How Hyprbrands CEO Gil Eyal grew to $8M revenue and 200 customers in 2017.

hello everybody my guest today is gil ayal he is the ceo and founder of hyper the world's largest influencer search and discovery directory he founded it in 2013 and the brand and the the company now offers brands and marketers in-depth audience analytics for over 10 million influencers across major social channels he's really revolutionized the way that many of the world's biggest agencies and brands are running influencer marketing by focus on the same data analytics and audience demographic information relevant to any other form of marketing the company boasts a client base of over a hundred of the fortune 500 brands as well as the biggest advertising and pr agencies in the world gil are you ready to take us to the top hey good to meet you nathan you're excited you're giggly either because you've had a lot of coffee or you're just excited to see me which one is it it's a little bit of both uh it's 4 p.m over here so i've had probably six or seven cups of coffee already all right so we i think people are very when they hear influencer marketing there is definitely preconceived notions right so how do people know you're the real deal kind of not like those people that are you know social media consulting companies yeah i think the biggest um misunderstanding is between fame and influence and i think most of the people in the industry don't even understand it there's a really big difference between being famous and being influential i'll give you the example alicia keys the face of blackberry she's famous a lot of people heard about it but they don't necessarily respect her opinion about which smartphone should they be using you take a channel like unbox therapy the guy talks about phones talks about digital all the time he's the face or he's not space but he talks about samson uh whatever next phone they have people respect his opinion he's influential he might not be as big as she is but he's really influential and people look at him to make a decision you should think about it the same way as you you look at decisions in your life if you want to choose which movie to go to you're going to ask a friend that's influential that in your opinion about what movies are good you're not going to ask a famous actor which movie to do it so influencer marketing there's a very very fine difference between those two it's easy to overlook because it's tempting to go after people who have really really big audiences and just hope that they perform yep okay so how do you get rich what's the business model how do i get richer out of the influence how's it how's it well actually give me both but what's the business model first so the business model for hyper is that we have a subscription fee we have a a database of about 10 million influential people we track about a billion social accounts on a weekly basis to see what they're talking about who they're following and what topics are the ones that um they engage with in order to understand in real time who online are the micro people not the really big not the kim kardashians of the world but who are the small people are influential in every niche so um if you have uh if you're trying to sell a product in the beauty space you want to make sure that you're talking to an audience that is interested in beauty you're not going to want to hire a bikini model on instagram yeah she has a big audience yeah she's female she has a pretty face but probably most of her audience is men and our system allows you to find the ones that actually have the right audience the second component is the real time if you want to sell to women who want to get pregnant if you missed by six months meaning if they were talking about getting pregnant six months ago they're not interested in your products anymore they're not buying uh strollers or pacifiers or whatever it is that you're trying to sell so it's all about understanding who's really influential at that point yeah who's paying you is it the influencer or the brand so we have no connection to influencers at all we made a decision to only work with brands and agencies so that we can always be um on one side we'll never ever be a suspect of oh you recommended this influencer because they pay you influencers cannot log into our platforms they cannot access their own data you don't have any marketplace issues you didn't have to build both sides yeah and as a former product manager i know what compromises that requires as a product manager if you have two clients they're never always going to need the same product right so one of them is going to want to see certain things in other words exactly the opposite and brands want to pay the least and influencers want to make the most it doesn't really work together we decided we only work with the brand how are those brands paying is it per campaign is it a sas model what is it completely a sas model they pay us uh an annual uh 95 of our clients have an annual or longer contract what is the size of that on average would you say first year first year contract usually so there's a big variety they vary between twenty thousand dollars a year up to uh about half a million dollars okay wow okay that's a huge variety and what drive what drives that variety is it literally how many impressions they want from this influencers you bring to them or what so we don't bring the influencers it's a discovery tool that allows them to reach out to as many influencers as they want but it's limited based on different uh characteristics that they want for their particular uh product if they're an agency and they want to co-brand it or white label it there's an additional fee if they use an api there's some additional fee based on how many searches and how many results they want if they want to reach out to a thousand influencers opposed to 10 um obviously it's a different package so you have a few different levers that allow you to drive expansion revenue one is just the pure feature set what do you want to turn on and off the second is number of kind of people in our database will expose you to that you can make then a choice on and i mean you have a seat model as well or no yeah yeah yeah so if you have an office if you have a firm that has uh multiple offices typically buy one subscription and then additional seats for each office uh which comes out for less than buying separate subscriptions to each one okay give us more of the back story here now we get the business and the customers when did you launch this thing so i launched this about four and a half years ago before that i was working at a company called mobley was a photo and video sharing platform um before instagram and the strategy that i had was let me get a lot of celebrities on this thing and they'll um create content and then their audience is gonna come which sounds like it makes a lot of sense but it didn't work the way that i wanted it to work even though i was able to get um instagram what did they see that you didn't well here's what happened so we got inv so celebrity investors like um leonardo dicaprio toby mcguire serena williams how much sorry how much did they put in a lot of money and millions millions of dollars and um we had in addition to them we also had about 200 deals with their own celebrities but they weren't driving the kind of traffic that we wanted as a marketer at heart i realized i wasn't reaching the right demographic for this product i was trying to sell the 14 15 year old teenagers with um celebrities that appealed to a very very very wide variety of an audience and i realized i would never advertise in a magazine without asking who reads this magazine i would never advertise on a tv show without knowing who watches it why would i work with a big celebrity without knowing who their audience is so i decided to build this tool that can can break down the audiences based on demographics psychographic data and what i realized was that i was paying a lot to get 200 celebrities on my platform and most 90 of their audience was never the audience i was trying to reach and that's a big issue that's what led to the birth of piper because i realized everybody's going to be wanting to activate these younger these smaller influencers these social media stars and if they don't know who the audience is and what they're interested in a lot of money is going to go away so how much have you raised to date we've raised about 8 million so far and why'd you decide to go that route when you're when you're when in your first company you raised from celebrities it didn't pan out so well um i i think the issue with raising with celebrities uh was that it created a lot of attention to the company at a stage where it wasn't ready for it we were driving uh we built an app where a bunch of people built an app and didn't expect to get 20 million downloads over you know a three or four month period and we couldn't handle it uh the app was crashing it wasn't good enough instagram had popped up there were better alternatives so the the publicity that comes with these big celebrities is great but it was the wrong audience that wasn't staying on the app and it was too much for us to handle as a company we decided to go traditional venture capital road with hyper because we didn't think it would benefit from a relationship to celebrities we didn't want to be associated with the influence so we wanted to be associated with a professional brand uh an agency side and what do you have today in terms of total customers using you we have about 200 customers today okay um primarily um fortune 500 brands and big agencies yeah you mentioned in the in the intro i think you said 100 of the fortune 500 right yeah 140 500 and then about 100 agencies 100 white agencies agencies got it interesting and and what's your team size today we have 35 people uh in total 11 in israel and 23 24 in the us are you ex-israeli defense i am but not the traditional way i was a computer crimes investigator wow um which sounds really exciting for people who saw the net and all these kind of movies but that was back in 1999 computer crimes weren't as sophisticated as you might come don't ruin it for me your cool factor just went down all right okay okay that's helpful to understand help me to understand how you're landing these customers these are high i imagine high touch you know high kind of contract value kind of customers yeah so we we all come from everybody in my company comes from a background of growth hacking and you know the first thing we did is we built this crawler that looks on all social media platforms and sees who's running influencer marketing campaigns then we evaluate the campaign and we send them a free report and the report will say not oh you suck it'll be listen great campaign here are some things that we could have helped you do better and that has a you know tremendously effective uh conversion rate because you're giving me value you're giving them value immediately yeah and look even if they're not the right client for us at least they become a champion because they say okay i know what i can do next time to do it better um so it's been a very effective channel for us we have a small sales team of five people that um will follow up once somebody's received the report and expressed interest in um exploring working with us so take those five plus all your other tech dedicated to getting the sale plus any direct paid spend you get what do you assume kind of fully weighted cac is so uh oh cost of acquisition or customer i know exactly what it is it's around twenty thousand dollars and and why do you say that with such confidence is that something you look at every day yeah we look at it every day we're a venture capital funded company we have to do uh reports we're very very um reports i can tell i i that i like them or i don't like you love them you you already really depends on what they say i mean they say i'm doing well i love them um you know you can find answers to anything you want to match what you think in data you just have to look hard enough so long as you're in charge of asking any questions the report will be fine as long as you're in charge of the data of where the data is coming from right exactly and what do you like to optimize for in terms of payback period um so we currently have about an eight eight-month payback period i think that's great i don't think that's going to be uh sustainable long-term but we'd like to keep it under a year typically our contracts are annual so we'd like to at least recover cost and we have a very good um return ratio so we start making money on the second year yeah i was gonna say so so if you're spending 20 grand on cac and your payback is eight months that means your average kind of first year contract is what about 25 30 grand finally more than 30 yeah a little more than 30 grand and then what do you do you know i mean it's a small cohort of 200 customers but it's obviously high vol obviously high value do you know predictably what you're going to drive expansion revenue from between year one and year two and year two to year three yeah we see it we see it in two channels and one is the kind of land and expand so a lot of the brands that work with us will then bring in their umbrella brand so if we work with say one of the png companies or we work with one of the shacheno companies then they'll introduce us to the umbrella and look at a package for the entire deal that's brought us clients that started at the 20 000 package and now we're paying you know close to 200 000 or sometimes more um the other one is just new customers i mean 200 is really a drop in the bucket compared to where this market could go we think influencer marketing is the next big thing and we see tens of thousands of companies participating in it not all of them can afford our price but we want to eventually offer smaller uh country related packages or location related packages that are more affordable so there's growth on the new customer side as well and we're running out of time here guild but what do you assume lifetime value is on these guys we expect you know for projections we take three years but based on current retention we expect about six to seven years six to seven years and what is that in terms of a money figure yeah it's about 150 to 200 000 okay in terms of value okay so you mentioned that you had some contract values that are like 500 grand annually those are really outliers you're more kind of one or two yeah one or two okay so have you broken the 10 million ar mark yet are you gonna hit that this year you think almost so close you're really do you think you got 30 days left in the year you think you're gonna break it this year you'll have to come back on okay so is it fair to say you're doing between nine and ten right now uh we're close we're close all right that's fair enough um okay good and then churn are you losing customers uh so what you know on a logo basis every once in a while you lose customers the biggest thing is is how did you qualify them when you got them we find that when we lose customers a lot of times it's because they no longer spend on influencer marketing or the person who is our champion champion left which is why we decided to focus on these bigger customers these uh away from the smbs and into the enterprise um on a dollar per basis every single quarter is a is a negative term meaning we get more dollars from the remaining customers than we lost but we will lose a logo every once in a while you have um um there's a learning curve as a young company this product's been around for about a year and a half it's still um we make mistakes sometimes and bring on customers that aren't the right fit yep and then can you give us a sense of growth so like today you're doing call between 630 and 750ish in mrr what were you at the same period last year about um 15 of that you were at 15 percent of that total number so oh my gosh you've like five six x yeah that's exactly that's incredible what was that what would you credit the number one thing i mean is it is same customers but more wallet share or more customers or what no i think it's it's a combination of a few things i mean it's a higher uh sale price because the product's much better it's a better product um so we can sell it to a better type of client and it's an expansion within the clients so many of our clients now you know came in at the smallest package now pay three to five times as much as they did incredible and it's a lot easier to sell a client um somebody's already a champion of your product than a new one yeah i want to make sure i got this right just to make sure i'm not going crazy here you're doing about a hundred grand a year ago now you're doing well you know say over 600 grand each each month that's great okay let's wrap up here with the famous five number one what's your favorite business book uh buzz marketing it's a little old marquees number two is there's is there a ceo you're following or studying elon musk but who isn't yeah yeah yeah all right number three uh what's your favorite online tool besides your own my favorite i love uh hubspot it's a great tool that's how we do all of our outreach um killer number four how many hours i sleep to get every night i get about four because i have a 20 month old and a six year old oh man and a company so holy mackerel so married two kids married two kids yeah and how old uh 20 month old and six year old sorry how old are you oh i'm 40 years old i was going to say you're not 21 you're not 21 all right last question gil take us back 20 years what do you wish your 20 year old self knew so you know i spent 10 years working as a corporate lawyer people don't really know that um so if i had two pieces of advice to that 20 year old is one is you don't have to stay a lawyer just because people want you to or it's this golden cage you can go do what you love and two would be lay off the hair gel [Laughter] there you guys have it from gil you don't have to stay a lawyer just because everyone wants you to do and he would have used a little less hair gel but listen something's working he's he's eating something for breakfast it's working because just a year ago his company was doing 100 grand a month recurring revenue now almost you know hopefully breaking 910 million in ar here shortly helping 200 brands and 100 of the fortune 500 companies do and basically do it at scale influencer marketing but he's avoided which i think is genius avoided the marketplace problem he's just serving up the data set letting them choose launched in 2013 raised eight million dollars with his team of about 35 people in israel and new york city economics with healthy gil thank you for taking us to the top thanks for having me