How Pixlee CEO Kyle Wong grew Pixlee to $18M revenue and 500 customers in 2019.

hello everyone my guest today is kyle wong he's the ceo and co-founder of pixley a visual marketing platform that helps brands to market and sell using real customer photos and videos all right kyle you're ready to take us to the top let's do it nin okay so first off is this a pure play sas company uh it's a peer play sas company with some data network effects um our business model is sas but you know like many other sas companies in this space we're based off usage versus seats okay so you don't have any upsell revenue based off number of seats it's only based off usage correct and so the upside revenue comes from that and not to kind of go so deep right now in the first 10 seconds but yes we're a sas based company and that scales with volume and usage of photo served okay so yeah give us an example of how maybe kempton use you how do these folks use you on a daily basis yeah so um so we're a sas platform that basically helps brands harness the value of their customer stories so our core belief is that your customers are some of your best marketers and that we built software to make that more scalable so a lot of the brands today um already have consumers that are posting about their brand um on a day-to-day basis talking about their experiences at kempton hotels or airbnb or the product they bought et cetera and what our technology does is we provide that infrastructure to use that content at scale everything from the collection of the content the permission rights of the content the tagging labeling of the content and then the infrastructure to put the place put the content in the right place you can almost think of it like an api for content but that content being customer stories otherwise known as your most valuable marketing asset and what are people paying i mean give me a general range here i'm sure you have a lot of different cohorts but on average what's a brand going to pay per year per month to use the tech yeah we have a ton of cohorts um so we have a free tour um so anyone who's listening and wants to just do it right away we have a free tier uh we have kind of a commercial mid-market tier that encourages anything between a thousand couple thousand bucks a month and then we definitely have an enterprise tier that's more in the tens of thousands a month and that's for brands who are doing this at a global scale so in other words if you just want to use this on a small part of your website that's one thing but a lot of our top customers today are using us at a global scale across their e-commerce email in their ads you know in their stores they're using it anywhere you see a photo so like a lot of api contents uh platforms it's kind of like a uh scale it scales with usage so kyle just a simple fight because then i want to get more of your background story here i mean are you you know let's just talk about your paid folks not free it's great you have a free plan but on the paid plans it sounds like people are paying you know your sweet spot might be like you know a couple grand per year or something like that um per month per okay per month okay good so you're very much an enterprise sales motion um yeah we've definitely moved more in that model um i think historically we were not not that because i think the market wasn't ready for it but over the past uh 18 months or so we've definitely seen a lot of growth in the enterprise segment which is definitely more than six figures a year yeah all right good and then put this on a timeline for me when you launch uh originally we launched the first version of our product in 2014 um so um when we first started the company um instagram just came out of android app and uh when we uh started the company like a lot of other silicon valley stories it was right on the out of the stanford dorm room so um it took some time for the market to really catch up to what we had what we did what we did because at the time the photo quality really wasn't good enough um you probably if you're active on social media you probably have plenty of photos on your instagram with really ugly black borders and very blurry picks um so as that content got exponentially better um so did the asset that we're dealing with and ultimately became a lot more usable for brands so i mean i guess one of the questions i'd like to ask is between first line of code and first dollar revenue how much money you sink into building the platform uh that's a good question i feel like there's a lot more sweat equity than anything else and part of that is because we started the company with four technical co-founders uh didn't really pay ourselves that much money um in the beginning just quantify what you did pay yourself um just to get the product built mvp honestly i think it was like a like like a little stipend like a couple thousand dollar stipend for a couple months um but you know we actually got um paying users pretty quickly in our platform um you know what was the distance between again first line of code and first paying customer how many months probably like five to six months or so okay so so what you know when you add up all the stipends across five developers you're talking like maybe 40 50 grand to get the mvp up something like that something like that yeah and did you bootstrap from the beginning or have you always kind of raised capital um we kind of it was a little bit of half half depending on when you consider uh the bootstrap but obviously like you know when we first wrote the first line of codes we didn't um we didn't uh raise capital how much total in the company today uh we raised an eight did low eight digits uh okay so crunch base says 5.5 million is that accurate uh it's not completely accurate okay why is it no why is it not accurate do you use debt uh no uh well that was equity um i i mean we just haven't uh got around to updating it um it's not something that our our customers really actively look at um and it's something that we're uh just not really uh using to actively promote the company anyway i'm surprised your customers don't look at that if these are enterprise deals a lot of times they see funding as more security means they can invest more in you because you're going to be around longer and part of that has to do with who you sell to in an organization we sell to a lot of vp of marketing vp of digitals vp of e-commerce and just candidly a lot of them really don't care as much they care a lot more about the other brands that you're working with right um and that that you can deal with enterprise scale of of their platform so okay we can be a lot more with the different brands that we work with in the case studies over the funding and i think that's actually more aligned with um our customer value anyway okay so we'll call it eight figures we'll call it somewhere around ten million dollars raised to date um and where why have you had to raise the capital i mean this doesn't seem like it's that capital intensive why do you have to take the dilution yeah well part of it is just the r d that we put into it right um so there's a lot of different areas of r d that we spent a lot of a lot of time on um first is just anything with enterprise functionality you know with all with hundreds of people that are in any system there's a lot of enterprise functionality that you need second is when it comes to things that are facing the customer there's a lot of customization so the same way that some of the customer facing applications allow you to customize everything uh we we allow you to do the same thing with no dev resources uh in the last is all your speakers all your revenue sas or do you actually have professional service and customization upsells um like 99 percent of our service revenue is sas so uh but so that's one of those things where this is something that one in every four americans like sees right and it's right on the front and center for a lot of the world's leading brands it needs to look and feel how they want it and we as a sas company don't really want to be doing all of that right and for us we spend a lot of time developing all that r d to make sure it looks and feels the way it wants and then last but not least over the last 18 months we spent a lot of time on some of the deep learning improvements in our software because when you think about customer stories and this content it's not just a quantity problem anymore it's really a quality data and infrastructure problem around how do you tag and label the content more effectively so that you know what photos or what products are in them so for example when you go to pages i mean google image api and these kinds of things these sdks have gotten pretty sophisticated did you build a lot from scratch no no there's no reason to build all that from scratch you want specific products that are in the photos right there's vertical specific applications of this technology that's super important so the same way that you go to pinterest right and you see the actual products that are in the photos we have we do we enable brands to do that but for their own platforms and so kyle what's the team look like today how many folks um what about 50 people and what portion are engineers or something else um it's about half half okay so and we have offices in san francisco uh toronto uh new york and uh kind of expanding internationally now take me back to your first couple customers how'd you land them do you remember uh i think we like sent out a thousand emails okay so it's cold basically cold emails yeah exactly and i wanted to also like set the tone for people whereas like when we started the company we were right out of college right um so there's definitely a lot of things that we didn't know and one of those snares where we don't know where you don't know and it took us a while to also figure out what type of customer segment this product was going to be useful for um initially our first set of customers were the professional sports teams so at a point in time we worked with maybe one third of the mba so just be clear you basically got a thousand emails of people inside of mba teams and you cold emailed them those were your first customers more or less yeah and then once we got a couple of them we were able to use that and and and what was the title like head of digital head of vp marketing what tyler optimized for at that time it was actually more the social media manager um over here no budget exactly right and also it's one of those scenarios where that role within a sports team doesn't really impact as much revenue um because if the team is good the team is good right the team isn't good you know it's it's it's only so much impact you're gonna have um so what we found out over time is that these small brands at the time uh these small e-commerce brands uh would pay us a significant amount more money um because we're adding a lot more value because we're impacting conversion and sales on their website because people before they bought products wanted to see how other people wore them and we could tie the conversion and they would yeah by the way i think my audience will totally they totally get the product at this point so i think that makes complete sense i want to try and get a stamp now on kind of where you're where you're going from here so help us understand where we're at first so 2014 you're selling to basketball teams you migrate from there you go a little bit more enterprise how many customers are you serving now today uh so clarify we definitely didn't go out go enterprise in 2014. uh it was like no you are now you just told me you're today you are yesterday today yeah yeah yeah so we served over a thousand brands okay and those are all paying correct uh no no i'll pay okay so how many customers are you working with today you probably pay work with with close to like 500 plain customers okay 500 that's great and then like moving forward where do you see the both the product going and will you service the same customer base or do you also see that changing um i think we can continue to service more of the enterprise segment as we continue to grow the platform because when you think about the demand for content that becomes even greater when it comes to international brands that have to find local content for places like south korea so for us we think we see ours continues to move up moving up market while while also working with a lot of the emerging brands that are you know raising funding and um very effective on digital how aggressive are you being with acquisition right so you said earlier the average customer's paying caught a couple thousand a month will you spit let's say it's three grand a month or 36k in the first year will you spend the full 36k to get the customer or how aggressive are you being there yeah um so we try to be a little more capital efficient around that um actually our model is a little bit different where we're trying to um do it a little bit differently so we're taking actually some of our traditional acquisition budget and we're investing it back in things like community um and our whole belief is that hey if we make our customers successful um they are much more likely to help us acquire a new customer than us you know paying for this conference sponsorship or us you know doing a tremendous amount of outbound et cetera so for us we've actually spent a lot more time on the customer success side of things making sure and making sure that we're building these relationships with people because they all know people and a warm introduction from one of our customers is worth just so much more yeah so that's going to be a little bit more of our focus so that also costs money right that requires people team energy time etc so i guess i'm just curious generally speaking right are you happy with the six month payback period if you do spend money to get customers or are you happy with 12 or more aggressive i think anything between 6 to 12 is is it you'll take that all day right as a sas company and you know especially because that's a lot of times you get cash upfront for a lot of these deals so i think you'll absolutely take that all day are most of yours up front um yeah a decent amount but probably a good majority of our business like more than 80 you think uh probably around there okay um yeah i think part of it is also um over time it's got gotten up there more like when you're when you first started the company and you don't have any credibility people are a little bit more risk adverse want to do a pilot and all that kind of good stuff when you have proven track record with lots of brands and people can um can't can easily reference your your product with somebody else um it's a lot uh you can do that you can definitely control more multi-year deals and in cash upfront as well churn kyle as you know it's really critical in any sas company right so how have you managed your turn to date and have you gotten to the point where net revenue retention is north of 100 oh yeah so actually just in q2 i just did my board meeting slide so yeah nice so i know that pretty well uh yeah so it's it's it's it's negative churn um but i think uh for us we've had to also work towards that everything from understanding like what you're putting in so the right ideal customer profile right and also what are the leading indicators for churn which i think is super important for any sas entrepreneur to understand kyle peel that onion real quick and then let's talk more about tactics you're kind of testing there so if you peel that back between what your churn was versus your expansion what are those two numbers yeah um so term infection so yeah i mean it's negative expansion right um so you can't have net negative expansion that doesn't make any sense basically if you get net revenue retention or net negative churn it means your expansion more than outpaces your churn revenue so i'm just trying to understand what was your gross churn over the past 12 months what was your expansion over the past 12 months and then that gives us the net number yeah um so i don't have all that right right right in front of me right now uh unfortunately but like the overall is the upsells in cross sells over it was greater than our gross churn okay do you have a general sense of one of those numbers you said you just did them for the board deck i mean are we talking like 10 annual churn or more for gross or net gross um probably around that number yeah okay yeah yeah so so again if you got 10 gross and you have 10 expansion net would be 100 or it sounds like you're negative so you have a little bit more than 10 expansion yeah what are you upselling against is it you mentioned usage-based upselling earlier what do you define as usage what's the metric um it could be a couple of different things one one is just volume of photo serve so like i said like like many other kind of api based companies it's volume and usage but we also have brands who move internationally as well and as they move internationally they come with different types of requirements because things like hey they're different data privacy in south korea versus russia versus in the eu right now and they have different product skus and much different team so it's kind of like sometimes it's it's like almost um providing another platform for that team um so those are just some of the key vectors around our upsell and usage and the last one is actually where you put the content so like actually physically or like a screen um well one of the areas of where people put the content is in store um so it'd be definitely upsell related to that um just to be clear you're upselling based off physical location like number of stores you put our picture wall in or or places meaning like the website and a billboard and a digital sign in new york city subway the latter okay got it so people are they not putting them i imagine they also put them in their geographical location their actual stores they do exactly but you don't upsell against that uh so uh we provide kind of an all-in all-inclusive opportun a package for that as you as you do that that gets included in the volume that you use it in i see okay so the in terms of upselling against kind of where you put it when you use the word where you mean specifically like again a billboard a subway sign etc and then you include the actual putting it in the target location or the nike location right across the country that's included in the other fee right i see interesting okay um before we wrap up my audience will take the 500 customer number you gave me earlier times the couple thousand dollar month arpu you told me as well and multiply to get about 1.5 million bucks a month in revenue today is that about where you're at um yeah i think you probably could get to a pretty close uh but get pretty close there okay and then in terms of growth rate so if you're there today where were you about a year ago are you doubling your year about doubling here a year that's pretty good and you think you can keep i mean obviously at some point it gets harder to do that because you hit such big numbers but do you feel like you do that for the next couple years you know and everything's always harder at scale right um but i think we have a lot of really good industry tailwinds that um that are at our backs right now um so i think one thing we can't really control as founders is just the overall market right and i think the market is kind of moving in our favor so i think we're pretty optimistic about our outlook for the next couple of years all right let's wrap up with the famous five number one favorite business book ooh um the reason one reason why i just recommended to our co-workers is how will you measure your life uh by clay christensen i think that's really important when it comes to building team culture number two is there a ceo you're following or studying uh there's a lot of ceos that i'm following just studying big one uh right now it's actually the zoom ceo eric and part of the reason why i think from as a leader he's incredibly authentic right and you know in in the way that he approaches customer support and customer experience i think is actually world class number three and by the way if you guys want to listen to eric he came on the show two weeks ago actually before it was about three months before the ipo actually and go listen to that episode number three what is your what's your favorite online tool called for building your company oh um i actually really like mix max right now it just helps me make sure my inbox is clean and making sure that like i actually get back to certain people and um you know bump people when appropriate so i think that i think that's been really helpful for me just just in calendar and all that kind of good stuff number four how many hours of sleep deep every night i try to average at least between around like seven hours of sleep that tends to be my sweet spot and how old are you i just turned 29 29 very good and situation married single kids uh not married and i don't have kids no kids all right probably the single category last question what do you wish your 20 year old self knew oh man i think the importance of consistency um i think when you're younger you can get super excited about certain things right but it's not just about spending one day or two days on it really really aggressively it's about can you maintain that level of consistency over a long period of time because i think that's really where you get to the difference between good versus great is consistently over a long period of time it's similar to podcasts you know by the way everyone wants to create one podcast and do two of them and then doing a thousands of different different levels so congrats on all the consistency you've had on this this is episode 2072 so thanks for that guys there you have it pixley again founded back in 2014 ugc marketing platform for brands that want to use their customers and users and uh you know again users of pictures everywhere 500 customers to date caught a couple thousand bucks a month on average so caught around 1.5 million bucks a month in revenue doubling year every year obviously nice growth rate there raised 10 million dollars to do it 50 folks on the team has looked to scale net revenue retention north of a hundred percent they are optimizing for called a six to eight month maybe even 12 month payback period but most their growth coming from customer word of mouth marketing as they double down on that kyle thanks for taking us to the top thank you for having me