How Host Analytics CEO Dave Kellogg grew Host Analytics to $45M revenue and 700 customers in 2017.

had a lot of success joined host analytics in 2014 right when they were doing you know much less than they're doing now they're now serving over 70 customers eighty-five million dollars or raised Skol between a forty and fifty million dollar run rate so far ASP around 70 grand they're studying 100 ran to get those customers again they're really focused on bringing the the really financial departments of these companies to the cloud and online right now only 5% of really folks have done that so he is in a time machine they are doing a very very well boat team of a team of about 300 folks scattered between India and the United States his secret to growth I love even the stickers this 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 your host Nathan many of you listening right now don't have time to listen to every b2b SAS CEO that I've interviewed if you want to get access to the database I've created with your your growth rates customer counts margins and many many other data metrics and data points you can go to g ET la TK a.com here's the thing though and this is that database I keep it to myself it's so freakin valuable and to preserve the quality of the data and make sure that the people that have access to it have a true advantage I'm only letting 10 companies on each month so we're full this month but you go to get black accom to get on the waiting list for next month and look there's the big people on the waiting list I mean the biggest PCs you've ever heard of you've probably heard of them they're big private equity billions and billions under management so it's an impressive waiting let's go get on now it gets black accom this is episode 778 coming up tomorrow morning I talked to the CEO of Foursquare you've heard of them and I broke down I said Jeff break down the transition from hot consumer social network to enterprise b2b SATs data company this will surprise you but you've actually used Foursquare in the past 24 hours even if you didn't realize it and know everybody my guest today is Dave Kellogg he has more than 20 years of leadership experience at high-growth companies his experience includes being CEO of MarkLogic CMO of Business Objects and member of the ask data board of directors he's also served in advisory roles to MongoDB developer 10gen had apt and tableau software prior to joining host analytics as CEO that's what he does obviously today he served as senior vice president and general manager for service cloud at salesforce.com overseeing one of the company's fastest growing businesses previously he spends six years a CEO of MarkLogic growing that company from zero and revenues to an 80 million dollar annual run rate before that again who is that marketing and business objects for nearly a decade as the company grew from 250 to 4,500 people and from 30 million to over 1 billion in annual revenues buckle up folks it's gonna be a good one Dave are you ready to take it to the top all right so you kind of quite a background here I could focus on a lot of different things but kick us off with your current your current challenge you're going after what is host analytics and how do you make money sure host next is a SAS company that is disrupting the space for enterprise performance management in plain English that means we sell software to corporate finance departments to help with financial planning and analysis you name a few other companies that you would say are kind of in this space just to get more context sure the the primary vendor back in the day was Hyperion software that got acquired by Oracle so they ruled in the on-premises era and then if you look at other cloud vendors you might find people like anta plan or I assume you're probably not doing any on Prem stuff are you strictly a SAS model basically means literally Davis known as overall is hiking out to the location setting up a little this little little server controlled climate-controlled room and installing these things manually Dave's not doing any of that right Perley SAS model and what are the levers Dave that you're using to determine kind of what pricing category customers fall into is it like you know API calls number of ledger entries per month with one of those unit economics yeah it's a tricky space for that because corporate finance departments don't actually scale that much with the size of a company and the number of users of our kind of software actually varies much more with the corporation's centralization philosophy and some big companies are super centralized and only four or five people make the plan and some little companies will empower it 200 people with budgets and they all need to use the software so our pricing model is based on a fixed base fee plus a per user fee to join interesting okay what's the fixed base fee [Music] number employees etc okay got it and then sorry I was thinking about the fixed base and forgot the second part you said so then then the monthly recurring is per user user yeah they're actually both recurring and there's a base fee plus a per user fee and that will vary as a type of user you are you know are you the VP of financial planning in which case you're using just about every function and the product or you the VP of Marketing is just entering a budget see you said is recurring I assume that 25 to 50 K is that a monthly recurring our annual what is the per user fee on average annually for a light user might vary from couple hundred bucks to give us a big range there so call it a hundred up to a couple thousand and then who are the so no we could have more that back story take us back to kind of your story you've seen a lot I mean you are a sales force during the gross guild days you know those kind of days why decide like when did you exit that world and jump into host analytics sure so I joined host a little more than four years ago and for me it was jumping back to the startup world so I'd run MarkLogic as a startup really from zero revenue up to an 80 billion dollar run rate what happens to try to be a general manager marklogic when I left the company right now still private it's still doing very well the unicorn round a few years ago so I basically passed the reins off to somebody who then passed the reins to a guy named Gary blue they raised that Unicorn round valuation that's great so how do you how did you for somebody right now in that position we have a lot of sophisticated I listen to this they're in a company they've helped it grow significantly their options are already vested how did you exit that without having to worry about like call back on your options or any kind of crazy stuff like that and this is a function of your capital and when you join the company but it's an argument for joining startups early where you have a very low strike price if you could do like an 83 be reversed exercise then even if the stock appreciates a lot if the business conditions are correct for you to leave you can leave without the complexity of having to deal with alternative minimum tax or needing to sell shares and the second area kind of almost definitionally opaque secondary market so the strategy that I'd recommend and I generally follow is to try and you know in tranches 83-b exercise your options we need when you do that that does shelter for like well I'm trying to get a sense of when you take the tax it on the Delta between your struck you know your exercise price in the strike price right and if you do this 83 be reverse exercise you minimize that for example then the degenerate case is on day one you exercise 100% of your options so the so the basically the FMV equals the market value right the fair market value equals the strike price because you don't know if those are actually gonna be valuable over time which is why people don't do that you have lost the optionality right so if you join a company where it's 4 bucks a share well that's a hard nut to crack which we can join a company very early phase where it's a Nikolas share 10 cents a share it's an argument for things early phase okay I cut you off because I wanted to hear what happened with Mark logic how you got out of that so continue the story there what happened after Mark logic I wanted to find another startup to Ron I looked at you 104 different opportunities over the course of 10 months I met with two to five people a day for 10 months just networking good idea to do that but I actually just did it on my own just kind of tracing through my network meetings for entrepreneurs founder stretch of capitalist angels I was actually somewhat amazed that I was able to keep doing I think I could have done for another year frankly without running out of network it was really amazing it was a great time for me but in the end I had some buddies at Salesforce was like hey come be a general manager we got this great product to service cloud so it's our second biggest product at the time and I thought what the heck one of the things you know I have 10 years of CMO experience I have ten years now CEO experience I've never actually been a GM at a big company so I thank you that a try I enjoyed it I love Salesforce I mean Salesforce does some of the best people I've ever worked with so so I had a great time at Salesforce I learned a lot about sass and Salesforce learned many many things there so it was...