero. And then what'd you do in 2016?

Ry Walker

09:33>> Yeah. We ended the year at a 600 ks ARR run rate. So we went from zero to 600. Yeah, yeah, it was

Nathan Latka

09:42a pretty good year.

Ry Walker

09:43>> So that means, that means

Nathan Latka

09:44like in December 2016, you guys had passed $50,000 in monthly recurring revenue.

Ry Walker

09:48>> That's right.

Team Size and Location

Nathan Latka

09:49Yep. Very cool. Okay. So, let me go back for a second. At team size, what are you at now?

Ry Walker

09:57>> We are 25.

Nathan Latka

09:58Oh, nice. Where are you based?

Ry Walker

10:00>> Here in Cincy. Everybody? Yep. There's just a few people that are remote, but yeah, most everybody's here.

Funding History and Convertible Notes

Nathan Latka

10:05Okay. And funding, have you raised capital?

Ry Walker

10:08>> Yeah. 2,000,000.

Nathan Latka

10:09Yep.

Ry Walker

10:11>> Over the course of about two years. Yep. And by the way, when I say we started on May 2015, that's the day of the pivot. So we kind of reborn on that day. So technically it was about two years if you included the previous vision.

Nathan Latka

10:26So you raised 2,000,000. What does that mean? Did a one what was your last round? What size?

Ry Walker

10:32>> 1,100,000. Okay. Priced. Yep. No. No. It was a it was a convertible note. So we've actually done like four rounds of notes, which

Nathan Latka

10:41Shocking is something to me. This is a trend I'm seeing. You know, I talked to a CEO every day, Ry, is something's happening because there are so many people doing note after note after note in the millions of dollars.

Ry Walker

10:52>> Yeah, I know. Well, it's, well, you know, obviously, like the people who do price rounds or really like to do those price rounds are all moving up market. You know, the old A's, B now and or I'm sorry, the old B's and A now. And and so, yeah, I think a lot of the earlier stage investors don't like to price things. So It's very interesting. Yeah. We've got this this inter creditor agreement between the four rounds

11:14>> of of notes. And so, I think we we started with, a KISS sort of note, then we did the SAFE, then we did a real KISS, and then we did this other round. So it's a yeah. It's pretty it's pretty wild. And, you know, luckily we try to keep all the terms pretty congruent through all that.

Nathan Latka

11:29Hey, guys. Won't It's mess. We won't get into specific terms of all those, but you can just Google SAFE and KISS and raising capital and they'll pop up with the standard templates. So you can research those. I fast forward to, so you're doing, I imagine you're probably somewhere around 55, $60,000 in MRR here in January 2017, right?

Ry Walker

11:47>> Yeah, yeah, actually that's about right. We have a huge bubble of deals that were trying to get done before the end of last year, but December happened and that's never good. So

Nathan Latka

11:58you've got an ARPU of $6,000 per month, 10 customers right now?

Customer Count, ARPU, and Churn

Ry Walker

12:02>> No, we're actually, we've got 20 customers. So, yeah, average revenue historically is around 3 ks a month.

Nathan Latka

12:08Got it, interesting. Okay, cool. What about churn? Has anyone left you?

Ry Walker

12:14>> One customer. So our churn, we've got a net negative churn of 48% right now. So, it's pretty awesome. You know, we've basically have a land expand sort of a strategy. So if a customer is like, hey, just need this little thing done, we'll say, sure, how much money you wanna give us for it? And we take that money and then we eventually try to work them into our standard deal as their use cases expand. So, sort

12:38>> of our strategy and it's been working out really great.

Nathan Latka

12:40Explain what you mean to me when you say your net negative 48.

Ry Walker

12:43>> So, a third of our revenue is from expansion revenue, of our current revenue. So, yeah, if you think about, know, a 100% of the original deal and then we now have a 148% revenue from, you know, from the original contract from those customers. Does make sense?

Nathan Latka

13:02If there was a bucket and you took all of Ry's initial customers and put it in that bucket, that bucket would grow 140% even considering the from the original signups. Is that right, Ry?

Ry Walker

13:14>> That's exactly right.

Nathan Latka

13:15Got it. And then you've got additional month over month growth on top of that, that it couldn't new customers you're adding.

Ry Walker

13:21>> Yeah, that's right. Yeah. So we had new customers, you know, and we're about to, like I said, add about a bunch of new ones here in the first part of the year and probably double our revenue, in the next six or eight weeks.

Nathan Latka

13:30What's it costing you to acquire customers?

Customer Acquisition Cost and Paid Advertising

Ry Walker

13:34>> We we actually just started here in in 2017 to to spend any money on customer acquisition. Everything's been referral and outbound, up till now.

Nathan Latka

13:45What do a lot of people that listen to the show are thinking about the same turning on paid stuff. How do you decide where to start and how much?

Ry Walker

13:52>> Start small, like we're starting very small.

Nathan Latka

13:55How small, what's the number?

Ry Walker

13:58>> Interesting.

13:59>> I our first month's budget was $600. You know, just really what I told our marketing guys, so we have a marketing guy down. I said, I want to see retargeting. I wanna see, I keep seeing all these retargeting ads happening. I'm like, it's gotta be effective, you know? So just enough to get retargeting up and running for us.

Nathan Latka

14:14Okay, so maybe too early to have obviously a CAC and same thing probably with LTV, right?

Ry Walker

14:20>> Yeah, I mean, our math on that is based on not a ton of data, but you know, what data we've done is we see like a payback period of around nine months based on our current data, which means the the the you know, so our we we consider our CAC, you know, our the cost of our sales and marketing team, the the labor at this point. So we factor that into the deal.

Nathan Latka

14:42So your basic payback period is nine months and your ARPU is $3,000 per month. So you're saying your CAC is somewhere around $27,000 right now?

Ry Walker

14:50>> Yeah, that might be true. I don't know that you have to check that back.

Nathan Latka

14:53That's just what your Excel sheet says.

Ry Walker

14:55>> Yeah. Okay. Then that's true.

Nathan Latka

14:56No. No. No. No. That's what you're I'm saying in your model, that's what you've put in there as a placeholder. Nine months.

Ry Walker

15:02>> I I'd have to check. Yeah. Yeah. Nine months. Nine months payback. That's all I know. Okay. And it's it we dropped it down to around six months and then we doubled our growth team size, threw more cost in there, but now it's creeping back down again.

Nathan Latka

15:15When did you went

Ry Walker

15:16>> from went from what yeah. Go ahead.

Nathan Latka

15:17No. I don't wanna cut you off. Go ahead.

Ry Walker

15:20>> No. I say we we started around twelve months, then we got down to about six months and then we doubled the team size where it went back up to twelve, and now we're back down to nine again. So

Nathan Latka

15:28And that guy's so that's a fully weighted payback period. That includes salaries of employees, including paid spend, all that jazz.

Ry Walker

15:35>> Yep.

Nathan Latka

15:36Ry, when did you when was that last round of funding? When'd you do it?

Ry Walker

15:40>> August.

Nathan Latka

15:41August last year. Okay.

Ry Walker

15:42>> So you got plenty of runway.

Burn Rate and Runway

Ry Walker

15:44>> No, we don't actually.

Nathan Latka

15:45Were you raising?

Ry Walker

15:46>> No. Yeah. We're raising. We we we burned we decided to burn the pile as fast as we can in a in a responsible way. But yeah, that's know, when you get to 25 people, the burn you know, I think our burn our net our gross burns around 200 k. So we're burning net $150,000 Mhmm. Right now. So, yeah, the a million doesn't last too long when you're doing that. And

Nathan Latka

16:05guys, it's it's where we get CEOs that are as open and transparent as, right, which I appreciate. So let's use this to learn for a second. So what that gross burn basically means kind of the the, you know, cash going out as basically $200,000 per month. What do you mean, right, when you say gross burn is 200 and net is $150,000?

Ry Walker

16:20>> Yeah. So, you know, our revenue being around 50 k a month offsets 200,000. Yeah. Yep. So

Nathan Latka

16:26Got it. You guys all follow that hopefully. So $150,000 is leaving his BB&T account each month. So a million bucks last, call it, you know, eight months, nine months.

Ry Walker

16:37>> Right. And we're right around

Nathan Latka

16:39What are you raising, Ry?

Post-Seed Fundraise Plans

Ry Walker

16:41>> We were so there's a new new idea called the post seed round. I don't know if you've heard that concept. I think Bullpen Capital sort of uses that lingo. But basically, we're we're doing a 3 to $5,000,000 round that is not a seed extension round. It's an up round. It's more money than we raise initially. And it's essentially the old A, you know.

Nathan Latka

17:05So you'll raise 3, you're talking around 3,000,000?

Ry Walker

17:08>> 3 to 5.

Nathan Latka

17:093 to 5, interesting. What, give me a what kind of valuation are you trying to aim for?

Ry Walker

17:14>> That's a great question, whatever we can get it at. Yeah. To be honest, it's, know, the

17:21>> great advice, you know, think about your your share price instead of your percent ownership. And, you know, if we can get this round on our share price, our the value of our equity rises and and our our the odds of us living goes up. But at this point, like, you know, a's are tough still, we don't really wanna bump our valuation up too much. So we're gonna just listen to what the offers are and not be

17:45>> too greedy on that. So we have some headroom for So that you're okay if

Nathan Latka

17:49it's a little, I mean, little more dilutive than usual, right? As long as the value is increasing, right?

Ry Walker

17:55>> Yeah, I mean, we're pumped about building a big company. I'm personally pretty generous with equity and I always have So, been with my if you're gonna be equity, you know, generous, you're giving up a bunch, but at the same time you have a bunch of co owners with you. So it's, you know, I think it's, worthwhile. More people

Nathan Latka

18:13on the boat is a good thing. Like I told you guys at the top of this episode, I have amazing data and you guys know from my interview style, I love data. But what I love more than data is making it actionable via beautiful dashboards that I can view on my phone, on my TVs, in my living room, or even on my laptop as I'm traveling. And the company that I used to create these dash boards

18:34which pulls in data from my Lipsin back end, my Google Analytics back end, Salesforce and other data sources is called Klipfolio. You can see an example executive dashboard or my social media command center or my web metrics dashboard at nathanlatka./analytics. That's nathanlatka.com/analytics. And you can try it there for free for three months. It's Klipfolio. You can try it free for three months. Everybody else has to pay. So you get it free for three months.

19:05Alan's a good friend. He's the CEO of the company. He came on the show. I said, I love your product. Can I feature it? So nathanlatka.com/analytics. Go check it out now. Guys, I get asked all the time. Nathan, you host all these interviews, hundreds of them per month. How do you do them efficiently? And guys, the answer is simple. People always agree to my calendar, back to back meetings. I batch my interviews to stay very efficient.

19:29And the way that I do it is I use a tool called Acuity Scheduling at nathanlatka.com/schedule. And the reason I use them is very simple. They keep my no show rate very low because they send out reminders about when the interview or the meeting is coming up. And also, they make it very easy to schedule time. Right? I don't have to go back and forth via email 10,000 times with people I'm trying to meet with. [email protected]

19:54forward slash schedule helps me so much. And by the way, look, I like have so many meetings. I'm the best in meetings. Okay. I do them back to back very, very efficient. You guys know me. Many people say I'm the most efficient they've ever seen. Okay. So I use the tool. It's so efficient. And by the way, I got Gavin. I said, Gavin, he's the CEO. I said, want a great deal for my people. He said,

20:14Nathan, will most people get a fourteen day trial? Isn't that great? I said, no. He's giving us a forty five day free trial @NathanLatka.com /schedule. That's not gonna stay up forever, so go get it now. Nathanlatka.com/schedule. Alright. Right. Let's wrap up here with a famous five. Number one, what's your favorite business book?

Famous Five: Books, Tools, and Habits

Ry Walker

20:35>> Oh, jeez. I would have to say is is, seven habits of highly effective people a business book? I don't know.

Nathan Latka

20:40That's a good one.

Ry Walker

20:41>> Let's call it a business book then.

Nathan Latka

20:43Number two is there a CEO you're following or studying?

Ry Walker

20:48>> Yeah, there's Morton from x.ai. I'm pretty hot on the whole AI. We've got some AI ideas for ourselves and, I don't know if you've seen x.ai helps set meetings. It's pretty cool. So I'm kinda, I'm pretty impressed by what he's built so far.

Nathan Latka

21:03Good. Number, three, what's your favorite online tool like acuity scheduling?

Ry Walker

21:10>> Favorite online tool, I would say right now for us is, gosh, what's it called? Hold on, what's this thing called? I'm so used to it, Phabricator. Have you

Nathan Latka

21:21heard of No, what's do.

Ry Walker

21:22>> Yeah, it's basically,

21:25>> it's a I don't know where it came out. It's basically has we use it for Wiki. We use it for internal tickets. It has project management. It has some sort of things like that, but it basically is our our call our intranet if I was gonna use an old school term. And so, yeah, our company, you know, we're we're on the WikiKick and we all kinda try to keep all of the all of our processes and

21:46>> everything all documented there. Phabricator, it's kind of a it's an open source tool that, you can tailor for your internal team.

Nathan Latka

21:53Number four, yes or no? Do you get eight hours of sleep every night?

Ry Walker

21:56>> No, absolutely not. Rarely.

Nathan Latka

21:59And what's your situation?

Ry Walker

22:00>> Married, sleep in.

Nathan Latka

22:01Yeah. I'm married with three children. Really mackerel. And, yeah. I I do I know.

Ry Walker

22:07>> It's tough for you.

Nathan Latka

22:09No. I am 44.

22:10Okay. Again, what were gonna say? I cut you off.

Ry Walker

22:11>> Yep. So nah, I was gonna say I I go to bed at twelve or one or two and and get up as late as I possibly can each day before someone forces me to get up.

Nathan Latka

22:20So last question, right? Take us back twenty four years. What do you wish your 20 year old self knew?

Ry Walker

22:26>> Oh man, I would have to say, gosh, twenty years. So I did start entrepreneurship pretty early, I would say to be bold, to be confident. I think confidence is pretty tough to do when you're that young. But if you can figure that out early enough, it's it works wonders.

Nathan Latka

22:44There you guys have it from Ry Walker, founder and CEO of astronomer.io. Be bolder. Have a bit more confidence again launched and really pivoted back in 2015 at Collision. Did about $600 or $600,000 annual run rate, in that first year. Now up over $60,000 in monthly recurring revenue serving over, 20 customers. Again, onboarding onto their data platform that helps folks really understand what's going on inside those channels. A combination of human plus machines. They've raised $2,000,000.

23:11Looking to raise another 3 to 5,000,000 here in the near future. Ry, thank you for taking us to the top.

Ry Walker

23:18>> Well, thanks.

Nathan Latka

23:20If you enjoyed Ry today, go back and listen to Monish yesterday yesterday of data science. They raised $5,400,000, and he's giving loans to Indian credit borrowers at one half the rate that money sharks do. He's targeting a 22% IRR and way less basis points.

23:38It 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 heck 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 it makes my team's day when we see great reviews and

23:59get your feedback. So thanks so much. Top Tribe, I love giving away free money. I feel like Oprah giving away cars, and 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 of you listening right now yes. If you're listening, you get a $100 in free AdWords. Here's how you get it. K? Again, thanks for listening. Get the

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