Latka logo

Founder Interview

How CHEQ Grew More Than 200% in a Year with 100 to 150 Customers and $30M Raised (Interview with CEO Guy Tytunovich)

Interview Date
August 6, 2019
Interviewee
Guy TytunovichFounder and CEO
Watch
Watch the full interview

Company Metrics at Interview Time

Annual MRR Growth (Aug 2019)

Well over 200%

Total Funding Raised

$30M

Team Size (2019)

100

Gross Churn (2019)

0%

Historical Snapshot

These numbers were reported by Guy Tytunovich during the interview recorded in August 2019 and are a historical snapshot, not current figures. See CHEQ’s current numbers.

Key Takeaways

  • 01Asked when CHEQ would break $2M in MRR, Guy said it already had, and he put growth over the past year at "way north" of 200%
  • 02The company serves between 100 and 150 enterprise customers
  • 03Median ARPU is $20,000 per month
  • 04Contracts are fixed monthly fee with a minimum two-year term, priced on traffic volume tiers
  • 05Gross churn is 0%, attributed largely to the minimum two-year contract structure
  • 06Accounts expand at approximately 30% annually based on traffic volume tier growth
  • 07The company has around 100 team members, about 70 of them engineers, mostly based in Tel Aviv
  • 0815 quota-carrying sales reps, with a year-one quota of $500,000 in new ARR and year-two quota of $1M
  • 09CAC payback period is approximately 7 months, which Guy calls "not representative"; CHEQ optimizes for a nine-month payback
  • 10Guy Tytunovich co-founded CHEQ in 2016 with fellow graduates of the Israeli Army 8200 Cyber Intelligence Unit

Company Metrics at Time of Interview

MetricValueSource
Annual MRR Growth (Aug 2019)Well over 200%Founder interview, Aug 2019
Customers (2019)Between 100 and 150Founder interview, Aug 2019
Median ARPU (2019)$20,000 per monthFounder interview, Aug 2019
Gross Churn (2019)0%Founder interview, Aug 2019
Account Expansion Rate (2019)30% annuallyFounder interview, Aug 2019
CAC Payback Period (2019)About 7 months (he calls it not representative)Founder interview, Aug 2019
Total Funding Raised$30MFounder interview, Aug 2019
MVP Cash Spend$750,000Founder interview, Aug 2019
Team Size (2019)100Founder interview, Aug 2019
Sales Reps (quota-carrying) (2019)15Founder interview, Aug 2019
Year-One Sales Quota (2019)$500,000 new ARRFounder interview, Aug 2019
Year-Two Sales Quota (2019)$1M new ARRFounder interview, Aug 2019
Salesperson Profitability Multiple (2019)5xFounder interview, Aug 2019
Minimum Contract Term (2019)2 yearsFounder interview, Aug 2019
Year Founded2016Founder interview, Aug 2019

Growth Breakdown

Revenue

When Nathan tried to work out revenue from the customer count and the $20,000 a month Guy had given as the average, Guy pushed back on the method: the $20,000 is "the median average", "the 20% huge customers" are calculated differently, and for CHEQ the average client "is not a division between the total revenue and the amount of clients". When Nathan asked when CHEQ would break $2M in MRR, Guy said, "we've already did that." A year earlier, MRR had been "way less than half" of that, and he put growth at "way north" of 200%.

Customers

The company serves between 100 and 150 enterprise customers as of August 2019, spanning advertisers, agencies, demand-side platforms, and supply-side platforms. Guy declined to give a precise count but confirmed the floor of 100. Accounts expand at approximately 30% annually as clients move up traffic volume tiers.

Team

CHEQ has approximately 100 employees, with around 70 engineers based primarily in Tel Aviv. The sales organization includes 15 quota-carrying reps, with year-one quotas set at $500,000 in new ARR and year-two quotas at $1M. The company optimizes for a 5x return on salesperson OTE.

Funding

CHEQ had raised around $30M in total by the time of the interview. Guy said the company had "just finished raising our B round", which had not been announced yet. If everything goes according to plan, he said, CHEQ had bought itself "around three years of runway". Nathan worked that out as burn of no more than about $700,000 a month, and Guy agreed: "That's my rule. That that is literally the number."

Growth Strategy

Enterprise-Focused Sales Motion

CHEQ targets large enterprise advertisers, agencies, and platforms with long sales cycles. Guy hired a COO from a company sold for nearly $1B to build out the sales operations, quota methodology, and ACV framework after early missteps trying to do it himself.

Long-Term Contracts with Volume-Based Expansion

All contracts carry a minimum two-year term and are priced on traffic volume tiers. When a client's traffic grows past a tier threshold, they automatically move to the next pricing level, driving approximately 30% annual account expansion without requiring renegotiation.

Cybersecurity Expertise as Differentiation

Guy spent nearly a decade in Israeli defense intelligence, working on cybersecurity and later on natural language processing, and says what he did for the government "really is similar to what I do now". He describes ad fraud as "a cybersecurity issue" that is "very specific and very expertise based", one where even Google and Facebook "sometimes need help". In one case CHEQ found site owners who had banded together to defraud an SSP client, and traced the scheme from one site to a network of interconnected sites.

Hiring Operators After Learning the Hard Way

Guy says he was "absolutely clueless" when he first set sales targets and learned "the hard way ... by failing, by making mistakes". His lesson is that a founder who is also CEO "needs to get help from people whose expertise is business operations", people who "have done it before, even multiple times". The COO he hired put in CHEQ's quota attainment and new ACV methodology only after Guy had "failed miserably in doing it properly", and Guy now calls the process "fairly robust".

Raising Capital Whenever Possible

Guy says he has been obsessing over something someone once told him: "You know when's a good time to raise capital? Always." With that in mind, CHEQ had just finished raising its B round when the interview was recorded. Nathan suggested that a company close to breakeven can tell investors "we don't need the money. Give me a better valuation", and Guy agreed: "Exactly."

Best Quotes

“I think the average, generally speaking, is at around $20,000 a month.”
“So we have around 100, the vast majority of which are engineers, mostly based in Tel Aviv.”
“For a junior new salesman that would be around $500,000 of annual added ARR.”
“I think that to be fair, we're a very young company with very long SaaS contracts. So in all fairness, whilst I think our clients are in love with us and with our product, they hadn't had the time to churn out yet.”
“Again, we do a good job, but it's not because of the good job that we do. It's because of the minimum term of the contract.”
“More aggressively, we're talking about around 30% annually.”
“Considering the actual burn rate and where we are in terms of profitability, this is, again, I can't go into specific, but this is very significant runway.”
“If everything goes according to plan, we've bought ourselves around three years of runway.”
“The growth has been way north than 200%.”

What Happened Next

At the time of this interview in August 2019, CHEQ had just finished raising its B round, which had not yet been announced, and Guy Tytunovich said that if everything went according to plan, the company had bought itself around three years of runway. The figures on this page come from that conversation and are a point-in-time snapshot. Visit the CHEQ company profile for current metrics and any developments since this recording.

View CHEQ’s current profile and metrics

Full Transcript

Introduction and Israeli Army Background

Nathan Latka

00:00Hello, everyone. My guest today is Guy Tytunovich. He is the Founder and CEO of CHEQ, which he founded in 2016 with fellow graduates of the 8200 Cyber Intelligence Unit in the Israeli Army. Guy, ready to take us to the top?

Guy Tytunovich

00:12I am indeed.

Nathan Latka

00:13Alright. I wanna put money in. One thing I've realized is you never bet against ex Israeli Army folks. Do you guys... You just... There's some... There's something about the program that just pumps out really smart software CEOs.

Guy Tytunovich

00:26Well, first of all, thank you very much. I would concur, only not in my case. I am an exception to the rule. But yeah, I think one of the things that's so great that's made us kind of the startup nation in Israel is the fact that to a certain sense, we're a post traumatic nation.

00:45When we're young teenagers, 18 years of age, we have to go to the army, and the nerds among us go to the defense intelligence, and they have to start learning stuff.

Nathan Latka

00:56Is that what you did?

Guy Tytunovich

00:57And and... Yeah. I did. I did. Started my journey in hacking at seven years old. My dad brought home a fax machine, and I thought, oh my god. What... Are there small people inside the the Then

01:12shortly after eleven years after I got drafted to the defense intelligence and spent nearly a decade working on different cybersecurity fronts later on also natural natural language processing and yeah.

What CHEQ Does and Why Ad Fraud Matters

Nathan Latka

01:24Okay. So now you're working on cheq. So why do people have to validate numbers that Facebook power editor is giving them in terms of their cost per click and their impression data and all that jazz?

Guy Tytunovich

01:36That is an incredible question. The answer is,

01:42and it might surprise, I think, some of the viewers, listeners, but at the end of the day, I think companies like Google or Facebook are extremely reliable. And I don't think we need to vet their numbers. What I do think, however, is... And I think Google and Facebook concur is that there is a cybersecurity issue revolving around ad fraud, and it's a very specific and very

02:08expertise based issue. And like in many, many different aspects other than advertising or other than ad fraud, the likes of Facebook and Google sometimes need help. And their advertisers sometimes need help in really preventing those bad instances from happening.

Real-World Fraud Case Study

Nathan Latka

02:26Wait, so can you give me an example of like a really bad fraud case that cheq found across one of your customers?

Guy Tytunovich

02:33Sure. So I can't go into too many specifics, including names and so on and so forth. But what I can tell you is that

02:41in a lot of the cases, what I used to do for the government really is similar to what I do now or to what my company does now. I'll give you a small example. One of our clients is a very big,

02:59what we call an SSP, a supply side platform. They monetize traffic for publishers.

03:07About a year ago, we discovered a very targeted and sophisticated fraud case that was targeting specifically them. At first, we saw it on one site, and once we were finished, we saw it on around 100 sites. Then we needed to prove that these sites are interconnected. And the aim of these sites were to generate fake clicks for that SSP.

Nathan Latka

03:32Interesting. Were all of these media, I'm gonna make this up. It's like a latkemagazine.com, you know, lacacontentmarketing.com, blah, blah, blah, blah. There's maybe they're it's not as obvious, but they're all kind of like in the same network. Were they altogether those companies purposely doing this? Or was there some bad actor targeting those media sites then to get to the supply side platform?

Guy Tytunovich

03:56In that case, it was the site owners. So the site owner... Site owners banded together specifically to defraud that SSP.

Nathan Latka

04:05Interesting. Is this...

Guy Tytunovich

04:06This is a real...

Nathan Latka

04:06So this is a real problem. I mean, there's these are like big schemes that do this. Are we talking like millions impressions?

Guy Tytunovich

04:12Yeah, we're talking about billions of impressions in that case. And we save about $2,000,000 per month of activity, of revenue, of wasted revenue, of fraudulent revenue. And at the end of the day, in these cases, what's also important to note is that you said for instance, blahblah.com, it's exactly that. But in some cases,

04:36I would never accuse the likes of Turner, WarnerMedia, etcetera, etcetera, of doing bad things. They are not behind those kinds of things. Yet these sites suffer too. In that case, in that example that I just gave, it's a bit of a different one because it was a bunch of small sites purposely designed and built to defraud that client of ours. But in a lot of cases, the big publishers also suffer from fraud. We call it nuclear

05:06windfall, basically. Obviously, it's not directed by the big publishers, but unfortunately, they're also targeted.

Pricing and Average Contract Value

Nathan Latka

05:12Interesting. Okay, let's get into your business model here for a second. So these folks pay you to make sure that they're getting what they think they're getting. You're you're preventing essentially ad fraud. Give me a general target. And you have so many different cohorts that you serve just based off your website and your pricing. We don't have to go on all of them, but give me like a sweet spot. On average, what's the company gonna pay

05:30you to use your technology?

Guy Tytunovich

05:32Oh, it really depends. It really varies on the volumes of traffic that they would buy. I'd say that a tier one massive, massive, massive international advertiser, think brands like the P and Gs of the world and the Unilevers of the world, the ones that spending billions of dollars yearly on digital advertising, they would pay in the realm of up to around $1,500,000 a year. The

06:02large platforms that aggregate a lot of traffic would pay slightly more than that.

Nathan Latka

06:09Now, are you giving me like your top 2% of your customers or is that a fair average? Is about a million a year across?

Guy Tytunovich

06:15No, wish it was the average. Not that 2%, but it said it's that 30%. I think the average, generally speaking, is at around $20,000 a month.

Nathan Latka

06:15Okay. So 250,000 a year.

06:31Yep, yep, yep. Okay, cool. And the reason I asked that is because it will affect the rest of my questions related to how you built your internal sales motions, things like that. This is clearly an enterprise

Guy Tytunovich

06:31Yeah,

Nathan Latka

06:31sales

Team Size and Engineering Headcount

Guy Tytunovich

06:40of course.

Nathan Latka

06:40So break your team down for me. How many folks on the team right now and how many of them are engineers?

Guy Tytunovich

06:46So we have around 100, the vast majority of which are engineers, mostly based in Tel Aviv.

Nathan Latka

06:56When you say majority, you mean like 70 or 80 of them?

Guy Tytunovich

07:00If I'm not mistaken, around 70.

Nathan Latka

07:02Okay, cool. Are you an engineer by train?

Guy Tytunovich

07:05I am not a very good one. I am by training.

Sales Team Structure and Quota Targets

Nathan Latka

07:09Alright, so 70 folks are engineers. And then again, let's jump over to the sales side. So I imagine you probably have folks with quota, how many quota carrying reps do you have?

Guy Tytunovich

07:19Everyone else pretty much Oh, except for maybe g and a, except for g and a, about 15 quota quota attaining the personnel.

Nathan Latka

07:27So how did it look one of the things that is critical scaling a SaaS company, especially if an inside sales team where your ACVs are at your level is making sure you get your like new salesperson profitability and pro formas right the onboarding time, the quota targets, the profitability per sales rep. How did you when you hired your first salesperson? Where did you, like, put a stake in the ground, and how have you had to edit

07:48that stake over your first 14 hires?

Guy Tytunovich

07:51You're jumping into conclusions that I actually put my stake under... Stake in the ground. I was absolutely clueless. I learned the hard way. I think maybe the best way, but the hard way, by failing, by making mistakes, and in this case as well. I think at the end of the day, there came a time where I understood, and I think every entrepreneur, especially if it's a CEO who's also the founder, needs to understand is that he

08:16needs to get help from people

08:21whose expertise is business operations. People like you, people who have done it before, even multiple times. So what I did is I hired a COO of a company that was sold for nearly $1,000,000,000 to be my COO. And he really instilled all the business operations, quota attainment, new ACV methodology, and so on and so on. And he put this stake on the ground only after I failed miserably in doing it properly.

08:53That being said, I feel that our current process is fairly robust.

Nathan Latka

08:53So what do

08:58you put if there's you know, I'm going to your indeed page applying for a job to work at cheq for your sales role, you hire me on day one, you're gonna say Nathan, just so you know, like first year, we expect you to hit quota of x, what is it typically?

Guy Tytunovich

09:12For if for a junior new salesman that would be around $500,000 of annual added ACV added added ARR

Nathan Latka

09:20over what period of time i.e., my first year

Guy Tytunovich

09:23annual Yeah, over the first year.

Nathan Latka

09:25So

09:27production, what do you put me at? Like a million in new bookings a year?

Guy Tytunovich

09:31Year two is at a million. Yeah.

Nathan Latka

09:33And does it cap out there or do you keep accelerating?

Guy Tytunovich

09:36It caps out in terms of the quota and yet it increases in terms of the bonus structure. So the bonus structure does improve with tenure or seniority.

Nathan Latka

09:50Okay, so the reason I'm asking this is every CEO I've spoken with, I don't know if you're this range or not, but every CEO I've spoken with doing between like 50 and 150,000,000 in ARR, they optimize for some amount of salesperson kind of profitability. And this is a function of what their on target earnings, like, quota is relative to their full comp at OTE. What do you optimize? Is it five x, 10 x, seven x? What

10:10do you optimize your salesperson profitability for?

Guy Tytunovich

10:13That is, again, a very good question. Basically, we are in a fifty-fifty between... Roughly speaking, it does vary quite drastically depending on the person and the seniority and so and so, and even the vertical that he's selling to, but let's say it's fifty-fifty.

Nathan Latka

10:30What do you mean by that? Like half our 5x, half our 10x?

Guy Tytunovich

10:33No, no, no. Fifty-fifty in terms of the division between commission and base. And hence, the profitability is usually... Because we don't put commission on the profitability margins, it's usually 5x. At the end of their profitability on the cost of

10:51customer acquisition is extremely high, and yet it's not due to the multiple on the salesman OTE.

Nathan Latka

11:00So Guy, let me role play with you. I'm a year two salesperson at your company. My quota target is million. You're optimizing for a five X return on me as a salesperson, which means my fully earned quota plus base is going to be about 200 ks of which 100 is base and 100 is upside in commissions if I hit quota.

Guy Tytunovich

11:18Almost, almost commission would probably be higher in that case.

Nathan Latka

11:18Okay.

Guy Tytunovich

11:18And also base would be a little higher, but yeah.

CAC Payback Period and Sales Funnel

Nathan Latka

11:24Okay, very cool. Interesting to understand that. So when you when you obviously sales is just one function of your fully weighted customer acquisition cost, will you spend the full year ACV, so two fifty grand upfront to acquire a customer? What payback do you optimize for?

Guy Tytunovich

11:39So theoretically, yeah, we optimize the return... To generate a return after nine months of the entire customer acquisition cost.

Nathan Latka

11:47Oh, that's great. So you have a nine month payback right now.

Guy Tytunovich

11:49Yeah. Well, that's what we optimized for. We actually surpassed it. I think that there comes a time at scale where obviously the sales funnel is very different for each vertical or for each type of client, for each size of client and so on and so forth. In our case,

12:09we are predominantly targeting very big clients with very

12:14long sales funnels.

12:16Sometimes they're also very costly. I'd say that nine months is a non representative average. That being said, we do optimize for nine months.

Nathan Latka

12:26You're saying you're better than across your cohorts right now, you're saying you're getting a payback in six, five, four months, something like that.

Guy Tytunovich

12:34Yeah, I'd say seven. But yeah, think again, I think it's not representative. I think that if we hit our goals this year, then... Well, if we hit our goals next year, then very likely it would pan out to be at around nine months.

Company Timeline and First Revenue

Nathan Latka

12:48Okay, fair enough. Alright. And then put this stuff on a timeline for me. So you're obviously in the Defense Department and Israeli Israeli military. What year do write the first line of code for this?

Guy Tytunovich

12:58For CHEQ? Yeah. Probably first line of code. So this is late twenty fifteen, early twenty sixteen.

Nathan Latka

13:08And first dollar of revenue was when?

Guy Tytunovich

13:14A year and a half ago, eighteen months ago.

Nathan Latka

13:16Okay, so call it 2018 or 2017?

Guy Tytunovich

13:20It's still 2017, unfortunately for my book

Nathan Latka

13:20So of the

13:23I was gonna say, so do remember how much you spent on your MVP before your first dollar revenue, like cash out the door?

Guy Tytunovich

13:29Unfortunately, of course I did.

Nathan Latka

13:33How much was it?

Guy Tytunovich

13:34So again, you need to be mindful that we did almost all of our development between the entrepreneurs. And back then we weren't

Nathan Latka

13:45And so it's a lot of sweat equity, but what was the cash out

Guy Tytunovich

13:48The of cash out the door at the end of the day was around... For the MVP, again, was around $750,000

Nathan Latka

13:55Wow. So okay. So the Israeli Defense Department pays a lot of money, right? Must have... You were rich.

Guy Tytunovich

14:01Yeah. In Israeli terms, a billionaire. No. Good.

Funding History and Total Capital Raised

Nathan Latka

14:05Where did you... No. In all seriousness, though, I mean, how'd you fund that early capital? Did you raise on day one or what?

Guy Tytunovich

14:10Yeah. I started the company with two great founders. One of them is my Chief Technology Officer, who's my best friend since we were six years old, the other is my chairman. And my chairman put in the seed money.

Nathan Latka

14:23I see. Okay. And how much total raise to date?

Guy Tytunovich

14:26Around 30.

Nathan Latka

14:2830. So much dilution guy. You had to raise all that money?

Guy Tytunovich

14:32Oh, no. No. No. No. No. No. No dilution at all. They tell me that the end I get Yeah. My shares

Nathan Latka

14:37It's a bigger pie guy. Don't worry about it. It's gonna be $2,000,000,000 exit. It doesn't matter.

Guy Tytunovich

14:422,000,000,000. Why the insult? Way more than that.

Customer Count and Market Segments

Nathan Latka

14:45I love the ambition. Okay. So first customer was twenty seventeen, twenty eighteen. How many are you now serving today?

Guy Tytunovich

14:51I'm not at liberty to say, but I can... But but what what I can say is it's between one hundred and one hundred and fifty.

Nathan Latka

14:57Okay. Fair enough. So 100 minimum up to 150. And again, this is a split between, I think you say kind of supply side folks. And then I mean, you're also probably selling to agencies, publishers, platforms, brands, all of them. Right?

Guy Tytunovich

15:09Yeah, predominantly the demand side. So predominantly agencies and advertisers. I'd say the second kind of layer of customers comes from the platform side of things, both on the demand side and on the supply side. And then we do some work with the supply side as well-being the publishers.

Recent Fundraise and MRR Milestone

Nathan Latka

15:28Rarely do I see someone with your kind of story where ARR is more than funding raised. So I think I have a number wrong here. A 100 customers minimum at that ARPU you told me earlier, $20,000 a month would put you at $2,000,000 a month right now in revenue. Is that accurate or generally accurate?

Guy Tytunovich

15:47No. The the average is non representative. So that is the median average.

Nathan Latka

15:52Okay, that doesn't make sense.

Guy Tytunovich

15:55Basically what I'm saying is that at the end of the day, the 20% huge customers, we calculate them differently to calculate the average. The average client

16:08not for us is not a division between the total revenue and the amount of clients.

16:15But yeah, you're not that far off.

Nathan Latka

16:19When will you I guess let me just I'll change my question. When do you think you'll break two a month? Do you think you can do that this year or it's going to take till next year?

Guy Tytunovich

16:27As in breakeven monthly?

Nathan Latka

16:28No, no. When do think you're going to break 2,000,000 in MRR?

Guy Tytunovich

16:30Ah, we've already did that.

Nathan Latka

16:32Oh, okay. So you're so you are north of what I just said?

Guy Tytunovich

16:32Yeah.

Nathan Latka

16:35Oh, okay. That's fine. That's okay. By the way, it's higher than

16:38what I would have expected. So look, mean, you're in a great position then. I mean, I I think an entrepreneur in your case, anywhere where, you know, if you can keep essentially your your ARR about equal to your total funding, you're in a good leverage position. So you must be raising capital right now.

Guy Tytunovich

16:51I'm actually not because of that wonderful B word that you mentioned. But no, in all seriousness, I think I'm a bit obsessive about everything I do, especially if it's work related, and I've been obsessing about the sentence that someone once told me, You know when's a good time to raise capital? Always. So with that in mind, I am... Mean, we just finished raising our B round.

Nathan Latka

17:23Oh, okay. When was that?

Guy Tytunovich

17:23We

17:25haven't announced it yet.

Nathan Latka

17:25Oh, okay. Very good. Literally, literally breaking news folks. There you have it.

17:33Now you just you just like me so much. You give

17:34me the insider news before it's out.

Guy Tytunovich

17:34Exactly.

Nathan Latka

17:37I was gonna say I'm looking at Crunchbase and my other my research team has only 5,000,000 in a company and a series A in June 2018. So that may from Battery, which means you must have just raised call it 25 about a month or two ago, did Battery lead or did they sit out?

Guy Tytunovich

17:50They're about in yet Battery.

Nathan Latka

17:50Oh,

17:53that's obviously a very strong and good sign to have. Congratulations.

Guy Tytunovich

17:53Thank you very much.

Nathan Latka

17:53Right. A couple of other things here before we wrap up. So you're north of two a month today. I mean, year over year growth rate. Mean, were you half that a year ago? Where were you in terms of MR about a year ago? Do you remember?

Guy Tytunovich

18:07Way less than half. Yeah. The growth has been... I... Again, I can't go into too many specifics, but the growth has been

Nathan Latka

18:15Can you say it was... Can you say it's definitely north of x? Is that fair? Could you just put a floor on it?

Guy Tytunovich

18:21Oh, the growth has been way north than 200%.

Runway and Burn Rate

Nathan Latka

18:24Oh, I mean, okay, great. That's good. All right, good. So less than $1,000,000 a month a year ago, more than $2,000,000 a month today, raised an additional round of capital. When you raise capital kind of in terms of where you're at today, how many months? Obviously, you're you're going to say, going to hire these many people and our CAC is going to change and our ACV is going change, but you're obviously looking at burn and you're

18:44buying yourself runway. How many months do you... I mean, you raise for basically when you look at your forecasted burn?

Guy Tytunovich

18:50Considering the actual burn rate and where we are in terms of profitability,

18:58this is, again, I can't go into specific, but this is very significant runway.

Nathan Latka

19:04You'll scale. I mean, I imagine when you went into this next round of funding, because you're a smart guy, you try to be as close to breakeven as possible, you could tell the investors, listen, we don't need the money. Give me a better valuation. Otherwise, we're not gonna raise

Guy Tytunovich

19:04Exactly.

Nathan Latka

19:04So but you're not gonna raise that money and take the dilution unless you have to spend it. So you're going to grow burn, think here shortly. My

19:20question is basically

Guy Tytunovich

19:20Without a doubt. Yeah.

Nathan Latka

19:20When you look at

19:22that

Guy Tytunovich

19:22If everything goes according to plan, we've bought ourselves around three years of runway.

Nathan Latka

19:27I see. Okay. So you will basically won't take your I mean, years of runway. Right? So you take 26,000,000 divided by thirty six months. It's like $700,000 a month. You basically won't drive burn any higher than about $700,000 a month as you look to deploy the capital you just raised.

Guy Tytunovich

19:41Always. By the way, always. That's my rule. That that is literally the number.

Nathan Latka

19:45What? Thirty six months?

Guy Tytunovich

19:45Me a long leg. No. What? Well, yeah, thirty six months, but also seven hundred.

Nathan Latka

19:50Oh, yeah. That's good math. Right? That's pretty quick.

Guy Tytunovich

19:53Yeah. It took me way more time than if it just took you. Are you looking for a job, Nathan?

Nathan Latka

19:59No. No. I'm I'm... I would... You would fire me in about two seconds. Alright.

Guy Tytunovich

20:03So I seriously doubt that.

Churn, Retention, and Contract Structure

Nathan Latka

20:05Alright. So you're growing the company. This is all great stuff. Last question here before we wrap up. Churn's critical in a SaaS company. I'm hoping you tell me your net revenue retention is way north of 100%, but peel the onion for me. What's gross churn? What's expansion?

Guy Tytunovich

20:17Net negative churn is basically zero. I think that to be fair, we're a very young company with very long SaaS contracts. So in all fairness, whilst I think our clients are in love with us and with our product, they hadn't had the time to churn out yet. So yeah, it's...

Nathan Latka

20:17So when you... But but if you

20:40look at like, let's say a year ago, you were doing $700,000 a month, right? You said less than 1,000,000, right? Let... Of that cohort, what percent of that revenue like either downgraded or or churned completely?

Guy Tytunovich

20:51None of it.

Nathan Latka

20:51So you

20:52have 0% gross revenue churn?

Guy Tytunovich

20:54Yeah. Again, we do a good job, but it's not because of the good job that we do. It's because of the minimum term of the of the contract, which is something that I would very

Nathan Latka

21:04What's your minimum? Like you're talking two, three years?

Guy Tytunovich

21:07Yeah, our minimum is two years, but most of our contracts are for more than that.

Account Expansion and Net Revenue Retention

Nathan Latka

21:12Okay, interesting. So let me ask you a question. That can actually be very dangerous. And I'll tell you why. I've seen a lot of companies get stuck in something here. If you don't create an excuse, right? To have a conversation to drive expansion revenue, at least quarterly, you really cut your AEs off in terms of driving expansion, right? Because you only have that opportunity every three years. So how do you manage that?

Guy Tytunovich

21:31Oh, no, no, no, no. We leave room for growth. Basically, the way we price is based on traffic volume tiers. So the more... It's a fixed monthly fee, and a minimum monthly commitment across the minimum two years, of course. However, when the client hits a higher tier in terms of the amount of traffic that he's purchasing with our protection, then he automatically qualifies into the next tier.

Nathan Latka

22:02Okay. So there's a variable component based off impressions. But again, some of the strongest upsell pricing axes that you see companies breaking 100,000,000 in ARR are things related to like feature based upselling, multiple utility based upselling, yours is number of impressions, but there might be other things you know about, also like number of seats, right? So what about those other components that are not baked into your contracts?

Guy Tytunovich

22:23You're absolutely right. We're now doing a very, very, very aggressive process into acquiring these additional components into our metrics.

Nathan Latka

22:38Got it. Okay. And then when you look at just that variable, yeah, when you look at just the variable component that you've had so far, just driving base growth based off number impressions growth, our accounts on average expanding at least like 5% annually, 10% annually or more aggressively?

Guy Tytunovich

22:52More aggressively, we're talking about around 30% annually.

Nathan Latka

22:55Oh, wow. Okay. So net revenue retentions and call it 130%, something like that.

Guy Tytunovich

22:59Something around that.

Famous Five Rapid-Fire Questions

Nathan Latka

23:00That's pretty healthy All stuff, right, man. Let's wrap up here with the famous five. Number one, favorite business book.

Guy Tytunovich

23:06Nathan Latka's A Millionaire Debt '29, something like that. How to be a capitalist without any help.

Nathan Latka

23:15I was say, to don't cater to me. I've already been tough on you. It doesn't get easier from here on out, yeah? Alright. And number two number two, is there a CEO you're following or studying?

Guy Tytunovich

23:25Yeah. But unfortunately, I have a very, very corny answer here, Jeff Bezos. I think everything he touches turns into gold. I think in terms of creative thinking,

23:36unbelievable.

Nathan Latka

23:37Number three, what's your favorite online tool for building your company?

Guy Tytunovich

23:42It's another... I wish you asked me stuff that I didn't have corny questions to, but basically Asana.

Nathan Latka

23:48Okay.

23:49Number four. How many hours of sleep you get every night?

Guy Tytunovich

23:53Around four.

Nathan Latka

23:54Dang. Okay. Wait. How old are you?

Guy Tytunovich

23:5634.

Nathan Latka

23:57And what's your situation? Married, single, kids?

Guy Tytunovich

24:00Married, one baby daughter, eight months old.

Nathan Latka

24:00Okay.

Guy Tytunovich

24:00She contributes to the...

Nathan Latka

24:04Yeah. That explains... You have two startups. Alright.

Guy Tytunovich

24:04Exactly.

Nathan Latka

24:04Last question. What do you wish your 20 year old self knew?

Guy Tytunovich

24:12That is all good.

Nathan Latka

24:14Guys, cheq.ai, helping folks make sure they are getting what they're paying for in the ad tech world. They've got over 100 enterprise customers paying north of $20,000 a month on average. Again, obviously, power law is at play there, but north of $2,000,000 a month in revenue, less than $1,000,000 a month a year ago. So north of 200% year over year growth rate, $30,000,000 raised to date. Again, 25 just fresh about a month ago. 100 folks on

24:37the team, 70 engineers, 15 quota carrying sales reps. They optimize for about five x salesperson profitability, 130% net revenue retention, seven month payback period as they're acquiring new customers to scale. Guy, thank you so much for taking us to the top.

Guy Tytunovich

24:50Nathan, it was a pleasure.

Nathan Latka

24:51Thank you

Guy Tytunovich

24:51so much.