Founder Interview
How Faraday Reached 60 Consumer Brands at a $150,000 Average Contract (Interview with Co-founder and CEO Andy Rossmeissl)
- Interviewee
- Andy RossmeisslCo-founder and CEO
Company Metrics at Interview Time
Average Contract Value (2018)
$150,000
Total Customers (2018)
60
Team Size (2018)
25
Historical Snapshot
These numbers were reported by Andy Rossmeissl during the interview and are a historical snapshot, not current figures. See Faraday’s current numbers.
Key Takeaways
- 01Faraday was founded in late 2012 and is headquartered in Vermont
- 02Average annual contract value is $150,000, described as coming in under the cost of a single data scientist
- 03The company had approximately 60 brand customers at interview time
- 04Team size was about 25 people, nearly all based in Vermont
- 05Faraday operates on monthly SaaS billing with twelve-month contracts
- 06Pricing is based on volume and usage: number of objectives, outreach volume, and API usage
- 07Onboarding takes six to eight weeks and implementation is not charged separately
- 08The company holds weekly calls with almost all clients to stay aligned with strategic priorities
- 09Institutional backers include Fresh Tracks Capital and lead investor Intercap
- 10Sales team is incentivized on first-year booked revenue; customer success team is incentivized on expansion revenue
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Average Contract Value (2018) | $150,000 | Interview |
| Total Customers (2018) | 60 | Interview |
| Team Size (2018) | 25 | Interview |
| Year Founded | 2012 | Interview |
| Onboarding Duration (2018) | 6 to 8 weeks | Interview |
| Payback Period (2018) | Under 12 months | Interview |
Growth Breakdown
Revenue
Andy described Faraday as a single-digit-millions ARR business, with the host's back-of-envelope calculation of roughly $6M based on 60 customers at around $100K ACV. Andy confirmed the company was not quite at the $6M level yet but said it was within striking distance. The average contract value Andy stated was $150,000 per year.
Customers
Faraday was serving about 60 consumer brands at interview time. Andy agreed it was a high-touch model but said the company tries to stay away from too much consulting and to keep things automated: onboarding takes six to eight weeks, implementation is not charged, and the team holds weekly calls with almost all clients.
Team
The team had grown to approximately 25 people, nearly all based in Vermont. The team includes a group of PhDs and analysts who are deployed to each new account during onboarding, as well as a dedicated data sourcing group.
Funding
Faraday raised institutional capital starting in its first year, backed by Fresh Tracks Capital and lead investor Intercap. Andy described total capital raised as single-digit millions.
Growth Strategy
Deep Early Onboarding to Reduce Churn
Faraday invests heavily in understanding each client's true optimization goal before building models or deploying predictions. Andy emphasized that getting this wrong early makes everything downstream ineffective, so the team takes six to eight weeks upfront and does not charge for implementation.
Weekly Client Calls for Retention
The company holds weekly calls with almost all of its clients to stay aligned with shifting strategic priorities. Andy noted that many of their direct-to-consumer brand clients change priorities every month, and staying close to those changes is central to keeping churn low.
Expansion via Customer Lifecycle Stages
Faraday grows revenue within existing accounts by expanding across the customer lifecycle. A client might start with lead generation objectives and later add lifetime value and retention objectives as their business grows, allowing Faraday to upsell additional modules on top of already-connected data.
Proprietary Identity Graph as a Data Moat
Faraday assembles what Andy called the Faraday identity graph, covering all 260 million US consumers, using licensed consumer data and opt-in marketing data. This graph is attached to client data to power predictions, and its cost is amortized across the customer base, creating a structural cost advantage at scale.
Pricing Anchored Below a Data Scientist's Cost
Faraday positions its $150,000 annual contract as always coming in under the cost of hiring a single data scientist. This framing makes the value proposition concrete for enterprise buyers and helps justify the price point relative to the alternative of building in-house.
Best Quotes
“So we help consumer brands basically predict things about what their customers are going to do next. Everything from lead generation and conversion through to who's gonna be further engaged to the customer or even down to retention issues. And we're a SaaS platform, charge monthly, work in twelve month contracts.”
“We're not a cheap SaaS platform certainly, but we're always gonna come in under the cost of a single data scientist. It's the way we like to peg it. So generally speaking, $150,000 a year.”
“So we started in late twenty twelve, just six years here as a company at Faraday. Started in Vermont. So taking a little bit more time than I think a lot of other tech platforms would. But growth has been really strong over the last couple of years. We've kind of entered a new age here at Faraday.”
“We're right now at about 60 brands.”
“So mostly a data science team. So we've got a group of PhDs here and other analysts who we have to deploy out to each account to get them on board and make sure we understand their business and what to optimize. And then we also pay for a lot of data here at Faraday. And so we amortize the cost of all of our licensing out across our customer base.”
“We do consumer license data, opt in marketing data. We don't do any social scraping. So it means that we have to spend quite a bit of money to assemble what we call the Faraday identity graph, which is all two sixty million US consumers, and attach that to our clients' data in order to make predictions.”
“In the customer success team, yes. Sales team, no, that's just on first year booked revenue.”
What Happened Next
At the time of this interview, Faraday served about 60 consumer brands, typically on contracts of about $150,000 a year, with a team of about 25 people almost all based in Vermont. Andy put the revenue run rate in the single-digit millions, not quite at the $6M level yet. He described the company as having entered a new age after six years in business, with growth really strong over the previous couple of years. This page reflects the company as it stood at the time of the recording. Visit the Faraday company profile for current numbers.
View Faraday’s current profile and metricsFull Transcript
Chapters
- 0:00Introduction to Andy Rossmeissl and Faraday
- 0:33What Faraday Does and Its Revenue Model
- 0:56How Faraday Prices Its Platform
- 1:25Average Contract Value and Positioning
- 1:51Company Timeline and Vermont Origins
- 2:14Funding and Institutional Backers
- 2:37Team Size, Customer Count and Revenue Run Rate
- 4:16Churn Prevention and Deep Client Onboarding
- 5:38Customer Acquisition Costs and Data Science Deployment
- 6:54The Faraday Identity Graph and Data Sourcing
- 7:33Expansion Revenue and Customer Lifecycle Upsell
- 8:13Net Revenue Retention and Sales Incentives
- 9:21Famous Five: Books, Sleep, and Personal Life
Introduction to Andy Rossmeissl and Faraday
Nathan Latka
00:00Hello, everyone. My guest today is Andy Rossmeissl. He's the... He leads the company... A company called faraday.io and its mission to deliver practical, powerful AI to consumer brands. A designer by training and lifelong software engineer, he's responsible for the product strategy, data science organization, recruiting efforts, and corporate matters. Previously, Andy founded the celebrated sustainability startup, Brighter Planet, and worked in politics. Andy, are you ready to take us to the top?
Andy Rossmeissl
00:23Sure.
Nathan Latka
00:23Am. You know, so many smart people are moving out of politics. I can't figure out why. But here you are building Faraday. What's the company do and what's the revenue model? How do you make money?
What Faraday Does and Its Revenue Model
Andy Rossmeissl
00:33Yeah, sure. So we help consumer brands basically predict things about what their customers are going to do next. Everything from lead generation and conversion through to who's gonna be further engaged to the customer or even down to retention issues. And we're a SaaS platform, charge monthly, work in twelve month contracts.
How Faraday Prices Its Platform
Nathan Latka
00:56That's great. And typically, pricing axes do you price around? Is it GMV, total SKUs, total data sources? What is it?
Andy Rossmeissl
01:03Yeah, so mostly we price around just volume and usage. So the number of different objectives the client's trying to predict, how much outreach is being done, volume through APIs and other kinds of things like that.
Nathan Latka
01:17Okay, great. And then I don't wanna go down every customer cohort, but what would you say on average an annual contract looks like to really use your platform aggressively?
Average Contract Value and Positioning
Andy Rossmeissl
01:25It's a good question. Mean, so we're not a cheap SaaS platform certainly, but we're always gonna come in under the cost of a single data scientist. It's the way we like to peg it. So generally speaking, $150,000 a year.
Nathan Latka
01:38Yeah, yeah. That's why I asked, by the way. I got the sense you weren't like a $20 a month product, but you also weren't a million dollar a year product. So about $150,000 ACV, somewhere around there. Yep. Yeah, that's healthy. Good. Put this on a timeline for me. When did you launch the company?
Company Timeline and Vermont Origins
Andy Rossmeissl
01:51So we started in late twenty twelve, just six years here as a company at Faraday. Started in Vermont. So taking a little bit more time than I think a lot of other tech platforms would. But growth has been really strong over the last couple of years. We've kind of entered a new age here at Faraday.
Nathan Latka
02:10That's great. And have you bootstrapped this or raised capital?
Funding and Institutional Backers
Andy Rossmeissl
02:14No. So we have had institutional backers from our first year a firm here in Vermont called Fresh Tracks Capital and our lead investors Intercap.
Nathan Latka
02:25Oh, that's great. And so how much total capital in the company to date?
Andy Rossmeissl
02:28Single digit millions.
Nathan Latka
02:30Single digit millions. Okay, great. Fair enough. And then over that time span, 2012 to today, what's the team size look like? How many folks?
Team Size, Customer Count and Revenue Run Rate
Andy Rossmeissl
02:37We've been hiring a lot. We're up to about 25 this week.
Nathan Latka
02:40Oh, that's cool. Congratulations. And everyone based up there in Vermont or spread out?
Andy Rossmeissl
02:44Yeah. We're only here in Vermont except for one or two people who've had to move for family stuff.
Nathan Latka
02:48Okay. That's nice. You still figure out a way to keep them on though.
Andy Rossmeissl
02:51Oh, definitely.
Nathan Latka
02:53That's good. All right. And what do we scale to in terms of total customers on the platform?
Andy Rossmeissl
02:58We're right now at about 60 brands.
Nathan Latka
03:00Okay, okay. That's pretty healthy. So this is like a, this is a very much kind of a high touch model then, right? High touch, you know, high onboarding, get GMV up and drive expansion?
Andy Rossmeissl
03:10Yeah, I mean, yes. I would say that we definitely try and stay away from too much consulting. We're a six to eight week onboarding process. We don't charge for implementation. So it's definitely important that we tend to keep things automated here, customization on a per client basis.
Nathan Latka
03:28Yeah, no, it makes a lot of sense. And look, I mean, 60 folks that call it an ACV of $100,000, that puts you around a $6,000,000 run rate. Is that directionally correct?
Andy Rossmeissl
03:37Yeah, single digit millions, like I said, and we're not quite at the six level yet though.
Nathan Latka
03:41Okay, good. Is that within... You feel like it's within striking distance or it's still a few years out?
Andy Rossmeissl
03:45Yeah, yeah, definitely within striking distance.
Nathan Latka
03:47Like you look like a skier. So like before you hit the slopes the next time, you're going to have $6,000,000 in ARR or no?
Andy Rossmeissl
03:53No. Definitely not. We ski almost every day when we can out here in Nevada.
Nathan Latka
03:57Okay. Never mind then. I I I forget I forget about that. You know, for me, I'm in Austin, so I'm waiting for, like, my first trip to, like, Aspen or up to the Northeast, and that's still a couple months away. All right, fair enough. So 6,000,000 in reach, not quite there yet, but healthy growth. Churn is critical in this kind of business. How do you keep churn low?
Churn Prevention and Deep Client Onboarding
Andy Rossmeissl
04:16Churn is just, for us, luckily, we have time.
04:23And it's really just about having the time and breathing room to have the deep conversations early on, make sure that we're really understanding what exactly the client wants to optimize. People often think they want more customers, but what they really want is more customers that don't return products and spend at least $100 and fit a certain profile that they believe they're gonna find a lot of growth in. So it takes a lot of time early on
04:51to really understand and get to the heart of what the client needs. Because if we get that wrong, then everything downstream, building models, assembling data, deploying predictions, it's all gonna be against the wrong goal. So make sure to take time early upfront is important. And then I would say also just, we have weekly calls with almost all of our clients, and it really helps us stay aligned with strategic priorities. Companies are changing every single month, especially
05:19a lot of our clients' fast moving direct to consumer brands. And so we have to keep up with the brands change.
Nathan Latka
05:27So when you look at, again, kind of measure your ability to do that, churn is obviously a good way to measure that. So if you look over the past twelve months, what does revenue churn look like today?
Andy Rossmeissl
05:35I can't talk about churn directly.
Customer Acquisition Costs and Data Science Deployment
Andy Rossmeissl
05:38In terms of
05:43our payback metrics are really healthy. They're much faster than average for SaaS.
Nathan Latka
05:49What would you say is average though? Everyone has a different meaning for average.
Andy Rossmeissl
05:53Yeah. I mean, a lot of SaaS products that are ACV, there's so much time and energy put into sales and marketing that it can be over twelve months before you get a payback. And we're well under that now, which is healthy.
Nathan Latka
06:06That's fair. So just to translate that, for $100,000 first year contract, you're spending less than $100,000 to get that deal?
Andy Rossmeissl
06:13Of course.
Nathan Latka
06:14Yeah, definitely. That's great. And whatever percent of that $100,000 you're actually spending, where are you typically spending that besides your sales team?
Andy Rossmeissl
06:22Right. Yeah. So mostly a data science team. So we've got a group of PhDs here and other analysts who we have to deploy out to each account to get them on board and make sure we understand their business and what to optimize. And then we also pay for a lot of data here at Faraday. And so we amortize the cost of all of our licensing out across our customer base.
Nathan Latka
06:46You mean in terms of buying sources from ad partners or consumer apps where people upload receipt data or things like that?
The Faraday Identity Graph and Data Sourcing
Andy Rossmeissl
06:54Yeah. I mean, yeah. So data sourcing for us is, we've got a whole group here focused on that. We do consumer license data, opt in marketing data. We don't do any social scraping. So it means that we have to spend quite a bit of money to assemble what we call the Faraday identity graph, which is all two sixty million US consumers, and attach that to our clients' data in order to make predictions.
Nathan Latka
07:20Yeah. In terms of driving expansion revenue year over year, so if I start with you as one of these brands at $100,000 per year, what are your strongest mechanisms to basically end up where my second year contract is $150,000?
Expansion Revenue and Customer Lifecycle Upsell
Andy Rossmeissl
07:33Yeah. So we focus, as I said, on a customer life cycle. And generally, when a client starts with us, they've got one or two stages that are top priority. So a client might be saying for 2019, we're really focused growing our customer base. And so lead generation would be maybe our initial objective with them. But maybe the next year, they've grown very well, and then their goal is really on LTV. Really then, it's just a matter
08:00of, okay, how can we engage their customer base more deeply? How can we anticipate when people are ready to buy again? And then that gives us an opportunity to say, okay, we'd love to do this for you guys. We're already connected all your data, and so we can add that on.
Net Revenue Retention and Sales Incentives
Nathan Latka
08:13Yeah, that's interesting. That's great. I mean, so how effective have... Well, maybe I won't ask specifically about what expansion revenue has been over the past twelve months, but let me ask it a different way. Has expansion revenue more than made up for lost revenue? So is your net revenue retention higher than 100%?
Andy Rossmeissl
08:27I think it's too early to say that. The way that we're adding new clients on these days is so fast that anything we'd be talking about renewals at this point, it'd be hard to really compare. But that's certainly the negative net churn is certainly a goal for us in 2019.
Nathan Latka
08:47Yeah. Sorry. What do you mean? I didn't follow your logic there on terms of the new customer ads. If you look at your cohort that signed up over a year ago, it's just, did those customers expand more than the ones that detracted?
Andy Rossmeissl
08:57Right. Good question.
Nathan Latka
08:59Or you're not sure? Don't Yeah, it's okay. That's okay. Do you have... So it's okay if you don't measure it. Lot of... Some people do, some people don't. Is your sales team or your customer success team, are any of them incentivized on driving expansion revenue via like customer success or no?
Andy Rossmeissl
09:12Yeah. So in the customer success team, yes. Sales team, no, that's just on first year booked revenue.
Famous Five: Books, Sleep, and Personal Life
Nathan Latka
09:21Interesting. Okay. Interesting. Very good. Great. Well, look, this is super valuable, super helpful to understand. Let's wrap up here with the famous five. Number one, what's your favorite business book?
Andy Rossmeissl
09:32My favorite business book, maybe a little bit of a strange one, but I was an architecture major in college. And there's a book called A Pattern Language that basically describes how the world works. The pattern? It's called A Pattern Language by Christopher Alexander.
Nathan Latka
09:51Number two, is there a CEO you're following or studying?
Andy Rossmeissl
09:56CEO I'm following or studying. That's a good question.
10:01I guess not at the moment. No, there's not.
Nathan Latka
10:03Number three, what billing tool do you guys use?
Andy Rossmeissl
10:07So we use Stripe.
Nathan Latka
10:09Oh, you do. Okay. Anything on top of that for analytics? No. Nothing. Okay. Interesting. Number four, how many hours of sleep do get every night?
Andy Rossmeissl
10:18Eight hours.
Nathan Latka
10:19Yeah. I asked that because I don't want my audience copying a seat or learning from a CEO that gets like two hours of sleep, you know?
Andy Rossmeissl
10:27That's crazy. Don't do it.
Nathan Latka
10:29Yeah, it's crazy. All right. So eight hours of sleep. And what's your situation? Married, single, kids?
Andy Rossmeissl
10:34Engaged. Getting married in March.
Nathan Latka
10:35Oh, congrats. That's exciting. So no kids, right?
Andy Rossmeissl
10:38No kids yet.
Nathan Latka
10:39That's great. And how old are you? 35. 35. Last question. What do you wish your 20 year old self knew?
Andy Rossmeissl
10:4720 year old self, I wish I could have made a better job of discerning important things from urgent things.
Nathan Latka
10:57Yep. Better at important versus urgent. It's a trap a lot of us get stuck in. Founder of Faraday, helping consumer brands or the e commerce brands figure out what their customers are going do next. How can they get more leads? How can they increase cart value and lifetime value? They're having success founded in 2012, now working with 60 enterprise brands. Average contract value is in the $100K range. You can kind of back into revenue. Pushing
11:17$6,000,000 in ARR, healthy growth, 7,100,000 raised in terms of CAC less than twelve months with our team of 25 people up in Vermont. Andy, thanks for taking us to the top.
Andy Rossmeissl
11:27Thanks a lot.