How Crystal Knows CEO Drew D'Agostino grew Crystal Knows to $10.5M revenue and 3.3K customers in 2024.

I'm Drew I'm from a company called Crystal so we've got like personality data platform um been around for a little while but uh for this talk I um it's kind of funny how the I guess when you do when you're in a startup slash like kind of bootstrap mindset growing over time how like the just you realize wow I've just interacted with a lot of people at my company um and I reached that point and this talk emerged out of an email that I wrote to a found another founder who was in this position where he's just felt like especially this was kind of during the bull market when it just felt like every software engineer was asking for like a quarter million dollars he's like how am I supposed to do this like I don't have the money to pay the people like I need to figure out how to get them in my company um so this I wrote like a very long email that ultimately turned into like my own little personal note and there's a lot of ideas that emerge so this is just like a talk with a lot of these ideas that have refined implemented over the last like five ish years um I don't even get something out of it so first of all there's like when you're running a company as a founder or as an executive the thing they don't tell you about is just how emotional it is like like he was just saying the talk um it's not gonna ask about like there's three heartbreaks that three types of heartbreaks I can think of so who in the room has lost someone they really wanted to hire and then they chose a different job for another reason all right it's a couple and was that was it ever because of money like better offer yeah it's always like all right um what about someone that unexpectedly quit and you didn't ex you didn't really didn't want them to anybody okay and then and then someone and then someone you had to let go mostly because either you not necessarily strictly because of like performance reasons but basically has anybody had to do layoffs before because they got over their skis okay got it all right so people in the room have felt this pain um I should have asked this how do I what's the uh the button to print yeah got it oh the middle button green yeah I swear I'm a tech guy right all right first first of all I have one of my employees in the room did everyone sign the non-solicit as well just in case no nobody recruit Neil he's making plenty of money okay um no but this talk this talk is uh mostly for people who are trying to pay their pay their people well but have encountered that pain point and um in that pain point I kind of loosely describe as you are operating with far less resources than your better funded competitors therefore you need to give people a reason to come to your company that is not all about the offer not all about the financial package so there's a couple of points in here that I'll kind of get into but largely I kind of stick with this idea that I want employees to stick around my company Dove twice the amount of like the average startup tenure which tends to be around like 1.82 years depending on how you measure it that's my that's my goal of measure of success um so I'm going to go into a couple of these parts share some stories share a couple of like the hard lessons and mistakes that I have learned over the last few years in hopes that maybe you can pull from that and then a couple of the uh specific things that I go to in interviews and policies that I've implemented at Crystal some of which are pretty new some of which have been for a while um that are kind of like I think working because we we have a we have a pretty strong culture now and and I the way I've talked to people about why they work at my company now we can pay people like more much more competitively than we were earlier on so it's not as much of a struggle to like be able to get someone a compelling offer but it's still you know working at a startup is or an early stage company of any kind is a higher risk so you need to package you need to put together something that's compelling to them somebody go into a couple of these strategies so 2023 we're not in 2021 so money is not flowing abundantly we're not in zero interest rate environment where everybody every company can fund themselves so startups all of a sudden became more risky again kind of like they used to they actually carry real career risks because everybody sees oh yeah X company did 20 layoffs and are you a company going to do the same so startups kind of carry in my view carry the risk they should because startups are inherently volatile and that means that I think this problem is going to get more acute as top performers also experience risk aversion and they also are going to look at all right what are my options in these safer environments um so as a founder there's no real alternative to having eight players because you're fighting against inertia you're building something from nothing it is very hard to do that especially when you're trying to grow quicker than would be natural so you just need those kind of top performers and now those top performers are experiencing the same types of you know economic stresses that a company is so they're looking you know just just as starters with just as Founders are looking for ways to be more secure at their future as are these people so I think this is going to become a more acute problems like how do I actually convince these people to join my company knowing that they might have to take a salary cut knowing that they're probably definitely taking more risk with their career um and here's the unfortunate truth something I learned as an introverted software engineer that did not like sales did not like recruiting they're not like all those people oriented parts of my job whether you like it or not you as a Founder are the most effective recruiter for your company we were just we were just talking the other day and this is kind of in business development just reaching out to a prospect or a customer with knowing that you're the founder and found or the CEO or senior executive like that carries weight that you can't get you can't just didn't you can't say nah I'll just pass that off if you're not doing the recruiting and doing founder-led recruiting you're actually I I think really hurting the company um so it's always really surprising when I get on the phone with some like I do a lot of phone screenings just to talk to people and have that first conversation some would say it might be a waste of time but I don't think it's waste time they're always kind of shocked like wait the CEO you're talking to me it's like yeah tell me tell me about this like jazz band you got on your resume here uh yeah um and in that process I think one of the reasons that Founders shy away from those parts of their job is because it is so emotional and I want to say like I already asked a little bit so it seems like some of us have had like the ones that got away in the business sense I'll share a couple of like those from me that are like stick for me so this particular one was a um I was trying to hire a very early on this is 2015. I needed a new engineering leader and this guy I was I had like the hugest developer crush on him he was like the he just had this amazing GitHub he was writing he was right in Nashville where I live we met like three times we're like so on the vision got really far into the process he accepted my offer and then ultimately his old company he sent this email was like Hey you know I was really not in their best spots with that basically they offered me more money and now they've convinced me otherwise and now I can come back that one hurt that one really stung here was one where uh this was a this was a product leader who yeah you can see basically my decision ultimately came from working at a company that was larger and much more well established which medicates some of the risk for myself and my family during these uncertain times I'm like I wish I could say something enough but you're kind of right um really wanted I really wanted that one um you know we'll stay in touch but I haven't talked to him since of course but yeah yeah this was a this was a more recent this was a more recent one um this was this job applicant that we got really far into the process and this is what I wanted to include this one because it's not like this doesn't happen to us now because this is just last month and um I think an Evidence of the the economic climate this is another case and I dug in a little bit more because I talked to him after this is another risk aversion thing you're a small company I had this huge offer from this big company salary was slightly higher I we we're gonna you know I'm gonna go with this so I think it's it's this is gonna come into play more and more that whole risk conversion thing um so every one of these though has a has a lesson like whether that's a one that got away or someone unexpectedly quitting and I've experienced this like multiple of those heartbreaks for like eight years doing my current company but I've also gotten I think better at not just the front end of it the recruiting part of it but building real policies at our company that had that I now share in the interview process and actually really helps um and I think it's also helping retain it's really helping retain people the long term now I'm not I'm not I'm not here to say like hey this is all I think I got to write our company's still pretty small um so granted this is a lot of ideas that are stolen one of the one of the ideas actually a lot of these ideas I stole from this book I'm not sure if anyone this read this book before it's really good I'd recommend it um so I read Hoffman and uh but he uh he outlines a whole philosophy of hiring and talent management some of the ideas like I've taken some of them I haven't but it's just a really really good read so a lot of Maya has kind of stole from that I also stole some ideas from my dad who's he's a carpenter and he always said he's got this like really thick Long Island accent so he's got these like you know one-liners one of the one-liners I used to work with him when I was a teenager and he has his guys like my bad my dad's best friends I never knew their last names I just know Ray the Plumber Bob the electrician you know Dave the lumber guy like that's that's who they are and he always told me you treat you guys good they treat you good so that's gonna make fun of my dad he's got his like Army of guys who just like been working alongside it for that forever so take a lot of his praise from that um so I've got like five principles not sure if I'll get to all of them I tend to like randomly go on a couple tangents but first principle is that I found that the people who especially the ones who are kind of tossing around between a big offered a big company that feels safer and your startup they're actually attracted to the challenge so I try to lead with that and there's this really famous um Ernest Shackleton quote about like he was going to Antarctica and put this ad out in the paper I try to use that approach in my interview process in the very first time so I say like these three things to make it really clear like hey I'm gonna kind of lead with lead with the hard and just see what happens so first of all I like will speak in longer terms and they're probably ready for I'll say like hey I just want to be clear with you I'm like recruiting you for the long term I want I'm trying to build my team that I build many companies with together I talked to Neil about this and that's part of like what the expectation is that I don't know how long Crystal's Gonna Last we're gonna we could succeed be huge we could fail it doesn't matter I'm recruiting you now because I want to work with you for a very long time and that's like if we share that let's continue this conversation if not maybe it's not the right fit um and I want a simple to sign up for a four-year commitment to each other not legally binding I'm gonna get a little bit into this but setting the expectation that this is this is kind of the time frame that mutually probably works best for us and then let's revisit and then a really upfront like hey this is actually probably going to be harder and more ambiguous and you're going to make less cash up front than your other opportunities and most of I think most of our especially our senior people I've had this conversation with and it's made them more excited about joining the company because I think in their mind it clarifies why they're doing it too um and and it also it also helps filter through the actual other most important parts of the job um so that's in the interview now that four-year thing this is something I stole directly from the alliance that book and I've implemented it at Crystal and um I think it it has it has helped people just think of the more structure about their tenure of employment so it's still still like we haven't had many people go through this whole process but um it's been pretty cool to see just the effect that the policy itself has so we very upfront that we want to do a four-year kind of not a promise legally but a four-year commitment to each other like we're gonna end the company's gonna invest in your growth and you're going to invest in the company's growth this is a mutually beneficial thing and if something is not working along those lines we don't hold it back and then you know just send you a breakup text one day like hey we need to talk it's it's a it's a it's a vocalizing of the issue and giving the other chance to fix it whether it's from the employee to the company or the company the employee um and then there's actual real teeth to it so like at the the big thing is after four years um there's a one month sabbatical a paid sabbatical with like two and a half thousand dollar travel stipend and that's not just a perk it's also because we want to give you a reset and allow you to like all right let's think about the next stage and at that point you have an official meeting where you can determine okay it's time to sign up for another Tour of Duty maybe another tour duty at a different role or maybe it's time to move on and let's make that like a smooth transition that's transparent and helpful for each other rather than kind of secretly looking for a job and then putting your two weeks and then leaving um so the goal is to create like an open and mutual and a very open um and structured timeline for things to uh move into the next phase whatever that is um I stole that idea the sabbatical idea from HubSpot second one radical transparency on the front end of recruiting this is something I've only done recently because I didn't have the confidence to do it earlier in my career I call it putting my worst foot forward everyone says put your best foot forward put my worst foot forward um filtering out I found filtering out the wrong people in the process is probably just as important or more important than identifying the right one so I want to like be very upfront I do this with investors too like when I talk when I talk to them about the these are the biggest risk things keeping me up at night I'll let you know all the flaws up front and then let's let's back into it then I'll tell you what the good parts are but let's get that up front so when both when both parties are kind of going into that um into the agreement with a very sober mind and Clear Eyes I think it just immediately felt you can immediately filter out the conversations you shouldn't be having and then really affirm the ones you should because the right people they'll they'll go right into that and say okay tell me more about the hard things you're working with and I want to solve those problems um and depending on stage is just a little part of it because we're in this phase right now where we're actually shifting from Trailblazers to bricklayers this is kind of how I think about the two stages where you can filter out like if you're in a phase that's a startup and you really need the Trailblazers you need to be able to understand that if you bring in Brick later layers they're going to be very frustrated and bricklayers kind of think about like you know we are building to scale building for the long term and likewise if you're in a bricklayer phase and you start hiring Trailblazers they're going to blow the thing up and create chaos um so yeah having those questions up front like if we're in a startup saying hey we have like a lot to figure out I might completely change the business model without really much planning in the next three months would that be okay with you and some people are like no I'm gonna go work in Adobe um all right um this one's pretty obvious it's it's it makes sense but I keep having to remind myself over and over that most people have a motive that's a lot stronger than money but it's very different for each person and if you can identify what that is you can really structure either a package for them on the front end or just policies on the back end for the long term that um that really helped them get what they want that might not be financial and these are just some of them and each one each like I said each person has a different one um one of the specific ones that I've learned a lot about is um these are the first one up there especially on the technical and Engineering side um learned a lot about hiring like really great developers because I've made a lot of mistakes with it is the best developers are so attracted to just the idea of them pushing code and then seeing it impact customers quickly that's like it's more valuable than money to most developers that are the most of the best developers that I talk to um and I didn't really understand that at the time because I we kind of think of people in these buckets as like oh you're in engineering you're not really thinking about customers of user experience you're thinking about the code but it's not the case at all you know we we think both ways so that's just like one example of that and oftentimes we use our product as a way to kind of detect this out so people that care about people and our products of Personality things so um it kind of helps determine that fourth principle and how it's time do I got then it's two three minutes okay cool um people want their market value to increase and that's whether I mean just like any of us as individuals but oftentimes I feel like as a startup executive or a Founder you can look at someone as a DOT instead of a line it's like I hired this person for this reason and that's their job and I'm paying them to do that job meanwhile they're viewing their life as a line I'm trying to increase it go up increase my value and that's where you can get the situations where they feel stuck so understanding ways to help your people increase their own value I think it's really good these are a couple of companies that I think do it really well particularly on The Branding side and the shared network effects like G2 and Catalyst I asked them if these I know both of them I asked if I could use their pictures in the presentation but their companies have very good employee branding and opportunities for their employees to to build their own personal Brands and I've seen that really um become a become a great way for people to grow alongside their companies that's one thing something we started to do was just start building those blocks so give people resources to have on their own personal websites their own social media grow alongside the company and then ultimately what this translates into is well after the employment tenure is tapping into the Alumni network because when people are proud of working at your company even afterwards you're building this compounding network of people that becomes a recruiting funnel um so part of that is when you part ways not screwing up and Burning Bridges unnecessarily so parting ways gracefully is an art that takes a long time to learn think about like writing a whole thing on that specifically because I think we focus so much on the hiring and nobody talks about the firing process and that's where everything gets messed up like half the time a couple of ways here and we're running low on time but to get that alumni now we get one minute all right basically sum it up when you when you fire people put more just as much thought into it is when you hire them asymmetric trade-offs um a couple of it's actually I'll finish off here the a lot I didn't our company's like eight years old now so we've been able to have a couple of situations where some of our top employees now about 30 of our employees came from an alumni referral and we've actually had some Boomerang employees come back too um and this is an example of like one of the situations where you know alumni basically goes finds a great designer at his company ends up selling it now we've got a great designer because he was looking for a place to put her and we had one of our first employees come back recently and he actually referred a couple other employees and basically creating that that alumni um flywheel is like a great asset that I didn't understand until doing this for a while so anyway just couple steps you want to take a picture of it before the times out and uh thank you foreign

Introduction hey folks my guest today is drew d'agostino he's the founder and ceo of crystal specifically crystalnose.com since 2015. backed by salesforce hubspot and other investors he's forbes third under 30 in enterprise tech he's author predicting personality how to use the ai to understand people and win more business he's a classically trained pianist pilot and distance runner drew you're ready to take us to the top yeah let's go all right so what is crystal knows for folks that are not familiar crystal is an adaptive selling platform so we use personality data and other behavioral insights to help people connect better with their customers and communicate more effectively so yeah we've been around about seven years now are you selling to you know an e-commerce brand trying to identify consumers or like a b2b brand that's looking identifying new business customers we've got customers all over the place but primarily b2b and if it is consumer it's consumer like very high ticket consumer items really high touch sales processes which are like very relational so not so much transactional or e-commerce or anything like that so should we think of this like i mean it's not cookie-oriented or maybe it is it's more like first-party more like a bombora sort of style tool yeah in that lens it's adjacent it's not competing with tools like that um so chris crystal is dealing with behavioral data and specifically like predicted behavioral data there's a lot of so there's a lot of information out there about people so if you're looking at a linkedin profile or there's lots of enrichment services where you can get someone's job titles interests skills anything to that you could use to personalize communication which is a lot of that data out there and it makes it it makes personalization on one hand possible but on the other hand really hard because it's impossible to do all that research and actually put that into action in an efficient way if you're a sales rep or if you're communicating with customers so crystal does is uses predictive models to take all of that information and then summarize and summarize the best approach for that person and then how you can do things like negotiate with them discuss pricing really follow them throughout the sales process so we so we have is machine learning models that say okay based on all that we know about them like the facts here's how you should present your message and your process and that could be based on we use a model called disk so we've historically been this personality kind of a personality app and ever since we've gone out market we've kind of adapted that that whole model to just make the sales process a lot more efficient and personalized so drew up market i when i hear that i hear higher rpos higher acvs what's the average customer paying you these days so our business is still divided between this self-service customers who's historically for the first six years of crystal was our main customers and our b2b customers so for them we have annual enterprise context so the whole focus really right now is in the b2b side so i'll just focus on those numbers that is around around 8 000 annual annual contract value versus the self-service which is historically for us been mostly monthly contracts but if it's annualized it's five or six hundred dollars um yeah and what's the breakdown between both of those like uh i guess you were founded in 2014 so you were doing the self-service all the way up through 2020 is that right we we actually just um got out of self-service last month so wow we yeah so but but over i would say since we we started really focusing on b2b in mid-2020 and that business just started kicking in beginning 2021 so since like really the beginning of 2021 it's gone from almost zero percent um b2b to about 60 to 65 percent so it overtook the majority of our revenue and more important probably more importantly than the acv the retention is a lot better on the b2b side i kind of anticipated that but i didn't anticipate the degree to which it would be better so we realized that our business is actually much better suited to be an enterprise sas company as opposed to like a self-service product totally product driven one um so that's we decided to just it's still technically an experiment because we don't know if self-service is totally in our past but we want to see what this business how it performs with a just total b2b model so how many customers today pay for your b2b tool Currently serving 3300 customers uh i would say 350. 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 it 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 valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner 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 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 raised they sold 22 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 valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to 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 evaluations or if you go to founderpath.com and hover over products click on get your evaluation 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 did you recruit those 350 out of individual users who used to be your self-serve or do you have to go recruit those 350 brand new over the past 12 to 18 months it's in a mix so that this is the breakdown is actually i don't really know the numeric breakdown other than just guessing it but there's definitely a contingent of those who were using our product for a long time as individual users and then we didn't just change the pricing model we also added a lot of robust features to the product that made it better for enterprise so a lot of them have come in through self-service mechanisms um some examples of those are like big professional services organizations like accenture is one of our big customers they've they've used crystal as individuals for a very long time um and ever since then we've kind of slowly been piecing together team deals and going with more bdb motion so it's kind of an example of that yeah something for anyone to do that's just like the self-serve folks is go look at all your thousands of self-serve users paying 29 bucks a month look at the domain name of signups sort you know alphabetize them and then highlight conditional formatting in excel where there's duplicates and when you see accenture except your extension there's like seven people on a team in accenture using you there's clearly an enterprise motion there is that sort of what you did yeah so there's a difference between self-service customers and crystals free user base we've got a massive free user base there's about 30 to 40 000 people depending on the month who sign up monthly for our product and they go through the motion of filling out personality assessments downloading trials of our tools like there's a lot of things you can do in crystal for free that's still the main funnel for our enterprise business but there is a segment of those who have signed up for um different types of paid uh subscriptions we've had over the years and i mean if you were to add them all up there's probably been something like 18 to 20 000 of those paid customers for some crystal product some of those have been recurring we've also had non-recurring products in the past so of those that's kind of like the low-hanging fruit for us so we can either look at the current customers also revisit the ones who have had a you know individual subscription in the past and start rolling out in like a marketing qualified lead flow to find out opportunities so we're kind of going at it the the good thing we have is seven years of experience in seven years of a giant funnel into crystal what we're not so good at is really efficiently identifying those opportunities so that's one of our big priorities this year andrew so how many folks are still paying today for that self-service tool you know 600 bucks a year sort of deal it's i'd have to get the updated account but it's more it's definitely more than 3 000. so it's more than 10x yeah it's more than 10x the the enterprise customer base in terms of just number of users yeah so that's still i mean 3 000 times 600 what is that that's like two million dollars of ar right there right it spills yeah it's still a big chunk yeah so how do you i mean do you you mentioned like you shut it off and now b2b is 65 percent like what does shut off mean do you stop servicing them let them turn off like what does that mean no so we everyone that had a self-service account still has access to all their tools and they and most of those users are pretty active at this point because um they've they've had the opportunity to just like you know you settle out with that churn curve so our approach with that has been let them keep their access to the tool but at the same time build on to the enterprise offerings that we have and there's a lot you can do in crystal now that you just as a company that you can't really do as a customer or as an individual user so we've been trying to go in from a value perspective like all right let's let's make this enterprise product more appealing to these customers who have these like self-service accounts but as far as new customers go you can right now if you go to crystal's pricing page there's a free user you you can't sign up for the self-service account so for that we've used the approach we've actually just like kind of taken the approach to a lot of these other sales enablement businesses like gong where it's just this big pricing request form and you can kind of go through that and um just basically just talk talk to our sales team at a pretty fast still pretty high velocity like and so when you look at the total revenue mix today i mean look if you have 65 percent of revenues b to b and your current like b to c or your lower rp model is you know 1.82 million revenue that means you got another 2 million on the b2b side so are you guys Monthly recurring revenue sort of around like a 4 million run rate today something like that yeah um we're around like 4.2 ish okay and where were if you're there today where were you about a year ago uh a year ago we're looking up real quick i'm gonna say three um somewhere out there yeah i'm curious when you say look up what tool do you use to track this stuff well i uh if i am looking in barometrics right now i do not really want to look at berman i do not want to look at barometrics why is um i've just had some issues with the tool so i all of these tools have always like i use i use barometrics profit well founder founder well technically founder path for um a couple of things i look at all these and i look at my spreadsheet um and all of them have just like little quirks about them that make me need to use another tool yeah so i can tell you i can tell you right now i use for my investor updates and my screenshots with with the graphs i use barometrics for um analyzing churn rates and like segmenting my customers and all that i use profit well um for looking up mostly on founder path it's kind of like looking up the um the amount of funding that i could get you know seeing what the seeing what the business health i really like the business health scores of it so seeing where i am benchmarked relative to other companies is very helpful so i always like to toggle between these things that's so fun financials i have my spreadsheet yeah we you can tell me we are actively trying to figure out can we just create all this in one thing and give it away for free but it's like everyone wants like a different little quirk and many times you just end up in the spreadsheet anyway yeah i would i would say yeah i definitely want to i definitely want to replace most of that with one tool um as far as financial source of truth goes there's only so much you can get around the spreadsheet but uh yeah yeah yeah three to four point two million i mean that's good now you you did raise though Bootstrapped a bunch i mean back in i think 2015 2018 right have you raised since then we've not raised since um january or 2018. that was the last round that salesforce put in yeah that's been a while i mean have you given any thought to like buying them back out um you know what i haven't really it's it's it's more of like there's no there's not a great reason to buy in the back out at this point i don't think because salesforce is a really helpful partner for us so um and they're they're just great to to work with they're really it's really um it's been a good partnership like i like having really like having them on the cap table um salesforce is also one of our larger customers too so it's kind of great to have those multiple you know multiple levels of connection so i would say if they were just a random vc then i'd be looking at that but because it's strategic and good salesforce um yeah i i like having them on the cat table there's no any plans to raise in Profits the near future or you're good to go you're profitable you're gonna say sort of bootstrap mentality moving forward i wouldn't say bootstrap mentality so this year we are adopting so we've spent about 18 months kind of solidifying what this enterprise i call it enterprise what this b2b model looks like enterprise means a different thing so after that first 18 month sprint of it i'm actually now way more convinced that crystal has far more legs and this thing could have a very viable path to like maybe not a 10x but like a 5x from where the revenue we are right now that that might take more money i don't know yet yeah we've got plenty of cash because we've been profitable for about three years so yeah so we're not like looking to raise but i am investing now so we got to burn rate again we are growing on the product side especially doubling down on some of our what's the team size drew today there are 30 and how many engineers engineers plus data science is nine we'll be ten there you go that's how i measure as someone really doubling down on product and r d okay there's nine they're doubling down this is great by the way you're like the exact i mean if at your run rate i mean founder path could get you pretty i mean almost overnight about two million bucks capital i mean you're the exact kind of founder we like to sort of work with so i'll flop with you afterwards on that i'd love that all right yeah yeah all right very very cool story here um we're also excited to have you speaking at founder 500 on september 1st in austin texas why don't you tease a little bit what you're speaking about what should people expect to see in your slide deck yeah i've always thought that you shouldn't go speaking an event unless you have something to say so i wanted to actually i'm glad we actually had an interesting insight from the last couple years um i think the most helpful thing for me was getting out of my security blanket which was our self-service business and leaning on a sales team and letting my sales and customer success teams do what they do well and ultimately figuring out that we could increase our ltv um from around roughly 500 roughly 500 to 2000 total and that's across the whole customer base that's because the the ltv between our two businesses um are vastly vastly different so that's um that was the main insight so being able to in 18 months or so or maybe a little more than that it might be it might span a two year technically expand but going total total ltv from like 500 to 2000 has been a really big insight for us and that's just going to keep improved i'm trying to accelerate that by just making sure most of our new customers are all coming in this like 8 000 and upside and um we're kind of continuing to just let the self-service business sit in its current form so guys don't miss president don't miss his presentation it'll be on friday september 2nd on the main stage at 2 p.m and the title is life after freemium how they killed their free business model and killed their first business model built a new one from scratch and increased lp by 400 it would be a good one drew let's wrap him here with the famous five number one favorite business book how to win friends and influence people probably still yeah number two is there a ceo you're following or studying uh ceo and polymer studying i think i mean i i read jeff bezos's investor letters like trite at this point but i read his investors investor letters pretty frequently so i'd have to say him number three what's your favorite online tool for building crystal inherits google apps yeah yeah me too number four how many are asleep to eat every night try to get eight okay and situation married single kids single no kidding okay no kids and how old are you 32 32 last question something you wish you knew when you were 20 i wish i knew i wish i knew that i was that i was actually capable of being technical and also learning classical music i used to think of myself as a total creative and i was and i just was not capable of learning technical skills um and i learned who i am so guys there you have it crystal knows they're helping they used to help sort of self-service customers now doing more b2b work with companies like salesforce helping them build profiles of their potential customers so that salesforce knows how to go sell to those customers ahead of time really interesting business model 300 enterprises using them today but 3 300 total customers all together just passed a 4.2 million run rate up from 3 million just a year ago that's all while being profitable over the past three years despite raising about 6.9 million bucks of vc back in 2015 and 2018 but again profitable today growing nicely team of 30. drew thanks for taking us to the top all right thanks april one more thing before you go we have a brand new show every thursday at 1 pm 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 arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m 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 nathan lacka dot 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 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 all right i'll be in the comments see ya

so everyone my guests say is Drew D'Agostino he is the founder of Crystal for the past three and a half years he started multiple businesses before that including an event software company attend comm a pizza box eat advertising agency in a bed bug extermination company he's also a private pilot songwriter Runner and local diner regular Jew are you ready to take us to the top I am alright so the website is crystal knows dot-com tell us what the company does and how you make money sure crystal is a personality platform and we can tell you the best way to communicate with pretty much anyone so we offer access to a large set of personality data for a few hundred million people and if you're in sales management recruiting or really any other kind of position where you have to communicate regularly with people you don't know crystal can help give you lots of information of the best way to communicate to have stronger relationships mostly first so Germany is like a sexy version of StrengthsFinder is so strengths finder is one of the personality frameworks that you can use to understand people better Crystal's really rooted in disk which is a pretty similar framework and the the main difference between a lot of you know if you're just taking an assessment online is that crystal is actually predicting the personality type versus requiring an assessment from somebody you got and what inputs are using due to the prediction so we actually train on traditional assessments so people can take free assessments on our website but the majority of our profiles come from at using that and an accommodation of machine learning and natural language processing to analyze public data so social media emails resumes really anything that we can get that users provide that is um we can detect the writing style for okay so that's how we generate the profile just to be clear though I mean your business is very different if this is a passive thing where the user doesn't have to do a thing versus the user has to upload you know X Y & Z things this is something where if I wanted a personality test on you before we just met and I started interviewing you I could go to Crystal and it would tell me what you're like based off your your public persona right yep okay and like what's the risk there that it's not accurate and I come on expecting an egomaniac and you're actually like humble and shy we are so it's not perfect we have about 83 percent accuracy confidence across our platform how do you measure that though like like how do you measure how wrong you were that his egos not actually 100 points big it's only 60 points big so that's based on a sample size of a few thousand profiles per month okay and what we do is we compare our personality results to the primary disk type that that person got in a personality assessment so those are the people that take their personality assessments like just a standard straight-up questionnaire like people are used to taking an eighty three percent of the time we can properly guess what the primary personality type is when they take that assessment so crystal so Chris will get that about four out of five times accurately okay and how do you make money what's right what's the business model it's all free to use for inside your company so I feel that want to understand their co-workers or their boss or like new team members better that's how we grow I love you but now I hate you I mean I love because I love money I mean how do you make money so the people that use it for free some of those are in recruiting sales and management roles and those people can pay to access crystal profiles outside the company too to access outside the company okay got it okay this is a really interesting model so you basically have extra leverage when you land an account to quickly expand to their full team because the pitches it's free and when you're thinking is once you're there in your ecosystem it increases your data set which makes the whole system more accurate and then they pay to go outside yeah interesting ok now what do you price it off is it is it like a price per one person they want to go outside or do you sell in batches or is the SAS model what is it there's two main revenue streams one is a pretty standard SAS model and that's a $29 a month account to get unlimited access to our tools so somebody who wants to install our Chrome extension can get access to Crystal profiles whenever they're looking at LinkedIn using it in Gmail it also works with Salesforce and HubSpot that's what that's about 70% of our revenues huh and then the rest of it comes from API and just your data partnership so so companies that want to use personality data in their own software or if they want to segment customer lists on psychographics they can just get our data without the UI and now they're purchasing like a number of API calls per month or something like that yeah it's um like a monthly subscription service for the data interesting okay give me more the backstraight when did you launch launched the product in March of 2015 when did you start the company though well so I started working on the project in September 2014 okay at the time that was it was after my last company and does a whole big thing we're my co-founder and I got fired by our investors and during that period of time I was late you can't just you can't just blank over that what do you mean so so so you're talking out of tend yeah how much have you raised that we raise I think about three and a half million at that point okay and and was it the last round of investors that pushed you out or was like your first like angel who said you guys should leave we only raised we raised two rounds from one venture capital firm okay so yeah and how did that coming describe the phone call or the email or whatever it wasn't mean how did you see this coming or was it a shock and surprise it was a shock but you could have seen the red flags the whole thing at once it really caught up it was about a week process and I remember the last line of the phone call which is the last I've heard from them was the motion has passed and so did you not have like legal up front like you guys didn't have full control of the company in terms of your voting rights on the board or what we raised our first round when we were both 22 it was our first our first real experience with this so we didn't really understand how our Terms worked it was just a you know a million dollars to start company and honestly it wasn't like a bad relationship throughout it was just we understood our market at a pretty deep level and the investors saw they had a different vision for it and they wanted to they didn't want to be as patient with some specific niches we wanted to go after do they crash and burn the thing after they kicked you out that's obviously what we love to see right is they died and you go I told you so you know the company got bought by another company except I didn't get any check in the mail so I I really have no idea so was it you know you didn't have information rights to even know what the exit price was no and then they recapitalize the company so I'm pretty sure I didn't really want anything of it so I honestly have no idea that is crazy yeah before when you when you raised about money what did they kept even look like you you had 30% in front or at 30 and they had like 40% or what we so my co-founder i started he was a CEO so he had we split it up so he had slightly more than 50% and slightly less and then they came in I believe by the end after raising that money I had I remember owning something about 20% yep yeah so here co-founder Ivy had like 30 ish or something and the other side at 50 yeah something like that that's crazy that and what was revenue when they kicked you out I think we're about to hit a millionaire are ok so I mean that's not only I mean it's a big deal for 23 24 year old right I mean did you at least create some wealth for yourself or you guys paying yourself a healthy salary uh I mean we thought it was healthy at the time well how much how much were you paying yourself actually we had it so we ended up around I think we ended up we started at 60 ended up in 94 the couple months preceding the proceeding though that's good so hopefully you saved a little bit right oh yeah and it was enough to it was enough to have some runway while I started crystal and and it was just I mean and crystal was something that I couldn't not pursue you know as one of those things that was keeping me up at night yeah so I figured it out I did some consulting and while this during like the nine or so months where I wasn't making anything from crystal yeah so what you're a nice guy because if that ever happened I would sue the hell out of these people I would go at them so hard so that no one ever mess with me ever again but you see my nice guy with good energy and you don't want to do that it just wasn't worth the time we actually got we thought we were offered a severance package in exchange for a release but because if we signed that I wouldn't be able to have this conversation with you at that level of specificity so yeah I I prefer I prefer being able to speak and story not filter myself I mean was it like a baloney said I was like here here's 5 grand to never say anything I know was more than that ok about 10 times that but ok just you want to go to tell the story yeah yeah okay that makes good sense all right back to crystal so you launch and you start filling out of in 2014 you go full speed no have you raised I imagine you haven't raised right after that Horror Story no I actually didn't want to raise at all I wanted to just boostrap little thing so start it off rate launch the product had customers secured revenue from day one and I hired my first employee when we were bootstrapped he was actually the best engineer from the last company and that was a heard of technology so it was it was revenue from day one but then I realized that we I was just getting offers for investment like in my inbox for a lot of people because it had gotten some publicity so it was just an inherently interesting subject what did you put out publicly like did you put out a public revenue figure like grossly or something no it was just it got picked up by The Huffington Post um in one article and then spread and kind when it went viral in like a two week period not like super viral but it was it made the cover of Wired eventually yeah that that led to a lot yeah and I realized just as I was meeting these people who were just all like founders or operators themselves they wanted to put money out of business because they really believed in it it was just I recognized that this was a very good group of people that were reaching out to me no did you raise I did yeah oh wait how much did you raise I raised like a five hundred thousand dollar seed round later in that summer okay and what am i raised total today um we have raised a total of seven million okay so okay so you you were like okay we raise the first time around I didn't work out slow but I'm doing it differently this time did do it differently yes you you can't you just please summon your if you have co-founders I don't have co-founders now okay but you can't lose control of a company right no yeah so I had several several deal breaker terms especially going in angel round was pretty easy because it was too safe but going into the series day yeah I I knew what I wanted and wasn't gonna move on those and we were we are lucky to have honestly like I couldn't be happier with our investors sales for its sales forces our lead investor and obviously they're a huge scary company but they been like fantastic especially I mean you know there's there's lots of ways that those kinds of strategic relationships can go sideways but who do you work with either they've been great so I mean Johnson more shy leads the group so we have worked with him but specifically more often it's Rob Keith and Matt Garrett yeah yes okay good so back to your story so again launched in a launch in 2014 did a small round you raised seven million to date what have you scaled to in terms of customers we have about just coming up on two thousand customers now okay got it and and I imagine that's your bike you're paid number do you also obviously the freemium on how many total people using it altogether the amount of like total signups is just crossed half a million but as far as monthly active users that's in the tens of thousands okay and that two thousand number you gave me is that each seat or that's just total logos two thousand accounts most of those are individuals but if you were to add up the total number of seats it's probably it is a rough estimate that's probably the range of four to five thousand okay so me if I take just the logos two thousand times at $30 price point up puts you like around 60 grand a month is that generally what you're doing right now we're doing more than that because a lot of those are larger deal sizes okay I was gonna say so so it might not actually be 2,000 seats it might be like closer to 3,000 I mean have you broke a hundred grand in monthly revenue yet coming up on it okay good you think it break it this month or next month within within three months okay that's good now what have you in terms of growing me you know the obviously SAS company turn is critical tell me about your turn we used to struggle with turn a lot how high was it the highest churn got to was consistently seeing seven seven ish percent net mor churn per month okay now we've we pretty much focused for exclusively on that for a year yeah and released a new released a new pricing model right at the beginning of this end of last year and we're actually able to cut churn so far the numbers are showing that it's those cohorts are turning at less than half the rate and it's it's really taking over and taking hold on our revenue growth so we're still we're still seeing a lot of hangover turn from our old cohorts that are not as that are not as likely to say because they signed up for different reasons yeah but we kind of really boiled it down and it wasn't such a product problem it was really a packaging problem we were we were charging for the wrong things at the wrong amount to the wrong people when were you what were you charging for we were charging for like 20% of our personality profile but you get unlimited profiles and then you could unlock the whole thing but what we realized was that that 20% of the profile actually gave away most of the value and people would upgrade and then downgrade just simply because they didn't need the rest of it so what we did was ended up giving the whole profile but just for a limited number of people and that results in people that are actually using the product very frequently they upgrade happily because they want to use the product more and they stay so people are upgrading for the right reason and then we did we did consolidate the pricing made something simpler some minor other improvements but that was the core thing we needed people to upgrade for the right reason and what do you you know with with these economics getting more healthy what are you growing I would say you over here so what were you at you know you're I call it south of a hundred grand right now on mor what we had about 13 months ago we averaged 2007 we averaged just about five percent monthly mr our growth okay so what helped me on the math on that what we're doing like like 30 40 grand a month twelve months ago around there around their authority yeah so it's about a hundred I mean it's about 100 percent year-over-year growth II a little less than that I think we're 40 we're 40 in change at the beginning of 2017 yeah simchas yeah so this year our projection my target is to average 10 percent month-over-month revenue growth we're not there yet and the reason that we the reason that it's gonna take a little while is cause we've got a lot of that hangover churn but I'm pretty confident that by the end of this year we can hit that number well when you split out and only look at the new cohort are you seeing north of 10% you have a look at the new cohort it's more like 20 to 30% yeah that's great that's all right so yeah last few economics questions before we wrap up with the famous five what are you paying to acquire new customers with your cat we don't have any paid acquisition and we also don't really do bounce sales at this point calculus tack is very low and well how are you a finding you is it just the natural like people inviting their own teams mmm it's that internal it's the internal company based model yeah so one one one one person gets it we get you know we'll see a random company blow up with like 50 people signing up at once and then of those 50 people the salespeople and recruiters they either reach out or they just start using the tools and upgrade yeah and what is the what do you assume length times like assuming look you know your chernov's does of is she changing rapidly going down but what do you assume lifetime value is on these accounts LTV give you our average yeah that agreat is on self service accounts LTV is just under 600 okay and what what I assume your average is probably higher than that on the larger accounts right yeah that's that's a little hard to measure I can't do that right now okay alright what are you looking at are you use bear metrics or something I used to our mobile char mobo okay good alright and okay good last few questions here so what's your team size today we are 12 people right now and where's home Nashville Tennessee Nashville I love it alright good natural gonna see 12 people and then what do you a suit like how quickly do you like to get I mean I guess you don't really have tax so you don't have to look at payback periods right yeah that's it was so we it's not really that important to us however we're we're with this latest round of funding that we raised that the plan is to build out the growth side the company a little bit more we we're gonna start to get our act together and have a real sales team when did you when did you raise last round of funding and how much is it for just a month and a half ago we raise five million dollars five million bucks okay and then you probably understood keep as close to the best but it would be valuable learning if you share in valuation wise we believe like a four five six that's multiple on a our or or how do you negotiate that so air we got a very good valuation I can't disclose details on it but it was it was a pretty significantly high multiple mostly because it was competitive process yeah you you create a nice bidding war yeah like Tim can we say can we say north of 10 million valuation is that fair yes okay guys let's say if you're raising five I know you fifty percent of your company so it's got to be well north of ten which is well north of a 10x multiple you're currently doing so you had you definitely had some good social pressures happening inside of that bidding process yeah now here's a question for you do you ever worry about rolling into that valuation um do I worry about it up well yeah I mean we it's kind of like the trajectory here that we've signed up for yeah I'm very confident we will because we it crystals an interesting business in that we have this like very big kind of sexy vision that we can project where it's true it's like kind of why I do this I want everybody to have a handbook for how to work with everybody else I think that is ultimately gonna be good for like millions of people that's the big far-off vision kind of what we're working towards but in the process because of the pressure we put on with the bootstrapping in the beginning we've got this revenue model that works doesn't work great yet like we're not you know it's it's not growing you know two-three hundred percent year-over-year but we've got the the core a bit working and with some optimization we're going to grow into that into that valuation relatively quickly I mean if you're like like companies like you with your economics right now I mean they're selling there are corporate buyers that are selling and they're paying calling an average of maybe three to five X even on the high end of these deals I mean you are well north of a 10x valuation I mean you have to like me I mean a good the way I think that's not I always wonder about your your I think you probably mind regulate twenty nine thirty twenty seven yeah twenty-seven yeah so so like if you were offered today it sounds like you almost the company a five million dollar offer for the company you could take that as quick momentum right use that cash then double down on the same vision in a new company what you've done now that since you've raised so much I mean you can't sell the company really for less than ten fifteen million for anyone including yourself to see a good return so I just that's what I always wonder about is how people that are young especially determine opportunity cost in these kinds of things it was a really fun learning year last year like I remember like when I mentioned there's a competitive process it was definitely a I learned a lot about what the next three years of the company could look like and what acquisitions down the road could look like and all those kind of stuff yeah ultimately I came down for me was you know I didn't feel done with it and I think the the the overall mission of what we're trying to accomplish like it's very big and I don't really want to be working on anything else for the next three years so I mean we've had it we've had opportunities to sell the company and it just makes so much more sense to me to be working on this because I don't I don't see anything else that's more exciting to be working on at the moment it's a great rebound real reason day right let's wrap up here with the famous five number one let's last business book that you read not a business book but in the process of reading how to do things with words more philosophy book that's aligned with my business number two is their CEO you're falling or studying right now I read Jeff Bezos annual letters religiously number three what's your favorite online tool I live in short mogul so to say literally you're in right now yeah no they're number four how many obviously feed of a 90 hours of sleep yep eight and what's your situation married some UF kids single single and no kids they know of right no kids and these are your 27 last question when he was your 20 year old self knew but always my 21 my 20 year old self knew I wish she knew how much money he needed and not yeah yeah there's more specifics around what do you needed in his life financially health-wise relationally think there was a lot of there was a lot of misconceptions I had about what would make me feel fulfilled and and I chased a lot of time there you guys have from Drew understanding more clearly what it means to be fulfilled for him personally and what happiness looked like he got kind of booted out of his first company doing about a million bucks a year in revenue now from his investors then started flowing with Cristal in 2014 officially launched it has now raised seven million dollars serving in well north of 2000 though those three to four thousand seats paying 30 bucks a month or flirting with 100 million sorry hundred thousand dollars in monthly recurring revenue mark-up about you know call it eighty ninety percent year-over-year churn was really bad at seven percent net mor turn per month that's down to about three point five now is our new cohort is performing really really well after some product changes they've got a team in twelve in Nashville again building crystal really helping people try and understand each other's personality so that everyone can work better with everybody else drew thank you for taking us to the top all right thanks