How Granulate CEO Asaf Ezra grew Granulate to $11M revenue and 50 customers in 2021.

hello everyone my guest today is assaf ezra he is a tao payot program alumni and continued his idf service as a commander an elite 8200 intelligence unit previously held positions as r d team leader and project manager where he led 30 plus researchers engineers and analysts in large scale projects today focused is a co-founder at granulate he helps to democratize performance in the building world without performance loss speaking specifically about the cloud it's off you're ready to take the top sure thing all right so help us understand who you're selling to uh and sort of how do you build are you paying sort of percentage of cloud savings saved or how do you how do you price it so grant actually uh emphasizes the performance improvements we actually help you get a lot more out of your machine so we price it on a per core per hour basis it's price per usage not per uh on the cost reduction not every one of our customers choose to take that into cost reduction uh you can think of other trading where every microsecond counts you can think of uh streaming services where the main goal is to get as many users at the highest resolution so it's not always about the costs got it so based off getting more out of each machine unit you said you built quarterly you said no on a per core uh cpu got it so you build a per cpu core basis and give me a general sense of sort of the size you're playing here when a new customer signs up for you how many cores are they onboarding typically in the first month or two well that depends on the customer uh if they choose to take that into cost reduction sometimes they'll start with a very small service just to test granular out see that it works for their own services not in general for someone out there um and then we have customers starting at 30 machines going all the way to 3 000 in two weeks so that depends on the customers and themselves and how many cores does your largest customer manage on your platform oh that's around 250 000. so see definitely power law is happening here huh yeah all right very good what's the back story when do you launch the company so we launched almost three years ago we actually started completely differently we started with load balancing opportunities we've seen a huge huge potential in the fact that load balancers today don't even have any knowledge of what happens on your back end system um so you can think of grpc or http load balancing where pretty much the only heuristics today is like this connection or at least outstanding requests but the truth is it doesn't mean how loaded the machine actually is so how much the resources are utilized and for what purpose and so we started there unfortunately it didn't go as planned we realized that a lot of people are not very enthusiastic to replace their own very easy to use infinitely scalable aws backed load balancer so we switch to something else that you can start with a single vm for the worst case and the cost benefit is like i'm risking a single vm with this unknown company and i can gain 30 40 60 uh on my performance improvements yep interesting now you get this one in 2018 you pivot a little bit you're obviously not scaling today you have again a varying use case based off me 30 cores on being on board or 250 000 for your largest customer but just for the sake of focus help me understand your sweet spot right so what's like the average maybe customer paying per month to use your technology um again that depends on the customer yeah give me an average okay just because it's a short episode i'm going to try and really focus here i understand there's a massive range but what would you say your sweet spot is on average uh i think our let's say median to average customer would be around a few hundreds of machines to a few thousands of machines okay and if i'm if i'm managing 500 machines on granularly what am i probably probably paying you per month to do that uh that's a good question that depends uh uh on which size the machines are uh that depends if uh you're seeing the performance improvements that we imagine that you're seeing if you're on kubernetes you can switch it to the service kubernetes service level or these specific containers that you want granulate to manage so it's not necessarily about how many machines granular is running on but how many actual cores granular is helping you with we have a list pricing uh again i think i think it depends on the customer itself can you give me the motion and obviously scaling at a different price which is very different if it's a grand a month a 10 grand a month or a 100 grand a month sort of average acv you know sort of level can you give me a general range of what customers are paying and then we'll move on yeah you start with uh you can start as low as a few hundreds and uh we are customers started at five hundred dollars a month and are now at three hundred uh sorry thirty five 500 uh or 30 000 right or 250 000 in terms of course yeah this is the number of calls it doesn't mean that that much a month but i'll give you i'll give you the the real number which is on average guarantee a customer if they choose to take all the benefit into cost reduction see about 75 to 80 of net savings that they keep and granulate is paid around 20 to 25 of the net savings since we don't build you on the savings themselves it's uh um it's hard to give you an actual pricing but let's say for every twenty dollars that you pay granulate on average you save eighty dollars that you would have paid uh uh extra on top of that twenty to someone else yeah do you know last year how much total savings you drove across your entire base yeah over 30 million over 30 million wow okay so i mean how fast can that scale mean can that double this year to 60 or 90 million you think we're hoping much more than that okay got it now have you talked to me about the team and how you built this is obviously a very technical product what's your team look like today how many people so we're we're around 50 today um our rnd team makes most of the company and they're all coming from the same uh pretty much the same group uh within the army that my co-founder and i came from now is this is this ex-israeli defense yeah very good you guys are always the toughest smartest entrepreneur ex is really it's like the number one thing you go if they're ex israeli defense i'm writing a check i want to get in no matter what you guys are always building interesting tools this sounds like a very bad heuristic all right so there's five zero 50 of you guys on the team how many of them are engineers uh 35 35 okay now do you have any quota carrying sales reps or no yeah of course how many um 15 or so the 12 or so by the way um and uh we're going on to 30 at the end of the year yeah so this is the reason i ask this is the second a company like yours in your space can really identify what quota a new rep should have and how many sdrs and then what's the csm to ae at am ratio you can really scale and pour fuel on the fire so take us back to the first quarter carrying rep you hired how did you determine what quota to give them so we actually started with a lot of inbound interest a lot of actual customer referrals so customers actually referred us to other customers um and we started gaining that momentum understanding how many customers each rep actually can carry themselves and how many they would need some customer success help some se help and and everything and we realize that number is pretty high but the truth is we want to make sure that we also uh hunt for new customers not just uh manage our own customers uh in our existing existing ones and we started at about 10 20 uh uh a month i think we're tripled that since but what's the actual quota target if i'm joining you as your first rep you're saying nathan you need to close a million dollars a new ar in your first 12 months or like what's the quota target for that first rep yep it's around that around okay that number okay and and do you see most of these 12 reps that carry quota hitting that quota metric or how what percent do you want to hit quota yeah i i think we're over 65 at this point interesting okay very cool now have you raised capital to scale this yeah um so we've raised uh almost 50 million dollars uh in total uh last round was a series b in december got it and how much was the series b in december 30 million 30 got it so 20 prior to that and when you raised the 30 what was the general use of funds there was it scaling the sales team or engineering or something else uh it's mostly around the sales and the engineering um this is the past four months we've grown both teams by quite a bit we were 21 or 22 i think in december um and as you can probably understand we're over double that yeah and you consider that your series b round it's always interesting to see especially the market we're in right now where there's so much capital to see what sort of series b rounds are coming in at these days can you give me a general sense of what valuation you raised at or how much of the company you sold um so unfortunately uh i can't give you that but uh the truth is we are seeing a lot of series b rounds that are much higher and and even series a rounds...