How QuantHub Reached $450K ARR with 21 Enterprise Customers in 2021 (Interview with CEO Matt Cowell)

Introduction and Background

Nathan Latka

00:00Hey, folks. My guest today is Matt Cowell. Proud prior to QuantHub, his current company, he spent fifteen years running product and tech at PE backed companies, including building a product engineering organization at DAXCO, delivering a 10 x 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 upskilling at quanthub.com. Matt,

00:25you ready to take us to the top?

Matt Cowell

00:27>> Yeah, let's do it, Nathan.

What QuantHub Does: Data Hiring and Upskilling

Nathan Latka

00:28All right. What does this mean, data literacy hiring?

Matt Cowell

00:32>> Well, are sort of two aspects of what we do. Both are focused on data skills. So hiring would be for organizations that are trying to hire data engineers, trying to hire data scientists. We have an assessment platform that helps them do so. So that market's a little crazy right now. Everybody wants to be in that field. You're getting flooded with applicants, not always a lot of great ones. So customers of ours are global management consulting companies

00:58>> that are interviewing thousands and thousands 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.

Key Enterprise Customers

Nathan Latka

01:08And then are those your biggest customers then? It's the consulting agencies, the key KPMGs of the world?

Matt Cowell

01:14>> Yeah. So one of our biggest customers is a recognizable name, the top two or three management consulting companies. HP is a customer of ours on that side as well. JetBlue is a customer. We signed them, of course, right before the pandemic. 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 So yeah, those types of companies that are doing a fair amount of hiring

Expanding into Data Literacy Upskilling

Matt Cowell

01:39>> in that space. And then we've expanded actually into upskilling for 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. Plenty of World Economic Forum, has some really good research on that front. So we have an upskilling platform that's basically like a duolingo of data skills that's helping

02:10>> employees across the entire enterprise upskill in data.

Nathan Latka

02:14And Matt, are you handling the full spectrum here? You're helping HP go from finding the data engineer they really wanna hire to interviewing them, so applicant tracking, to onboarding them, to then ongoing training and support so they can get smarter?

Matt Cowell

02:27>> So we're helping in a couple aspects of that. One is really just the, we're helping in the skill aspect of that. So when they have candidates and they wanna 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 on the upskilling side, once you get employees in the door, you wanna continue to build skill sets.

Nathan Latka

02:50Got it. What are helping bring them potential Not hires

Matt Cowell

02:53>> necessarily. We're not like a staffing type of platform.

Nathan Latka

02:57Yep. Yep. Interesting. Okay. So you're solely, if people are looking at a 100 engineers and they wanna 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.

Matt Cowell

03:07>> Yep. That's exactly right.

Nathan Latka

03:09Okay. What do these customers pay

Pricing and Contract Models

Matt Cowell

03:10>> you per month on average? On the assessment side, on average, our ARR, our ACV is about 22,000 ARR. And so we have different pricing models depending on the product. We'll charge of on a per assessment basis on the hiring side and then more of a per employee per month on the upskilling side.

Company Origins and Founding Story

Nathan Latka

03:36And what's the backstory here? We got a little bit of it in the bio, but when did you launch the company?

Matt Cowell

03:41>> We actually are an offshoot of an AI consulting company out of the Southeast Birmingham Alabama and Atlanta Georgia. And that company was struggling with hiring like most companies are. So decided to, didn't see anything out there that was really good at, there are a lot of programming assessment platforms, but not a lot of great platforms to assess the conceptual skills required in data. We built that and then ended up spinning it out into a separate company,

04:10>> which really became QuantHub.

Nathan Latka

04:12When was that? What year did you spin it out?

Matt Cowell

04:14>> 2018. April 2018 was the official.

Nathan Latka

04:18How much revenue was the agency doing before you decided to shut that down and spin out this new SaaS product? The agency actually stayed on. I basically came

Matt Cowell

04:28>> 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 we barely had a product. Mean, it was very, Did have, founder at different

Nathan Latka

04:38play then?

Matt Cowell

04:39>> Did I personally?

Nathan Latka

04:41Yeah. Like, I mean, are you essentially the founder? You owned a 100% on day one. Maybe the agency has a little bit.

Matt Cowell

04:46>> So the agency was the primary was the primary shareholder. I came on and obviously have incentive equity as well as as CEO. So basically we had two co founders there, and then given the stage of the product, I came on and really is kind of a third co founder.

Nathan Latka

05:04Sorry, I'm confused. So the agency and who were the two co founders?

Matt Cowell

05:09>> So the CEO of the company was a company called StrategyWise, was an AI consultancy. He's one of the co founders. The guy who's now our CTO was a chief data scientist at that firm. He's the other co founder. And then basically I came on because they continued they had a good business on that side and felt like this had its own future, needed somebody to come on and run it. So I came on as basically a

05:34>> third co founder and CEO.

Nathan Latka

05:36Okay. Got it. Then how many customers are you now serving today compared to when you joined?

Matt Cowell

05:42>> Yeah. We didn't have any customers when I joined. It was just sort of a proof of concept type product. I came on, we raised money, we built out the product the rest of the way and, or at least, sort of MVP, if you will. Started bringing on customers in 2019, sold two sixty ks of ARR in our first year.

Nathan Latka

06:02Congrats.

Customer Count and ARR Today

Matt Cowell

06:03>> Yeah, that was a good start. We're now up to 21 customers. Yeah, so we're doing pretty

06:09>> well.

Nathan Latka

06:10Got it. So 2019 was about $250,000 in sales. You now have 21 customers. Are they all paying about $2,000 a month?

Matt Cowell

06:17>> That's the average ACV. It's really pretty lumpy. So we're starting now to sell, it's almost exclusively to enterprises. And so we have some 6 figure deals well into the 6 figures, and then we have some $4,000 deals. So we're a little bit all over the place.

Nathan Latka

06:35But but but the average, is is $2.

Matt Cowell

06:37>> Yeah. That's the average.

Nathan Latka

06:38Times 21, that would put you at about $42,000 a month right now in revenue?

Matt Cowell

06:43>> Yeah. We're 450 k in ARR. That's great.

Revenue History: 2019 to 2021

Nathan Latka

06:46And it sounds like that's almost doubled from where you were about a year. Well, no, no, no. Maybe a little bit less. Where were you a year ago?

Matt Cowell

06:52>> A year ago. So we went into 2020 at 260 ks. So we sold about two sixty in our exactly two sixty in our first year. And then, yeah, over the last year and a half, call it, have gotten up to four fifty. We've since you know, the hiring

Nathan Latka

07:09side slowed down a little bit last What did year. You finish though 2020 with though, in terms of ARR run rate?

Matt Cowell

07:14>> 2020, we finished at, just about 400.

Nathan Latka

07:19400. Okay. Got it. So well, I guess I mean, look. So this is a fair question then, I think. Why have you only added $50k in new ARR in the past eight months?

Matt Cowell

07:26>> 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 nine, well, about ten months ago, that we felt like upskilling was actually the, a big part of our future in addition to the hiring side. And so we focused a pretty good amount of our

07:52>> business on upskilling and specifically in data literacy where this is sort of the next gen of the workforce has to have data skills. It's almost like in the nineties 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 unique approach to that. And so we've, to

08:16>> a degree, shifted towards that. And that problem exists in enterprises 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, it just takes a little time to get enterprises up and going. And so we just started a pilot with Dell in Singapore. We've got a company called Axiata, who's a big Malaysian Verizon like company, 37,000,000,000 company out

Fundraising: Convertible Note and Priced Round

Matt Cowell

08:49>> of Malaysia. They just started the other day. We've Got Our target is 1,000,000 in ARR by the end of the year.

Nathan Latka

08:55Okay. So you think you're thinking up

08:57to $80 a month in the next four months, three months?

Matt Cowell

09:01>> Absolutely.

Nathan Latka

09:02Okay. And tell me a little bit more about the how you've chosen to capitalize the business. So you mentioned to raise. How much did you raise and win?

Matt Cowell

09:08>> Yeah. We raised, we raised the note round early on in our existence in July '18. That was a, 1,250,000, and we've since raised just shy of another 2,000,000. Okay. And that was in priced When

Nathan Latka

09:23was that? What year?

Matt Cowell

09:25>> That actually was during 2020, basically closed at the end of the year.

Nathan Latka

09:29Okay. Got it. So 2,000,000 raised in 2020 priced round. What valuation did you raise at?

Valuation and ARR Multiple

Matt Cowell

09:35>> Yeah, we raised it an $8,000,000 pre.

Nathan Latka

09:37Was that right? Feel fair?

Matt Cowell

09:41>> Yeah, I think so. I mean, I think look at the market size, look at the traction that we've gotten, the types of brands that we brought on.

09:50>> Yeah, I think so.

Nathan Latka

09:51Yeah. I mean, what is that? What multiple is that?

Matt Cowell

09:54>> This is 20x multiple on 400 of ARR. That's not bad.

Nathan Latka

09:57Oh, yeah.

Matt Cowell

09:58>> Yeah. I think at our stage, multiples are a little, yeah. Little hard to go by multiples at this number and this scale, but yeah, I think it's still fair.

Nathan Latka

10:07Yep. No. No. Obviously, a lot of it is 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 has equity because you were like the third co founder essentially coming in, unless they gave you 70%, which I don't think they did. Why not just go start your

10:26own thing? Why did you decide to join us instead?

Matt Cowell

10:28>> Well, haven't been in this type of role quite this early stage, so my background was more kind of CTO type role more of a growth oriented SaaS business, SMB, but, kind of went into that company at about 6,000,000 in ARR and we ended up at 80 plus by the time I left. And so that was kind of more of the scale and I liked being close to the problem. And so I wanted to get into something

10:55>> 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, 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

11:20>> at stage of life, risk profile, you know, that type of thing. 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 kind of what I was looking for.

Nathan Latka

11:38Did they get you more or less than 10% equity?

Matt Cowell

11:40>> Yeah, I don't want to speak to exactly the equity, but I think it's fair.

Nathan Latka

11:45Okay, got it. What's team size today? How many people?

Team Size and Engineering

Matt Cowell

11:48>> We're at 10, and we leverage contractors as well, but 10 core team members.

Nathan Latka

11:54How many engineers?

Matt Cowell

11:57>> We actually have four engineers on the team.

Nathan Latka

12:00Do you still code?

Matt Cowell

12:02>> It's been a little while since I've coded. I will say that I'm involved in, I'm more involved in the database type of stuff now because that's the stuff that I'm still decent at. Got it. Supporting customers, converting things, stuff that I don't want our team focused on, strangely, I am as the CEO doing.

Nathan Latka

12:23Yep. Do you imagine this ACV, you probably have quota carrying sales reps. How many do you have?

Sales Team and Quota Carriers

Matt Cowell

12:29>> Yeah, we actually have a chief revenue officer I'd worked with before at Daxco, the SaaS company that I mentioned before. She came on and is running sales marketing and also customer success. And she has an account exec on her team as well.

Nathan Latka

12:44So those two of those people carry a quota then?

Matt Cowell

12:46>> Absolutely.

Nathan Latka

12:47Okay. Interesting. So you think those two quota carrying sales reps, they can that they can add about $600,000 of new ARR in the next three months between them?

Enterprise Pipeline and Deal Lumpiness

Matt Cowell

12:55>> Absolutely. Yeah. Mean, we've got a proposal out that has it's it's out for 420 k in ARR, just to give you an idea. So yeah. I I mean, that's part of selling to enterprises. Right? For us, a part of our challenge is, and you know, this can be an okay challenge, but it's lumpy. You know, we'll sell a multi $100,000 deal and then nothing for a month. And then, you know, we've got another one coming that

13:23>> I think is going to be 200 ks. And so

13:29>> it's not as steady as some SaaS businesses that are selling to SMBs, they're selling individual licenses, they're $50 a month, but they're selling a thousand of those. We're just a completely different model.

Famous Five Rapid Fire

Nathan Latka

13:39Yep. No, makes sense. Let's wrap up here, Matt, with the famous five. Number one, what's your favorite book?

Matt Cowell

13:44>> My favorite workbook

13:47>> is monetizing innovation.

Nathan Latka

13:50Number two, is there a CEO you're following or studying?

Matt Cowell

13:55>> No, not really.

Nathan Latka

13:56Number three, what's your favorite online tool for building the business?

Matt Cowell

14:04>> Personally, honestly, like Trello. I think it's super flexible. It allows us to stay nimble change things and adapt, and it's very lightweight. So I like lightweight.

Nathan Latka

14:12Number four, how many hours of sleep do you get every night?

Matt Cowell

14:16>> Probably about seven hours.

Nathan Latka

14:18Seven. And what's your situation? Married, single, kiddos?

Matt Cowell

14:22>> Yeah. Married. I'm 47, almost 48. My son is 20 at University of Illinois, and my daughter is 18.

Nathan Latka

14:29Very cool.

Matt Cowell

14:30>> In high school. It's crazy.

Nathan Latka

14:32Kiddos. That's great. Take us home. Last question. Something you wish you knew when you were 20.

Matt Cowell

14:39>> I've thought about it a lot. I have no regrets. When I was 20, I wasn't doing this at all. I was a chemist at Procter and Gamble, knowing that I wanted to do technology. I went back to school and got a master's in chemical engineering and started working at Accenture. And so I found my way into tech. So I would like to know that I was more interested in that, but I'm afraid it would have changed

Closing Remarks

Matt Cowell

15:01>> my course and I wouldn't change anything.

Nathan Latka

15:03Guys, there you have it. QuantHub got going in 2018 as an agency spin out. They're now serving 21 customers. These are customers like HP and others that are looking for data engineers to hire. QuantHub helps them understand which engineers can pass the tests or challenges they set up, and then also help up skill those employees once they are hired full time. Raised a $2,000,000 seed round at the end of last or mid last year at an

15:26$8,000,000 valuation. Team at ten now looking to scale and break a million dollars in terms of run rate by the end of twenty twenty one here. We're rooting for you, Matt. Thanks for taking us to the top.

Matt Cowell

15:33>> Yeah, thanks, Nathan. Appreciate it.

Nathan Latka

15:36One 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

16:02Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big

16:24fundraise, a big 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

16:46for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We

17:05got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. All right. I'll be in the comments.

Matt Cowell

17:12>> See you.