How Leadspace CEO Alex Yoder grew to $20.4M revenue and 200 customers in 2019.

hello everyone my guest today is doug buscher he's a ceo of leadspace the leading customer data platform for b2b uh folks lead space was the ra was rated as the leader and by forrester in 2019 has over 200 customers including leading b2b brands like amex zoom sap salesforce and microsoft doug you ready to take us to the top absolutely all right customer data and just data products in general it's a very fragmented space how are you kind of carving out a niche here well it's kind of interesting like i was a salesforce i was the cmo of salesforce before this gig when everyone talked about engagement and now everyone is talking about data the thing that matters is about ai and intelligence and how you figure out that data and i think the new technologies are changing the way b2b companies and b2c companies can do that yep okay so maybe describe can you describe how your customers are using you today maybe amex or someone you can talk about yeah sorry you broke up a little bit so talk about microsoft they've talked a lot with us pretty much now if you go onto a microsoft site you fill out a form or give them some information we're helping them get information about who's the company who you are so they can get the right information back to you they can we can use all the different data sets that we have the models that they have what they can actually figure out in terms of how to best personalize and send you information that's relevant to you and that's a huge win both for the customer which is really important so you don't get a lot of spam you don't get a lot of rubbish and all that kind of stuff but also for the company so that they can actually engage you with the right products and services so they can be more successful so how help me understand how this is different from like a discoverorg or or a clear bit or any of these other kind of tool providers or data providers sure what the point about a customer data platform is more and more companies recognize you need lots and lots and lots of different data sets so discover is great they're a partner of ours but they are just one data set clear bit is just another data set what you need to do is bring all these together at the person the company and also this new category called intent and actually use that to sort of blend that data create a single source of truth a single identity so that you can use that to build models and intelligence so that's the difference between a data platform and just a data provider and we work with all the big data providers whether it's discover zoom dmb all of those kinds of guys bombora uh you're talking zoom info not not eric won zoom sorry superinfo zoom is also a customer of ours as well yeah well zoom info is now discoverorg you know it's incredible they pulled that deal off now now doing about 320 million bucks in arr yeah it's it's a great business and i think you know with dmv also going private right you're going to see an interesting battle now between discover and d and b as they sort of really look to consolidate the data space you're talking dun and bradstreet right indeed yeah very good all right let's uh give me a general sense here of of kind of sizes i'm sure you have customer courts that are all over the place but on average what would you say a customer's going to pay you per year to use your technology yeah as you say it is all over the place and we bought reachforce which is a forms product and so they have some pretty small customers maybe 5 10 15k a year okay but we also have customers which are in seven figures so we sort of see the gamut but typically we're working with enterprise software companies and they will typically spend six figures something like that because what they're trying to do is really kind of enable a sales team of thousands of people so we'll call it ten thousand dollars a month is maybe a sweet spot for you or something like that uh another zero to that yes no that was 100 that was a month ten thousand a month oh ten thousand month yeah yeah yeah and okay so let's just stick with this kind of persona we've made up so if i'm gonna pay you about ten thousand a month or 120 grand a year what kind of metrics are bounding that pricing plan do you upsell against any value metrics or how does that work uh so we tend to follow pricing quite similar actually to a like a marketo or one of those guys which tends to be on how big the data that we're working with is so if you have a database of a million records that might be that kind of price it's it's fairly standard in this industry about pricing like that versus a seat based model and then yeah you know we do data three real things data management so that's the core offering which is to create that single source of truth then we help customers building various different models look like models predictive models whatever and we tend to you know potentially add incremental price for those models that help you get more information and then we have activation points if you activate into live ramp for ads or salesforce or marketo or you know your site then we have those connectors and they tend to be one-off integrations that we do kind of like number number of api integrations essentially feeding the system exactly yeah yeah interesting okay very good put this on a timeline for me when you launch uh so the company is israeli originally so the founders out of you know the israeli nsa was doing anti-terrorism kind of stuff amazing story and that was back in 2010 and then we moved and i joined five years ago that was when we moved the company really to be focused on the us market so five years building a great product in israel now we still have r d and so forth in israel but really the company is based here in san francisco in the you know two months ago we bought reach for so that's also giving us a presence in austin and so that's really the scope of the company today did you come in with the battery b round eight was that part of what were you like an eir there after salesforce or something no i did battery were part of bringing me in um i came in when we decided to move the focus of the business to the us you know how these israeli companies tend to be there was a point at which the board said are we just a technology player and we're going to sell to somebody as a piece of tech we are real business and that's why i came in because i think there was enough momentum in the business for us to build a us office but at that point though battery was already an investor in the company they were actually one of the i think the actual first investor originally in this company and how much raised today total uh we've raised today about 40 million total okay 40 why is it different uh different than like the 56 million listed on crunch base you know crunch base is a approximate estimate that they take from lots of press releases and things in terms of how much we've raised in terms of capital so it's it's reasonably close okay not a bad data source okay i mean that's a pretty big difference right i mean basically what you're saying is the 17 you know the 17 million series a and 2011 they're essentially not that didn't really exist you just had the 18 from battery and the 21 from arrowroot uh yeah i mean there's some other capital raising there in terms of things like debt as well right that all get kind of rolled up into the numbers that they report as you're in crash bank were you around when the company leveraged debt to drive growth or was that before your time uh we had when i joined we had a little bit of debt and as we continue to grow in terms of revenue that's allowed us to get greater debt capacity so we continue to grow on that front why have the fundraising's been basically equal so i mean this is you know the pattern you typically see right is like okay you do like a b and then a c is like triple a size and then triple size you it's basically been like a 17 to 20 million dollar round you know since 2011 once every like three years oh why i mean by the way you could just be printing money and you just don't need more capital i'm just curious why yeah so a couple of things on that it's a really good question by the way um so one thing is because we have a strong technology platform we are not you know just selling ourselves to an investor on the basis of our revenue right we are selling ourselves on the fact that we have a really strong technology so a lot of our investment goes into our r d team in israel right that's kind of the asset one of the most important assets that we have in that way it's a fairly fixed amount that you're using to continue to build that skill we have about the same r d team that we've had over the last couple of years and at the same time our go to market our sales marketing has become more efficient so what we've seen is we continue to invest in building the product but we're really reasonably self-sustaining in the way that we actually grow the business just a little different from some of our smart competitors in this space which has spent a ton of money building a brand and throwing money at sales people and doing all that kind of stuff but never really sorted out the underlying product so that's why you see us being fairly fixed and we're at a point where now as you said we don't actually need to raise any more money and so that does become as we look to potentially raise money in the future if we were it is to do things like buy other players in the space or do inorganic or maybe you know grow in a new market that we're not in like europe so you said did i hear you right you said 100 folks on the team today yeah and how many engineers uh out of that we're about 35 in the engineering okay still it sounds like based on israel and how many quarter carrying reps uh we're i wouldn't give these exact numbers but we're sort of in double digits now okay so kind of more than 10. yeah um so the reason i asked that number is you said you're getting more efficient with with time right in terms of you don't need to throw more at marketing i i think that you would see this in the following number most ceos i interview that have broken you know the 50 or 100 million ar mark uh they're driving their sales person profitability up right so it maybe starts at like three or four x and then some are pushing seven eight nine 10 x so when you look at a sales person who's fully ramped right at lead space and you compare their total compensation you know when they hit ote relative to the the new booking new ar bookings target the quota is that like a you know is that really high for you 789x uh i think in the kind of enterprise sales we do we're not talking about 789 x right i think the most of the metrics that i would see is if you pay a sales guy you know an ote of 250 let's say right then you might give them a quota of one to one and a half million bucks right now typically we're seeing our sales guys exceed their credit which is fantastic right but that benchmarks also to some of the metrics i've heard at salesforce where i was before where 25 of your revenue is being spent on your sales costs right so i think that's fairly consistent i think if you're seeing 10x you're probably being a little bit over optimistic or you're in a very high velocity kind of sales model a la zoom perhaps right which has smaller accounts that are high frequency right where i typically see this that was actually like indeed like like sales teams not built in the states where sales people are not actually there's not a ton about commission actually right which would require you to and so that's fine and it's a great business model but that also tends to be an inside sales model if we're trying to go out and sell a large deal to i don't know cisco or somebody typically they would actually want somebody on the ground who they can work with because this is also about transforming the way they work we're not just selling sort of a widget into their process so they're good both of them are very good models um they're just different go to market strategies so to land a new 120 000 account are you comfortable spending fully weighted the full 120 for a 12 month payback are you being more or less aggressive today sorry i missed the start of that yeah so pay payback period 120 000 account are you happy with the 12 month payback period or more or less aggressive uh 12 months given our retention and upsell rate would be fine okay um are you generally this is typically not a stationary number ceos are typically getting more or less aggressive depending on where the company is which where are you trending so we are trending down in very interesting questions here so we're trending down in terms of our payback period right to you know obviously goal is to get 12 months and less because then you're a self-funding company right i think at the same time we will want to continue to get larger deals so there's a balance for me i don't i actually feel quite happy with where we are with the payback period right now there's you know other elements of the business that i want to continue to work on in terms of getting larger deals more customers and i'll stick with that payback in order to get to that outcome yeah okay bit of the backstory here so 2010 you get going on you joined the company uh sorry that was when the company was founded you said you joined four years ago or five years ago five years ago yeah five years ago okay so you're joining call 2014. um help me understand the customers that you were getting back then are they the same customers today or have you really moved upstream so uh some of the customers are the same like you know oracle and microsoft is a very early customer in others right because they were fairly innovative and some of them aren't right you know some of them have changed typically we've tended to lose the smaller customers right because we have tended to go to doing more enterprise kinds of deals and those customers who we started with they might have bought 25 000 a year from us and then they went to a hundred thousand and now they're at three hundred thousand so we've seen nice growth in terms of how we grow with them as we expand within those organizations but but we've been pretty lucky in terms of or lucky or whatever in terms of having customers that have been with us on this journey quite a long time five six years so how many i mean how many customers are you serving today uh we got uh around just under 200 customers today okay and it sounds like you've got a pretty expensi impressive kind of expansion muscle which is critical to any sas company one to make up the churn hole right and then i'd consider you know world-class net revenue retention to be in the 130 to 140 range so are you guys close to that have you beat that already or if not when you think or what do you think you have to do to get there yeah so we're definitely in the hundreds on the net revenue i'm not going to share the exact numbers here um continues to grow in the right direction and i'm feeling pretty good out about it yeah well to get up to 100 obviously you have to fill the gross churn number so is that a big hole you're filling are you talking like 10 revenue churn on a gross basis annually yeah so we are yeah so we're fairly standard in those kinds of metrics that you would see in this industry i think you've got a fairly good benchmark that you're sort of referring to you're giving me way too much credit so are you talking like 10 are you talking you're you're very doug you're very you're very good at this but i've done this too many times i mean so when you say standard though i mean i won't pin you down on your exact number but 10 annually fair you call that standard in the industry yeah i think 10 churn is a pretty decent number in our industry okay uh so second question you're more than filling that hole to drive expansion revenue is mo is your strongest i'm curious you gave me some upsell metrics earlier in terms of api integrations modeling activation points are there any one of these upsells that your sales team are just finding it's the most powerful one it's the easiest upsell the easiest upsell for us is getting into additional business units right if you think about i don't know um we work with a company like uh well just go back to microsoft because the easiest you know we tended to work with you know one bit right azure is where we would start but then we get into the cd yes and then we get into the whole global marketing organization and then we get into being you know you grow within an organization by getting to broad broader and broader sales teams it's one of the beauties of being an enterprise software versus necessarily having to take the same customer and the same thing and sell them all we do do that too so you know success breeds success right i i strongly believe that enterprise sales is a lot about finding somebody who's an advocate you know you can do all of this outreach and all this sdr stuff but number one is when somebody goes to somebody else and says what should i use to solve my data management problem and they say you should talk to lead space and when that happens within somebody within your own company and you've already been through all of their complicated technology integration problems it's a really good place to be so i think that's why we see the success before we wrap up with the famous five and i can tell you're gonna hate you're gonna hate you're gonna hate me for what i'm about to do but i have to do it uh you say 200 customers our poo caught a hundred thousand 120 000 bucks i mean that would put your mrr today at somewhere around 2 million dollars per month or 24 million run right is that generally correct uh we inherited a few customers from reachforce who are smaller as i mentioned earlier on so it's a tad less than that but when will you break it do you think will you be is that a stretch goal to break it this year or you think you need next year to break 24 in arr uh we will be there i would expect early next year okay fair enough and then help me understand historical growth so where were you a year ago uh we've been pretty consistent at growth i don't know if i'm going to give you all these metrics i mean i can guess right i mean you you fit base i mean everything you've given me is pretty basic and stan not basics but standard right so i mean i would assume based on what you raised and what you're doing you're growing probably about you know 80 to 110 percent year every year and you're going to keep doing that for a year or two before you go down to like you know a you know a 30 or 40 growth rate year every year there we go that's the what's what we're required to do in terms of seeing nice growth some of the numbers right getting to a good scale right as you said in sales and marketing business there's very very few scale players very few people who did 2025 in enterprise software and the kinds of things and most importantly doing that off the back of a technology platform that as you know we talked about at the start cdp's are being you know aggressively looked at by all the big technologies cdp's customer data platform customer data platforms yeah okay very good and just last question on expansion over the past so if you caught 100 year over year did most that come from driving because i just i think you just did this acquisition did most that expansion come from expanding lower paying customers or adding new logos all together uh most of it comes we actually have a land and expanded strategy so what we'll tend to do is we'll go into a customer we'll start working with them in limited way and then we'll grow that way so some of it comes from new logos but less than you know i'm not making all that from that but most of it comes from our ability to take a poc or a relatively small piece of business and really you know triple or 5x the time as uh the size as people actually start using the product yeah and i think that's why we're seeing it are you planning to get back to break even before you go and do your next round if you do choose to do next round yes okay do you think you will raise more capital or no i think this space is right for consolidation i think if we raise more capital it's so we can actually go and acquire more business why won't you just use non-diluted debt for that why wouldn't i use debt for that yeah i mean this is like a play that vista and all the big guys would use when they're buying sas company is there a lot of it it's like kind of buying a house you put up 10 equity you know 90 debt yeah so my so the balance between equity versus debt is a good question right i haven't i guess when i'm thinking about i think of raising more capital than necessarily the vehicle for that fair enough if you were going to raise in the next year what would what amount would you target you think you're talking like 20 30 million ish i i think if we did a growth round that's what we're talking about yeah all right very good let's wrap up with the famous five number one what's your favorite business book oh my favorite business book uh i think behind the cloud is pretty good actually no no bias there at all no but you know i didn't i don't in general buy business books i think you know i was at mckenzie for many years and so i don't buy it but that was pretty good as a marketeer to read how you know he did his work yeah the benny book has a great story there number two is there a ceo you're following or studying uh you know i work for josh silverman um when i was at skype who's now over at etsy and i follow his progress i think he's a brilliant analytical marketing consumer ceo so great guy number are you trying to close him right now on a deal is that why you're giving it no he's a consumer product we don't sell to people all right just check gotta ask number three what's your favorite online tool for building your company uh slack i you know i've been for a long time in uh you know this collaboration space when i was at skype mig 33 in various places so i love online collaboration slack's the first one to have got it right and when we're building a team in israel and here and whatever transformative doug how many hours you sleep to get every night uh i'm pretty good i get eight hours a night okay and how old are you i'm an old man no how old are you how old am i 51 51 last question and what's your situation married single kids i'm married with one 14 year old kid oh good okay a handful here last question what do you wish your 20 year old self knew uh oh my god what um so it's interesting i wish that i had had more exposure to all the different all the different kinds of things you can do as a person i was very you know i went to oxford i came from a family my grandfather started a company i was very much in a certain box of doing something and wanting to be a ceo as i look at my son i'm like i hope he expands his horizons and just thinks about all the opportunities before he jumps into one guys leadspace a customer data platform for b2b folks 200 customers today doing call at 1.7 1.8 ish per month with eyes on a 24 million dollar run right here shortly in the next call one or two quarters uh raised about 40 million dollars today to grow the business where it is today about 100 folks on the team 35 engineers it north of 10 in terms of quota carrying reps where they optimize for call of 5x profitability spending about 12 12 months worth of lifetime value on cac right now so 12 month payback period with north of 100 in terms of net revenue retention as doug looks to scale the business doug thanks for taking us to the top great thanks a lot