How Lead Genius CEO Mark Godley grew Lead Genius to $5M revenue and 250 customers in 2024.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is prayag narula he's the founder and executive chairman of lead genius a customized b2b contact and company data company before founding lead genius in 2011 he worked at finland's top research institute as an expert in ubiquitous interaction and built mobile applications and embedded systems in delhi's startup scene he's the author of several book chapters and papers on human computer interaction computer networks and network security praia you're ready to take it to the top i'm excited all right very good so tell us what lead genius is doing and what's your revenue model are you pure play sas yes so it's a sas based revenue model what we do is we help large-scale sales and marketing companies manage their uh manage their sales and marketing data so if you're a large company you have ton of sales and marketing data that you're managing and you need we come in and and we do that for you okay so i mean it's a manual process or it's sas you're using machine learning ai et cetera yes so it's a it's a sas model um we use a combination of ai but then we augment it with what what we call crowdsourcing that's my research area from from berkeley coming into picture so we augment ai with actual human intelligence to uh to solve our uh customers problems so praia give me i'm sure you have a huge range here but for the sake of our time constraints today what would you say that this sweet spot is for you so on average what's the company going to pay you per year to use your technology uh the com so uh as you said it is a big range but i think the on the low end anywhere between you know two to three thousand dollars a month on a high end so that becomes you know what like thirty forty thousand dollars a year on the high end which a lot of our customers are could be you know high six figures and even seven bigger contracts okay if i did though force you into kind of a sweet spot though i mean is ten grand a month on twenty thousand dollars a year kind of a sweet spot uh i think i think five to ten grand a month uh six uh seven to ten a month is probably used okay fair enough so let's dive in let's dive into that use case so someone that comes in is paying you seven thousand dollars per month what are they getting for that is it based off number of leads you're analyzing or what are the things you price against yeah so it's the amount of data that we manage for you right and it usually is based on uh amount of data you have or the amount of data you need which directly relates to you know what is uh what is the size of the sales team you have how much marketing campaigns you are running and uh so on and so forth so um you know so since these contracts will be talking about you know five seven grand they're like you know high high five figures we'll do some sort of a custom pricing it will come up with the pricing that actually makes sense to you um uh based on your need we we hate over selling um so uh typically it will be based on your your your requirement okay and what year do you found the company in uh the company was founded in 2011 uh the product incidentally came to market in about 2013. okay so what did you know as you were building the property in 2011 and 2013 was the first line of code in 2011 yes okay and the first sale was 2013 yes okay how much would you guys sink into the business right building your mvp in terms of how much cash it took you to build um so we were graduate students uh so it was three of us and then there was one another uh that we had hired and so it was probably about a few hundred thousand dollars like two or three hundred thousand dollars but it wasn't it wasn't that much okay especially in the vc fund it wasn't that much well yes you know you guys were students right so where'd you get 300 000 from did you raise on day one so you guys were students where'd you get 300 thousand dollars from did you raise on day one uh no so we got some money from y combinator uh so we had this idea so we raised some grant money which was not enough but it was like you know a few thousand dollars that kept us going while we were in graduate school and then uh we joined an incubator called y combinator they again gave us you know 10 15 grand uh not enough but kept us going for another few months and then we raised some money from from some small investors okay so to date how much total into the company uh we've raised about uh about 25 million okay so why did you need to raise that much and take all that dilution why do you need so much cash to build this it's a very competitive market um and we have been investing a lot in growth you know so cost of acquisition of customers is high uh you know we are doing some interesting stuff in technology that has never been done before especially this idea of like you know actual human interacting embedded into technology not as a services field but actually embedded into the technology that came out again our research at berkeley um you know requires a bunch of uh you know good high-tech good engineering team to build so mostly it's to require customers and to build technology okay so you mentioned cac as you were talking about your costs right so to get a new seven thousand dollar a month account or eighty four thousand dollar first year ac how much will you spend up front to get that customer um you know good i think 20 25 000 is probably uh probably something we'll spend yeah okay that's not a bad cac at all that's a payback period of like three or four months most people in this market they're looking at 12 to 18 month payback periods right but remember like when you say most people their acvs are probably like smaller smaller than ours so it's a lot more you know in a lot more transactional model um you know 12 months is is is a lot more common but in more quote-unquote enterprise sales uh you know six months is pretty common now i would actually argue the opposite on smaller transactional sales payback period is typically shorter on big enterprise accounts that are usually stickier you have a longer lifetime value so you can validate a higher cac so you're willing to pay first month acv or two years of of you know your first year contract value and second your contract um so it's because it's a cash flow situation right like if you are paying if the customer is is is paying you you know uh if a customer is paying you say five six thousand dollars uh a month the cat can be in high you know high high mid to high five five figures you can pay 25 30 35 000 um if you are a transactional business you're probably spending uh you know anywhere between three to five thousand dollars but the customer is paying you um you know a few hundred dollars a month so um but where do you get that data from sorry i've never heard of a ratio like that where who are you sitting there where are you getting that data from i i i i'm signing at the top of my head so i this is not the right data uh or at least not the the cited data i'm just arguing you've raised so much i'm trying to figure out why you're not being more aggressive on cac if i was in your shoes and your churn was low and you've raised 25 million bucks so you can bridge a cash gap i'd be spending one to two months of lifetime value sorry one to two years of lifetime value to get a customer which in your case would be 80 to 160 thousand dollars to get a customer um 80 to 100 000 so how many customers can we raise um after spending i mean uh how much how many customers can we raise based on you know remember this 25 million is not being raised for it's raised over like you know six seven years right so six years how many customers can we they say last round was 13 million um you know that should last us say two to three years it's a hundred thousand dollars how many customers can we can we can be acquired oh yeah that's a question it's a question for you not me right so there's a limited number of customers right there's a limited number of customers that you can acquire um uh it's yes we sometimes we are aggressive uh but honestly like 25 30 000 is it's pretty high for a cat uh yeah but attack in itself though is not in my opinion cac in itself is not relevant tack relative to how much cash you get from the customer in the first year is what's relevant so i guess what i'm hearing you say is you feel like you're being aggressive at a four month payback period you pay 25 grand to get a 7 000 a month customer you get paid back in four months you feel like you are being aggressive on cac i think you're aggressive on cad because honestly like a cost like acquiring a 30 000...