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...