Lead Genius Revenue, Valuation & Funding (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 30 000 that's a lot to pay for for an app and that's an average customer right like half of them are going to pay uh pay us over a lot a lot longer right so um and sometimes honestly like seven thousand here's one thing that you that i probably didn't make myself clear on it's seven thousand dollars it's not seven thousand dollars off the bat it will start at a much lower rate and say two to three thousand dollars and then it will increase as the customers expand so what is average first year what is average first year acv twenty or thirty thousand yeah somewhere okay so if you're spending twenty five thousand you get a twenty five thousand dollars probably like more but yeah so yeah so 30 to 30 30 to 40 000 30 20 000 yeah so brag if you're spending 25 grand to get a 30 000 customer your payback is about a year yes that's correct yeah in the first year in the first year right yes well yeah that's when cac is spent on day zero so all you care i mean of course it's the first year that's how you would casual that's how you calculate profitability on this on the on the sale okay yeah okay interesting all right let's let's get off that for a second it's helpful to understand that though so help me understand what the team looks like today how many folks on the team about uh 60 yard people around the world six zero yeah how many engineers about a product team of about 15 people okay and do you have any quota carrying reps or no we do have food okay gaps yeah we have a sales team about about 10 15-ish people also okay and they all carry a quota not all of them carry quota well uh not all of them carry a quota in dollars what do you mean by that some some quota carriers have uh opportunity number of opportunities that they need to build and some quota carriers have uh you know they are based on acting well uh so we have part of our sales team is is uh kind of managing some sort of the delivery so that includes renewal so they'll their quota would be based on how many renewals how much upgrade so on and so forth okay okay fair enough let's go back to day one so 2011 you're coding 2013 you get out the market you spend 200 300 grand to build the mvp do you remember that beautiful first sale who was it two and how did you get them um so you know businesses are not straightforward right so our first sale which we made was not for lead genius it was for a very different product that we were building that happened so we initially built the technology first and we licensed the technology to anyone who wants to use it right whether it's sales and marketing whether it's finance whether it's something else uh you know they chose um and as they um as the as we build the technology we thought the technology itself was good was going to sell itself so the first cell and the first few sales we made was kind of providing the technology directly through an api um that was already i think it was the end of 2011 there was some australian companies that bought a product for six thousand dollars for three months i think okay and then fast forward to today how many customers are you serving about 250 customers or something okay two five zero yeah and when you look at the kind of your growth trajectory so over the past 12 months is most your growth coming from upselling older customers or adding new customers all together i think upsell is a big part of our growth i would say you know uh 30 to 40 percent probably comes from us upsell if not more okay that's pretty good now can i do this math you told us earlier kind of our poo average was to call it seven grand a month across 250 customers that would put you at like 1.7 million a month in revenue is that right no i i don't think that's we are about i think about half of that okay so then rpoo is more like 3 500 per month across 250 customers across 250 customers yes but about across a target segment which is more mid-market and enterprise that's what's going on that's where we spend all our tax is spent on acquiring those customers fair enough okay so monthly revenue today is more like 800 000 bucks a month something like that okay and if that's the case where were you about a year ago do you remember uh about i think we were doing like i know like by 600k somewhere around that 600k okay so if you're at like you know 600k obviously going up to 800 is is fine for like a growth like a bootstrap company but for a venture backed company it's not great growth why aren't you growing faster i think we so we have uh pivoted our business model from uh supplying primarily to smbs and now supplying to uh moving kind of entire go-to-market from selling to sle to selling to mid-market and enterprise so we have seen a lot more growth in our mid market and enterprise customers that's kind of where our uh our mindset is um so that growth is is is a lot better but you know in that when you stop focusing on part of the market that uh that market kind of either goes away or at least the growth slows down your logo churn then might be pretty high because you're churning off cheaper customers but your revenue churn should still be pretty healthy so if you look at gross revenue trend over the past 12 months what would you pin that out i think like the nutrition gross revenue churn yeah gross revenue churn um i know man like i don't have those numbers at top of my head but like seventy percent uh sorry thirty percent yeah okay and does does the expansion revenue more than make up that thirty percent hole makes up for most of them okay if not so when would you think you can get to the point where you're at 100 net revenue retention it sounds like you're flirting with it right now yes oh hopefully by early next year okay okay that's pretty good that's good all right um last question here before we wrap up um uh boards how do you manage your boards is it five seven people yeah so we have a four person board uh four four voting people and two observers um so six person board um board is there to to to help you right so one of the things that i've learned is always be honest with your board just just tell them what it's like especially like be upfront in the bad news um don't try to hide anything because boards usually especially professional boats would not like surprises so don't surprise the board would be would be kind of mine is mine and i assume you probably do this like quarterly or something when's your next board meeting yeah we do so we just wrapped up one uh two weeks ago um two or three weeks ago so next would be next quarter i don't know if i have we have time on the calendar we don't have uh a board recurring board meeting we should probably do that but we basically set it up every quarter beginning of the quarter yep okay good so so next one might be like right before the holidays or something right so it will probably be like middle not middle of october oh middle october so you do one every like two months then one or two months if you just finished one no it's the timing thing because like the first one we were able to we had to delay it because people were on summer vacations got it so we had to uh you know we couldn't do it for for the time that we wanted so that got delayed to the next one but we would want it to get back on track and brag last question here before we wrap up with the famous five um how aggressive are you being with burn i mean are you cool burning 300 400 grand a month or what are you guys at no no i i think burn is uh our burn is a lot lower than that's probably like half of what you're mentioning um even less than that um we are cognizant of our burn especially when you're you know when you're when you're not growing at 100 percent you need to keep your abandoned under control so that's what that's what we've been doing so now but we are so sorry accelerating that with to bring the growth um as we are seeing a lot more traction in enterprise and mid-market large customers we're going to spend a lot more money there so the projection is that might go up okay but right now it sounds like it's about 100k a month something like that a little over that somewhere between 100 200 okay fair enough let's wrap up with the famous five number one favorite business book hot things about hot things number two is there a ceo you're following or studying uh ceo i'm following on studying adam levy number uh three what is your favorite online tool for building your company online for building my company um any open source tool out there pick one django python django django number four how many hours of sleep to get every night uh six hours and what's your situation married single kids uh uh married kids how many kids one one kid and how old are you uh i am 35 35 take us home last question what do you wish your 20 year old self knew um you can always ask and aspire for more than you think you can guys always go for more founded and started writing the code in 2011. they spent about 200 300 on the mvp got their first paying customer in 2013. now today serving about 250 customers at about three four thousand dollars per month doing 800 dollars per month in revenue up from call it six hundred thousand dollars per month just a year ago it's about 50 year-over-year growth they raised 25 million bucks to grow this company again really enriching and helping people understand what their leads look like what the email addresses are keeping their data in the crms accurate as they look to continue to scale uh prague thank you for taking us to the top thanks man you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data points from the world's leading sas ceos click and watch one of them right now