How Rev AI CEO Jonathan Spier grew Rev AI to $11.7M revenue and 400 customers in 2020.

hello everyone my guest today is olin hyde he's the ceo and co-founder at lead crunch ai one of the fastest growing markets in history they're ranked number two in marketing in the marketing industry number 35 overall in the 2020 inc 5000. he was a finalist for ey entrepreneur of 2020 in san diego he's an adex serial entrepreneur with two exits allen you're ready to elaine you're ready to take the top i am thank you so much nathan all right so first off you have a very interesting billing model before we get to that because i think it's the future i want to talk about what lead crunch is for those that miss the first one what do you do for b2b sas companies so lead crunch 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 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 me a lot of like what eric bambora is doing is it similar we are complementary to bombora bombor 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 billion data points on about 10 million companies okay 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 is your company have a high need for communication services is your company have a high cyber security threat these are the things you can't look up on a database and they're the things that would augment what bombora is doing yeah now you're not charging a lot of sas companies they have churn issues because they charge a flat fee per month and whatever the utility is doesn't actually get used and then people churn you said screw that we're going to build on a cpl cost per lead model tell me about that yeah we really believe in building 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 attraction hard to track so what we decided to do is 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 sas companies track it's about 138 percent quarter to quarter so that and it started off much lower than that i think the last time we spoke we didn't want to reveal it because it was probably below 100 and it's it's crept up yeah you said in 2017 100 and then in 2019 130 percent um peel that onion back for me though today so 138 quarter of a quarter what you know two components make that up gross you know dollar turn on growth space and then expansion on a dollar basis what are those two metrics most of it is expansion we actually are our gross revenue retention which would be you can think of that as uh the logos from prior quarter spending in this quarter is only at about 80 percent and that's because we had a big dip in the first half of the year what do you mean by that only 80 churn no uh that would be if you have 100 customers uh in the first quarter and they spend 100 each the next quarter hundred dollars still spend each but only 80 of them are buying so we we lose uh about 20 percent of our existing uh uh logo revenue per month while the other side's growing at you know almost 40 percent 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 so let's move away from logo churn because of that trend that's why i want to dig on onto dollar trend so i'm going to use your same exact example 100 customers today paying 100 bucks a month next month 80 churn but the ones that are left are not hopefully still only paying 100 bucks a month ideally they've expanded that's what i want to know yeah it's not an 80 churn it would be a 20 sorry that's what i meant but you get my point yeah and and and the others are paying in some cases uh six seven times x but what is it i mean when you take the total revenue amount from those 100 in one month and in 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 we don't track it like that and i could certainly pull those numbers i don't have them off the top of my head okay all right got it so so basically 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 correct that's on a net net basis yeah yeah okay interesting um last time we spoke you know you were testing some different uh uh customer sort of generation inbound methods talk to me today how are you getting new customers and how many customers do you have you know we we're gonna do two million dollars of revenue this month which is our best month ever uh 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 uh of our current uh we will run about 150 campaigns this month uh rather 150 different companies will be running campaigns for this month 74 of them are new customers in the past six months and of those 74 about 40 of them are from inbound marketing interesting okay so 40 new inbound and what's the general size of the initial contract folks spend with you you know the first month they pay you x yeah yeah we we don't like to do anything less than 10 000 and that's really going away the average right now for a first time order is around 50 000 okay and and how many leads would you deliver them if this is a tool like monday.com or click up a team productivity tool yeah i love click up their san diego company just raised 100 million dollars in their series b awesome um yeah so not just that it was one of the fastest rounds i've seen from they just they just literally two months ago to the 33 million dollar round at a five you know half billion valuation then 100 million at a billion dollar as fast as i've ever seen that happen yeah well i'm going to buy your report just to see if you know there's a plug for you yeah so so uh 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 per lead you can per lead yeah so you can think of an average of around 75 is is a number that was the low end the low end is around 50. okay so 50 to 1200 average 75 interesting okay what's what's a 1200 lead like what is it like a fin like a hedge fund or something yeah yeah hey what is hedge fund well it's it's uh it's somebody selling very very expensive things maybe like airplanes or financial packages to large corporations those type 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 uh a hundred leads but they're very expensive well listen congrats on the growth i mean last time you were on in 2019 you were doing about you know 20 million in terms of 1.6 1.7 million a month you're now up to 2 million a month or 24 sort of run rate so so congrats on growth in a tough year for everybody have you raised additional capital we have not well the last raise we did was about uh two years ago i think uh we still have plenty of dry powder in the bank uh we uh we are profitable for the past three months oh wow how much can i ask how much uh yeah but this month we'll have about four hundred thousand of ebitda on about two million of revenue oh and how on earth does your board who want to reinvesting and growth let you sit on 40 well not 40 percent a little 20 percent even to margin 20 even yeah so i think that our philosophy is we've really been inspired by john singleton and the whole theory of cash management so 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 you know our companies raised a total of about 20 million dollars and have revenues that are similar to companies that have raised 100 million dollars so i think there's 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 uh there's it creates problems for founders where you can't clear preferences uh there's a problem with raising money too high evaluation so 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 and you...