How QCC Reached $100M ARR and 1 Million Paying Customers in 2022 (Interview with Ex-CEO Zong Peng)

Introduction and Company Overview

Nathan Latka

00:00Qcc.com. Think of it like the Zoom info of China launched in 2014. Zong was part of the four person founding team he joined in 2016 when the company was doing $3,000,000 a year in revenue. The company hit 60,000,000 in 2020, 80,000,000 in 2021, a 100,000,000 in 2022. Zong said, I wanna grow this thing fast. The other founder's like, man, we really like our $20,000,000 of profits last year. There was a bit of a difference. He left.

00:21He's now deciding what his next move is gonna be. We will see what he does. Hey, folks. My guest today is Zong Peng. After fourteen years in The US, he moved to China in 2017. He's he's an early investor and former CEO of qcc.com, the leading direct to user b to b data intelligence tool in China with a 100,000,000 plus registered users and 80,000,000 in ARR in 2021. He loves SaaS, artificial intelligence, machine learning, and data

00:44driven businesses. He's he's also solo motorbike across Vietnam in twenty eight days and a Columbia alum. Zong, ready to take us to the top?

Zong Peng

00:53>> Thank you very much for the intro introduction. Let's begin.

Zong's Role: Early Investor and CEO

Nathan Latka

00:56You bet. So just to be clear, were you also are you the founder of qcc? I know you it sounds like you left last year, but were you the founder?

Zong Peng

01:04>> Well, I joined pre A, yeah, and I was an early investor. I know the founder very well, and

01:12>> strictly not a founder, but very, very early stage.

Nathan Latka

01:16So what year did you join the company, and what year was the company launched?

Zong Peng

01:21>> Company launch was in 2014, and I joined in 2016.

Nathan Latka

01:26Okay. 2014. Got it. And and walk me through that relationship. So you were an angel investor in 2014 or 2015, and then the founder brought you in as CEO?

Zong Peng

01:35>> Well, I was in The US back then, and then we found this company, and

01:43>> we could have been an early investor, but got in on the pre A round.

Nathan Latka

01:51Okay. Got it. So you came in before the series A round as an investor?

Company Launch and Zong Joining in 2016

Zong Peng

01:57>> Yes.

Nathan Latka

01:59So I what what was the round size in 2014 or 2015 that the Founder raised?

Zong Peng

02:04>> $5,000,000.

Nathan Latka

02:05And you were part of a 5,000,000?

Zong Peng

02:08>> Yes.

Nathan Latka

02:10Okay. So how does somebody go from part of a pre series a round of 5,000,000, you know, an investor to becoming the CEO? What happened there?

Zong Peng

02:18>> I was

02:21>> When I was at S and P Capital IQ, and I had always been a very student of the market of the data company, right? And

Pre-Series A Round of $5M

Zong Peng

02:38>> I had a lot of friends in China that back when I was at Columbia, the story when some days a person called me, hey, would you you like to be the CEO of this company? Would you like to look at this company? And

03:00>> qcc was one was a company that came onto our screen, and I look at it,

03:13>> the business model is very much similar like Cap IQ or ZoomInfo or

Nathan Latka

03:18So were you at? Were you at Cap IQ?

Zong Peng

03:21>> I was at Cap IQ.

Nathan Latka

03:23Were you a Founder or a Leadership Team, or what was your role there?

Zong Peng

03:27>> No. I was not a Founder or Leadership Team. Joined very much much later.

Nathan Latka

03:33Yep. Yep. Okay. So you're on the leadership team at Cap IQ. You were also an early investor at qcc. You joined qcc full time in 2016. Now how much revenue was the company doing when you joined? Do you remember?

Zong Peng

03:48>> $3,000,000. It was a baby. It was very very much a baby.

Nathan Latka

03:55Okay. So 3,000,000 in 2016. And just we skipped over sort of the product. You've mentioned ZoomInfo, Cap IQ, but tell us real quick, what are customers paying you for today? Is it still sort of data intelligence?

Product: The ZoomInfo of China

Zong Peng

04:06>> Very much data intelligence.

Nathan Latka

04:09Okay. So we can think of it like the ZoomInfo of Asia. Is that fair?

Zong Peng

04:13>> It is fair, but ZoomInfo, you know it. They do enterprise sales, they a lot of enterprise sales teams that push the product, but our product is pushed to customers directly via app stores and via a lot of direct channels.

Nathan Latka

04:36So you're bottoms up. You're saying you're bottoms up and individual employees are paying for you versus top down. You're not selling to the CRO.

Zong Peng

04:43>> We're not selling to the CRO. Well, we we at the beginning, we were selling to the CRO and the CIOs, but that was not sustainable. Because in China, if you do a top down approach, the sales cycle is very, very long. It takes months. Like in The US, it months

Bottoms-Up Distribution via App Stores

Zong Peng

05:07>> or half a year to get the sale done. Yep. Our product was pushed through the app stores, Apple App Store, Android App Store, directly to the consumers. All they have to pay is 360 RMB, not dollars. You could divide that. It's very, very cheap.

Nathan Latka

05:33What is that? I need to do the conversion real quick. Hold on. Dollars 52. Dollars 52 a year.

Zong Peng

05:39>> $52 a year.

Nathan Latka

05:41Oh, 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

06:04your 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

06:29get 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

06:51not 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

07:16going 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. Alright. We're gonna go back to the YouTube video here in a second, but if

07:38you 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 the

08:05interview. And so if if if you're a consumer in China and you open up the Apple App Store or the Android App Store and you find qcc, what's the headline? Right? What does it say? What what's gonna make me wanna download it?

Zong Peng

08:18>> Check out companies. Look up your bosses. Or check I out your employers. That's the catch.

Nathan Latka

08:30Yep.

App Downloads and Monthly Active Users

Zong Peng

08:31>> So If you want to get hired, you want to go look for sales lead, want

08:40>> that's the kind of catch.

Nathan Latka

08:43Yep. So how many downloads do all the apps have today combined across Apple, Android, and other app stores?

Zong Peng

08:51>> The last time I checked, it's 3,000,000,000.

Nathan Latka

08:553,000,000,000 with a b?

Zong Peng

08:57>> Yes.

Nathan Latka

08:58Billion or million?

Zong Peng

09:00>> A billion.

Nathan Latka

09:01You have 3,000,000,000 app downloads across all the app stores?

Zong Peng

09:05>> Well, there's duplicative.

09:06>> Right?

09:07>> But overall, there's millions of There's a lot of repeated downloads, but overall, there's more than 300,000,000 people who have downloaded the app. Non duplicated.

Nathan Latka

09:19Okay.

09:20300,000,000 unique downloads of the application. And then how do you measure how many of those 300,000,000 are active in the last thirty days?

Zong Peng

09:29>> Well,

09:32>> we measure DAU and MAU, right?

Nathan Latka

09:34Yep.

Zong Peng

09:37>> Anybody who has opened up the app in the past week or the past month, that's MAU. But data user that's very standard metrics.

Nathan Latka

09:47Yep. So what is your what is your MAU past thirty days?

Zong Peng

09:52>> 50,000,000.

Nathan Latka

09:54Six zero million?

Zong Peng

09:55>> Fifty million.

Nathan Latka

09:56Oh, five zero.

Zong Peng

09:58>> Five zero.

Nathan Latka

09:59Five zero million. Okay. That's I mean, what is that? That's that's almost I mean, it's almost 20%. Right? 20% of your total downloads are active every month. That's pretty good. How do you drive that kind of activation rate?

Zong Peng

10:12>> Well, the activation rate is

10:16>> that has to go back to the history. If you know ZoomInfo, Cap IQ, or other B2B companies, like the one that you founded, right? It's very much B2B. You had to drive it through sales channels, through

10:37>> basically sell people. But with China, it's very different, because

10:45>> back in 2016,

10:48>> when our company was founded,

10:52>> Apple was the only channel where you could market it. But in 2016, 'seventeen, and 2018,

11:03>> Android fluctuated because a lot of mobile phone makers started using Android systems. That's when they established the Android app stores. That's when we had the opportunity. Originally, was just the app, the app, Apple app store, but after that, Android fluctuated. That's when we actually really drove adoption, really through through different channels.

Revenue Milestones: $60M to $100M ARR

Nathan Latka

11:34That makes a lot of sense. Okay. Now you told me in the bio revenue, but I wanna I don't wanna bury a lead here. I'll let you share with the audience. So what did you guys finish with in 2022 in terms of ARR?

Zong Peng

11:45>> A 100,000,000.

Nathan Latka

11:47Okay. Okay. And and in the bio, you said 80,000,000. So did it increase?

Zong Peng

11:51>> That was 2021.

Nathan Latka

11:54Oh, okay.

11:56Got it. So you added 20,000,000 of new ARR over the past twelve months?

Zong Peng

12:00>> That's right.

Nathan Latka

12:02What drove most of that growth? Organic channels, paid? Where where did get it?

Zong Peng

12:05>> Organic channels.

Nathan Latka

12:06Organic. Wow.

12:08Okay. And then take us back one more year. What was AR in 2020?

Zong Peng

12:13>> On 2020, it was 60,000,000? 60. Yeah.

Nathan Latka

12:1960, 60,000,000. Okay. And then I guess this begs the question you said in your bio that you left. It sounds like this thing is a rocket ship. Why'd you leave?

Zong Peng

12:28>> That's a long story. Probably didn't we couldn't talk finish it in fifteen minutes.

Nathan Latka

12:34Okay. Were you did you bootstrap the company, or did you guys raise a bunch of capital?

Why Zong Left: Strategic Disagreement

Zong Peng

12:38>> We didn't raise a bunch of capital. We only raised probably a couple million dollars and bootstrapped it for a very, very, very long time.

Nathan Latka

12:47Mhmm. And then what?

Zong Peng

12:50>> Well, then they just skyrocketed.

Nathan Latka

12:56Well, my audience is gonna be going, okay. But then

12:59why did he leave? So did other investors come in? Did a private equity firm take it over? What what happened?

Zong Peng

13:05>> Oh, that's another conversation. Well, with China, you have to understand this is a Well, how should I begin?

13:17>> The US, I think a lot of founders would

13:25>> treat capital very kindly or want to bring it to the IPO market. But in China, you had to understand, if you understand the regime that are currently going on, I'm saying something that's probably going to get censored,

Nathan Latka

13:44which is okay. That's okay. Everyone in The US will hear it, so go ahead.

Zong Peng

13:51>> That's okay. A lot of founders in China grew up in under a very different regime. Their mentality is that, let me grow it and let me take control of it. The investors are just

14:08>> capital money. They're debt. They're not equity. So,

14:25>> take control of the company.

Nathan Latka

14:29So the government effectively took over control of the company?

Zong Peng

14:33>> It's not the government, but if you are a founder, if you have a very profitable company, what would you do?

Nathan Latka

14:43Keep all the money.

Zong Peng

14:45>> That's right.

Nathan Latka

14:49But you can't keep the money if you leave the company, but and you left the company.

Zong Peng

14:54>> Well, it's just a philosophical challenge.

Nathan Latka

14:59You give up did all your someone force you to give up all your equity?

Zong Peng

15:04>> No.

Nathan Latka

15:05So you still own who's running the company today?

Zong Peng

15:08>> One of the founders.

Nathan Latka

15:10Okay. How many founders were there?

Zong Peng

15:12>> Oh, three. There's three. Okay. We're four founding team, and and I was one of them. Yep. And an early investor. And just because of disagreement with how we would run the company, and and that's why I left.

Nathan Latka

15:32What? You wanted to pull profits out and they wanted to keep profits in?

Zong Peng

15:37>> That's not exactly right. I would like to see the comp because we have a lot of competition.

15:44>> When ZoomInfo was founded, it's probably back in 2007, right? You know the founder.

Nathan Latka

15:55Well, I don't know the ZoomInfo founder. I know Henry Shuck, who is the founder of DiscoverOrg, which acquired ZoomInfo.

Zong Peng

16:01>> That's right. That's right. That's right.

16:04>> We have a lot of competition, and that's a question you ask a founder. When you are faced with very intense competition, do you raise money and compete? Or you know that you're very profitable? And do you keep the money? That's a very, very realistic question.

Nathan Latka

16:25Oh, I see. So do you believe qcc is about to announce a major fundraise because they're gonna wanna go spend money and compete versus you wanted to sort of stay under the radar and be profitable?

Zong Peng

16:37>> Never.

Nathan Latka

16:38You didn't That's not accurate. You didn't want that.

Zong Peng

16:42>> Well, I want I wanted the company at least to raise another round of money to compete effectively, and it was profitable. And I made the

16:55>> we launched a very profitable advertising campaign across social media and

17:05>> other media channels that actually brought a lot of money in. And but a lot of founders didn't want to do any of this.

Nathan Latka

17:16Mhmm. Oh, so you wanted to be aggressive and grow faster. And the other founders were like, don't spend so much money. We like our profits.

Profits and Net Margin

Nathan Latka

17:26I see. Now it all makes sense. Okay. How much how much revenue how much profits did the company have last year on a 100,000,000 of revenue?

Zong Peng

17:34>> 20% net margin.

Paying Customers and Conversion Rate

Nathan Latka

17:36Oh, I mean, that's Yeah. Pretty darn

17:39That's pretty good. Okay. And and how many paying customers does the company have today?

Zong Peng

17:44>> More than a million.

Nathan Latka

17:45More than a million. Okay. So of the 50,000,000 MAUs, only about 2% of them actually pay. Is that right?

Zong Peng

17:53>> It's very much like gaming companies. If you play any games, that's the the subscriber ratio that that that you get.

Nathan Latka

18:03Yep. I mean, I mean, look, when you look at other B2B SaaS companies I mean, you are in B2B, though. You're sort of like B2C, but you're going bottoms up. You know? I mean, do you see a path to getting up to a 5% conversion rate from free to pay? That would be sort of world class for this sort of, you know, comparable business model.

Zong Peng

18:17>> Very much so. If you do a lot of improvement on your product, getting into a 5% conversion rate is very achievable.

Nathan Latka

18:26Mhmm. Mhmm. Got it.

Zong Peng

18:28>> Especially when you have so many user. Right?

Nathan Latka

18:32Yep. Yep. Yeah. You've got so you've got you've got a million customers paying about $100 a year, which is a $100,000,000 a year in revenue. Right?

18:42That's different than the $52 a year you told me earlier.

Zong Peng

18:47>> Well, our subscription rate is 600 and 360 RMB. If you divide it by that by seven, that's $50 a year.

Nathan Latka

19:00Correct. Yeah. Dollars 50 per year. You just said you had a million paying customers, right?

Zong Peng

19:06>> Yes.

Nathan Latka

19:07Got it. So so there's fifth

Zong Peng

19:08>> You multiply that by six or seven, that's a 100,000,000 ARR roughly.

Freemium Model and Tiered Pricing

Nathan Latka

19:17I see I see what you're saying. But what I'm saying is, do you do you have you you have a million customers paying $50 a year, or you could have 2,000,000 customers paying $50 a year. That's what will get you to a $100,000,000 run rate. Do you have only one price point, which is $50 per year, or do you have other more expensive price points?

Zong Peng

19:31>> There are other tiered pricing. It's very much a a freemium model, right?

Nathan Latka

19:37I see.

Zong Peng

19:38>> The reason why we have 2% conversion rate is mostly the app is free. We do have one year subscription, two year subscription, and three year subscription, And all that, it's just tier pricing.

Nathan Latka

19:52Yep. Yep.

Zong Peng

19:54>> And the one year subscription is 360 RMB per year, and two year subscriber

20:00>> rate had the discount.

Nathan Latka

20:03Yep. Yep. Very interesting. Did Henry Shuck ever try and buy the company?

Zong Peng

20:09>> I never got a call from him. I did talk to

20:16>> well, never intended to sell because it's a very unique company.

Nathan Latka

20:21Yeah. No. I agree. It sounds like it's on a very unique What do guys think you'll finish with? I know you're not involved anymore, but what do think 2023, what do you finish with in terms of ARR?

Zong Peng

20:30>> Well, that depends on whether the economy opens up or not.

Nathan Latka

20:34Yeah. Yeah. That's fair. What are you gonna do next?

Zong Peng

20:39>> Well, that's a very interesting question. Keep on doing things in AI and machine learning and data company space, and keep on looking at other interesting SaaS and data companies. The companies we've been looking at were including Snowflake, ZoomInfo,

21:03>> CrowdStrike. A lot of very interesting SaaS companies that in The US, I found it just very different from China.

Team Size and Revenue Per Employee

Nathan Latka

21:16Yeah. No, I agree. How many people before we wrap up here, Zong, how many folks are full time at qcc today?

Zong Peng

21:21>> 200 people.

Nathan Latka

21:23200. Wow. That's that's really good revenue per employee as well.

Zong Peng

21:27>> Very much so.

Famous Five Rapid Fire

Nathan Latka

21:29Yeah. Wow. Okay. Let's wrap up here with the famous five. Number one, what's your favorite book?

Zong Peng

21:35>> Favorite book?

Nathan Latka

21:42Or the last Well, one you

Zong Peng

21:45>> I have to I have to say Three Body Problem.

Nathan Latka

21:48Three body problem?

Zong Peng

21:50>> You probably have read it by Liu Cixin. It's a side habit.

Nathan Latka

21:53I'll read it, though.

21:55That's great. Number two, is

21:58there a CEO you're following or studying?

Zong Peng

22:02>> Recently, Elon Musk. I know it's a cliche.

Nathan Latka

22:06Number three, what's your favorite online tool? Your business online tool?

Zong Peng

22:12>> Business online tool. What do you mean?

Nathan Latka

22:16Like Slack, Trello, Figma.

Zong Peng

22:21>> Well, the reason I the one that I use the most is Wind.

Nathan Latka

22:27How do you spell it?

Zong Peng

22:29>> W w I n d, wind. It's the Bloomberg of China.

Nathan Latka

22:34Ah, very cool. Okay. Number four, how many hours of sleep do get every night?

Zong Peng

22:40>> Six hours.

Nathan Latka

22:41And what's your situation, Zong? Married, single, kids?

Zong Peng

22:45>> Single.

Nathan Latka

22:46Okay. Not married, no kids. And how old are you?

Zong Peng

22:50>> Below 40.

Nathan Latka

22:51Below four below that's interesting.

22:53Most people say older than x. You say below 40. Alright. Last question. Something you wish you knew when you were 20.

Zong Peng

23:03>> Not be so kind. Be more anxious.

Nathan Latka

23:06Be so kind.

Zong Peng

23:09>> That's another different the conversation. Be be be be more anxious.

Closing Recap

Nathan Latka

23:15I love that, guys. Qcc.com. Think of it like the Zoom info of China launched in 2014. Zong was part of the four person founding team he joined in 2016 when the company is doing $3,000,000 a year in revenue. The company hit 60,000,000 in 2020, 80,000,000 in 2021, a 100,000,000 2022. Zong said, I wanna grow this thing fast. The other founders like, man, we really like our $20,000,000 of profits last year. There was a bit of a

23:37difference. He left. He's now deciding what his next move is gonna be. We will see what he does. Zong, thank you for taking us to the top.

Zong Peng

23:43>> Thank you. Bye bye.

Nathan Latka

23:46One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday, 1PM Central. Additionally,

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24:33big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up for that

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