Founder Interview
How Inbenta Reached $14M in 2018 Revenue with 300 Customers and 120% Net Revenue Retention (Interview with Jordi Torras)
- Interview Date
- February 11, 2019
- Interviewee
- Jordi TorrasFounder and CEO
Company Metrics at Interview Time
2018 Revenue
$14M
2017 Revenue
$10M
Customers (2019)
300
Gross Revenue Churn (2018)
5%
Total Funding
$26M
Historical Snapshot
These numbers were reported by Jordi Torras during the interview recorded in February 2019 and are a historical snapshot, not current figures. See Inbenta’s current numbers.
Key Takeaways
- 01Inbenta closed 2018 with $14M in revenue, up from $10M in 2017
- 02The company serves around 300 customers across Europe, North America, South America, Australia, and Japan
- 03Average contract value is $30,000 per year on an annual subscription model
- 04Gross revenue churn was 5% annually, with 25% expansion on existing accounts yielding 120% net revenue retention
- 05Growth in 2018 was roughly half new customer additions and half expansion revenue from existing accounts
- 06Inbenta has raised $26M in total funding, including a Series A in 2014 and a convertible note in 2018
- 07The company spends 80 cents to acquire each new dollar of ARR
- 08Operating loss was $2M in 2018, with a similar loss planned for 2019
- 09The team is approximately 165 people, mostly based in Barcelona with around 20 in the US
- 10Inbenta was founded in 2005 and pivoted from consulting to software around 2010
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Year Founded | 2005 | Founder interview, Feb 2019 |
| 2018 Revenue | $14M | Founder interview, Feb 2019 |
| 2017 Revenue | $10M | Founder interview, Feb 2019 |
| Customers (2019) | 300 | Founder interview, Feb 2019 |
| Average Contract Value (2019) | $30,000 | Founder interview, Feb 2019 |
| Gross Revenue Churn (2018) | 5% | Founder interview, Feb 2019 |
| Expansion Revenue on Existing Accounts (2018) | 25% | Founder interview, Feb 2019 |
| Net Revenue Retention (2018) | 120% | Founder interview, Feb 2019 |
| CAC Ratio (cost per $1 of new ARR) (2019) | $0.80 | Founder interview, Feb 2019 |
| Operating Loss (2018) | $2M | Founder interview, Feb 2019 |
| Team Size (2019) | 165 | Founder interview, Feb 2019 |
| US Headcount (2019) | 20 | Founder interview, Feb 2019 |
| Total Funding | $26M | Founder interview, Feb 2019 |
Growth Breakdown
Revenue
Inbenta reported $14M in revenue for 2018, up from $10M in 2017. The company ended December 2018 at a $14M run rate. Jordi put 2018 growth at about 40%, split half and half between new accounts and existing accounts.
Customers
The company serves around 300 customers as of early 2019, spanning Europe, North America, South America, Australia, and Japan. Customers are predominantly medium to large enterprises paying an average of $30,000 per year on annual subscriptions.
Team
Inbenta had approximately 165 employees at the time of the interview, with the majority based in Barcelona where R&D and consulting teams are located, and around 20 people in the United States.
Profitability and Funding
The company recorded an operating loss of $2M in 2018 and planned a similar loss in 2019. Inbenta has raised $26M in total, including a Series A in 2014 and a convertible note in 2018, with investors including NTT Docomo and Scale Capital.
Growth Strategy
Expansion Revenue from Existing Customers
Roughly half of Inbenta's 2018 revenue growth came from expanding existing accounts. The company grows these accounts through increased usage, measured in sessions, and by expanding into new use cases such as internal call center tools alongside public-facing chatbots.
Geographic Expansion Driving Usage
As customers expand internationally, their session volumes increase, which directly drives higher revenue under Inbenta's tiered session-based pricing model. This creates a natural upsell path tied to customer growth.
New Use Case Penetration
Some customers grow into different use cases. A customer that uses Inbenta's technology on its public website can also use it to improve the life of its call center agents, which is a different use case.
Efficient Sales Motion
The company spends 80 cents to acquire each new dollar of ARR, investing across marketing, outbound and inbound sales, SDRs, account executives, and demos. This ratio reflects a disciplined approach to customer acquisition cost relative to contract value.
NTT Docomo and NTT Communications
Asked whether any of Inbenta's investors are also customers, Jordi said no. NTT Docomo is one of the investors and NTT Communications is a customer, and officially they are two different companies.
Best Quotes
“Most of our customers are medium to large enterprises. Average would be around the 30,000 dollars per year. That's where we are now.”
“We have today around 300 customers in Europe, North America, South America, Australia, and Japan is the market where we are now.”
“We didn't raise what we call our series a investment until 2014.”
“Today, is 26,000,000 pretty much at this point.”
“Last year's revenue was around $14,000,000.”
“Sometimes investors said, what is your churn? We said something like 5% and say, that's too bad. We're expecting a negative number.”
“25 is the increase in existing accounts. 20% is the new accounts.”
“Last year, our loss was around $2,000,000... We are planning to have a similar loss this year.”
“So let's say, adding $1 of new ACV is costing us 80¢.”
“I should have learned English better when I was studying.”
What Happened Next
At the time of this interview in February 2019, Inbenta had just closed 2018 with $14M in revenue. It lost about $2M in 2018, planned a similar loss in 2019 and was targeting breakeven in the second quarter of 2020. Visit the Inbenta company profile on GetLatka for current figures and updates beyond this snapshot.
View Inbenta’s current profile and metricsFull Transcript
Chapters
- 0:01Introduction and Company Overview
- 0:28Business Model and Billing Structure
- 0:49Average Contract Value and Customer Profile
- 1:09Product and Technology Explained
- 2:32Customer Count and Markets
- 2:47Funding History and Investor Relationships
- 5:302018 Revenue and Growth from 2017
- 6:46Gross Churn and Net Revenue Retention
- 9:30Upsell Mechanics and Pricing Axes
- 10:37Customer Acquisition Cost and Sales Spend
- 11:40Burn Rate and Path to Breakeven
- 12:34Famous Five: Favorite Book and Tools
- 13:39What He Wishes He Knew at 20
Introduction and Company Overview
Nathan Latka
00:01Hello, everyone. My guest today is Jordi Torras. He founded Inbenta in 2005 to help clients improve online relationships with their customers using technologies like artificial intelligence and natural language processing. The first beta version of the tool was released in 2010 thanks to a team composed of linguists, software architects and customer care specialists. In 2012, Jordi moved to California to continue to grow Inbenta there. Jordi, you ready to take us to the top?
Jordi Torras
00:24Yeah, absolutely. That's... That description sounds familiar to me.
Business Model and Billing Structure
Nathan Latka
00:28Very good. So talk to me about the company. Is it a pure play SaaS company?
Jordi Torras
00:32It's a pure player AI NLP company. Yes.
Nathan Latka
00:36Okay. But the way you bill people, it's monthly recurring, it's software as a service.
Jordi Torras
00:40It's software as a service, most of our customers pay yearly.
Nathan Latka
00:44Okay, So
Jordi Torras
00:44we have a budget for the whole year and that's a yearly subscription.
Average Contract Value and Customer Profile
Nathan Latka
00:49And I want get into the products here in a second, but first, on average, just to get a sense of your... If you're small business, medium business or enterprise, what's the average customer paying you per year for access to the tech?
Jordi Torras
00:58Most of our customers are medium to large enterprises. Average would be around the 30,000 dollars per year. That's where we are now.
Product and Technology Explained
Nathan Latka
01:09And then tell us about the tech, what are they paying for?
Jordi Torras
01:12Well, basically the value that they get out of Inbenta is the capacity to answer the questions of the customers of their customers online, and that way basically they alleviate their customer support team to from having to manually deal for repetitive questions from their customers.
Nathan Latka
01:33So this is a tool where I click, I'm using some software tool and I really get stuck, I need support, I click their live chat, I ask a question and they said, hey, before you talk to a live person, do any of these articles answer the question you just typed in, that kind of thing.
Jordi Torras
01:44That kind of thing, that's right. It comes with different flavors, there's like the classical conversational chatbot, but also we have more search inspired kind of applications where you you have a search box, you search your... You ask your question as a search request, you get several answers that you would click on one of these articles just as you described.
Nathan Latka
02:03And when did you launch the company? What year?
Jordi Torras
02:06So started the company a long time ago, that was 2005, and as you described at the beginning. Although it's a little longer story, we started more like a consulting business, professional services company. So it wasn't until 2010 very much that we had that idea of of building a software that would basically understand human language and give relevant answers.
Customer Count and Markets
Nathan Latka
02:32Mhmm. And what have you scaled to today in terms of total customers?
Jordi Torras
02:36We have today around 300 customers in Europe, North America, South America, Australia, and Japan is the market where we are now.
Funding History and Investor Relationships
Nathan Latka
02:47And have you kind of done this bootstrapped or have you raised capital?
Jordi Torras
02:50Good question. For many years, the company was bootstrapped, particularly during the time that we were a consulting business and we were self financed. That consulting business actually allowed us to finance the first... Very first version of of the the of the software. So we didn't raise what we call our series a investment until 2014. So way...
Nathan Latka
03:13So so how much raised to date?
Jordi Torras
03:16Today, is 26,000,000 pretty much at this point.
Nathan Latka
03:203 or 2? 26?
Jordi Torras
03:2326,000,000.
Nathan Latka
03:2426. Got it. And did you do most of this was equity or did you convertible notes or debt?
Jordi Torras
03:31We used convertible note as intermediate
03:38mechanisms to actually get some of the of the equity invested. So essentially it's equity, a little during the time there were...
Nathan Latka
03:47When was the last time Jordi that used a convertible note?
Jordi Torras
03:52Last year.
Nathan Latka
03:53Okay. And strategically help us understand why it made sense at the time.
Jordi Torras
03:58Basically regulations that some of our customers that out of the country have, so they they had to to have an investment in two phases. First, convertible note that was convertible a few months later, but that was more an approval process and a regulation than an actual and strategic decision.
Nathan Latka
04:15So some of your investors are your customers?
Jordi Torras
04:18No. Well, you know, we have NTT. NTT Docomo is one of the investors today, and NTT Communications is our customer. So officially, are two different companies, although all part it. Right.
Nathan Latka
04:31Who who couldn't just put in the money directly? Who had to go on a convertible note and because of regulation, they had to wait for it to convert to equity?
Jordi Torras
04:37Scale Capital, investor out of Chile.
Nathan Latka
04:41And why was that? Why does the regulation prevent?
Jordi Torras
04:45That particular investor is is partially funded by a government organization that takes longer to approve some of the some of the proceedings and that that we use this this mechanism.
Nathan Latka
05:01Got it. And talk to me about the team today. How many folks?
Jordi Torras
05:05We are around a 165 people today.
Nathan Latka
05:09And where's everyone based?
Jordi Torras
05:12Well, most of the employees that we have are based still where a company was created in Barcelona, because there we have our R&D, our consulting teams, and then we have around 20 people in The US.
Nathan Latka
05:26So Barcelona and remote?
Jordi Torras
05:28Correct. That's right.
2018 Revenue and Growth from 2017
Nathan Latka
05:30And then, know, I wanna understand more about growth here. So I mean, can I take 300 customers that you said earlier times the other figure you gave earlier, which is a $30,000 ACV, that would put you right now at about $750,000 a month in terms of monthly recurring revenue? Is that about right?
Jordi Torras
05:44Our... So the average... If you take the average...
05:49Yeah. Last year's revenue was around $14,000,000.
Nathan Latka
05:53But what run rate did you end at in in December 2018?
Jordi Torras
05:5714.
Nathan Latka
05:58You ended at a $14,000,000, so you're at what like $14.02 or three today, something like that?
Jordi Torras
06:02Correct.
Nathan Latka
06:03Yeah. Yeah. And then take me back a year before that, where were you a year before that?
Jordi Torras
06:07It was around 10,000,000.
Nathan Latka
06:09Okay. Good. So you basically went from kind $830,000 a month to kind of 1,100,000 a month over the span of twelve months.
Jordi Torras
06:15You are fast computed divided by 12, man.
Nathan Latka
06:17That's good, man. Okay. Good. That's good. It's good growth. What did most of that growth come from the new customer additions or expansion revenue on older customers?
Jordi Torras
06:26Last year we had a good expansion on our existing customers.
Nathan Latka
06:26Okay.
Jordi Torras
06:26So it was basically half and half.
Nathan Latka
06:35Oh good. So if you look at your full growth, the extra $400,000 you added in ARR and MRR, you're saying 50% was upsell, 50% was new additions.
Jordi Torras
06:44That is correct.
Gross Churn and Net Revenue Retention
Nathan Latka
06:46That's interesting. Okay, breakdown you know expansion revenue can be a beautiful thing especially if it's covering up churned revenue on that same cohort. What is your gross revenue churn look like annually and then and then what are you upselling to fill the gap?
Jordi Torras
07:01We have at this point what we call a negative churn so in other words our up sales...
Nathan Latka
07:10They cover your churn.
Jordi Torras
07:12Cover the return today.
Nathan Latka
07:13Totally get that. I'm asking you to peel back the onion there. So so what percent, so if you have a net negative churn obviously what drives that negative is up you have a lot of upsells, but if you ignore upsells, what's just gross revenue churn annually?
Jordi Torras
07:26Oh, that will be for the last year that will be around 40%.
Nathan Latka
07:3040% gross revenue churn?
Jordi Torras
07:33Yes.
Nathan Latka
07:34And what was expansion over the same period?
Jordi Torras
07:39Oh, you mean that the... So 40%... Let's say 20% was expansion, 20% was was new new accounts. Does that make sense? So the 40% growth is half half divided between new accounts and existing accounts.
Nathan Latka
07:51Yeah. Sorry. I'm trying to get it. What is your gross revenue churn over the past twelve months?
Jordi Torras
07:56Gross revenue churn churn churn. Right? Yes. That's around 5%.
Nathan Latka
08:01God, was gonna say there's no way it was 40%, you wouldn't have $26,000,000 raised. 5% gross revenue churn annually and then that same that same cohort that signed up a year ago, what are you expanding them by like 10, 20% or what's the number?
Jordi Torras
08:16The expansion of the existing customers.
Nathan Latka
08:18Yep.
Jordi Torras
08:18So that the... Let's say the the growth in existing accounts.
Nathan Latka
08:23Yep.
Jordi Torras
08:24Right? Sometimes referred as negative churn. That will be around 20%.
Nathan Latka
08:28Yep. And just to be clear, you can still have growth in a historical cohort, but still have churn and not have net negative churn. So so the reason I asked that number is if if you have 20% expansion, and right, and you have 5% gross revenue churn, that means you essentially have net negative 15% or said differently, net revenue retention of 115.
Jordi Torras
08:49So okay, five is the churn.
Nathan Latka
08:51Yep.
Jordi Torras
08:5225 is the increase in existing accounts. 20% is the new accounts.
Nathan Latka
08:57Yep. Perfect. Yeah. So you have you have a 120... You basically have a 120% net revenue retention.
Jordi Torras
09:02Correct.
Nathan Latka
09:02Yeah. Which also is set as net negative churn.
Jordi Torras
09:05Exactly. I... I'm sorry. I heard at least five different definitions of churn.
Nathan Latka
09:11Everyone has... By the way, you're not wrong. Everyone has a different definition. That's why I always ask.
Jordi Torras
09:16Yeah. Sometimes investors said, what is your churn? We said something like 5% and say, that's too bad. We're expecting a negative number. So well, you ask me about churn, not churn plus. Expansion. Expansion.
Upsell Mechanics and Pricing Axes
Nathan Latka
09:30Yeah, no no no. This is a healthy business, 5% churn, 25% expansion, 120% net revenue retention. The 25 expansion, help me understand what pricing axes are your sales team upselling against to get the 25% expansion?
Jordi Torras
09:44So a couple of things. One is just usage. So some of our customers move international that creates more sessions, more usage of our technology.
Nathan Latka
09:53But usage based off what? It's location based?
Jordi Torras
09:56It's sessions, what we call sessions. So you go to this... Our applications as a final customer. You ask a question. You start that session. We charge at the end of the day based on tiers based on these sessions.
Nathan Latka
10:09Got it.
Jordi Torras
10:09Now, you know, moving to another territory, we'll add more traffic, therefore, more sessions. In some other customers, we've been able to grow into different use cases. So let's say you have use our technology on the public website, but then you say, hey, I can use Inbenta also to improve the the the life of my call center agent. So that's a different that's a different use case as well. So so kind of a different use cases plus
10:36geographic extension.
Customer Acquisition Cost and Sales Spend
Nathan Latka
10:37That's great. And then how aggressive are you being, Jordi, in terms of adding a new customer? So if a new customer is worth $30,000 in year one ACV, are you willing to spend $30,000 to get the customer?
Jordi Torras
10:47That's what... When it comes to cost acquisition, right, and all and all that. We are into the 0.8 at this point. So
Nathan Latka
10:57terms of payback period?
Jordi Torras
10:59Yeah. So that would be in that $1.
11:04So let's say, adding $1 of new ACV is costing us 80¢.
Nathan Latka
11:11Yeah. You're putting an 80¢ in the machine and you're getting $1 of ARR out.
Jordi Torras
11:16That's right.
Nathan Latka
11:17Yep. Which would mean for a $30,000 ACV account, you're willing to spend up to call it $25,000 to $26,000 bucks to get it.
Jordi Torras
11:23You're a fast man.
Nathan Latka
11:24Yeah. Yeah. Very good. Where are you spending that money typically? Is it sales commissions or any direct paid stuff?
Jordi Torras
11:30Well, we put in all that cost of marketing, outbound sales, inbound sales, SDRs, account executives, demos, the whole the whole thing.
Burn Rate and Path to Breakeven
Nathan Latka
11:40Mhmm. And then how aggressive are you being in terms of in terms of just capital in general? So you've raised a bunch, assume you're burning capital to grow. I mean, we talking $100,000 a month burn or $500,000 or less?
Jordi Torras
11:52Last year, our loss was around $2,000,000.
Nathan Latka
11:52Okay.
Jordi Torras
11:52We are planning to have a similar loss this year. Which is...
Nathan Latka
12:04That means you're burning about a $160,000 a month net burn.
Jordi Torras
12:06Man, you are you're good at dividing by 12.
Nathan Latka
12:10Good. Well, I just... I like to break it down on monthly. One thing I learned during the podcast is you can't... It's hard to switch different metrics between monthly and annually. It's just better to stick with one. So... Yeah. Two two million loss, 2,000,000 loss again this year as you look to scale. Do you see breakeven in your future or no?
Jordi Torras
12:25That's what we plan to have second quarter next year.
Nathan Latka
12:29Okay. Good. Okay. So call it a year, maybe a year and two months away, something like that.
Jordi Torras
12:33Correct.
Famous Five: Favorite Book and Tools
Nathan Latka
12:34Good stuff. Alright. Let's wrap up here, Jordi, with the famous five. Number one, what's your favorite business book?
Jordi Torras
12:39My favorite business book is a book called
12:45Whale Hunters.
Nathan Latka
12:47Whale Hunters.
12:48Good. Number two, is there a CEO you're following or studying right now?
Jordi Torras
12:55Yeah, all the CEOs that are part of the portfolio. Number one.
13:02Can't.
Nathan Latka
13:03Okay, number three, what's your favorite online tool for building the company?
Jordi Torras
13:09My favorite online tool to build a company is our own tool we use.
Nathan Latka
13:14Beside your own.
Jordi Torras
13:15Which is a combination. Alright, that's gonna be Salesforce then.
Nathan Latka
13:19Number four, how many hours of sleep do get every night?
Jordi Torras
13:25Gotta be something around average seven.
Nathan Latka
13:28And what's your situation Jordi? Married, single, kids?
Jordi Torras
13:30I am married. I got one son and three... And two daughters.
Nathan Latka
13:34Okay. So three kids and how old are you?
Jordi Torras
13:37I'm 50.
Nathan Latka
13:3850.
What He Wishes He Knew at 20
Nathan Latka
13:39Last question, what do you wish your 20 year old self knew?
Jordi Torras
13:42What would my what? What's the question?
Nathan Latka
13:45What's something you wish you knew when you were 20?
Jordi Torras
13:48Oh,
13:52I should have learned English better when I was studying.
Nathan Latka
13:57Learn English faster. English sounded good today guys, again launching... Launched this company Inbenta back in 2010, now 300 customers paying $34 a month doing 1,200,000 a month right now from $800,000 a month just a year ago. They are... They have raised $26,000,000. They're burning call it $2,000,000 annually right now about a $160,000 in net burn per month. Team of a 165 people in Barcelona and other remote locations. 5% gross revenue churn annually, but 25% expansion. So
14:25120% net revenue retention spending 80¢ to get a new dollar of ARR. The economics work again, are helping customer support teams be more efficient with their automated intelligence and artificial intelligence platform. Jordi, you for taking us to the top.
Jordi Torras
14:39Thank you so much for your time.