Atrium Revenue, Valuation & Funding (2019)

hello everyone my guest today is chris heineken he's the ceo of atrium leading a world-class team and empowering companies to embrace the next generation of tech through the power of ai chris you're ready to take us to the top i'm ready to go nathan all right here thank you yeah you describe this as consulting service companies for a sorry consulting services companies for ai what does that mean uh what we do is we help companies kind of define what they can do with artificial intelligence we help them create a vision for the possibilities and then we help them implement that vision so are you a consulting company or a sas company we're a consulting company we work with several uh sas companies as enablers so one of our biggest partners is salesforce.com among others and so we're very familiar with the uh the sas community so how are you typical i mean give me a general sense i'm sure you work with a lot of different customers but on average what are companies paying you per month or per year to use your consulting uh really ranges like what uh what they typically are looking to do is um take some of the infrastructure they've already invested in and make it smarter make it more intelligence and so we do it quite a bit around helping companies with analytics and getting predictive algorithms built within their business and so typically they're coming to us and wanting to improve things like lead conversion customer churn um employee productivity those types of things with machine learning and ai and weave that into the investments they've already made in cloud infrastructure like salesforce.com so the the level of engagement that we have with them can span you know a hundred two hundred thousand dollars uh on up from there depending upon how robust they wanna build artificial intelligence into their infrastructure are these typically one time or is that a hundred thousand dollars like for a year it's like a you know a retainer they want you always live um the the interesting thing about what we do is we do a lot of decision support outsourcing so some companies we're working with have for example data science teams that can build and maintain the algorithms once we get them going many of our customers don't have that and often they will work with us to help support do the care and feeding of the the work that we're implementing so it actually we see both scenarios and how many of these customers are you serving now today we have just north of 30 customers today so we've been in business for 18 months we got going in early 2018 and it's been a fantastic ride uh for the last 18 months and uh it's a really interesting kind of captivating space it's you know kind of a little bit wild west pioneering days and that's what it kind of feels like uh when we're working with our customers many of the largest sas companies today start off as agencies like what's your building and then they realize oh my gosh we're solving the same problem for every customer you then build some code around it and before you know it you spin that out as your own sas product are you seeing that pattern internally with the stuff you're working on ai today we definitely see a lot of patterns um and industry patterns if you will we work with for example some universities uh for-profit not-for-profit and some of the the challenges they're looking to solve for whether it's enrollment and improving their enrollment or improving their student attrition those are all interesting problems that many different universities are going after and they share a lot of the same features and data sets so we haven't gotten into a place where we started to build out um product and nor do i think we're going to go to that place just because i think being a consulting business and a services provider has a it's just a very different dna than a product company so we'll certainly dabble with helping companies with reusable assets um assets that will help with accelerating projects but we don't plan to get into uh the product space and that's something that we would leave to some of the other larger partners that are out there in the sas community yeah and what's your team size today how many people we are at 85 today hope to be 100 by the end of this calendar year okay manny would argue over 18 months going from nothing to 85 employees is like just i mean it's a full-time job just finding that much talent hiring them much less actually running the agency how have you scaled so quickly um so this is our third or fourth incarnation as a team i've been very fortunate that the crew that we're working with has been in the consulting world for a long time in this in the space that we're in and now we're kind of weaving together some of the new paradigms with artificial intelligence and machine learning and applying that to what we've known in the past so in some respects we've had a 20-year head start our network is really strong so we have an ability to uh you know have continuity with our team and we've also benefited tremendously from being in a very hot space um you know there's a lot of buzz about what we what we're doing in artificial intelligence but there are very few companies that are really helping large fortune 1000 companies kind of figure out what's real and there's a lot of hype and i think where we kind of accelerate is helping bring that to um to concrete terms for companies and what they can invest in and we've been very fortunate that we've had some great customers join us over the last year and a half that have helped us build the business in such a way where you know we've done it completely organically so chris you have you've bootstrapped we bootstrapped it to begin with uh we did some initial seed money from our founders um and since then we've actually been profitable really every month since we've been going so how much have you raised total we raised 800 000 to begin with among our founders and you're one of the founders right yes yeah how many of the of you are there there are four of us in total four okay got it very good now if you go back i would like to ask this with an agency first year revenue do you remember what you guys broke last year well so uh last year we did about three million okay i mean i would say and you're only in business for eight or nine months right we got started in january we didn't really really get going until like february march yep so it was about three million on three quarters of a year right and what do you think you'll break this year well we'll do north of 14 this year yeah i mean it's again really incredible growth now can you keep going back to these same customers over and over and selling them new stuff or do you have to go you know sell you know a million dollars worth a new product every single month um if we do it right we're going to be going back to these customers for a long time and historically the agency you talk about us as an agency it's interesting a lot of the like digital agencies the thing that's great about them is they have a lot of repeat business repeat customers you get into our space which is more like technology systems integration a lot of the project-based companies really struggle with having long-term customer relationships they tend to have you know it's on and off a lot of nomadic existence and from our perspective our key for are we doing this right is how long of a customer relationship are we having and that's why it's so critical for us you asked that question about you know how much recurring work are we doing and do we have any kind of product the key for us is being able to help companies do the care and feeding on the work that we're doing long term so the predictive models the analytics so that we're around for multiple years that's that's really going to be kind of i think the the single biggest inflection point for us as far as whether we can figure that out or not yeah you're seeing a trench day where private equity firms are coming in and doing a big secondary round into into agencies once they hit 20 30 million kind of in annual revenues uh you're not quite there yet but you might be there soon right if someone came in and offered you guys you know the early founders early employees are like call it 20 million dollars in a secondary in exchange for you name it x percent of the company um that would obviously get you guys early liquidity would you look at a deal like that or no that's not in our vision right now i mean we our our point of view is we're in for a really long haul um we like uh we want to be in a space where we can control our own destiny if we certain if we feel like there's an area where we can point the investment to something that's going to dramatically accelerate us either through ip service offering geography we'll certainly look at it but for now you know we're running at roughly 20 operating margins we do not we don't need to raise money to fund our accounts receivable what does that mean by the way is that so you have 20 percent gross gross kind of kind of even to margin or net or gross margin uh we're running between 40 to 50 percent gross margins and 20 operating margins yeah that's good so call it you know a million bucks a month almost if you're going to break 14 this year you're talking 200 grand ish to the bank each month net roughly yeah that's good where and so where do you reinvest that do you just put it into again more head count sell more human hours um it's it's a combo of uh building out areas with recruiting so we've got three different uh solution centers of gravity as i refer to them so we've decided as you mentioned at the top we've got operations in bozeman montana we're looking to pick up infrastructure and office space in indianapolis and we have a team in jaipur india that is critical to our delivery capabilities so building out those areas as well as just creating a presence and a set of mindshare for us in the market so we're we decided very early on to partner very heavy with salesforce some of that's based on the fact that they have a tremendous ecosystem and a great market reach as we start to and a lot of our deal flow comes through that relationship as we start to deliver on our vision of helping companies do business transformation with ai that's going to mean that we work with other companies just outside of salesforce but other best to be best of breed providers and so getting the minds here in the market is another area where we we place investment yeah interesting all right chris let's wrap up with the famous five number one favorite business book oh boy that's a good one recency i'll give you start with why um i think an entrepreneur when you're starting to get going you really need to get gut check yourself as far as why are you doing this and that you're in it for the long haul number two is there a ceo you're following or studying uh i got a fascination with elon musk i think it's tremendous what he's doing in the space yeah number three what's your favorite online tool for building your company google uh we do a ton with google whether it's you know conferencing sharing docs instant message email they're an amazing provider for a startup company number four how many hours of sleep to get every night i'm i'm good for six to seven and i need every one of those what's your situation you married single kids um i'm married i have three daughters i have a 17 year old 13 year old and an 11 year old to keep me missed all right and how old are you i'm 45. just turned 45 two days ago congratulations that's exciting all right last question what do you wish your 20 year old self knew uh enjoy the ride this is the third time i've gone through uh kind of a startup incarnation and for entrepreneurs it's very easy to be always looking at what's next take like 30 seconds and think about and enjoy the ride that you're on guys chris building atrium they do consulting specifically in the ai space they have over 30 customers will break 14 million in revenue this year up from 3 million in 2018 their team is about 85 folks right now as they look to continue to scale he says he is not looking at getting into the product space for ai if i was a betting man i'd say they're probably gonna end up sitting on a billion dollar ai idea over the next couple years we'll see what happens chris in the meantime thanks for taking us to the top great meeting you nathan thank you for having me