Collective[i] Revenue (2024)

guys work hard when you're young he built his first company over nine years so for 425 million bucks it's called link share very nice obviously business model there and two years later went into a new business called collectiveeye.com uh think of it you know as building neural Nets really trying to help cros and companies understand what their actual pipeline looks like based off a contributor model there's a free tool they use to get this data they've got 101 folks on the team today they've quote unquote bootstrapped it but put in a lot of their own money to fund it up to date as they look to continue to scale got their first paying customer in 2012 broke a million dollar run rate in 2014. hey folks my guest today is Steven Messer he currently serves as co-founder and vice chairman of collective eye prior to Collective eye he co-founded and served as CEO of linkshare until it sailed to Rakuten for 425 million bucks he received a Bachelor of Arts degree from Lafayette University and his Juris doctorate from Cardozo School uh of law all right Stephen you ready to take us to the top I'm gonna do our best all right what was it like because I guess before we talk about Collective what was it like at recruiting I mean were you sort of joining it was already the Titanic you just had to drive the right way or were you still in building mode no so when linkshare got acquired I mean we had been doing it for about 10 years so affiliate marketing became a thing under link share the first affiliate marketer we became the global player I think when we when we finally sold the business to Rocky 10 it was probably 96 of the affiliate Market globally and still is today it's just behind the scenes that most people don't know so when we came there it was the first American acquisition they had made and I think to this day it's probably still the greatest Revenue producer outside of Japan that rock kitchen has ever had interesting I mean everyone's going to want to know a 425 million acquisition price you were see you I mean do you get filthy rich on this or how did that work out well filthy rich is always in anyone's eyes right uh it's whatever it depends what you want look we were fortunate in the sense that we didn't come from a lot of means uh but we had worked really hard we'd built the business that had become quite successful it had grown really quickly more importantly it enabled every other entrepreneur to make a living off their business in a way they couldn't have done today so when you look at the Creator economy when you look at people who had blogs uh podcasts well all of them were making commissions on sales from referring people to other websites and that was really what linksure enabled and and for us it was just a joy to be there so well I think we did very well and I'm very happy with how we performed um and the results we got what I'm most happy is every month we were sending out millions of dollars worth of checks to people um and changing their lives and so I hope that business continues to change lives of all the great entrepreneurs that are out there probably listening to this amazing podcast I love that yeah you found it in 1996 sold in 2005 so it's a while ago now do you ever look back and go oh gosh we could have taken that 10 billion or no it was the right time 425 was the right number you know I don't think he ever looked back as a Founder you know this right and then you speak to great people all the time you've built great things um what you know more than anything else is that there's always another thing to build and always another opportunity to scale and uh and I'm I'm really proud that Lee shirt to this day is still a dominant provider in space I'm happy that Collective eye is a dominant provider in its face as well and uh I'm happy to be associated with a whole bunch of other companies uh whether it be on their boards or helping them get started uh and I don't I don't think that'll ever stop all right let's talk about Collective IU launched I think in 2008 walk us through who who's who's paying for this and what are you giving them I mean look at the benefit of having uh the the exit that we had and a whole bunch of others is that it enabled us to fund something that probably people wouldn't have done um you know we are a neural net based technology so for anyone who's used chat GPT recently or stable diffusion you're starting it for the first time as an individual feel the power of this neural net AI that people like us have been talking about but you had to be a real practitioner in this stuff and um and we we just had a great opportunity to be on that Forefront of that group that today is you know open AI is not a young company it's been around for almost a decade as well we have all started at the same time we're all getting to this inflection point where these Technologies are just dominating the way we think about how the future of work will be oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different evaluations inside of your founder path dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when I hover over here here right so the teal is what a VC would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on YouTube all these datas are built from real-time valuation data points Founders share with us on the show so traction 1.2 million seed round 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of SAS valuation than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna go back to the YouTube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash valuations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform I hope to see you there all right let's jump back into the interview so who who is buying Collective AI today what's your main customer segment yeah so we sell predominantly to sales organizations so when you're thinking about it if you if you run a sales org you probably have no idea what they're working on you have probably no idea what Revenue they're going to bring in you're trying to figure out what's changing in the market because it's always changing and you're trying to figure out how to manage more effectively well that is essentially what we saw we removed the need to log anything for those people who are suffering in CRM every day imagine a world where the AI did the work of logging all the people you spoke to the conversations you had the communications that went back and forth imagine if it did that automatically then imagine if it told you which deals were real and the reason it did that was because just like Waze it's observing other sellers in our Network and seeing how the buyers behaving when they buy when they don't buy down to the individual so it's telling you every day if this is a deal you should actually pursue and you may not know this in sales they had this saying buyers lie because you never really know if they're interested or not well imagine if the AI could tell you no no they are really interested or I mean are you buying or sitting on the same intent data that bombora and some of these other providers are sitting on or do you have a unique data set it's a unique data set so if you think about in sales my experience when I close the deal is mine I you can only find out about if you hire me to work on them again but in our model we're observing every transaction of every customer just like ways observing your journey without even exercise data confidentially well they're giving us access to their CRM through the API calendar phone video conference so just behind the scenes we're logging all that activity we're also observing what's actually taking place and in a confidential way it's all abstracted away like no one knows that you've left your home but they know the fastest route because when you've been driving it's guiding ways to learn about that Journey that they can share with the next person who's behind them to find the fastest route especially Let me Give an example here click up click up cro might pay for your software so that they can get an understanding of their top 10 deals I think they're going to close in q1 but oh crap they just saw that one of those deals purchased base camp a competitor they're now not a deal how how to how do you give them the information that the click up Prospect just bought a competitor do you get receipt data from that person's inbox or how does that work so the way we deal with it is we're actually uh it's a better way of thinking about it is by observing stellars across multiple buyers I can spot when that particular buyer is behaving like they're going to buy or not because for all the AI knows they may buy both right I don't think they're going to but let's say they make a mistake and they buy the wrong product right the odds are going to start changing as the buyer's Behavior starts changing because they don't bring in the right people as they start communicating different things or they say things like oh that's really interesting can you send me this piece of information but that always means they're not interested in buying the thing is you just don't know it because for you it's your first experience with this buyer but when an AI is observing multiple people selling that same person it can spot it cold and it starts guiding you and figuring it out so you're you're not looking at the unboxing you're not looking in the inbox of the click up Prospect click up is giving you access to their sales team's inbox and you're looking at like response times or length of the email or the questions asked by the potential buyer in the click up head of sales email inbox down to that individual we're talking about almost close to a million different data features so that's a lot of data that we're able to observe that say okay this person is likely to buy or not likely to buy and it helps us really understand it and today we track about five percent of the globe's B2B economy so we see a lot of that data and we see that interaction so we can tell you here's what's happening so how many companies how many companies like click up have Collective AI basically installed they're using you it's everyone from Fortune 5 companies down to SMB it doesn't but how many uh we don't disclose the actual number we usually just disclose to about five percent of the globe's B2B economy is passing through us every day I have no we have no idea what that number is so we don't know what five percent means let me put it in perspective uh Amazon is the equivalent of five percent of b2c so it's the Amazon of B2B data it's a lot of transactional data billions of dollars are passing through us that we're just observing how people are buying and selling and getting their deals done do people have to go to Collective Ai and sign up like is there a way for you to get access to inboxes like click up sales team without click up cro signing up for Collective eye hey you can go to intelligence.com and get the free version and for sales professionals or any individual contributor they'll always be able to get access to the product for free forever which includes free contacts you don't have to pay for if you're going to zoom or seamless for those other players you get free contacts forever you get free relationship mapping free activity capture 3D collaboration daily forecasting and daily odds on your deals you will get that free forever just by going in and signing up and connecting two apis email calendar and CRM to start okay the company they always say if it's free you're the product so that they people sort of understand that's what's happening here you're losing collective intelligence which is great um I guess walk me through the back story here so so how many folks are on the team full time today about 140 in the company okay 140 how many are engineers I'm almost the entire company's engineering oh who does Marketing sales products CFO very small team and the product spreads itself very quickly it's very viral for sales organizations uh when you join the first thing you do is you have the ability to automatically add anybody who's helping work with you on a deal so the first thing is let's say I'm a sales professional and I'm working with three other people a sales engineer a finance person a legal person it will automatically invite them to join for free that brings them in where they can actually work collaboratively on a single deal there's no cost for that that helps it grow when you have connectors which is a product that helps you find which friends of yours actually know the buyers that you're trying to reach and how well do they know them well that you just click for free they can invite and join people that's predominantly how we scale but Stephen like Gabriel koning on LinkedIn is listed as one of your content writing folks on your marketing team right how many people are non-engineers like Gabriella maybe 15 20. 20 folks okay not a large not a large group yeah okay got it so about 120 Engineers uh obviously that's expensive are these all in the US engineers in the US mostly in the US the fewer around the world again deep learning is not a simple piece of technology to build manage and scale they call it the game of Kings for a reason yeah and is this off freemium right now or do you have folks that pay and if they're paying what do they pay for so the people who pay in our products if you think of our model it's not a SAS model it's what's What's called the data Network or Community model so if you're familiar with Waze you know that as a consumer I'm sorry as a contributor of data by using the product you get the product for free that's the individual contributor when you're a consumer of the data in the b2c world that's usually advertisers so that would be like Dunkin Donuts or Starbucks paying for an ad they're the they're the person who pays in our world it's B2B so it's really leaders and managers of a sales organization who want to get visibility into daily forecasting know which deals are real which ones aren't to be able to do deal inspection to understand what's going on for those people they're going to buy the product on a per seed basis okay while their team gets it for free I see okay that makes sense and and give me a sort of range here are we talking like a ten thousand dollar a month contracts a hundred thousand dollar your chronic what's sort of the range of acvs you're looking at usually you're looking at per manager roughly around nine thousand dollars a year per manager so depending on how big your team is so our ACV is usually above a hundred thousand dollars but we have smbs all the way up God and someone paying you 100 000 bucks a year that would be like what like a team of seven or eight something like that yeah exactly and then you're talking about also their sales organization they might use us for another product we offer called intelligent right back for those of you who CRM we're trying to keep your CRM hygiene if you want all the activity data and contact data that we capture push back into your CRM that's another product we offer called intelligent right back okay now you I don't think I don't think you've bootstrapped I think you've raised a bunch walk me through your funding history and why you decided to raise no we actually bootstrapped the whole thing the business has been funded by us um and oh you were the 20 million series A H there there is no 20 million dollars Thursday it's actually uh much more money than that into this company um AI companies you're usually talking about you know usually north of 100 million dollars to get these companies off the ground why do I say why do I see a series a 20 million dollar deal on your profile on crunchbase not accurate we have no idea how that got there or who even put that in there people keep asking I have no idea where that came from got it got it so you guys are I mean look you had a nice exit so you've basically funded this yourself no outside investors no outside investors okay I love that so then your bootstrap I mean well in in the grand scheme of things I guess yes you could call it that um I think I think we've acted as the Venture Capital investor in this deal as uh as we think this is just probably the biggest opportunity we've ever come across I mean are you comfortable sharing how much you've put on the line here I mean how much does this mean to you hey look I I think uh like all investors you put everything out there you know Elon is an old friend um you know we'll tell you you put everything you have into these things your heart your soul and your wallet and uh and we are proud to be doing that because we believe in this Mission so no safety net let's assume you made 100 million bucks when they're on the deal when you sold link shirt you put all 100 million bucks into Collective well let's hope uh what what I hope we made more than that which we did um and thankfully uh we it's not a question of putting all of it in I think the question of is how big is the opportunity how fast is it growing and can we make this a multi-billion Dollar business if not trillion dollar business and we believe we can all right very cool um any plans to raise outside funding or no you'll keep keep doing what you've been doing look I think uh the business is uh you know I have a great um uh one of our our old investors and now board members a guy named Julian Brown who's the co-founder of podcast told us you know focus on building a great business you can determine whatever it takes to get there as you go and uh and that's exactly what we're doing if someone said hey here's a huge amount of money I don't know if it would make a difference but if they said hey here's some money and some some other way to grow the business faster we'd always consider it but I don't think we're necessarily looking for money other than to keep building and building and building as fast as we can yep I guess last set of questions here before we wrap up you get going in 2008 do you remember how you got your first paying customer tell that story yeah look it's funny in data networks like ours you're actually not trying to get paying customers in the beginning you're trying to figure out how to get data and the challenge with neural Nets in particular is they tend to be really bad until you get data scale and so the first ways we went out and signed our customers up where people were trying to solve the hardest problem in sales that's out there which is forecasting and we went to one of the largest publicly traded companies in the world and said let us be your first partner let us be your data science arm outsourced sign up for this new model that allows for sharing of data but in a confidential way and the thing about neural Nets is they're black boxes people used to beat up on that a few years ago oh it won't explain to you why it's working even though it's really good today that black box is actually the reason why people realize if I contribute my most proprietary date it won't matter it's totally safe it's a black box because it can never tell me about what's going on these guys realized that early on and said if you're willing to bring that technology to bear you're willing to fund that will sign up and that is to gotta be 20 probably 2011 2012. okay so that's something we got our first on a big check I mean 2008 to 2012 you know all pre-revenue all about getting data you're you're putting your money out going okay I hope this bad boy works well we weren't 140 people at that point and you have to remember neural net Technologies while they've been around since the 60s that was when Google brain first proved that it really worked well a lot of my buddies were over at Google brain at the time and they were the ones saying you've got to get back into this you've got to look at this and so we spent a good four years trying to figure out how do you make this stuff work how do you make it work at scale because remember most people weren't really able to get the stuff working very well they were going to areas like Transformers like NLP where they thought okay maybe we can get this stuff to work it really took a lot of r d and we spent a lot of time figuring out how these business models worked I think it's why it worked so well for us and why we're still the only one in our Marketplace who's able to use these Technologies as successfully as we've been it's also why our business model is the only one like it so 2012 first customer it was this publicly traded company how many customers are now serving today I mentioned we only give out the five percent of uh B2B GDP that we track and we do that intentionally because our customers are contributing their data and they want to know that they're not helping with this person or that person's not helping this person so we give them a sense of scale just like ways to say hey look there's more drivers on the road than any other solution I understand you can only share so much data can you share when you guys passed a million bucks in terms of Revenue what year that was I assume it was many many years ago yeah that was many years ago I mean that had to be eight years ago nine years ago I'm trying to remember okay so that would have been uh 2014 something like that yeah it was a while ago okay and then if I take I mean look we can look at you know if you're not necessarily B2B SAS company right but if we take 101 customers times average sort of Revenue per employee of 120 Grand at most B2B SAS companies that puts you somewhere around sort of a 12 million dollar run rate how much time do you think you need to get up above 100 million uh so again we're not disclosing Revenue numbers out here but what I can tell you is that number would be wrong um and remember that's because you're thinking about it as a SAS business we are not a SAS business we're a Data Network business we scale it all I'm doing is I'm looking at your head count right so unless you're burning millions of dollars per month and you're continuing to fund it which you could be by the way right um that's probably your Revenue per employee is going to be around 120 to 180. um you're saying it's not it could be higher it could be lower you're not wanting to share the same thing by the way link share if you look at link share the revenues if you try to look at it as a staff model that's not how we grew exponentially we didn't grow linearly linear in general it's a different metric the way you'd look at it it's like saying a look at a revenue like uh Facebook or Tick Tock about a revenue per uh per individual that wouldn't work the same model well not no that doesn't work individual I'm not talking about individuals in the network I'm talking about Revenue per employee no it's in 20 million yeah yeah yeah so you're saying your Revenue per employee is more analogous to a Facebook right which is in you know Millions per employee it's versus a traditional B2B SAS I think that'd probably be a better way to think about it yeah yeah that's fair that's fair all right very cool let's wrap up here with the famous five number one favorite Business book okay of all time crossing the chasm number two is there a CEO you're following or studying I I think it's always reading Hastings uh number uh three what's your favorite online tool for building Collective recently chat GPT um number four favorite or sorry how many hours of sleeper again every night I always get eight no matter what that is good situation married single kids single uh no any kids no kids no kiddos and how old are you um uh 52 52 last question something you wished you when you were 20. I'll give you the piece of advice that I wish I knew when I was younger that one of my board members gave me which is you have a choice in life you can work really hard when you're young or work really hard when you're old but you're going to be one of the two so pick young if you're smart guys work hard when you're young he built this first company over nine years sold it for 425 million bucks it's called link share very nice obviously business model there and two years later went into a new business called collectiveeye.com uh think of it you know as building neural Nets really trying to help crosst companies understand what their actual pipeline looks like based off a contributor model there's a free tool they use to get this data they've got 101 folks on the team today they've quote unquote bootstrapped it but put in a lot of their own money to fund it up to date as they look to continue to scale got their first paying customer in 2012 broke a million dollar run rate in 2014 scaling from there Stephen thanks for taking us to the top thank you for having me here really great opportunity to speak with you and I love your show one more thing before you go we have a brand new show every Thursday at 1pm Central it's called Shark Tank for SAS we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back-end dashboards their expenses their revenue our poo CAC LTV you name it they share it and the buyers try and make a deal live it is fun to watch every Thursday 1 p.m Central additionally remember these recorded founder interviews go live we release them here on YouTube every day at 2PM Central to make sure you don't miss any of that make sure you click the Subscribe button below here on YouTube the big red button and then click the little bell notification to make sure you get notifications when we do go live I wouldn't want you to miss breaking news in the SAS World whether it's an acquisition a big fundraise a big sale a big profitability statement or something else I don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack Community for B2B SAS Founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathanlacka.com forward slash slack in the meantime I'm hanging out with you here on YouTube I'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive I am on these shows but I do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that I appreciate your guys's support alright I'll be in the comments see ya