Rev AIrevenue, valuation & funding

[00:00] Hello, everyone. My guest today is Olin Hine. He's the CEO and cofounder at LeadCrunch AI, one of the fastest growing martechs in history. They're ranked number two in marketing in the marketing industry, number 35 overall in the 2020 Inc. 5,000. He was a finalist for entrepreneur of 2020 in San Diego. He's an 8X serial entrepreneur with two exits. Olin, you're ready to Olin, you're ready to take us to top? [00:22] I am. Thank you so much, Nathan. [00:24] Alright. So first off, you have a very interesting billing model. Before we get to that, because I think it's the future, wanna talk about what LeadCrunch is for those that missed the first one. What do you do for B2B SaaS companies? [00:34] So LeadCrunch is a B2B marketing platform that finds the ideal targets and then delivers the ideal audiences based on buying signals. So we find your ideal customer profile and then detect the buying signals that indicate those ideal prospects need your product or service. [00:56] So you might track the clicks of that person through the web and notice they're looking at your competitor pages. This is sort of reminds you a lot of like what Erica Bombora is doing. Is it similar? [01:04] We are complementary to Bombora. Bombora is doing what's really called intent, and it's around looking for things on the web. What we're looking for is we look at about 40,000,000,000 data points on about 10,000,000 companies. [01:19] Okay. [01:19] And you can think of our technology as modeling out how companies fit into each other's supply chain. So we're actually looking at things like, is your company an early adopter? Does your company have a high need for communication services? Does your company have a high cybersecurity threat? These are the things you can't look up on a database, and they're the things that would augment what BombBora is doing. [01:44] Yep. Now you're not charging a lot of SaaS companies, they have churn issues because they charge a flat fee per month, and then whatever the utility is doesn't actually get used, and then people churn. You said, screw that. We're going to bill on a CPL, cost per lead model. Tell me about that. [01:57] Yeah. We really believe in billing on actionable intelligence. And when you're generating demand for your company, it's not a commodity. People are not commodities. They have different values. And so when we first started, we thought, well, we should really charge a percentage of customer lifetime value or a percentage of customer acquisition cost. And we found early in our history that we couldn't get that data in any Hard to track. So what we decided to do is [02:27] charge on a cost per lead basis where we can estimate the general cost of customer acquisition, the general value of that lead across a campaign. And so the good news is that our net revenue retention, which is a metric a lot of SaaS companies track, it's about a 138% quarter to quarter. Mhmm. So that and it started off much lower than that. I think the last time we spoke, we didn't wanna reveal it because it was [02:54] probably below a 100%, and it's crept [02:56] up. Yeah, you said in 2017, a 100% and then in 2019, 130%. Peel that onion back for me though today. So 138% quarter over quarter, what, you know, two components make that up gross, you know, dollar turn on gross basis and then expansion on a dollar basis. What are those two metrics? [03:13] Most of it is expansion. We actually are gross revenue retention, which would be, you can think of that as the logos from prior quarter spending in this quarter is only at about 80%. And that's because we had a big dip in the first half of the year. [03:31] Wait, what do you mean by that? Only 80% churn? [03:34] No. That would be if you have a 100 customers in the first quarter and they spend $100 each, the next quarter, $100 still spent each, but only 80 of them are buying. So we we lose, about 20% of our existing [03:56] logo revenue per month, while the other side's growing at, you know, almost 40%. So same same customer revenue increases dramatically, whereas the overall customer base is shifting. As we move from SMB into the enterprise, we're dropping off some of our less than ideal customers right now. [04:17] So, Ola, let's move away from logo churn because of that trend. That's why I want to dig on to dollar churn. So I'm going use your same exact example, a 100 customers today paying a $100 a month, next month, 80 churn, but the ones that are left are not hopefully still only paying a $100 a month. Ideally they've expanded. That's what I want to know. [04:34] Yeah, it's not an 80 churn, it would be a 20% churn. [04:36] Sorry, that's what I meant, but you get my point. Yeah, [04:38] yeah, and the others are paying in some cases, six, seven times X. [04:44] But what is it? I mean, when you take the total revenue amount from those a 100 in one month and then the next month, a portion of them churn, cancel revenue and then they expand by X dollars. What's the churn on a revenue basis and the expansion on a revenue basis? [04:57] We don't track it like that. I could certainly pull those numbers. I don't have them off the top of my head. [05:02] Okay. All right. Got it. So, so basically what you're telling me is net net a cohort from a year ago or a quarter ago is paying 138% more because they're using more, they're using you more more leads. [05:14] Correct. That's on a net net basis. [05:16] Yeah. Yeah. Okay, interesting. Last time we spoke, you were testing some different customer sort of generation inbound methods. Talk to me today, how are you getting new customers and how many customers do you have? [05:28] We're going to do $2,000,000 of revenue this month, which is our best month ever. And almost all of it is from customers that were here in October and November. Unfortunately, we have not been able to do a lot of marketing because we've been so busy just keeping up with demand from current customers. We track our inbound leads through a multi touch attribution method. And of our current, we will run about 150 campaigns this month, rather a [06:00] 150 different companies will be running campaigns this month. 74 of them are new customers in the past six months. Mhmm. And of those 74, about 40 of them are from inbound marketing. [06:14] Mhmm. Interesting. Okay. So 40 new inbound. And and what's the general size of the initial contract folks spend with you? You know, the first month they pay you yeah. X [06:24] We we don't like to do anything less than 10,000 and that's really going away. The average right now for first time order is around 50,000. [06:32] Okay, and how many leads would you deliver them if this is a tool like monday.com or ClickUp, a team productivity tool? [06:41] Yeah, love ClickUp. They're a San Diego company just raised a $100,000,000 in their series B. Awesome. Yeah, [06:47] so Well, not just that, it was one of the fastest rounds I've seen from they just literally two months ago did a $33,000,000 round at a five, you know, half billion valuation, then a 100,000,000 at a billion value. It's fastest I've ever seen that happen. [06:59] Yeah. Well, I'm gonna buy your report just to see the number. There's a there's a plug for you. [07:04] Yeah. [07:04] So so your I think your question was, what is our price per lead? Yeah. It depends upon the specification. So it can be as low as, say, 50, and our most expensive that we've ever sold is 1,200. [07:20] Per lead? [07:21] You can per lead. Yeah. So you can think of an average of around 75 is number that [07:27] What was the low end? [07:29] The low end is around 50. [07:30] Okay. So 50 to 1,200 average 75, interesting. Okay. What's $1,200 lead? Like what is like hedge fund or something? Yeah. Yeah, what is a hedge fund? [07:41] Well, it's somebody selling very, very expensive things, maybe like airplanes or financial packages to large corporations, those types of things. They're not big lead packages. They take a lot of work to go through. And so that package may only include say, a 100 leads, but they're very expensive. [08:01] Well, congrats on the growth. I mean, last time you were on in 2019, were doing about, you know, 20,000,000 in terms of 1.6, 1,700,000 a month. You're now up to 2,000,000 a month or 24 sort of run rate. So congrats on the growth and a tough year for everybody. Have you raised additional capital? [08:17] We have not. Well, the last raise we did was about two years ago, I think. We still have plenty of dry powder in the bank. We are profitable for the past three months. [08:30] Oh, wow. How much can I ask how much? [08:32] Yeah, this month we'll have about 400,000 of EBITDA on about 2,000,000 of revenue. [08:39] Oh, and how on earth does your board who wants you reinvesting in growth, you sit on a 40 well, not 40%, a little 20% EBITDA margin. [08:47] 2020% EBITDA. Yeah. So I think that our philosophy is we've really been inspired by John Singleton and the whole theory of cash management. We will spend money aggressively when we know we can get growth that is responsible and sustainable. I really am a big fan of managing expenses. We've been very capital efficient. Our company has raised a total of about $20,000,000 and have revenues that are similar to companies that have raised $100,000,000 So I think there's [09:20] such a thing, and this applies to me. I'm not saying this is true for everybody. There's such a thing as raising too much money. It creates problems for founders where you can't clear preferences. There's a problem with raising money at too high a valuation. From our perspective, we really want to deliver remarkable returns to our investors and we want to raise the right amount of money to capture the market. You can expect us to do a [09:45] round in another year that would be a large Series C. What we're using our capital now for is what I call small bets. Let's go out and see what channels work for us. And when we start to see one work a lot, we'll spend a lot of money on it. It will pay for itself and then we know what we'll do with our series C. [10:02] Your last run, I believe was an $11,000,000 round in 2018. Is that right? [10:06] Yeah, it was about, I think, a little bit more than that, but that's the ballpark. [10:09] And sold sort of the, what you see most companies sell, something like 10% to 15% of the business? [10:15] Yeah, was a little bit more than that. I think that we raised 12.5. Mean, I don't think there's any secret. Post money valuation was 56,000,000. [10:24] Okay, and if you go out in 2021 and try and raise, what valuation do you think you can command? Obviously, the combination of metrics plus your ability to storytell. [10:32] Yeah, well, think that that's the job of the VCs. I can tell you in general, I'm not interested in raising a round that's not it's got to be a big enough round for us to take the company all the way to an IPO. And I think in our world, that's a number north of 30,000,000 and less than say 60,000,000. I know that's a big range, but that's the ballpark that we expect the valuation to justify. [11:00] Yeah. So what you're saying is you want to get a check size in of 30 to 60,000,000 without selling more than call it 15% of the business. So you really need to angle to figure out can you get 15 to 20 x multiple on a 24,000,000 run rate or something like a three hundred to four hundred million dollars post money valuation? [11:16] Yeah, maybe, yeah, I think we'd be willing to take a little bit more dilution than what you just outlined. I think 10 to 15% is pretty aggressive. VCs [11:27] Aggressive or conservative? You'd sell more than 15% for 30,000,000? Yeah. Okay, got it. [11:33] Yeah, I'm sorry if I reversed that. It depends upon the perspective which side you're on the table for what's conservative. I think that good VCs add a tremendous amount of value and add a lot to your exit value because they've done it a lot of times. They bring a lot of experience. I think that it's more important to get the right team than the ideal valuation. I've seen a lot of companies, again, raise a too high [12:00] valuation or raise too much money and they can afford to be stupid or make more mistakes. I think there's a real value in capital efficiency. We're not seeing that in the market right now simply because there's so much money on the street. But I think in a couple of years from now, likely the business cycle will be at the stage where capital efficiency is people pay a premium for it. [12:24] Yeah, and talk to me about team today. How many folks on the team? [12:27] 35. [12:28] 35, okay, how many engineers? [12:31] Well, we separate our product engineering, our code engineering and our data science. So let's treat all of them the same. [12:39] Yep. [12:44] 12. 12, okay. And how many quota carrying sales reps? [12:49] Five. [12:50] Interesting. Okay. So these these are down since 2019. I and maybe you were so you told me 72 in 2019, you're down to 35 now. You cut your engineering staff in half and you kept the same number of sales reps, it sounds like. [13:02] Yeah, it's actually, we were at 75 and then I did three layoffs. [13:07] Okay, tell me about those. Those are tough. [13:08] Yeah, it's painful. So we went into Q1, things were looking great, Q1 twenty twenty. Q2, the floor fell out from underneath us, and we were in the wrong place in the market. And we had already started the migration into the enterprise accounts, and we really had a tough second quarter. We basically lost the quarter. So this year, we're going to end the year about exactly where we were last year. It's kind of a jokingly way to [13:37] say it is flat is the new up. Yeah. The second half of this year has just been amazing growth for us, but the first half was the other direction. And so what happened is, unfortunately, I think the skills that get you to 10,000,000 are a lot different than the skills that get you to twenty, thirty, forty million. We had some amazing team members that we'd outgrown or they had outgrown us and we really wanted to pare [14:04] our team down. One of the key metrics that I use is, I think, of valuation per employee. You can think of that as how much [14:16] revenue per employee, what's your gross margin per employee. We wanted to increase that a lot and really pare our team down to have a smaller team where we were a lot more efficient and we could go a lot faster in one direction. That's something that we were successful in doing and now it's time to start building the team back up. [14:36] Dollars 24,000,000 run rate, dollars 35 employees puts you at, again, way above average, 685,000 in revenue per employee. Average in public companies, you see about $195,000 in revenue per employee in the SaaS space. So it makes sense Where will your next hires be, you think? [14:51] Well, we've got nine open positions right now. We're going to expand our sales team. We're going to expand our engineering team, and we're going to expand our product team. Absolutely. It's really the old mantra that Peter Drucker said, A company has two functions: marketing and engineering. I would say the company has two functions, sales and product engineering. And that's where we want to focus on right now. [15:18] All Alen, let's wrap here with the famous five. Number one, favorite business book. [15:23] The Outsiders. [15:25] Yeah. You know, does not surprise me you would say that book with how you talk about capital efficiency in Singleton. Number two, is there a CEO you're following or studying? [15:33] Many. Everyone should be following Reed Hastings and Jeff Bezos. They're two of the smartest guys ever, but there's many. There's a few local ones here that I love a lot, too. I think Doug Winter over at Seismic is doing a remarkably good job. [15:48] Number three, what's your favorite online tool for building lead crunch besides your own? [15:51] Wow, there's a lot of those too. I'm really in love with, [15:59] it sounds so simple, but we couldn't live without the Google Office Suite, [16:04] the [16:04] Google Docs and that so forth. It's amazing what you can get done with that and Slack. [16:08] Number four, how many hours of sleep are you getting every night? [16:11] I get at least eight and I measure my sleep with a WHOOP tracker. Fortunately during this pandemic, I lost 25 pounds and got in shape. And if it could be measured, I like to measure it and I measure my sleep and really pay attention to make sure I get eight hours of sleep at night. [16:26] And Elman, what's your situation? Married, single kiddos? [16:30] Married with adopted kids. [16:31] How many kids? [16:34] Three nieces and one nephew. A lot of them have started to grow out of the house now. We've got one that's graduating from college, two that are in college and then we've got an eight year old. [16:45] Okay, you, so you've adopted four kids? [16:47] Yeah, we're guardians. So they Oh put mine between us and their parents. And so it takes a village to raise these kids. [16:54] I love that. Okay, and how old are you? [16:56] I am 55 years of age. [16:58] Last question, what are wishing you when you were 20? [17:02] I wish someone at 20 would have said, it's not enough to be smart. The only thing that really matters is hard work and don't misinterpret your luck with skill. [17:13] Guys, there you have it, Olin Hyde lead crunch.ai. They did 2,400,000 revenue back in 2017, have since scaled in 2019 up to about 20,000,000 in revenue. In 2020, this year, they're now doing $2,000,000 a month. So healthy growth rate year over year. They're also profitable, $400,000 per month for about a 20% EBITDA margin. They're also scaling their, team size down. So they're more capital efficient generating almost $700,000 in revenue per employee before they look to scale [17:39] next year targeting a $30,000,000 round at somewhere around a 200 or $300,000,000 valuation. Olin, thanks for taking us to the top. [17:45] Thanks so much, Nathan. Have a great day. [17:50] One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday, one [18:14] p. M. Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two p. M. Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's [18:34] an acquisition, a big fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You wanna get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are [18:55] saying. Sign up for that at nathanlaca.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter [19:14] those people. We gotta push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright. I'll be in the comments. See you.

hello everyone my guest today is olin hyde he's the founder and ceo of leadcrunch.ai the b2b lookalike marketing platform oh and you're ready to take us to the top sure absolutely all right so why is kind of look-alike marketing so difficult to get right and how do you help people do it better so b2b targeting is completely broken it's predicated on things like industry codes which were developed in the 19th century most companies fit into multiple industry codes and those codes are not only out of date they're not relevant to what a company does so very fundamental things the way companies think about marketing to each other are broken and that's why it's been so hard for uh marketers to get return on investment so how does this get actually tackling in the house actually works though so people understand look like audiences you push a button on facebook and it just magically does it for you how do you help marketers create look-alike audience across other channels we do exactly for businesses what facebook does for consumers you push a button and we magically create an audience how what's the data source what part b how how do you do that what data source are you ingesting many data sources thousands of data sources so it's not something that we can give a quick answer and be accurate it would be simple it would be simplification to the point of distortion what we do is we take your list of best customers and we look at about a half million dimensions on those companies are they early adopters how many of your employees are in high communication roles uh how fast are you growing very fundamental things and even things like industry we look at very differently we look at apple computer and we look at to what degree are they a retailer to what degree are they in different lines of business so instead of giving them an industry code we give them an array of industry codes so this reminds me a lot of like sarah from moz right she buys a lot of data 3.8 million in terms of dollars spent on data back in 2017. i'm talking about moz i'm curious for you i imagine you know it's very ancestral the database everyone buys everyone else's data when you look at your total data spend last year right how much did you spend total on other people's data a lot like like two three million a lot okay i mean is it in the millions yes okay and then just some rapid fire stuff so you do buy full contact data yes discoverorg oh you're talking about full contact the company we don't reveal our specific data sources okay but i'm just what i'm trying to understand here is what's proprietary to you versus what other data are you just ingesting that anyone can go pay for so full contact you you pay for their api feed it's a paid product they have on their website nathan we don't talk about specific data sources that we buy we talk about three classes of data we buy data we scrape data and we collect data that no one else has so isn't that the proprietary thing why would you not talk about data you're buying anyone can buy it i understand if i'm talking about something proprietary but i'm not that's not the question why why would i give my competitors any help whatsoever well aren't they your competitor isn't that exactly who you're competing with ever all of you compete with each other we run campaigns so what we do is we generate a look-alike audience and then we engage each prospect in that look-alike audience with display ads content marketing telemarketing whatever it takes to get that prospect on the buyer's journey so that our customers are dealing with marketing qualified or sales qualified leads we're all about conversion we're not all about selling data we got it okay so when you came back on in 2017 it was actually july 2017 so about two years ago isn't that crazy yeah well so i'm gonna rock your world here in a second so you had told me at that point you had about 55 customers what do you got today over 400 that's amazing okay so i want to dive into that in a second and then you mentioned at that point you were trying to move up market so the best way to quantify this is back then you said your arpu monthly was about 3 600 bucks a month what's the effort what was it we were doing 3600 back in a month not annually a month okay it's gone up a little bit we do that in an hour yeah well well i mean part of this is part of my question for you right do you consider yourself a pure place sas platform or is it more pay as you go that's awesome question we are not a sas company in fact we grew our first two and a half years we grew revenues by 20 per month every month because we're not sas so what we believe is sas works phenomenal for certain business models but we're not in the business of selling data we're in the business of cultivating relationships and some relationships are worth a lot more than others and so what we do is we sell our services on a campaign basis so it's a cost per lead basis and a lead can cost as little as say forty dollars and some leads cost in the hundreds of dollars but i mean part of this product right our teams buying it to power their sdr teams that are in charge of scheduling demos with their a's if you become a critical part of that stack even though you don't call yourself a sas platform you should see payment behavior that stacks and is very very predictable right which is basically what sas is so my question to you is is your churn all over the place it's very seasonal people are not actually addicted to you well actually that's a great point i love the way you framed it because in that regard we look at our business as a retention business and so we look at retention in two dimensions net retention which is take our uh trailing three months as the numerator and then four to six months is the denominator in the numerator for our net retention we say okay how much of those original customers came back and we include the upsells and the cancellations and that's net retention and that could be infinitely large and we also look at gross retention where we only look at the cancellations and that would be a maximum of a hundred percent so that's the way we look at our business so what is that's an interesting way to measure those metrics what is your gross are you talking like 20 30 percent gross journey uh we don't reveal that we're not raising money right now um we by the way i don't care if you're raising capital i [ __ ] that who cares about capital i care about bootstrap ceos building great companies churn is very difficult to build a meaningful company on top of it i don't care if you're raising or not raising yeah we're always looking to optimize our churn our churn is very healthy compared to pure sas play companies we don't reveal those specific numbers okay but i'm not going to let you get away with just mentioning hyperbole when you say very healthy compared to other sas companies i don't buy it because other sas companies their gross annual revenue churn is going to be sub five percent you are very seasonal and you're not play stats i don't believe that your gross churn is less than five percent annually you you don't have to believe it okay well if you've got it under five percent though we can learn how you did that right so i'm gonna i wanna learn from you if you've actually done that i just don't think you have then i don't know how to respond to that basically what you told me is your churn is anywhere from 100 to basically give me the full range of any potential thing of anybody so i don't unders how can you say that you're i mean when you tell me that you feel like you're gross turn is best in class even compared to sas companies when you just told me you are a campaign-driven approach that doesn't make any sense to me campaigns are by nature one-off now they can recur over time based off the seasons but they're by nature went off no they're not by nature one off marketing company marketing executives look at campaigns as their lifeblood they have to deliver leads to sales just like you don't go to the gas station as a one-off thing if you have a gasoline-powered car you're going to go every time the tank runs low and that's the same with our business there is seasonality to it you know certainly august is one of the slower months of the year and november is one of the busiest months of the year and we've seen that consistently over time but if we look at our trailing uh six months which is what we do is trailing three trailing six trailing twelve uh we have a steady improvement and that improvement in uh what you're calling churn we would call uh we look at it as a positive in terms of net retention it really correlates to a couple things i don't understand what that means on when you say net rich i mean so you tell me where my definition is different than your definition when i look at the sas space and i i basically would say okay look at the court of customers you signed up exactly one year ago right of those let's say that that revenue across those hundred customers set up a year ago that month is equal to 100 grand per year today when they're all renewing some portion will churn let's say five percent so 5k of revenue churn but others will expand by like 30k so you have 30 expansion 5 percent sure net revenue retention be 125 percent then how does your definition differ great great framing of the question so uh when we did our series b uh and we closed and announced that i think in april we closed it in march our net revenue expansion was 18 per quarter per cohort of customers on a trillion three basis call it 118 percent uh best in class sas would be about 130 per year so you know we believe our business is fundamentally a quarter by quarter business because that's the way our customers think about it and we also think of our uh net retention is optimized at about 130 percent over the course of the year we were doing a little bit better than that uh however that was also a boom time month so i think that you know we i will tell you this as we dropped a little bit on that yeah well but by the way um drops are not necessarily a bad thing it could just mean it's a different position markets i'm not trying to point out weaknesses i just want to understand how you're instrumenting your company yeah the way we instrument the company is we when we first when we first spoke which it seems like it was yesterday two years two years ago crazy uh we were intentionally really wide aperture basically selling to whoever would buy and as we've matured and we've crossed through the 20 million run mark uh we actually started month what month was that last month that was in june so we hit so we hit profitability in june that's right and i don't want to be profitable we like to accelerate our growth but we started to narrow that aperture down and really focus on ideal customer profile and it's funny uh one of the things i've learned that i think your audience would be interesting is you know everyone talks about product markets fit and here we are i feel like we still are discovering it uh in a market this big it's really easy to fool yourself and look at the growth numbers and not see the major problems underneath the growth numbers and one of the things that i've learned is that ideal customer profile changes dramatically as we went up market yeah when we first went to market we were selling leads for two dollars a piece we now regularly sell leads for 200 a piece and guess what they're different buyers they're different selling cycles it's a different product we now have to have an interface with our customers so that they the technology tracks those leads as they go through and that's suddenly a much different product market space than we started in and i think that's something that we learned a lot about since we last spoke and so let's quantify these learnings and again metrics you just passed 20 in terms of run rate in june where were you exactly a year ago do you remember gosh okay so the first quarter we were in business we did 150 000. uh in 2017 we i we did a total of uh 2 million in revenue yep in 2018 we did a total of 8.4 million of revenue yep and this year you know we would be happy if we got to 17 million so another double yeah when you say that you passed i thought you just said you passed a 20 million run rate but then we had some so there's like you said earlier there's some dips it's not the same every month so if you take those rolling uh three months we've got some dips in there that will finish the year probably you know like i said is our low end estimate yeah but i just understand what you meant by that so when you what number are you multiplying when you say you just passed a 20 million run rate in june a single month multiplied by 12. i see okay so you did 1.6 million that month multiplied by 12 is 20 million right yes okay got it got it interesting okay very good so that would mean look this is obviously averages which are dangerous especially in your kind of business but 400 customers right doing 12 20 17 to 20 million run right that means they're paying on average per month somewhere between kind of four and five thousand bucks a pop yeah exactly yeah which is about and the order sizes you know are typically uh 15 grand so it's about it's about a three month order um it takes us i think something like 3.6 months to recognize the revenue you know under the asc revenue recognition regulation it was about 3.6 months and you mentioned you raised additional capital how much in the company to date we raised about 18 and a half total and okay so why did you when was last round uh last round was led by bow capital with rally ventures uh following uh we closed it in the beginning of march and how much was that one for that was for 11.5 million so you mentioned you're profitable now but you just took all this dilution and raised capital why would you not be spending it and burning well uh first off uh you want to we want to spend it in the right places and we we saw some hiccups in the economy coming we wanted to be conservative with our cash we've seen from our sas competitors such as radius and sixth sense never string that they were spending a lot of money to do customer acquisition and we really wanted to pull back our spending on growth yeah better product market fit and uh yeah that was controversial uh you know it's something that i was really felt strongly about is just that if we do go through a downturn in our economy uh those with cash will win so and just be clear that 11 point you but you said you're profitable now that 11.5 you race just four months ago that's basically all still sitting in the bank yeah i mean so again so i guess your rationale it's not good or bad it just is your rationale is you're saying okay to hedge any kind of downturns in the economy it's worth taking the dilution back in march just to have this cash in our balance sheet for whatever we need to use it for in the future right i see okay fair enough what's the team size today how many people about 72 and how many engineers we look at it a little differently we have a data science team a product team a design team and an engineering team and there's engineers in all four of those teams so the newer engineering team is only about 11 people but how many engineers in the organization uh about half of our company okay 35 that's good and how many quota carrying sales folks five okay interesting you how did you determine what you know you hire your first sales person you got to set some quote a target how do you decide what the first quota target is wow that's going back really in ancient history and i'd have to remem i think what we did was uh we were pivoting we had a really bad business model before we found this opportunity and we basically took that number doubled it and said can you do that in a year and he did that in the first quarter so uh i don't think we had a particularly good skill at quota setting back then now it's gotten a lot more sophisticated so we are very disciplined around a what we call an operating plan which is a full p l broken out uh by department uh for on a month by month basis for the entire year and so bookings which is when we sign a contract is what the quotas are based on and we're very sensitive to that we want our bookings to be within five percent of plan either way on a month-to-month basis and the way we do that now is we assign accounts we have a model that determines how much that account is spending on marketing and then we decide okay what is our likely share of wallet at the beginning of the year and 12 months later and that's how we set our quotas now and so what is that a new sales person at fully ramped not a new hire but a fully ranked sales person what do you what is their quota monthly typical we're we quote our guys a little bit higher so typically the fully ramped brand new sales person we expect them to produce at least two million a year in bookings okay got it so they're closing at least 160 000 and new monthly ukrainian every month right interesting okay very good all right and um five people obviously carrying that quota uh you're profitable today so i mean are you just going to sit on the 11.5 basically or do you have any plans to ramp burn here shortly oh we want to ramp burn as fast as we can find the right places to burn it so we'd like to expand our team uh you know hiring salespeople is very difficult um we're in southern california which is not known for building great sales teams so our sales team is actually spread all over the country right now um you know i would use this an opportunity as we're very selective in who we hire it takes about 950 resumes for us to get to a higher uh and that 11 million dollars we're sitting on is going to be spent on expanding our sales team expanding our marketing and taking more product to market and we're we're ramping up that spending now but it's going to be judicious it's not going to be spent on uh bars and free lunches for employees today for these new accounts the fifteen thousand dollar kind of for a three month thing or let's just put it in an annual contract let's say to get a 50 000 annual contract today what are you spending on the fully weighted cac oh that's a good question uh we get payback um [Music] our cac our our payback is a it's about five thousand dollars maybe a little bit less maybe about 4 500 our payback is within the first campaign yeah yeah i mean if you're again your average customer paying between four and five grand so if you're only spending 4500 to get them you have basically an instant instant payback period first month payback period uh on a revenue basis but we look at it as a gross margin basis what's your i mean i assume though you're up in the 80 are you in the 80 range gross margin now we're a little bit lower than that we're in the 70s okay still still high then that's probably because you put a little touch on the lead scoring and the data you're getting yeah yeah so like we actually do lead scoring for free you know we think that's just part of what we do um we really want to be the trusted partner and that means that we have a very large uh customer success team of our of our we have a customer success team of 20 people yep that's good all right let's we're out of time let's wrap up with the famous five quick answers here if you can number one favorite business book uh this one oh um connecting the dots by john chambers i just had uh dinner with him brilliant guy it's easy to see how he took cisco from 70 million to 47 billion really number two is there a ceo you're following or studying besides john a lot uh my favorites are of course bezos and musk just for style but i also have a a lot of other favorites um probably let's just go with bezos as the best number three what's your favorite online tool for building your company besides your own you know what i like some of my competitors a lot um not really direct competitors but i like terminus i think they're doing some really good stuff um i really like tech target they are a direct competitor number four how many hours a sneak every night fully that's good and what's your situation married single kids i'm married and we've adopted four kids wow near the big house four kiddos okay and how old are you i'm 54. last question olin what do you wish your 20 year old self knew take bigger risks earlier um i think i started my first company when i was 25 and there's absolutely no reason why i should have finished college i could have started my first business then and i think that uh the 20 year old me was uh too focused on becoming being a marine guys there you have it 400 customers paying between four and five thousand dollars per month they did 8.4 million in 2018 revenue on target in 2020 to break the 17 million mark on the low end they've raised 18.5 million to do it 11.5 million basically their whole last round still sitting in the bank as they figure out what to go burn that capital on the drive growth 72 folks on the team 35 engineers five quarter carrying sales reps net revenue retention about 130 we've got a payback period of call between kind of two and three-ish four months on these accounts coming in paying four or five grand per month olin thanks for taking us to the top you rock man thanks so much nathan