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Fireside Chat

How Cognism Reached $52M ARR and Its First $1M Customer in 2023 (Interview with CEO James Isilay)

Interview Date
March 17, 2023
Interviewee
James IsilayCEO and Founder
Watch
Watch the full interview

Company Metrics at Interview Time

ARR (March 2023)

$52M

Revenue Growth (2023)

100%+ per year

Largest Customer (March 2023)

$1M

Funding Round, Closing (March 2023)

$50M

Kaspr ARR at Acquisition (2022)

$2.2M

Historical Snapshot

These numbers were reported by James Isilay during a fireside chat at SaaSOpen in March 2023 and are a historical snapshot, not current figures. See Cognism’s current numbers.

Key Takeaways

  • 01Cognism hit $52M ARR by March 2023, up from $44M in 2022, $22M in 2021, and $11M in 2020
  • 02The company has grown over 100% per year, driven primarily by organic growth
  • 03Cognism acquired Kaspr, a PLG-focused business, for $20M when it was at $2.2M ARR; Kaspr grew to approximately $5M ARR after acquisition
  • 04Roughly 20% of the $20M Kaspr acquisition price was paid upfront, with the rest tied to revenue milestones
  • 05Cognism was closing a $50M funding round the following Friday, which James Isilay disclosed on stage before it had been announced publicly
  • 06The company landed its first $1M annual customer contract, marking a push into enterprise
  • 07James Isilay targets owning over 10% equity at IPO and aims to take Cognism public in the UK
  • 08Investors have targeted $300M ARR as the threshold for an IPO
  • 09The Kaspr acquisition was sourced through the sales team flagging a new competitor, not through bankers
  • 10Top challenges cited were upgrading the executive team and improving enterprise multithreading in sales

Company Metrics at Time of Interview

MetricValueSource
ARR (March 2023)$52MFireside chat, March 2023
ARR (2022)$44MFireside chat, March 2023
ARR (2021)$22MFireside chat, March 2023
ARR (2020)$11MFireside chat, March 2023
Kaspr ARR at Acquisition (2022)$2.2MFireside chat, March 2023
Kaspr ARR at Interview (March 2023)$5MFireside chat, March 2023
Kaspr Acquisition Price$20MFireside chat, March 2023
Kaspr Upfront Cash (approx.)20% of $20MFireside chat, March 2023
Funding Round Size, Closing (March 2023)$50MFireside chat, March 2023
Largest Customer Contract (March 2023)$1MFireside chat, March 2023

Growth Breakdown

Revenue

Cognism grew from $11M ARR in 2020 to $22M in 2021, $44M in 2022, and $52M by March 2023. James Isilay attributed the growth primarily to organic efforts, with the Kaspr acquisition adding a PLG revenue stream that grew from $2.2M to approximately $5M ARR after the deal.

Customers

The company historically served commercial, SMB, and mid-market segments. By March 2023, Cognism had landed its first $1M annual customer contract, signaling a move into enterprise accounts.

Team and Hiring

James Isilay cited hiring as a top challenge, noting the company was actively searching for a new CFO and other executive roles. He highlighted a recent hire of the former head of people from Datadog as an example of the talent the company was attracting.

Funding

Cognism was finishing a $50M funding round, due to close the Friday after the March 2023 event, and Isilay disclosed it on stage. Isilay noted the round represented a slight increase over the prior round valuation, which he described as unusual given that many peers had seen 50% valuation cuts from 2021 peaks.

Growth Strategy

Organic Growth as the Core Engine

James Isilay stated that Cognism has grown over 100% per year and that the majority of that growth has been organic. The company's focus is on being the best international contact data provider rather than expanding into multiple products.

Strategic Acquisition of Kaspr for PLG Motion

Cognism acquired Kaspr, a PLG-focused competitor in France, to gain a bottom-up go-to-market motion and improve its French dataset. The deal was structured with roughly 20% upfront and the remainder tied to revenue milestones, keeping the Kaspr team motivated and limiting Cognism's cash outlay.

Marketing Engine and Resource Sharing

Isilay credited Cognism's marketing function, led by Alice de Courcy, as a key asset. After acquiring Kaspr, Cognism applied its marketing capabilities to the PLG business while keeping the two brands and teams separate to preserve their distinct motions.

Enterprise Multithreading

The company identified moving upmarket into enterprise as a key growth lever. Isilay described teaching sales teams to engage multiple decision makers simultaneously as a critical and difficult skill set needed to close larger deals.

Equity Pool and Talent Attraction

Cognism refreshed its employee equity pool and used its reasonable valuation history to attract senior talent at what Isilay described as a good entry price, citing the hire of a former Datadog head of people as an example.

Best Quotes

“It's, organic now. I mean, we bought a company called Kaspr, which is a PLG, like focused business, last year. And so that, when we looked at it, was 1,500,000 ARR, and now it's, like around about 5,000,000 ARR.”
“When we actually ended up acquiring them, were about 2,200,000 So we paid 20,000,000 at the time.”
“I mean, I think we're mostly focused on organic growth right now. Like, we've been growing like over 100% per year. Most of that is organic. So right now, we're focused on organic growth. We wanna be the best in like international contact data provider in world.”
“What's the largest customer pay you today? >> Like, a million.”
“No, it was our sales teams complaining about competitor. So and then knowing that we had a gap there in terms of an offering that we had, in our case it was data, and then just going after that building a relationship, At the end of the day,”
“it's about founder to founder typically and you having a good vibe. That's one of the things I've really learned about acquisitions. You don't want to do a deal with a founder that you're not going to be friends with. You won't want to have like a beer with. That's disastrous.”

What Happened Next

This interview captured Cognism at a moment of strong momentum in early 2023, with $52M ARR and a $50M funding round due to close. The figures shared here are a point-in-time snapshot from James Isilay's fireside chat at SaaSOpen in March 2023 and do not reflect the company's current performance. Visit the Cognism company profile for the latest reported numbers and funding history.

View Cognism’s current profile and metrics

Full Transcript

Chapters

Introduction and Setting the Stage

Nathan Latka

00:00James, the first interview. Hey. Work. I'm excited for this. How many of you guys have have listened to the the podcast or been on the podcast? Raise your hand. Okay. Good. Do you feel better or worse after going on?

James Isilay

00:12>> Better. Okay.

Nathan Latka

00:13This is good statement.

James Isilay

00:13>> Shopping to mind.

Nathan Latka

00:14So I thought a lot about what I know you've done because I only want people teaching up here that have actually done stuff. I want them to say here's how we did it and here's the proof. You've bought companies. You put the LOI up on the screen at the last event. I think a lot of people in a distressed situation, they may have competitors that are maybe in trouble. They might be looking to buy events. So

Current ARR and Revenue Benchmarks

Nathan Latka

00:33before we get into that, I just want to establish benchmarks and then jump into M and A strategy for Cognism and how you're thinking about product roadmap. Before we do that, what's MRR today?

James Isilay

00:42>> 52. ARR?

Nathan Latka

00:44Million a month. Give this guy a round of applause. ARR is 50,000,000. Million. Okay. That's up... That's even up from back in September. So what's driven the growth? How much... That's what's 5,000,000 more in ARR?

Year-over-Year Revenue Growth

James Isilay

00:56>> We went from... At 2021, went from 11 to 22. Last year, '22 is 44, and this this year, we'll end this month at, 52. Wow. So what's driven the growth?

Nathan Latka

01:06Are you buying? Is it organic? How are you doing it?

Kaspr Acquisition and PLG Strategy

James Isilay

01:08>> It's, organic now. I mean, we bought a company called Kaspr, which is a PLG, like focused business, last year. And so that, when we looked at it, was 1,500,000 ARR, and now it's, like around about 5,000,000 ARR.

How the Kaspr Deal Was Sourced

Nathan Latka

01:25And talk about how you got that deal done. So how did you find the deal and what

James Isilay

01:27>> did you pay for it? So we found the deal because my sales team came to me and said, we've this new competitor, and they're coming up more and more. And then what I did is I reached out to the, CTO and the CEO to actually see... You know, to to engage with them. And because they were in France, we wanted... We didn't have a great French dataset, so we wanted to, like, improve our French dataset. And,

01:50>> also, they were... They had a different model to us. They were more like... We're more positioned against ZoomInfo. They were more positioned against Lusha. They were they were more PLG motion. So I wanted to get a PLG motion for, you know, because we weren't very skilled at that and our IT team wasn't. I wanted to... For us to get the skill set for that.

Nathan Latka

02:07How many of you guys would you consider yourselves bottoms up PLG, low ARPU, high volume? Raise your hand. Come on Ruben, you're high. Anyone else? If you're under a $100 ARPU and you're sending more than a 100 clients a month, you're PLG. Okay. Okay, so most other people so top down then. Raise your hand if your average ACV is higher than $10k a year. Yeah, yeah. Okay, okay. So most people are like what you are and

02:30not like what you went and acquired. Yes.

James Isilay

02:31>> So you

Nathan Latka

02:32acquired the bottom up motion. So walk me through how you used your top down genes that you were good at to grow the PLG business to... From 1.5 to 5,000,000 in ARR over the past, I guess, it would have been eighteen months.

James Isilay

02:43>> I think it's just giving them the resources that they needed to grow grow more. So, using our marketing engine, we've got... We have a really great marketing engine. Alice de Courcy, who's a... You know, she... So that skill set, bringing that skill set to them so they got better at marketing. I think, right now that we kept the businesses separately, so we've got the PLG business in a separate brand. We haven't brought it in under the

03:05>> same brand. So we... And we're really going after different countries and territories with it. So right now, we're keeping the businesses separate, and we're keeping the motion separate. And all I'm doing is giving them more resources so they can do PLG better and more on scale. So so, I mean, think that's the different... I mean, there's the IT teams are different. The IT teams are in Tunisia where we're paying like

Nathan Latka

03:26I don't know where that... James, I have no idea where that is.

James Isilay

03:27>> North Africa.

Nathan Latka

03:28So where is the Tunisia. Tunisia.

03:31Oh, got it. Got it. Missed it. Sorry. I dropped out. I missed the geography part of school. Okay. Cool.

James Isilay

03:36>> So different geos. Yeah. Different skill sets. So, like, when we do revenue operation, like, we do a monthly rev ops meeting where we look at how the revenue is. That's a very different meeting for a PLG company than it is for a sales led growth.

Nathan Latka

03:48So what multiple did you pay? 1,500,000 ARR, you paid what?

Acquisition Price and Deal Structure

James Isilay

03:52>> When we actually ended up acquiring them, were about 2,200,000 So we paid 20,000,000 at the time.

Nathan Latka

03:57$20,000,000 all cash offline?

James Isilay

03:58>> Yes. No. And the cash is released in stages when they hit certain targets, so over a long period of time. So that's that's working out really, really well. They're highly motivated. We've given them a little bit of equity as well, but, actually having those kind of revenue goals to hit has has created incredible focus. And also, man, we haven't really paid out a lot of cash initially, so we're we're paying out cash as they hit targets.

Nathan Latka

04:20What percent of the 20,000,000 was upfront?

James Isilay

04:22>> I think around about I'd say around about 20% of it was Okay.

Nathan Latka

04:27So smaller chunk. A lot of people in here maybe been approached by bigger companies that say we want to buy you, we'd to buy you for 10,000,000, but we're going to do some amount of earn out. And the second they hear, you've gotta hit these revenue milestones to earn their earn out, they go, I'm never gonna see this money because you control a business. Aren't you a little disincentivized to see Kaspr? I'm being... I'm wearing the

04:46devil's hat here. Aren't you disincentivized to see it grow because you don't wanna pay the extra 80% of the sale price?

James Isilay

04:51>> I want the growth. No. No. I I did not at all. I want them to succeed. And so... And it's also just you you wanna work with motivated, if you acquire a company, you want to work with a motivated team. You don't wanna work with a demotivated team. So, I mean, there's every incentive to be engaged with them and and every incentive to help them achieve those goals. I I would... The faster they achieve their goals,

05:11>> the happier

Nathan Latka

05:12I am. Yeah. But, guys, this is pretty impressive. I mean, you've actually negotiated. If a company is doing, you know, 2.2 at acquisition price and you pay 10% or 20% of $20,000,000 is upfront cash, right? That's $4,000,000. You basically paid your risk upfront in terms of cash outlay. Was it like a 1.9 x or something like that? Yes, very low risk. Now some other anyone else? Scott, have you bought any companies yet? You looking at it?

05:36Maybe? Thinking about it? Rajesh, is this built into your presentation tomorrow at all how you bought Unboxed?

05:44Okay. That would be great. You paid all cash upfront, right? 90%. 90%. And that was a $100,000,000 deal, so it was 90,000,000 upfront. Interesting story there. Anyone else bought companies thinking about it? Okay. Let me let me ask you a different question. How are you now thinking over the next twelve months? How are you thinking about M and A in this sort of new world that we're in?

James Isilay

06:05>> Right now, we're just finishing off a round. So we we got another round closing next Friday.

Nathan Latka

06:09What's the amount?

James Isilay

06:10>> It's 50,000,000.

Nathan Latka

06:11Is that breaking news? Oh, it is. Yeah. Round of applause. Although he's... You know, we... Hey. I thought of... Stop that. How much dilution? How much? Like crazy amount? No. No.

$50M Series C and Valuation

James Isilay

06:21>> No. I mean, it's it's... We're doing we're doing that on a $4.25 pre.

Nathan Latka

06:26Okay. And you're raising 50? Yeah. Okay. Okay. So okay. A little more than 10%, 15 to okay. And do you have to do, like, an ESOP pool on top of the round as well? Another 10% for employees? Yeah. Exactly. Interesting. Yeah.

James Isilay

06:38>> But we we... We're pretty good at getting equity back to employees from investors.

Nathan Latka

06:42That's great. Yeah. How much equity... If you wanna go on the IPO track, how much equity would James personally like to own at IPO? What would you be happy with?

James Isilay

06:49>> I have a kind of target to over 10%.

Nathan Latka

06:51And and are you on track to do that?

James Isilay

06:52>> Yeah. Yeah.

Nathan Latka

06:52Well... Okay. Cool. That's... This is great. It is a lot of data in two seconds. That's pretty good. Thank you for sharing. That's okay. Alright. So how... Okay. So let me ask you this then. I imagine your ability to buy other companies when you're buying other companies and saying I'm gonna give you stock in Cognism. You can now defend the valuation you want because you can say these investors just paid $4.50 pre. We don't have yet

07:14we've never had like a crazy valuation.

James Isilay

07:16>> I mean some of our competitors were raising like 40 x's back in late twenty twenty one. We kind of kept our valuation reasonable. So I think the good thing as well is that our employees have seen growth in that equity rate versus now a lot of employees of those companies have their equity deeply deep underwater. So we're in a good position and that we never really had an overvalued round. We didn't get those crazy valuations.

Valuation History and Avoiding Overvaluation

Nathan Latka

07:43What was your last round valuation?

James Isilay

07:45>> It was slightly below this round. So we've got a slight up around this, which I think is quite unusual. The the other companies I've invested in, I've seen, like, 50% cuts to the valuations Yeah. From 2021. So we've got a slight increase, which is good. But then I think right now, this is kind of like the the low in terms of, like, historically. Right? It's a little bit below market. So, like, every should see upside from

08:07>> here, and that should help me with, like, new hires. So for instance, we just we just got in, the former kind of head of people from Datadog's joined us. So I'm able to get great hires now because we've got amazing growth. Yeah. Great growth. We've got, a really good equity pool refreshed, and, the people are getting that equity at a really good value. So it's gonna help

Nathan Latka

08:27me with the get... Getting next kind of, like, generation of talent in. Guys, if there's any bootstrapper that really wants to just get the article and whatever press you want, say you raise it a billion dollar valuation and you just needed to hire the talent executive, like, I'll put a dollar... I'll put in how much you want over a nine thousand year period. It all hit in year 9000. You'll never see it, but it'll be true

08:45and I'll write the press release and we can get you the press so you can hire the talent without getting dilution. Right? I think that there would be a service for that. I think people would pay for that, honestly. But anyways, James, this is very exciting. So how do you go from a $50,000,000 run rate today to a $100,000,000 run rate in 2025?

James Isilay

09:01>> I I think it's, again, it's like invest... Like last talk, investing in your people, making sure that we just...

Nathan Latka

09:07No. Come on. Is there a big competitor doing 30,000,000, you know, bucks in revenue that you're

James Isilay

09:10>> gonna use the 50,000,000

Nathan Latka

09:11you just raised to go buy?

Organic Growth Focus and Path to $100M

James Isilay

09:12>> I mean, I think we're mostly focused on organic growth right now. Like, we've been growing like over 100% per year. Most of that is organic. So right now, we're focused on organic growth. We wanna be the best in like international contact data provider in world.

Nathan Latka

09:28We're really, really

James Isilay

09:29>> focused on that, not go multiproducts, be really good in our niche. And I think just from that and then and then getting our sales teams to to be multithreaded and sell to enterprise, like, that's our biggest challenge.

Nathan Latka

09:39It's like,

James Isilay

09:40>> you know, our sales teams were very good at selling to, like, commercial segment SMB mid market. And now we're starting to land these big 7 figure deals. And that's really about, like, getting those salespeople...

Landing the First $1M Enterprise Customer

Nathan Latka

09:52What's the largest customer pay you today?

James Isilay

09:53>> Like, a million.

Nathan Latka

09:54So you have a... Do you have a couple at a million plus per year?

James Isilay

09:57>> We have... We've we've we've

Nathan Latka

10:00just landed our first million 1... That's great. That... That's a round of applause for that. A million dollar customer, that's a big deal. Yeah. You can't hit a $100,000,000 in revenue without having a couple million dollar a year client. It's like a key thing you have to look at. You've to have those.

James Isilay

10:11>> It's getting our sales team to learn that they can do that, and then it's getting them to to give them the tool set so they... That that they they can kind of get into those enterprise accounts and they can multithread and get all this, which is more important than ever now. Like, it's harder than ever to kind of, you know, land those big deals, which is really about, engaging all the right decision makers at the right

10:30>> time to get that deal over the line.

Nathan Latka

10:31I mean, back in the day, I mean, I would shit myself if I looked at a customer and said, it's a million dollars a year. I couldn't say that with a straight face. I mean, with it, I'd be like, I would smile or something. I I wouldn't get a deal done. Just the act of being able to ask a customer for a million bucks a year for the value of the platform is a stepping stone for

10:44any sales team. Yeah. So congrats on getting that. It's very exciting. How much did Henry Schuck offer to buy Cognism for?

James Isilay

10:50>> He hasn't. He's busy. He's been quite busy being a public company.

IPO Ambitions and UK Unicorn Goal

Nathan Latka

10:54Okay. So ZoomInfo hasn't made an offer yet. Would you sell?

James Isilay

10:57>> Right now, I'm I'm I'm quite... But I'm... I I I really enjoying running this business. I'm really enjoying growing it. I love my exec team. I love I love the whole company.

11:07>> So I'm actually having a lot of fun. I I don't right now, I wanna take it to IPO. I'd love to I'd love to become a unicorn. UK doesn't have too many of them. I think we've got about... Last count was 42. I'm sure it's a lot less now. So I'd like to... I like Cognism to become a unicorn, and then and then I'd like to list it. I think that's the path I'm going on right

Nathan Latka

11:25>> revenue?

11:25I don't know what it's

James Isilay

11:26>> like in The UK.

Nathan Latka

11:26How much revenue do you have to have to have a good IPO in The UK?

James Isilay

11:29>> I I... Well, I I I think my investors

11:31>> are kinda like targeted 300,000,000 ARR, right, for us to to go to IPO. So the question is like, how much do we do that organic? How much do we do that inorganic? I think we've got a lot of optionality there in terms of different paths to go down. But right now, we're focused on organic for the next couple of years, get the company profitable. And then once we're profitable, then look at our options to speed up

Nathan Latka

11:55>> the idea.

11:55Is Zhong in here with QCC? Not yet? Okay. I'll introduce you to him. Okay. Let's get we have two minutes left. Let's one or two questions. Rajesh, you got a question for James? Curious about anything?

12:08Yell it out. Top

12:14two challenges going forward in the next twelve months.

Top Challenges: Hiring and Enterprise Sales

James Isilay

12:17>> Right now, it's hiring. We've we've got execs fill in. So I'm looking for a new CFO, and then I've got another exec. So it's, upgrading the exec the exec where those execs are kind of not scaled. And then I think, overall, it's the economy, of course. Right? So I'm sure everybody's seeing win rates kind of drop and deals getting harder to close. So, for me, it's really, upgrading the sales team so they get more multithreaded and

12:43>> we can start to get more of those enterprise deals then because I think that that is where we need... The issue right now in win rates, specifically enterprise, is that there's more decision makers needed to close deals. So you need to get more more more multithreaded and you need teach your teams how to do that. And that is a skill set that isn't... You know, is is not in many books you can just pick up and

13:02>> lay up.

Nathan Latka

13:03James Benson, take us home here. You got a question for James?

13:07What are you curious about? Okay. Scott, contact any question?

James Isilay

13:19>> No, it's my sales Just repeat the question.

How Acquisitions Are Sourced: Founder to Founder

Nathan Latka

13:21Who how did you find the acquisition offer? Did bankers bring it or somebody else?

James Isilay

13:23>> No, it was our sales teams complaining about competitor. So and then knowing that we had a gap there in terms of an offering that we had, in our case it was data, and then just going after that building a relationship, At the end of the day,

13:41>> it's about founder to founder typically and you having a good vibe. That's one of the things I've really learned about acquisitions. You don't want to do a deal with a founder that you're not going to be friends with. You won't want to have like a beer with. That's disastrous.

Nathan Latka

13:55Guys, So... Again, it had grown from 11,000,000 to 22,000,000 to 40,000,000 to now 52,000,000 today. Did it through buying one of his competitors to get his PLG Motion bottom up going, but he's really good obviously at top down as well. We have breaking news, not in the press yet. $50,000,000 round at $4.50 pre closing as we speak, is very exciting. And no email in his inbox from Henry Schuck offering to buy the company for a billion

14:18dollars. He wants to take it public himself in The UK once he gets $300,000,000 in revenue, become his own unicorn. James from Cognism, give him a round of applause.

James Isilay

14:25>> Thanks. Thanks a lot.

Nathan Latka

14:26Appreciate it, man.

James Isilay

14:27>> Thank you.