QuantHub Revenue, Valuation & Funding (2024)

hey folks my guest today is matt cowell proud prior to quantum his current company he spent 15 years running product and tech at pe backed companies including building a product engineering organization at daxco delivering a 10x revenue growth seven acquisitions and three enormously successful recapitalizations he led the team to deliver the first machine learning and ai solution to the gym and fitness market and is now focused on data literacy hiring and upselling at quantum.com matt you're ready to take the top yeah let's do it nathan all right what does this mean data literacy hiring well so there's sort of two aspects of what we do both are focused on data skills and so hiring would be you know for organizations that are trying to hire data engineers trying to hire data scientists we have an assessment platform that helps them do so and so that market's a little crazy right now everybody wants to be in that field so you're getting flooded with applicants not always a lot of great ones so you know customers of ours are global management consulting companies that are interviewing thousands and thousands of of candidates a year and so they'll use our assessments to benchmark basically who has the skill to do the job and who doesn't mm-hmm and when are those your biggest customers then it's the consulting agencies the kpmgs of the world um yeah so one of our biggest customers is is is a recognizable um name the top two or three management consulting companies hp's a customer of ours on that on that side as well jetblue was a customer we signed them of course right before the pandemic so they kind of stopped hiring a little bit i don't know if you've noticed the airline industry was struggling a little bit but um so yeah those types of companies that are doing a fair amount of hiring in that space and then we've expanded actually into upskilling for kind of skills data skills across the board so data literacy being just the fact that we all consume data we all operate with data we all use data in the modern workforce yet we don't really have the skills to do so and there's plenty of world economic forum has some good really good research on that front so we have an upskilling platform that's basically like a duolingo of data skills um that's helping employees across the entire enterprise upskill in data and matt are you handling the full spectrum here you're helping hp go from finding the data engineer they really want to hire to interviewing them so applicant tracking to onboarding them to then ongoing training and support so they can get smarter uh so we're helping in a couple aspects of that one is really just the um we're helping in the skill aspect of that so when they have candidates and they want to know do these candidates have the skills to do the job our assessments will tell them that and that's specifically what hp uses us for and then um on the upskilling side you know once you get employees in the door you want to continue to build skill sets not necessarily we're not like a staffing type of platform yep yep interesting okay so you're solely if people are looking at 100 engineers and you want they want to give them a quick test they can set the test up on your platform give it to them and then figure out who to hire and then upskill yep that's exactly right okay what do these customers pay you per month on average so on the um on the assessment side on average our arr our um acv is about 22 000 okay um arr yep and so we have different pricing models depending on um depending on the product we'll charge um sort of on a per assessment basis on the hiring side and then more of a per employee per month on the up stealing side and what's the back story here we got a little bit of in the bio but when did you launch the company so with uh we actually are an offshoot of an ai consulting company out of the southeast birmingham alabama and atlanta georgia and that company you know was struggling with hiring like most companies are and and so decided to didn't see anything out there that was really good at a lot of programming assessment platforms but not a lot of great platforms to assess the conceptual skills required in data and um and so we built that and then ended up spinning it out into a separate company which really became became clown hub so when was that what year did you spend it out 2018 uh april of 2018 and how much how much revenue was the agency doing before you decided to shut that down and spin out this new sas product the agency actually stayed on and we just i basically actually came on um on sort of day one to run this as an as an offshoot of that company we didn't have any customers we didn't have um we barely had a product i mean it was like did i personally yeah like i mean are you essentially the founder you owned 100 on day one maybe the agency has a little bit so the agency was the primary um was the primary shareholder i came on and obviously have incentive equity as well as ceo so basically we had two founder two co-founders there and then given the stage of the product i came on um and really is kind of a third co-founder sorry i'm confused so the agency and who are the two co-founders so the ceo of the company is a company called strategy wise was an ai consultancy he's one of the co-founders the um the guy who's now our cto was a chief data scientist at that at that firm he's the other co-founder and then basically i came on because they continue they had a good business on that side and one it felt like this had its own future needed somebody to come on and run it and so i came on as basically a third co-founder and ceo okay got it and and then how many customers are you now serving today compared to when you joined yeah we didn't have any customers when i joined it was just sort of a proof of concept type product so i came on we raised money um we built out the product the rest of the way and or at least you know sort of mvp if you will um started bringing on customers in 2019 um sold 260k in our first of arr in our first year um we're now up to 21. yeah that was a good start we're now up to 21 customers um yeah so we're doing pretty well got it so 2019 was about 250 000 in sales you now have 21 customers are they all paying about 2 000 a month uh that's the average acv it's really pretty lumpy so we um we're starting now to sell um it's almost almost exclusively to enterprises and so um we have some six figure deals and and well into the six figures and then we have some four thousand deals so we're a little bit all over the place but but but the average uh is is too great yeah that's 21. that would put you at about 42 000 bucks a month right now in revenue yeah we're at 450k in arr that's great and that's it sounds like that's almost doubled from where you were about a year well no no maybe a little bit less where were you a year ago a year ago so we went into 2020 at 260k so we took we sold about 260 in in our exactly 260 in our first year um and then yeah over the last year and a half call it have gotten up to 450. um we've since you know the hiring side slowed down a little bit what did you finish the 2020 with though in terms of ar run rate uh 2020 we finished at um just about 400. 400. okay got it so well i guess i mean look so this is a fair question then i think why have you only added 50 grand a new ar in the past eight months yeah so we actually were expanding into i mean like any startup you know we're looking at opportunities and trying to see where we think we fit the best and where we're differentiated and where the market's headed and we made a decision about about nine well about 10 months ago um that we felt like upskilling was actually the um a big part of our future in addition to the hiring side and so we focused a pretty good amount of our business on upskilling and specifically in data literacy where you know this is sort of the next gen of the workforce has to have data skills it's almost like in the 90s when computers came out we just all of a sudden couldn't work without computer skills we're getting to that point with data skills as well we're not quite there yet but data literacy is a big movement and we have a really a unique approach to that and so we've to a degree shifted towards that and that problem exists in enterprises and and really exclusively almost in enterprises and so we started selling that late last year and really had kind of a v1 product in january of this year and so you know it just takes a little time to get enterprises up and going and so we just started a a um with dell in singapore uh we've got a company called oxyata who's a big malaysian verizon like company um 37 billion dollar company out of malaysia um they just started the other day so we've our target is a million in a r by the end of the year okay so you think you can get up to 80 grand a month in the next four months three months absolutely okay and tell me a little bit more about how you've chosen to capitalize the business so you mentioned a raise how much did you raise and when yeah we raised uh we raised a note round early on in our existence in july of 18. that was a 1.25 million and we've since raised just shy of another 2 million okay well that was a bright and priced price when was that what year uh that actually was during 2020 um basically closed at the end of the year okay got it so so two million raised and 2020 priced round what valuation did you raise at yeah we raised in an 8 million pre was that right feel fair yeah i think so i mean i think look at the market size look at the attraction that that we've that we've gotten the types of of brands that we brought on yeah i think so yeah i mean what is that what multiple is that it's a 20x multiple on 400 grand of ar that's not bad oh yeah yeah i think at our stage multiples are a little um yeah a little hard to go by multiples at this at this number in this scale but yeah i think it's still fair yep no no obviously a lot of it is a story i guess the only part of the story that doesn't make sense to me is why a guy like you with your background would i mean you're basically starting from ground zero but you don't have equity like a founder as equity because you were like the third co-founder essentially coming in unless they gave you like 70 which i don't think they did so why not just go start your own thing why'd you decide to join us instead well i mean i hadn't been in um i haven't been in this type of role quite this early stage so my background was more kind of cto type role of a of a more of a growth oriented sas business still still smb but um you know kind of went into that company at about 6 million in arr and we you know ended up at 80 plus by the time i left and so that was kind of more the scale and i like being close to the problem and so i wanted to get into something early stage and you know these these guys actually i i was networking when i was trying to figure out something earlier stage to do next and you know i really like like the people that were um starting this i felt like it was a huge market really interesting and you know i was in a position where yeah i think i could have gone for more equity but instead i chose some cash compensation i'm just kind of stage stage of life um risk profile you know that type of thing and so you know everybody's got to make their own decision do you want to do you want to be highly leveraged or do you want to blend and so for me a blend of of some you know cash compensation and reasonable equity that has some upside is is kind of what i was looking for did they get you more or less than 10 equity yeah i don't want to speak to exactly the equity but i mean it's i think it's fair uh okay got it now what's team size today how many people oh we're at 10 10 and we we leverage um contractors as well but 10 10 kind of core team members how many engineers uh we actually have four engineers on the team do you still code um it's been a little while since i've coded i will say that i'm in involved in um i'm more involved in the database type type of stuff now because that's the stuff that i'm still decent at so supporting customers uh converting things stuff that um i don't want our team focused on strangely i am as the ceo doing and and do you imagine this acv you probably have quota carrying sales reps how many do you have yeah we actually have a chief revenue officer i'd worked with before at daxco the sas company that i mentioned before she came on and is is running sales marketing and also customer success and she has an account exec um on her team as well those two of those people carry a quota then absolutely okay interesting so you think those two quarter carrying sales reps they could that they can add about 600 000 bucks of new ar in the next three months between absolutely yeah i mean we've got a proposal out that has um it's it's out for 420k in arr just to give you an idea so um yeah i i mean that's part of selling enterprises right for us um a part of our challenge is and you know this can be an okay challenge but it's lumpy you know our rep you know we'll sell a 100 multi hundred thousand dollar deal and then nothing for a month and then you know we've got another one um coming then i think it's going to be 200k and so you know that that's it's it's not um it's not as steady as some sas businesses that are selling to smbs they're selling individual licenses they're 50 bucks a month but they're selling a thousand of those you know we're just a completely different model yep no makes sense let's wrap up here matt with the famous five number one what's your favorite book uh my favorite book is a book my favorite workbook is uh monetizing innovation number two is there a ceo you're following or studying um no not really number three what's your favorite online tool for building the business uh for building the business i mean personally i honestly i like trello i think it's super flexible it allows us to stay nimble and and change things and adapt and and it's very lightweight so i like lightweight number four how many arms sleep to eat every night uh probably about um seven hours seven and what's your situation married single kiddos yeah i'm married um i'm 47 almost 48 my son is 20 at university of illinois and my daughter is 18. very senior in high school crazy kids that's great take us home last question something you wish you knew when you were 20. i've thought about it a lot i'm i'd have no regrets you know when i was 20 i wasn't doing this at all i was a chemist at procter gamble um and not knowing that i wanted to do technology so i went back to school and got a master's in chemical engineering and started go started working at accenture and so found my way into tech but um so i would like to know that i was interested more interested in that but i'm afraid it would have changed my course and i wouldn't change anything guys there you have it quantum got going in 2018 as an agency spin out they're now serving 21 customers could either customers like hp and others that are looking for data engineers to hire quantum helps them understand which engineers can pass the tests or challenges they set up and then also also help upskill those employees once they are hired full time they raised a two million dollar seed round at the end a lot or mid last year at eight million dollar evaluation team at 10 now looking to scale and break a million dollars in terms of run rate by the end of 2021 here we're rooting for you matt thanks for taking us to the top yeah thanks nathan appreciate it one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 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