Mparticle Revenue & Funding (2024)

hello everyone my guest today is michael katz he's the co-founder and ceo of a company called m particle he's responsible for creating and overseeing the execution of the company's vision of becoming the premier multi-screen data solution he previously served as vice president of optimization and analytics at yahoo where he came via the acquisition of interclick the company he also founded michael are you ready to take us to the top let's do this man all right data everyone either loves data right now or hates data right now and you're in the thick of it so what's mparticle do and what's your revenue model how do you make money yeah so we're a customer data platform uh which quite simply means we help some of the largest and most innovative brands in the world capture their data unify it and then make it easily integratable into the different systems that they use to ultimately run and grow their businesses um we charge on a on a licensed model it's based on the number of user records and we work with some of the largest brands in the world from starbucks walmart mcdonald's to airbnb spotify venmo you name it if you've used the product they're probably a customer of them particles that's great and and can you um let me let me just ask which customer are you most able to talk about is that is there one where you can kind of get even get more detail to me and help me understand if i go into starbucks and i check out and i order a grande mocha today how does that data eventually hit m particle yeah so um for example someone like starbucks uh you go and you order a head and you go to the store and you pick up your um your order so as you're as you're doing that there is data that's created really along every step of the journey right from the time you pick up your phone and open the app to then how you navigate through the app to the selection process ultimately all the way through the through the payment and order confirmation so that creates a really rich artifact of data that starbucks needs to understand how to optimize those user flows those click streams they want to apply that data to drive better personalization better marketing strategies whatever it may be and ultimately that data ends up going to anywhere between like 10 and 20 different systems so their data warehouse their analytics vendor maybe their attribution solution their marketing automation platform potentially some of the big um paid advertising partners that they work with maybe facebook or google so on so forth so rather than integrating all of these point solutions one by one destabilizing the user experience um incurring high maintenance costs um you know we we really streamline the process so we allow them to capture data once and then multiplex or federate that data out to as many different vendors as uh as possible and you said you're charging you said per data record or per user record so i would be that what you the use case you just described would that be one user me or would that be ten data points that you're charging based off it would be one user you so if we see if if we see you across web and app and in some cases like if there's an in-store kiosk and we can track that back to your user profile that's just one user so the idea is you know ultimately we're helping our customers drive cross-channel multi-channel personalization and optimization and so we need to really we needed to kind of carefully align how we were thinking about our pricing model to be able to make sure that that was aligned with our uh our biz our customers and how they think about their business yeah so obviously don't tell me a specific customer here but give me an average here's like on average what's a customer paying you per month i assume these are fairly large deals yeah there's they're enterprise contracts so we have customers that pay six figures we have customers who pay seven figures uh annually but look we also have customers who uh who we consider growth customers who will take on in the call it five figure range with uh a kind of clear shot at growing over uh over a number of years and you're talking kind of minimum for five you know five figures per month or on an acv basis on an acv basis so yeah that's so that's annually okay all right so i again i'm just trying to get in the head here how you're thinking so some of these customers are onboarding they might start off as thousand dollar a month kind of accounts but as long as you see a path to 10 grand a month that becomes interesting correct yeah or even potentially more i mean we've worked with some of the highest growth startups over the past five years and yeah they started at a thousand or a couple thousand dollars a month and they've and they've grown kind of well beyond 10 grand a month so it's been exciting to see us power the personalization and the marketing outcomes and being that serving as that backbone as these as these companies and brands establish themselves uh not only as like category leaders but also market leaders yeah and if you uh again i know this averages are a dangerous question but if i did force you into an average across your base i mean would you say you know you optimizing around kind of a 10 grand a month kind of contract is pretty is pretty average customer for you or is it higher or lower would you say yeah i'd give you i'd give you a range i'd say it's uh it's probably closer to like 20 to 25 a month okay and and paint that picture more for me they're typically managing on that spend how about how many contacts it really varies um you know it can be a few million monthly user records it could be i mean we have cost that have hundreds of millions of user records per month right and we work with some of the largest uh brands in the world guys like spotify and activision king and again airbnb right like these guys have really really large user bases so it goes well beyond you know seven figure uh monthly totally you def you definitely have kind of power laws happening i'm sure in your base in terms of top 20 custom top 20 customers making more than 80 of revenue potentially yeah and i get it very good put this on a timeline for us what did you launch so as you mentioned at the at the top uh i started a advertising technology company called interclick we took that public in 2009 subsequently selling it to yahoo in 2011. i stayed at yahoo for roughly about a year and then left to start and particle so it was you know early 2013 when we got the team back together so it was myself my brother who's my co-founder and cto and was also my co-founder and cto at our last company oh cool yeah it's great it's great getting to work with him um and then a guy named dave myers who is our chief operating officer who keeps us uh keeps us out of trouble and keeps the buses running on time and then we hired our 10 best engineers so you mean yeah yeah originally from from inter-click and then they were um doing a uh doing a bid at yahoo for for a little bit yahoo must love you uh yahoo doesn't exist anymore hey that's probably a good answer yeah exactly and michael how many folks are yet today full-time employees uh we have about 110 we should be at about 125 by the end of uh by the end of 2018. and everyone's remote or is there a hq uh hq is here in beautiful new york city but we have offices around the world we have an office in san francisco we have an office in seattle we have an engineering office in south florida we also have an office in london and uh 2019 will be the year that we expand into both apac as well as latin that's great and over so 110 folks founded 2013 new york city in remote locations over the past four or five years how many customers have you scaled to today yeah we're at about 150 customers so yeah we're not we're not going after everybody we're kind of squarely focused on enterprise class um consumer brands right so the the the very biggest and the best yep and michael when i i mean look when i take the 150 times that kind of 20 grand per month ish that you gave me earlier that puts you somewhere around call it three million a month today is that kind of generally accurate in terms of size yeah for the most part okay and can you give me a sense of growth so a year ago today what were you doing per month um i think we'll close this year right around 100 percent growth year-over-year which is which is up from 95-ish percent growth uh from last year to the prior year okay well look it's uh what's today i lose track of time it's november 8th today so you've got about a year a month left in the year and if you're around call it three today let's say you get up to three five and you said you said you you doubled or you grew 150 percent you're over you're 100 year over year uh yeah it's closer to 100 100 okay so maybe something like 1.5 million a month about a year ago um yeah yeah in that range yeah that's good and where's most if you know i'm asking where's most of the growth coming from is it coming from expansion you know just more users on the same logos or is it really new logo ads yeah so our net retention is right around 150 so it's we have world-class net retention that is definitely world-class yeah our our revenue composition is made up of both new logo sales as well as upsells from existing customers and so the uh the the mix for this year is right around like 60 40 new logos to upsells and renewals and then you know next year i think that we're going to expect to be more like 70 30 maybe 75 25. yep just to be clear 60 of the new revenue is coming from upsells and 40 new logos or the other way yeah the other way around the other way okay got it yeah that's healthy look i mean i i you know i've interviewed about 3 000 b2b ceos and you know i can count on one hand as many how many times someone has said their net revenue retention is 150 or greater and the pattern i found is typically they've done in a ton of price testing and they've hit a sweet spot where they clearly understand what to upsell against and it's working really really well and it sounds like yours is just it's user records yeah so upsells for for us [Music] map back to really three different activities so there's organic organic growth i would characterize almost like same store sales for for any customer so if they are building a successful brand and they're attracting more users and they're just kind of naturally growing then we'll grow with them the other way that it's uh it has manifested is as uh as we maybe start with one property certain brands may add other properties so maybe we start in the mobile app and then they add the desktop web and mobile web or maybe we start with uh web and app and they start to bring in offline data so they're bringing in more data sources and then the and then the last thing is as we think about what we do effectively we are serving as a as a real-time customer centric data pipeline and so then that data gets easily syndicated out to lots of different vendors and we built various applications on top of that customer data pipeline so segmentation enrichment transformation there's some ml and ai stuff that's that's coming down the pike and it and it uh it gets deployed as platform features but the way that we think about it and talk about it internally are really these applications that we put on top of the on top of the data pipeline and so those new features and functionality have served as great upsell opportunities yeah that's really smart peel back that onion for me so on the 150 net what's give me the the bad number here what's gross revenue churn per month before you add or sorry per year before you add back up sales yeah so like uh logo churn would be um in any given quarter somewhere between like 95 and 97 percent retention okay and what about on a revenue basis annually what's gross turn i actually don't have that number but it's going to be even higher than that the the customers who we have seen churn are our smaller customers we separate our revenue into two different categories you have enterprise revenue and then call it growth accounts or mid-market accounts sure um and we see as you can imagine much higher churn in those accounts relative to what we see in the enterprise we don't we actually don't see any churn in the enterprise so it's it's higher churn but much much much smaller dollars yeah yeah i mean so definitely accurate to say less than five percent revenue churn in that enterprise cohort annually i think just doing the back of the envelope math uh that sounds about right yeah all i'm trying to do is figure out do you have a big gap you have to make up with expansion before you get above 100 retention it sounds like you've done two great things great upsells and you also really don't have a huge gap to make up each year either yeah i mean i i think also when you look at the nature of of what we do and and the product that we provide we become mission critical infrastructure right we are the um we are the the data platform of of record and we go through an extensive identity and data planning and strategy session to allow our customers to to formulate that data strategy and get their get their house in order if you will and then ultimately when we start sending data and orchestrating these data flows across five 10 15 different partners we start to serve as like the main artery right and so the to rip us out is really really difficult and something that really nobody even wants to do and and what that means though is that there's a lot more scrutiny placed on the buying decision on the front end so we tend to see longer sales cycles but then we have pretty good insulation once uh once we've been adopted michael we're out of time here but quick answers if you can uh sales cycles how long right now so two distinct cohorts in our uh in our sales cycle you have uh customers who've reached that fever pitch hair on fire moment where they know they know that they need to get their their house in order and they've kind of reached the realization that they don't like they can't outrun these things and so those sales cycles can be one to three months and then you know more of the classical enterprise sales motion where you have to get uh cross-functional support and you go through a procurement and legal process and there's usually multiple revs of that and they're never really fun that could usually take anywhere from like six to nine okay so when you factor a fully weighted cac to get a new twenty thousand dollar a month account um are you spending up to twelve months of acv on that or sorry of monthly rpu or what um our so a couple things here our our payback periods are you know we're we're aiming for you know about a year and a half um you know we're we're probably closer to about two-ish years right now um so we need we know that we need to get things down from 24 to 18 months but just to be clear 24 if you're getting if you're spending you know if the customer is going to be worth 20 grand a month you're willing to spend about 400 500 grand to get that customer right now yeah yeah that's great and drive that down over time yeah exactly funding michael you guys bootstrapped or raised uh we've we've raised a a decent amount of money so we're 75 million in our seed was led by bowery capital with participation from google ventures and greylock and a whole host of other folks social capital letter a bain capital letter b harmony partners led our c and we're thinking about our next fundraise at some point in the not too distant future all equity or any debt in there all yeah all those guys i mentioned are uh are equity investors sorry sorry of the 75 that's all equity correct yeah good stuff all right michael let's wrap up with the famous five here number one what's your favorite business book hmm that's a uh competing against luck number two is there a ceo you're following or studying [Music] no number three what's your fave beside your own what's your favorite online tool for building the business linkedin number four how many hours of sleep are you getting every night about six okay and what's your situation married single kiddos married kids dogs living the dream all right and how old are you uh 40. take us home here what do you wish your 20 year old self knew that it's uh it's all going to work out um you know you put in the work you don't get uh too high or too low when things are going well or not so well and you just put one foot in front of the next and and you don't stress guys it'll all work out m particle founded in 2013 really helping big brands like starbucks manage their user user flows use your records across many different uh platforms whether it's mobile desktop or you know tablet they're serving 150 customers right now doing about 3 million bucks a month today that's up 100 year over year they were doing about 1.5 million bucks per month they're in that range in october 2017. they're scaling nicely economics-wise 150 net revenue retention annually that comes from really nice upsells and very low churn less than five percent revenue uh churn annually on a gross basis they've raised 75 million bucks to scale this team of 110 people in new york city other remote locations 24 month payback period so spending caught 400 500 grand to get a new 20 000 a month customer michael thank you for taking us to the top great time man really enjoyed it