How Knotch CEO Anda Gansca grew Knotch to $14M revenue and 20 customers in 2024.

hello everyone my guest today is on dagoon Skye she's the CEO and co-founder of knotch the leading independent provider of real-time intelligence for marketers founded in 2013 not just been recognized as one of the most innovative marketing technologies in the world as it seeks to change the way global brands engage and understand their audience and are you ready to take us to the top I'm so ready all right tell us about the company what do you guys do and how do you make money so we help brands understand the impact of their digital marketing who started off specializing in content marketing because as a new category there weren't a lot of solutions out there to help marketers make sense of ROI and we make money because we work directly with brands and you know we try to help them as much as possible to get unbiased data across ket's it's across all of their different partners whether it's publishers agencies and other distribution channels just to be clear though are you pure-play SAS model yes we are okay and give me a general sense I don't want to talk about you know every customer cohort but on average what's the customer pay for a month for this would you say I mean we're pretty transparent with all this we have three different buckets we have a bucket for measuring owned-and-operated channels that sits between 150 and 250 K a year we have a second bucket of measuring paid channels that sits between 200 and 350 K a year and then we have an enterprise that will deal which can honestly go up to a million dollars okay so just again so we don't have to break down every single and give me an average would you say the average contract has caught a quarter of a million bucks per year for you would you say it's around 300 K around around 300 K and are they typically engaging with just one of those products you just mentioned are they you know buying multiple together they started with one and they end up being enterprise level customers yeah that's great okay and put all this on a timeline for me when you launch the company so we launched a company about four and a half years ago but when we launched it it was a consumer facing kind of data focused company and it ended up becoming a data focused slide consumer side consumers aspect to it so you know as most startups who ended up pivoting a lot and trying to find her way and responding to the market and we found that enterprise fast was the best way to go to market enterprise SAS is a good space to be enough how many customers yeah how many customers have you scaled so over the last four years so we're at around 20 big paying customers at moment and we have a lot more in the pipeline I would say the biggest conversion of the pipeline has happened in two tranches probably the first one about a year ago and the second one about three four months ago and what were those inflection points well the inflection points were one raising our initial funding to higher sales team pipeline to you know take take the leads through the pipeline so that was I would say the second inflection point the first one was really just me getting our first two to three big customers and trying to figure out how do you build processes around that and how do you ensure customer success yeah now how much have you raised today total 14 14 million okay very good and all equity are their debt built in there no hole equity all bakkwa t now if I take 20 customers times that you know call it a I guess I said $300,000 first your a CV that puts you right now at about a six million dollar run right is that fairly accurate we're in the range yeah okay and talk to me about growth so if you're out in that range today where were you about about a year ago so we've tripled growth year-on-year amazing y-yeah and we're pushing for an even more aggressive growth rate at the moment that's great so that would mean about a year ago you were doing call maybe two million run right you're now 3x that up to six that's incredible as most that growth come from expansion or adding new customers altogether it's both actually I would say about 60% of it has been from new customers just by virtue of being a new company but about 40 percent of that has come from upsells and cross-sells that's an incredible kind of expansion revenue rate you know across the base I want to dive more into how you're doing that but let's start at the number right so net revenue retention annually how high above 100 are you oh we we have not had any churn ok so you've had no revenue turn even downgrades no okay so the net revenue retention if you have about 40 percent expansion would be about a hundred forty percent you're on here is that right yes negative churn and whatnot yes yeah yeah but yeah so negative turn on net revenue retention 140 percent let's dive into how you're doing this so when you are expanding these accounts are you what are the axes you're using is it additional feature additional seats additional usage what is it it's a great question so as I said we usually start with one license and then we we build into an enterprise level license we imagine inside thank you have a business unit let's say the credit cards unit we started with a paid license at 250 then we add an own license for 150 then we add we have a couple of other owned license like owned content or owned marketing then we have a couple of other adjacent products that are really helpful for marketers around competitive intelligence and benchmarking as well as a different product for planning and so we we kind of build up to an enterprise level deal inside of a business unit and then we cross sell with other business units so we could go from credit cards to auto loans to student loans etc mmm interesting and you know when you have no turn if you extrapolate to get to LTV you can I mean the numbers get huge right so you obviously don't do that right because you want to say honestly I've been assuming 10% sure and just to kind of come up with an LTV so I started doing CAC failed to be so yeah so what that nacho is gonna ask you right okay so use 10% so what do you assume lifetime value is in terms of dollars on these accounts typically we assume it's between 2.5 to 3 million at the moment okay yeah and again it's kind of it's really back of the napkin it's very difficult to think about but it does help you think about what you can spend on kak so what are you spending to acquire these customers so right now it's pretty crazy because we're super lean so we're spending between 45 and 50 K okay to get a $300,000 first year ACV account yes that's great so I mean payback is what three months yeah it's super fast and the kacct LTV is a crazy number yeah well yeah it's 50 grand at 3 million is obviously a crazy number walk me through what's the team size today so the team size is almost 30 at the moment we're hiring really fast I think you know part of the CAC is gonna is gonna grow up a little bit because we're a bit understaffed on the sales and marketing front and the composition is really kind of a third engineering a third marketing and sales and the third product operation executives everybody's in New York almost everybody New York we have a couple of people on the engineering firm that work remotely they kind of work remotely and in New York and then we just hired someone to run West goes for us got it and walk me so I want to go back now since we kind of understand all the numbers and the and all that your first few customers in 2014 ha ha tell me the story of how you got your first customer yeah I got a cold email intro to an amazing woman whose name is Beth Comstock and she is like you know Marty right yeah she's the CMO that all semo's want to be and I didn't know that at the time cuz I didn't know anything about the industry but she was kind enough to I guess just take a intro I guess she did a bit of research on us and then introduces to her team and that's really what kicked it off we did a really good job of over delivering for that team and then she started introducing us to other CMOS she then ended up investing in the company which was amazing and so we had a really strong story going into meeting Unilever JP Morgan Chase JP Morgan Chase has probably been a similarly amazing I guess customer and situation for us Kristin them cow is the CMO there then started introducing us to other CMO so we D we started getting our first few customers by I guess word-of-mouth CMO word-of-mouth so that initial betho introduction so by the way was just when she was still a GE yes at the time she was the CMO of G okay so GE was your first customer there how did you get that cold intro though that I mean that's really the secret sauce here how'd you get that well I was coming to New York we were based in Silicon Valley at the time and I was coming to New York and meeting literally everyone I knew and just asking them do you know any CMOS here's my value prop can you help me get to them I probably met 200 people before I got five introductions and of those five only Beth responded no interesting very interesting okay and she an open vessel yeah that's great she ended up investing as well which is nice when what how big was your angel you're like your first round your seed round so we did an initial round of four and then a second round of ten did you do that initial one like on the safer or was a typical convertible note we did the initial one in Silicon Valley on convertible notes and then the second one was an equity round so walk me that's a big move most people say you go to Silicon Valley if you're building a you know a software startup you went the other way why because I felt that in order to be truly empathetic to the people who are selling the product to we needed to get out of the bubble and get closer to the people who are selling the product to there's a lot of CMOS in New York there's CMOS and if they're not here they come here all the time so it makes sense and to be honest is not just about the CMOS cuz we work with a bunch of people on their teams we work with their agency so it was really important that we were close to them um is no churn a bad thing you know it's funny I've been thinking a lot about this I think to some extent it's it's weird with investors almost it also up a lot of the metrics that are you trying to calculate so in a way it's it's bad on paper because makes your job harder but I mean who are we kidding of course it's an amazing thing I mean it means that we've figured out how to do customer success properly and that we have a product that works um I'm not gonna complain about it well let me let me position it differently if nobody's churned maybe you're too cheap and you're leaving a lot of money on the table I feel like we're very expensive but nobody's turned nobody's turned I think if you look at the the I guess competitive competitors they're not really competitors but they're there prices are probably a quarter to half but you just said they're not really competitors I mean my basic question is usually when you look at anyone's cohort data on their turn customers a you know 50 percent will be you know credit card failure if they're like SMB once he and midmark and enterprise a lot of it is just expenses and budgets it's too expensive that's why they churn you've had no churn so are you leaving money on the table have you like if you double prices what do you think would happen to be honest I think that's an area where we do need to rethink some of the pricing and how we how we captured the value that we bring the the challenge of building software for an emerging category is that there's a lot of stuff that you kind of have to invent and define and so we have to constantly consider what is the value that we bring what is the ROI that we bring and are we leaving money on the table and I'm a hundred percent going through exactly that exercise with our head of sales and and why take me in those conversations there's a lot of people go through this I mean how do you run a pricing experiment like this if you decide yeah let's test a higher price point yeah and we we are constantly thinking about what is the percentage of the media spend that goes towards measurement analytics then we're like okay well how much of that money goes the agency has a pass-through cost and then how much of that money then goes into the distribution channel and if we centralize that how much money are we saving the brand and then on top of that how much money are we kind of making them by just bringing those insights in real time when in the alternative today is that they would get it three to six months later yeah so we're and we're working closely with all of our partners to ask them these questions because obviously the data is and you can't just move all this stuff so so just be clear on if GE is gonna spend a hundred million dollars in q4 on ads or something like that you know one way they could do it is through an agency and there's typically what people call an agency tax there are a lot of middlemen and maybe only 60 percent of 100 million goes towards the actual placement call it 60 million the other option is to use you and what you're saying is well if we're saving them that 40 million of that agency tax but we weren't there only billing them 500 grand in a CV that's that's that's the comparison you're doing should we be charging more cuz that's what we're saving them is that right to some extent so actually we're a percentage of that as well so we are just measurement and ethics we don't actually run the media through any platform so we're trying really hard to be an independent judge as opposed to kind of be both judge and jury so I would say if G spends a hundred million then they would probably understanding 60 million across you know it's a six different distribution channels so they would spend ten million per distribution channel at the level of the distribution channel about six percent six to eight percent of that is going to go towards measurement and and research analytics research and so that is the tax that we saved them which is six hundred a hundred grand per channel then yeah so we work directly with the brand and centralize the data collection across all these different distribution channels and that's that's a big part of our value add interesting um what when the last round of funding when was it the last round of funding was about a year and a half ago okay so you're either raising capital right now or you're selling to Adobe which one is it can tell that the rate of growth has been very exciting for everyone the industry including investors oh yeah I mean if you're 3x in year over a year you basically have any option you want to know are you cashflow positive right now or no you're still burning a little so burning a little bit very very very close okay so you really could do anything if you let me ask you this a different way if a VC came or an investor coming term-sheet at evaluation that you really liked but someone another company called Adobe offered you that same valuation to buy the company which which direction would you go PC a hundred percent so you want to keep building I think there's so much opportunity especially with mode being a part of Oracle integral ad science now being part of vistas portfolio I think there's a lot of opportunity to be that independent source of truth you know across all digital marketing so yeah very good on to let's wrap up here with the famous five number one what's your favorite business book that comes talks look she just came out with it right it's really new it's coming out on Monday actually which is very exciting I got to read it before so yeah imagine it forward what's the next one imagine it forward very good number two is there a CEO you're following or studying right now yes Jeff Jesus of course number three is their favorite online tool you have for building your business you know I really like this product called nota bene it started by Sam lesson it's a really simple app that enables you to take really fast notes and send them to either yourself or your assistant what's it called n o ta nota bene ve any interesting and pronounce it with the Romanian accent I like it it makes it sound like it should be priced more right makes it more expensive no number four under how many hours of sleep are you getting every night around six and a half that's good and what your situation married single kiddos I'll tell you why because a lot of people when they listen they like to go oh my gosh she's married with seven kids and she's been I can do it too they get inspired so what's your situation people are gonna date me I don't am I'm in an amazing partnership ok god no kids yet no kids that's great and you mind me asking how old you are thirty and just earn thirty a few days ago congratulations very good last question what he was your 20 year old self knew that I needed to trust my gut how so were you stuck in corporate or something no no bill I've been building a company for a while I was in the VC land before and then before that I was building NGOs across the world and you know you have a lot of moments when you have to make hard decisions with very little data and you have to just trust your instincts guys I've trusted my instincts more trust your instincts not she again launched in 2014 now doing about what six million bucks in terms of run rate that's 3xu over a year August 2017 doing only about two million so healthy growth fourteen million dollars raised twenty enterprise customers that pay caught on average three hundred grand first year ACV they haven't turned anything so net revenue retention annually is about a hundred and forty percent which is great just really working out CAC to LTV stuff they assume LTV is call it three four million bucks assuming a 10% churn rate even though they don't have any churn which means they can spend call it 50 60 grand something like that on CAC lots room to play there as they look at growing their sales team thirty people right now based between New York City and other remote location again transparently collect own and action the data from your digital content marketing for enterprise brands onto thank you for taking us to the top