Brightfunnel Revenue, Valuation & Funding (2017)

hello everybody my guest today is Chris man he has over 25 years of experience in product management and strategy in 2010 he joined biz o and created a marketing automation system for b2b paid advertising and led the company through its 175 million dollar acquisition by LinkedIn he was also involved in leading product strategy for linkedin's advertising business prior to biz o Chris helped product leadership roles or held roles at IBM and core metrics today he is a founder CEO leading bright funnel Chris are you ready to take it to the top yo Nathan excited to be here I sure sound old with that long track oh man you look fresh you look hip you look cool it's all good so tell us real quick I want to get some clarity on something you said you led biz o through the acquisition were you like head of BD there or were you the founder or what what was your role there yes hope I didn't say it that way so I was head of product started when there was 15 people and was the key executive on the team as we agreed the company's best time in my life man so I want to get in your brain right to understand where your head was that when you launched bright funnel part of that is you know an entrepreneur whenever they launch the company they have to look at risk like I have three kids I have to have this much in savings before I do this in case it fails so I can put food on the table that kind of stuff where was your brain prior to launching bright funnel in other words I mean were you early enough that busy where the financial reward of the exit was enough to basically give you security so you could go take another big risk no well so what happened at bright funnel for me was that I began advising bright funnel when there was about 18 people in the company were about 45 now and so that was while I was at LinkedIn after the acquisition of biz oh and Nadine Hussein the CEO at the time and I became good friends and we decided that I should join the company when the my time at LinkedIn was over so I joined as head of product and we planned a transition where I take over as the CEO see so I took over in the CEO seat here in April so that was my path to the CEO seat it's a that's a difficult bridge to cross that you're talking about in terms of going from zero to one and people have family and that kind of thing and I would have loved to have done that but all of the pieces were never in place for me to make that type of a job did you have to stay at LinkedIn II was there aren't out component to that sale which made mean you had to stay there for a while oh yeah yeah what was it like I mean is is late look I this is a side question but I think it's relevant for my audience you know I'm using LinkedIn pretty aggressively now in terms of republishing content I'm starting to see like some changes where I'm getting more engagement it's actually it's interesting I'm getting more engagement in some cases and I am on Facebook and other outlets I mean will they ever have a really mature a dominant advertising platform to the likes of what Facebook has in your opinion well from the scale standpoint no you know like that's a b2b focused audience the audience of professionals that they go after are you know high talent high income professionals so you know as opposed to janitors on the the the far end of the spectrum you know those types of audiences aren't on on LinkedIn so so the scale will never get to to Facebook where anybody in the world can get value out of Facebook right however what's so rad about LinkedIn is that data set that they have I mean they know skills they know the content you're interested in they know your job history they know your education they know the people that you you network with so you can imagine from an advertising standpoint that's super powerful and in fact not just advertising but figuring out you know who the hell you should be advertising to and what kinds of companies you should target so that that's gonna be a very powerful always-on part of the b2b marketers ad budget for a long time interesting and then help me understand it was it just the relationship with Anna d-mat at bright funnel that led you in or were you part of the fun the last funding round they did and it was contingent upon them bringing a CEO or like what were some of the other epic lawyers being weld yeah well so I was part of the ad game for her now for eight years right and so when you're thinking a lot about advertise you're you're thinking a lot about how to prove or understand or measure the value of advertising so back at biz o we started building something like bright funnel that tries to understand all of the touches with the key people and the key accounts that lead to pipeline of revenue right and so when we got to LinkedIn we actually acquired a company called flip top where we wanted to repurpose that team and build this kind of thing for advertising so bright funnels for advertising and so as I got to know bright firm like holy [��__��] this is way more complicated than I had suspected and you need to have kind of a switzerland if you will for doing attribution or marketing measurement where you know LinkedIn should not be in a company that you go to to have them prove the value of their advertising yeah nor should Facebook right you need a platform that measures all of that and for b2b marketing you also need to be able to look at offline things like what happens at events and road shows and and so forth so it's it's a much bigger problem and I saw this thing and I know b2b marketing so well and you can just start to see all the different things you could build off of a platform like this and the data set so so I couldn't turn my mind off and and nadeem like dude I mean what about like I think you had there were two other co-founders I mean are they still out the company and that were they kosher and cool with you coming in as well there's I mean the reason I'm asking is that there's usually conflict when this kind of thing happens and I'm curious if there wasn't if so how you resolved and how you're growing you know now relative to getting over any conflict that might have existed yeah well to a certain extent you know in a forum like this I probably don't want to get into the all of the details of the transition and how that happened I would say that it's hard to have something I would imagine that it would be difficult we must be a case study in how to do this because Nadine and I work together every day he's you know executive chairman on the board he's doing business development for us he doing some opening doors in this network so you know the transition has been very smooth and to a certain extent plan but not fully over my time here I've built a lot of credibility and great relationships with all of the executives so I Ranjan and the sheath part of that executive team are they still with the company or now yeah they are yet so everything's tight man yeah I'm not I'm not bullshitting you it's it's really happening here we just had a record corridor people are always I mean you can't call my show and say record core or without attaching numbers to it what's that mean yeah so you know a hundred and fifty-one percent of revenue plan you know revenue was three times new revenue new ARR was three times that of what it was over first quarter a lot of things are happening even though you mean q1 of the same year of 2017 or of last year 22 2016 2017 got it got it blew it we blew it up this quarter and give us a sense of so you joined in twenty you said 2015 or 2016 I was advising in 28 2015 and got in the walked in the company in January of this year okay so we haven't spent much time because I was focused on the story but the company was launched I think in 20 late 2012 early 2013 but tell it for people I don't know tell us what Brightcove does what sorry what bright funnel does yeah yeah so marketing is the second biggest you know budget line item on the P&L right and so so it's important that the CEO understands and optimizes that spent number you know very big priority yet when you look at what's happening in marketing today b2b marketing is where our focus is is there isn't a measurement platform that stitches and can see every single touch that marketing has on a prospect and an account all the way through the buyers journey so the right funnel puts this data together and presents it in a way it's really easy to understand and then let's marketers do you optimization so you can do things like okay wow I'm looking on getting all these leads from Facebook the cost per lead for advertising on Facebook is super low and it looks like from LinkedIn that the cost per lead on LinkedIn is much higher so I should put more budget to Facebook this is how without this kind of system the marketers would think now when you can tie all of those Facebook leads and LinkedIn leads down to pipeline and revenue you say holy [��__��] the cost per revenue on LinkedIn is lower than the cost per Facebook for revenue on Facebook and that trick is typically like dollar spent for a new dollar of ARR yeah yeah exactly so it goes on you're looking at and then you're looking at events and you're looking at road shows and your content and the interplay with our box and overtime cohort analysis yes sir yeah interesting okay and then I mean so what's the business model is it is it's a spaced I imagine yeah yeah it's a it's an annual subscription you know our I know you like the numbers give it to me don't even make me ask save me the air what can you tie I'm super excited our average ASP this last quarter was 93 K which is great for a cloud company the average selling price that's annual annual yeah and yes that is that reflective of historical data as well or has that been like doubling or tripling you every year it's a 60 K coming out he won so we're so we're moving upmarket we're finding at the larger larger organizations concurs the customer of ours they have 150 marketers that touch and use the product across the globe and so we're finding that we have a bigger impact a better success rate you know more revenues yeah similar customers support costs as a as a 50 person company so we're wanting to play in these companies that are a thousand people and hire yes there's a lot of there's a lot of good volatility happening right or was it was 60 K you know said q1 it's it's like increase but almost like a third right up to 90 so maybe a better question would be if you look at all historical data back to 2013 I mean what is the what's the average ARR per one of your customers and is that based mainly on number of seats or what parts of the product they have turned on so you're asking if I look at the whole book of business what is the average yeah that's right yeah I mean what's the all your goin stop on the Unbounce so and we no longer take a deal for less than 30k when the company started annual subscription 30k when the company started they were scrapping for yeah you're just trying to get it yeah so what's the average if you look across the whole the whole base okay okay that's pretty healthy so that I mean that's enough to warrant an inside sales team correct oh yeah absolutely what's what's your you have 45 people now what's the breakdown between engineering and versus sales and marketing yeah so we are about a third engineering we have a pretty heavy marketing team because we're a marketing organization I think there's eight and marketing well that includes our sdrs so we count the STRs and that and then the sales team is now six sales folks which is lightweight you know for historical reasons we've been slower in building up that organization and what's the weirdest thing you've done don't tell me like Facebook ads or LinkedIn how's your inbound marketing or whatever what's the weirdest thing you guys have done to acquire customers the weirdest thing I don't know the fun part is just walking in and telling them that we're [��__��] winners and we make our customers winners and if you go with us you're you're gonna be on the right path give me somebody give me something real though I mean was there a weird conference you sponsored or like stickers you print it off or like oh yeah went crazy yeah Dana Rothman's our VP of Marketing and she's just very creative so we were at mark the Marketo conference is a big conference for this space she had you know this thing where we brought in a bunch of dogs from the companies puppies you know there was a puppy Corral and people could come by and see puppies and you know just it's like a magnet how many how many leads did you get from that I'm curious I don't know I'd have to check in bright funnel to show you I don't remember but we had a lot of hang time you know people come over they pet the dogs everyone softens up this dog if you want to pet the dog you give me your business card that's right yeah all right and then so what about our other economics on this I mean what are you spending to acquire one of these customers let's see so Cpl has been cost per lead has been roughly $59 across all of the programs and how many leads do you need for a new sale we are converting I had the pipeline numbers revenue numbers in my head and not the the lead counts so we're converting about we had a hell of a quarter we converted about 30% of our pipeline last quarter okay so you need about caught three or four leads to get one new paying customer yeah we we want to have 5x the pipeline every quarter that we feel good if we can have 5x the pipeline a recorder that as a head of our revenue goal just to be clear just to be clear though Chris so on a $59 cost per lead if you get four leads you said you're converting 30% so if you get four leads which would cost about two hundred thirty six bucks you're converting one of those into a an average selling price of 90 grand yeah you're asking for metrics that aren't in my head what are what is in your head tell me those well just what I just described so if we have a pipeline which is you know total value of all the opportunities that we track in our systems so let's say we go into a quarter with 300 mil in pipeline yeah our 3 mil in pipeline rather we in last quarter we were able to close so there's a number four we closed a third event so you can see million million and new pipeline I see but we don't want to have to be that tight we'd like to have 5x what do you mean by 5x if you have three million books in your pipeline you want to close what so I would have a 1 million dollar quarter for new ARR I want to have five million pipeline Oh got it got it got it got it you know you don't want it to be that tight is what you're saying are those the real numbers 3 million in 1 million yeah that was yeah interesting um and then so take me so team size 45 are you guys all based in San Francisco or where are you based everybody's here in the city and now we have two people that are remote one guys up in reading of all places and then we've got a guy that I hired out of busy who's out in New York now so when my former buddies taken on a count executive role gonna be the feet on the street in New York that's great and how many customers are you serving today we just crossed the 70 customer mark that's great yeah that's great okay so you guys are really I mean there's two kinds of SAS companies like high volume low ARPU or low volume really really high ARPU you guys are very much in the latter yeah yeah yeah totally so I mean I I mean if I take the 70 customer amount times the 50k kind of eight you know ASP on average annual selling price it it takes you're mr2 somewhere around like 300 grand I mean is that generally accurate or we get you get me back here yeah all right Chris you cut out did you hear my question no so what I did is I multiplied 70 customers times a $50,000 asp to assume you guys are doing over three million bucks in ARR is that generally accurate it's a little bit lower than where we are but yeah that's good it's good I don't want to give all this away hey you just keep smiling just give me big just give me big ranges if you want to stay keep it keep it high level last few questions here before we wrap up because we're running over but I'm enjoying this churn or you can do you guys have I mean logo churn monthly if so what is it and then what's your net revenue churn annually we'd like to stay away from churn if we can yeah we have turn we always have more than we want yeah what's more than you want like what's your target don't tell me what you have but like what would you like to be below well you know 10% you know revenue churn or logo turns our annually yeah we're able to you know upsell the account base so that we're we're never going negative on a quarter in terms of revenue churn yeah but logo churn you know you just hate to lose every one of those customers but if we can stay at 10% you know annual logo turn that would be where we'd want to be and then revenue cannot ARPU expansion over time if someone in year one is paying you a hundred bucks what are you usually able to expand that to in year two is it 120 so it's 20% growth or what 2025 really I got that right damn baby I'm on fire all right yeah okay cool let's wrap up here Chris with the famous five number one what's your favorite business book oh there's too hard thing about hard things and high output management by Andy Grove number two is there a CEO you're following or studying right now well Russ glass was the CEO of is oh and he's just ingrained in me and can't say enough about him this amazing guy number three besides your own as their favorite online tool you have favorite online tool that I have [��__��] man I'm using LinkedIn all the time that's good all right number number four how many hours of sleep dude every night working on nine okay but what are you getting seven what's your situation married single you have kids yeah two kids dog great wife that's awesome man how old are you Chris forty-eight all right take us back twenty-eight years what he was your 20 year old self new why do I wish I knew when I was 20 years old well this so this is one of the things that Russ glass taught me and asked for me was he said