Dakota Revenue (2024)

hey folks my guest today is gee kossin he's the co-founder and ceo of dakota where he leads a team that has raised over 40 billion of investment from since 2006 he's led the expansion of dakota's offerings into software and data to enable investment sales people to sell more efficiently key you ready to take to the top absolutely all right so let me understand what is the business model here is it a marketplace you take kind of what you raise or is there a software sas sale here traditional so it's actually it's it's really counter-intuitive but you'll you'll get it instantly so we founded our firm in 2006 investment firms hire us to be their outsourced sales and marketing team which means we raise capital for their investment strategies so we've raised over 40 billion since that time and in or in order to do that we built a database using salesforce.com of investors all across the country primarily the us a little bit in canada we made the decision in 2018 to create a business around that and sell access to our data to our industry colleagues and it's the only content and database that is built by fundraisers for fundraisers and we now have over 400 investment firms and growing using our data to set up meetings to raise money that's incredible so so your database is really what is it like a rich list of like wealthy lps that are writing angel checks or lp checks no it's actually different than that it's like big state pension funds foundations endowments banks broker dealers there's a whole ecosystem of investors that will invest in professional money managers in in your world you can think kind of venture capital it can be growth equity private equity but they're calling on harvard and yale in the state of california and those pension funds because they have a ton of money they need to invest in funds just like that and so our data set is about 4 500 different accounts and about 13 000 contacts and we have a ton of more data as well focused on serving one avatar which is somebody who gets up every morning and has to raise money for their venture fund or private equity fund it's a hell of a job that's a hell of a life call call close close close all right so what do these investment forms pay you to access the database in the software on average it's 12 500 for two user licenses and then a thousand dollars for x each additional user monthly or annually uh annually got it so 12 500 base and then a thousand percent after yep interesting okay do most people just stick with one seat or do they go up to four five six ten we've had 27 seats i mean a lot of people go up and the main reason is it's a super small investment so if you think about the value proposition again is really simple sales people need to be making sales calls and setting up meetings if they're spending time researching websites messing around or don't have a complete data set right so for instance if you go to boston and you only know 40 potential investors in boston when there's actually 175 you now only have maybe a quarter of the total adjustable market covered we give you a tam we give it updated and so your sales people can be much more efficient focusing on what they exactly should be doing not wasting time doing meaningless research and such so gee ignoring seats for a second how many unique logos paid is that 400 number yeah about 402 a 402 okay and how many seats does that make up uh about a thousand and twenty right now okay wow so call it one and a half well two two and a half two and a half average sheets per account something like that yep interesting okay take me back to customer number one that's always a fun story when did it happen uh well do you want the really funny story yeah story is we had a platform that we spent two years building it was the exact opposite of this we built a platform so investment firms like venture capital private equity could put their pdfs and like their pitch decks and everything on our platform and they could drive their investors to our platform we launched it june of 2018. 14 paying customers paid us fifty five thousand seven hundred fifty dollars june avoid union of eighteen okay so we launched it and they all said where are all the investors and we said well we thought you were gonna bring some well essentially they were not happy so as the summer went on at 18 i finally looked at our investment sales team for eight people strong we have a weekly meeting i said what if we just invite all those 14 firms and their sales people to listen to our weekly sales call and our sales team was like wow it's kind of weird but okay cool yeah and we'll share all this information great and so they are paying us we'll just share some information so we did that we invited a bunch of prospects as well well everyone loved the call so we did it again the next friday at 11 o'clock this is like august 24th of 2018. so we did that but what we did is we brought on an allocator from like harvard or from the state of california and interviewed them so you'd learn all about their platform we then covered a city we'd cover boston or chicago or new york go through all the investors in that city we then cover a key account again it could be jp morgan private bank who's got you know trillion and a half dollars under management and we help people navigate well it was total grand slam we actually were selling licenses to that call like we made it into like the tonight show like a true webinar and it's so industry specific and we're sharing like this deep deep level of information it's ideal for a sales person well what they said is they said hey can we have all that information names phone numbers email addresses of all the people you're talking about we're like wait a second that's our database that's the goose that's laying the golden eggs and i finally looked at our team and i said listen i don't think the first content platform that we built is going to go anywhere what if we sold access to our database it'll make our data better we'll be able to hire a data team they can improve it so it'll be great for our sales team because we'll use the same data so we so customer number one we launched on april 1st 2019 was a healthcare firm pavadi and thank goodness they did it they they got us launched and now right two and a half years later we're you know growing really quickly and so you know i'd say the most important thing is not so much that we're growing quickly which is cool and i think it's a it's a great business we're adding tremendous value to our customers lives and their business lives because what was if 2019 was the first you said we found this in 2006 how did you make money between 2006 and 2019. we raised 40 billion and we get a percentage of what we raise on the 40 billion what percent usually uh it kind of ranges from seven to twenty percent you taking seven to twenty percent of 40 billion dollars raised no no of the fees off of 40 billion i don't know the fees what are the things so let's say the fees would be they could be 50 basis points so that would be let's say 200 million and then we've got a percentage of the 200 million i see okay got it so you would get seven to twenty percent uh of the or ten to twenty percent of the two hundred million right it's about twenty to forty million something like that and it's and it's it's paid it's it's paid we we get paid on the come right it's a it's a commission-based deal so if we generate if we generate the revenue then we get paid a fee and that's that's that's standard in the industry um it's where the industry works right so if you deliver a thousand dollars as a salesperson you get paid a percentage of that thousand dollars totally understood yes so that was the model pre-2019 then you launched the platform 2019 now there's 400 firms paying for that platform at 12 13 000 acvs do you still take up seven twenty percent of the fees on money that you raise no so two completely separate businesses the one you can still run both we still run both so how much did you raise in in my cove a year 20 20 20 about 4 billion okay was it higher or lower than 2019 uh it was probably about the same okay that surprised you at all or was that what you expected uh no i mean it covered if you were listen if you're in the right strategies during covid like what did really well in covid all the gross growth stocks right asset light you know zoom all that stuff did great you know the googles the amazons everything all the tech companies the traditional value businesses you know energy i mean airlines all of those type cyclical type businesses got annihilated so it just really depended you did really well and raised a lot of money if you just happen to be in the right end of the market interesting and how much do you think you'll raise this year um probably a little bit less than uh than that just because that you know in some ways it kind of goes in lumps if you will and i would say we'll probably raise between two and three billion okay so this that business is is slowly declining while the other one is growing right right but it's on a it's still on a big base right instead of the base and growing and you know hopefully we'll have that business for you know the next 20 years we love that business the other business though is completely independent it's software licenses to data and we're growing that business and uh it complements the other business but they're completely separate but obviously one complements the other what did that database business do last year so if we did you know i think we doubled in size so we went from 200 this time last year to 400 per month no no no no i mean in total contract signed got it 200 customers uh last year to 400 now today now but if i take 400 today times that acv you mentioned earlier of 12.5 right so that's what is that that's like a 5 million run rate on the database business that right today yup exactly anyway and it was about a 2.5 million dollar about a year ago yeah i wouldn't say a little less than that but yeah okay i mean that's that's that's obviously great growth where is the growth coming from is it expanding seats on historical accounts or adding new accounts all together adding new accounts where are you finding them what's the process look like uh we we've just built up a really great database of investment firms that we call on so it's so it's outbound yeah it's a lot of outbound it's it's a very difficult business to do inbound but the dakota live call that i mentioned you that call that call still goes on today and that that's really how people find out about us and the word database in our industry is a really dirty word because most data is stale and so to establish your credibility people come on the dakota live call and it establishes our credibility and so from there they're like okay wow what you guys are doing around content creation is really strong i'd love to talk to you and see what else you guys are doing what's your team size today how many folks uh 45 total employees how many engineers uh one with do you give your sales people quota or no um no we're targeting five demos a week is kind of sort of handicap it and then we have and how many of those people do you have 11. so they're doing 55 demos a week something like that uh yeah ideally it's not we're not quite this you're scaling to that exactly exactly yeah interesting okay and so what is there like you've modeled this if you have 11 that you're it's a repeatable process like how much new arr do you want a sales rep closing new per year i would say it has to be between 70 and 100 contracts okay which is equal to about a 70 grand a month to 100 a month of new mrr yeah exactly yeah or about you know 1.2 million a new arr per year yeah interesting that's great now have you done all this bootstrapped are raised uh totally bootstrapped how how anti what you're building i mean you are the raised guy and you've done those bootstraps that's hysterical yeah well yeah you would laugh yeah like partner when you raise money you change the complexion of your business and your company right right it's just a totally different discussion and it's not cool would you value the business that today oh geez it's you know we're not quite making money right now which is fine i mean our our whole goal is to maintain their product quality so if you're in the data business it's a really sharp knife because people get on the demo and they ask questions about certain accounts and if you don't have that information or it's missing you lose all your credibility so we just want to make sure that we have the right construct in place to support the product because if you think about it all we want to be able to do is be that engine that sales people rely on on a daily basis to set up meetings with potential investors and so it has to be complete and has to be accurate it has to be updated every day every second so bootstrap okay what about churn how do you think about churn you know to tell you the truth churn's kind of weird because the investment industry like people do close their doors and good investment firms people just don't want to manage money anymore they leave so the churn's been mostly through other mergers or through you know we've only really had one firm just say you know what uh i don't want to renew and you know they say they make a comment you're like okay like your data isn't complete and we're like it so let's see yeah listen as i always tell tell our team there's no matter what you do in life there's always haters right and he's got to put a smile on your face and just go find new but what's the number though like what's the can you quantify churn oh yeah it's like probably like three percent per month per year a year okay got it that's not at all and uh do you have more than three percent expansion so your ndr is above 100 yes yep yeah we're as we renew uh we're adding additional user licenses that's right are you way above 100 in terms of that dollar retention or probably 115. okay got it so you're expanding 18 to make up for that 13 hole and get to 115 net very cool interesting hey great model here what's next you're gonna stick with this part for a while or anything on the pipeline uh no we're sticking with this and it's it's working on integrations like we've got a great integration sales force we're adding a bunch of additional data sets uh we have a few other products uh in the pipeline but nothing that i don't want to get too distracted right now and our biggest thing is just making sure we're serving our existing membership base so they're getting value right because if they're not getting value then we're not going to go anywhere else you do 100 of the business right now yes oh wow that's incredible okay 100 no co-founders i love that it's rare and uh yeah it's been fun now now i we're we're very collaborative as a team like we we're probably as team based as you can imagine now i end up making you know someone has to make the final decisions but culture is pro is by far and away the most important thing that i deal with every single day and making sure it's an amazing place to work people like coming to work they feel challenged they feel like they can grow that's been the case since 08 when we first started hiring people pitchbook comes to you today and offers you 40 uh 40 million dollars all cash up front to sell the business to sell no no no we're even even even one guy made a comment like the the thing that makes the product great is that we're in it and using it and it's like this culture right now so no plans to sell right now um but exactly titchbook would be like address d 40 million all cash upfront it's a lot of money it's a 10x multiple i know but uh yeah right right now we're super content with growing because i still think there's a lot of growth ahead and i think there's a lot of value that we deliver and it's it's one hell of a fun business to build and when your customers really like because we get such great feedback it makes you feel good and i think we've got a lot more room to run and a lot more value to add so yeah all right let's wrap up the famous five number one favorite business book oh gosh um i read so many goodness uh you know i'll say good to great number two is there a ceo you're following or studying uh chris lockhead most favorite guy on the planet number four three what's your favorite online tool for building a business besides your own sales force and number four how many hours of sleep do you get every night about that's not bad what's your situation married single kids uh married a 20 year old a 19 year old and a 17 year old busy guy how old are you i'm 54. 54. last question something you wish you knew when you were 20. uh best line i've ever had around hiring okay guy goes i can deal with no breathing i just can't deal with bad breath okay the most important thing the right seats that whole thing on the bus you just need to have people that are on team dakota and are aligned with your values and have no one that's not if i if i knew that earlier it would have changed everything we finally got that concept and things like are so much more fun guys dakota.com we have 400 customers paying about a thousand dollars per month for their database of over 400 or sorry over uh 4 500 accounts and 13 000 contacts across pension funds firm and firms in their database it's the ultimate tool to help you go if you're raising capital and a lot of folks are using over a thousand twelve hundred seats on the platform sorry they went from a two point five million dollar run rate a year go to four point eight million dollar run rate today totally bootstrap key the founder owns 100 they're right around break even no plans to sell the business 45 people today as they look to continue to scale gee thanks for taking us to the top yeah thanks so much nice 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