Mode Analyticsrevenue, acquisition & funding

Introduction hey folks my guest today is derek steer he's the ceo and co-founder of mode before joining mode in 2013 he was a member of yammer's analytics team where he led sales and marketing analytics drawing upon his experience on the monetization analytics team at facebook and his background in antitrust economics derek are you ready to take us to the top david thanks for having me back you bet we we recorded exactly almost one year ago today so i'm not going to repeat stuff there but for those of you that have not heard of mode before give us the quick sort of 15 20 second what is mode doing yeah so uh we make data analysis software uh we aimed it primarily at analysts and data scientists to make them much faster at delivering analysis to their business and in doing so you know a big part of what they do is share with other people in their business and so what we've ended up building is something that works for your whole company uh a little different model than traditional business intelligence but a lot of companies that are really forward thinking in the way they use data like lift twitch door dash kind of you name the folks who are really doing it well uh use mode to run their businesses now you told me a year ago your team sizes 120 and pre-call we were talking about some changes you made to your aes and bdrs and sdr so what's the total team size today and then let's dive into the sales motion what changes have you made yeah oh it's hard to keep track of um we held relatively steady last year because like you know kind of big year of uncertainty a lot of shifts in customer base that kind of thing uh we came out the other side really great and have been having an awesome year so far uh we are at a 160 high 160s now team size and like really trying to get over 200 as fast as we can um why is that the goal oh uh lots to do uh i mean the the short answer is the goals get higher and higher um in every department in the business but i would say i put it in two general places so there's a standard like late stage company go to market scaling thing that happens that just requires bodies and and we can talk about the bdr ae structure but that's one of the places in particular where we found that like we can we can win by having more people um the other one is we've got a really technically complex product and it used to be that engineers would join our team and they would kind of say like wow you it seems like it seems like this team has done a lot of work like we've really produced a lot of stuff with a pretty lean technical team how many are on the team how many engineers today ooh uh i think the epd org is in the like 60 person range at the moment actually i don't have the right you've grown that then you've grown that about 20 then since we last spoke so so we had a pretty lean engineering team for size and i think that's right we've grown it all over like a little bit product um you know we've grown like we have an epd ops team now um we had a whole management layer that i think was missing before we really learned how we have a we have a new engineering leader who uh he runs engineering and product and design and arrived in i think april of this year and so we've been steadily growing it behind uh buying his leadership and and have pretty aggressive plans to continue expanding it just to get more product context here but also get into your head a little bit about pricing and scale you sort of have like three i think three sort of key products right your sql editor notebooks which touch on r and python and reports and dashboard you then choose to sort of package those in unique ways across three separate types of pricing plans studio business and enterprise but then you also have like you know in a you know the helix data engine for example how do these things all work together to make up a pricing plan for mode yeah um i'll back up and talk about just some of the the basics of how we think about it but the first thing is um it's it's really one product uh it has a bunch of features that are tied together but the important thing and this will always be the case right i don't ever want to separate sql from you know python in mode because the point of the product is that you can move seamlessly between the two if we break those into separate a la carte items you know i don't want our customers to have to choose and a big part of the reason is folks don't realize exactly what they're going to use before they start using it and a lot of what we've done with our interface enables people to level up into jobs that they didn't know they could do or hadn't done before right in the python world if you want to set up jupiter right this is the standard tool people use for python for data analysis right you set up this python notebook on your desktop the fastest way to do it is using a product called anaconda uh it's still hard to do like it'll take you half an hour with someone who's done it before sitting next to you pointing out how to do it whereas if you want to use python to do like a very simple the example i always use is median right so sql is a really bad tool for calculating a median in python it's like trivially easy yeah it's just one line of code so if you want to do that you can just go look up the line of code on stack overflow or wherever click on the word notebook in the mode interface and we will save you a half hour of setup and just take you directly to the notebook so you can get immediate so so that leveling up is really important and we've always thought about that with respect to price most of our industry prices like editors versus viewers and we get some pressure from our customer base to do that because like uh there we have customers that have 500 editors 6 000 viewers you know like is that your biggest account 500 or 6000 viewers who i don't actually know the stats on the biggest one completely but but the last time i checked uh that was that was about right um that that company is probably bigger now yeah yeah yeah did you just you're charging for editors viewers are free well that's what our customers want um no but that's not how we do it we charge the same price for every single person and oh okay look in our overlords history we've tried both methods um and when we when we split out editors and viewers the feedback we got was well like i've got this product manager who's like not really an editor they're not going to spend all their time in mode so i don't want like a full i want to pay like half editor price for them and give them access sometimes it's like well it doesn't work like that you know you can't have like a half-time license yep um the important thing is there's a total cost of ownership that has to line up generally with the market like this is a competitive market so we are beholden at least somewhat to what our competitors charge which would be what look or tableau these kind of companies or someone yeah those are the two that we see most frequently right so so like for you know if customers evaluating all three products they're gonna come in in roughly the same range and the question is how you get there and how it scales um the the challenge with editor viewer is the editor seats needs to be very very expensive and people don't like that like what the expense give me what's expensive well we did this we charged 3000 a year per editor okay yeah and i think today we might charge even more so we've gone through we've gone through a bunch of models i think the big thing so we asked about helix and what that does to pricing um and think about helix so so helix for for folks who have listened to my previous appearance on this show uh thanks for coming back by the way we always appreciate your return yes so i guess you enjoyed the hopefully you enjoyed the first one i did this why i'm here i love that i like you i like the directness of the show yeah so so the thing about helix is it's an in-memory data store and what it allows for is i'm an i'm an analyst i do some analysis i pass it off to whoever it may be let's call it our head of revenue ops right she can slice and dice she can do any kind of like quick visual analysis operation without writing code after i've shared this thing with her and part of what allows that to be fast and performant is that we've got this in-memory data engine that can take up to like 10 gigs of data so way way way beyond what excel can handle or like a desktop tableau or something like that so we can put like a really really big data set in there excuse me for her to go analyze and helix is what's going to enable that but the challenge for mode the company is that helix adds a new cost for us so uh that cost is really big for some customers uh smaller for others and and you know we we try to eliminate it in a couple ways right the the way that aligns to our cost because because if so it's possible for someone to just make put us under water on on our contract with them pretty easily so the way that we manage it is we have two axes the first one is throughput so we say okay you how much data do you even pull into helix over the course of a month we're going to give you a range for what you're allowed and then measured by what like gigs or what yeah exactly just just uh storage amount yeah right um it's all transitory right so it's coming in and out of memory but but the question is how much do you put into memory over a given period of time yeah so that's one but it turns out to be really hard to reason about when you're just doing analysis day to day and it's it's tough we have to do something like that but it's just i think people don't don't have that in their their minds like okay day to day i'm doing this yep um and that's i mean it's bad for them because it's hard hard for them to reason about how much they're using and it's kind of bad for us too because when we're selling to a customer and we say hey we think you're gonna have high throughput their answer is almost always like well let's see yeah let us start off on a small plan first so what's the second exactly it's throughput and the second one is what the second one is the size of an individual data set right so how big of a data set can i can i pull back um and we soft limit it at different tiers of service so you know the lowest one um i forget exactly what the lowest one is i don't wait dirk i don't think i understand this so the first one's throughput what's i don't understand the difference between that and how much you want to pull back isn't it saying you're measuring gigs through the system we are but we're measuring uh how many gigs in one shot versus how many gigs aggregate over a month i so it's like per project based pricing versus monthly pricing uh the the throughput one is we just look so like there's a lot of ways that people put data through mode or the the the primary two are kind of ad hoc analysis like kind of one-off things you write a sql query some data comes back that contributes to your gigabyte limit throughput right um but also i write a sql query some data comes back if that data set is more than 10 gigs in size we won't load it for you all right right and and so we have we have what a pricing mechanism that is like how big is that data set right can you bring back one that is 10 gigs can you bring back one that's five gigs one gig and so forth so derek just to put all this in a beautiful little package for my audience tell me if this following statement is correct you are upselling your product based upsell is based off like sql editor notebooks reports and dashboards your usage your utility-based upsell is based off throughput or you know one project going through and how big that is and then you also have seat based upsell which are editors and viewers are those the three main pricing axes it's really just the two ladder ones um because because the the sql python r et cetera that's just the product right we're not we're not seeing that included in your free plan um the exception to that so actually why maybe the correction that i would make is from a feature perspective the way that we upsell is on standard enterprise stuff like octa skim yeah you know like sso right yeah yeah exactly right i mean real stuff which like you know i i i it is probably the best differentiator or the best uh segmenting feature right because like bigger companies needed smaller companies don't and it's actually funny i'm i i curse this a little bit right now because we are going through so we bought mode.com mo we were motivated i was going to say i was going to congratulate you on that congrats what about more or less than a hundred thousand dollars more more than a million less a lot less between there you guys have between 100 and we'll call it 500 thousand dollars there you go yeah that's that's the range um it's i actually feel pretty good about the price we paid that's not a bad i mean that's not a bad price for a four-letter domain name four-letter real word i feel like you know the real business in the big house on the corner now yeah uh now did you do that after the 33 million dollars here was a series d we did oh man well we did it after the round before announcing the round i see okay perfect yeah um which is the right time because like you don't want someone to be able to go look up the f the financing amount and be like these people can pay more yep the story of the domain is a really funny and interesting story um but to to put the to put the bow on the pricing thing um we mowed overwhelmingly grows with seats because it is the natural part of the workflow and i guess anyone can you share that can you share how many editors are on the platform today just across all the customers uh that that's not stuff that we share publicly okay okay um so can is there a range you can share derek like above a million or above ten thousand it's is about ten thousand it's it's not in the huge millions i mean like it'd be tough to get a million people with you know well you could have viewers couldn't you have viewers like editors plus viewers be well over a hundred thousand let me uh i think that the thing that's that's probably interesting about this or at least kind of sheds light on the way that the product works is um is the ratio of editors to viewers and it varies from company to company because some companies have bigger data teams and so forth but in general [Music] you're looking at for most companies right even just a potential set of people you're looking at between 15 to 20 viewers per editor at like a mature mode organization and it's just based on team size and what's happening right so so you know what i think about our customers that's more aggressive though than the one you told me earlier with your big customer we had 500 editors and 6 000 viewers where we got 10 to 1 ratio this is a 21 to ratio yeah so so 10 to 1 ratio is like kind of what we see at the of well 10 one ratio is editors but not necessarily people who are analysts and data scientists right um so so that's going to be like tech forward companies if you were to look at you know someone who is not a super techie company it's going to be much higher like we have um we have some media companies for example that operate differently where it's like a lot more viewers and in fact like the viewership is so large that they they don't even do the viewing in mode they build a separate web portal and like the data team will slot stuff into the web portal it's like you know a totally separate thing dedicated just to viewing like there are no editor features even in that portal but you still charge you're still charging for those we do yeah um because those are people who get value and and because the price is low enough i mean you know it's not three people charging for users is it sorry it's not 3k a year for viewers that's just the editor price well the thing is that by charging for viewers we're able to lower the editor price too so we charge one price across everyone which is 300 it's a tenth of of what i i subscribe to you right so so 25 dollars per user per month is the list rate and then especially as we get into these big like many thousands of company uh of employee companies we negotiate contracts that have uh stair-stepped seat pricing as i think most sas companies do this totally standard really standard yeah so but but you mentioned ten thousand editors i mean if you have that twenty to one ratio i mean you're talking then you've got maybe maybe i don't know 200 000 viewers so an ecosystem is pretty healthy here mode mode is i mean yeah there's real usage of our product um it's i think the important thing like if i were you know teaching a course on this or whatever my advice to other folks is we this happened all through the natural workflow of the product right like we attached ourselves to something that was inherently viral and and that enabled us frankly to trip all over ourselves like we introduced customer success as a department very late in mode's lifetime um and in fact the first true customer success leader who actually had customer success experience has been at the company for two years that makes a lot of sense yeah it's and this is an eight-year-old company all right so like we went for a long time without it because we just saw such incredible growth naturally and so what just um so obviously just talked about like number of editors but across how many logos now do you have using you i think you're at 600 last time we we Currently serving 750 customers spoke are you about a thousand number we have on our website that's still the number i'm going to give you interesting why have you stopped sharing that it's not that we stopped sharing it it's that we just do it at milestones usually i think sometimes the milestone is we made a new website sometimes the milestone is like about uh you know a big number so is the next milestone you want to celebrate a thousand customers we'll wait for that i think that's i think that's a very good sensible one we'll probably probably go out there you've got to be flirting you've got to be flirting with that right now yeah i mean you've got to be flirting you've got to be very close to that by christmas i bet well you know i will say like we had kind of an interesting year last year where we had higher than normal churn um and we we had a lot of companies so something about mode that is a blessing and a curse is that we come in alongside analysts and data scientists or alongside traditional bi rather right so so we serve the analysts and data scientists who a lot of times is using a looker or a tableau and like pulling their hair out they just hate it for their own workflow and so for us you know that's an opportunity and we say hey we serve you we can come in alongside but then we grow we grow to all of the other non-analyst non-data scientists just through this natural sharing mechanism that's like part of the analytics job so imagine it's a pandemic you got tightening budgets you're trying to figure out what you can cut and you look at your data stack and you say we've got two like bi dashboarding kind of products one that is optimized for everyone at the company one that's optimized for the analysts and data scientists and look there's a longer conversation here i i think mode actually delivers for the rest of the company in a way that's uh it's different and very effective and we've we've shown that we've been we've been tremendously successful in empowering entire companies over and over and over again but if the person who makes this decision is like ignorant to the process like if it's if it's like a cfo for example who who cares purely about the numbers and is like this one costs a lot it's optimized for a small team i don't understand their website because it's not aimed at me so i think we should get rid of it yeah that happened to us a fair bit like we had certainly our worst churn year ever last year as i think a lot what is that you turn more than 20 of revenue uh on a on a i think about this in terms of customers so not more than 20 of revenue we turn more than 20 of customers though logos uh yeah which which we by the way are we have gone way the other direction like we are 12 to 13 percentage points better on retention this year than we were here would you will your ndr will your net dollar return this year be well of like 110 percent way beyond okay wow that's great even even churning so even churning you know more than 20 of logos last year we still had net dollar retention above 100 because that's incredible so there's just because of the way that the product works right like we've never had net retention under 100 that's incredible well look if you've got i mean i'm seeing right now these public the valuations you're seeing in private public markets and sas even more than revenue growth the the ones with higher net dollar retention but even lower revenue growth are getting higher valuations than faster growing revenue companies so like ndrs like i'm seeing at least just the most important thing if you're raising right now would you agree well i mean i i don't i don't know about that i i don't know what's important raising right i mean feels like just hype honestly as anything that looks like it could be a breakup company's getting a mega round um and that's all your attention i think is an important thing that contributes to that yeah mode has just always been good like again it's not something that we had to engineer it was just an inherent part of the process and so you know it's been frankly quite easy like we'll do yeah i guess i'll just say we'll end the year way way way north of 110 like in a true best-in-class net dollar retention i'd say 150 best in class are you around there uh well that'd be a little bit of a stretch okay we can say between we can be in between we won't push further between 110 and 150 all really good numbers yeah yeah we will be we'll be closer we'll be closer on that to 150. that's great and what is um obviously you probably can't share like actual hard numbers in terms of the Monthly recurring revenue revenue but when you look at just your growth rate over the past 12 months on a percent basis what does that look like uh i guess what i'll say is this year's growth rate will be double last year's years uh so so if last year's growth rate was a hundred percent this year's growth rate will be 200 uh i'm hypothetically i'm not going to give you the exact you know but i'm i'm i'm just trying to translate the ratio you just gave like yeah that's that's the type of thing that i am saying i see got it got it got it okay cool um my best guess in terms of your revenue is like you've got to be you know in in 2020 you close somewhere around 20 million bucks in ar i mean can you guys break 40 million bucks in ar this year uh again i'm i'm gonna i'm gonna plead the fifth on that one but the i would what i would say is like we are i think the most important thing is and we didn't haven't talked about the bdr piece yet the most important thing is we kind of by accident discovered the thing that is going to carry us through the next several stages of growth um and it has been an interesting journey because like you're like okay no one no one can learn anything from where we are in revenue though it is interesting but like the thing that was really fascinating that happened last year um that has totally changed the trajectory of the business is uh we have we had a small bdr team that you know it was made even smaller by like personal life circumstances so people were sick they had family stuff whatever it may be and we in like you know october november of last year so almost a year ago we found ourselves in like a pretty bad situation with respect to incoming leads and my philosophy on this has historically been you know the inbound leads are going to be high quality leads we're like you know at the time we were a 95 plus percent inbound business we've added some outbound into that since but but not a ton right it's primarily an inbound business still and my thought was okay this this inbound business is basically going to close itself like people if they want to try mode they're going to try mode and and so we don't need to have a zillion bdrs to qualify them we we need enough but you know a couple is enough um it's very very wrong so going down to one bdr active at a given time was a big part of the cause of slowing that down and our cmo so correctly identified this and made the correction um our bdr's report into marketing so she said hey we're not going to make this mistake again we're going to over hire from what we think we need so we you know we had three or four but we're gonna go up to six seven uh and we did that in january we hired a bunch uh on board of them and then in q1 which for us starts in february uh oh my goodness things went the opposite way and we kind of realized like oh actually the leads we're getting are proportional to the number of people that we have who are even taking phone calls doing qualification now sending outbound emails that kind of thing so everything started to go the other direction and then we just have kept growing bdrs and it works like we just keep adding more we keep generating more leads like everything about it seems to be scalable and it's great not just because it's adding revenue to the business and feels like a thing that we can continue to invest in it's also great because our bdrs turn out to be the most successful sales people at mode quant derek let's try and this is great like like qualitative can we quantify how many bdrs right now on the team full time uh i want to say that our bdr team is 18 people and how many sdrs uh that's the same thing for us but we split it into we split it into like studio right so there are people who are like trying to upsell on our studio audience that we have corporate we have uh enterprise which is like a little bit more you know high touch for a given customer so we've essentially tracked it um and the the folks who are running that team you know this is a well hold on derek so try and keep quantifying for me so there's 18 there how many account executives do you have oh we have eight right now and one and how many not even doing new business really she's just doing uh kind of strategic upselling and how many account managers do you have you know working post sale um we do so so there's one for strategic we we've kind of split this interestingly between csn um and uh we'll add those together how many cs how many cs folks oh i don't know the answer to this this team has changed a lot it's been growing a lot recently like we just hired four new managers for this team oh wow more than more than what definitely more than how many i think that the cs team overall is 25 people which includes customer support and sales engineering the sales interview is pretty small let me repeat that back to you so you have 18 bdrs or sdrs you have eight account executives and then you have 25 more than 25 customer success folks i yeah look again customer success is inclusive of like support right we want support and solutions engineering and customer success all together do your cs reps have an expansion a dollar expansion quota they have to hit yes well they do they do for smaller accounts so basically we say like for for our smaller accounts there is a clean handoff between new business ae and csm um because it turns out that you can manage the relationship very directly there uh smaller companies tend to not need quite as much hand holding right like it becomes more complicated when we're like managing big training sessions and doing other things to drive engagement across like a a business of many thousands of people so in those cases right the enterprise csms are on the hook for retention but not growth necessarily and then we have sales people whose job it is to drive growth um and that's especially relevant in a in a company where like as i mentioned you've a big part of what drives our strong net dollar retention is just the natural like virality of the workflow right it's not even our product it's the workflow that we are attached to it makes sense on your aes the eight folks there do they all carry this standard sort of million dollar quota uh they're all at like five times ote to i mean that's like the benchmark that we use yeah that's totally extreme so your standard there it's usually like 200 000 on target earnings against a million dollar quota yeah yeah the um the actual numbers are slightly lower than that i think a lot of those because we're well we're like leveling people up from our bdr program right so like a lot of our sales reps are entry-level folks when they start yeah got it so that might be like a 150k on target earnings against a 750 000 quote or something like that yeah but i mean we also have a guy who's like a few years out of you know bdr territory who did a 600k quarter wow very cool okay very cool that that system makes a whole lot of sense um let me i'm trying to think there's anything else here that i'm missing we can learn from you i mean look one thing i will say is like you Raised have you've decided this is going to definitely be a vc backed company and sort of once you're on that path you've got to always be on that path which means you have a funny announcement about every 12 months uh we're 12 months away from your last funding announcement is there anything you want to share with me uh no not now but um what i'll say is like look the market's nuts um and there's just a dance between like how long do we think it will be nuts versus how much further can we get to raise our evaluation that's that's the that's the calculus that i'm doing and uh i think the for the further we can distance ourselves from covet right like i just told you you know like we have a high churn here i think a lot of people did um this year is great right like you know what i want to do is say hey we've got continued really awesome growth both from new and existing business like the year we're doing awesome like let's write this out for a couple more quarters before we raise because that's we're just going to look that much better so so that's kind of the math that's going on in my head but what i'll say is like you know we talked last time about bootstrapping versus raising and that kind of thing and what i told you is that like i kind of i believe in the uh austerity a little bit you know in the early days i think that the uh the hunger from having less cash makes you more focused...

Introduction hello everyone my guest today is derek steer he's the ceo and co-founder of mode prior to co-founding mode in 2013 he was an early member of yammer's analytics team there he led sales and marketing analytics drawing upon his experience on the monetization analytics team at facebook and his background in antitrust economics derek you ready to take us to the top let's do it all right so i want to jump right in with yammer how many people when you were building out these tools at yammer how many data scientists was yammer employing to work on this problem so we had when i arrived the company was probably like 140 150 people we had a team of maybe five analysts and then there was i forget whether it was right when i started but um my mode co-founder josh eventually split out to start a data engineering team that was responsible both for building out data pipelines and managing the quality of our data and also for building internal software that looked a lot like mode for us to do our jobs and that was something that a lot of folks were doing at the time is like they were hiring up teams of developers to work on these sorts of internal tools so what i want to get to now is i imagine you probably had a cushy salary at yammer when did you build up a conference say you know what i'm taking a risk we're going out we're going to build this and we're going to build it for everybody well uh the the cushy salary only came after the acquisition by microsoft okay um you know i the the the decision to go and start a company really had to do with the fact that i was waking up every morning thinking about this particular problem and going to bed every night and and when i talk to other would-be founders the advice that i give them is make sure you're obsessed because it's pretty hard and you know i think that obsession with making the lives of analysts and data scientists better is like what has gotten me through some of the challenges of just starting and running a business and so let's so you can actually can you share i always like to measure opportunity costs and those sorts of things i mean can you share what salary you gave up when you left uh well it's i'd have to go do some stock math because uh the my microsoft shares at that time uh were worth a fraction of what they would they're better now yeah yeah yeah if you look at the price now it was a seven figure annual type type of amount like but but i had no way of knowing that it was it was less than that i was actually getting paid really well at microsoft now you leave and some of your early investors are your yammer bosses so yeah so so walk me through i think you raised 500 000 from them how much of the company did you sell uh boy i don't remember the so so i guess it was about 10 right the valuation was like in the range of 5 million which we you know we were just triangulating around like kind of standard yc evaluations at the time um it was a pretty straightforward negotiation in fact um the you know we wanted to do everything really above board and so we we told our boss that we were gonna leave and we you know declared our intention to leave and then after leaving went back to david sacks and said hey we got this thing that we're gonna go do here's what it is we brought him a deck and on the second slide he was like okay yeah i'm in let's do it like like the it's fine the second slide was um it was github for data which which was like you know in in 2013 that was like an awesome pitch um but more importantly he had seen our work and and understood the value of what we did at yammer and that we could go and do it on a bigger scale and so he so so he was in and then it was just a very quick like maybe quicker than i was even prepared for a conversation around like like okay how are we going to do the deal like what's the what are the terms etcetera yep branching off a totally different direction some of your earlier customers you talked about were folks like twitch and lyft and you said in other interviews you start off as sort of a three thousand dollar per seat license but then quickly realized you're gonna have teams signing up for massive amounts of users and three grand a seat one scale what are customers paying you today on average per seat oh uh the way that we do it is is based on scale and we have folks who are buying you know four five six thousand seats we also have a piece of technology now uh called helix where we do some data processing on our end and and you know that costs us money and so we do we we have a cost that's associated with that so the way that we do it now is we have a platform fee and then a per seat fee um the list price on the seat fee is 25 per person per month okay and it you know it works like any kind of sas product where like we we go we we batch it so like you know the first 500 might be a certain price in the next 500 another one yep yep that's great and so walk me through how you learned from sort of like you know when you discount your pricing did you let twitch come off a 3000 per month seat down to your new cheaper pricing how do you handle grandfather accounts and pricing experiments oh boy grandfather accounts so so i think we've been through probably like seven different models that that vary a little bit i mean we we introduced freemium not initially but later and that threw a wrench into something so we had some people who decided they wanted to go freemium and some people we kind of grandfathered into pricing on a business tier um in general we tried to do right by our customers um that's really it and if you made an early commitment to mode and you want to keep doing it then we're we're going to try and and accommodate you um and i think i'm really proud of how we've supported some of our early customers who grow to be to be very big and i think that they're trying to do right by them has been a part of that Currently serving 600 customers and how many customers are you serving now today just logos not seats yeah uh it's around 600 this is okay the most recent thing that we published yep that's great and you know one of the things you have on your website is 50 52 of fortune 500 folks are using you guys i mean obviously there's probably significant expansion opportunity there to add more value to that cohort but eventually you've got to open top of funnel and move back downstream to get more customers and add more products and drive more arpu how do you think about that transition has it already started um i think the mode is atlanta expand business and and the the important thing to understand about mode is that we started off as a very analyst centric company that's my background and my co-founders backgrounds and that's the thing that we knew how to solve and maybe most importantly that was the hole in the bi space right bi generally as a category decides that the technical person's job is to specify the system right they build out a menu of metrics and then the actual analysis or dashboard building or whatever is going to happen by people who aren't professional analysts or like aren't necessarily super technical mode is about supporting the people who are technical like that's that's where we started at day one the where we've evolved and i think you know pricing is tied into this right so the notion of paying 3000 per seat per year is focused on delivering a certain value to analysts only right like that's a price you can command as a very critical workflow tool for one person but when the value is actually distributed across many people like in mode's case the value is not in providing some groundbreaking new way to do analysis what we provide is great collaboration around that analysis so the value is is uh experienced by lots and lots of people so a lower price spread across an entire audience makes more sense so when we think about the way that we expand you know that was a part of it was shifting from that pricing model to one that again is now like 25 percent per month as opposed to 250 per seat per month when i look at the way that we expand in the future it is about going wall to wall like you were saying okay well you know what's with 50 of the fortune 500 how do we how do we allocate resources between existing and new customers the the answer is we've always got to be bringing people in the top of the funnel but price isn't necessarily the most important thing for us there the most important thing is landing because we have a product that sort of naturally like just through the natural analytical workflow starts to expand the thing that we're the sort of path that we're on now and what we've talked about with our customers and a little bit publicly is you know once we expand once as a as an analyst or data scientist once you've shared your work with lots of other people at the company those people need to be served well too right like as a as an analyst your reputation lies in the thing that you produce and that you hand off to them right you are doing a good job only if you produce a good product and mode has to do that part of a good product is something that they can expand upon work further from and so what you're going to see from mode in the coming year is a lot more that's geared toward making the analyst look like a superhero by empowering their own customers previously like when we started all about empowering the analyst now empowering the analysts to empower their customers analyst is a superhero i want to come back to that in a second but first with this approach where you're sort of trying to democratize this sort of technology means a lower price point more people you know you started doing this i think i think more than 12 months ago what does your company growth rate look like over the past 12 months on a percent basis with this sort of strategy well you picked an interesting year to ask that question yep um you know i i think i we we tend to keep the like high level revenue and and the growth stuff generally within the company um but it continues to grow pretty fast and and be an exciting business to be a part of like we are we are in the tens of millions revenue range i know that's i never say derek you know you know i listened to the show so you know i'm going to push you on this i won't pin you down exactly but i know the show i read the show can i i mean can we put you in sort of a 100 year over year growth club i mean would you is that a fair statement yeah yeah i think so uh it's it's been a little bit lower than that this year i think in some in some very interesting ways um but it is yeah i think that's like the right range to put us okay well i mean look at the hot space right i mean we had frank bien on uh you know seven months before before you know the acquisition happened and i straight looked at him on that call and said are you an acquisition talks with google right now for billions of dollars and he said no and then smirked at the same time something's happening here right so you're in a very very hot space and and one you know on the flip side you know folks like you get all the attention where people don't spend a lot of attention are the folks that try to do what you do but then they fail for some reason and i talk to a lot of those folks and usually the reason they fail is they fail to identify a utility value for the data they're surfing like they don't enable their customers to actually deliver and become a superhero internally so let's now go to that sort of the business right you know a lot of sas companies that are in your space at your scale uh are building communities to drive stickiness and expansion do you have sort of a analyst superhero community you're building somehow so so this is the company that does this really well is fish town uh the makers of dbt i've never heard of them oh man company to watch for sure they did a series a with andreessen pretty recently um you know they live between five tran and mode so five tran brings all your data into a database you need to then transform it to make it you know really effective for analysis dbt is kind of the product right that's that's gonna be the next thing and if we were gonna build it we would do it the way that they did it um and the name of the company is is fishtown so they've built a really excellent community i think they're really good at that um we've been talking a lot about like what the future of this is going to look like and and we've done some things in the past that have been really effective so you know the founding team for modis three people um myself ben stancil and josh ferguson of the three of us josh is the only engineer right ben and i can do analysis we can write some code but like it's different from building production software so in the early days what we did is we very quickly hired some other extremely capable engineers and then they worked with josh on actually making the product and what ben and i did you know we did some amount of customer development and understanding what the product should become though we also had an intuitive sense for that because we had done it ourselves internally at mode already or sorry at yammer um so so we knew kind of what it should look like so we spent a lot of time writing blog posts building content and essentially just making sure that the mode brand was associated with good analysis and i think that's the thing we're really good at like like we're not our our dna is not to have like the the super thriving slack channel that that fishtown has they're going to do that better than we are and they are doing an awesome job of it right now what we can do really well is make the best analyst and data scientists focus content uh the type of thing that helps businesses understand the value of good analysis um one of those things that has been honestly i on essentially a whim in early 2014 wrote this sql tutorial and you know i had taught sql basically every business i've been at the big problem with sql as it was taught like if you were to go buy a sql book at that time and maybe even still today uh it's focused on software development which means that the first chapters are going to be about setting up your database getting data into it and doing all this other stuff that doesn't matter at all if you're an analyst like if you get hired as an analyst you're going to come into a situation where that already exists and what you need to do is write the world's best select statement like you need to be able to get data from a database and transform and do stuff with it you don't need to do the other stuff so i wrote this tutorial that we call sql school um and lives on mode's website you can go to it and there's a little resources tab mode.com resources it is one of the most popular tutorials on the internet and i think the reason for that is it approaches the user as though their only knowledge is excel right it's like we're gonna assume you're not a programmer you know some concepts from excel uh you know like what a spreadsheet looks like but maybe you haven't worked with databases before and we're going to teach you all the basics of that stuff without forcing you to create a database and do all this other heavy lifting and that's been tremendously i mean this thing gets hundreds of thousands of uniques a month yeah i'm saying that for a while so so so like that you know that's the place when you think about community of of analysts i think the place where would be really great in the future is around uh continued education making great content that kind of thing Raised so let me just ask you something i mean you just raised 33 million bucks i believe right i mean would you do you ever say you know what let's let's pull off five million of this and go buy a community like codewars.com where developers are competing on quizzes i mean you're already doing a bunch of these quiz sort of things on this resources page you get a list of a million engineers by doing that i mean do you ever would you ever go by community like that oh i think it's hard i mean so for our audience authenticity is critically important um i think that's true for for technical audiences in general um people just smell sales and that kind of thing and nothing feels worse to me than buying a community right like it just well i don't i i i just think i i think that our our customers in the market would would view that as uh too corporate maybe yep yeah no it makes good sense makes sense so content's a strategy you know maybe not build your own community just put out great content that allows these analysts to become superheroes internally love that all right look community forms around that too right like it's not a deliberate effort for us right now to like have a conversation going in a forum or on our slack channel or anything like that like that's not an explicit effort that we have um but but it but it probably will be at some point yeah talk to me about your team today you mentioned the founding team how many folks are on the team today total about 120 one okay how many engineers 40 ish plus some more for product design okay and how many quota carrying reps do you have do you know seven eights for new business okay yeah when did you hire your first out of curiosity what revenue were you doing when you had your first quota carrying rep okay uh so so the first rep um so we were a little more than a year old as a company we had been in public open beta we had some folks who are using the product um this is october 2014. okay okay um were you at half a million run rate already or no not even close not in close okay no we were at like um we were uh somewhere north of zero and south of 50k so oh wow an arr yeah oh wow okay look and so the composition of this founding team is a bunch of people who are like pretty analytically sound and have done analysis on larger businesses in plenty of different areas like there's an understanding of how products should work and how go to market should work from like running the numbers at bigger companies but it's very different and like i certainly had to learn this the hard way it's very different to sell than to analyze sales and had i known that at yammer i probably would have liked done some parts of my job differently but anyway we realized pretty quickly that we wanted someone who was going to be a more of a sales expert and then in the process of interviewing people found someone who coincidentally worked with it worked at yammer but but we didn't know him super well his name is chris davis he was our first sales hire um he was like kind of fresh into ae land he he had come out of being a a very successful bdr at yammer um had done a couple of deals but but didn't really have a ton of skill closing yet um eventually we ended up hiring an advisor to help him so someone to come and do deal review she came to our office every monday went through our crm sales manager sorry who is she uh her name's emily's husband she also she was at yammer uh briefly as well i mean we were hiring the people we knew who were good you know um and she had gone to admiral so while she was at adroll uh she would after her you know day job at ed roll she would show up at our office on monday we our office was like three blocks away at the time so she would walk over from adroll do our deal review monday afternoons um and then eventually we hired her as our as our first sales leader the company from like you know ballpark Monthly recurring revenue you know 500k to 10 million yep and that was that 10 million i think you hit what about october or last year 2019 yeah i think i think that's right somewhere in there yeah that's great hey last question i want to ask there's a lot of folks earlier stage stats coming able to access debt these days probably on much better terms than what you raised the 375 i think you raised 375 back in 2015. is that number accurate and if so why'd you do it and do you regret it or was it powerful um i heard you like bootstrapping i love bootstrapping oh you love bootstrap i love it um here's what i'd say so i got a really great piece of advice in the early days um that i didn't actually realize was advice at the time from yammer's then cfo mark wilway who said uh because a different gamer group had split off and raised immediately like day one at like a 20 million dollar valuation on a business that you know [Music] mode has surpassed um his take was that 20 million valuation is not good for anybody and what i saw was that they made hires right off the bat that probably didn't make sense they weren't like the necessary people to find product market fit now i don't want to be too critical because like startups are hard i don't know what's going on there yeah but what i can say is that um a certain amount of hunger you know sharpens the senses and and really focuses you in and i think look we had it easier than most like we raised basically on day one from from david saxon from some other yammer execs and then we went out to people that they knew and raised another round that i think 375 i think is right yep um or or actually i think it was more like one 1.2 million then maybe we added 375 to that or something like i don't remember the exact order okay but we raised a bunch more money from uh formation eight and from some other folks at that time and we just had money like we had money to spend even from the earliest days and if i were to do it differently i would bootstrap longer the resources are also different today like you can just go get 100k and aws or google credits and you can you can you can run your business pretty much for free for a pretty long time um i wish we had done that i wish we had i wish we had gone super super lean in the early days because i think we would have found the market faster we've been focused i mean you can hear me on other podcasts talk about some of the experiments that we ran with like like you know github like a pub like an open source community all on github with data um you know there are other places where i've explored that more but uh i think we would have just gotten much faster to like the core elements of value with less money that's great well hey you're on a tear sounds like almost number sent you over your growth in a really tough year for everybody you know if you're you know in the tens of millions of 10 million and 25 bucks a seat and 600 customers you've got to be getting close to a million seats here soon we'll hopefully maybe you'll hit that next year we're we're all rooting for you man uh any any not any acquisition you're not any acquisition talks with google are you mean frank uh uh no there are not an acquisition dogs in google fair enough and did you guys talk about you just raised a 33 million i mean usually at that stage you're probably selling somewhere between five and ten percent of the business where you're sort of in that range uh again those are the sorts of things you know we don't talk about the valuation publicly so uh i'm sorry maybe maybe years down the road we can go back and talk about that okay very good i will i will hold you to that you'll get an email from me exactly every year from this point forward and we'll keep following up derek let's let's wrap up here with the famous five number one what's your favorite business book uh hard thing about hard things there are some chapters that i still go back to on a regular basis number two is there a ceo you're following or studying you know uh i i have a guy that i connect with on a regular basis and we met just through kind of silicon valley stuff a guy named jim benson who is now the ceo of chorus and and it's i i think he's just like clearly excellent at what he does and uh always has something really insightful to share with me and because he's running a business of similar scale uh it's super super helpful i think that's important to find mentors who are you know the types of people you aspire to be and and who are running businesses you know or have run business that look kind of like yours number three derek besides mode what's your favorite online tool for building the company uh besides memo was going to be my answer i use it a lot i bet i think coda honestly like the the ability to to structure to structure documents can they be a notion can they beat notion i just think they went through very different paths you know he he raised 60 million bucks based on day one pre-revenue notion was basically bootstrapped and did a massive round they both basically do the same thing you like coda though i like both products um coda happens to be a thing code is a customer of ours uh so is notion um i like working with with both teams that i use notion personally uh we just happened to use code mode uh that's just the way it evolved like someone on a product team i think started using it and that's the way it went when you have you can you can embed you can embed mode into coda but not notion that is one critical thing is today mode embeds working code very good that is the most diplomatic answer i've gotten from a ceo who has cus who has two customers and has to give an answer that caters to both of them but also i felt like it was very honest there's reasons you love those number four derek how many hours of sleep you get every night uh depends on the night i i have a um i have a toddler uh so that's been decreasing so uh it's yeah in the range of like six to seven okay and just one kid or multiple just one yeah i have a one and a half year old married with a kiddo and how old are you how old am i uh i am depending on when you air this 35 or 36. when's your birthday uh january 7th oh happy happy early birthday that's great thank you okay take us back 15 years what's something wishing you when you were 20. i i this is gonna this is such a cop-out answer i know but like i i am very happy to have generally done the things that i have been passionate about and i have found great success in that i don't think i knew it explicitly but it's just what i happened to do like i've been the type of person my whole life who gets extremely motivated about certain things and i and i really succeed where i am motivated and where i'm not motivated i i don't succeed quite to the same degree uh there's my other diplomatic answer for you um i i think this is really important and and as i reflect you know it's not something that i really thought about but it but it has been probably the most important lesson of my life is to always make sure that i'm doing stuff that i'm passionate about and when you asked me earlier about opportunity cost and salary like it doesn't even it doesn't even factor in for me really like it's i just was so passionate about starting this particular business with those two co-founders that like there was nothing that was going to get in the way of that guysmode.com making analysts superheroes internally externally everywhere launched in 2013 with again three co-founders all together raised 500k at a 5 million valuation right on day one have scaled since then finally up past 600 customers hundreds of thousands of seats on the platform passed a 10 million dollar runway last year and almost up to that 100 year over year mark obviously in a tough year for everyone but hot space we'll see what they do next derek thanks for taking us to the top all right thanks so much for having me one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares backend dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these 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