How Dashlane CEO John Bennett grew to $113.4M revenue and 500K customers in 2024.

hello everybody my guest today is emmanuel chalitis the ceo of a company called dashlane the world's best password manager he's over 20 years of management experience across the tech and media sectors before dashlane he was ceo of cbs outdoor friends evp of universal games and the founder of ce and ceo of flipside.com he began his career focused on navigation algorithms for the mars exploration rover emmanuel are you ready to take us to the top i am all the way to mars no offense but i think like mars exploration is a little bit cooler than password management why did you decrease your cool factor and go into password management um because i think at the end of the day uh short term i can have more impact on mankind by focusing on this good good answer good answer all right so you came on back in october uh last year 2017 told us a lot about the business give us a quick update uh for those that did not hear that interview what's the company do and what's your revenue model how do you make money so we are very focused on getting revenue from the right place which is from our users why because that allows us to be very transparent about our business model and to earn their trust we make money because they pay us for the services we provide not because we do anything with their data yeah and so we are um a few days away from uh passing the 10 million user milestone and um a large portion of these users are paying subscribers yep i think you told when you were last on the show you told me you had about 500 folks 500 000 folks minimum paying three bucks a month minimum and so minimum you're doing 1.5 million a month at that point but those were all minimums so you could be way bigger um we are bigger now i think uh you know we're getting closer to uh to uh very close actually to two million a month oh great um and and continuing to grow uh our revenue overall uh grew by uh more than eighty percent last year and could grow by even uh higher percentage this year sorry you say over 80 percent yes so i mean if you're doing if you're about to hit 24 million in ar you're saying about a month about a year ago in march 2017 you were called somewhere around 14 15 million that's a reasonable assumption okay great and just to be clear you're not selling data all that revenue is coming from a number of paying subscribers paying three bucks a month exclusively whether they are individuals or whether they are companies that buy uh the business version of our product for their employees i see so whether the consumer buys it or the or the person buys it directly on their own credit card or you're selling a team plan the average seat price still comes out to about three bucks uh three bucks on the individual side uh more like four bucks on the business side i see so many features i see so if i divide three bucks into two million in monthly revenue you're about to hit and what you have about 650 000 paying customers something like that uh directionally correct okay uh because it depends on on the mix between the two but you're in the rough ballpark and and one thing that really impressed me and emanuel i want to dive deeper on this about last time became on the show typically churn is through the roof on companies like this this low arpu high volume but yours you told me was less than one percent gross logo churn per month is that still accurate today and how have you gotten it so low no it's actually significantly lower what's what's probably unique uh manual how the hell do you go significantly lower than one percent of gross logo churn per month well because you look at it annually and if i depending on the courts i look at for some courts we have annual churn that is in the uh you know zero point three zero point four percent so that's how you perform but in reality our net churn is actually negative let me explain why because that's not coming from any upsell that's coming from the fact that we are in a business where there is a very long tale of conversion to give you an example we have people today that started using dashlane in 2013 that have used the free version for the last five years and because of gdpr because of facebook and cambridge and rtc i say you know what i gotta get serious about this i'm gonna get the paid version and so we add more people uh to our supreme subscriber accords every month or every year than we lose which are we effectively have net negative chart let me ask that differently it's a little easier to understand annually what is net revenue retention how far over 100 uh you could think about 105. okay that's pretty healthy at this kind of volume so good 105 percent annually and have you have you made any additional tweaks i mean you have a huge user base 10 million people you know converting 500 600 700 000 to paid is obviously a healthy rate but if you can add or eat out an additional percentage point it's huge for your business are there any tests or leverage you're pulling to try and do that constantly but our focus um and and it's gonna be more and more the case is on engagement rather than revenue we see revenue as a direct consequence of engagement another way to think about that is the ratio between let's say for instance mostly active users and paying subscribers is one of the most stable metrics in our business and so our focus is how can we get more engagement because we know by product of that is an increase in retention and in revenue so so you because you have a huge cohort you probably know the one or two things you've got to get a new sign up to do in the first two hours to make sure they're sticky what are one or two of those things the the two clearest indicator of future engagements are uh you know people that have added 10 or more passwords in their app very soon um and even more so people that have installed dashlane on two devices your phone your laptop the moment you've done that the likelihood that you stay for a very long time and that you end up becoming a premium subscriber is very very high so let's talk about the first how do you drive and make like what do you do in the interface or how do you drive 10 passwords added in the first you know five hours well one great example of a feature you talked about things we released uh we released in q1 um is a feature that aimed at mobile first users which are today the majority you know today we now advertise on national tv in the us which means a lot of people hear about us on their couch they take their phone they go to the app store they download dashing and what we've added is an experience where when you add when you start your journey with dashlane we just ask you to connect dashlane to your inbox to your mailbox to your gmail account to your hotmail account and we scan that directly on your phone purely client base and we identify because of the emails you've received all of the accounts you have we we can tell you which one are at risk which ones may have been breached and we allow you to import those accounts directly in dashlane that's one of the ways you drive more engagement with minimal effort from the user does someone actually have to sit on their phone and let's say you say hey nathan i've identified that you have a hundred applications with passwords like start verifying them on the mobile app and i click you know freshbooks i have to manually type in my phone for each one that password is there any way you can port them from online so great uh great question there are there are two things we can do the first one is that and that's actually a driver we use a lot we tell people if you now connect dashing app on your phone to your desktop will be able to import all those passwords from your browser because nobody wants to type in although right no that's the biggest friction point exactly so that's one of the ways we drive that engagement is to tell them now you can go get these passwords because they sit in your browser and actually it's a good opportunity to remove them from that browser where they're not secured interesting uh each month how many new users are you adding free users total um think about um a quarter million okay and what percentage of those are coming from mobile first versus desktop installs today think about uh 50 50. okay that's pretty healthy and how aggressive are you being in terms of like you know tv promotions direct paid spend well more and more uh because the challenge we have to address is very simple today the vast majority of individuals know about the problem the pain points related to digital identity but they don't even know that there are solutions yeah you know people our biggest competition is do nothing or it's an excel file or an evernote note which is a terrible id most people don't know that there is a solution that is why as the leader in this market we have to invest more and more aggressively to educate consumers to educate businesses about the fact that there is actually a solution that makes good sense i mean tell me what more is though i mean are you talking like you're spending a million a month five million a month how aggressive are you being on direct paid monthly um today you can think of us as spending uh we are below a million a month but that number is is quickly growing got it yeah north north north of 500k a month absolutely yes it's closer to a million than 500k okay and you've raised capital how much have you raised so we um have raised two um two types of capital um we have raised equity uh in the past we did three rounds of equity for a total of 54 million um but we have a business now where essentially uh the the uh the use of capital is largely user acquisition and because of the incredible retention characteristics we have because of the high predictability of our cash flows we are actually able to fund the business with debt which is much more attractive from a a from a cost of capital standpoint from a dilution standpoint so i won't go into the details but today we have uh the ability to raise significant amounts of debt to accelerate our growth because that capital mostly goes towards user acquisition and we have very short payback times yeah how sure uh significantly less than a year okay got it less than six months or no it depends on the amount i see i see okay so you'll you'll let it fluctuate but it's right now it's currently less than 12 months and you won't go above 12 months ever in any cohort no we we're trying to stay below 12 because then you know that increases our ability to be uh capital efficient that's right talking about capital efficiency if you spend a million a month on direct paid stuff and you're adding a quarter million folks right in terms of free users that's about four dollars per free user and you mentioned earlier you have about almost 10 million users you've converted 600 700 grand seven hundred thousand of them into paid so seven percent conversion rate it means you need what was that you need about 13 leads to get one new paid customer over some period of time so can i multiply that four dollars for a free lead times the 13 to kinda back into your attack you can but um you're ignoring uh and and you don't have a choice but but you're ignoring what i said about this very long tail of conversion like if you take it into account uh in reality it ends up being lower interesting yeah so what is cap today are we talking like 30 bucks 20 bucks for a paid customer yeah um i no i i won't get into that sorry okay yeah well i can do this worst case it's 52 dollars based off what the numbers you just gave but what you're saying is there's other things i don't know about it's actually a little less well significantly less than that yes and there are synergies between the b2b side of our business and the b2c side of our business which means that whenever we generate individual users they end up working somewhere and that's somewhere they tell that company to and so the the the value of those relationships and this engagement we're creating is actually much higher than just thinking about the cac and the the first year yeah and again when you have very very high retention uh when you're you know in the low single digit annual churn those lifetime values are extremely long in fact we don't know where they end and so you know you're creating a true asset yep i want to dive more into kind of the land and expand kind of synergy you just articulated i think a good place to start is on team so last time you were on seven months ago you had about 130 folks on the team what are you at today um all in i think it's closer because that that 130 includes both employees and people that are working exclusively for that functions like user support qa that are not employees but that are effectively members of our team if i include all of that today um i think we are uh north we've grown by about 25 but our growth is now accelerating because we've uh we've raised a new uh new capital and so um you know that all in number could be a pretty close to uh 180 to 200 by the end of the year and how many of them are sales folks or onboarding our um the bulk of our business is actually happening in a self-serve way whether it's consumer or uh whether it's with small businesses we have a small focused sales team that deals with bigger accounts how many though that's what i'm curious about it's it's really small today it's like two people two two a's and one css got it yeah that because that's what you get into the land and expand right you see 250 000 new logos starting using you every day and if you see it at uber.com sign up you're going to put one of your inside sales reps on there because you know that you could expand that to 3 000 seats pretty quick that's certainly one way to approach it i think we're also trying to push more and more the fact that um employees are going to do that work for us by pushing more and more collaborative features so that actually at some point it's uh that company calling us saying wow i now have you know a third of my staff using dashlane i want to get that in a more you know centralized fashion with more control can i get and i want to pay for it uh um in you know one subscription rather than having 30 people expensing it yeah debt is getting actually more and more popular for a variety of reasons walk me through the kind of model you decide to go with did you go with the traditional kind of interest rate approach over kind of a four-year period or did you do something that's a percentage of monthly revenue and that's what it's the payback's tied to no the uh and and here i can't go into details but let's say that um um in our case we were able to negotiate really attractive terms because of the nature of our cash flow and that none of what we have agreed to is is uh tied in a hard way to you know revenues or covenants or anything it's really uh we were i think our business was sufficiently attractive that we didn't have to yeah to get there did and and can you you obviously did some research on debt options before you decide to you know do the deal with whoever you did the deal with what are some options like actual name some names you know sas capital lighter capitals out there silicon valley banks scale works there's a recurring capital there's a lot of kind of debt financing companies are there any that you could you should you want people to make sure they take a look at if they think about this no i i don't think i i i've done enough detailed research myself i talked to the top firms we were engaging with um one of them we we we retained the other ones we didn't but i name a few of the top ones though don't say who you worked with but name a few that you talked to no i'm i'm not sure at this stage but i can give you another perspective which is that i think uh one thing i heard from many of these firms is that when you get to later stage rounds you're often constrained by things like minimum check size uh which then force you to either accept a lot of dilution or a very high valuation that may turn against you if the markets go in the other direction in our case we needed capital but we didn't need an extremely high amount and i felt it was bad for the company to take more than we needed that's why debt was very attractive there's no notion of minimum check size there's very little if any dilution and there is no forcing mechanism on the valuation that ends up being artificial and turning against you yeah now you need to have the unit economics to attract that debt but today we're fortunate that we do yep uh look you're approaching 24 million bucks in ar you've raised 55 million in equity you have some debt on top of that i mean when are you gonna go sell this thing for you know 500 million bucks and go start figuring how to go to mars um well given the cost of going to mars my target is closer to 2 billion that's 500 million so i need a bit more time but look we right now we see our business accelerating um more than we anticipated we see macro trends around what happened with gdpr what's happened with facebook and cambridge and uh you know furthering that acceleration we have no uh interest in in selling of course if somebody knocks on our door with an offer we will look at it very seriously especially if it's an offer that can help us accelerate our growth but we are very very focused on the acceleration of our business right now because we are carried by macro trends that are extremely favorable would you in last past ever merge well lastpass was sold to a company who logged me in two years ago now yeah sorry i said differently would you would you would you is that a good home for you if log me and came to you so you could essentially merge with lastpass would that be interesting or no i'm not necessarily sure because i don't think our strategies are as aligned um log mean is fundamentally focused on the v2b market which is not a bad thing in and of itself but we approach digital identity with a different length which is it's not b2b it's not b2c it's b2h business to human we are focused on the end user whether he's at home and at work and the let's say the the approach to the individual the mass market approach we have is probably not at its best home in a company that is purely focused on b2b or of course yeah you go ahead no no that's that's that's all okay good on that note emmanuel let's wrap up here with the famous five number one what's your favorite business book the last one was uh where is everybody which is a book about why the fermi paradox uh hasn't been resolved why have not we found aliens it doesn't sound like a business book but if you read about it the right way it is number two is there a ceo you're following you're studying uh the guy who's gonna put a million people on mars elon musk number three what's your favorite online tool for building the business oh it's gonna be atlassian suite of tools you know our business is effectively built on it number four how many hours of cpt every night i'm trying to be religious about seven and religious about always going to bed at the same hour even on weekends that's and what hour is that um it's going to bed at 10 and waking up at five every day of the week in the year that's pretty good and what's your situation married single you have kiddos married two kids an eight and a half year old boy and a one and a half year old daughter oh great congratulations young ones and how old are you i am 54 not for very long though okay that's good well happy early birthday emmanuel last question what do you wish your 20 year old self knew nothing more than i knew because then where the where would the fund be guys there you have it he wishes he knew nothing more than what he already knew he's really enjoying the journey having a lot of fun likes thinking about mars decided to go do something more practical in the short term we're gonna have a bigger impact and that is passwords and password management really you know the macro trend of cyber security in general 2012 the company was launched they've now passed or they're about to hit 10 million total users on they're adding out 250 000 new users to the platform every single month about 50 50 installing mobile first versus desktop they've converted a significant portion portion of those caught between five and eight percent to actual paying customers about to cross two million dollars in monthly occurring revenue or 24 million bucks in ar 105 net revenue retention annually again with their team of about 180 people based all around the country super healthy payback period to less than 12 months emanuel thank you for taking us to the top thank you