How Quanticmind CEO Brian Bird grew to $15.6M revenue and 65 customers in 2019.

hello everyone my guest today is brian birdies the co-founder and ceo of quantic mind the platform for smarter advertising his company is the pioneer of predictive advertising management software for paid search and social channels brian you ready to take us to the top yeah absolutely excited to be here nathan thanks man okay so that's a mouthful help me understand what the company does and what's your revenue model is it based off percent of spend or is it pure play sas yeah so so great question so quantic mind enables performance marketers to achieve superior results and we do that through a combination of uh platform as well as service offerings that that are layered in on top of that ultimately depending on the sophistication of the in-house digital marketing team that a particular brand has so our typical customer is a google 5000 enterprise marketer and in some cases those those companies use an agency in which case they'll the brand will have the agency work with quantic mind and in other cases the uh the brand has an in-house team and that in-house team will will leverage the aquatic mind platform interesting now if you look at your revenue over the past 12 months what percent would you say is pure sas versus services sure so uh it's in the mid 90s in terms of the the sas there is a a percent of spend component that goes into how the sas fees are charged but we're we're a sas or a sas company that is is simply looking to use the the services offering to be able to help ensure that we can deliver the technology because that's the that's the start of the show yeah it drives up it drives churn down right when people when you help people set up on professional services absolutely that's great okay what give me an example of a customer actually using you so a lot of the hits you know i've had a lot of kind of um like bill wise media ocean these kind of companies on and they always get hit because of the ad tax that they take right so so how should people think of ad tax relative to how you price and what they get yeah so ultimately we don't buy or sell any media so we're simply a technology that helps enable the media acquisition that a brand does to be done more efficiently and to deliver better business results so i'll give some examples of some of our customers so um can you actually use would you would you mind using that just because i had just had the wp engine team on can you tell me wp engine uses you sure so wp engine does um or spends uh their digital marketing budget um among other places on google ads as well as bing ads and so they use quantic mind to be able to manage and optimize how those investments are made across the google and bing advertising ecosystems okay and then help me understand i'm sure you have a lot of cohorts but on average what do these kinds of companies pay you per year to use your technology sure so typically um in the low to mid six figures on an annualized basis okay um so our our model is really focused on enterprise programs that typically are spending anywhere from a few million dollars a year on up to some that are in the mid to high nine figures a year on with additional advertising spend yes what how much toilet spend goes through your profit or or is this optimized through your platform annually would you say um it's uh in the low one billions yeah that's very that's kind of a fun number to say right it's uh well we have even more data points that the system is processing on a on a day-to-day basis i think uh i think the last check uh last week was a little bit north of 17 billion data points per day that's great all right um put this on a timeline for me when you launch the company um so the company launched in uh 2011 and ultimately that it takes a while to build a platform of of this scale so first uh first two to three years were spent tinkering getting alpha and beta customers on board and ultimately uh we launched the first version of our enterprise platform in 2014. was that your year we had the first dollar revenue first our revenue was a little bit less than three months in uh oh okay uh we we're revenue hawks we're going to chase every every opportunity we're going to bake borrow and steal to be able to help deliver value to customers i guess the reason the reason i'm asking i'm always curious um there's a lot of founders that'll spend like a million two million over two years building a product totally in the dark like and then they go get customers versus there's others that are like you know what i'm not writing one line of code unless i can pre-sell the idea in a powerpoint there's two very different worlds right so i'm curious what did you spend on your mvp before you had your first dollar of revenue do you remember um i mean we'd probably spend about 15 or 20 thousand dollars in total including like incorporation fees and everything before we earned our first dollar revenue that's great i mean this is not a simple so i mean you you were you can't build this platform with just 20k so you were selling very much an idea on that first dollar revenue yeah well and and the business model um ultimately we didn't have the platform to provide three months in but we had an ability to deliver value that eventually the platform would be able to automate and so what what we had was was ultimately some of the data science based models they would be able to drive the calculations those were ready and we just had to layer in some um some analyst horsepower behind that to ultimately be able to execute the algorithms do things like push bids and ultimately um use that as a vehicle to deliver value keep ingesting data use that to refine the models and then at the same time have our our back-end team continue building the platform yeah that makes good sense now um 2011 was launch date three months later first revenue 2014 enterprise uh platform kind of goes out how many customers are you now serving today uh it's about 65 okay and do you remember how you got your first five that were true sas um so you know there there was an old saying that um we would uh we would use that if opportunity doesn't knock then build a door um no one knew who we were in the early days but we're we're data geeks and we're going to use data to try to solve problems so what we wanted to do was be able to model our uh target market understand who those five top five thousand google customers could be and unfortunately google doesn't publish that that list um despite our asking so we had to come up with some creative ways to be able to to back our way into the who those companies are um and then use things like linkedin sales navigator uh to be able to understand who the right contacts are and then just do targeted customized outbound messaging to be able to say hey we really respect what you've done as a brand to be able to to build your business we we believe that we might be able to add some value and love to have an introductory conversation yeah so a discussion like that happened in uh mid-2013 with the uh homeadvisor cmo uh and ultimately they came on as our first real enterprise sas deal in uh the beginning of 2014 huge milestone for the company but that that discussion um happened over the course of about six months in 2013. and now is it mostly outbound or inbound or what's the process today yeah so so for um from 2014 through 2018 call it we were primarily outbound based but ultimately that one of the big transformations that we've made as a business over the last 12 months was just acknowledging that we weren't participating enough in the conversation and so uh we made the shift to be able to leverage our in-house experts to be able to do a high volume of content of both high quality um content generation across written formats so ebooks white papers but also in events so we'll be at the etail east summit next uh next month in boston yeah we also do a lot of uh things like webinars we have a data science meets sem webinar series that is incredibly popular both with in-house data science teams at some of the biggest uh digital marketing uh or got it so you're getting some inbound now right as a and then also mixing in these other events as well absolutely what's the team size today how many people uh about 75. okay 75 folks and did you guys decide to bootstrap this or raise capital and take delusion um so we we have raised capital so um raised a series a and a series b um and what is that what does that add up to in terms of total capital so total is in the kind of uh mid uh or actually about 37 million okay and did it was it all equity or did you use debt um those were all equity okay why not use debt um so fair fair question and it's it's one of the options that i mean we do have and uh or we we do have lines that are obviously made available to the company by our banking partners uh but but ultimately just based on the the quality of uh investors that we've been able to bring on board feed we chose that yeah you feel like it's worth taking the dilution versus the six percent interest rate on the line because the strategic value of the investors yep so for example in uh in our series b foundation capital uh led that and ashu garg who um had been a part of uh two mogul and and part of adobe um he's been publishing um a series on the decade of the cmo and being able to bring someone with that um level of exposure to this particular market onto our board uh was a a very exciting opportunity for the company yep now that that seems to make a lot of sense now how aggressive are you being in terms of growth i assume you're burning capital today right um a little bit oh really i mean we're uh hold on guys you have to remember brian here is from california so a little could be like 20 million dollars so why are you talking like a million a month burn or a hundred grand a month burn or what no i don't know i mean we're we're very close to being able to um uh to manage our uh our own growth and fund our own growth and that's that's a decision that from from our standpoint it's uh certainly strategic to make sure that we can allow a little bit of um what's going on in the marketplace today to settle itself out i mean some some companies who we've seen as competitors have uh really started to struggle over the past few years and it's given us an opportunity to grow market share but it's also led to some pretty significant changes from the big uh marketing clouds as well as from from google and we we have some very innovative ways to be able to um to to address that from a technology standpoint but there still is a lot that's that's in motion that we're making sure that um as we bring on customers they're long-term customers they can stick and not just bringing up i mean obviously retention is a really important thing and and let's actually chat about that obviously retention is critical in any sas company so if you look at the past 12 months on a revenue basis what was churn and then on top of that what was net revenue retention when you add back expansion sure so um the called it gross revenue returns uh around 10 percent uh but anyway right yeah anyway and the ones who who stick um you typically are growing um in the kind of low single digits so on an annualized basis then kind of right around break even to slightly positive in terms of the revenue and net revenue retention yeah and just to repeat that back so 10 percent annual revenue churn on the core that signed up a year ago what you're saying is those accounts about expanded by the same amount so you have about a hundred percent net revenue retention yeah that's that's awesome so at this price point i i would i mean i expect to see like 120 130 140 net revenue retention typically because upselling i mean it's just it's asking them to go from 100 grand a month to or a year to you know 120 grand a year it's not that huge you know massive difference why don't you have more upsell revenue more expansion revenue yeah so great question and um at least what we've done historically is offer the product as one suite and typically when um when a brand is coming on to the quantico mine platform they put all their digital marketing dollars onto aquatic mind so in terms of the growth that we see oftentimes it's the organic growth of a program naturally scaling say going from 15 million a year to 17 million a year to spend in in spend and that that leading to the organic growth you absolutely upsell against the spend then uh so so that's one of the components where the um the spend will factor into what the the committed revenue will be and so whether we're doing adjustments at the next renewal or whether it's um it is a variable piece that'll adjust what the minimum is on on a monthly basis um so got it and then brian a critical piece obviously being break even or in control of your own destiny is to make sure you get to the point where essentially whatever you're spending on cac is paid back as instant as possible right so to get a new let's just call it an easy 100 grand first year contract will you spend the 400 grand up front to acquire the customer or what do you optimize for payback period-wise i mean so we certainly want to keep the cac below that 12-month um payback period and it it depends on the the quarter i mean so when we're talking about 65 you know customers here we're not talking about bringing on an additional 30 per quarter or anything like that so but typically it's going to be in that uh call it eight to 11 month payback period okay good so that's where you are today and you're comfortable there yeah yeah okay where are you spending that money is it sales people commission mainly or events or paid marketing yeah so it's uh it's a little bit of uh of everything so all all the above but certainly this is uh uh this product it's really important to be able to go sit across the table from the folks who are going to be able to um to be using it and make sure that they've met our data analysts they've met our data science team and they're able to feel comfortable and trust that the care and thought that we've put into building this product is something that that they can feel good about just because uh when when you talk about digital marketing practitioners um that it's uh it's both an art and a science and we're not trying to challenge or say that we're automating anyone out of a job but there are a lot of the components of what the platform does that will change the the way that the the practitioner is going to do their job and we need to really make sure that they understand what that transformation looks like and feel feel good about how their skills are going to continue being relevant while they're allowing the machine to do the parts that that may not be the best use of their time before we wrap up uh if you take 65 customers which we talked about earlier and you mentioned earlier also these contract values you know call it low to mid kind of six figures uh let's say it's minimum 100 grand a year or 10 grand a month across 65 customers it's fair and accurate to say you're above 650 grand a month right now in revenue yeah or definitely definitely a fair hopefully hopefully way above that right yeah where um how what in terms of growth if you go back a year ago from today where were you at that point um so we've uh just about doubled over the past year okay good and what's the next big milestone i mean do you think he hit 20 million bucks an ar this year is that a stretch goal and it's a little uncomfortable um i mean not not too far out of the the ballpark you don't sound very confident here no no no well so with uh revenue figures and and specifics i mean we just have we have company policy that we play those cards a little bit oh god i got it um given who we're taking customers away from we're uh really starting to irk some of those uh larger markets good they'll love listening to this episode then they'll hate you even more and they can uh we'll sell against them all day long fair enough i guess i'll rephrase that question so you don't actually have to review the actual number are you trying to double or triple your beer at this point um i'd say double is the realistic um projection that we're working toward yeah and another funding round coming up you're about a year or a half or actually two years removed from your last one now would be the time yeah so you know always having those conversations we don't we don't need the capital right now but it's certainly something to look at if if there is a strategic opportunity that aligns itself well then certainly we're we're having those conversations and we'll continue to do you think because you were founded almost you know almost a decade ago at this point do you feel like that would be a secondary where there's providing some early liquidity to early folks or do you think most of it will be towards good door operations i mean the the focus of what we're doing is building the the company we're not trying to have something where we're treating a particular class of folks within the company separately or or giving any sort of uh i mean if you're an employee you're you're a team member regardless of whether you're you're a founder or you joined yesterday so we we want to give everyone the same level playing field and hold hold ourselves accountable to that all right famous five let's wrap up here number one what's your favorite business book brian um so one that i i make a point to read uh frequently is the hard thing about hard things just because i would consider that the uh the startup bible number two is there a ceo you're following or studying right now um jeff bezos has always done some amazing and innovative things but what he's doing in digital advertising right now is really powerful number one what's he calling that platform again um so i mean just the uh amazon marketing platform i believe yeah number three what's your favorite online tool for building your company um i know your your uh interviewees give this a lot but i'd say salesforce okay do you listen to the show um i i've uh um when we initially uh heard from you guys um we uh spent some time listening to some of the interviews and and such just to get a little bit better idea of what's going on but yeah i've gotten uh accustomed to it good good good i like that's good to hear i'm glad you still came on you know some people they listen they go oh my gosh nathan you're so mean and nasty and i go and i'm a big teddy bear in person i just want to talk to you about the food truck business but we'll do that yeah there you go number four how many hours of sleeper i get every night uh according to my fitbit it's probably a little bit over five and how old are you i'm 38. situation married single kids um uh married uh 18 month old son and uh 14 year old dog oh how how fun okay and um last question here what do you wish your 20 year old self knew um i get two things um keep it simple and uh it's all about people guys keep it simple quantic mine serving 65 enterprise customers uh caught in the low billions of ad spend being optimized through their platform uh those customers are all paying in the you know six figures so call it well north of 650 000 a month right now in revenue more than doubling year over year they drive growth they could be profitable if they wanted to be 37 million dollars into the company last round about two years ago so who knows maybe a fundraising around coming up here soon 10 annual revenue churn on the base but about 10 expansion so they're about 100 net revenue retention there and brian is totally comfortable spending anywhere between call it eight and ten months of uh first year acv to acquire the customer in the first place as they look to scale brian thanks for taking us to the top yeah thanks nathan great chatting with you