Kwanzoo Revenue & Valuation (2024)

hello everybody my guest today is Manny I air he is the CEO of a company called kwang-soo a leading provider of account based advertising and retargeting solutions for mid to large b2b enterprises he previously founded a software business that was acquired by Oracle and PeopleSoft he's a serial entrepreneur industry speaker on account based marketing demand generation b2b marketing and advertising and a start-up advisor Manny are you ready to take us to the top absolutely okay what was your previous company you sold the PeopleSoft er Oracle yes so it was you know in the corporate elearning area so we kind of helped companies yet plant like that child Schwab Juniper Networks aspect communication of several others tech companies you know some government organizations you know primarily with employee training customer training partner training so I was more selling into the HR and training departments at those types of organisms what was the name of the company company was called team scape so we could all their days of Netscape its you remember say yeah we were one of the other escapes that so far and what was the acquisition price would you sell out for we got a decent exit I would say it's look I mean I'm based in Silicon Valley but and also you know in Austin Texas so you know both locations of work out of both the business was pretty much self-funded bootstrap we got a few million in revenues so we got a decent revenue multiple this was back in the you know early early part of the decade okay you can say it was kind of maybe below between 10 and 50 million is that fair yeah I would say a little bit in the lower end of the range okay good so maybe between 10 and 30 million yeah look I don't want to pin the exact trigger and we as I said that the we had a few private investors this was early in his decade I miss was like 10 20 years ago yeah it was about 10 15 years ago yeah listen if any of them come back at you you just send them my way I'll take care of him that was like forever ago all right all right so you got a successful exam to your belt it wasn't kind of fu money but it was enough to kind of you do whatever you want to do the rest of your life kind of money why decide to get into kwang-soo and what does Kwanzaa do yeah so again as you said I did finish that a company go off and you know helped us some younger company startups with a customer development business development that kind of thing but then I found that there was an interesting opportunity for us to go build a business again and this one really for us you know it took us I would say a couple of years to figure our product market fit but then we've seen a pretty nice ramp since 2015 with Kwan zoo we focus on as you said we call it account based advertising the whole category within B to be called account based marketing really came together and started taking off in 2015 and so B being focused in that category in an area more around integrating connecting advertising technologies into marketing technologies right and now do you is it a transaction based approach you take a percentage of money through your platform or is it SAS based it is it is actually SAS based off but again we also get a piece of the action in terms of scale or use of usage right so it actually has a bit of both you know as a SAS component in that we do get platform fees license fees for the use of the platform by all of our customers typical 12-month contracts if you will we see what specific alone those I mean we talk in 10 grand or a million bucks no it's not a myth it's not a million bucks look a way to frame us in the market today at least the way we look at it in the mid to large enterprises you know we are the strongest alternative to a if you're familiar with a company called demand based yeah and be in a piece of the business they have around advertising so as you know demand base where does more so they're going broad in that ABM category we think of what Vito is we're going deep right you can you know we didn't want to be like a mile you know I think it was a mile wide and inch deep you want to go really deep and so if we're going deep into the hole ABM dismay advertising the Italian Daria then you answer your question the platform fee for us range anywhere from a thirty thousand dollar entry price point twenty five a month thirty thousand scales all the way to eighty two hundred thousand yes sir you said that's thirty thousand a month or a year a year yes I got 200k annualized platform contracts and then on top of that you know we also you know make some additional dollars on on services and there's some media and data and so on that we end up managing for what when if you look at your revenue pie what percentage it is SAS versus a you know percentage cut look I think we if I look at all the dollars flowing in we make about sixty point sixty to sixty five percent sixty five percent of the dollars coming in flowing to us the other thirty five percent goes into what's called media and data be clear so sixty five percent of your revenue is SAS 65% is SAS and there are some services in there so okay like professional like one time professional services stuff yeah there's some one time there's some yeah we package it as part of running these programs in campaigns so we the situation is a lot of this VC pretends we can go to agencies in the coming years in just the state of the market the market is still early not enough customers or the agencies have the expertise to run these a VM add programs in-house so we end up taking that on taking that piece of the business too now when did you launch the company one year 24 2015 okay so when IBM thing took off I would say you know we have been added a couple years earlier to again and what different iteration we were doing more for retargeting business in b2b but honestly you know we were we didn't have I don't think that I can of differentiation of product etc the real traction revenue growth for us has been since 2015 and we've seen at this point it's been pretty healthy 300 300 plus person we brought over the last two years what about just the last year this past year again has been decent again it's been a big transition either for us no we're talking like 50% or 100% I'm sorry are we talking like 50% or 100% year-over-year growth so they got it got it so about 50% year-over-year growth ashore closer to that at least and then what do you now today in terms of team size again you know we're you know we're not getting into specifics on revenue and team numbers but again the Manning why would what what is why is I always wonder when people hit me back on this question why would you not share your team size why is that strategically important look you know to be honest that you know we are up against like you know say say a major competitor I just feel like you know we don't have to necessarily get into it yeah I can I can go I mean I can go on to LinkedIn right and and look at what it tells me in terms of people right so it says 10 people right so but I'm so curious if I mean if you only have one employee but you're ever-new per employee is killing all your competitors that's a great business right why would you hold that I'm just always curious why people hold that back so you're at about 10 employees right now well more than that I mean they also have some outsource teams and so forth it be used so yeah look we're certainly you know south south of 50 definitely well north of 10 okay you're kind of rocking in your chairs you say that are you embarrassed by having such a small team you feel like it makes you weaker for some reason no no not at all I mean we have the strongest technology in this category you know we have some great data but why hesitate on show you team size I think it's about trying to get you I'm sorry but then why hesitate about sharing the team size that's what I'm trying to understand look I think private companies can decide what they want to share what they don't want to share no I know that but I want to get in your brain and learn from you I'm trying to understand if you feel a small team strategically saying that is disadvantageous or advantageous to you and why or why not well I mean you're right about that when look we sell a fairly complex piece of software and there are certain customers out there who do look at some of these metrics and parameters some do some don't and so I think private company sometimes don't want to necessarily you know get into a detail on that kind of topic if customers really care about though they'll ask you that before you sell to them right won't they yeah they do they do so you gotta tell the number anyway sure yeah okay interesting all right let's move on so so that's awful understand 2015 you launch the company now the bootstrap Derby raised mostly boots fat a lot of my capital riding on the business yeah okay any outside capital besides your own though no no I mean we have one angel investments put a small amount of money but the rest of the capital is mine okay so it's fair to say like less than five hundred grand in the company right from other people yes okay good okay sometimes people say oh you were basically boots dropped and I go well how much is that have you raised and they go oh we we have five million company okay that's not bootstrapped you've raised five million dollars a year your bootstrapped or you're not right all right they've seen a significant investment on the tech right I mean so but I'd be the guy who's been funding it okay and we're yet today what have you grown to in terms of customers we are about 50 customers but many of them are large enterprise customers yeah they're great customer sir yeah yeah so we got as you said you got some strong logos there Infosys Equinix and that's several others did you see yeah and now if I take 50 times again that that minimum price point you said earlier about $30,000 i mean i can assume you guys are north of kind of 120 ish a month in revenue right yeah we are in that range for sure I mean again I think yeah from the revenue standpoint you've got a ballpark about okay good and yeah and you're grown you said I think you said you know 50 or closer to 50 percent year-over-year so it's fair to say December of 2016 you guys were maybe more around or last year you were maybe around the 75 80 ish mark so that's that I mean that's healthy growth for a company this size what about things like unit economics are on customer growth so are you seeing any churn happening in the business I would say we we did have challenges last year I'm saying 2016 but I think what's been nice for us is at least this year we've seen a lot of the big enterprise customers as you know scaling growing you know expanding usage and so we've certainly seen core customer revenue growth pretty healthy retention of the larger accounts have been great you know we certainly from time to time you know do have challenges with some of the you know kind of people who are new to the sector and new to this category seems to try to get a sense of ADM you know do they do they really why I own it always on yeah in their programs and campaigns what do you want yeah how quickly do you like to get your money back in terms of what you spend to acquire customer do you try and keep it to six months 12 months 18 or more look honestly at the stage we're at for us it as I said it's really about can we turn that customer comes in with that initial 30 40k you know for budget total budget into into them spending 200 K+ with us I'm talking over overall program dollars right because we do we have the assessments but we also have the execution business meaning they come and run these ads to us so I'm looking at all about program budget and yeah I mean I ask the payback questioner because you're bootstrapped right so if you have your pip up here it gets a little long I mean you eventually into cash problems I mean do you right now have like a like an instant payback period or six months what do you try to optimize that for we are honestly trying now focused on just a new logo new customer acquisition that you know you don't care what it costs well oh that's why I'm asking right so if it costs you a 10 grand to get a $40,000 your contract your payback is a quarter of the year right so yeah I'm trying to understand yeah absolutely no no our cost structure is definitely not that high but partly it's because we've been focused on a few key partners and then we're starting to see deal flow through partner what is that mean err so you spend less than 10 grand to acquire new customer I would say that that's that's about the it's probably a bit less than that yeah got it but that's maybe you were going to say that's the max that would the max brass okay good so you answer my question go back you do see pretty quick payback periods right so you have high money velocity which allows you to reinvest quickly that's certainly what we're doing we're trying to grow carefully in terms of staffing and the other kind of things cost interesting how do you kind of see this space progressing especially in terms of additional things you can build to upsell your customers and what you assume their lifetime value might be across your company how do you look at that so you know it's still early it's open season early days the way we see it so we're going after big spenders in b2b right in terms of this account based marketing advertising basically paid media spent so I believe you so again to rephrase your question you said how do we see the space evolving basically the the way we're position the market is there's demand base there's us there's a couple of players sonicator to a pretty large market you know multiple n dollars are spent in b2b paid media advertising we see the DSPs are certainly not serviced saying so many needs that these customers bsp our demand side platform and I'm talking Google app next to some of the others right we see what we do as creating that system of engagement so that we are trying to get embedded in these customer environments so the user technology they pull all the reports out of our technology they do a lot of the personalization of these ads on the ad units on the website through our technology so really for us it's about can we get sticky as a system of engagement across more and more of these big enterprise Manny that's more what I'm asking you right is is is assuming you do get sticky what do you assume lifetime value is on some of these customers like definitely more than three-year like definitely more than 120 160 I mean how do you think about that yeah we definitely think that platform component that should say you know 50 to 80 K 30 50 80 K in the first year can grow to a quarter of a million to half a million right within like a three three-year time frame these are lifetime value significantly higher than 250 grand assuming I'm on board absolutely okay very good and we're you guys all base where's your team or distributor I mean we have created a culture where you know people can work out where where they are I mean we've got a head of marketing out of Virginia we got our customer success head out of the Bay Area we've got a staff in Austin Texas Maryland you know product team overseas that cetera so yeah it's you know get the talent where we can and then you know trust them to do their job it's good stuff Manny let's wrap up here with the famous five quick answers here number one what's your favorite business book oh you know I just heard about and I'm gonna be reading this thing by Chip and Dan Heath the power of moments very interesting about how you can create you know very positive moments for people you know in how you talk them how you engage with them and also on line number two is there a CEO you're following or studying right now you know for me I would say you know certainly a LinkedIn CEO Jeff Jeff one number three how many I'm sorry but it beside your on what's your favorite online tool my favorite online tool man I spend way too much time I don't know if it's good or bad on the google chat instant messaging you know that's pretty much how our whole company works and how we all stay connected and Manny how many hours of sleep to get every night I get seven hours okay and what's your situation married single you have kids married I got two boys I mean one is that a long Honda you know gyuki University of Texas Austin is the way I'm down here at third in Brazos at the Whitley oh wow yeah we should get up there over coffee at some point I would love some yeah and then yeah so the other I've got a high schooler and how old are you Manny I'm a mid 50s mid 50s okay last question take us back at you know about 35 years what do you wish your 20 year old self no 20 year old man there's so much I could do different okay but again you know we were in the constraints of no cell phone technology no internet no this no that but I think you know for whatever I had to work with it's all good well so what was it sounds you regret but just what's what's a lesson you wish you knew what do you tell your boy I think it's about just doing a doing a better job building your network meeting people learning from people kind of having a learning mindset and growing faster and I would say that's one aspect others financial management are you how do you put to use the funds you do have there you guys have it from Manny at kwang-soo again build your network quicker and understand financial management how do you effectively use funds you've raised they're playing in a very hot space launched in 2015 with their team of 10 they're supporting about 50 customers doing about 125 grand a month right now just on their SAS platform you know they have another component obviously to their revenue as well growing about 50% year-over-year super-healthy retention spending under 10 grand to acquire a customer so payback is about three months assuming LTV again as well north of 250 grand they're building something sustainable with hopefully enduring powers again in the account based advertising space Manny thank you for taking us to the top thank you