How Numerator CEO Eric Belcher grew to $130M revenue and 2K customers in 2018.

hello everyone my guest today is Dennis Moore he is a husband a father studied statistics at Michigan play sports like golf and paddle tennis and loves to use data to analyze things professionally that means using data to help CPG companies make better decisions and personally that means a love for poker and wagering the company's called numerator calm Dennis are you ready to take us to the top sure I'm sure I'm over the pack over the past 12 months how much money have you made playing poker oh geez probably negative something okay so should we listen to this interview or not not if it's about poker advice no all right what's numerator due and what's your revenue model how do you make money yeah we we collect information that big companies CPG companies like Procter Koch Kraft companies like that need to understand how advertising promotion and pricing are trending in their in their industries okay so a couple questions on this obviously your data is only go to the inputs you feed it and then how you use that data so we're what are your inputs so our probably our most important input is a panel of consumers we've about 300,000 people in the United States who send us all of their receipts so when they shop in a store they snap a picture of the receipt when they shop online they've given us opt-in permission to collect their email receipts either in front of their email box or other Amazon Sandee that's direct or you've partnered with an app that is like a receipt imaging app and you don't have our own app so there's two apps one is called shop aruond once called receipt hog on the App Store and it's very direct actually an important point our relationship is very direct with the consumers they know they are signing up to send us their receipts do you pay them for it we pay them for it I'm one of the apps is charitable based if you ever cut out the box tops off your cereal boxes when you're a kid for your school so one of our apps donates money to schools every time you upload a receipt that we gave $750,000 to schools last year collected receipts that way the other one is game of Phibes there's another app that you know if you're not charitably motivated we'll give you some tokens and you can play a game that sort of thing oh interesting that people know what they're doing it's not like we're sneaking the data away from them its own oh by the way I think that's the future right I think if Facebook kind of business model where they paid users some amount of cents 10 cents 10 or whatever a month for all their data we wouldn't have all these issues we're having now about your collecting unwanted data right so I love it okay good I understand the data input now and give me a sense of kind of the velocity of that pipeline how many receipts per month are you ding oh my gosh we collect about 1 out of every 500 receipts in the grocery stores across the country so it's it's hundreds of thousands of receipts a day okay hundred thousands a day but you don't know the number like for the you don't know like last one how many you got total don't know I know I know we've caught we crossed over 500 million in our lifetime and I like in the four years we've been in business but I'd have to be that helpful okay he says is across 400,000 users correct okay that's great okay now let's go the next step so how do you then make how do you add utility value to the data to get CPG brands to pay you yes so the the main thing is insert of measurements of market share so if you think about loyalty data so think about a retailer for instance a retailer knows a lot about who shops in their store right the loyalty card gives a lot but they don't know what those people buy when they're in another store they're not actually they pretty important there's my poker analogy it's like you you don't know what the other guys holding that's the important that's the important fact similarly with the manufacturers what's going on is cuz the retail landscape has changed so much in the last few years I used to be if you knew what you sold in grocery stores you knew most of your sales but now people buy online they buy and so ulties and Sephora's and Dollar Shave Club they just like the way that CPG products get sold is so vast that you need sort of a wide range of consumer data to kind of track all the sales and so that's the primary value we have is really measuring the full omni-channel from physical store to online store and is this a SAS product for CPG brands or papered line of data or what it's a little of both I mean so there's a SAS based model but there's also a services component so people would sign up for a subscription and they can access their own data and do a lot of their own reporting but there's also times when the this the business use case is a little bit more involved and the client wants in addition to the subscription they want some professional services help and we provide both over the past twelve months if your whole revenue pie is a hundred percent what percentage was professional services versus SAS probably I think I'm probably about it's about probably that a third of the panel business the panel business itself about house it's probably someone that order of twenty percent of our revenues probably services okay not crazy especially the attention on the SAS product yeah this we generally speaking we try and provide like one person's worth of service for every million dollars of stuff you buy from us yeah that's pretty good and then okay so let's just focus on the SAS company today so so I'm sure you have a bunch of rent cohorts but I'm gonna force you into an average here just cuz we're short on time so what's the average customer pay you per month or per year would you say per year is probably high five figures right like seventy five and guessing a little bit brand average but yes it's probably it's probably a high five figure annual subscription okay got it so so call it 75 grand a year or maybe around sixty you know sixty two hundred bucks per month something like that and put this on a timeline for us to us before we get too deep here what did you launch the company what here well the company is really a concatenation of about 12 different acquisitions so I'm not the founder you know that I'm sort of the PE CEO of the accumulated companies but the the panel business that we've been talking most about that business started in 2014 it has grown from you know just it's a panel business so it'd take the first year you don't make any money because you that is numerator calm though right yeah yeah yeah yeah the numerator calm yeah the most of the business we've been talking about is like is a subset of numerator correct yeah yeah okay so hold on so I don't understand kind of you were you at the private equity firm that then went and bought market track and info scout or you were at one of those companies and basically moved up the chain after the roll up happened yeah I kind of joined in the middle so I joined when we had a previous private equity owner and we owned several of the businesses that make up the current numerator I joined we then sold to our current owners Vista Equity Partners and shortly after Vista acquired us we made a very big acquisition in this panel based company so yeah that's interesting the acquisitions and then and with both the one owner back and the current owner yeah so one thing I have to ask you because I think private equity firms a lot of people don't really dive into strategy here but there are so many synergies a company like Vista can do that other people just don't even think about for example they also are owners in return path but return prep has a ton of data I imagine your receipt data is also very interesting to return paths inside of a big private equity giant when when when you know Robert puts you right and return about in the same room and says figure out kind of work together I mean how do you and he's kind of saying like definitely figure out way to work together how do you make that work yeah you know well thank I think we actually do quite a bit of that and I can't speak for other private I think this is actually probably ahead of the curve in terms of doing more of that because most of the companies Vista choirs have sort of that tech enablement or SAS synergy so there's more in common so we actually return pass actually no longer part of the portfolio Vista but we would have done something with them but there are two other Vista companies that we talk a bit the partner with quite a bit one is called media ocean yeah that's a little bit the advertised great guy yeah it was yeah bills in fact on our board so that's one other was just on the show a couple weeks ago he had a baby earlier this week so yeah and then integral ad science so I don't know them know by IAS they compete against mote and double verify but all of they collect both meaty ocean and is have a lot of information around how advertising its consumers merged it up with our data we can start to draw the connection between consumers being exposed to ads and do we or do we not see a change in the in the lift of their own volume interesting okay so uh okay so when what year did you join the company like at all any other parts I joined the company in the summer of 2016 okay so two years and then we sold the company to Vista in the spring of 70 okay was it public with acquisition price was no it was not it was private okay all right okay so 2014 Agora you joined 2020 2014 I launched 2016 or upsells to Vista you stay on you're now leading kind of the conglomerate and then so walk me through kind of where you at J so so over the past couple years what it be scaled to in terms of total customers you're serving yeah so we have we have over 2000 customers and we're probably gonna hit about 130 million dollars of revenue this year across all of the combined companies and really the driving force for all that is that the channel fragmentation the traditional CPG companies they traditionally rely on like Nielsen which is a company I worked at for a long time now iri is those are like the traditional places they got data on the market but as the market has moved to this kind of amorphous mass between brick-and-mortar and online they need some new sources of information and that's kind of like the spot that we really dig in and say that there are new things in the market that aren't being well measured and we're measuring them better and that's kind of our pitch yeah so 130 run rate today helped me understand growth a year ago where we added up over 2017 yes just over a hundred ok so pretty healthy growth now as most that of this kind of 30 and kind of new bookings you've driven over the past twelve months what personnel that has come from expansion versus totally new customer ads yeah I mean most of it is from expansion in the sense that we had multiple we had these multiple companies we've tied together and so we might start to sell the new service to a company that was already buying something else from us yeah yes I would say it's so its expansion but it has an element of new business because of the company did it to the client who's buying it's a brand new service from us yeah that's interesting so someone that signs up I might use easy numbers here someone that signs up for your product brand-new today for a hundred grand a year hundred thousand dollar a CV typically when you put them through this well-oiled system you've built what will that expand to an ear to I think on average we'd say somewhere like 130 like Odie help me something like that if you know it can't what it tends to be is a little bit lumpy though because what can happen is there are certain services that if they you know if they expand to it and I double or triple their revenue right and the other other services where they just sort of make a marginal expansion by maybe expanding the box of data a little bit you know yeah and let's let's stay on kind of this line for a second which is kind of cohort analysis so that same cohort you know you're from today it sounds like there's some expansion maybe average thirty percent expansion let's talk about the flip side of that gross revenue churn what's gross revenue training that cohorts sure is probably we're kind of come in the upper eight our net retention rate is probably just shy of 90 so in the mid to upper 80s right now there are there's one line of a business that we have where we do like we collect data for I scrape being data off the web sort of yeah place information in another and that tends to be a business line that there's just a lot of people do in that space right now and so we do have a little bit more churn on that side of our business than we wish we had so Dennis I want to make sure I understood that hole real quick so you said net revenue retention is 90 percent yes correct okay and so just to make be clear a thirty percent of the expansion right which means that's essentially you know so if I take 30 percent off the 90 I mean I can basically say you guys are what churning what about how I mean it's a pretty significant amount of churn gross revenue churn maybe I maybe we're talking about a little bit differently of it I'm talking of all of all the bookings that I have right and I set price increases aside just you know how much of what I had last year do I keep silent n percent of my base I'm losing but then of the 90 that stays I'm expanding that so my network so I'm gonna say you're never attention is alright I grew up my growth with my existing customers is larger than my net it my network and then the churn I'm losing yeah yeah okay okay just so let me let me say it again and see if where I wanna make sure I'm interpreting your numbers accurately you lose on a cohort that signed up a year ago you'll lose gonna be 10% of that revenue you'll expand it though 30% so net you're 120% net revenue attention on that cohort correct sure I got it very good yeah that makes more sense and yes I get confused when you include the price increases don't include the price increase yeah I would include him that's expansion revenue but let's dive deeper on that actually when you do increase the price what have you found is the most effective way to get people comfortable paying that new price when they go but Dennis I'm on the grandfathered plan I was an early customer I love you you have great hair give me a discount yeah mostly it mostly it's about improvements in the product so like pretty good way that they say like the panel business we've taken that when we acquired the business over a year ago then panel side we had 75,000 people in like but we we had it for 1,000 people the panel that we there's a subset that you draw to be a representative sample and that was 75,000 we've made it a hundred thousand we're gonna make it a hundred twenty-five thousand in the next year and so there's quality improvements so like we've made the data larger so the number of issues that they can study and the number of things that they can read has increased and so that's it's kind of a classic quality place so we can legitimately say that there's been enhancements in product quality that you know manifests themselves at a price increase interesting talk to me about kind of dollar based CAC and the reason I ask is I've had a VI I've had several kind of private equity owned companies on the show and I found that this is a good actual idea understand how fast can the staffs marketplace is growing so when I had on Drive for from ping which is also I believe part of this stuff mystic oh yeah the CEO as well sure yeah I mean he articulated to me that kind of they're currently he's currently thing about a dollar 20 to get a new dollar and air are and they're actively and aggressively trying to figure out actually how to spend more because they have so much confidence in their lifetime value where's your head on your business yeah I mean I know we're not as we're not as Extreme as that we spend about 20 total cost of sales and marketing about 25 percent of our total revenue right so we're spending a lot of money every year on our sales force and our marketing efforts but the but I went but we're not in a situation where we're spending more than the first year's revenue just to acquire a customer got it you can think it's different about our business and some others you know we have like over 2,000 clients we have lots of clients that spend 20,000 30,000 40,000 50,000 dollars a year with us yes the lifetime value is large and the renewals are important but it's not like it's not as if these are seven-figure deals that you would spend you know an enormous amount of money to win because they're going to be eight and nine figure lifetime value so it has a little bit more wider range of clients so just to repeat that back to you you're spending maximum $1.00 of kak to get a new dollar of ARR a 12 month pay said differently it's about a 12 less than a 12 month payback period and in terms of just total macro level you're spending 25 percent of your total revenue which is about a hundred thirty million bucks today on sales and marketing correct you're gonna have and and so let me understand more about the team what's the team size today well it seemed our worldwide we have 1500 associates although 700 of them are in offshore capacities because we have a lot of data handling data coding data entry sort of issues but in terms of say client facing folks we have about just under a hundred commercial sales folks in about another 75 services based consultants and services folks and talk to me about the process talking about there's a very light because I didn't say anything about the engineering team - that's the other big pocket of staff that we have is a large number of Engineers because all of our businesses just continue to use the receipt position as an example and I say that someone takes a picture of a receipt we know what's on it as you can imagine there's actually quite a bit more to it than that in terms of the OCR required to turn that image into actual data that's right yeah break down that kind of machine for me for a second so I wonder send the sales machine you mentioned about I think he's at 75 professional services 100 commercial sales what's the ratio between kind of STRs and IES how do you use customer success and onboarding reps in that equation yeah we were and and we were with the I would say generally speaking we're rooted in more of the enterprise sales level because our biggest clients so our but that the think of the 50 largest CPG clients P&G Coke Nestle Unilever those are like where those are where our bread is really buttered and so we have a lot of various tenured staff focused on those accounts we do have an SMB market we do have a lead gen team kind of chasing the mid in the smaller market but in terms of dollar expenditures were probably top weighted a little bit more than other companies of our size okay interesting when Vista acquired you guys first change that you guys decide to make together was what internal systems we had we had I think we had six instances of Salesforce with three different accounting systems because we had concatenated all these all these small acquisitions before and you know this just kind of looked at and said you know this is kind of ridiculous you know we need to get on one instance of Salesforce that instance that needs to be the system of record for all of the things related to clients and it needs to tie in one time to our accounting system so we spent a good gosh we spent probably close to six months just kind of getting all of that straight now so that we now can go from from quote to order to bookings all in one system but that was that was not easy yeah okay so systems optimization is number one and what would you say that was kind of say that's very tactical what would you say is the first like should big strategic change that happen was it a price increase or something else no it was it was in the go-to-market team so we we had again again still some remnants of we had a very product focus you know people who came to us selling one of the products and we would buy another company would people would sold that product and the obvious opportunity was to have a united sales force and sort of bring the whole bag to clients and start to integrate the thing integrate the services together so we had to do a lot of work to essentially take a fractured sales force and align it up into sort of one go to market which then following on that heels they're kind of in parallel with that also meant certain things to better do with the product to make sure that the product experience was truly integrated but the products were somewhat easier to integrate I'd say that the sales forces were further behind so we took on the sales force first that's interesting yes so basically you're saying is every sales rep knows all the things they could potentially sell they can recommend better packaging and get more you know wallet share etc yep that's a you know and I can typically you've got a you got a portfolio of products I mean they're all differentiated in certain ways but some are more differentiated than others and so by integrating you kind of take the the equity and the differentiation of your best products and you kind of give a little bit of lift to you say - you're more amore you're more commoditized products yes very very good Janice I was enjoying US history as we ran out of time so let's wrap up quickly with the famous five one-word answers if you can what's the last business book you read I don't read business books okay that's a no number two name and name under the radar CEO that you really respect or you're learning from uh that I'm learning from Bill wise Bill White it's a good one number three what billing tool do you use billing tool oh my god I don't know you're not sure okay name your favorite online tool for building your business uh geez online - man I you're stumping me man I'm old school I don't know all right number four how many hours of sleep to get every night seven ish okay that's good and what's your situation married single kiddos married two kids one in college one in high school oh great and how are you be fifty in December so forty-nine for now that's exciting all right Dennis take us home here last question what he was your 20 year old self knew oh I wish my 20 year old self knew more about starting companies and smaller ventures you know I just I kind of thought you went to school you got a job at a big company and that's kind of how a world worked and it took me until I was 47 years old to discover private equity in smaller companies okay get in the starting the company game sooner coming from Dennis now leading a company called enumerator about to pass one hundred thirty million bucks in ARR that's up from 100 million dollar run right just a year ago so a healthy growth owned by private equity firm Vista equity if past 2000 customers mainly all the big CPG guys you know average contract values call it five six seven grand per month they're you know not as aggressive of some other portfolio companies in terms of dollar based spending up to a dollar to get a new dollar of ARR or about 25% of their total revenue on sales and marketing first moves again bring efficiency to the sales team one instance the sales force that was what they did first two moves kind of after the Salesforce acquisition again company launched in 2014 team about 1500 today growing rapidly Dennis thanks for taking us to the top all right thanks man see