How Finch CEO Jeremy Zhang grew Finch to $24M revenue and 250 customers in 2024.

hello everyone my guest today is bjorn espinaz he is the co-founder and ceo of finch a google award-winning marketing tech platform for paid media one of the fastest growing private companies in the us with expertise in e-commerce ppc marketing and sas a passion for innovation and customer success uranus founded three companies uh technology companies since 1995. bjorn are you ready to take us to the top i am ready are you i am ready tell us about finch what's the company do and i really want to dial in on your sas model how does that work sure so we started um in a fringe nine years ago and uh before we had finished we had an e-commerce platform and we did every channel but paid search and our pursuit of trying to find a partner that could do uh paid search for our e-commerce uh clients did not end up so well uh a lot plenty of agencies out there plenty of promises but when it comes to executing an e-commerce paid search or paid media campaign it takes very strong discipline to be able to spend budget and deliver revenues that are profitable in return so that's what we set out to do we couldn't find a partner so we decided let's go and build a software platform that can do this so walk me through how the sas piece works if you know what are people paying per month on average and what do they get for that sure so if you look at paid media in the u.s you know high 90 of paid media you know search and shopping is purchased through a combination of manual labor spreadsheets scripts static tools and where the where the challenge is this is how clicks are purchased when you look at how they're sold you know being google amazon facebook you know they sell clicks in a highly automated fashion right there's not a lot of manual manual labor involved for google to sell a click right so there's this gigantic technology gap in the industry and that's what we set out to close so so what do people pay per month on average to get access to this would you say um i think our average client is uh about three thousand to four thousand a month in that rate and that's not ad spend that's what you keep from them correct that's what we keep from them okay and what is that based off is it is it you know the money they put through the platform it's based on the the ad budget that runs through it and the revenues that we pull out got it okay he said he launched nine years ago so 2009 absolutely and what have you seen yeah the interesting thing is not much have changed all the technology in this industry is on the sell side when it comes to the buy side most of the technology developed does it have been for display or for helping agencies to uh to scale you know billing reporting those types of things but not focused on actual advertising performance so how many customers have you scaled to today uh we currently run 250 clients worldwide okay 250 folks and is this i mean do you kind of employ an enterprise inside sales team to land these customers or how does that work yeah we have an inside sales team um you know typical pre-sales you know sas model pre-sales account executives and then we also have partnerships that reformed where we sell to um you know a larger organization like rakuten in japan is using our technology for all their search and shopping and bjorn can i take the 250 customers times that 3 000 per month kind of average and assume you're doing about 750 000 bucks a month in revenue no i wouldn't make it that easy for you okay well which of those one of those two numbers that has to be wrong which one's wrong well it's the that's the average customer we have a lot of of partners that we work with that are account in that customer account in the 250. yes so our revenues are higher than you said but i say okay so it's fair to say minimum 750 per month that's fair to say okay very good and what's growth look like what were you doing about a year ago um so we uh um last year we grew you know over 50 and we're trailing a little bit behind it this year but not much okay so we're on a very nice ramp rate so so what can i calculate at a minimum then so october 2017 you would have been doing what like 550 something like that if you're going 40 year over year uh maybe maybe not i'm not gonna give you the the revenue number well i don't want the revenue number but i'm looking at the minimum so you just told me minimum was 750 right now so i'm basically saying okay to grow 40 year over year that means you're doing call it 550 a year ago minimum right well i don't want to really argue with you about this because the the 750 was the minimum it's substantially higher than that yeah so by the way you're welcome to give updated numbers but i'm giving i'm working based off what you've given me so that's what i'm going with yeah so okay very good and walk me through funding so have you decided to bootstrap this or if you raised capital uh we have not raised any outside capital it's all externally bootstrapped and and sweat blood and blood sweat and tears i love that how have you resisted more people need to learn to resist well i've it's not my first rodeo right so we tried the other paths and uh we decided to to do without funding this time doesn't necessarily mean that there's not a right time and place for companies to get funding but we've been able to really pull this off and uh we actually had what we discovered to be a pretty clever way to to make this happen we had about 40 clients signed up before we write uh before we wrote any lines of code right okay well i don't have to ask the question obviously i'm gonna ask well tell us how you did it well so we uh we knew there was a big problem in industry and so we went through our network and we talked to about 40 clients and said we're going to go build this to solve this problem and if we build this will you buy it and if you buy it will you pay us this for it and then we essentially built our first client list based on that based on that we realized validation and then built the minimum viable product but one customer on it kept tweaking it until it worked for that customer and then just add it to what does we want but there's a lot of people though that will go out and ask people if i build this will you pay and they say yes and then when they actually build it and put them they don't actually pay so i mean obviously it's great that there was customer research there but did how did you actually try and hold them to that to see if they how did you test their seriousness well we didn't in order to get them to do this we made them sign in on nda to make it exclusive right and uh and then get their bind and as we made progress you know i kept kept them in the loop and so yeah i mean of course you can't um really keep people to the fire but the hit rate and the commitments we got gave us enough confidence to go do it and as we started on ramping new clients there were very few that fell off yep that's very good what is churn today uh churn in um in our uh uh in our target uh audience we're turning about 11 a year okay that's 11 revenue turn per year yeah and you use you used very specific verbage there which was in your target kind of audience but if you look at your entire paid customer base is it still about 11 uh no it's higher than that and part of that is we um we're moving very quickly up market we started out and uh in the micro the smb markets and we're working our way up really fast and as a result of that uh a lot of the in order to take advantage of a platform like this you need to have a lot of data that flows through it and a lot of the smaller clients that we had from that legacy clients uh we're letting those fall off you know as uh we're not really putting a lot of effort into keeping those it's more focused on enterprise level clients and what does your team look like today and how many of those folks are inside sales uh our sales team here um on the inside sales about 12 people and what's total team size uh we're about 70. seven zero yes and do you have um who's in charge of driving expansion revenue the account executive or do you have a customer success team we have a customer success team quota carrying or not uh they have a book of business that they manage yes okay but so this is a big debate right now i talked to a lot of people doing you know 100 million bucks in arr they all have cs teams and i ask about expansion revenue some of them actually do put that onus on the cs rep to drive expansion some of them do not so just be clear you have quota carrying cs reps yes okay that's great how do you do you mind me asking i mean obviously don't give away anyone's personal salary but how did you structure that to make sure incentives are aligned across the sdr to the ae to the cs rep well so we have a single kpi across the entire company that is annualized in our revenues uh and that's sliced and diced into different functions different geographic regions you know and so forth and what uh what comes from that is you know there's always the in a business like this that's transactional e-commerce driven there's a lot...