How Leadspace Reached Just Under 200 Customers with About $40M Raised as a B2B Customer Data Platform (Interview with CEO Doug Bewsher)

Introduction and Company Overview

Nathan Latka

00:00Hello, everyone. My guest today is Doug Bewsher. He's the CEO of Leadspace, the leading customer data platform for B2B folks. Leadspace was the rate... Was rated as the leader in... 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?

Doug Bewsher

00:18Absolutely.

Carving a Niche in the B2B Data Space

Nathan Latka

00:19Alright. Customer data and just data products in general. It's a very fragmented space. How are you kinda carving out a niche here?

Doug Bewsher

00:26Well, it's kinda interesting. Like, I was at 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.

How Microsoft Uses Leadspace

Nathan Latka

00:44Yep. Okay. So maybe describe... Can you describe how one of your customers are using you today? Maybe Amex or or someone you can talk about?

Doug Bewsher

00:51Yeah. 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

01:12can actually figure out in terms of how to best personalise 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.

Differentiating from DiscoverOrg and Clearbit

Nathan Latka

01:30So how... Help me understand how this is different from like a DiscoverOrg or a Clearbit or any of these other kind of tool providers or data providers.

Doug Bewsher

01:38Sure. Well, the point about a customer data platform is more and more companies recognize you need lots and lots and lots of different datasets. So Discover is great. They're a partner of ours, but they are just one dataset. Clearbit is just another dataset. 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

02:01source 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, D and B, all of those kinds of guys, Bombora,

02:17G2Brad.

Nathan Latka

02:18You're talking ZoomInfo, not not Eric Yuan Zoom.

Doug Bewsher

02:21Sorry. ZoomInfo. Zoom is also a customer of ours as well.

Nathan Latka

02:24Yeah. Well, and ZoomInfo is now DiscoverOrg, and, you know, it's incredible. They pulled that deal off now now doing about $320,000,000 in ARR.

Doug Bewsher

02:32Yeah. It's it's a great business, and I think, you know, with D and B also going private, right, you're gonna see an interesting battle now between Discover and D and B as they sort of really look to consolidate the data space.

Nathan Latka

02:42You're talking Dun and Bradstreet. Right?

Pricing Model and Customer Tiers

Doug Bewsher

02:44Indeed.

Nathan Latka

02:44Yeah. Very good. Alright. Let's, give me a general sense here of of of kind of sizes. I'm sure you have customer cohorts that are all over the place, but on average, what would you say a customer 's gonna pay you per year to use your technology?

Doug Bewsher

02:56Yeah. 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, 15 k a year.

Nathan Latka

03:06Okay.

Doug Bewsher

03:06But we also have customers which are in 7 figures, so we sort of see the gamut. But typically, we're working with enterprise software companies, and they will typically spend 6 figures, something like that, because what they're trying to do is really kind of enable a sales team of thousands of people.

Nathan Latka

03:20So we'll call it $10,000 a month as maybe a sweet spot for you, something like that?

Doug Bewsher

03:25Another zero to that. Yes.

Nathan Latka

03:27No. That was a that that was a month. 10,000 a month.

Doug Bewsher

03:30Oh, 10,000 a month. Yeah.

Nathan Latka

03:31Sure. Yeah. Yeah. And and... Okay. So let's just stick with this kind of persona we've made up. So if I'm gonna pay you about 10,000 a month or $120,000 a year, what kind of metrics are bounding that pricing plan? Do you upsell against any value metrics, or how does that work?

Doug Bewsher

03:44So we tend to follow pricing quite similar actually to, 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

04:06the core offering, which is to create that single source of truth. Then we help customers build in various different models, lookalike 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 LiveRamp for ads or Salesforce or Marketo or, you know, your site, then we have those connectors, and they tend to be one off integrations

04:30that we do.

Nathan Latka

04:30Kinda like number number of API integrations essentially feeding the system.

Doug Bewsher

04:34Exactly. Yeah.

Company Timeline and Founding Story

Nathan Latka

04:35Yeah. Interesting. Okay. Very good. Put this on a timeline for me when you launch.

Doug Bewsher

04:39So the company is Israeli originally. So the founder's out of, you know, the Israeli NSA who 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 and D and so forth in Israel, but really

05:00the company is based here in San Francisco. In the... You know, two months ago, we bought ReachForce, so that's also giving us a presence in Austin, and so that's really the scope of the company. A 100 people today.

Nathan Latka

05:12Did you come in with the Battery B round eight? Was that part of what... Were you, like, an EIR there after Salesforce or something?

Doug Bewsher

05:19No. I did. Battery were part of bringing me in. 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 gonna sell to somebody as a piece of tech? We're a real business, and that's why I came in because I think there was enough momentum in the

05:40business 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.

Total Funding Raised and Investor History

Nathan Latka

05:50And how much raised to date total?

Doug Bewsher

05:52We've raised to date about 40,000,000 total.

Nathan Latka

05:54Okay. 40. Why is it difference, different than, like, the 56,000,000 listed on Crunchbase?

Doug Bewsher

06:00You know, Crunchbase 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.

Nathan Latka

06:09Okay.

Doug Bewsher

06:10Not a bad data source.

Nathan Latka

06:10Okay.

06:11Well, mean, that's a pretty big difference. Right? I mean, basically, what you're saying is the 17... The, you know, the 17,000,000 series a in 2011, they're essentially not. That didn't really exist. You just had the 18 from battery and the 21 from Arrowroot.

Doug Bewsher

06:22Yeah. I mean, there's some other capital raise in there in terms of things like debt as well. Right? Did it all get kind of rolled up into the numbers that they report as you're end Crunchbase?

Nathan Latka

06:32Were you around when the company leveraged debt to drive growth, or was that before your time?

Doug Bewsher

06:36We 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.

Nathan Latka

06:46Why have the fundraisings 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 it's triple size U. It's basically been like a 17 to $20,000,000 round, you know, since 2011, once every, like, three years. Why... I mean, by the way, could just be printing money, and you just don't need more capital. I'm

07:04just curious why.

Doug Bewsher

07:06Yeah. So a couple of things on that. It's a really good question, by the way. 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 and D team in Israel. Right? That's kind of the asset,

07:27one 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 and d team that we've had over the last couple of years, and at the same time, our go to market, our sales and 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

07:48in the way that we actually grow the business. It's a little different from some of our competitors in this space, which has spent a ton of money building a brand and throwing money at salespeople 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

08:08so 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.

Team Size, Engineers, and Sales Reps

Nathan Latka

08:20So you said... Did I hear you right? You said a 100 folks on the team today?

Doug Bewsher

08:20Yeah.

Nathan Latka

08:20And how many engineers?

Doug Bewsher

08:26Out of that, we're about 35 in the engineering.

Nathan Latka

08:29Okay. Still, it sounds like based in Israel. And how many quota carrying reps?

Doug Bewsher

08:34We're... I wouldn't give these exact numbers, but we're sort of in double digits now.

Nathan Latka

08:39Okay. So call it kinda more than 10?

Doug Bewsher

08:39Yeah.

Nathan Latka

08:39So the 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 $100,000,000 ARR mark, they're driving their salesperson profitability up, right? So it maybe starts at like three

08:58or four x, and then some are pushing seven, eight, nine, 10 x. So when you look at a salesperson who's fully ramped, at Leadspace, and you compare their total compensation, you know, when they hit OTE relative to the the new booking, new ARR bookings target, the quota, is that like a... You know, is that really high for you? Seven, eight, nine x?

Doug Bewsher

09:21I think in the kind of enterprise sales we do, we're not talking about seven, eight, nine x. Right? I think that most of the metrics that I would see is if you pay a sales guy, you know, an OTE of two fifty, 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 quota, which is fantastic. Right? But that

09:46benchmarks 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? And so I think that's fairly consistent. I think if you're seeing 10 x, you're probably being a little bit overoptimistic or you're in a very high velocity kind of sales model, a la Zoom perhaps, right, which are smaller accounts that are high frequency.

Nathan Latka

10:10Right? Well, where I typically see this, though, is actually, like, in the... Like like, sales teams not built in the States where salespeople are not actually... There's not a ton about commission, actually.

Doug Bewsher

10:20Right. 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 that process. So

10:43they're good... Both of them are very good models. They're just different go to market strategies.

Nathan Latka

10:48So to land a new $120,000 account, are you comfortable spending fully weighted the full 120 for a twelve month payback? Are you being more or less aggressive today?

Doug Bewsher

10:58Sorry. I missed the start of that break.

Nathan Latka

11:00Yeah. So pay... Payback period on a $120,000 account. Are you happy with the twelve month payback period or more or less aggressive?

Doug Bewsher

11:07Twelve months given our retention and upsell rate would be fine.

Nathan Latka

11:10Okay. 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 way are you trending?

Doug Bewsher

11:19So we are trending down in... Very interesting CAC questions here. So we're trending down in terms of our payback period, right, to... You know, obviously, goal is to get twelve months and less because then you're a self funding company. Right? I think at the same time, we will wanna 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,

11:43you know, other elements of the business that I wanna 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.

Nathan Latka

11:52Yeah. Okay. Back... Bit of a backstory here. So 2010, you get going on. You joined the company... Sorry. That was when the company was founded. You said you joined four years ago or five years ago?

Doug Bewsher

12:00Five years ago.

Customer Count and Expansion Revenue

Nathan Latka

12:01Yeah. Five years ago. Okay. So you're joining, call it, 2014. Help me understand the the customers that you were getting back then. Are they the same customers today or have you really moved upstream?

Doug Bewsher

12:12So some of the customers are the same. Like, you know, Oracle and Microsoft is a very early customer than 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

12:37they went to a 100,000, and now they're at 300,000. 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.

Nathan Latka

12:54So how many, I mean, how many customers are you serving today?

Doug Bewsher

12:57We got around just under 200 customers today.

Nathan Latka

13:02Okay. And it sounds like you've got a pretty kind of expansion muscle, which is critical to any SaaS company. One to make up the churn hole. Right? And then I consider, you know, world class net revenue retention to be in the one thirty to one forty range. So are you guys close to that? Have you beat that already? Or if not, when do you think... Or what do you think you have to do to get there?

Doug Bewsher

13:18Yeah. So we're definitely in the hundreds on the net revenue. I'm not gonna share the exact numbers here. Continues to grow in the right direction, and I feel pretty good out about it.

Nathan Latka

13:28Yeah. Well, to to get up to a 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?

Doug Bewsher

13:36Yeah. 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.

Nathan Latka

13:46You'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'd call that standard in the industry?

Doug Bewsher

14:00Yeah. I think 10% churn is a pretty decent number in our industry.

Nathan Latka

14:05Okay. 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?

Doug Bewsher

14:23The easiest upsell for us is getting into additional business units. Right? If you think about, I don't know, we work with a company like... Well, I'll just go back to Microsoft because this is... You know, we tended to work with, you know, one bit. Right? Azure is where we would start, but then we get into the CDES, then we get into the whole global marketing organization, and then we get into Bing. You know, you grow within

14:46an 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 in Southampton, but we do do that too. So, you know, success breeds success, right? 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

15:10is 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 Leadspace. 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.

Nathan Latka

15:27Before we wrap up with a 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 You say 200 customers, ARPU, call it a 100,000, $120,000. I mean, that will put your MRR today at somewhere around $2,000,000 per month or a $24,000,000 run rate. Is that generally correct?

Doug Bewsher

15:46We inherited a few customers from ReachForce who are smaller, as I mentioned earlier on. So it's a tad less than that, but that's

Nathan Latka

15:53When will you break it, do you think? You... We... Is that a stretch goal to break it this year? You think you need next year to break 24 in ARR?

Doug Bewsher

16:00We will be there, I would expect, early next year.

Nathan Latka

16:04Okay, fair enough. And then help me understand historical growth. So where were you a year ago?

Doug Bewsher

16:09We've been pretty consistent at growth. I don't know if I'm gonna give you all these metrics.

Nathan Latka

16:14Mean, I can guess, right? I mean, you you fit base. I mean, everything you give me is pretty basic and standard, not basic, but standard, right? So I mean, I would assume based of what you raised and what you're doing, you're growing probably about, you know, 80 to 110% year over year. And you're gonna keep doing that for a year or two before you go down to like a, you know, a, know, a 30 or 40%

16:31growth rate year over year.

Doug Bewsher

16:34There we go.

16:36So big story. 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 are doing 20, 25 in enterprise software and the kinds of things, and most importantly, doing that off the back of a technology platform that is, you know, we talked about at the start,

17:00CDPs are being aggressively looked at by all the big technology.

Nathan Latka

17:04CDP is a customer data platform?

Doug Bewsher

17:06Customer data platforms.

Land and Expand Growth Strategy

Nathan Latka

17:07Yeah. Okay. Very good. Just last question on expansion over the past. So if you grew quite a 100% year over year, did most of that come from driving? Because I just... I think you just did this acquisition. Did most of that expansion come from expanding lower paying customers or adding new logos altogether?

Doug Bewsher

17:22Most of it comes... We actually have a land and expand strategy. So what we'll tend to do is we'll go into a customer, we'll start working with them in a 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,

17:44you know, triple or five x the time as, the size as people actually start using the product more.

Nathan Latka

17:50And are you

Doug Bewsher

17:50So that's why we're seeing it.

Path to Breakeven and Future Fundraising Plans

Nathan Latka

17:51Are you planning to get back to breakeven before you go out and do your next round if you do choose to do next round?

Doug Bewsher

17:55Yes.

Nathan Latka

17:56Okay. Do do you think you will raise more capital or no?

Doug Bewsher

18:00I think this space is ripe for consolidation. I think if we raise more capital, it's so we can actually go and acquire more business.

Nathan Latka

18:06Why wouldn't you just use non dilutive debt for that?

Doug Bewsher

18:09Why wouldn't I use debt for that?

Nathan Latka

18:11Yeah. I mean, this is like a play that Vista and all the big guys would use when they're buying SaaS companies. There... A lot of it... They... You know, it's a kind of buying a house. You put up 10% equity, you know, 90% debt.

Doug Bewsher

18:20Yeah. So my... So the balance between equity versus debt is a good question. Right? I haven't... I guess when I'm thinking about it, I think of raising more capital than necessarily the vehicle for that capital.

Nathan Latka

18:32Fair 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 to $30,000,000 ish?

Doug Bewsher

18:39I I think if we did a growth round, that's what we're talking about.

Famous Five: Books, CEOs, and Tools

Nathan Latka

18:42Yeah. Alright. Very good. Let's wrap up with the famous five. Number one, what's your favorite business book?

Doug Bewsher

18:47Oh, my favorite business book. I think Behind the Cloud is pretty good, actually.

Nathan Latka

18:52No no bias there at all.

Doug Bewsher

18:54No. But, you know, I didn't... I don't, in general, buy business books. I think, you know, I was at McKinsey for many years, and so I don't buy... But that was pretty good as a marketeer to read how, you know, he did his work.

Nathan Latka

19:04Yeah. The Benny Alpaca has a great story there. Number two, is there a CEO you're following or studying?

Doug Bewsher

19:10You know, I worked for Josh Silverman, 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 a great guy.

Nathan Latka

19:24Num, are are you trying to close him right now on a deal? Is that why you're giving him a call?

Doug Bewsher

19:27No. He's a consumer product. We don't sell to be consumer.

Nathan Latka

19:30Alright. Just check. Gotta ask. Number three, what's your favorite online tool for building your company?

Doug Bewsher

19:34Slack. I... You know, I've been for a long time in, you know, this collaboration space when I was at Skype in Mig 33 and 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, transforms it.

Nathan Latka

19:51Love it. Doug, how many hours of sleep do you get every night?

Doug Bewsher

19:54I'm pretty good. I get eight hours a night.

Nathan Latka

19:56Okay. And how old are you?

Doug Bewsher

19:56I'm an old man. No.

Nathan Latka

19:58How old are you?

Doug Bewsher

19:59How old am I? 51.

Nathan Latka

20:0151.

Personal Background and Advice to Younger Self

Nathan Latka

20:02Last question. And what's your situation? Married, single, kids?

Doug Bewsher

20:04I'm married with one fourteen year old kid.

Nathan Latka

20:08Oh, good. I'm getting your hands full here. Last question. What do wish your 20 year old self knew?

Doug Bewsher

20:13Oh my god. What... So

20:19it's interesting. I wish that I had had more exposure to all the diff... 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

20:42all the opportunities before he jumps into one.

Nathan Latka

20:44Guys, Leadspace, a customer data platform for B2B folks. 200 customers today doing, call it, 1.7, 1.8 ish per month with eyes on a $24,000,000 run rate here shortly in the next, call it, one or two quarters. Raised about $40,000,000 to date to grow the business where it is today, about a 100 folks on the team, 35 engineers, call it north of 10 in terms of quota carrying reps where they optimize for, call it, five x

21:05profitability. Spending about a twelve twelve months worth of lifetime value on CAC right now. So twelve month payback period with north of a 100% in terms of net revenue retention as Doug looks to scale the business. Doug, thanks for taking us to the top.

Doug Bewsher

21:16Great. Thanks a lot.