How Concentricmarket CEO Greg Silverman grew to $6.9M revenue and 135 customers in 2023.

hello everyone my guest today is Greg Silverman he's the CEO of a company called concentric a software company that licenses concentric market a simulator that improves your planning processes and forecasting abilities previously he was global managing director of analytics and valuation for Interbrand he's author of turning complexity into strategic advantage and the Interbrand top 100 brands report Greg are ready to take it to the top how's it going I'm doing good man you said you knew me well right before we went live but that means you listen to the show huh I do what do you think you like it I like it are you nervous not at all don't be nervous I'm a big teddy bear and soft soft all right tell us about concentric what do you guys do how do you make money yeah so we license product called concentric market and basically it's designed to bring people's data together put it in a system and allow them to forecast how well their business plans or marketing strategies are gonna work and what's the business model is it like per API call per record you know SAS yeah cela it's a seat license and you you you pay per user okay pay per user now and you listen any other things you want to add on before I start asking questions no it's a I think it's a breakthrough right it's it's a really great tool in the sense of how accurate we are and how how fast we help people change the decision-making yeah and I want to dive more to the product in a bit in terms of kind of artificial intelligence machine learning how you're doing that is amidst forecasting stuff but give me a sense first seat on average I mean are we talking 10 bucks a month 100 bucks a month a thousand we're talking at least 12,000 a month a per seat per seat okay got it and is that is that a fairly representative average or is that just your enterprise accounts that's that's average our enterprise accounts are bigger okay got it so average is 12 grand a seat tell me more about how this thing actually works so you see the gray you know Greg the risk in this interview is we lose people when they hear a kind of predictive analytics cuz it's such a frothy word talk hard science to me turn me on here what do you do yeah so first off we're not predictive analytics we're forecasting capability and what we've done is bring five Sciences together that came from social science into one planning platform we actually create mathematical representations of consumers how they make decisions how they talk to each other how they consume media and then forecast what's likely to happen for political campaigns marketing campaigns social policies anything where there's an alternative where people are choosing between one thing or another okay give me a real story here let's type in politics is easy everyone knows how it works give me a give me a story of how you did this in an accurate format and it helps someone you know early on change behavior yeah so we work with a large automotive company and they were going to launch a new version of a car and we started working with them four years in advance of the launch so we started to recreate the market train the system to understand how their market work and two years before the launch with a new powertrain new features new pricing we were able to estimate how well the car would sell two years in advance and when it launched we were 94% accurate on the actual vehicle sales for the first year of the car so that allowed them to drop features that they might not have needed it helped them tailor their advertising and they saved 160 million dollars in deferred capital and got to market six months earlier well Gregg let me ask you a question though so when someone starts using you before they start using your recommendations today for product lease in two years they want to see how accurate you are first at predicting that's the only way then the next report you do do they'll actually act on your behavior so that's right that's a long quote sales cycle route how do you manage that how do you get people to take action on your first you know report or diagnostic before you give them yeah we've been there we've been in business eight years and so it was a long sales cycle for probably the first five or six years but now the cases the body of work we've done with others people want to get into it very quickly and I think that's the biggest difference in our system and other types of forecasting tools is you to be up and running in four weeks and you can start forecasting every month and getting some accuracy adjustments like how well we data is assumptions and they're often running you know inside of six months they can start making you know simple decisions and is they get more confidence that the decisions work and they get feedback they expand across the the organization so for this Clark company you might give them a report and say I'm gonna make this up sales are gonna be 1 billion at the current feature set however if you remove the second door sales will go up to 1.2 billion what you're saying is when they took your recommendations you are right on to about 94% accuracy that's correct interesting really interesting really interesting do you typically focus on automotive are there specific sectors you go deep in we we do great in automotive that's our longest legacy we're very big in films movie gaming television content development we do really well in telecommunications hardware I tell me a film one I would give me a Hollywood connections a movie producer comes to you and says here's the storyline is it gonna sell in theaters that's right can you talk about a real example of this from like maybe a couple years ago yeah we can go pretty far back to do something say like battleship okay tell us everyone knows battleship yeah battleship so we were working with a with with the film and they we saw the marketing that was in it who the actors were and also taking a look at game recreation right because they think behind battleship is there's a hundred million battleship games in closets and they're trying to tap into that storyline and when you started to look at the script it probably wasn't deep enough into that b4c three you know the game we've all played and we could give them some feedback that said you may not make your your box office the way you're intending so what do you predict box office sales would be before your changes what changes did they make and how accurate were you and it actually came out we were very accurate when it came out we predicted around 75 million for North America and that's what it was okay I can't was it before changes like if they hadn't major changes what would it have been I can't disclose that okay okay interesting so so look there's private equity firms that listen to the show I mean I say have the most sophisticated audience they're listening this going if if he's really this accurate I want his data to make investment decisions yeah I'm surprised that they don't do more simulation think about it if you you have a five hundred million dollar fund and you're picking ten winners you should be estimating one how good the market is going to be or how good they'll be in that market and also do you off tap Howie how you optimize the investments you make in him yeah well Gregg this is what I'm saying this is a red flag for me you should be a billionaire by now if what you're saying is actually true in terms of your accuracy you should be floating in money well you know it took a while to get the system to work and make it production ready so we we were kind of a technology inspired consultancy and then three years ago we pivoted to software now we're experiencing that kind of triple digit growth that you would expect and you know sometimes science just takes a while would you grow at year over a year past 12 months 100 percent hundred okay that's great and and bootstrapped of you raise capital we we've bootstrapped and then we did around with a group called Launchpad ventures which was a series a okay and how much how much is that for they're pretty don't they have a pretty standard package they do they're they're pretty largely they're up here in the Northeast and do about 10 million a year and so we've done a couple million with them okay so combined that's your only capital in the company we you bootstrap then we did a seed round through an angel and then they came in and have driven us to the you know productize and gotten our marketing running but caught like three million ition to date so far everyone yeah good more okay a little bit more than three million that's great and what have you scaled to today in terms of total customers we've got what we'd call 15 primary customers some of them are partners and so they might have another ten each so you can think about us just over 50 different brands using the product globally okay so 50 brands and how many seats across all those brands gosh that must be closing in about 135 ok 135 seats interesting and whoo-hoo inside of these companies is typically owning that seat is it the CMO the chief revenue officer who is it yeah so we're usually bundled up against the chief marketing technology right and they're partnering with the CFO because what they want to give the marketing team the product planning teams the sales team are better forecasting tool and so that allows them they drive it so there's a core team usually about six through the heavy modeling analytics workflow people and then we have a second seat where people can just run experiments the what-if analysis so you can think of our models like six plus twenty five dot exhale yeah you were gonna add on that six plus twenty-five yeah that was it okay so if I take the hundred thirty five seeds times twelve thousand bucks a seat per month it mean that puts you at one point six per month is that generally accurate or no that's it's it's generally accurate there's some some volume discounts okay got it is they get to an enterprise are you north of a million a month or are you still under that we're still under you think you'll break that you know in this year or no we'll be really close you'll be close ok so by December 2018 maybe you break a million a month huh maybe alright maybe we'll see and tell me more about economics so what does it cost you to acquire one of these new twelve thousand dollar-a-month seats it's pretty low cost in the sense that you know we go out and find the companies we're just doing very traditional stuff some basic marketing shows so you can think of like our acquisition cost of maybe six to eight percent of the a of the first year value of the company okay so if someone's worth again twelve thousand that's one seat is worth twelve thousand bucks a month times 12 that's about 144 grand a year you're saying you'll spend about 11 or 12 grand to get 144 grand worth of value that's right and you can see like when you look at the industry indexes you know people are investing 300-400 percent of their revenue stream to build that hundred percent growth really capital efficient because you know we were actually using our own system to forecast our results yeah you're you're getting it if you're paying 13 grand and cakana seats 12 grand you're basically getting your payback in a month that's right yep what's your team look like today it's small it's about 15 folks just put in a couple marketing people just could put in a couple salespeople less than a year and a half ago so based with everyone up there and in Boston that rose up there in Boston okay very cool so everyone's in Boston everything is frozen right now hopefully not your pipeline but everything is frozen generally that's good that'll that'll be good I appreciate that talk to me about churn have you lost any seats over the past twelve months in the last three years are we've had a hundred percent repeat rate for our software customers so are you not charging enough we've been raising the price but I think what's happened is a lot of those folks invested us to prove the business case we needed those early customers so I think you know we're working our way up but I it hasn't been full value against what they received obviously yep but we do have proof with some really big name companies that you can see on the site that's great and are you cashflow positive right now are you still burning with the capital you raised we've been we've been cashflow positive throughout you know we were profitable when we raised that we had a period where we have to invest in know at some point yeah yeah we invested that but now we're back to write about breakeven on one burn yeah it depends on a month but that's always something we can dial up and down as we we see fit yep and you mentioned you're growing about a hundred percent year-over-year so take me back thirteen months what were you doing per month about thirteen months ago would you say gosh not a lot maybe fifty to eighty okay about eighty maybe okay fifty to eighty thousand bucks yeah okay wait so something is really wrong with my math 130 you do big volume discounts then at 135 seats you you you're nowhere near a million a month right now I'm sorry you know the difference is we were shifting people from I was saying just software revenue so we we have a lot of upfront consulting to give people hot up so again so 18 did you say 18 months ago we were probably two-thirds consulting one-third licensing now that's reverse or one-third I mean two-thirds licensing one-third services so back into member of 2016 the end of last year you see you're saying you're doing about fifty thousand bucks a month and pure sass revenue is that accurate yeah even a little bit more than that okay a little bit more than that and you're and you're growing that one hundred percent year-over-year so call it 120 ish today promote yeah okay and then add on top of that are you doing about the same amount per month and professional services about the same can be a little bigger for setting somebody up you know it's a one-time let's get you set up you're moving on yep so 120 grand per month today in pure sass nice and predictable on top of they've got another maybe 120 grand and setup fees consulting onboarding yeah nice visit lower margin but nice business model that's I mean that's obviously healthy that can be why your churn is so low is you're able to put a lot of human touch on the setup cuz you charge a provider setup fee that's right interesting it's a it's a high touch but once people are up and running they go full software so how do you how do you I mean what do you assume a customer is worth to you over their lifetime a seat it's a bit unclear yet right because we're we're we're just getting past that core analytic team yeah you know just what do you think the minimum is though and they stay with you for a minimum X years and a minimum X amount of revenue yeah so if they're with us two years it's probably 500 k plus yep okay interesting so if I might take three years to get there okay two or three years good that's good now are you uh when would you last race that money from launchpad how many years ago almost to eight nineteen months 18 months okay and year one was which year again with the raise 2015 toward the end of 2015 when did you launch the company we launched in 2010 but we we pivoted to software in 2015 okay and you did the race so two years later right now you're either raising capital or you're selling which one is it we're focused on growth and new accounts that's that's the right answer Greg but I know it's accurate are you selling are you raising capital we're selling concentric market good answer all right never you never sell your company somebody has to want to buy I hear yeah let's wrap up here with the famous five number one what's the last business book you read scale number two is there a CEO in Boston you're following or studying um no number three what's your favorite online tool for building your business besides your own [Music] concentric market no besides your own Oh LinkedIn number four what how many hours is safe to go every night for four and what situation married single you have kids a 100 percent growth no family that that's a good way to say that so single no kiddos but four hours sleep how do you survive not well weekends you catch up catch up all right lights at 7:00 some nights at 7:00 how old are you 55 55 okay last question what are you is your 20 year old self knew I should have been an entrepreneur from a long time ago waited too long start your company earlier there you guys have from Greg again concentric market.com they're helping you do really you know analytics understanding you know if you add this door and a car model or you don't add it your sales will be X they do it across movies they do to cross all kinds of different landscapes there people are paying them on average 12 grand a seat to get up and running back a year ago doing about 60 grand a month in a revenue today doing 120 grand a month in revenue and just pure sass another hundred 20 on top of that in terms of professional services so called a quarter of a million a month in revenue super healthy economics they have not lost a customer paying 13,000 bucks CAC on average getting that paid back in less than a month with our team of 10 based up there in Boston Greg thank you for taking us to the top thank you