How Coralogix CEO Ariel Assaraf grew Coralogix to $90.8M revenue and 2K customers in 2024.

hey folks my guest today is ariel aseroff he's uh had a career in the israeli intelligence unit of 8200 and later joined variant systems to work at the homeland security decision and co-founded corelogics in 2015 to change how companies analyze their data from index then analyze then analyze to index and go back and forth on what matters ariel are you ready to take to the top thank you very much nate great to be here as i say is x israeli intelligence you know monday roy mann chorus i feel like you all you just know something we don't it's interesting actually i think there was a research now in israel that showed uh where most entrepreneurs come from i think there are three specific units there's 8 200 there's 8 100 that came out of shadows recently and there's pilots so in our company we have a mix and in our board we actually have um 80 of the board members our uh uh pilots in in their past so i guess there's a there's something when everyone has to to get enlisted to the army uh that kind of ranks people on what they like to do and should do in life when they're 18 which makes decisions uh easier that's amazing all right so let's jump into corelogic what are folks paying you for today yeah um so the the thing is if i take a little a step backwards um the observability space logging metrics security uh tracing it started about almost 20 years ago or really started to explode almost 20 years ago when splunk took it from the appliance um sort of approach to actual software and then uh software as a service uh with the the concept of uh let us ingest all your data we'll index it we'll store it we'll become some sort of google for your organization or for your operations or for your uh security and it worked great uh because the the amount of data 20 years ago was was something that can be handled like that and with time we're seeing data growing exponentially what we tell our customers and our investors in the previous round was data grows faster than revenue so you'll see any company you're covering you'll notice like you'll ask them and they'll give you the the most uh uh insane kpi of growth if you ask them how much did their data grow during that time their observability data it'll be like 510x what happens is that you know data and observability tools are part of your margins they're part of the basically they're part of the unit economics of an organization and as data grows faster than revenue it becomes hard to manage super expensive hard to scale performance issues start to rise so we started a company like almost seven years ago but we didn't start where we are today 20 2014 right that was uh end of 2014 and uh we started uh with like a a lighter version of splunk you know data like a cloud cheaper splunk but with time things started evolving and we saw that customers aren't looking just for a solution that can do whatever the others can because their model started to break cost containment was impossible performance was an issue and then we kind of decided uh after three years of basically doing nothing so the first three or four years the company was zero revenue zero customers it was almost shut down so we were so hold on so between 2014 and 2017 no revenue the first dollar came in october 2017 um and we actually had a board on september 2017 where there was a decision point where the board members said you know we like you guys they were super nice and and uh patience how much have you raised to that point two million dollars and um it was okay did you do a 5.2 million dollar seed though in 2016 no not not 5.2 million dollars it was it was uh a million then another million that's why i say okay and then they kind of wondered whether they should just uh uh close a company and and and hand out the money back to the investors but there was so little that they decided not to because it doesn't really matter how much how much was in the bank 2017 before you shut down or thought about it 100 000 wow end of 2017 we're five people wow so i was i'm one of the co-founders but i was not the ceo the ceo left at that point um and how much equity did you own at that point um it was you know we just had a couple rounds so it was it was still fine and then um the cto that was an employee left after him because you know the company kind of fell apart so he went to manage a group this big company and uh yoni uh a good friend of mine who also led a group in variant uh basically became the cto became my co-founder and we restructured a company entirely and we started running from that point onwards um and within the four or five months we got to like 20 25 000 of monthly recurring so the board was very surprised because they thought they're going to shut down and they gave us 2.5 million dollars more like an extension like a uh uh um cla what evaluation the valuation back then was roughly 10 million dollars okay got it so you sold 25 yeah so we started uh running the company and uh ended that year at like a bit over a million um and then something interesting happened um we got an acquisition offer and that was for a few tens of millions uh 2018 that's beginning of 2019 okay you were really considering because you know we we had so much we we had so much uh uh trouble getting this off ground and people in the board and in the company started getting tired because we were only seven eight people back then so we gotten to a point where we had an s uh like an spa in our hands um what does that stand for like an loi sp is sure's uh purchase agreement no it's it's all the way to the actual signature oh yeah okay that is the definitive agreement now i was 29 and at that point getting a few million dollars looked like you know when when i thought about starting the company for me that was like an ultimate outcome right and but then you know we're fortunate 10 and 50 percent is that a big enough range yes okay fair enough and the offer was for in the tens of millions so like it was like 30 40 minutes yeah yeah not not 90 okay okay okay so um we were actually fortunate to be at that point because not many people get to you know everyone says i want to grow a big company i don't want to sell you know and then the acquisition offer comes and and now you're sitting in front of something that is real and we were actually there to look at how it'll feel like just signing a piece of paper and receiving a few millions of dollars and then me and yoni said you know we actually don't want to do that yep we have a lot more to do so i went to one of our board members at stage one and i said listen i know there's going to be a board meeting next week to approve the sba which means this is a definitive agreement i need your support on this so he said listen i'm part of the committee that ran this deal so i what i'll do i'll resign from the board and resign i'm sorry resign from the committee and then i'll i'll be able to do so which was a little bit dramatic and then he said and what's the alternative i mean the company is you know we bear in mind we don't have money in the bank at that point so i call a friend of mine from aleph vc um aaron and i say listen um next week we need to decide on an sba i know you know the company here are the numbers and i text the numbers and whatsapp what were they by the way high level back then it was like 1.4 million a year maybe or so that's that's mid-2019 so like after the acquisition offer it took a few months to get to the sba and then um what happens is that he tells me you know what i think i'll we'll make an offer and i said okay so when when can you make it he said you know i'm coming back to israel next week let's meet my partners i said listen man there's there's a meeting monday it's tuesday now i need to to get it so he arranges his uh partners in this room in new york we barely hear each other 30 minutes we speak and then he says you know what i'm going to send you an offer and he sends the offer again on whatsapp like this one two three four five and i said can i bring this to the board because you know they're going to turn off an offer that that's going to make like a nice income for everyone even though even the ones that got in and 10 million will they make they're still 3 4x right yeah and he says um tell the board that we are 100 behind it we're not backing off no matter what we discover in the due diligence which was very ballsy and then and what was the whatsapp this was a ten million dollar round at what valuation the same exact offer the 10 million dollar round the same valuation of the acquisition offers so we make it you know make it apples to apples uh with some nice restructuring the cap table because back then there was already because of the the bridge loan so oh that 2.5 million that was a that was a loan yeah yeah it was a cla it converted together with the the round okay and um we took that up that that uh offer and uh we signed that in i think it was like summer of 2019 and um he told me after that that conversation listen this is going to...