Bloomreach Revenue, Valuation & Funding (2024)

hello everyone our guest today is Raj da Dada he has brought 10 years of enterprise and entrepreneurial experience with him when he co-founded his current company Blum reach before launching the company he was entrepreneur residents at mordabito ventures prior to that he served as Cisco's director of product marketing and was on the founding team of telecom company first mark lambda net which grew to 80 million in run rate in AR I presume he also worked in technology investment banking at Lazard fr��res he holds a Bachelor of Science in electrical engineering from Princeton University and an MBA from Harvard Business School he thought his thoughts on navigating the challenges of high-growth startups can be found on his blog at d.com it's de dat ta dot-com Raj are you ready to take it to the top I am absolutely all right tell us more about Bloom reach what's the company do and how do you make money absolutely so what blue breach is is we're in the business of offering a platform to power digital experiences so think of every interaction you have online you go out you buy a pair of shoes you look for a date you're organizing a movie all of those experiences online can be can be pretty painful and the start of the company was really asking the question why couldn't every experience on the web feel the way it does at Netflix or at Amazon or it where are some of those sort of much more modern tech companies out there when we think of enterprise brands the banks and the airlines and the insurance companies and all of the other big businesses we interact with in the world their digital experiences feel nothing like Netflix and Google and the like so we came we came about trying to say let's create a great digital platform that makes it possible for every enterprise in the world to build amazing digital experience and let's offer that platform to everybody let's get seven billion people around the world to have an amazing digital experience that's why we started the company and fast forward now several years later we make money in a SAS based business model so we offer our services in the form of a subscription and large enterprise to sign up and and and we drive their digital presence and are we talking give me a sense here of generally on average in a year they're paying 10 grand a hundred grand a million 10 million which general size average average ASP for us is around 250 K per year we've got several clients that pay us more than a million dollars a year yep so it's an enterprise type business and what pricing levers do you use to drive expansion ARPU is a number of site locations like a Neiman Marcus or or what are those utility metrics yeah so there's a bunch of ways by which we grow we grow because people when they launch digital properties websites and apps they'll often do it in many countries they'll have different properties they will own many brands you mentioned even Marcus Neiman Marcus owns a selection of brands beyond Neiman williams-sonoma and other one of our clients also owns Pottery Barn Pottery Barn Kids so they'll have multiple brands and they'll pay us more you know when that's the case and then and then we'll charge them more as their pageviews grow and as their traffic grows you know then they'll use more of the platform and finally they buy more products from us that's why they buy more products and that's an expansion in the amount that we charge so a number of languages cite impressions and just pure additional product up sells products that's right interesting okay getting more of the back story here so when did you launch the company yeah so you know started working on the company in 2009 and it was a small team of us myself my co-founder a shoe who had built a lot of the search engine at Google and we pulled a team of people mostly out of Google was a group of five or six of us and the original pitch wasn't we can build on a platform that you can plug in any website or app into and its gonna immediately generate highly relevant experiences for consumers wouldn't that improve the consumer experience and drive more revenue for whoever's publishing the website or app and if we could build that platform it would serve everybody so we spent about a year year and a half kind of an R&D built a machine learning system around that basic problem proved that it could work by kind of 2010 started to approach a set of clients and really only launched the company publicly in 2012 or maybe was end of 2011 and that was when we sort of began to take it to market and how did you support yourself in those first two three years you guys just had savings from Cisco and Google that you lived off off for what yeah so we definitely did that for a period of time eventually we had our first investor AJ other wall who's a partner at Bain Capital Ventures he put in the initial five million dollars and you know kind of our pitch to him was pretty simple it was sort of if we build this platform it's gonna transform every website and app in the world wouldn't that be a great business yes and so the risk here is really the technical risk of whether we can build a machine learning self learning system that could work for any website or app in the world and so to mitigate the technical risk we got to hire the 10 best engineers we know who are at places like Google and Facebook recruit them in and so he put in the original five million dollars we said we wouldn't really spend it we'll just perfect the platform and once who was it was up and running then we'll start approaching clients for revenue so today how much total have you raised so today we've raised a hundred million dollars okay so obviously significant capital raising after that was you know I want people to make sure they pull the right lessons from this interview I mean one of the reasons you're able to get five million early on obviously is because of your present backgrounds right it's not as simple as just saying look here it is it's gonna be a success Boehm right Wow yep so I'm a third time entrepreneur I've done this before Asha was a well-regarded machine learning kind of guru out there so was our background and I think we had a Kris problem statement that was pretty different nowadays the use of AI and machine learning is popular in 2010 2009 we were very early and saying we're gonna have every website and app in the world powered by that and so it was a distinct message and a distinct proposition of hey we'll do something pretty different with this class of technology solve it in a different way with a different kind of team and with a fairly clear business idea that we were gonna go after enterprises a SAS based pricing model and so we were fairly clear what we wanted to kind of go about doing and what's interesting so many years later is the mission of the company hasn't changed so what have you scaled to today in terms of total customers you're working with yeah so we we work with about 250 large enterprises and they have tens of brands each so if you think about it in terms of websites or apps it's probably a thousand plus if you think about it in terms of companies it's probably 250 the number you gave me earlier the 250 grand a CV though that's really perk that's per company you're working with right / 250 that you work with or no it's per website or something else yeah so that's that's that's an average per account yeah and you can think of the scale of the business as being between fifty and a hundred million dollars yeah I was just gonna say so if I take 250 times 250 grand a year you know you're cranking somewhere you know five point two is I think per month that comes out to or somewhere around what you know 50 five sixty million annually right now yeah it so when we have services revenue you know that we charge for as well because when people use our platform they have to implement it and we support them through that so you can think of our our air or our total revenue is as between fifty and auditors got it now of the of the number that I just give out though the basically five million a month is that pure place asked the two fifty or did you include the professional services in the two fifty ACB not included and is one of the reasons so tell me tell me the correlation between how you think about professional services and what that's done to help you reduce your churn I assume you're you're basically taking that money and to do on boring things that's right we do a couple things with professional services we help with onboarding we help with analytical services people use our services how do they get more value out of the software once they've bought it we'll do things like premium support services so some of them are technical in nature some of them are business consulting in nature we also have a very large partner community so we'll do training of partners and certify them on our platform all of that is services and so diving deep into some unit economics here for a second what is your turn today or how do you think about it yeah so we think of you know gross churn for an enterprise business we think best-in-class you know you want to be at no more than say 10 to 12 percent gross churn and we're in that range and then you want to be pretty close to zero percent net churn or negative net churn and we are we are there as well because we have a healthy upsell business just to be clear that's that range egay that's 10 to 12 percent gross revenue churn annually and negative churn obviously annually as well for net yes yep and the ones that do churn why do they turn yeah I think it happens for a variety of reasons you might have mergers and acquisitions and companies may may get folded in you might some of them might go out of business but the smaller businesses will go out of business some of them will use the platform and decide you know they want to they have a change of strategy they want to build some of the software others might a selection of them will go to competitors and the scale that we're operating at now where we're driving you know the number of accounts and the number of deals that we're doing it could be for a variety of reasons but what's interesting in our spaces I think we are very much a challenger in an eight billion dollar market that is dominated by people like a we even have a 1.2 billion dollar software revenue stream in our market yeah so from from the markets perspective we're sort of the fast growth challenger with the net new platform that's opened and as you know machine learning and intelligence built-in is much more cloud as much more subscription all the sort of new software models that we and Silicon Valley take for granted it's still not the predominant model in the industry would you sell to Adobe for four hundred million if they offered it well I think I think it's fair to say that we've received very healthy acquisition offers you know at around that range and turned them down yeah and and walk me through as an entrepreneur how do you manage that risk I'll never forget the mistake I made it my first company where I turned down an acquisition offer that would have changed my life but I'm like you know what I read that Marc turned on Yahoo for a billion and you know what my dicks big - so I'm gonna say no right and it was a huge mistake so how do you manage when you take your wins over and move on to the next big thing yeah I think I think you know there's no right answer to that question one it's a very personal question each individual I think is in a very different spot in their life and so one I would I think you got to ask yourself you got to not be doing it for ego you got to be doing it because it's what you really want if your life no one will reward you for making a bad decision later but just because you made a decision to satisfy your ego at the time so know yourself would be the first thing I would say the second thing is know your opportunity and be real about it you know I think every time you turn down one of these things the moment that I've talked to every entrepreneur about is you have that ocean moment after you say no before something that happens in your life man I should have taken that deal right and you got to know that's coming so it will happen yeah will happen you got to know the risks after you do it and then of course it's about the rest of your shareholders ecosystem customers employees I make I believe in the promises that we make both to our investors our employees our customers so I take those things pretty seriously it's not just about the money last feeling on Mike's questions here before we wrap up with the famous five so at 12% gross revenue churn I mean what do you assume a minimum is a maximum can get dangerous because you're doing so well at term but what do you sue a minimum is in terms of lifetime value on these accounts once you get them in you know I think in our kind of business these accounts are with us for a minute you know five to seven years yeah so you know that that's kind of good that's a good minimum I mean many are I expect longer than that but yeah if you think about lifetime value calculations off of churn they're very healthy lifetime value yeah me five years at 250 a year and I assume that's probably that a CV is expanding actually you're over here but minimum that's one point two right yeah um how does that help influence what you're willing to spend on cat yeah I mean III believe that CAC is about a few things first you can look at the lifetime value economics early in a couple companies life cycle the realities you actually don't know the lifetime value of your customers they just haven't been with you long enough so you can divide by churn and the Excel works but if you don't really know how long they're with you and I think we're still early so yes I look at lifetime value as a ratio of cat but I also just simply look at risk so if you if you where we are today we we tend to spend sales and marketing at a ratio of about a 1 kak ratio right a 1 year payback period basically and that to me seems healthy for where we're at so just to be clear and just to be clear you would if your if your first year aids to me is 250 you're okay spending that first year a cv on acquisitions the 255 your first year a CV because I know at a minimum I've got five to seven years on the back end we've got a high gross margin business plus expansion revenue plus expansion revenue etc right so it makes sense now arguably one could be more aggressive than that yep as well I mean and I think there it's about risk it's about saying well stuff might change downstream you know all kinds of market factors affect your business you can really can't predict for five to seven years out with certainty at the scale of a business so you need to think about the risk associated with that and and we have gone back and forth between kind of I would say eight and nine month pay backers and as long as 15 month payback periods and it's it's sort of gyrated through the life to planning on cohorts totally yeah what's your team size today about 250 people all in Mountainview know we've got offices in Mountain View Dallas a small office in Boston London Amsterdam and Bangalore Mangalore interesting and last question you every year growth what do you what are you targeting what do you add yeah I think the the the without talking about today's row threat I think that the attention for the company is to get to a point where the company caught when it crosses a hundred million dollars it's a profitable company growing at forty to 50 percent here over a year and we're on track with that okay good I mean can you give me a sense of the past twelve months have you doubled tripled over a year or your over year is growing really nicely okay I mean is that more than two or three X what's really nice for you it's cool and really nicely without getting into specific okay just to be clear my audience may not know what really nice means but you've that's something you don't want to dive into I'm not into diving into the specific growth rates or the exact revenue numbers I think it's a it's between 50 to 100 we're on tracks great good so so over the past 12 months you've grown between 50 percent haven't you the revenues is between 50 to 100 million dollars on it and the expectation is that as we approach 100 million dollars it will grow between 40 and 50 percent and it will be profitable and that's within sight yeah it's because of how large numbers work I mean it's fair to say you have to be growing faster than that though currently right and you're as you get bigger you'll settle into 40 to 50 you have to you have to manage your both the growth and the profitability to achieve those targets yeah growing really fast and burning really fast you don't hit the profitability target and are pure on the other hand growing too slowly you don't hit the growth target so the data the art isn't balancing both of those it's it's certainly a dance let's wrap up here Roger with the famous five number one what's the last business book you read [Music] well actually the last well we just say the last book that I read that I believe applies to business is the giver which is uh is kind of a children's book and is about a world without emotions and irrational behavior and what that looks like and what that tells me by the way is there's a lot of things we like about our life that are irrational number two is there a CEO in Mountain View you're following or studying well the CEO that I admire the most is certainly Jeff Bezos you know I think what he's done with Amazon is extraordinary and you know a lot to learn number three besides your own with your favorite online tool for growing the business yeah I think I think my favorite on online tool to grow the business is actually Salesforce as much as I like all the cool mark tech stuff that we do I think the single most important thing to get right is use of Salesforce at our scale number four how many hours of sleep are you getting every night are you about seven eight okay so it's healthy and what's your situation married single you have kids I have two kids and I'm married awesome two kiddos and how are you Raj I am 42 42 okay one last question what he was your 20 year old self knew I wish my 20 year old cell knew to get into entrepreneurial undertakings even earlier and I did it pretty early how old were you in the first company I was 26 alright guys there you have it Raj get in before you if you're listening right now in your past 26 you're too late start go go faster at least that's what he wishes his 20 year old self knew launched the company bloomer reach back in 2011 scaling nicely raised their first 5 million they're now helping over 250 really enterprise customers paying on average 250 grand a year managed exp right digital experiences at scale they've raised a hundred million to date looking at you know settling in as they look to you know you know hit them break the 100 million dollar mark selling into 40 50 percent year-over-year growth rate healthy growth rate today currently doing between 50 and higher million bucks and revenue 12 percent again gross revenue churn annually of between 10 and 12 percent healthy economics with their team of 120 or sorry 250 based across Mountain View Dallas Boston London a few other locations Raj thank you for taking us to the top awesome