How Braze CEO Bill Magnuson grew Braze to $593.4M revenue and 2.3K customers in 2024.

hello everybody my guest today is bill magnuson he's the ceo and co-founder of braves formerly app boy bill's humanizing connections between brands and customers at a global scale by streamlining customers past present and future data in an interactive feedback loop braze allows brands to take immediate actions on insights creating personalized messaging experiences bill are you ready to take us to the top absolutely all right so so tell us about the company what's company do and is it a pure place sas company yeah so uh braze is sas company you know we sell technology we sell the platform um at our core what we're trying to do is help uh people form better relationships with their customers through a customer engagement platform um we've really built braze to be the backbone of customer engagement for people as they're looking to you know run more sophisticated strategies better engage their customers for more valuable relationships with them interesting and and walk me through uh on average kind of a customer are they gonna pay you you know 100 bucks a month a grand a month a million a month what general space are you playing in so we work with uh you know generally large-scale consumer companies uh and so you know average annual contract values are in six figures okay got it's called 100 grand or north yeah okay very good and walk me through you know kind of put this on a timeline for me when did you launch the company so we were founded in mid-2011 uh so we've been at it here for a little bit over or coming up on seven and a half years uh and you know when we first started you know i think that we saw this fantastic opportunity in the market where we really fundamentally believed that uh the advent of you know mobile as a technology platform as a way for brands to communicate with customers as a way um to deliver products and services or supplement um you know real real world products and services would really kind of transform the economy across every vertical um and transform that relationship between brands and customers and so when we started what we wanted to do was bring technology to play in that you know particularly hard problem and create an opportunity for brands to reach out with engage and engage customers in a way they couldn't before and have you been able to kind of grow and scale those bootstrapped or did you kind of give in and say okay we're gonna raise some capital here uh we raised uh venture capital from the onset and you know over uh over time we've kind of tried to you know responsibly match our own growth rate to the transformation that we were seeing in the industry uh you know i think that the first six years of the company uh if you look at the financing history we raised about 40 million dollars and now uh in the last about year and a half we've actually added another 130 to that um so obviously uh quite an inflection point recently and we think that that you know is largely matching the opportunity that we're seeing in the market got it so 170 into date i yeah roughly did you did you choose to do most of that um on equity or is a bunch of that kind of debt on the back of a big round uh that's all equity it's all equity financing okay interesting yeah we've we've used venture debt a couple times along the way uh but you know presently sitting without debt and you know generally preferring equity financing tell me quickly when was the moment you said okay now is the right moment to use some venture debt here uh you know we've never really had to tap it necessarily for operations or anything like that but just to give us some breathing room you know as we were growing make sure that we weren't uh under the gun for financing timing so that we could just stay focused on the business fundamentals and not worry about the financing as much yeah makes sense 2011 is launched six years in obviously growth there it sounds like you're growing even faster over the past 12 months what have you scaled to today in terms of total customers using you uh so we're coming up on about 600 customers uh today and you know we've been we'll end the year uh close to around 300 employees as well uh and you know with that customer base is across a lot of different verticals uh we kind of broadly break out you know our client base into what we call digital first uh and then you know enterprise uh but broken out across a lot of different regions you know one of the things i think that was really interesting uh especially as we kind of had our provenance with a lot of mobile digital first companies if you go back to you know 2013 2014 and some of our early clients there that uh they were a lot more global uh than you know a lot of other businesses were your early customers yeah i think more global than even our investors expected uh you know and i think a big part of that was just that the app store and phones and you know the distribution platforms were very global and with digital goods and such and as well as a lot of the new ways for businesses to scale uh they were increasingly you know being started in places all over the world uh and scaling all over the world so we've been kind of global from the very early innings uh but now uh you know very much have a broad global client base talk to me about kind of economics around the sas space are obviously critical really to churn cacarp but pay back these kinds of things help me understand churn and how you measure it at your scale and what it is today and how you keep it low yeah i mean i think that you know looking at uh cost so obviously we're measuring customer churn on kind of a net dollar basis as well as um from a brand base or from a you know local basis and uh you know it's it's changed over time as well uh especially as you know we've ascended into working with enterprise companies and as digital first companies and such have also grown uh in their own size uh and stability uh in the early days you know there was uh you know we worked with a lot of mobile startups you know a lot of which didn't survive and what have you and so um as we've matured as a business you know we've seen uh our turn you know declining year over year for the last few years uh you know partially due to uh improvements that we've made in terms of how we integrate onboard and support customers as well as just changes in our client mix and you know a lot of other kind of business changes so when you leave expansion out for now i'm sure you have a healthy engine there but if you leave that out for a second and look at just gross revenue churn over the past 12 months i mean are we talking like five ten percent where where do you fall there yeah something like that uh you know and it depends on the category uh obviously the kind of more traditional enterprise fortune 500 are going to be on the lower end of that and then when we're looking at you know mid-market uh digital first companies and other regions that's going to be a little bit on the higher range yep i've noticed once companies that are at your scale uh that have your price points you know typically have very healthy expansion machines when a customer or a group signs up for you in year one i'm gonna make this up let's say i sign up for a hundred grand uh what a tip what do you typically expand that same kind of contract to in year two yeah i mean it it kind of depends because we have a few different archetypes of how we get started with customer so um you know sometimes we'll start on a particular product or a particular set of channels uh you know where we really work across a lot of different mediums and across a lot of different messaging channels so we're going to work with a client with their mobile user base as well as their web user base maybe uh their you know people using digital set-top boxes if it's uh you know a media client things like apple tv or what have you and then messaging going out across uh earned chat or you know own channels on those first party platforms like delivering messaging to the web or web push uh maybe mobile push maybe email and so some clients you know when we first start working with people they're going through a digital transfer information and we uh take over all of the client communication for them kind of right out of the gate and so when we see growth in those clients it's usually because their customer base is growing or they're adding new products or we're expanding within the corporate umbrella uh in other cases you know we've had clients that have grown 10 20 x uh because we started out working with them on just one channel and then you know over time we've kind of taken over all the customer communication that's great well so let's let's just look at a macro level then when you look at net revenue retention annually across your entire cohort of customers i assume you're north of 100 how far north i'd say best in class is like we've had some people on at 140-ish i mean where are you generally yeah i mean we're a little bit lower than that uh but again it's kind of a bimodal distribution right there's some people that are you know huge multiples and then others we just grow as their user base grows yep no that makes sense um the reason i like to ask that question is i always like to understand how much of your growth year over year is coming from expansion on your cohorts versus brand new customers um what would you how would you answer that yeah i mean it's it's been that's been an increasing number so the kind of the amount of our new business that comes from upsell uh has been growing over time as we've added more channels and as we've added kind of more places that we are and also you know obviously as our um as our customers have uh kind of continued to break down silos within their organizations this idea of consolidating responsibility for customer communication so that you can kind of have one cohesive experience is really something that we're seeing more and more into the enterprise uh and and kind of across all different verticals and so that that's been an evolving story for us over time and it's you know it's something that's been growing and if you go back even two or three years ago we didn't have like a dedicated account management function uh you know and now we have that it's a dedicated team it's global um you know it's it's put out uh into specializations across different categories as well some other ceos i've had on that are that are at your scale or north or just barely south like cvent reggie you know ryan at qualtrics when they talk about dollar based cac in other words what they spend to get a new dollar of ar a lot of them are actually doing something which most people at lower scale would think is counterintuitive which is they're pushing their dollar base cac up because they assume that if you can you know whoever spends the most for the customer wins the customer and if you have confidence in your kind of cohort lifetime value expansion you have confidence to spend that up front where is your head in terms of aggressiveness around cac yeah i mean i i think that that's another um you know that's another thing that we certainly break down by client category as well as by region as well and it all correlates back to renewal rates that we're seeing um and how that breaks down so you know i think that at a high level that idea of uh obviously spend into renewable business uh right we we want to have customer relationships that last for the long term and you know those are the places where we want to be investing dollars uh from uh from a just kind of more absolute number standpoint you know we try to benchmark ourselves against uh the numbers that are available right uh so it's it's hard to kind of get the full story especially as uh from a lot of people especially as you know definitions change or what happens so we like to analyze s1s and kind of look at what companies that went public looked like in the years prior uh you know as when we look at kind of where our scale is right now to help us understand where we sit in ranges and i think that our fundamentals uh in a lot of this due to you know i think the we raise relatively less money than a lot of the competitors in our space for the first five six years of our life and so uh there's a lot of kind of discipline uh and you know kind of careful responsible spending and investment that's ingrained in the culture here and so you know we always benchmark very well uh kind of within ranges that we that we've been able to collect what would you so like we obviously saw in terms of another b2b sas company we just saw qualtrics s1 before obviously sap scooped in and so we get a good sense of their kind of dollar base cache i mean generally speaking i'm going to ask this in terms of ratio because as you said you have different archetypes you put this around but generally speaking no matter what the archetype no matter what the channel i mean are you happy with call it a 16 payback period are you happy with 24 months you know you can make money there where do you try and optimize payback period for yeah i mean i think that you know we're certainly comfortable uh with depending on the client we're comfortable uh within that range uh you know we just looking at our turn and renewal and and you know upsell and all those types of things uh we can certainly run a sustainable business in a range like that we're always at like 16 months yeah i mean like yeah certainly um you know that would be that's that kind of those kinds of numbers are fine but again it depends a lot on the category right like and with a large fortune 500 company that's 16 to 24 is totally fine um you know with a smaller you know big market digital first company um you know we obviously needed to be lower than that so yeah because you because you're assuming churn might be a little higher or or lifetime value lower yeah and there's you know there's business risk with them or the you know expansion uh dynamics are different or whatever it happens to be interesting um when you do spend money to i mean you spend money to acquire customers right where are you spending that money i assume there's some head count of the 300 that are focused on this i'm assuming you're doing some paid but anything unique you're doing there uh you know i i think i would say something unique uh we do a lot of uh internal dog fooding and use braze i braised quite a bit uh and so as we're you know moving and we do this not just for um prospects but also for uh new customers and for new employees uh where these are all just kind of a life cycle journey right and we want to be able to kind of communicate and orchestrate across all different channels uh as we you know are working to improve relationships and so uh there's a lot that's done there uh and you know that ability to kind of have real-time data flowing through the system and taking action across a lot of different channels uh has allowed for us to run you know some great strategies i think that uh you know we're not built to be a kind of b2b scale platform uh you know we sell primarily into consumer scale businesses and so it is interesting with us kind of dog fooding uh our own product at a smaller scale than that uh it's an interesting kind of lens from a product inside perspective yeah as well yeah um have you guys passed 100 million bucks in arr yet uh yeah we haven't passed that yet um it's certainly within range you know the way that we're uh given our growth rate uh you know it's a number that we can see in the near future do you see that like next year are you still thinking maybe two years to hit that i think that we could get there next year for sure it's like like it's a stretch kind of uncomfortable goal for next year or no it's like we should do this otherwise we're not growing how we should yeah we feel good about it yeah that's good all right very good and then in terms of i mean today we can kind back into a minimum right so if everything's starting out at 100 grand in terms of acvs and you've got over 600 customers that puts you north of 5 million bucks a month today is that accurate uh something like that yeah yeah that's great and then when you look at growth year over year um where were you about a year ago today uh uh i don't know mid-30s something like that i don't remember exactly you mean like 35 or 35 percent of your growth or ar we're chatting uh that's that's ar we're chatting december 13th right now so uh you know obviously q end of q4 is coming up uh and then a q4 was coming up last year so i don't remember exactly but yeah yeah no well it's so look q4 is a big one you know your sales reps are going hey listen buy it now it's a 30 discount you avoid the tax man right it's an expense yeah we don't uh we don't get into timing based discounts uh like that you know no obviously i don't mean you discount i don't mean you discounting i mean if if brands have money left on the table and they spend it with you today they don't have to pay taxes on that money so if they're essentially getting a 30 discount from the government oh sure yeah yeah yeah very good bill all right let's wrap up here quickly with the famous five number one what's your favorite business book uh i would probably say the hard thing about hard things uh is my favorite one i've read in a while uh but you know i think crossing the chasm uh was an early favorite read i read that before part thing about how things was even published and it's a really interesting lens on uh product design in markets yeah jeffrey moore it's it's one a lot of people don't know about but the ones that know it know it number two is there an under the radar ceo in new york that you like kind of getting lunch with and learning from uh you know i kind of expanding and continuing to engage with more ceos is something that i've been working toward but not uh not something where i've got a good kind of you know network right now i've been sitting in the coc for about two years now so that's uh that's something that i've been working at oh god you're not so you're not the initial founder are you coming with the vc round i was uh the co-founding cto actually i took over ceo about two years ago oh great very good all right number three what's your favorite online tool for building the business uh you know i think that when i look at this the favorite uh favorite tool in general is you know we're trying to work to be more data driven make sure we can kind of stamp out bias and make good uh decisions around the organization and so one of the areas that we have invested pretty heavily into um at least in comparison to a lot of the people that i talked to at our stage is in uh technology and software in the people space so we're using you know greenhouse is our ats we're using lattice for performance management and okrs we're using uh bamboo for you know just kind of directory and other sorts of hr tracking information and we're also using culture amp for uh you know quarterly engagement surveys and things like that so uh and then we've got braze like bray's tying all those things together uh in order to kind of pull the data through and move people through a customer journey and that brazen brace stack is also hooked into skill jar which we're using for uh internal employee enablement as well as customer training and such so we've got some good uh kind of collaboration going on there amongst both internally and externally facing teams and so there's there's kind of a full data flow and software stack that we're putting to bear there you've got a machine you've got a machine bill how many hours of sleep are getting every night uh not enough uh you know it depends on whether i'm traveling i'm at home uh and the uh the kids wake up at about 6 30 every morning so it's uh so so how would you say like six seven hours maybe something like that yeah yeah yeah and two kids on the weekends you know less during the day two kids you said married yep and how old are you live in the east village uh i am 31 31 last question what do you wish your 20 year old self knew oh man i don't know there's a lot that uh a lot of you go through in business and life that uh you don't get to do very many times uh you know founding a company is one of those things fundraising is another uh you know big big personal life decisions uh you know buying a house getting married etc kids more yeah kids more context on any of those things would obviously be helpful for a 20 year old self but i don't know if that's really i don't know if any of our 20 year old selves are really ready to impart the wisdom of the ages on any of those topics so yeah guys enjoy enjoy the journey again bray's helping uh helping uh customer and helping big brands really understand customer engagement simplifying it formerly app boy you know call it 30 to 35 million run rate a year ago now growing call it 5 million ish per month that's from 600 enterprise customers paying north of 100 000 acvs founded in 2011 bill was the co-founding uh cto took over as ceo about two years ago today they're about 300 people 170 million bucks raised to drive that growth uh revenue churn or sorry net revenue retention again a little south of call 140 so healthy expansion revenue totally healthy depending on the archetype between a 16 and 24 month payback period as they look to scale bill thanks for taking us to the top yeah absolutely thanks for having me