How Neoreach CEO Jesse Leimgruber grew Neoreach to $4M revenue and 100 customers in 2024.

hello everyone my guest today is jesse limegruber he is the founder of a company called neoreach he's a mentor to the alchemist accelerator a theo fellow and a frequent guest lecturer at stanford and usc neoreach has generated tens of millions in revenue from customers like walmart amazon and nbc jesse are you ready to take us to the top let's do it all right hey kick your video back on because we'll use both audio and video feeds when we publish this thing uh we'll deal with the delays it'll be okay but tell us about the company what's what's new reach do and how do you make money yes so neoreach is an end-to-end social intelligence platform brands pay us a licensing fee to analyze the performance of their sponsored post campaigns everything from paying tiger woods to wear a nike hat to red bull sponsoring athletes we to youtubers you know promoting a product we measure the effectiveness of those endorsements and we sell that data to uh large brands and fortune 500s interesting and give me a general idea i'm sure you have a lot of different customer cohorts but we're short on time on average what do one of these customers pay you per year for your technology um we typically the minimum licensing fee for a brand is about 25 000 annually and we have uh quite a few as in more than a handful of brands spending over a million dollars with us annually that's great i mean so would you say maybe 100 grand or 150 grand is more of a fair average yeah i would say at least at least half of our customers are spending over over 50k a month okay fair enough you're definitely excuse me 50k a month or a year sorry 50k 50k a year decay a year i think our our average revenue per customer is around 200 000 a year that's great very good so i want to dive more into the story you've clearly kind of jumped into an enterprise model here you know we had sprinkler on reggie gave a great interview and hootsuite is obviously other end of the spectrum um and and attribution is tricky and social in general so put this on a timeline for us when you launch the company what year we launched it in early 2014 and uh probably the first that was we launched the company then probably the first year i don't think we had any customers or nothing significant um 2015 was really when we launched our product in a sort of beta and then towards the end of 2015 um it took its current form and so 2016 2017 and this year have really been the primary product so but it's really about two and a half three years into you know live revenue live customers but the business is a bit older than that that's great so and then how have you scaled right so from 2015 today how many customers are you working with now um you know it's not it's not as big as some custom companies by number it's enterprise by the way so i'm expecting like a dozen maybe yeah we just passed a hundred total customers okay that's i mean that's fair that's that's that's expect you were hedging there why were you hedging so hard well you know everyone you know has does the sas business is like oh we have you know 35 000 customers but it's like five dollars a month well yeah i mean in a freemium model but your model you can have a hundred and build a great business yeah we just we just passed a hundred i think about 102 103 something like that congrats that's great well look i mean 100 at that at that 200 000 kind of average per year puts you at like 1.6 million a month something like that is that accurate uh not quite but pretty pretty close okay and can you help me understand growth rates are you doubling your every year where were you exactly a year ago you know i uh i like to think of the way to scale a sas business says you know if you want to ipo you need to triple triple triple double double over five years so three x revenue three x represents your x revenue and double and double and then you you're currently that's that's the pace that will get you to an ipob number um we're about about that so we are we're in between two and three x a year growth rate right now yeah so that would have put you out around maybe call it 600 grand a month about a year ago a healthy grow you added a 3x in there you know usually it's 3x3x222 what changed your thesis oh yeah well we uh we started with such small numbers so i figured we need to uh we need to pick it up somewhere fair enough fair enough very good all right breakdown down some of the the kind of economics around this right so i'm really curious about your first customer was it and did you start enterprise and then stay there or did you start smaller and then scale up tell us the story how you got your first customer yeah first customer so uh you know the product was like didn't work probably and it was uh it was really buggy and you know we needed a customer that would sort of believe in it so what we did is we actually outreached to maybe two or three hundred customers on linkedin and we didn't even we didn't pitch them we asked them for feedback on what we were building so we said you find them like what'd you search for what terms cmo okay got it yeah we we emailed about two or three hundred cm modes i remember sending the emails we're a custom email email our to the linkedin messages linkedin mostly and we did some email too yeah and uh the first we had a couple you know tiny startups that maybe spent a thousand dollars but the first real customer we got was uh zappos the cmo of zappos actually responded himself introduced us to his ad agency which introduced us to someone else's zappos and they signed up for i think it was a small deal at the time five thousand dollars for a year license but it was meaningful to get zappos and they were our first first recognizable brand that's great now talk to me about the rest of the company today how many people are you total oh total uh just over 30. just over 30 that's great everyone in san fran you guys spread out we are spread out we have an engineering office in orlando we have a sales and marketing office in austin and then uh we've got the executive and a lot of other employees in the bay area okay very good so 30 folks kind of spread out and then help me understand today right churn is critical in any sas company i'm expecting you probably have pretty significant expansion revenue based off the size of some of these accounts what's your kind of gross revenue churn per year and does your expansion cover that we have we have high churn um compared to compared to certainly you know a business that's that's super super deeply integrated you know the downside of our businesses and we're is it's a software it's not a um it's not like tied into the infrastructural stack of their of their companies like aws or something like that so relative to some businesses we have high churn but over the last year we've actually been pivoting a lot of customers to our api product where it is actually tied deeply in um jesse i mean do you know about revenue trend are you talking like 10 a year it's a little higher than okay okay i mean by the way like you know it you're pivoting to an api model you know tied to a usage pricing axes which probably makes it way stickier so this is a fun transition to make so a little higher than 10 is your expansion does your expansion make up for the 15 you lose yeah i know for sure it's close to closer to 20 percent of customers uh churn but we we grow at a significantly higher rate than that and the ones that stick kind of really expand you know the ones that tend to turn tend to be the 25 000 a month cost the 25 000 of your customers they tend to not be deeply integrated and the primary reason they churn isn't usually a product problem on year which is more or less a marketing software the campaign stocks of marketing and they just can't justify it relative to their to their overall budget like celebrity endorsements and influencer marketing isn't working for them not really as much our software yeah or jesse it's campaign driven right a campaign starts and stops right exactly exactly so even though our business is sas um you know a lot of businesses buy it for it's a one-year license but they just launched the company or they just launched a new division and they don't need it after that so that's something we deal with um and it's really just about picking better customers picking better you know getting api customers larger deals multi-year deals that sort of thing what does expansion look like so you said 20 churn what's expansion on that same cohort look like um so customers that expand uh you know there's this tiny segment of customers that expands like significantly that drives most of our growth so you know to put that into the actual numbers we've had quite a few customers started under a hundred thousand dollars a year with us and actually expand to over a million dollars a year um and those types of customers this tiny niche that scales massively drives almost all of our growth yeah okay but so that's that's that's those are obviously outliers you only need a few of those to really drive growth but if you look at the core that signed up exactly one year ago so december 2017. you know today you're going to say basically 20 of that revenue is lost that same cohort that signed up how much do that does that cohort all together and aggregate expand by 30 or 40 okay good so net revenue retention is about 120 percent yeah that's right that's obviously really healthy economics right so talk to me about how you get these guys in the door the first place so when you look at your fully weighted cac how aggressive are you being [Music] um we we have difficult time doing marketing attribution because of the scale of our leads and because of the the length of the leads we jesse you can't say you have trouble with attribution that's your business oh i know i know it's really bad we joke about that all the time almost almost almost 100 of our leads are inbound right but we get over a thousand inbound leads a month what really ends up happening is you know salesperson flies out we meet with them we see them at a conference again you know we we work with them for a year and then they sign a million dollar deal with us and so it's kind of challenging to attribute like this particular retargeting ad or this particular click you know if if we do it on sort of cost per lead basis you know we have channels that will spend between 50 and 500 a lead um and but our close rates under one like it's under one jesse let me sorry let me ask this differently um to get a new 200 000 account are you willing to spend up to first year acv to get it uh we spend on it on a on sort of our typical if you take out outliers we're spending about 40 the first year customer value so i mean you still have like a five month payback period that's pretty healthy yeah yeah yeah that's that's great um that's great okay talk to me about how you've capitalized the business you mentioned theo fellow i know i think there's capital involved there how much have you raised to date we've raised uh four million okay across about two rents four million that's great well look i i love companies where the arr it's a raised ratio is in favor of the arr so it sounds like again if you're you know call it 1.5 ish right now per month obviously that puts you at a great run rate of like i think 20 per year that's i mean that's a nice ratio um are you looking at raising go ahead we're going to add something yeah yeah i mean we would look to raise again but you know we're profitable and you're about right we're shooting for next year we're we're projecting to be over 20 million that's great sorry do you mind do you mind can you share where you're at actually now so we can understand how aggressive you're trying to be you're in the ballpark i mean you're but that is 20 right so like right now what i just said 1.6 million a month is 20 million you're saying you're not there that's your goal next year are you at like 1.1 ish or 1.2 ish now like how aggressive are you trying to be with bookings growth yeah we're we're trying to more than double next year and more than double for us is is going to be about 25 million as we're projecting okay got it got it so i can basically take 25 million divided by two and that's kind of your run right now that's that's i won't push you further because that basically is the answer right talk to me you know peter peter till got a lot of pushback for the fellowship program i've interviewed several of the folks i've gone through they say wonderful things what's your take i love the teal fellowship i mean you know it's it peter isn't like super closely involved granted i've been quite a number of times i mean really the teal fellowship is about the community of other entrepreneurs i mean in terms of businesses you know my business is reasonably successful it's profitable a lot of employees millions of revenue but i i'd say on the stack of other two fellows i'm like wait on the list i mean we've got like people like vitalik who founded ethereum the founder of oyo rooms i mean there's quite a few 100 million and billion dollar companies in the in the batch now and it's a really tight cohort so to have that community is is it's the strongest network i have for sure yeah that's great very good um so i mean what's the you're profitable today right you know you only raised 4 million bucks where are you if cash is kind of just building up in the bank you obviously want to deploy that either drive the company or pay it out to employees as kind of distributions i mean how do you think about what to do with all your profits you know that's a good question it's something we think about all the time um we we you know we're constantly in this battle of increased profitability to increase scale right you know if we invest all of our cash back into the business does that make us more profitable five years from now and it's a it's an unanswered question and we're trying to balance it right now you know we're we're looking at potentially scaling up aggressively not in terms of fundraising but actually we could double hedge and we could afford it yeah um but you know we're just not sure if that actually is going to yield more revenue and so that's that's this year's big focus is what's the next five years look like all right jesse let's wrap up with the famous five number one what's your favorite business book favorite business book has got to be uh the lean startup or zero to one number two is there a ceo you're following or studying right now preferably not like a mainstream one ooh a ceo i'm studying or following right now not a mainstream one um i don't think there's one ceo i'm particularly following right now now number three well what billing tool do you guys use what sorry billing tool uh bill.com bill.com yeah or stripe depending on the category of customers yeah stripe for smaller bill for bigger yep exactly number four how many hours of sleep to get every night i really value sleep so i i budget for nine and i end up getting almost over eight almost every night that's awesome uh and what's your situation married single kids i live with my girlfriend of uh four years in san francisco any kids yet no no kids but some at some point that's great and how old are you i am 24. 24. last question what do you wish your 20 year old self knew 20 year old self you know i didn't realize how how deep startups would go i mean it's it's it's crazy the kind of the the where you know after over moments and the roller coaster i mean i probably would have took a few more years to learn and reflect on what i really want to do before jumping into it i don't regret it but i i thought it was going to be you know unicorns and rainbows the whole time guys make sure you make sure you have time to learn coming from jesse at near reach just past 100 customers about a million bucks per month in revenue call it 12 million a year hoping the double year over year to 25 next year growth was about two between two and three xu every year over the trailing 12 months so healthy business profitable four million raised 30 people between orlando austin remote locations 20 gross revenue turn annually 40 expansion on the same cohort so call it 120 net revenue expansion spend spending up to call it five months of lifetime value to acquire customers they might use profits to get more aggressive with that over the next 12 months as you look to double we'll see what happens again attribution for influencer marketing got like the craziest all the numbers out you like that jesse jessie am i hired i said i know i mean we need to get out of here all right jesse thanks for taking us to the top talk to you soon