Grain Intelligence Inc. Revenue & Funding (2024)

hello everyone my guest today is mike adams he's the ceo and co-founder of grain a tool that empowers remote teams to record transcribe annotate and share the most important moments from virtual meetings in a highlight reel he previously co-founded degreed and mission view which is required by wework mike leaves that recorded conversations and spoken knowledge they generate fundamentally expand our ability to listen empathize and connect with each other mike ready to take to the top i'm very excited too all right so you get an exit at wework by the way was that sort of a life-changing event that allows you to take bigger risks now or is that sort of just a nice sort of flat exit for everybody it's a flat exit for everybody and uh the big win i got was discovering the need and ultimately the product for grain that i'm building now over solving my own you know my own need for two years building an online school and so uh um our students were able to actually get absolved their income share agreements and still you know for the most part get jobs and so it ended up being kind of a win-win for everybody so so what happened to that that sounds very interesting is that the one we were bought yeah so um weworkbot mission u uh fully remote on the back of zune started in 2016 so we were one of the first like fully embracing the remote you know learning environment and cohort based model and uh we ran into a lot of regulatory challenges at the state of california that has since made it extremely clear that their position is that income share agreements where you pay a portion of your income in the future once you get a job and only if you get a job that's aligned with the students that those were not actually legal in the state of california they took up kind of an anomalistic stance on that so that that created a lot of challenges for our business we looked forward to um you know the event our ability to return venture um to make a venture outcome and ultimately made a determination that an acquisition was uh the best situation for us how much you raised that company we raised 11 and a half million got it cool so i imagine a lot with this just sort of going to we work stock yeah so it went into wework stock our investors got you know we still had it eight and a half million dollars in the bank so we made a call it's not like we ran out of the money we were like we looked at the future and we said you know this uh this ability for us to actually like deliver on the projections that we made up front given the change in climate given you know a lot of the you know kind of unit economics that we were learning over the next couple of years uh we we looked at it and we said i think it's actually you know best for our investors to uh you know get their as much of the money back as they can and then the rest was made up for and we work stock and uh i have the opportunity to start a new company i would say kudos to you for doing that i mean right there are so many founders i know that they see the writing on the wall but they feel stuck because they don't raise vc money they don't want the negative headline right if they shut the company down but ultimately the biggest opportunity cost for anybody is your time right so you don't want to waste you don't want to even though you have eight and a half million you can pay yourself you can pay your team you don't want to do that for years kudos to you for doing the right thing there and getting that out grain is born what year did you start coding grain so we the acquisition from wework was in 2019 and so i started full time on grain september 1st so my obligation through the wework acquisition was uh expired august the 31st of 2019 and i started training september 1st so um we raised some venture capital right out the gate from a lot of the people who backed me in the past they still were big believers in me and they really loved the division that we had because i was building grain just to solve the same problem for future people that i had sold to myself building a school in the back of zoom what i the insight i discovered was that spoken information it's unstructured it's largely ephemeral it's usually not even captured but it is the key to being able to bridge the gap in the future of work between seamless um between remote uh synchronous and asynchronous communication so asynchronous communications tend to be text based and the medium is usually the documentation i wrote the message it's in it's they go and search the slack logs the same is not true of the synchronous spoken world but it is true if you record it if you transcribe it if you make that content searchable but you need a new kind of uh wave of tools or software that can make it as easy to work with the content of spoken knowledge as it is to work with the content of written knowledge and so that's kind of how how grain was born i started it with my brother who was the first employee at branch metrics and so he had a four year you know unicorn run uh as the first employee there or do you have more uh we split slightly less uh slightly different very close to 50. like 51.49 sort of situation that's uh very close no you want to have good thanksgivings moving forward so yeah you can't tie yeah we'll say uh i have been a co-founder twice and uh jake and i are dramatically closer to 5050 than i ever was as a as a first-time co-founder even a second time co-founder fair fair okay how much did you raise in that first round uh we raised uh so what we did on our financing is we did about a million right out the gate which is us and a pitch deck um and a vision and a belief uh uh and that was on like a safe and then we did a priced round uh about nine months later so this is uh uh fall of oh i'm sorry this all started in 2018 not 2019. okay so that million was 2018. it was 2018. it it's fall 2018 mission you got acquired in 2018 so it's about almost three years ago mission got acquired and then we did a seat round nine months later in 2019 so this is a year before the pandemic and um we were onto this kind of trend we knew it was inevitable and then the pandemic has just really accelerated it and then we did a follow-on round um that hasn't been announced yet but uh it's with freestyle capital and so we did an initial three million on a safe there after the press round so it's been about seven million dollars total we've raised and um our team is about 15 people yeah so just be clear so there's seven total four it's unannounced but with with freestyle one was at the beginning i'm sorry three was with three free freestyle so one at the beginning and three and then three in a price round that four was announced and we raised an additional three that has not yet been announced got it okay so so let me ask about that right when you do make that announcement people will go wait a second it's very rare you see a price round and then going back to unpriced they'll go wait was there a down on there trying to manage through here what's the story there yeah the story was an up round on with amazing investor on amazing terms and we wanted to work together very very you know on quickly so what happened is we launched on techcrunch a year after that price round um this is about a month after the pandemic and we made a positioning bet to say we're on the back of zoom we're the we are the zoo map when you think about zoom apps think of grain so we had a techcrunch launch and then one of the investors that i really had a great experience with her name's jenny leftcourt at freestyle vc a year before um it timing-wise didn't work out for her to lead the priced round but she really wanted to get involved a year later and so uh this was a really easy way we had a huge amount of like in insider interest and so the rest of it was just bought up by insiders um so that's where we did the three million and they took like a much bigger check than they would normally do um just because she was so eager and excited to work with um drain and we got really nice you know up terms on it as well so when you look at a simple easy way to get more capital yeah it was a cap higher than your last priced round is that exactly like yeah yeah substantially higher interesting okay very cool let's take more to the product because i think this is interesting right you know when i had sid from git lab on he said the reason he has all his companies all of his team members post meetings even private meetings on youtube if you go to their youtube channel you'll see you can open the transcript that google automatically does and search the meetings quickly you're sort of doing that but in a much shorter more formal way and you're building business around it you're using it right now actually on this call so what is great work yeah so grain taps into this recognition that the the tools for the spoken world that we live in um are primarily designed to facilitate the conversation not to facilitate the transfer of information across the bounds of of synchronous and asynchronous work that's where grain comes in is that we recognize that well like what gitlab does where you can upload videos and these artifacts if you record it all the world is open to you but grain takes it one step further and recognizes that you're doing cognitive processing you're identifying moments in time that matter that moment mattered and in instead we don't have the time to go back after the call and re-watch all the time it's nice that we have that option and that's kind of the git lab approach where we come in is we give you a real-time annotation layer you can take notes like you would normally take notes in a notion or an evernote or whatever else but they get time stamps and you can actually and they get turned into highlights so you can share a moment of uh that you identified or flagged as important in the moment uh as it happens independent of the underlying recordings like literally right now you're telling me some fun stories and i'm taking notes in my apple notes app on the left side of my screen right now where would i do that where it gets integrated with grain like literally if i was using it now how would i do that so you download grain onto your desktop and you can actually use it on the web here in a couple of weeks and we hook into zoom to where when you are recording either through zoom or through our native recorder um there is a notepad that is live for the time that you are recording as soon as you stop recording the notepad goes away and it goes and it takes the content that you identified or flagged as important and it brings it into your web app where it synchronizes it with the transcript with the full recording and it becomes this like imovie for the web where you can create and edit the video itself and create highlight clips using just the transcripts you select the text you want from the transcript and you pull that out and it becomes like a loom-like link where you can embed it you can share it anywhere you want or you can turn any of your notes into a highlight with with a single click okay if i fall in love with this thing what's the average customer paying you guys to use this technology per month yeah totally so we have um two plans so there's a pro plan which is 144 a year and then we have a uh unlimited plan which is 436 dollars a year per a creator seat so grain is a tool for teams from default so we don't have this idea of grain of like well there's this individual kind of usage in the team usage it's like it's built to be used by and for and with your teams from the very beginning and so you can have your entire team on grain and not actually have to pay for everybody who's in there who's accessing and like getting um value out of viewing the content and having this like centralized source of spoken knowledge for the team you you pay a license for those that are contributing and adding and editing the content in there so if you just view it and you want view only that's that's that's a free seat but if you're contributing um and collaborating and editing and adding new recordings you get an allocation of recordings um according to your uh license type whether that be pro it has a set number of recordings or unlimited you know yeah unlimited you can use you know you can you can use it on every one of your calls sweet spot mike what's a team on average paying you right because you're looking at number of seats and then the plan they're on to get up that average are we doing like 100 100 bucks a month yeah totally so we we find that it ends up being uh depending on the team the average team is about three people right now so it's growing a lot we have uh we have some teams that are you know dozens and dozens of people we have some teams that are three so um our self-serve model we don't have a sales team yet we're just kind of uh you sign up for grain you start using it you can grow and expand that usage um the average team right now is about three months so three at 12 a month you're talking about like 36 dollars per month so it's pretty cheap exactly so it depends on how much you need to use it and so what we found is that teams come into grain with one of two mentalities it's either i want a very specific use case in mind where i want to use grain instead of like the regular zoom recording or instead of uploading my files and transcribing them and i use it for like user research interviews or whatever and oftentimes those teams find themselves uh selecting into like the pro plan we're like okay that's enough allocation for me and then there's this other group of teams that like we use grain for everything we use it for hiring interviews we use it for team meetings we use it for sales calls we use it for customer success and support and we also use it for customer research and for interviews and those teams don't want to have to think about like oh well like is this one going to cost me am i going to like have to pay more because and so that's why we've created our unlimited plan is you just embrace this record by default mindset and then you you pay grain for your service and then you just are kind of living almost in a new way of operating in us in the knowledge economy where you can make use out of your spoken knowledge without ever having to think about it i don't know but we're we're running short on time there's a bunch i want to learn so you got your first customer back in 2018 as really yourself right you're building this for yourself help us understand your skill today how many customers are you serving now yes right now so we have um we have several hundred paying accounts and then across that you know we have a lot of users per account and so um we right now are uh we have well over 10 000 that have uh signed up for the for the product and um are obviously you can kind of calculate our conversion rates from there and so we are freemium based product that has well mike i can't actually i actually don't know obviously like i've had lumon i've had a bunch of folks on the conversion rates from freedom to paid are always all over the place as low as one percent and still working via as high as five percent where are you guys coming in yeah so on an account basis we have um it you it ends up being at about about a about a three percent conversion rate um on the new companies that come in and that are getting into a paid account and are you happy with that conversion rate from free to pay oh i mean it's it's a great place to start but uh is uh we believe that we can go you know upwards of 10 on that conversion rate you know and like slack has like 25 conversion rates paid and uh you know we believe because we're a team-based product that as the functionality grows and about the power and the usage of grain grows we our conversion rate will continue to increase so mike can i take 300 that's what three percent 300 teams right times an average of three per team on that pro plan 12 percent so 300 times 36 years about 11 000 bucks a month right now on mrr um we have there's there's also a split of people who are on um the there's also a split of people who are on the unlimited plan so um there's the the 12 a month we're about 50 50 between people who are on unlimited and people who are on the pro and so the uh the average uh account tends to be a bit higher than that yeah yeah so you're maybe closer like 20 or 30k and mri do you think you can break a million dollar run rate by the end of this year oh absolutely yeah i mean for us the the growth rate is continuing to grow and increase we've just been just begun to tap the market and so um we're absolutely on track for that with that being our goal this year and and what sort of gives you that confidence i mean where did you get significant growth of the past 12 months what was that growth rate yeah so i mean we just turned on um we just turned on pricing in like at the end of last year the very very so you didn't have any you were your pre-revenue last year we were pre-revenue last year oh wow okay got it got it so we just turned on pricing we don't have a sales team it's all self-serve and so what we've done is proved that like there's a tremendous amount of willingness to pay an economic value that businesses are getting by using our product and so as we layer in more and more of our go to market uh team uh where we are adding in our inside sales team and eventually adding in an outside sales team and what's the team today mike how many people it's all engineering and product and design that's how many people total 50 15 yeah one five how many engineers so of that it's uh there's three that are not uh that are not so myself and then two others that are not uh so heavy heavy engineering you're you're that you're the sales guy right now um talk to me about churn it's obviously critical in this sort of business yeah so what we found is that uh those teams that have reached the threshold of uh either five uh highlight so there's five people on the workspace um those those teams don't turn so like once you've established that there's uh that there's a core use case for grain um we found uh a less than a 10 turn right there across time like and we've had those teams for well over a year now and so um a lot for us our challenge of what we're focused on over the next year is getting activation rates increased and higher and and by getting you faster to that time of aha where you're like oh my gosh like i can never go back to a pre-grade world like how did i ever let all this information go ephemeral whether that be you use a research interview a podcast interview a hiring interview a team meeting et cetera and so the teams that reach that threshold are uh they stick around yeah look i imagine one of them that i mean a mistake i would argue in a business like yours is you think the utility value is number of recordings right and that's actually priced against but really if i start using your tool and then i get a paywall because i'm automatically reporting everything but i haven't actually figured out how to use the reporting so utility value i'm going to churn it's like isn't the real question what you're doing with the recordings not how many recordings you've done yeah totally so we've so baked into that that stat is that because if you reach a recording threshold and the the fact is is that those that reach the recording threshold are not churning um the product has established value like by the by virtue of the fact that you're adding recordings into the system those users are experiencing the value which usually comes from sharing as soon as i create a piece of content that's derivative not sharing the whole entire recording but a piece of that recording um in and i drop that in slack or embed it in notion or i put it in air table that is where our engagement uh metrics are all are focused is on the percentage of people who are coming into the product and are creating content that gets shared externally and then that gets viewed and that's the like aha magical moment that i have as a grain user is like oh my gosh this was valuable to you like i created something in this amazing tool and then you got value out of that i'm going to do that more often and then i'm going to do it in more areas and so we see that account expansion for those teams that reach that engagement threshold well mike we're out of time congratulations guys check out grain dot co automatically record and highlight important moments in your zoom meetings they are basically uh just turned on revenue about a year ago uh they they launched back in 2018 with a million dollar round they raised seven million to date as they look to break a million dollars ar this year serving 300 accounts and many many more users inside of those accounts mike thanks for taking us to the top hey thanks a lot nathan one 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