How Finch CEO Jeremy Zhang grew 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 of seasonality uh so you gotta you know bake that into uh and it's difficult to do month of a month and year over year is the more effective measure but essentially there are there are uh you know two main components for uh uh for this and it's you know how much we grow in account and it's the churn numbers right so and and that's you know i think a lot of the all the challenges you know companies like ours have or the industry have is how do you calculate all these things in a way that's fair uh that takes a lot of the noise around the numbers out and i think that's one of the key factors that we have done is to uh find a way to have a uh a single kpi that is licensed around the company so you are and i want to try and break that down to make sure i understand it i'm going to make this up you're saying okay team here's our ar target but you know from 2017 to the end of 2018 we want to be at this if we hit this metric by the end of 2018 the cs reps you're gonna get of this there's a bonus pool of a million bucks you're gonna get ten percent of it your a's you're gonna get 10 engineering you're gonna get 20 i mean is that kind of how you think about it uh actually i think about it more on the individual level uh and you know every uh every employee has a daily report that tells them exactly where they are and how the tracking towards the goals do you use a tool to do that or is it something you built internally built internally interesting yeah i think it's obviously super smart um and this is very difficult to incentivize everyone at the same time towards the same goal um do um how do you decide what uh the bonus is that's paid out is there like a is there like a this is the pot of winnings and it's distributed you know do you understand what i'm saying um yeah so it's all individual right yeah yeah but what are they so at the end of the year if you hit the company target what are they splitting so we don't do it like that we have it's you know because once you start building a pool like that it's easy for people to hide you know we have all these numbers are sliced and diced so granularly that each individual know exactly where they are where they're tracking if they're header behind and bonus or commission payouts and it's more of commission type payoff than a bonus per se okay and it's paid out you know during the year so how would an engineer who's critical to a company obviously commission is not lingo they're familiar with they're also getting a commission and if so on what sales uh so they get um it's tied to sales uh and but it's a higher level number than their individual um you know performance like so for example on engineers they get paid on a on incremental revenues over the past 12 months and there's certain triggers that that makes that happen really interesting are there any books or resources that helped you develop kind of this model um no i think we uh you know i was really focused on yeah guys when we first started you know the first year and a half it was eric and me who he was my co-founder and we'd come off a company before we started finch and we really wanted to make things very simple and we spent a lot of time figuring out what is the one kpi that uh that we can work with now that's motivating for the two of us as we got started that can scale over time and we've and as i said we've built and uh the tool uh internally and it's been modified a ton over the years but i think that's one of the the keys to keep everyone focused and you know compensation is an effective way to keep people focused right yeah no no it's more i'm just more interested in obviously compensation makes sense but it's more about how this model kind of changes and evolves over time which it sounds like you've done a really interesting job with that so very good of the 70 people where's everyone based uh they're based in salt lake city dublin munich and manila okay double and got it and remote remote spots and then last question here on kind of economics what are you paying to acquire a new customer typically fully weighted i'm not i'm going to share that number with you okay what i'm really asking is how aggressive are you comfortable being in terms of payback period will you push 12 months or are you trying to stay below six or what uh we are well inside twelve months okay are you happy with that are you getting more aggressive and pushing higher uh we have been more aggressive uh over the years and and pushing more uh and it's just as the as the company scales and uh generates more resources where we're getting more aggressive on the on the sales and marketing side and that's for a company like like ours the the limiting factor to growth is the uh it's the customer acquisition cost sure yeah i mean you said earlier rpoo was about 3000 bucks per month so if you're spending less than 12 months in terms of payback period you're definitely spending less than 36 grand to get one of those new customers right yeah that's great healthy uh any obviously you haven't raised capital to date you did say there are right times to do that any any plans in your future to raise nope no conversations right now no conversations you selling to anyone right now no come on man you said all the straight face you're good you've practiced no it's this we got a good thing it's like we're running i think one of the ultimate luxuries in life is you get to choose who you work with yeah we're solving a really big problem for a lot of of companies out there and uh we're just getting started i love that uh let's uh let's take it home here with the famous five number one what's your favorite business book uh good to great number of concept number two is there a ceo you're following or studying right now um no number number three what's your favorite online tool for building your business linkedin number four how many hours of sleep to get every night um five six ish okay and what's your situation married single kiddos married with children how many years two okay 16 and 15 married 21 years that's amazing and how old are you 53 53 last question what was your 20 year old self knew um don't worry about what anyone else thinks and think bigger guys don't worry about anyone else and think bigger founded finch back in 2009 now over 70 people between salt lake city dublin and other remote locations their bootstrap they've got about 250 customers paying three well north of 3000 bucks per month so they're doing well north of 750 grand per month right now in revenue 11 revenue churn per year that's obviously on a gross basis again spending less than 12 months in terms of uh payback period so healthy economics there as they look to continue scaling again all bootstrapped which i love yarn thanks for taking us to the top hey thank you so much