How HG Insights Doubled Revenue to $6M in 2015 and Projected $10M to $12M for 2016 (Interview with Chief Revenue Officer Mark Godley)

Nathan Latka

00:00This is the top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. 5 and 6,000,000. He's hell bent on global domination. We just broke our 100,000 unit sold market. And I'm your host, Nathan Latka.

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01:00you subscribe. Many people ask me what tool I used to sell my first company, Heyo. The answer is the topinbox.com. I used it to send emails, schedule emails to be sent out later, and set reminders inside my inbox so I would know when potential buyers were actually interested, and I easily remember to follow-up with ones that hadn't replied to me. You can try it for free at thetopinbox.com. Nathan Latka here. This episode five thirty six. Coming

01:29up tomorrow morning, you're gonna learn from Justin McGill and how he raised a $150, then his CTO left. Now he's cruising at $30,000 a month recurring revenue with his company, LeadFuze. Top job. Good morning. Nathan Latka here. Our guest today is Mark Godley. He has helped he has held leadership positions at technology companies of all different sizes from pre revenue to publicly traded. He's best known for driving revenue at significantly... That significantly outpaces industry growth while

01:58rejecting herd mentality that really is well, you know, thought of throughout the entire industry. He breaks many of these molds. Mark is equally proud of his accomplishments outside of work, finding time daily to read, workout, and cook, all while being being an engaged father, spouse, and citizen. Mark, are you ready to take us to the top?

Mark Godley

02:17>> Absolutely. That guy sounds pretty interesting.

Nathan Latka

02:19Let's have some fun. Alright. Tell us what HG Data does and how you guys generate revenue.

What HG Insights Does and How It Generates Revenue

Mark Godley

02:26>> HG Data is in the competitive intelligence space, whatever that means. To to break it down, We build datasets used by sales and marketing teams to do precision targeting at scale is the phrase we use. So the gen... The general gist of what we're trying to accomplish is the days of mass marketing from a B2B perspective are over. People are expecting you to know something about them, their company before you reach out, and we provide information that

02:56>> we believe allows people to do that at a scale never before possible.

Nathan Latka

03:00And when did you launch? What year was the company launched in?

Founding Story and Background

Mark Godley

03:04>> I am not the founder. Craig Harris founded the company in 2012 after a prior exit. He had built a similar company in the philanthropic space, realized that for profit companies had a lot more money. He sold the prior brand and customer base to Blackbaud, a CRM company, maintained the underlying IP, and decided to be a greedy capitalist by applying the the same methodologies to the B2B arena.

Nathan Latka

03:34What a beautiful thing. I love greedy capitalism. So, Mark, you... Just to be clear, yeah, you are not the Founder or CEO, but you are the CRO today, right, the Chief Revenue Officer?

Mark Godley's Role as Chief Revenue Officer

Mark Godley

03:43>> Yes. I have a fancy title that not even I'm, sure I know what it means. It's one of those Silicon Valley buzzwords, CRO.

Nathan Latka

03:50We love money, so you could argue. I mean, many people would say the CRO is actually more interesting to talk to than the CEO. Right? That's where everything happens.

Mark Godley

03:57>> Fair enough, fair enough. To be specific about what I do, I handle all the market facing functions for the company, which includes sales, marketing, product, service, all but engineering. And one could argue given what I do manage to some degree indirectly engineering is highly influenced by me as well.

Customer Segments: Enterprise, OEM, and Mid-Market

Nathan Latka

04:19Great, so walk us through some of the economics of the business today. How many customers are you currently serving in here in December 2016?

Mark Godley

04:27>> Customers, so that's an interesting, very interesting topic that I hope we delve into a little bit more. When the company was founded, served largely enterprise space, which is very different for early stage startup companies. So we started selling to companies like HP, IBM, etcetera. And

04:47>> only in the last year or so have we started to go down market. To be very specific because I know you're a guy that's gonna pull those out of me sooner or later, We have about 15 to 20 enterprise clients. By enterprise clients, I mean folks that are spending mid 6 figures with us. Again, the likes of the IBMs, the HPs of the world.

Nathan Latka

05:07Is that 6 figures annually, Mark?

Mark Godley

05:09>> Absolutely. Yeah. Recurring revenue, Mark. Yep. Yep. And then the other traditional customer we've had is OEM partners who use our data set as part of their product. And those folks, are names like the data.coms of the world, the DiscoverOrgs of the world, the Dun and Bradstreet's of the world, the predictive vendors like Lattice Engines and LeadSpaces and these kind of folks. We have about 50 of those, They spend about high 5 figures, so 80 to

05:40>> $100,000 with us annually.

05:43>> And then what's most interesting is we've really transitioned from being a data company to a product company in the last year or so by offering UIs and skins on top of our data for the mid market companies that don't have the internal teams to onboard third party data sets. And we probably have 100 to 125 of those with an average ASP of about 25. So you add all that up, which I know you're trying to do

Nathan Latka

06:08>> as Is that

06:09an annual sales price ASP?

Revenue History and 2016 Projection

Mark Godley

06:11>> Yes. That all adds up to, we'll finish the year somewhere between 10 and $12,000,000 which is we've doubled the business each of the last four years. So if you roll that back, you know, it was 1,500,000, then 3, then 6, and now 10 to 12.

Nathan Latka

06:26Guys, don't you love it when I have a guest on that's listening to the show? It's like, I don't I don't even have to be here. I just let Mark, you just talk to the microphone and just give it to my people. You know all the questions I'm gonna ask. Alright. So you'll finish here in 2016 with around ten to twelve, and you said you did about 6,000,000 in 2015?

Mark Godley

06:43>> Yes.

Nathan Latka

06:44Okay. Very good. So break down

06:45that revenue in 2015, you said it was more top heavy and your hope is that in 2016, 2017, you're gonna kind of go increase the customer base, but lower ARPUs?

Go-to-Market Strategy and Moving Down Market

Mark Godley

06:54>> Exactly, so when I came into the business a couple years ago, and largely was responsible for putting the go to market strategy in place, again, it was these large enterprise clients. And honestly, I thought this was a great problem to have because most SaaS companies start with selling to their buddies that are other VC backed companies that don't have a lot of revenue or budgets, and then they eventually try to leapfrog in enterprise. We've done the

07:20>> exact opposite in that we have a very, very secure enterprise client base. You know, I can I can throw out that that silly Silicon Valley term of negative churn? All of them come back and actually spend more money with us. And what we're now endeavoring to do is, I would say, make the use of that data that we sell, which is hundreds of millions of rows of data, much more usable by a 25 year old BDR,

07:47>> you know, two years out of college, or much more usable by a marketing coordinator. So we've created use case specific experiences, and we're selling, rather than selling the data, we're selling subscriptions to those UIs, and that's why the ASP is is coming down from from 6 figures down to frankly low low 5 figures in the $20,000 range.

Nathan Latka

08:08Well, any of this... Like, if a big company that's paying you, you know, it's called a $100,000, they signed a two year contracts, they're paying you $200,000 on that. If they see you introduce lower pricing, do they call you and go, hey, give me the lower price. Like, does this cannibalize any of your revenue?

Channel Conflict and OEM Partner Risk

Mark Godley

08:21>> So there it is the tricky balance we're trying to walk. Matter of fact, it's not just the large enterprise customers, Nathan. Keep in mind what I said earlier, it's also the OEM partners. But in fact, if I get real specific, I'll tell you that 50% of our revenue is direct clients. The other 50% is partners. Those partners that are about 50% of our revenue Wait, and

Nathan Latka

08:42hold on, those partners, sorry, those partners are people like FullContact DiscoverOrg?

Mark Godley

08:48>> Not FullContact specifically, but that ilk, those type of companies.

Nathan Latka

08:52Okay.

Mark Godley

08:52>> So here... Here's the tricky challenge. They are selling into the mid market and OEM space directly. So how do I enter that market without cannibalizing them? That's what I worry more about because of the enterprise space, the product is differentiated. They have access to columns of data and longitudinal analysis that the mid market has no interest in. So those big boys see they're introducing mid mid market products. It really doesn't apply to their use case. What

09:20>> I'm worried about is how can I how can I double in 2017 without pissing off all my partners and saying we're going after their clients? That's the that's the rub that frankly we're in the process of trying to figure out.

Nathan Latka

09:32What's your gut tell you how you're gonna do that right now? I know it's not perfect.

Mark Godley

09:36>> Well, I come from a background where cannibalization and channel conflict is what a VP of sales spends 30% of his or her time on, and it's a freaking nightmare. What I'm really intrigued about at HG Data is those OEM partners, they actually don't use our data in a client facing way. They use our data as an ingredient to predictive work, scoring work, filtering work, where our data is not exposed directly to their client. And so what

10:08>> I'm hoping happens Nathan, is we introduce products that don't compete with them, but actually can sit side by side in that enormous sales and marketing stack that's been created, and we'll actually end up collaborating and helping each other. So for instance, when when a client buys my HG Focus Chrome extension and says, this is great. Can you score my leads with it? I can say to them, no, I don't, but go go work with one of

10:33>> my partners that actually has already done that for you.

Nathan Latka

10:36Got it.

Mark Godley

10:37>> That's the hope. Let's do this interview a year from now. If I'm still sitting in this chair, probably means we've been successful.

Nathan Latka

10:42We'll see we'll see what happens. Yep. Very good. Okay. Let's let's get into some more of unit economics. Let's focus just on your enterprise sector to make it simpler. So you said you did about $6,000,000 in 2015. You'll finish out 2016 between 10 and 12,000,000. What's each kind of a customer paying you on average per month or per year, whatever's easier?

Unit Economics and Annual Contract Values

Mark Godley

10:58>> So we do it annually Nathan. So

11:03>> on average $250,000 now that's very misleading because the way these enterprise clients evolve is they will start with us in year one with some kind of business unit or specific pilot of sorts that typically they're spending 50 to $100,000 on. That's the proving ground of our data. Once they see that it performs incredibly well, by the time you go from a pilot to the first annual subscription, the first annual subscription is probably saying, I want all

11:35>> your data in North America for $250,000. They then use it and say, wow, that was pretty cool, our ROI was significant on that. What do you have in EMEA? What do you have in APAC? What do you have in LatAm? And so what happens over time, and that gets to that silly negative churn phrase I used earlier, is our renewals on enterprise accounts go from $250,000 to $500,000 to $750,000 to we have accounts over a million dollars that

12:00>> they're spending with us in year three and Good.

Tallying the Customer Base by Segment

Nathan Latka

12:02Okay. So if you had to tally up a total customer base, is it 15 to 20 enterprise? How many OEMs?

Mark Godley

12:09>> Probably 50.

Nathan Latka

12:10Okay, so you have around a 100 customers?

Mark Godley

12:14>> Well, so a little bit more than that because I mentioned the last year we've gone into the mid market and we've acquired somewhere between 80 and a 100. I was on an airplane this morning, so I actually couldn't go into Salesforce and pull it directly. But somewhere between 80 to a 100 in the mid market at that at that $20,000 to $27,000 ASP. So In December twenty twenty customers directly is

12:36the number I think you should

12:37>> be comfortable with telling your your listeners about. And then again, the OEM partners, I got 50 of them. They're they're using our data across hundreds of customers, and they're actually to some degree building our brand and building the market for our competitive intelligence data by using it in there.

Nathan Latka

12:52So Mark, out kind of 2016 here December, or you probably have a good guess of what MRR is this month. What is it?

MRR vs ARR and Funding Update

Mark Godley

13:00>> I actually don't follow MRR.

Nathan Latka

13:05You only follow annual, the annual contract renewals.

Mark Godley

13:08>> Yeah, I mean, this stage of our company's growth, we just closed our B round of funding earlier this year. It's all about expansion.

13:16>> Well, we've been changed our total funding through the B round, think is $24. Billion? I'm sorry, 24,000,000. Yeah, imagine that $24. You're on a We're focused really about building this new space. We are losing money by design. We expect to be cash flow positive if things go as planned by 2018 and we have enough cash to get there with a lot in the bank. So honestly, we don't look at MRR as much as we look at

13:44>> ARR. ARR know, is gonna be somewhere north of that 10,000,000, if the next three weeks of contracts in in red line right now go as planned.

Nathan Latka

13:53And what about, don't don't count, upsell, revenue. What is your gross annual customer churn?

Churn: Enterprise Retention and One Six-Figure Loss in Four Years

Mark Godley

14:01>> So how do you want me to calculate in number of customers?

Nathan Latka

14:06Exactly.

14:09This an important number for you guys? You don't know it, maybe

Mark Godley

14:11>> Less it's not 10%. We don't... We... We've been incredibly fortunate that we have close to no churn, no matter if you look at revenue churn or client churn. Now interesting, you know, go look at one of the post, I did a blog post about two months ago about... Let me give you real specific. We've had one 6 figure churn in the last four years. So you do the math on that. Yeah. We may lose a $10,000 to $12,000

14:35>> dollar customer here or there, but in aggregate, it's not very meaningful against the overall base of business.

Nathan Latka

14:39What are you willing to spend to acquire a customer?

Sales Team Size, Compensation, and CAC

Mark Godley

14:42>> Well, we're trying to bring that down. So so given that most of our business has been that high 5 figure and low six figure or mid 6 figure number, most of our sales team, which right now is about 10 ish people of our 80 total employees, you know, we're paying these people

Nathan Latka

15:00North of one fifty?

Mark Godley

15:02>> Definitely north of one fifty.

Nathan Latka

15:04Obviously, it's a deal.

Mark Godley

15:05>> What's that?

Nathan Latka

15:05North of two fifty?

Mark Godley

15:08>> For the ones that are performing, yes, probably not for the Okay. So we're looking two to two fifty on on a whale hunter of sorts. Yep. But as you move down market, you know, those numbers don't don't play out. So we're building an inside BDR team ourselves. We're looking at more of a high velocity sales model, and we're hoping that the product is so good and we design it so well that we can, you know, bring

15:32>> in a $60,000 to $80,000, a $100,000, type early early career inside sales rep and just scale the hell out of this.

Nathan Latka

15:40Mark, what what is current CAC?

Mark Godley

15:43>> I actually don't know that. I... And I... I'm not being

Nathan Latka

15:46North of north of what? Just give me a range. What do you think it's definitely north of?

Mark Godley

15:50>> Nathan, I totally honestly don't know. If you had... If you had Craig on it, he wouldn't know he wouldn't know either. We need we need our CFO for that.

Nathan Latka

15:56Well, yeah, how do you how do you... Okay. How... I mean, obviously, it's important because you said we have to get it down immediately when I asked the question. So you know it's too high.

Mark Godley

16:03>> Well, I know it's too high because you don't find $250,000 sales rep selling $25,000 products.

Nathan Latka

16:09Got it. Got it. Okay, good, makes sense. Where are you guys based? You got a team of 80, where are you at?

Company Location and Team Distribution

Mark Godley

16:14>> The company is based out of Santa Barbara, a beautiful place to work. I live in San Francisco and Silicon Valley and come down weekly. Of the 80 people, most of them are here. There's a little bit of a Silicon Beach thing going on here with a couple other really, successful tech companies that are, finding refugees from the Bay Area or people from LA that are sick of entertainment that know how to code, that wanna come up

16:36>> and live in paradise.

Nathan Latka

16:38Awesome. Hey, Mark. Where's the best place for folks to connect with you online if they wanna watch you keep building this thing?

Mark Godley

16:44>> Probably LinkedIn or on Twitter. M gavi twenty one is my personal handle.

Nathan Latka

16:50Folks, I may have to stop doing I will tell you why. I have found a business, Folks, and I'm ready to go all in. It's the one I wanna take public by the time I turn 30. It's called thetopinbox.com, and here's why I know it's gonna be big, very big. There are so many other companies charging way too much for this right now. Yesware, ToutApp, Boomerang. That's to do things like send later reminders and auto follow

17:12ups for salespeople inside of your Gmail inbox. I'm doing it. I'm gonna do it for free. We have so many people using it. It's growing so fast, and we do many of the things that salespeople love. We don't require people to leave the inbox to go log into a website. It's so simple to use, and I have to tell you, I mean, salespeople are, like, drooling over this thing. They're, like, licking the the drool off their

17:34keyboard. They're loving this thing so much. Thetopinbox.com. Go install it now. Use it for free people. Okay. I like you because you're listeners. Use it for free before I decide to start charging for it. Go right now to the topinbox.com. Okay. Top tribe, I have to tell you many people go, Nathan, you came out of nowhere. Your website's growing so fast. How'd you do it? The answer is simple. So I use HostGator. I don't if you

17:57guys know that yet, but I use HostGator. And the reason I do, they have, like, about 4,500 free templates I can use because I don't code. They've got a great ecommerce plugin. And guys, I bug the heck out of their support. They've got twenty four seven support, which I love. So what I've done is I've worked with them. You guys know I make great deals. If you go to hostgator.com/nathan, You can sign up, get your own

18:18domain for 30% off, and a forty five day money back guarantee. Okay? Again, I make great deals for you guys. Go to hostgator.com/nathan to grab that now. Alright. Top Trouble link to that in the show notes at Nathan Latka dot com forward slash the top five three six. Again, /thetop536. Mark, let's wrap up with the famous five. These are one word answers. You ready?

Mark Godley

18:41>> One word is tough for me, but I'll try.

Nathan Latka

18:42Alright.

Famous Five: Books, Tools, and Life Advice

Nathan Latka

18:43>> Number one, what's your favorite business book?

Mark Godley

18:45>> I don't read business books. I think the world's much too interesting for that. I am reading right now a book, called Devil in the White City by Eric Larson, fantastic historical novelist.

Nathan Latka

18:55Number two, is there a CEO you're following right now? The

Mark Godley

19:02>> folks in the startup community of Martech and Sales Tech are folks that I watch pretty closely, and two guys that I would suggest you reach out to to maybe talk to that I think are doing amazing work would be Henry Schuck of DiscoverOrg and Jonathan Stern of ZoomInfo.

Nathan Latka

19:18And we had... If you guys wanna check out Henry, we had him on back on the December 18. That's nathanlatka.com forward slash the top five one two. They just passed $70,000,000 in ARR at discoverorg.com. Who was the second one? Scrappy dude. Who was the second... What was the second one?

Mark Godley

19:34>> Stern.

Nathan Latka

19:34Okay.

Mark Godley

19:35>> Yeah. Jonathan Stern of ZoomInfo.

Nathan Latka

19:37Very good. Number three, is there a favorite online tool you have?

Mark Godley

19:41>> So on the personal level, I use Flipboard and Stitcher daily. You'll you'll you'll appreciate Stitcher.

19:47Yep.

19:47>> On the business perspective, I use GaggleAMP to to allow our employee base to amplify our social coverage. Then Lead Forensics is one we're bringing on board who we have high hopes for to do reverse IP lookup to convert, unknown visitors to known visitors on our website.

Nathan Latka

20:05Number four, yes or no. Do get eight hours of sleep every night?

Mark Godley

20:08>> I I had three I had three daughters in diapers over a decade ago, so the answer would be no. Six hours, I get up at 5AM. I wish I could sleep on less.

Nathan Latka

20:20What's... And how old are you today?

Mark Godley

20:22>> I'm 47 years old.

Nathan Latka

20:23Alright. So last question, Mark. Take us back twenty seven years. What do you wish your 20 year old self knew?

Mark Godley

20:28>> So I actually think I've won the lottery of life. If the implication of that question is what would you do differently, I actually have no regrets. That being said, general advice I would give any 20 year old, living below your means gives you tons of options. Think about your life you want at age 50 and work backwards. We're running a marathon, not a sprint. It takes planning, sacrifice, and resilience, and then don't define success or happiness

Nathan Latka

20:56>> by your paycheck.

20:56There you guys have it from Mark Godley, CRO at HG Data. They're serving around 200 customers. They raised $24,000,000. Did 6,000,000 in 2015 revenue. We'll break the $10,000,000 mark here in 2016. CAC and ARPU and all that right now is focused on enterprise. They are moving down market to service more people with their back end data set with a team of 80 people based in Santa Barbara. Mark, thank you for taking us to the top. If

21:23you enjoyed Mark today, go back and listen to Dominique yesterday. He's a 24 year old founder, but now he's a venture capitalist at Hummingbird BC in Europe. Hey, top tribe. I love giving away free money. I feel like Oprah giving away cars, and I have something special for you today. How many of you have heard our super sharp guests talk about success they've had with Facebook and Google Ads? Well, all of you listening right now... Yes.

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