Klaviyo Revenue, Valuation & Funding (2024)

hi everybody and good morning andrew good morning to you bye lucky am i pronouncing your last name you got it right thanks for having me on and i also need to do a pronounce on the company's name because i know it's a little bit difficult for some people clavio that's right and some huge news this morning i mean there's so much money in private markets right now and you guys have more than doubled your valuation and you guys just reached unicorn status less than a year ago is that right uh yep it's been a bit of a whirlwind last 12 to 18 months yeah well let me ask let me start by asking did you set out to raise more than 300 million dollars in this round because i've heard stories of founders getting more than they even asked for in the recent months yeah it's interesting for us i mean actually the first three four years of clavio we were entirely bootstrapped business so the idea of fundraising we just didn't even know how to do it um you know obviously things have changed a little bit the last year or two uh we've always tried to be very opportunistic so as we've just been kind of getting to know folks uh we found some investors we really liked and uh yeah we were lucky to be you know kind of oversubscribed all that kind of stuff um but we're really happy with the folks we got to partner up with so did you end up raising the round did you raise more than you set out to raise uh we were pretty disciplined on that so we kind of uh you know we picked a number that we were comfortable with and you know more importantly we picked the people we really wanted to work with and we were lucky that we could kind of get them all to agree to be involved right so talk a little bit about the mix of investors um i know that sans capital raised this round we also know a cell very well in the bay area but i noticed that your makeup is not a lot of bay area names and you guys are based in boston does that speak to sort of a broader trend of seeing more tech outside of silicon valley yeah i mean good question we're data point of one um you know certainly since we've started we've kind of believed in you can build great companies outside of the bay area or outside the west coast um so we're definitely proud to build such a you know a big and impactful company uh you know on the east coast we're basing the east coast at least um and yeah when it comes to investors i mean look our number one criteria is we're in this for the long run so clavia is a company that's uh building that builds what we call customer infrastructure so uh we build software that helps businesses take all the data they know about their customers store in one place and then put that data to work across all the different customer experiences and touch points they have um and so we think that you know in some sense we're taking the technology that you might expect if you use a third-party marketplace or a third-party platform we've kind of ripped all that out and we're giving it directly to companies and creators and um anyways i mean we know that that's very early for that i mean it's a big macro trend and kind of where technology is going and um you know how businesses are taking more ownership and control over their customer relationships so it's really early i think the thing that kind of is we have in common with our you know previous investors and new investors is a real focus on the long run um you know we talked to everybody and said hey are you really ready to be signed up for us not for the next few years but how about for the next five 10 20 years um unfortunately everybody said yeah that's the most exciting part about flavio so you guys are sort of like the back end if i had to think of like a public market comparison i think about twilio which is also software on the back end that sort of allows companies to manage their customer relationship a little bit more directly is that accurate yeah so i mean what we see is this like if you think about consumer businesses um or just consumer organizations you can buy non-profits um everybody we're all we're all big we are all consumers of many businesses and organizations that have you know hundreds of thousands millions tens of millions of different customers they serve um and the challenges as we as consumers all want we want personalization and we want it on demand which means that it has to be driven by software and so our goal with clavio was hey what infrastructure is necessary to help any company whether it's just starting out you know doing the nights and weekends things you know i've been there i know what that's like how frustrating it is when everything feels like it's beyond your price point all the way up to the big you know fortune you know 500s the category leaders you know how do we give them the backbone that again allows them to get all the first party data they have we're big believers in first party data and then to incorporate it into all of the different ways that customers um you know their consumers experience their products and services so why is that why is that important if i can sorry if i can interject for just a moment why is it important that they control the experience when you have these massive platforms like amazon and walmart that can manage all of that for you why is it important the company sort of take back that data and that process yeah well it's a great question so we think you know the most natural i think that for a long time it's felt like the only people capable of building that technology um are the biggest you know either internet companies or the biggest companies in the world um and our goal with clavio was to democratize that to say actually you can have control over this and it's not as um uh it's not as maybe as big of a lift as you think um so we believe that at the end of the day the people that are building products or services the creators of the world they're the best people to know what consumers their customers want and so when you kind of take out that disintermediation when you remove the middleman uh you actually you allow consumers to get closer to the people that are creating and you allow those businesses to get more information they can make better decisions about their products and services um so i think the big challenge was just the technology existing and being available so like you said i think in the first era of the internet it was commonplace to just use you to rent or use that technology through platforms but now we're opening it up where anybody can have direct access to that technology and what's cool is they can use it in lots of interesting ways we're seeing very different uh kinds of algorithms very different kinds of experiences getting created because in some sense there's there's fewer constraints um when you're on a platform there has to be some sort of standardization uh for a brand brands can be very unique um so we're really excited about what's happened so far so when cleveland has the back end what do we see as a consumer is that an email saying something like oh you left these items in your shopping cart or this is what you might be interested in next is that what we see yeah that's great so you know a lot of our customers today so we've got over 70 000 paying customers hundreds of thousands of freemium customers that's our model is grow with companies just from their starting out as they grow into big iconic brands and for them yeah today our primary um the experiences we power are mostly messaging experiences um so you can think about email and text messaging you know we believe that email and sms text messaging the two largest social graphs in the world more than half the world has an email address more than half the world uses text messaging um and so we're allowing people to personalize those so some of them are really simple things like for a retailer might be abandoned card email but a lot of it gets more sophisticated it's it's figuring out preferences um and using machine learning uh to figure out exactly what products what new products are going to appeal to which consumers so that messages can be more relevant um so i'm one of these people when when i go to any website and they ask me for my email address i think which email address am i going to give i have a specific email address for all of the emails that you're talking about i don't really like them i don't really if i'm gonna buy something i'll go back to the cart and you know the recent changes that apple made with this operating system i think was 96 percent of users opted out they don't want targeted advertising they don't necessarily want more emails so i just wonder what's telling you i know that the customer your customer wants it but what about the consumer um are you making the experience better for the consumer and what's telling you that they actually want this as privacy as the privacy landscape changes to give your customers potentially less control yeah definitely i think we're we're kind of entering uh the next stage where it's really like consumers are going to be at the forefront much more than they have in maybe the first era of the internet so internally we measure uh customer engagement um or consumer engagement i guess you could say um and you know how well they're responding and that's actually the cool part of what we're doing is so it's not just allowing businesses to get more specific in the messages and the content they send each consumer but it's also allowing them to read out on what's working and what's not and then we'll automatically help them call out messages that consumers don't want either on an individual basis or an aggregate basis um so we believe you know because you know our business model isn't about you know uh monetizing you know advertising eyeballs it's really just about helping consumers and businesses connect better more authentically uh we have the ability to kind of figure out you know where's that sweet spot of which consumers like which messages what's relevant for them so that over time and we believe for businesses the best way to build an enduring business is to have long-term customer relationships and you know rather than just kind of blast away and send people very generic messaging it's much better if it's specific to them and oftentimes that means that the frequency of messaging goes down too um so anyways that's all the technology that i think just wasn't as accessible and available to the vast majority of businesses out there um but that's what clive is all about is making that available to everybody well you mentioned you've mentioned a few times the importance of first party data that's something we talk about a lot of tech check especially with the recent ios changes so have you seen your business increase or more demand more outreach since these changes went into place and i'm sure a lot of developers and retailers etc are looking for more control over that data right and you can't rely on third-party data in the same way yeah i mean there's two trends i mean you see lots of things like you know you see artists publishers they're going first party they're going to wanting to be independent have ownership of that customer relationship um you know i think on the other side you're seeing changes like the idfa changes browser changes that are uh you know sort of uh you know a discouraging use of third party data we think first party data is is super undervalued uh most companies uh don't know how to use it and it's a technology problem it's not that they don't have ideas um and so yeah we've seen i think it's still very early because you know a lot of the changes you mentioned are very new but we're starting to see more businesses say you know i've been wanting to invest in using more of my first party data and taking more control over my customer relationships but you know the status quo was i could get away with using third party data i think as that shifts we're seeing a lot more folks come to us and say hey okay i'm really ready to invest and the good news is once they see what they can do with first party data i mean they're realizing one it's their data so nobody can take it away from them and two it's a lot more profitable because there's nobody else that's uh you know kind of in between them and the consumer so that's what we love it's a better experience because there's fewer you know middlemen it's more profitable and we think ultimately it helps those businesses be more durable we want more businesses to start out using first party data and having customer infrastructure so that's what you know that i know you're part of this sort of direct-to-consumer ecosystem with the likes of shopify and big commerce um finally we just got a few minutes left um what is next for cleveland i know you just phased around um you know typical business report i gotta ask are you eventually you know targeting an ipo have you seen interest from other parties i imagine that you guys would be quite appealing to sort of a bigger tech company or even a retailer um what where do you see the company going where do you see yourself in the company let's say five years from now yeah well we're in this for the long run um like i said that's when we're picking the people we want to work with uh we always ask the questions like are you with us for the next 10 years um so for us i mean we look at even though we're working with tens of thousands of businesses today uh with still that's a vastly small percentage of the uh small businesses and large businesses out there around the world um so we have a lot of work to do in terms of expanding globally we also you know we talked about this we're only helping with some of the customer touch points and we're only working in a handful of industries today ultimately i think technology like klavio hopefully it's clavio ends up powering every consumer business it becomes the new way that consumers and businesses interact like we become that standard infrastructure that everybody's relying on um so it's very early for us but uh you know we're excited being a public company eventually is that important to you to get to that milestone yeah i think you know at some point it'd be it'd be interesting or fun but it's not something we spend a lot of time thinking about right now we kind of look like it's a graduation process uh you know at some point it'll happen for us but it doesn't really i'm always curious what do you look at to know whether you're ready or it's the right time to become a public company yeah it's a good question and there's a whole variety of factors some are external some are internal um you know i think we're just honestly right now uh it feels so early for us uh you know a lot of folks ask but we're just it's not it's not our near-term horizon it's not something we're really focused on we're just focused on how do we help more businesses uh help improve more of their you know consumer relationships head down working hard i'm andrew thank you so much for being with us um i love doing these things and thank you to everyone who tuned in we're looking forward to watching your progress and we'll see you again either here or on tech check during live tv um but best of luck and thanks for sharing all those insights with us yeah thanks so much thanks for having us okay take care