How Observepoint CEO Rob Seolas grew to $18M revenue and 250 customers in 2024.

hello everyone my guest today is Rob COC co-founded a company called observe point in 2007 helping grow the company from a lean startup with a global leader in digital data quality that today serves enterprise clients worldwide he's a thought leader life enthusiast and successful entrepreneur he has more than 15 years of experience leading innovation in the digital marketing space Rob are you ready to take us to the top yeah sure ends alright beer you bet so tell us what observe point does and what you mean by digital data yeah so we're a data quality platform where a SAS platform and we ensure the proper implementation of digital marketing technologies from Google Analytics to Adobe an Olympics any other marketing technology we ensure that it's properly Qaid and that's collecting the data that is supposed to and validated properly that's data governance okay so I assume that's growing is to but more options for their marketing and tech stacks or ready really any stack in the SAS world your business is growing it sounds like what you're doing is you're making sure all these things are connected properly and data is flowing smoothly and accurately that's correct interesting okay and what's that you said your business model is SAS is that right that's correct yes okay and I want to get on every customer cohort but on average what a customers pay you per month for this service and what do they get between thirty and forty thousand okay that's an you first your a CV typically yes okay and what do they get give me a sample like what do they get if I paid 30 grand or do I get for that so the first thing you get is our ability to accurately validate an implementation for digital marketing technologies so we have well over 600 technologies that were experts on and will go back and say okay you're implemented kruk correctly you know across 80% of your website for example and most of our brands are very large enterprise brands with hundreds of properties across the world multiple teams so there's also a process involved where we help them manage that process who owns the technology you know what is it trying to collect each each digital marketing tech these days is super-powerful so you can collect as much as little as you want and trying to validate that and make sure that rolls sound correctly is difficult so are you working with like a very very small handful of clients call it a dozen or do you have an SMB like no touch offering as well no we're all Enterprise but we have over 250 enterprise customers the large brains Hotels American Express very large brands like that okay and I mean if I take 250 brands times that first year a CBI word you just gave me if 30 grand I mean it's was at 2,500 bucks a month times 250 customers was at 625 and mor per month is that generally the range you're in yeah we're north of that okay North like far like I'm Way off far north of that now so we just crossed actually a really nice milestone for SAS at 10 million a RR that would be 888 that's a good milestone you should get as where's there should be sham empty champagne bottles in the background of this headshot here there's nothing if you look close enough you'll see some empty glasses back that's good okay so you're past that that that 10 million dollar mark which means you're a CV it sounds like if I take that 10 million divided by 250 customers is actually a bit higher right yes I mean you you ask for first bite right first buy the Apple not lifetime value yep so people you're adding are typically starting at 30 grand now what is the playbook you're running you drive expansion revenue are you selling more seats sorry I know you have three product lines are you selling additional product lines what's extension revenue looks like no so we actually focus on the the number of domains essentially so we're on seat base we're domain base so a large customer like turner for example can have over a hundred worldwide properties and then there might be a really large company that only has two or three so I can like a Best Buy for example so it just completely depends on where the the brand places its most value and so that's around domains and that's how most companies think about it they think about domains and that's how we do it as well and we have an app product that allows for validation of Adobe Analytics and other key analytics tags inside an application okay and its findings describe the video I get web assurance and a passer and describe the video assurance product Oh video hoping to manually QA as well as to validate out in production so imagine you have to watch a 35 minute video to validate that there's an Adobe Analytics heartbeat tag happening inside we can do that you know be a software so there's no there's no human yeah as it provides a huge an immediate ROI for all of our customers okay and now what are you growing it so you just said you just passed 10 million a are what we react twelve months ago yes we nearly double the last previous year and we have some really high lofty goals for ourselves this year that's good so December 16 you call it you know 5 million in a are about 400 grand per month do you think no you haven't you you you know I obviously know this Rob it's harder to double year after year when your numbers get bigger do you think you can double again this year or you think it'll flatline to 70 you know 60 percent yeah I think that's probably where we put ourselves right now this year we have some tailwind coming we think we talk about data governance and have as four years right now if you were to ask most of our amia customers because we have quite a few there as well your wonder what customers amia what's that europe middle east asia dot a half sorry so if you ask one of our london-based customers and ask them what data governance as they would say gdp are because that assigns what gdp are is its data governance it's just called gdp are so that is a tailwind that we expect to see in a really positive way for the next two three four years of the business and give me more the backstory what you did you launched somebody in what you do we launched the company in yep so we we incorporated if you will in 2007 but that's not fully accurate really we fill our first year is 2010 our first role alpha customer came on board in 2010 so what we've got seven years old what was happening between oh seven and 2010 well not a lot actually i had built and sold a company previous to this the other co-founders john post anna so john post anna was the almond ship co-founder so they obviously had the adobe acquisition and the transition there so he was busy doing a few other things as well that kind of caused us to to take the business not as seriously as we started to and it takes time to build software so we bootstrapped our way all the way to being profitable to a million dollars plus and then we went and you know went out and got capital for the business to accelerate after that how much have you raised today or mean how much have you raised to date in north of twenty nine north of 20 million okay and is that all equity like that's all equity or their debt on the back of that and that's all that's all equity mercado's our leave investor as well as telling on venture partners both here in utah where who is it mark you said Marketo is the lead no Mercado Oh marcado okay God as I say I thought I heard you wrong okay good and and what is the weird question here a lot of people wonder when founders like you guys have big successes I know Dom attracts it was a good one I don't know what your exit was but I soon was a meaningful financial event I mean it's hard to make a wealthy person yeah you know I feel like their backs against the wall again so so how are you brainwashing yourself that your backs against the wall so you have that drive well that's really interesting I think most entrepreneurs actually just are inherently self driven if you were to go back and ask me of my 20 year old self you know how much different I am now and then there's just experience I don't think the drive is fundamentally change so most of the entrepreneurs that I see that take companies from zero to exit and then I experience they go on to the next project I know very few that have just had an exit and then do literally nothing they all have different projects sometimes those projects change from technology to real estate but they still have a project and that's what it is for me tell me about your turn yeah I think that's the that's the juice if you will incite any SAS business retention retention retention is our focus for this year as we acquire a lot of customers one of the things that you learn is what your best customers are I think we really understood what those look like feel like and how we interact with those in the last 18 months so the focus on the business is ensuring that we acquire retain and grow the right customers from from my point of view you can do all the it's kind of like going to the gym you can do all the lifts that you want and take all the right supplements and grow but but if you really want to juice up and grow that's that's high logo retention you know Heilig retention eighty high 80s to low 90s that whatever right now now that's our aspirational goal for this year or so that grow a little retention what do you out right now annually well we've been at 84% we want to get north of us no that's not horrendous right so logo now now is it about the same in terms of you can wear that to a revenue or attention it's about 84 percent I know revenue be tensions north 100 percent north oh well give me gross revenue retention before it well gross revenue retention can't be higher than a hundred no I'm sorry I I'm sorry you said gross I meant net yeah yeah yeah so what I was asking was what is your gross revenue retention is at eighty four percent or is it higher it's higher than that okay and then what are you driving comes with expansion revenue year-over-year to then get to your net number well it driving just threw up sales yeah in an actual metric yeah yeah like is it ten percent expansion or revenue and then you've got six percent turn so your net positive by over a hundred percent yeah it's pretty close to that okay interesting so that's that's pretty healthy now the people that are exerting why are they turning are they just shutting down domains and they're lowering their ace V's or they can sing all together as combination of factors one is just that we're a new technology and some customers are better equipped to use us than others so we certainly have that part of that's us identifying the right customers we have customers from AIPAC and other parts of Europe that have been hard for us to service and and we've also had some South American customers Wells so there's some Geographic differences and then just overall you know understanding how we best get traction in deep traction inside these larger enterprise brands which sometimes can be somewhat difficult to work with an almost dysfunctional to the level yep do you the pricing axes you told me earlier that you can drive expansion on you set a number of domains do you I mean a business can still grow revenue significantly but not grow their domains I mean do you feel like you're a handicap because you don't have other metrics that you can upsell on like number of seats or number of corrected errors or anything like that no I don't think so it hasn't felt that way and there's certainly module is a ssin of the product line and and clear room for us to grow down the future that we we're not necessarily concerned so much about changing the the pricing model okay I doesn't seem to be a big positive or negative and inside the business right so you feel like you can drive meaningful expansion revenue just buy up some additional product lines even if they're the number of domains aren't expanding and you don't have a perceived model so it really is just upsell additional products yes but I would say that we I don't know of a current enterprise customer that doesn't have some type of increase in domain and increase in apps I you take a look at like CBS comm has been a customer for quite a long time how many propers they have and then how many apps they've gone from you know three years ago with apps that number less than their domains and now apps number three times their domains there so there seems to be plenty of growth in there for us got it another question so once somebody uses you to make sure everything's working properly right boom they check that checkbox why do they keep using you month after month well because a website is comments like a living breathing thing it changes all the time so website can work perfectly in that perfect data collection one day and you have a release from a team over in India or a team in Cincinnati or Miami or wherever that team is and then all of a sudden data collection breaks and part of our technology is to instantly notify marketing departments when that happens tell me more about some of the other economics about growing your customer base so what's your tack look like today yeah so basically one of the things that we really focus on is a premium analytics users so we know our target market in our entry level Tam I think really really solid you take a look at the best Adobe brands out there best Adobe users and they're generally who we go after so I think we're we're pretty healthy that way because we are able to really focus and know where our bread is buttered so to speak and it allows us to make sure that we're not out chasing too many balls and and putting resources in the company to go outside of basically to go outside of that's one of the reasons we are a high-level partner with Adobe in fact last year we won their technology of the Year award because of the relationship in the natural value add that we are to the Adobe customer base yeah I totally understand all that and the focus is obviously a good thing but I'm curious fully weighted what is your tak about to apply were these guys I mean I assume you have insight sales people working these deals maybe you do some paid spend or conferences what's that fully weighted tactic like you know somebody probably won't want to talk about okay okay and why is that is it just is it higher than what you'd expect or you feel like it's the kind of thing you don't want to share because you've kept it low a little bit a little bit of all those things okay do you pay Adobe a kickback for that partnership or no it's just out of the good of their hearts they love the product yes well we're instant ROI for them one of the things that the companies started if you go back to our founding story was John cast Anna so John was the co-founder bah mature and their biggest problem was having customers call and say the data is not right and would blame Adobe and at that time Omniture and I'm sure an Adobe would say it's not the analytic solution it's your implementation of it and there's been multiple different attempts and ways that the market is understand that this needs to be solved from tag management solutions to CMS high level CMS integrations and now when you think about it all those are front-end but there's nothing to ballad in the backend and the changes are so rapid in today's you know mobile and web development cycles that you actually need something much more proactive going out in validating proper data collection more than just hey it's in our CMS or it's in our tag management solutions so it must be working Rob when you when you bring on these customers I don't know what your sales like it looks like but you invest a lot to bring them on how patient are you considering what you've raised and how big you I mean how how many months are you willing to wait to recapture that money what's your payback period look like well I mean acquiring customers in the enterprise sales cycles long right so we average you know a little bit shy of 150 days which is pretty much right in the wheelhouse for customers we've had customers that take nearly two years to fully acquire and because of that you know you have to you work really hard to get them and so you have to work even extra hard to retain them again so in terms of payback period are me are you trying to operate the business from an efficiency perspective where you get that money back in the first year or the first two years or are you less aggressive and you six months is what you want to get it back in Yeah right now we're pretty healthy with slightly over a year okay that's pretty good call 1415 months something like that yeah and then I mean backing into that right so if you say first year a cv is between thirty and forty grand it's very say you're comfortable spending something like that amount to bring these guys on at all yes that's right and as most good then you have to do that I mean the the sales cycle and the expense of trying to acquire an enterprise customer mandates that you retain them mandates that you actually grow and upsell into your account you can't just have the first bite of the Apple B by the Apple that's right yeah I know is most your growth you over you're coming from expansion revenue into the corn base or is it coming from brand new customers both okay but if you had to pick which one is driving more growth which one right now new logo grows more okay is more growth than up sales okay good and and last few questions here what's your team size up like today about 80 people it's about 70 people here and I in our Provo Utah headquarters and we have some oh we have an immediate team as well and with the London office and some contractors as well okay and wrapping up and closing out the economics lifetime but I don't know why people use lifetime value because I think you can lie to yourself really easily especially with you have some pretty healthy economics here in terms of revenue retention you could probably rationally argue to your team that these folks are worth an indefinite amount to you how do you keep yourself rational I mean when you assume a minimum lifetime value is on these guys well I think it comes down for us to to logo retention a high logo retention rate and as long as you're doing some level up sales basically most of the metrics fall in line pretty simply after that alright so though most of the metrics kind of get wonky if revenue retention therefore gross and net dollar retention get wonky too and so if you are my point of view is the simplicity of a very high logo retention solves most of you especially once you get to a business that's you know doing north of 67 million in NIR and growing yeah I guess my question is you mentioned earlier with 84 percent annual logo retention that I think you know reverse comes out to 16 percent Cherne chi or call it 1% or month which means the average customer is staying with you you could argue rationally about a hundred months at that three grand per month price point on average I mean you could argue that these folks are worth worth north of 300 grand a pop to you guys right and the reason I reason I asked that is maybe if you like it's worth more maybe it's less but a lot of CEOs will use that out to be number to drive back to what their CAC is and they can sometimes drive spending up too much because of an unrealistic LTV so I'm just curious how you think about balancing these well I think efficiencies in the business has got to be a focus it's very easy to talk about all the different pieces that you need in order to service a large customer or any customer but particularly large ones just because they the dysfunction inside big brands and the multiple teams and and I don't know I don't know very many of our our bigger customers who don't have multiple teams in multiple cities across the United States let alone the world so if you don't so it's really easy to convince yourself how much more you have to spend and how you have to market and talk to them and it's easy to kind of get efficiencies you know kind of sideways so I think it's just a has to be a discipline of the business to do that yeah when did you raise your last four enough funding so seventeen months ago okay sixteen months ago so I got so Robbie you're either raising right now or you're selling to somebody which one is it so we've got a little add-on round with our lead investor doing an inside round yeah and typically you see those inside rounds being done where you need a little extra capital to grow to kind of a run right you want to grow to and that gets you to the next point where you can go out and the value you want on a new round from outside investors is that generally what you're thinking generally the thought process yes cool right let's wrap up with the famous five number one what's last book you read boy the last book I've read I reread the advantage number two is their CEO you're following or studying right now mm-hmm you know there there is one button I almost don't want to share his name so I I'm still I'm still a fan of some of the local CEOs here in Utah I think Utah's got a little bit of an interesting culture and so there's there's some folks here I talk to well look at you want to my audience wants to study who your study named name one you're comfortable sharing well so I love him and hate him it's hard not to to love and hate Steve Jobs but because there's so many things he does well and there's so many things I look at and say I'm not sure I want to be that guy yeah yeah all right number three name a tool that you use every day to build the business we use domo quite a bit to help build a business number four how many hours of safety every night I don't get my required and recommended eight hours but I get generally six to seven that's pretty healthy and what's your situation right married single yep kiddos I am divorced with five kids holy mackerel five kids that's amazing are they all are you empty-nester or no I know that's a Utah water kind of thing every CEO I've spoken with it's like five six twelve Aaron Ross has 12 kids I'm like what is you what are you drinking alright five kids and how old are you I'm 46 46 okay last question while you was your 20 year old self knew just to keep going I think that they're so easy to get discouraged and I think the number one thing is you hear so many great pieces of advice information has never been easier to attain or acquire but with that is the breakfast the prerequisite to say what piece of information am i hearing and does that apply to my business right now because you can hear somebody talking about what worked for them as a 50 million dollar business or a 5 million dollar business and you might be right in the middle and it may be disastrous if you implement that so it's very very careful to validate and understand what piece of information here listen to as a CEO and what you actually want to use and strategize on in the business there you guys have a be cautious with advice from an Rob launched observe point back many years ago you know unofficially in 2007 officially in 2010 they are helping enterprise clients make sure they've got their marketing tech in their stack they're their sales stack basically any webapps connected making sure the information is flowing smoothly the tags are firing they also do that with applications and video as well so bring 250 customers right now they've passed 10 million bucks an error that's up from about 4 or 5 million just 13 months ago so healthy growth they've raised 20 million bucks eighty four percent annual logo retention is healthy he's obviously working on driving that up spending about you know getting their money back on new customers in about 14 months with our team of 80 folks based mainly in Provo Utah Rob thank you for taking us to the top it's good to be here