How Infoscoutinc CEO Jared Schrieber grew to $30M revenue and 184 customers in 2018.

all right good morning everybody my guest today is Jarod Schreiber and he's the co-founder and CEO of a company called info scalp where he leads that startup that has fundamentally changing the way brands understand and engage consumers in a 21st century previously led research product and services for retail solutions where he shaped how 500 plus CPG companies leveraged POS data to improve sales and execution at retail during his tenure the company was recognized by AMR his storied past includes a few hacks at MIT co-founding the Pat Tillman foundation throwing a job when I'm playing Australian rules of football Jared are you ready to take it to the top all right what's coming out commonality between Australian rules football and the info Scout business model holy cow we're aggressive I was doing that without a doubt we take no prisoners there are no sacred rules that we follow unlike many of the traditional incumbents that have been around for 50 years in the market research industry I'd say we're pretty ruthless by comparison I like that okay what's the company doing how do you make money is it a peer place ass it is not a pure place ass we have a very big project and services based component that is how we get started with clients it creates a low-cost way to prove the value of what we do and then we use that to fund our sales cycle into the account to actually sell them on an ongoing subscription so we actually use projects and one-time project based revenues to fund the sales cycle of a ongoing subscription and generally if you look back at 2017 total revenue what percent was from kind of the professional services versus what percent was from the ongoing recurring yeah I'm going recurrence about two-thirds of our revenue and project or about one third that's actually I mean it's pretty healthy so let's we'll circle back to how the project stuff helps you onboard customers and they pay you basically for it but for now let's just focus on the SAS component when people pay you a monthly kind of sassy what are they getting yeah so typically it's around $250,000 entry on an annual basis so annual subscriptions they're getting 10 licenses for access to insights platform that allows them to ask questions of consumer behavior where are people buying a particular category of product are they loyal to a particular brand how much do they respond to a promotion which brands do they switch between those are the kinds of questions they can answer through our platform and generally speaking about how many customers do you have on that sass platform yeah we're supporting a hundred and eighty four different brands right now on the platform okay now I mean can I can I multiply kind of the ARPU you just gave me times 184 to assume you guys are doing about 3.5 a month I wish I wish were that that big we we surpassed 30 million this last year okay well what do you mean you wish you were that big that's that that was accurate sorry you know that's 184 bucks times that price point of about 250 grand a year right or they're paying about 21 grand a month that puts you at about 3.5 million a month and Mr R which is a little off but still it's close it's about 30 million yeah yep now how are you guys I mean what does growth of like year-over-year in other words what were you at about 12 months ago at the end of December 2016 yeah we're more than doubling on a year-over-year basis and that's impressive how are you driving that growth oh well what we built a product that not only zero-turn associated with it but those customers subscribe to more modules and it has more users to those modules on a year-over-year basis so our net revenue retention is a hundred and eighty nine percent from existing clients so it's more about growing business with existing clients that it is landing new ones guys so you're very much in the net negative revenue a kind of churn at this point you got it I have been day one okay okay interesting and when was day one they want to go to markets in terms of starting to sell subscriptions was April 2014 and why did you go that route usually agencies tend to go the SAS model when they start thinking about raising capital they realize they get a better valuation if they have a technology component oh boy well I would say my co-founder and I thought we were building just a data business to start or at least a data and software business and what we quickly realized is there had to be a decent services component and project-based component up front based on how our customers were going to buy what they expected from a service provider in this space I think Nielsen and I arrived ease billion dollar-plus incumbent to trained and trained the market on what to expect and what to buy and and so we couldn't just walk in with a software-only solution start god it's a 2014 is when you launched kind of a SAS pot from when did you launch even just to professional services stuff only about seven eight months prior so ok yeah well it was a long time prior we started with some projects got some wins and that was enough to convince a compromise to make it bet on us with with an actual software product and what's the team size today 145 and then we're guys all based mainly so we've got about 60 in San Francisco about 30 in Chicago 20 in New York and the rest spread out all over the country wherever our clients are in sales and services roles interesting now take me back to kind of the first few months how did you land the first customer what was that first first strategy yeah well we went to going to a trade conference really and which one in front last networks oh my gosh I think it was like shopper insights in action it was so specific to our particular particular field of understanding shopper behavior and shopper insights and just started networking talking to folks tell them what we were building and you know one of those handshakes led to a follow-on meeting which led to a first project and I think all of $3,000 in revenue do a survey of our panelists and six months later they were signing up for a four hundred thousand dollar subscription what was first total first year revenue back in 2014 do you remember how little it was but you know I'd have to count the 2013 we ended up doing about two hundred thousand dollars and then 2014 our bookings were actually four and a half million so we we really hit the gas and our first year of actually selling any type of capability or solution that's one Kaymer went from almost nothing in revenue to for an athlete a booking recognized revenue was probably only around two got it so you were selling some kind of two-year contracts no it was one-year contracts but if we sold them late in the year we only had maybe a month or two to recognize revenue on them I see I see got it so two and a half recognized four and a half booked ish I mean it's incredible growth what would you I mean I don't take this as a job but you're an engineer you're MIT I mean how did you drive those early sales you bring on a sales person earlier yes idea that fortunately I think some of my prior roles I picked up a little bit of a sales habit myself but I brought in a sales exactly would work for me before at a prior company and he just lit it up that's exciting now what percentage of your team today is dedicated to sales well we've got about 35 quota carrying sales reps today between a little bit inside sales mostly direct outside sales in the field and when you take a new account you're paid spend plus their salaries to generate your fully weighted CAC what are you spending right now to acquire customers oh let's see here we are spending you know it's interesting terms acquire customer right because that could be a project customer at $10,000 if you will let me just do the math and get it right here every time I want it I want to say it's about 25 to 30 thousand dollar customer acquisition cost well if you've got customers paying you 250 grand a year on the sass platform that's about 20 grand a month I mean you're getting your payback in less than two months still right it's fast once we get them on the platform the reality is we end up with a lot of project work for the first six to nine months so it's not as clear in terms of what that payback period is but the math works out quite well at the end of the day we've been a project work if you're billing a five grand or 10 or 20 grand project obviously that helps to recover CAC pretty quickly yeah let's shed some light on that for a second you're upfront kind of professional services fee right what are they getting and how do you typically price that so what they're typically getting is the ability to survey our analysts and specific questions about why they bought a particular product on a particular trip why did they choose this brand over that brand why don't they buy this time and not last time why do they buy it at this retailer or not that retailer when they like about the product versus competition that's super simple or why are they stop buying their brand why did why have they switch to a bit better benchmarking those kind of things so it often involves surveying our panelists and getting some answers to some business questions the end deliverable is kind of an executive ready PowerPoint presentation of our findings from doing that survey of what we would recommend around it and we're good takes a month or two to deliver the work and and ends with a PowerPoint presentation and where are you getting most of your data from I'm sure you have some proprietary stuff and I'm sure you also kind of pay for access to certain things where are you getting your data from it yeah surprisingly it's all it's all our own so we built a couple of mobile apps that incentivize people to take pictures of their everyday shopping and dining receipts and then we incentivize them more to answer some questions about those shopping trips and so we've got over 400,000 Americans now actively doing this on a day-in day-out basis what's the incentive that must be very strong because I never respond to those surveys and they say sign take the home video survey and win $500 gift card I never do it yeah I get it the key is we're incentivizing people for every shopping trip they makes every time they go go shopping they take picture of the receipt they get a reward their charity of choice gets a reward depends on on which app they're in and then it's pretty easy to follow up and ask them some additional questions about that shopping trip so I think you'd be surprised it's pretty low cost have you ever considered going are you familiar with expense find David yeah I mean I tried with him on a harassed him a little bit about this when I interviewed him and I said David why are you not opening data partnerships on some of this stuff assuming you're EULA and TOS makes sense I mean he's got a huge data set there yeah I mean you don't you don't have any relationships like that right now eyeing into QuickBooks or things like that so we looked into that we actually built our own little app that was used by small businesses to capture all their receipts and digitize for free what we realized was it wasn't consumers doing it with small businesses and building a small business panel and taking that data to market is an extremely different business model than taking consumer data to market so we shut it down got it now do you go I imagine sometimes you just go in the App Store look for consumer apps that I've already done well where people are taking pictures or receipts and you just go buy them because you make way more money from the data than the sole developer in their basement that doesn't know what their how many have you done actually we've well we've done we've done three acquisitions but only one was for the reason you described it was the top shopping list that called out of milk and we thought we could build receipt capture into it because people were using it to plan all their shopping trips already turned out not to be a great integrated use case and we ended up improving the alphabet and selling it a few years later to a firm that could make better use of it as a marketing application you know for grocery marketing as opposed to data capture if you wanted you alive and I purchased it all right I can't let's just say low seven figures and ended up selling it in the low seven-figure range did you say did you cover your capital though at least you got it at net negative or no or never waited well capitalized yes we covered but obviously when you're a start-up you know investing your time is what's more important and I think we ended up investing our time in the wrong area for a while so the end of the day that was a mistake however we did make a couple of aqua hires of mobile apps that people have created that really didn't have futures but we were impressed with the team and what they've done so we acquired them shut down the apps brought in the team members and some of the engineers we've gotten from that a bit outstanding so it's now definitely a successful strategy for us last few questions on you in economics before we wrap up with a famous five gross logo churn annually I assume that's pretty negligible what is it Oh gross logo turn oh that would be customers that do a project with us and just don't continue on the next year and so I'm gonna say that's under 10% okay got it and and what do you assume lifetime value is the most your clients once they're signed not your not everyone that comes on your but once they're signed up on this ass product what do you assume lifetime value is yeah it close to 10 million and how do you back into that and make sure you don't like lie to yourself and over-exaggerated since it's such a sticky product yeah I think we have a fortune in a situation of knowing how much our clients spend in our market space with with our competitors and we've seen our attraction our ability to eat into what they're spending with with other market research providers and take that on ourselves so it's kind of a known entity now and now that we've got four years of data selling into these into these particular accounts and growing these accounts I think we've got a good sense I think where we could be lying to ourselves to be frank is what happens outside the top 500 clients and you start down market I don't think it's true that that same kind of like my value holds up it does diminish got so you know LT we have 10 million you're talking just about your top 10 percent of customers right well for us it's probably the top half of our customer base today but if you talk about three years from now or other lifetime value lifetime horizons that is going to be the top 10 percent right yeah I mean exact man significant right if you take 10 million and divide it by what people are paying you per month on average about 21 grand that's a lifetime timeline-wise about four hundred seventy six months or forty years I believe I did that right right forty years as you were saying but you know top top clients we're going to end up paying many many millions a year for our services and we're getting some of the clients there so yeah so we don't look at it in terms of what it wouldn't yet today we look at it in terms of as we continue to deliver the services and grow the account what does that account worth to us makes a lot of sense what about funding have you raised or bootstrapped we raised thank goodness we did we did everything from a seed of angel round of friends and family series day from Bain Capital Ventures and founder collective a series B from a strategic WP pecans ours and then venture debt on top of that which was a lifesaver to us in a great way who did you choose we have over the venture debt Trinity capital they were there actually a great partner for us and that it saves our employees and that's there's a ton at the end of the day when when we sold the company last July oh you did exit the company yeah okay so hold on before the warning at this post Gallup but but we were required by Vista Equity Partners the software focused private equity firm and last July before we get into the acquisition in real quick so how much total had you raised before the acquisition 22 is okay 22 and that is just the equity or including the venture debt just the equities to another 8 and venture debt okay got it um it's 26 cities sold in 2016 right sold in 2017 okay why'd you decide to sell III think we we had gotten to a point where we were doing pretty well in the market making some waves we were looking at potentially raising another round to Serie C the sort of the growth equity firms one of the right really large checks and we didn't need that much money it's a large chunk how much are you talking about minimum 30 million okay and we we felt like we needed 10 to 15 million even if we took 30 million from a new leads we'd have to do pro rata for existing investors so total cost around that's going to get us closer to 40 million the level of dilution just didn't make sense to us relative to what we need to get our goals so we started talking to some strategic about Center check mark if you turn on market track specifically or know someone else not that and other strategics in the market you know that we're in market research knew who we were potentially either partners or competitors and ended up not going that route they wanted special business terms or licensing agreements or other things that's what led us venture debt instead allowed us to keep our foot on the gas keep firing sales adding new products from growing the business and then you know we completed the year the strategic is followed up with us and say hey how do your finish up and they didn't think we were going to hit our aggressive goals and we did we actually beat him and that meeting a 39 in 2017 yeah yeah we this all started happening at the end of 16 even some of some of the timing it's about that it's down there yeah exactly and No early early 2017 the strategic started paying real attention when we exceeded our goals and decided instead of just owning a chunk of the company why not own the whole thing that ended up resulting in kind of a strategic interest that led to quite a few companies showing interest in it so Scouts and Bobby got paired up with fist equity partners in that process them they're the ones who acquired it and then paired it up with Market Tracker Vista Equity loves 7.2 X multiples it's the multiple they paid for cement it's also the multiple they paid for Marketo I don't know why it's just a trend I saw so did you sell for more or less than 250 million bucks which is about 7.2 X or 30 million okay we'll leave it at that let's wrap beer Jared with the famous five number one what's your favorite business book how to win friends and influence people Dale Carnegie I don't think there's a better way for for managers and just employees to think about how to work together number two is their CEO you're currently following or studying well I think orang Hoffman's brain every chance I get he's founder live rat now a safe graph right specifically on on media Menkaure I think he's sharp as can be number three besides your own what's your favorite online tool for growing the business oh yeah I personally like a sauna I was a guy you sticky notes for all my to-do list and was headed paper entirely and I started using a sauna and font found I actually had a digital way to manage all of my TAS and two do's and we've used it across the team of it as well number four how many hours sleep together night I used to be notorious for going on four or five hours of sleep now now I need a good seven to feel fully functional that's good and Jared what's your situation manner he married single you have kids married 18 years now three kids Wow teenage yeah so and how old are you 42 okay last question take us back to your 20 year old self what do you wish the back I knew you know when I was 20 still in college and I wish I'd have studied even like computer information systems computer science something I should have been learning because in college instead of learning to hack once I got my first job so I wish I'd done at least a technical field and probably computer science there you guys have it from jarred of info Scott he would have studied the technical stuff earlier on launched the company back in 2014 in December 2016 run rate was around fifteen million bucks that beat their target it's spurred competition for other investors to get involved with the company ended up doubling you over a year to about thirty million last year they served about 184 customers that pay about of a quarter a million bucks a year in the retail space super-healthy revenue retention year-over-year with their team of about a hundred and forty five people between San Fran Chicago and New York sold abyss to equity now they're cranking the business with market track Jared I appreciate you taking us at the top thanks a lot appreciate ur