How Query.AI CEO Andrew Maloney grew to $10.5M revenue and 10 customers in 2024.

hey folks my guest today is andrew maloney he's the co-founder and chief operations officer at query.ai where he's responsible for establishing and delivering on the company's go to market and business operations strategy the tool provides the market's only security investigations control plane all right andrew ready to take to the top sounds great nathan thank you all right explain this to a commoner like me what does that mean security investigations control pain plan great question great question so first thank you for having me it's great to be here with you today uh so query ai is a relatively early stage company uh we just raised our a round in october um the premise of what we pre-revenue our post we were post revenue yeah we just uh we did our a round we had two rounds this year we just see round early in uh the uh may time frame right now i think there's man look at the specifics of it it's all coming together it's been exciting year for us um but then we did uh october a follow-on a round of that to kind of help expand uh and continue the the growth in the market your question though was more like what is this and what does it do um have been in and around security for for 20 years my co-founder dhiraj and i and uh you know we've spent a lot of time in in sim type tool sets working with security operations teams and how to bring all of this data together to effectively run an investigation what we found though is even in historical times with less data more on-prem environments it was very difficult to centralize all of this uh and what we found with the adoption of cloud and uh you know software as a service providers data is truly everywhere so this silo data that is really a disparate environment the inability to see this kind of centralized view has really slowed down security teams and their ability to run investigations and get to outcomes with high confidence so the investigations control plan is really about bringing all of that together centralized insights and access to all of this decentralized data without having to worry about how to move the data around how to get it centralized first which which offers a lot of capabilities and advantages to you know comparative to legacy approaches and what are customers paying on average per month or per year to use this technology you've built our asps today are just under 100k we're planning on growing those to 125 and our 2022 forecast plans and i think realistically we can get into the 200k range pretty easily on our average customer that's annually right annually correct yes yep okay that's great nice mrr but we're not quite there yeah that would be incredible that would be great um okay cool give me sort of a back story here when did you guys launch the business so we started our go to market operations in very late 2019 uh we officially launched the company perfect timing aligned with the pandemic in march of 2020 so the first year was an interesting one for us just coming out of kind of stealth mode and getting those first kind of customer traction as the whole world was shifting to remote workforce but i think we've been a remote first company from the beginning so for our operations capabilities didn't really change too much of our tempo and we i think we're very well aligned to this market shift in the move to the cloud right because the less data you can get in one environment the more you start without these different technologies the more you have a need for a solution like ours now when did you turn on your first paying customer it would have been july in 2020 so uh shortly after our launch 2021 is the year we're inside all right 2020. you're all good we're on the same page how did you how did you fund yourself from 2019 to 2020 before your first paid customer so we had a pre-seed round from angel investors uh which gave us the initial runway to build the prototype do some market validation and testing it's interesting kind of story uh how much was that for just under a million dollars okay yeah operations have been very lean and a lot of our development is out of india which keeps our costs down but they are query kind of employees so uh those relationships have been very beneficial dhiraj has been in engineering for well over 20 years now uh he and i met about 16 years ago at a company called arcsight so he's got a lot you guys just split 50 50 at the beginning or no no he actually started the company prior to my joining uh from an incorporation perspective and was building a bit of a kind of a prototype you know how do you more simply access data from a single solution almost like siri for your sock as it kind of started the technology was even called iris inside and you can literally natural language processing ask it questions and get answers and that is unique and interesting but the real market problem that we saw and aligned to as we really started to kind of test and validate is the need to do this across decentralized platforms because no one again has all that data in one place which kind of an obvious aha moment looking back because we tried so long to get it all in one place but it's really a paradigm shift in the way people think about security today so what's the energy like that between the two of you i mean would he call you a co-founder do you have more than 20 of the business uh he would call me a co-founder we don't disclose publicly the ownership percentages but we're both in strong positions and want to see the company succeed but yeah we're definitely partners in this so i would say 50 50 partners without any kind of equity association to that if you will yeah yeah fair enough i mean the reason i ask it sounds like you have a story to history right you're not going to join a company like this unless someone puts together a very compelling compact for you that actually looks like co-founder equity yeah no i agree with that absolutely and i think uh you know the way that we split the responsibilities of the business and and how we've kind of built this up um i think he would very much agree that we have completely done this together i handle all the business operations go to market sales marketing customer success he's responsible effectively for kind of r d and bringing all of the product to life okay so you get going in 2019 you sign up your first paid customer 2020 how many customers are now serving today so we have um just under 10 customers today with a couple more we hope to get done in the last couple weeks always down to crunch time in the year um we've got a pretty aggressive growth plan coming into 2022 uh which will be both on kind of the revenue and the customer acquisition in terms of number of new logos but we've landed from really strong accounts that we're very excited for no it sounds like it and at the average asp that you just articulated a couple minutes ago times 10 customers it sounds like i can give you congratulations you guys are either flirting with or just passed a million dollar run right we are flirting very close and uh you have great plans to go and not just expand new customers and logos but we got some deals that we see a lot of expansion opportunity with andrew you have you have 10 days nothing happens now you have 10 days i know or 5k of new mrr hit that hit that magic number baby i will tell you too that my vp of sales is feeling that pressure as well i bet i bet he is all right very cool what a fun story all right so um fill up the capital stack again so a million in 2019 what was the next round um it was a million in 18 was the pre-seed round in um early 2021 we did a seed round of 4.6 million okay um well 4.6 3.6 million we announced it including the precede let me make sure that i'm getting that right so 4.6 that announcement included the first funding announcement we did um for a total of 4.6 and then this year we just did a 15 million um in october a second round uh which was our a round decision yeah how do you go out i mean again you sort of just told us your revenue run rate you know imagine you guys aren't going to go out and do a series a that's super dilutive you know most companies are selling 10 to 15 percent of the business right in the series a so assuming you were in that range you had to go out and convince the world that you're worth 100 million bucks or something around that right which is basically like 100x multiple how did you do that well uh multiples are crazy right now and evaluate they are but that's really great i mean that's another one we didn't we didn't get to 100 million in that we gave a little more away it was important for us to find the right investors who could really help us move the business from a relationship from an experience perspective we feel like we've built a very very solid board to help us drive the company forward so i think we did very well we didn't give too much of the company away but you know we we also were telling a story on kind of what the future holds versus just what we've done today right because you know you've got to drive towards revenue we did it probably i don't say you know late summer we kind of started some of these conversations we had some folks interested early on that we had kept up to date so they saw the progress they saw us kind of marching towards our targets and milestones some of the forecast abilities where we're going to end the year and then obviously our operating plans going forward are very aggressive right we'd like to be uh at or as close to 15 million in ari by the end of 2023 as we can be which would make us you know hyper growth kind of company and what would you have what are you trying to finish 20 22 with 22 would be collectively about 4 million yeah so 4x and then sort of 3x after that is what you're targeting yeah the triple triple triple double double you'll be four maybe a quadruple a quadruple triple triple double double never hurts to overachieve like i said there's a lot of opportunity we believe in our kind of upsell as well and expansion in customers we've landed some really large deals with pilots to kind of other sub-customers whether it's mssp style things or even a large government agency we did a deal with in q3 where we want to come back to that in a second because ndr is really really important in this space um just again phil finish the capital uh stack question it sounds like you guys basically sold 15 to 20 three times over the past you know three years that basically accurate um there's different conversion rates based on when the equity was raised right so there was caps obviously in some of the angel investments they were doing safe documents without over disclosing too much but yep yep yep yep i mean we've maintained i mean that pre-seed round in 2019 pretty standard back then to do you know a million on a five cap sort of deal right so without disclosing all of the details we have maintained over 50 employee equity in the company and still have room for new investments as well how did you and daresh decide if i think i'm pronouncing his name correctly correct me if i'm wrong but how did you guys decide how much to set up in your esop pool um i mean standards kind of a ten percent is what we've gone for employees options uh and we've we've proved that up every time we've gone um there's often leftover shares depending on what your hiring plan looks like right and we are i would say rather conservative in our operations but we do try to make sure that every or every employee has uh has a meaningful ownership percentage and that they are bought into this because you know ultimately we are all partnered in this at this early stage of a company it takes every employee wearing multiple hats to make it successful yup okay cool so again between you your co-founder and the stop pool over 50 equity investors own the rest so far um i without looking at the cap tables are over displaying too much detail uh that sounds about accurate yeah yeah very cool all right i'm talking about the ndr stuff right so so again the highest actual i mean we're seeing even in series a round the highest multiple companies right now not the ones growing revenue the fastest it's actually ones that are proving out they can hit 150 to 200 ndr especially only being a year or two years old tell me a story about someone who started paying you guys i'm making this up five grand a month a couple months ago and they've already upgraded to whatever 10 20 30 grand a month well i would tell you that with annual contracts we haven't gotten to realize a lot of that value yet we're definitely seeing for the early stage customers opportunities to grow those accounts but i can't tell you we've realized all of those yet because as i mentioned we closed our first customer in july of 2020 and that was actually a multi-year uh paid annual deal right so there was no upsell opportunity until the third year of that contract so we were just into the opportunity in 2022 where we'll have upsell potential isn't that a massive liability with a sales motion to basically only give yourself one shot each year to drive expansion when usage might be increasing from a customer every single month it certainly could be i think we've looked at different ways to model this it's pretty standard in our industry to do annual deals you know and again as early as we are a lot of times it's more important to get the customers on understand the usage drive that value home make them very successful and referenceable customers because they can help drive additional revenue so there is investments if you will that may impact the short-term revenue we can acquire for a customer but you know we really we feel like we can uh we can capture that back to some extent as we go forward even if not directly from that customer in dollars in you know multipliers of them being able to help us get other customers case studies references those things are critical at early stage you got to show the product works and hear it from somebody other than the company right that's right and in terms of growth rate if you're sort of flooding with that 80 grand a month uh today in revenue where were you exactly a year ago do you remember um we had pretty significant growth this year i think we came out of 19 in our first year selling only just just over um i don't know about 150 125k in in overall revenue at that point was our first year selling but where were you exactly so in 2020 this in december 2020 what was your monthly revenue do you remember uh i i don't coming into 2021 was about 125k in total so that divided by oh i think i said 2019 was that got it i may have misspoke we're both getting our years off our first customer was 2020. so yeah end of 2020 coming in 2021 uh we would have been just north of 100k in revenue yeah you were doing something like 10 grand a month a year ago now at 80 grand a month so obviously easy to multiply by 800 percent on small basis your bases are getting well that's the thing those numbers aren't all that impressive when the numbers are small but when you start talking about taking the million and you're quadrupling it and then from there expanding those larger numbers by 3x that's when it gets really exciting and i would believe we're seeing that opportunity it's a massively i think underserved market for one where again the problem is well understood uh incumbent and legacy technologies um have a very standard approach like kind of the only kids in town doing it this way and really starting to disrupt some things and we're getting more and more buy-in but again you do something kind of net new and unique you're starting a company from the ground up there's a lot of that education and uh evangelization frankly to get people to start thinking about other options because they don't know what's there if you're just creating something that new yep what do you guys upselling against is it number of seats number of api calls something else yeah so currently we try to keep the pricing model as simple as possible it's all based on tiers and it's all based on number of analysts for our kind of direct sales go to market strategy so it's like one to three analysts would be our first tier and then the upsell would be additional analysts from that so uh say four to six and then so on and so forth in buckets of three until you get to 15 and then it kind of goes enterprise custom because we want to make sure it fits for you know the best model for the customer as well okay so your sales people have that as leverage upsell number of analyst seats but what is there a usage-based upsell you have as well not today it's kind of an all-you-can-eat in terms of you know number of integrations apis we're even looking at a product like growth strategy that can enable us to uh to give a freemium model away to get more people leveraging the product and seeing these kind of very unique capabilities that is something that we're looking at for kind of the end of 2022 to roll out but very excited for the potential there and and both the ability to kind of generate new opportunities for us right but just get the product in the hands of more people and start seeing some of the value that we're we're seeing realize with our direct customers today very cool talking about team today how many folks will time we have uh 26-ish employees today we had two more start this week so it's hard to keep track as we're growing pretty rapidly at this point uh we started the year about 10 so we've added about you know 15 16 and we plan to get somewhere around the 40 range by the end of 20 22 with ramp hiring and you know sales marketing how many engineers are investing in engineering right now uh good question so we are sprinting to uh 16 as fast as possible we're at about 12 14 right now with some offers out there pending yeah engineering hiring is very difficult these days i'm sure you're aware yeah yeah you're building your inside sales team and people always wonder what should i put what quarter should i get my first sales rep as i try and figure out this motion what would you do for our year one we stuck with a million and we gave him some ramp time right uh you know our objective now is to find very hungry reps that can uh you know work with early stage companies do that discovery help us learn because every conversation we have we're still learning from uh that we're seeing really strong alignment and again and uh you know reception to to the message we've got so we started with a million um our plan is to kind of keep it at one point two now for the foreseeable future so we can create a lot of upside for these reps if you're in what random three months is kind of standard i think um so we're we're planning those things and trying to get some of that out of the way this year right so we've been onboarding sales reps for the last couple months trying to get them set up and going for early 2022. so just to be clear if you bring on one or two reps you'll give them three months to quote a target but in that third month you really want them closing sort of 80 000 in new arr you know each month effectively ideally we would i mean i know that there's going to be some seasonality to that and it's not going to be a direct linear path for us at this point but uh we do believe with the pipeline we've got on hand today even bringing new reps in they're not starting necessarily net new so we can help them get started give them some windows of their belt and then hopefully they're bringing in their own new deals by uh at mid among the six month mark how many quarter carrying reps you have today we've got uh three currently under three it's a tough motion to get right but you're you're in the thick of it it is it's always a balancing act right you don't want to go too heavy too fast you really got to figure out the sales motion so our focus for series a is very clearly find that repeatable path for revenue that we can really scale up because again going towards that 15 million number we need to know that we've got a sales motion that we can put the right pressures behind and apply the right resources and ensure we're going to get the right outcomes no i agree all right let's wrap up andrew with the famous fob number one favorite book uh favorite book that's not in order from what i saw um i don't have a single favorite book there's there's my favorite business books i i saw snowball or red snowball from warren buffett which i thought was an excellent book for a lot of that's a big a very long one i actually listened to it if i'm being fully transparent there we go now the truth comes out little blue truck is a great kids book for those of you who have kids which i think is a question coming up maybe i've jumped the gun yeah so how many kids do you have i have three now actually we just welcomed our uh our youngest daughter two months ago oh wow how cool and how old are you i am 38 as of last week december amazing all right we're going out order but that's okay how many is there a ceo you're following or studying um you know i looked at that question i don't really have one specifically that that rang out i've got a lot of friends ceos or fellow entrepreneurs that that you know i bounce ideas off of um and just make sure you know there's a lot of comparison points a lot of learnings if i had to name one though as i was thinking through this brian murphy from earlier quest probably earned some credit i've known him for a long time he's done a lot of great things with that company built a really strong culture and a great team over there so i definitely admire him and i think you know his focus on his people is an important thing that's often overlooked in business number four how many hours of sleep you get every night that is uh very near and dear one to me i strive for seven to eight it's probably more like six to seven but i'm a big believer in sleep and kind of recharging for your health so i do try to get to that point andrew take us home somebody wish you knew when you were 20. oh god that wasn't endless um there's a lot of ways to make money everybody you know i grew up in a blue-collar family and it was all about like you got to be a doctor or a lawyer and what i've learned is you can make money doing anything to include janitorial services if you want to own the company that does the janitorial services so don't limit yourself follow your passion and then you could you'd be surprised how many ways you can build businesses that are going to make a positive impact guys shore up your security with query.ai they got going back in 2019 raised a million dollar precede around 3.6 seed round 15 million series a sound between caught 10 and 20 of the business they've already onboarded 10 enterprise customers flirting they're so close to that million dollar run rate about 80 000 a month right now in revenue up from 10 000 a month a year ago so really healthy growth but as they look continue to scale their team of 26 12 engineers three quarter carrying reps with a 1.2 million dollar target as andrew looks to scale the team hiring engineers fast apply today andrew thanks for taking the top thank you so much 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 try and make a deal live it is fun to watch every thursday 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m 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 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