Habu Revenue, Valuation & Funding (2024)

hey folks my guest today is matt kilmartin he's the ceo and co-founder of habu the global innovator and data clean room software he's passionate about entrepreneurship and developing technology to help brands and their digital transformation he's got 20 years of experience in his career working for innovative software and data companies such as salesforce crux and akamai matt you ready to take it to the top let's do it all right so what does a clean room software yeah so what it basically means is uh two companies that have data um who have a common business interest to collaborate around each other's data but they don't necessarily want to give each other their data right so meaning it shot cleanroom software is neutral infrastructure where two parties can effectively do analytics across distributed data sets this is cross beam space not really i would say okay because that's the closest like i try and i try and pattern what's interesting is a lot of the um cloud data warehouses do this are doing this now so aws gcp um microsoft are trying to do this and that's where data sharing now happens at the cloud data layer and then snowflake and data bricks have capabilities around this as well and so maybe for my audience give some use case so the use case i have is you potentially are going to partner with a company you want to share email lists cross beam is like sort of how you do this anonymously without like giving up data what's the use case people use youtube for use case addresses we work with a lot of so so i know cross beam because we use it um uh a use case for us is um disney disney's a client disney owns hulu espn and they have all the tv viewership data basically um l'oreal is who is a big advertiser and they want to know what are the all the disney and hulu what do you know about my customers basically right so disney doesn't want to give all of their data to l'oreal loyola doesn't want to give all their data to disney they use our software to do data collaboration so i see big media companies like roku disney are examples of clients um and then also another big one is with retailers and manufacturers so like grocers and people in cpg companies interesting are those are two big use cases disney and hulu and grocers and cpg those are yeah and we have other verticals as well that we're successful in um but those are meat entertainment retail cpg um advertising those are a lot of the use cases of which people are using our software for today and are disney and hulu both paying you or is it one side of the marketplace uh today it's one side of the marketplace um disney or hulu well disney who's part of disney actually um i go with the comparison here grocery store or cpg jane uh it can it can be either actually uh it depends who the actual licensee is right so so it could be the grocer if they're the ones saying hey we're standing up an environment for all of our cpgs to collaborate with it can be the the grocer but also it could be like um l'oreal is a client and l'oreal is basically saying hey i want to go work with all the beauties i want to work with beauty people i want to work with sponsorship people and they can basically influence it as well but our our our our um we want to make it friction free for data collaboration so we are not charging both sides i see i see okay so you're charging one side and what is one side paying your current customers one side paying on average per month to use the tech yeah uh well per month we look at a sort of a annualized basis so our average acv is um uh by mid 300k range and how do you get someone paying 600k what's how do you upsell consumption so when someone buys our um software they get a certain number of data clean rooms or slots for collaboration and as they uh use them and as they use more they uh they grow and and there's an upsell opportunity okay so let me try and give an example um let's say heb the grocer is paying for your software they have x number of slots a slot might be filled by procter and gamble because they sell dove shampoo and dial okay that's how it all works yes yep you got it your quick study okay interesting interesting interesting oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview okay so your upsell that's a powerful upsells number of slots are there any other sort of very powerful upsells here number of seats or no we don't have a seat model right now it's more based on as people are are consuming more slots and collaboration okay interesting then also um um we're starting to look at some different modules as well right so sort of version one of the software was around um you know let's just let's just stick with the l'oreal example l'oreal has their beauty customers right that's a data set and then there's a data set with you know heb or whoever else we're starting to do now things more on machine learning where they might have machine learning models built around skin types or propensity to buy other products and and how do you now start to do machine learning on other data sets so that would be a more advanced module um but out of the gate it was sort of more dated to data and now it's more advanced modules are around ml and more model data and when was out of the gate when did you launch uh we've been building we've been at it for three years built technology for a year launched commercially two weeks before the shutdown so march of 2020 is when we launched commercially mm-hmm and uh what was that like how'd you get your first customer uh beg burrowed steel um yeah listen it was a weird time right because as you can see by our price points um it's kind of an enterprise sale and we're selling to big brands there wasn't a lot of appetite for companies to to enterprise buying at a time during covid in the beginning and so we had to get super flexible and so we actually did some uh shorter term deals we call them first value deals where instead of letting someone sign up for a year we'd have more flexible terms and start using our software and and you know we probably did um well actually interestingly enough of all those all those deals we did sort of six-month deals with to do sort of pocs or first value engagements every single one of them has continued on as a customer how many how many pocs have you done to date uh well now we're done with the pocs that was like two years ago um okay like that was two years ago we first launched now we're doing proper property but take me back because there's so many listeners that are in that state right they're launching pocs to get going how many do you have to launch and how many like converted to paid and what did you learn oh yeah great question um so for us because it's a little bit because it's a like enterprise it was less around um volume and in quantity and more around quality right like one of my good buddies is the founding revenue leader hubspot and obviously their model is very different right um and so um so yeah so for us it was all around like quality of fit and then also really handshaking what those customers are on mutual success plans right so that would be my advice is like you know you don't know your icp you're trying to figure it out place a few bets place a few different types of experiments identify what your learnings would want to be obviously you want sort of the the money but but really the money is like a short-term thing but it's good to get money what they're doing matt how many of those bets did you place though we're talking like five disney's or five grocery chains or five ten we we we placed probably eight to ten bets okay eight to ten and you're and and then what does that sound like back then was it like listen here's we're gonna try and deliver over the next month or year or 15 days and at the end it's gonna cost you this if you're happy what was the timeline and what was the cost if they were happy uh it was more um it was probably more of a a 90-day 90 to 90 to 120 day window of make happy value realization and then we didn't break our pick honestly if it's gonna cost this right we were really just focused on delivering great product delivering value and we said if we do that it's gonna work itself out we'll have a proper business conversation oh so you didn't try and set an anchor at the beginning of poc to say if you if we work hard to make you happy it will be 30 grand a month no it was it was covered it was the beginning of it right you just negotiated at the end yeah so today today maybe we would be a little bit different but yeah i mean it was it was a different time right and interesting this is an in-person sale it's an enterprise sale and so also we're trying to do the resume screen so we were flexible early on and it's and it served us and it served us well um how many today how many customers oh boy uh we are south of 50 still okay 50. when do you think you'll break 50. end of this month oh you're close yeah yeah we're close we're growing a lot i mean we're because you think about it is okay so let's just stick with your heb and and um proctoring gamble yeah yeah so procter gamble they might not be paying us but all of a sudden they're collaborating with hp heb so they're getting exposure to our software right so all of a sudden we have a nice network effect where you can potentially go and have a conversation with procter and gamble so we're i mean it's still an enterprise selling motion we're working hard to to identify some more product-led growth and that's that's an area for us that we're focused on right now um but we're um we're definitely it's a hot category i would say there's rfps out there right now a lot of um a lot of people are thinking about it it's not just it's not just by the way that's not just a nice tactic up i mean that is a golden staple of the fast drawing sas companies right you look at build.com i learned about build.com because someone told me that they only were going to pay me if i signed up for build.com because they were already using build.com it's the same sort of thing for you you know dial procter gamble uses it via heb then procter email goes wait we work with hundreds of retail partners we should buy our own licensed copy of this to use it yep you're exactly right yeah that's a great that's a great trade to be able to have which is nice now did you intentionally plan that going in or was that like a nice accident um i wouldn't like to say the word accident um but no we didn't we didn't i mean you were hopeful yeah i mean listen listen i was at salesforce so i this is my second this is my second startup right you were at salesforce in 2018 before 20 when you launched in 2019. i yeah i resigned from salesforce uh three days to the day after they acquired my last company so i was at a company called crux which salesforce acquired um i was the cro at crux so i was did you make a lot of money in that acquisition or no did i personally or did the company yeah you as cro i mean maybe you had one or two percent equity or not i don't know uh it was a good outcome um yeah i mean not not after you not after you money but like you know it's comfortable money yeah listen i i'm still working you're doing what you love though come on yeah yeah i mean this was not a small dude this was not a small deal though i mean this was i think what a 700 million dollar deal if my memory is right yeah yeah yeah yes yeah yeah yeah but listen salesforce is awesome i learned a ton there but what i also learned was when there's rapid change and there's chaos in a market you need innovation and sometimes it's easier to innovate when you're a really sort of small company starting with a clean slate how long were you at crocs uh almost five years oh come on you're totally he's on guys he's underselling himself you had some equity there that was a very good exit for you did you plow any that money back into abu or no so you could so you could say bootstrap at the beginning or no um so hubba was actually launched inside of a venture studio so the founders of crux started a venture studio uh it's a fund called superset it's a 65 million dollar fund and they start startups they're not vcs they they start so they actually started 10 companies in the last three years um so how did you get involved well i was thinking about starting my own thing um but i'm not an engineer um and so i needed a technical co-founder and to go hook and these guys are my old bosses right from from the last company and so to go work with them i basically had instant access to world-class engineering talent and plenty of capital to get going right and so we raised uh series a right as i came in uh we actually just closed our series b snowflake invested in us actually as well oh nice rough rolling now quantify those terms what was the series b how much 25 million and uh that was a series b when was a series a uh series a was november well we left said february of uh 2020 is when we announced it feb 2020. okay and how much was that and the end of 2019 is when we really closed it okay okay okay and how much was that for 13 13 enter and that's when you came in yes right right then right right when we closed that did the did the series any investors was that a contingency they had to bring you in as ceo uh you know superset actually leads the rounds as well and so it's it's i mean it's people i've worked with forever right so it's not i mean it yes we sort of mutually agree but was not necessarily contingent like they had been incubating and building some some tech as well trying to think about ways to solve this problem interesting okay so so got it so you go into this so help me understand if someone else is listening right now going i am just like matt i need to go find adventure studio where i can be the ceo of one of their companies and spin it out i mean how does that cap table shake out i mean do you look at superset like a 50 50 sort of co-founder effectively are you way under 50 equity in the business um i'd rather not get into the specifics of the of the um cap table for habu there are other venture studio models out there um you know i think superset's a little bit different than like y combinator and some of the other folks like that because you know the the um the uh they play sort of very operational roles so the the the sort of the cco who actually was the cto of salesforce's marketing cloud and cto of my last company he was the cto of habu for for for two years um the other superstar partners actually chairman of our board so they're pretty active um roles now that we've sort of raised our series b and we're a bigger company they've sort of taken a back seat but yeah i mean listen the the cap table sort of appropriately represents the different inputs of where people are adding value fair fare yeah thanks for that context and then look most people series b you're selling you know 10 to 15 of the business were you guys sort of in that same range uh sorry i say that question one more time most series b's today you know sass b to be sas you're selling 10 to 15 to the business were you guys sort of in that standard range uh yes we're in the range yeah okay fair and then um uh i should probably do a better job paying attention all these details i'm more focused trying to grow the company rather than uh staring at the cap table every day well let's talk more about that so 50 customers today um at a 25 000 rpm and that puts you at about 1.2 and monthly revenue today correct ish yes how do you go from 50 to 100. let's talk about growth yeah so we for a long time and for people listening out there i'd be happy to feel free to ping me on linkedin or share war stories um we stayed a little too lean too long on the sales and marketing function i would say um we had ton of engineering product engineering and um but i didn't i felt like we probably could have invested earlier in sales and marketing and so we um um you know we in the end there's other people in our category who are a lot bigger right we're an early stage company um and they're they're doing a lot of marketing about the category so rising tide lifts all boats so we're benefiting from the category expansion um but we need to do better and we have a better product but we need to do a better job sort of increasing awareness around what we do so um matt who are those name one or two in your space that are sort of educating the market um there's a public company they're also a partner um and a great partner as well but there's a public company called um live ramp who has a as a competitor as a competitive product so anyways um but listen great company we actually use some of their identity products as well you know classic competition but um what was the question you just asked me oh how do we go yeah listen we're um we're adding uh we're adding sales people um and we've got a you know i think at this point you know and you've probably heard this you know we're talking a lot of different other founders it's about um defining your selling motion how do you try to repeat it like we're going through you know all of that stuff right now and really how do we how do we try to codify it even more yep what is your team today how many people full time uh we are just under 50. just under okay got it and how many of those are engineers oh boy uh um half oh wow okay and how many are sales reps with a quota six maybe got it and did you hire your first quarter carrying rep like pretty recently this is a pretty new motion for you uh no no no okay we had uh we had uh one early on sales person and she's a total um she's a rock star she was you know i me and the executive team was all involved in a lot of these sales and we had a lot of contacts right just from our last project as well and last company so um but we had an awesome sales executive who's been with us sort of since the beginning since day one and um and then sort of middle issue of last year we've been adding now we have a chief revenue officer as well um who's got a domain expertise she's awesome so uh the one fact which is rare in sales comes where our sales force is about 75 women um which is yeah very very cool that's sick that's great we love hearing that um and and it sounds like i mean from a growth perspective if you're doing you know one 1.2 a month today where were you exactly a year ago oh boy you should you know i should have invited my co and cfo to answer all these questions come on don't act naive you you you told me before you listened to the show you knew all these questions were coming [Laughter] uh or just give me a growth rate are you guys recording listen we're we're we're we're like you know like we we sort of have a mantra of like uh triple triple double-double right in terms of growth growth expectations and so we're we're on track for that so well it depends on when you start triple triple double so did you double last year did you trip over the past 12 months um our fiscal year actually just ended uh jan 31 um and so we're still um finalizing things with our board meeting next week so i'd rather not uh such a political answer okay you already you at least met you at least your listeners aren't going to learn anything from me for me telling you these numbers it's more of course they of course they are because it's all conte it's much better than you saying like fluffy duffy we had a big failure so somewhere between doubling and tripling last 12 months that fair statement okay got it got it and um okay cool so series b why raise 25 million that's a lot of dilution or where are you spending the money i could actually raise more um uh it's actually not yeah um listen i mean by the way if you're doing a million bucks a month right now in revenue right uh which by the way is pretty high 240 thousand bucks in revenue for employee with 50 people so i'm assuming you're actually a little less than probably a million right now per month but let's say you're around that yeah because like i sort of quoted the average price of some of our our deals more recently there were still some of those early on deals which were a lot more flexible and smaller right something there the numbers don't tick and ties as far as but you're flirting with a million a month in revenue i mean you you got you're around there we're on that my point is you traded that somewhere around evaluation multiple of like 20x i mean i know others in your space not your space directly but with the same metrics that are trading like 3040x right so like i'm just trying to get a sense of how you guys thought about dilution yeah um listen i think we had a unique opportunity with our partnership with snowflake um and we partnered with snowflake and snowflake ventures invested in well and and i think we snowflake's a great product and we built a bunch of our technology on it and it made it made sense to um listen i saw the power of distribution at a company like salesforce and if you can do a partnership with with snowflake to help people sort of drive more compute with snowflake like we can get the potential you know benefit and partnering with them from distribution perspective so um that's that's why it made sense that was one of the reasons and also the market's market top yeah no i agree that's a great answer um last question are you flying traditional model with your six quota carrying reps are you you have them you know aiming at 5x they're ot in terms of quota 100 million dollar quota target if they hit quota they make something like you know 250 grand it's funny i actually missed that meeting this morning where we're actually going through those specifics but yeah it probably quoted probably be a little bit a little bit higher than that and um you know i i'm actually a fan of six month quotas at this stage of a company still a little bit because i feel like you know we're still trying to figure it out um and you know listen i i love listen i love um you know sales people who make 300 of quota blah blah blah but it's like yeah well guess what your cfo is going to change the goals next year right yeah so we want to make sure that we're appropriately compensating people but we're also not setting the bar sort of too too too low um everyone's a shareholder um you know and so um all 50 people own equity options pack comes with every off offer yes oh that's great that's nice so you do six month quota so what like 600 grand as a target for six months in terms of quota 1.2 for the year something like that something like that yeah yeah interesting very cool and how do you split it up amongst the reps is it geography based or some other way it's funny it's a it's a hot topic right now internally um because i think we're actually i think like we're literally making these decisions today uh i think we're probably going to move to some sort of a blend where it's actually more um vertical which i think our stage is not that normal but i think given the nature of what we do that vertical expertise is really useful right if someone can talk that heb game and go talk it everywhere else that's a good thing so that's how i'm thinking about that's how we're thinking about it right now especially because you have a very you have a very clearly defined three or four key areas that makes complete sense to me um super interesting and then talk to me about you man you mentioned how you're able to drive expansion based off number of slots and also module upsells was your net dollar retention over the past 12 months greater than 100 yes how far 120 not sure that's a yes on 120. it's a podcast people can't see my face all right fair enough fair enough yeah but but we already understand how you're driving and that's obviously healthy healthy metrics are you doing a bunch of stuff in terms of paid marketing like do you have a real cac here no not yet actually in fact we we just uh we have a just hired some the cmo who's coming on board so yeah snowflake offers half a billion dollars to buy the company tomorrow do you have to sell i don't want to answer that question i mean are you in acquisition talks right now with with snowflake no do they have a roafer because they let your series be let's not get into the specifics on that you guys can you guys all i'll say is um you know we have great investors and you know if people want to like learn about this type of stuff talk to your investors right i i had great counsel from our chairman board and our investors on on the best way to get the partnership and honestly that's the thing i would actually say and i would even say this from the crux days is um you know there's a lot of uh capital in the markets today and i would encourage any entrepreneur to really focus on value-added capital and i'm super fortunate to have that not just from snowflake but also from some really awesome investors and yeah we probably could have gotten better terms from what not from people and whatnot but at the end of the day you want people that are actually going to make you better and i i'm i'm uh i feel super fortunate for the for the investors that we have and i think they they push us to be better so i mean it's not an easy decision though right the reason i bring this up is like deciding to take capital from a much larger player in your space i.e snowflake is both an advantage because they're more likely to distribute your software it's also potentially a disadvantage is live ramp less likely to acquire you because snowflake is a major investor do you limit your options moving forward it's so there's a give and take yeah i think so but at the end of the day like snowflake's not looking to restrict our tam and you know we we have to be agnostic um well we'll see what happens man in the meantime though let's wrap up with some easy some fluffy questions here for you number one favorite business book oh boy uh most recent business book let's do that one i actually just read uh the ceo of snowflakes book amp it up which is actually a pretty good read amp it up number two is there a ceo you're following or studying besides snowflake yeah i would say uh actually actually the chairman of our board tom chavez he actually is the ceo of a of a portfolio company as well um and uh yeah he's he spins a lot of plates and i'm fortunate i've had him for a mentor for a long time so what do you mean portfolio company are you an lp and start in superset or something no um hobby was incubated inside of superset and so it's part of this the super set portfolio awesome and so you're chairman he's a ceo of another company as well but he's the ceo i probably pay the most attention to i see i see number three what's your favorite online tool for building habu the telephone it's underused today in business number four how many hours of sleep to get every night sleep's important uh between seven and eight okay that's good and situation married single kids married four kids four holy crap how old are you 47. okay last question matt what about something you issue when you were 20. say that one more time something you wish you knew when you were 20. um it's a marathon not a sprint and the importance of managing your own psyche guys there you have it matt was at a hot start up sold to sales for for 700 million bucks after he cut his teeth there he said he knew i'm gonna jump out launch my own thing but he didn't have any technical skills so what he did is he partnered up with a venture studio called superset to spin out this company called habu.com they're growing nicely call it 500 year-over-year growth or 200 year-over-year growth doubling or tripling last 12 months from 500 grand up to about a million caught a million months flirting with it in revenue across 50 enterprise customers just closed a series b 25 million bucks with a critical partner and snowflake they sold caught 10 to 15 percent of the business now looking to scale their sales team total team of 50 six quota carrying reps really excited about the space we'll see what happens next matt thanks for taking us to the top thanks it was nice meeting you appreciate the opportunity one more thing before you go we have a brand new show every thursday...