How Bootstrapped Measured Got to About a $5M Run Rate and 45 Customers After 250% Growth in 2020 (Interview with Co-Founder and CEO Trevor Testwuide)

Introduction and What Measured Does

Nathan Latka

00:00Hello, everyone. My guest today is Trevor Testwuide. He's the cofounder and CEO of Measured, an industry leader in cross channel media incremental... Incrementality measurement portfolio investment decisions. He spent twenty years building careers in enterprise technology companies. He's He's a pioneer and expert in the cross channel marketing measurement category having spent the last ten years working with advertisers to deploy and benefit from advanced cross channel measurement technologies. Trevor, you're ready to take us to top?

Trevor Testwuide

00:24Yes. Let's do it. That's quite a mouthful there, Nathan.

Nathan Latka

00:26Heck of a heck of a domain name. What's the story on measured.com?

Trevor Testwuide

00:31Yeah. That's great. We we lucked out in that landing that URL. So so Measured exist to to help marketers understand media incrementality. What that is is is what is the the true incremental marginal contribution driven by a media tactic against against your business. The methodology is anchored in test and control experimentation. So think of having an audience exposed to a media tactic, another audience not exposed to media tactic. What is the difference in the two conversion

01:02rates and forms incremental marginal contribution? And you can think of us as a portfolio management tool like a Fidelity or a Schwab or an E Trade for marketing. We live right between kind of finance and marketing. This contribution incrementality language is really the language of finance and it's a concept that that we apply to to marketing. So we're this finance tool for for marketing.

Business Model: SaaS Plus Customer Success

Nathan Latka

01:29And how do... I mean, do you bill for this? Is it a... Is it an agency or is it a pure SaaS play?

Trevor Testwuide

01:33No. It's a SaaS engagement complemented by customer success resources. So if you read our contracts, they're SaaS based contracts. There's just service element to it as a thought partner and industry expert. You know, we pop on and do weekly calls and monthly business reviews to help them make the most of our technology and tools. It's SaaS complemented by CS.

Gross Margin and Cost Structure

Nathan Latka

01:55And so I love this model. Right? A lot of the SaaS companies with the highest net dollar retention complement it with some form of productized service on the back end even in the user technology to make that a higher margin productized service. Mhmm. Last year, if you add up your total revenue, what percent was SaaS versus what percent was service based revenue or productized service?

Trevor Testwuide

02:12Yeah, don't break it out. If you read our contract, we don't bill and reconcile back on hours. What I'll... What I will tell you is is last year we were right around an 80% gross margin business.

Nathan Latka

02:28Yeah. That's great. Blended.

Trevor Testwuide

02:29Yeah. And that that that factors in 100% of our our CS salaries. That also facts... Factors in onboarding engineers. When we kick off an engagement you have a director of customer success that owns the success the engagement. We also have a solution architect that is responsible for getting engagement fully deployed and on board and aligned you know each unique business that we work with. So both of those salaries are factored in and we still arrive at

02:55you know just just under 80% but you know at steady state I expect this business to be you know 80 slightly north of 80% gross margin business.

Pricing: Entry Point to High-End Contracts

Nathan Latka

03:05And what does this typically look like? I mean the average customer that uses you, where they're pay you per month or per year to use you plus the technology?

Trevor Testwuide

03:12Yeah. I mean it it it varies you know on on an entry point, it could be $7,500 a month for a very simple engagement. On the high end, it could be $25,000, $30,000, sometimes north of that. Is it a function of scope and complexity? So scope of experiments we're deploying, scope of brands and geos that we're deploying and then the service part of that as well.

Upsell Drivers: Channels, Experiments, Geos

Nathan Latka

03:36Interesting. So your main ways to upsell someone from $7,000 a month to $20,000 a month is based off it sounds like number of experiments. Are there any other usage based upsell metrics you use to drive expansion revenue for the business?

Trevor Testwuide

03:47Yeah. It's really a number of channels. So as you look across a portfolio, we seek to be the source of truth system of record for cross channel media reporting right and some of these clients come to us and they've got you know two or three channels in play, others come to us and they have twenty, twenty-five channels in play. So how many channels are we integrated into and presenting in this portfolio view? How many experiments are

04:11we deploying to inform in market incrementality for these tactics? We have a lot of international clients that have multiple brands, so is this a single brand, a single geo or is this you know a single brand across multiple geos and in those cases the contracts can get you know quite north of the high end number that that I gave you.

Founding Story and Co-Founder Partnership

Nathan Latka

04:31What's the backstory here when you launched the company?

Trevor Testwuide

04:34Yeah. My co founder and I, we met in 2011 at a company called Visual IQ. It's really the the pioneer of of user level algorithmic multi touch attribution. Madan was my head of product there. I was out evangelizing the business and then leading revenue for the West Coast. Madan and I worked very closely together there from 2011 to 2014 and really found a great partnership in Madan. So we've been close friends over the last ten years.

05:02He reached out to me in the beginning of twenty seventeen and with this innovative idea around deploying experiments to solve this cross channel media attribution problem statement, which traditionally was done through building user level paths that was becoming more and more difficult. It's become now nearly impossible to do and that's mapping like a user's ID, Nathan, your ID for being exposed on let's say Google media to Facebook media to Pinterest media to a conversion, it is

05:34no longer possible within the realities of Martech to build these user level path of exposures to a conversion. Madan was seeing this back in 2015 working across a portfolio of clients is the walled gardens. We're starting to really dominate the media mix. And I... Pat me on the shoulder and say, I think the future of solving this attribution problem statement is is is incrementality measurement experimentation. I've got a framework.

Nathan Latka

05:59So so 2017 was launched? That's right. January And '20 how did you guys, you know, equity conversation is really difficult with co founders. It sounds like maybe he was CTO and you're on the other side. How do you guys have the equity conversation or do you just split fifty fifty?

Trevor Testwuide

06:12Yeah. Madan and I have always been really great friends and I think we we we... It was a very simple conversation that we were gonna be fifty-fifty partners. There's so much that he brings to the table, so much I do and we're a very complementary partnership. Now four months, four years in, it's proven to be a really outstanding.

Bootstrapped: No Outside Equity

Nathan Latka

06:32Still fifty fifty or have you sold some to investors? Have you raised any capital?

Trevor Testwuide

06:36We haven't brought on any any equity partners. No.

Nathan Latka

06:39Love that.

Trevor Testwuide

06:40100% bootstrapped.

Nathan Latka

06:41100% bootstrapped. Yeah. Congratulations.

Trevor Testwuide

06:41Yeah. It's I mean, it's it's it's a it's it's a hell of a journey, but very happy that we've taken that that approach. And and we were both of a a strong mind that we wanted to bootstrap this company when when we started it and fund the fund the company through customer contracts, be incredibly capital efficient. One of our superpowers is how capital efficient we are. We've got some great engineering resources overseas that that...

Team Size, Sales Target and 2020 Growth

Nathan Latka

07:09How many people are full time on the team?

Trevor Testwuide

07:11Full time is 42 today.

Nathan Latka

07:13And how many engineers do you have? A part time and full time?

Trevor Testwuide

07:15Of those 42, there are... There's one full time marketing person, there's one marketing sales, and then there's me on the business side. There's three of us that are on the business side. The other 39 are engineering, product, data science, customer success. Yes.

Nathan Latka

07:33We're... And does the one salesperson does the one salesperson carry a quota?

Trevor Testwuide

07:38Yes. I mean, we've got a target. I I I share the target with him. I spend more than half of my time out evangelizing the company in a in a in a sales capacity. So we have a target that that we agree on, and he has comped against that target. Yes.

Nathan Latka

07:53What what was that target? You plus him for last year in terms of new new, I guess, ARR added or however you measure it.

Trevor Testwuide

07:58Yeah. The target... I'll I'll share the growth. So last year, we we wanted... We plan on tripling the business last year, but with the COVID lightning strike in March, I adjusted that down to doubling the business last year. We ended up growing the company by 250%. So, more than doubled the the business last year.

Nathan Latka

08:16Well, sorry. I guess one of the critical first hires any founder makes is your sales hire and the quota you assign to the sales hire, you can kill yourself if don't do it the right way. Right? If the quota is too close to full on target earnings and the ratios are out of whack, usually at scale it's usually at like five x typically. Is that what you're doing inside your business about five x quota relative to

08:33full OTE?

Trevor Testwuide

08:34Yeah. You know, I I spent my career in enterprise sales. I'm twenty two years in. I've always been in an enterprise sales role selling technology, and so that's where I've spent quite a bit of my time here at at at Measured. And so the first hire was not sales, that was with me, and so I brought in a gentleman by the name of James Bans, who's just another veteran in our industry, to help me with marketing

09:00and taking all the leads that come in, and so it it hasn't... That that was not a problem that we had to wrestle with early on in the company.

Nathan Latka

09:10Well, so sorry. Especially considering your background enterprise sales, my question is even more relevant. What ratio did you set quota to full OTE for your first sales hire?

Trevor Testwuide

09:20Yeah. So like I said, I I I don't have an exclusive sales hire right now. Right? So he

Nathan Latka

09:25is You plus him. You plus him. You plus him manage the quota. Right? The growth?

Trevor Testwuide

09:30That's correct. Yeah.

Nathan Latka

09:31Yeah. Yeah. So he's not a founder. You are a founder. So your first guy doing sales with a quota target. I'm just curious how you think through that.

Trevor Testwuide

09:39Yeah. So, you know, it's it's aligning to his incentives, making sure that I put a a comp plan in front of him that is is very attractive. What the ratio looks like, I I I have to take a look at it. I'm not sure off the top of my head.

Nathan Latka

09:55Or come on. You... You're in enterprise sales and you don't know the quota to on target earnings ratio of your first guy doing sales directly? Come on.

Trevor Testwuide

10:02Yeah. So it's us together own own own the number for the business. We team up we team up in a in a in a blended way to hit that that growth goal.

Nathan Latka

10:13Fair. Fair.

Trevor Testwuide

10:14Fair. Okay. That is... Yeah. That's a that's a model that that I will figure out at some point this year as I build out a, sales engine, but at this this point, it's been a blended effort between...

First Customers and the Johnny Was Contract

Nathan Latka

10:23Take me back to your first two or three customers. How'd you land them?

Trevor Testwuide

10:27Yeah. I'll tell you it's it's... I did an MBA at USC. The the the two things they preach in MBA school is number one, fail forward, and number two, if you're gonna start a company, go out and and find a customer, solve a really hard problem for them, prove it, and then start start the business. And so we started the the the company when we landed our first contract. The brand is called Johnny Was. Mhmm. We

10:51were very transparent with the brand and where we were with our technology and with the engagement and expectations we're gonna be... Four years later, we still work with this brand Johnny Was and the CEO Rob Travers. He's a big fan of ours. So we landed this contract. First contract, I'll share was as a $185,000. I called Madan and I said, let's start this company and take your technology to market. Madan had been, you know, working on

11:17the innovation here for quite a while and so we decided to do with that contract incorporate the business and off we off we went.

Nathan Latka

11:24Great. Now how many of these guys are you working today? How many customers?

45 Customers and Growth Strategy

Trevor Testwuide

11:27Yeah, today we have 45 customers.

Nathan Latka

11:30So still pretty, you could still do high touch, high ACV, that's sort of the approach.

Trevor Testwuide

11:34Yes, that's right. Yeah, the plan for this year is to grow to a 100 but only if we can do so in a responsible way where know CSAT is high. Everyone in this company has rallied around CSAT and we live and die on unhappy clients especially in this world of marketing analytics and decisioning.

Revenue Run Rate and 250% Growth in 2020

Nathan Latka

11:54Yep and 45 customers at your minimum price point of $7,500 a month which puts you somewhere right at like $340,000 in MRR, definitely north of that right now?

Trevor Testwuide

12:02Yeah, definitely north of that right now.

Nathan Latka

12:05Do you think that be a minimum entry point for a very turnkey scalable like Shopify Shopify Plus ecom business.

12:14Yeah. So definitely north of 4,000,000 run rate in terms of in terms of last year, how close are you do think you can get above 10,000,000 revenue this year terms of Yes, our rate by

Trevor Testwuide

12:23so that is the plan and the goal and we've got a clear line of sight on passing that $10,000,000 ARR mark this year.

Nathan Latka

12:31That's great and with that target this year where were you exactly one year ago in terms of revenue? It sounds like maybe in the two ish range, 2,000,000?

Trevor Testwuide

12:37Yeah like I said, yeah we grew 250% last year.

Nathan Latka

12:41Yeah, yeah well I just don't know what the base would be right so if you're at around 4 or 5,000,000 today I guess you'd be somewhere 2 or 2,500,000 a year

Trevor Testwuide

12:47Yeah, closer to north of five million right now, right around five million.

Nathan Latka

12:51Okay, fair enough.

Trevor Testwuide

12:52Yeah, yeah.

COVID Tailwind and Digital Transition

Nathan Latka

12:53That's great, that's incredible growth during COVID. Did most of that come from any new customers or expanding the current ones you already worked with?

Trevor Testwuide

12:58Came from both and we you know, we were actually benefited from well to certain that benefited from COVID. We help e com brands and traditional brands make that transition over to being a digital first company. And so we work with a lot of e comm, we work a lot of retail and helping them migrate over to a digital strategy was where our clients really leaned into us.

Nathan Latka

13:26Love that. Trevor, thanks for taking us to the top. Where can people learn more about you?

Trevor Testwuide

13:29Thank you, Nathan. Yeah. Measured.com, www.measured.com.

Nathan Latka

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