How Indicative CEO Jeremy Levy grew Indicative to $6M revenue and 83 customers in 2024.

hello everyone my guest today is jeremy levy he's the ceo and co-founder of indicative indicative aims to put behavioral analytics in the hands of product managers empowering them to map analyze and optimize the customer journey across every customer touch point with up to a billion free events indicative removes the barriers from becoming data driven empowering anyone to perform sophisticated analysis jeremy are you ready to take us to the top absolutely all right so tell us about the company um you know the obviously customer journey and behavioral analytics is a really hot space there's companies like pendo we've had on and full story and some other folks where do you play in the space absolutely so you know our our solution is fairly unique we have three main areas where we differ from the companies that you mentioned one is that we are agnostic in terms of where customers data comes from so as opposed to like ga or pendo and so on we don't care if your data comes from your website from your app in fact we are unique in the sense that we allow you to connect directly to your data warehouse number two is we provide a analytics platform that is designed around essentially providing you unlimited power flexibility from an analysis perspective we don't have templates we don't have canned reports our tools are designed to allow people who aren't technicals in our case specifically product managers or marketers to be able to form perform the type of analysis that is typically in the realm of someone with greater data skills and nathan like you mentioned a moment ago we don't charge based on data volume we can see the writing on the wall with the way cloud services are moving more and more unlimited data volumes and the price of storage is rapidly moving to zero we offer a billion user actions per month for free that's great and how many actions across all your customers are you performing today per month that's a great question many multiples of billions i don't know the answer off head okay i'm curious so i want to get more into the product but give me a general sense first the customers you're targeting so i know you have a bunch of different cohorts i'm certain of it but on average what's the customer pay per year for this sure so historically we've have supported customers who are fortune 500s down to the two guys in the garage um our our starting um our starting pro plan is at 9.99 a month so about twelve hundred twelve thousand dollars a year and then that scale reference four historically as high as a couple hundred thousand dollars a year um from the average company um the average sort of mid market to startup you know you can get away with our free plan um and then it graduates nicely into the thousand dollar a month plan okay so would you say i mean would you say like your sales team and everyone else you're really built around maybe a 12 or 20 000 acv starting point is that fair that's correct that's our entry point okay got it makes a lot of sense um all right now now give me more the back story here so you know when you say that you're not pricing around data or data volume look a lot of reason these companies have a pricing axis around data volume is it's directly tied ideally to utility right and value of the output so and it allows them to drive incredible expansion revenue year over year so so what pricing axes do you price around sure so given our background of primarily focusing on the enterprise we have a suite of features that are targeted really that only really become a factor for you once you reach a certain level of scale so on the simple side everything from things like training to single sign-on to more advanced data integrations our goal is to provide the suite of behavioral tools that we offer to everybody and then only will only worry about monetization once you reach a certain level of scale and the same similar model to what slack and hootsuite do whereas the you know they want to give you something that is really really useful for free but then only become something that you need to pay for as you scale it out and and and and you become more dependent over time and we have pricing tiers that allow you to do that without making it prohibitively expensive or difficult for you okay and when you when you say until you reach a certain level you're talking about until once somebody hits that billion user actions per month sure that's one lever you know things like additional permissions um in our free tier for example everyone gets access to see the same data there's no notion of different roles there's no notion of enterprise single sign-on these things are not show stoppers for many businesses but once you reach a certain scale from a governance perspective from a permissions perspective from a privacy perspective these are things that become more and more important data retention for example where you collate co uh where you where you locate your data be it you know different regions of the world um once you start hitting those types of uh limits that's where our features come into play that's when our paid plans come into play so jeremy it sounds like to me what you're saying is really your your upsells come from kind of additional module add-ons whether it's single sign-on white labeling domains on-site training things like that not necessarily seat based or usage-based metrics you got it we want our free plan to be incredibly generous we want our free plan to be sufficient for ninety percent of our customers no i get that i mean i'm talking about i'm talking about upgrading it sounds like it's really a module approach not a data or usage model and not a seat model you got it exactly interesting okay so how effective has that been what what what does expansion look like usually from a year one customer to their year to renewal so we've only opened up this free plan notion within the last six months historically before that we were doing primarily enterprise sales so we're only really a few months in this plan and the growth has been really surprising for us we've doubled our acquisition month over month um from when we launched this back in june july okay so just be clear you launched the whole company here in 2018 in july no no the company is about four or five years old we launched the freemium version this free version um just in july of this past year 2018. okay but just looking at your enterprise account so like let's say someone signs up for year one they're paying a grand per month your middle tier what i'm asking is that's a 12 000 acv account what do you know based off what you know about usage and you know onboarding what do you know they're probably gonna grow to in year two sure um you know uh to be honest we haven't focused on um existing customer growth in that way so you know i'm just trying to think off the top of my head um okay don't don't make it up i mean if expansion revenue revenue hasn't been a focus we don't have to go down that line of questioning i was just curious yeah so it's not if that's really not a focus sorry it's no it's not going to focus yeah that's fine okay great so launch in 2014 uh good understanding of the products and the pricing how many customers have you scaled to today um we have um several hundred customers pushing you know pushing about a thousand oh okay that means yeah pretty healthy so call nine and just be clear those are all paying not your free people no no those are those are including the free customers okay come on jeremy just the paid how many how many paid we don't share those types of numbers i knew you were gonna ask that okay well well you know why i ask it right i assume you're trying to back into our revenue well no it's for this exact reason um it's easy to say we have 20 million users but guess what you can be broken losing a crap ton of venture capitalist money and have no company with a bunch of free users so um you said you watched i'll give you a roundabout way to get there which is the company is about 15 people and historically operated at or around breakeven okay 15 people and where's everyone based in new york city okay got it and these just be clear these are all full time correct okay i mean look so if you assume a base salary i've called five grand per month which is very conservative i would say for new york city that means you got to be doing about north of a million bucks per year to be break even i'm i'm not i'll i'll leave it to you and your audience to speculate but we don't comment on those numbers yeah that's fine by the way i'm going to ask because the the tactics you give us in terms of expansion and pricing axes and things like that will mean more if they're tied to real numbers i mean look i would say actually your pricing is fairly weak because there's only one access you can upsell against you have no seat model you have no usage model that's really just your sales people if there are sales people trying to sell additional modules what does your sales org look like today it's small we're really focused around growing this free tier if you think about sort of the stage of our business although we've been around for a number of years um with this free plan with this freemium model we're really focused on the growth aspect there today more so not to say revenue isn't a focus but um it's not the primary focus right now we're looking to leverage the mouth perspective um tweaking the paid tier the thousand dollar month tier is something that um you know we have on the near horizon but not a focus today and you know i go as far as to say um the way our features and and and you know the the things that are beyond the paywall right now will be tweaked in the future but it's not the focus right now when how many years did you spend coding this another another way to ask is when did you first kind of turn on a paid option was that right at the start in 2014 or was that just maybe last year um probably around 2016 late 2015. okay is when you turn that on so so have you raised capital i mean how did you support the company when it was pre-revenue so for some context uh the original intellectual property was spun out in a previous company that i had started um that we exited meanwhile that's right okay um and then we raised um several million dollars over two rounds um um up until you know up to date okay and the those those rounds of funding was that traditional equity or did you use venture debt or convertible notes to get creative traditional equity oh it was traditional equity um interesting and then um and uh by the way my research team said about two million is that accurate raised to date uh it's it's greater than double that okay interesting i wonder why that wasn't that didn't come up in the s1 and in the in the filings okay good all right so more than four million bucks raised um that's great and then walk me through the tech that's actually interesting so this the company you exited i believe was to match.com was that was that when i think match.com i think like tinder basically was this like relationship related software first so my my background is a little bit diverse in terms of the industries i've worked in the answer is we started uh the first location-based dating company in 2006 um that you really was built for mobile first so we tracked location as people were walking around um we uh we made real-time matches with people um that was a little bit of a lab for my co-founder and i um we developed not only the intellectual property around uh indicative but we also developed what was the first enterprise crm um spun that out in 2008 to a company called extify which we exited to uh ibm in 2013. um that is now a a core part of the messaging platform in ibm's marketing cloud um and so you know we've developed both of these technologies from really businesses that we had you know we developed them really just to scratch our own itch not to say i was um well you know when we started the dating company i was single and married now but it worked it didn't work indeed i did meet my wife through uh through the company you did yes very good you got to eat your own dog food literally all right yeah that's great um churn's critical in any sas company what is your turn today and how does the you know usually when you introduce a freemium offer turn actually spike so i'm curious what dynamics you're seeing so um i'll be really direct churn is not a problem for us once customers are on board and can you and understand and learn our platform they stay basically forever given our background historically focused on the enterprise we took a heavy hand with regards to onboarding customers so where we're really focused from a churn perspective is in that sort of zero to five if you can imagine sort of a proficiency level there um getting people to become proficient at our tool is where our big focus is now once we get them over that hurdle they stay forever but getting them to become um proficient in our tool is a big challenge for us right now where we're spending a lot of time so i want to measure kind of where you're at today in terms of your ability to do that so people that actually put i'm not ignore the free people people that actually you do convert from free to pay they put in at least you know spend at least a dollar with you guys how many of you know what does that look like over the year what are we talking like 30 percent churn even including the for people that turn out and don't onboard and if we if we if we ignore the freemium aspect of the business our churn has been probably less than five percent people once they're integrated with our platform and start using as a critical piece of their business infrastructure they stay forever yeah but what i'm trying to differentiate here let's say someone puts in their credit card today starts and starts using you um what you're saying is if they start using us and get addicted to us they're going to stay forever well everyone would say that what i'm trying to measure is what people that start paying you how many of them do you actually successfully onboard so ignore once they're all hyperactive of everyone who starts paying you what is churn on that cohort annually um if we're only looking at the paid users um keep in mind the self-service asset this platform has only been out for three or four months we haven't churned a single one of those customers yet if that if that if self-service free though correct self-service free i'm only talking about once people have put in some kind of payment with you so of the cohort of people paying you what does that churn look like annually that's been less than five percent historical it is less even if they're not even people who don't get activated if you when you say activated if you're saying if we're only looking at the cohort of people who have entered a credit card and are paying us how many of those people have churned the revenue churn yeah it's less than five percent yeah so the reason i'm pushing so hard your drum is because the activation metrics that a company build their onboarding around are so so critical if you've got less than five percent revenue churn once people stop paying you're doing something really really nice here so what what do you know you have to get a new paying customer to do in the first week to make them really sticky with you so the our platform is really powerful from a diagnostic ad hoc perspective but we provide virtually nothing in the form of value in your first experience so people connect data we don't have a historical set of data for you so the value you get from our platform is fairly limited we don't provide you today unfortunately without any sort of out of the box metrics so for someone to become a a a high lifetime value customer they have to build up some initial kpis manually themselves in our platform we're working to make that more automated but someone needs to commit now or to to figure out how to build those basic kpis so that they have something to come back to that's what i'm saying that sounds like a lot of work your churn based on that should be higher yes are our are free to pay churn like i said that sort of notion of like we think about this in terms of time to value i conceptualize this in terms of your skill set with indicative when you sign up is zero yes sorry jeremy just to be clear sorry i i'm trying to separate i keep saying this i'm i don't care about the free i'm talking once they're paid how are you activating them making another there's a lot of people have had paid customers that haven't logged in for two years and they're still getting paid it's not real revenue i'm only talking about your paid plans if i understand your your question correctly nathan once someone pays us money yeah they're already ramped up they're already uh proficient at our platform no one pays us money without going through a trial no one pays us money without going through a pilot nobody pays us unless they've already reached that level of proficiency okay so just to be clear um on your pricing plan that is kind of listed under custom you've got additional things listed here like white labeling and custom domain i assume if they start paying custom you've got to do something to help them set up white labeling and custom domain to make them sticky otherwise they're going to churn right there's a bunch of things you have listed in this enterprise cohort where that don't exist in the other two cohorts that you have to actually do work to onboard them on those is that wrong that's correct we have to do work to help onboard them yes that's so that's what i'm asking right it's like in that enterprise cohort what is the most critical thing you've got to get them doing after they start paying is it helping them set up the customer name domain name helping them with the sso you know what is it it's helping them build their basic kpis in the platform it's a you know historically with our with our paid customers it's having a conversation around saying what are the objectives that you have from a customer behavioral analytics perspective usually that consists of somewhere between five to ten specific kpis whether their product kpis or marketing kpis and make sure that they can get visibility into building those kpis into a dashboard in our platform that's the big hurdle every customer no matter what tier we're talking about they need to overcome to become an engaged user it doesn't matter if they're an enterprise customer or a free customer if they can't get that initial value in the platform they'll leave yeah totally totally get that someone though paying you a million bucks per year is way more likely to leave if they're not getting value than someone who's using you for free that might continue to tinker along yeah with enterprise customers we have done everything from doing office hours where we go and sit at their office for two hours you know twice a week um where their employees can come and sit down and we can help build analysis with them you know the amount of hand holding at that level is dramatically higher cool hey jeremy i just we're actually out of time so quick last questions here um how aggressive are you being on cac so to get a new thousand dollar a month account what are you willing to spend fully waited to get that customer um almost up to five almost at the 50 of their ltv okay of ltv or first year acv first year atv yeah okay got it so you'll spend up to maybe six grand to acquire that customer uh that's you know you get paid back there then in six months yes that's good stuff all right let's wrap up with the famous five number one favorite business book um the one that i most recently enjoyed was uh never split the difference it's a negotiation book um that has been invaluable for me as an entrepreneur everything i do on a basically a day-to-day basis is negotiating something um it's a must read number two uh name under the radar ceo you're following or studying uh i'm under the radar ceo that i'm studying or following um oh that's a good question um pass all right number three what billing tool do you use what i'm sorry what billing tool do you use uh stripe and then we bill our enterprise customers manually oh wow okay uh number four how many hours of sleep to get every night oh my gosh maybe seven six okay and situation married single kids married any kiddos no no kids in hell are you jeremy um 39 take us home what do you wish your 20 year old self knew uh fire faster pivot faster um higher faster you know too slow to make decisions be more decisive guys there you have it be more decisive do everything faster launched in 2014 indicative again helping people make sense of their data streams no matter what the source is uh requires obviously you get in maybe test around with their free uh free plan then obviously convert hopefully once you hit maybe a billion events or users per month or you need one of their module upgrades like sso or white labeling custom domains or just additional custom kpis and data source integrations uh they've had some success doing this you know currently average price point called a grand per month they've got 15 people in new york city they've raised 4 million bucks less than 5 revenue churn per year jeremy thanks for taking us to the top thanks nathan really appreciate it