How Proof Analytics Raised $4.5M From Family Offices and Prices Year-One Contracts at $65K to $150K (Interview with Founder and CEO Mark Stouse)

Introduction and Company Overview

Nathan Latka

00:00Hey, folks. My guest today is Mark Stouse. He's the CEO of Proof Analytics, a marketing analytics platform that helps CMOs and CFOs bridge the ROI gap by providing cause and effect analytics that shows marketing and sales true business impact on financial worth. Award winning B2B CMO and CCO, Mark is one of the first leaders to connect all types of marketing investment to revenue, margin, and cash flow impact on complex long cycle companies. In 2014, he was named

00:25innovator of the year for his pioneering work by US marketing leaders. Mark, ready to take us to the top?

Mark Stouse

00:30>> Hey. Thanks, man.

Nathan Latka

00:31You bet. So just to be clear, is proof your baby or you're a hired gun? You're a hired CEO here?

Mark Stouse as Founder and Former CMO

Mark Stouse

00:36>> No. I'm the founder. Alright. And, I'm a I'm basically a former large company CMO turned software CEO.

Nathan Latka

00:46All right. So your cool factor went up is what you're saying.

Mark Stouse

00:49>> Well, I don't know about that, but certainly it's interesting to kind of connect those two.

What Customers Pay For: Marketing Mix Modeling

Nathan Latka

00:54All right. Tell us what folks are paying you for right now. What are customers using you for?

Mark Stouse

00:59>> Basically, if you know anything about marketing mix modeling, or for that matter, other kind of regression based causal type analytic, you know that it's been around for a while, it's extremely accurate, but it's very difficult to operationalize into the decision making process. And so we really mastered that at Honeywell and other companies like BMC Software and HP, and we really got to the point where we understood what the next step had to be, and so we

01:33>> built an automated platform version of marketing mix modeling. And so particularly given the fact that third party data has been really impacted in the last two years, it's been, you're seeing even more deprecation there. People are really moving rapidly towards in general, and specifically a really low latency, very fast version like proof.

Pricing and Contract Values

Nathan Latka

02:02Okay, so this sounds like an enterprise motion. What's the average customer paying you per month or per year, would you say?

Mark Stouse

02:08>> So we typically range year one anywhere from about 65,000 to about 150,000. It's all based on the number of models that you want to compute, so you can scale it to whatever degree you want to.

02:27>> The payback period is less than sixty days. We're talking about typically on that kind of

Nathan Latka

02:35Are you talking about your payback period or their payback period?

Customer Payback Period and ROI

Mark Stouse

02:38>> In other words, the amount of time that it takes for the customer to realize that they really did well in buying proof is less than sixty days. Average savings or repurposing of marketing spend is usually in the millions.

Nathan Latka

02:54Okay, very cool. This makes sense. So $65,000 contract values, you can expand from there and go up, which is great based off number of models. Do you upsell based off anything else? Number of seats, any other utility based pricing upsells?

Usage-Based Pricing Model

Mark Stouse

03:06>> No. It's it's 100% based on value. And the and the increment of value being created is the answers to these questions. Right? These models. Right?

Launch Timeline and a Hot Market

Nathan Latka

03:17The number of models. Okay. This makes sense. Now now put this on a timeline for us. When did you launch?

Mark Stouse

03:22>> We launched about four years ago.

Nathan Latka

03:25I guess you call it 2019.

Mark Stouse

03:27>> Yeah, and basically the last,

03:31>> I'd say the last two years have been really hot, you know, the volatility and the speed of change during COVID and all the way up to right now has been severe. And people have really understood that it's not about just measuring marketing, it's being able to understand the cause and effect relationships that exist across time and the fact that we all live in a multi variable world. So it's basically, if you're not looking at what the

04:02>> marketplace is doing to you, in other words, what the headwinds and tailwinds are and how that's impacting the investments that you're making, you're not gonna get there.

Sponsor Break

Nathan Latka

04:13Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually, Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

04:37your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

05:01get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity And red is if you sold the whole thing outright. Now what's cool about this is this is

05:23not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're

05:49going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, we're gonna go back to the YouTube video here in a second, but

06:10if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into

Bootstrapping vs. Raising Capital

Nathan Latka

06:37the interview. So you get going in 2019 coming from your own experience. You build this thing out. Have you decided to strap and preserve your equity or did you decide to raise capital and take some dilution?

Total Funding and Family Office Strategy

Mark Stouse

06:47>> Actually, kind of took a middle ground. So we have raised, but we are absolutely a lean startup. So we have sort of hybridized some raise from all family offices. So we did not VC at all.

Nathan Latka

07:04Give me that history. So when did I guess how much total have you raised to date from family offices?

Mark Stouse

07:08>> About 4,500,000. So everything that we have done to date is a combination of that 4,500,000 plus bootstrapping.

Nathan Latka

07:17Okay. We love bootstrapping. That's great. We also love raising in the right context. So I guess what's the breakdown of the 4.5? When did you bring in the first tranche? What year and how much?

Most Recent Funding Tranche

Mark Stouse

07:26>> You know what, I honestly can't remember that right now, but we have generally, we have stuck with the same family offices and have, our joke is that we raise money from them much like a politician raises money. It's based on whenever we feel like we need it, right? And so whenever there's a real strong opportunity to invest more in proof beyond what is funded through bootstrapping, they're there.

Nathan Latka

07:59And so I guess if you don't remember the first one, do you remember the last one? When was the last tranche you took from them?

Mark Stouse

08:05>> About a year ago.

Nathan Latka

08:06Okay, and how much was that for?

Mark Stouse

08:08>> About 1,000,000.

Nathan Latka

08:09Okay. 1,000,000. Got it. Interesting. Now I I've never I don't I know what raising from a VC is. Like, I don't know if family offices give you the same standard terms that a VC does. So are they giving you stand pretty standard terms?

Mark Stouse

08:20>> Actually, we have great terms

08:25>> with our investors. So I would say way better than we would normally see from a venture capitalist firm.

Nathan Latka

08:32And I guess what terms are most important to you? You know, liquidation preferences, valuation caps, you know, what's most important to you?

Mark Stouse

08:40>> I think that the most important thing is that the investors are have the same vision that we have.

Nathan Latka

08:47Oh, Mark, come on. That's a fluffy answer. I understand. Obviously. Obviously, that's important. We all know that's important. Talk to me about terms, though, specifically.

Interview Ends After Tough Questions

Mark Stouse

08:54>> You know what? Honestly, can we stop this? Because I didn't this is not even remotely what I agreed to talk about.

Nathan Latka

09:00Oh, Mark, did have you did you listen to any other episodes before coming on? We've recorded about a thousand. But this.

Mark Stouse

09:05>> I Okay? And the I'm not here to talk about our all that stuff. That's

Nathan Latka

09:12not We've what so you understand, the reason we have 15,000,000 downloads is because we we record top founders, and we ask tough questions. We don't follow scripts. You know what? So if you don't like if you don't like the questions I'm asking live, we should probably end. And, guys, there you have it. That's why we do the show. We don't follow a script. That's why you love us. We'll catch you tomorrow morning. See you.

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