How Forge CEO Jim Crowley grew Forge to $1.2M revenue and 10 customers in 2019.

hello everybody my guest today is jim mccrowley he's the co-founder and ceo of forge.ai a cloud-based data company that enables intelligent machines to auto autonomously perceive and reason across the ever-changing global flows of unstructured information before forge uh jim was very active in several technology companies from startup through either an ipo or acquisition by public companies like skyhook wireless he was the ceo a wi-fi location acquired by liberty media turbine m cube uh and uh network plus as ceo of data and communications which went public on the nasdaq jim you're ready to take it to the top let's do it all right man so first off tell us what forge does and what's your revenue model is it pure place ass so so forge what we chat what we are focused on is the issue well what does forge do number one the challenge is unstructured data intelligent machines machine learning rich analytical ecosystems cannot absorb that readily or easily it's very hard to do we close that bridge so people can analyze more build more models build them faster building better than they could before the revenue model that you asked about yeah it's a subscription-based revenue model uh we sell into the enterprises so 4ji is a subscription-based ai company okay and give me a general sense here we're talking 10 month customers or million dollar month customers what's the average customer pay per month or per year we're on the expensive side of that we're on the upper side of that of what you just arranged okay i mean do you think like 100 grand a year is like a fair starting point for most folks or where is it usually we're more than that we're less than seven okay less than seven figures so we don't we don't really get into the pricing models but um it's it's an expensive subscription-based model but pricing is important because obviously that drives your your sales model field sales inside sales no touch etc so it sounds like you're very much in the field sales outbound account based you are absolutely correct we we are we are direct sales uh enterprise sales people speaking to large financial organizations yeah put this on a timeline for me when you launch the company we launched about two and a half years ago okay so call it 2017. now it sounded like you have a hyper focus on the financial sector is that accurate and if so how do you drive customers that that is absolutely accurate a financial sector us means banked uh banks mutual funds hedge funds insurance companies and we are focused there because the financial sector to forge has invested a true tremendous amount of resources and uh infrastructure into the machine learning ecosystem so they're a ready customer of ours that's number one how we got our first customers we spoke to them uh we're out there talking to customers all day long about their problems and their challenges with unstructured information how they can model risk in the world differently how they can see change in the world differently uh they discovered what we were doing and where you we started from there be specific though right i mean every founder like looking back on your first customers you forget how tactical you had to be early on to actually land that first customer so when you say you just talk to people i mean who did you talk to what was the title how did you get their phone number their email yep uh it was classic sales outreach number one uh it occurred at a trade show uh where we reached out to this specific customer a very large financial organization and said this is the problem we're challenging how are you wrestling with it today uh they left at the problem they said could we start this in the next month and we had just started the company and we said well we don't even have a product yet uh so we had to uh let's keep talking and uh they became a customer about six months after that um what what gives them the confidence to sign i mean by the way contract values are pretty high i assume they were always high right including that first customer that first customer was very high as well what gave them the confidence to do that you're a startup with no revenue i mean you could go out of business tomorrow how i mean you must be a great sales guy uh well the the confidence is really based upon what we're doing for them number one we should we can show them exactly how we're solving the problem that we're facing that's number one two we have great financial backers so we're not going out of business tomorrow uh but have you raised that capital on day one well we already had seed capital that was significant how much uh we raised over three million in seed funding okay i mean that's that's some but i mean it's not huge especially for i mean basically the reason what i like to look at right relative to these ratios are essentially first year ac first customers relative to funding raised i mean if you've got a customer where you're selling a million dollar plan and you raise three million total i mean that's i mean that's a significant ratio i mean it's 30 percent of your total funding it's it's a significant ratio as i said where you you throughout the cove the number of a hundred thousand i said we're above that so we weren't at a million dollars with those customers but we were in the multiple hundreds of thousands of dollars with our first customers yeah i guess still though i'm trying to give you credit here and then deconstruct how you did it right that is still a large sale for a three million dollar funded company on day one but sure first i appreciate giving credit but let's talk about the problem uh how does one get the sell the issue is how are customers and wrestling with that problem today what do we leave what are we removing from that they had to do two key things the way organizations wrestle with this unstructured information problem today they throw huge numbers of bodies at it or they use relatively old archaic tools that let them do the scratch the surface of the problem we eliminate 4ji eliminates all of that so as a result we remove a tremendous amount of work that they had to do internally originally and then those resources can actually do the work they're supposed to be doing which is actually building models that look at risk that help them solve problems so to your specific question the reason we're able to extract the value we are is because of the value we're giving we're removing a very significant pipeline that people have to wrestle with today we let them go faster 4ji lets them model the world ways they couldn't do before and that's very valuable to our customers is it sticky so if you look over the past 12 months what's revenue churn been gross zero okay so you've had no customers downgrade we have no customer we've only had customers growing okay what is expansion typically like year over year on the historical cohort stuck on 30 growth 40 growth yeah we actually don't get that information out right now okay i mean is it because you're not measuring it or because you don't want to give it out for sensitive reasons we just don't give it out for sensitivity reasons we obviously measure a whole bunch of numbers yeah what what other numbers do you measure uh we measure revenue we measure cost of acquisition uh we we measure usage a whole number of different ways in terms of types of queries types of data uh we measure which usage which usage metrics do you price against do you so the prices mesh is essentially measured against the data collection that we're providing for our customers and what's coming into them uh so it's a cut we really have a number of different levels in terms of how we can price yeah but what's the actual metric though you say data but what's the it's it's it's the amount of data that we're sending to you and the latency with with which you want that data both those elements allow us to to meter the the prices based on yeah when you say amount of data right are we talking what's the actual unit of measurement is it gigabytes records queries per hour it would be it would be records okay okay so okay so amount of records over a given period of time sure and those records just to be clear the these are not like hubspot contact records these are more like company profile records or some other financial kind of record that's relative it's it's it's more than a hubspot record it's more than a uh the record is a very rich data structure uh that can change in size based upon the specific subject of the data record uh that could run anywhere from uh kilobytes to many many megabytes uh so it it it varies that's good okay so you price against that what about do you have feature based pricing upsells and then also seat based up selling or no so we have a number of features at our current stage we incorporate those features we are adding in in in our base pricing uh we are adding enhanced intelligence features which will create more upside for us as a business okay what about seat based up selling no or yes so we don't sell on a seat basis as i said the two key measures are data and latency of time okay uh very good um what about team size today how many folks we're 21. okay and you raised three million series a have you raised any uh since then and if so how much the the total raise for forge to date has just been north of 10 million is that too much uh i don't think so i think it the question of too much is relative it gives us the runway to keep maturing the business to grow the team to mature the platform and to keep acquiring some very very significant customers so it feels about right and uh so far we we're comfortable with it you've seen uh because you've done this...