How Radius CEO Lee Everett grew to $5.9B revenue and 150K customers in 2023.

hello everyone my guest today is joel carrosone he's the ceo of company called radius the first b2b enterprise customer data platform joe holds a wealth of knowledge on and a passion for the cdp space and was one of the original architects of radius unifi the first ever fully flexible b2b cdp bringing the new solution to market joel are you ready to take us to the top i'm ready all right so first off help us be really prescriptive here on kind of the definition of or how you define b2b enterprise customer data platform what's that mean for sure yeah i mean i think cdp's have been around for quite a while now it's more synonymous with the the business consumer side about a year or so ago i mean radius has been in the i would say the b2b uh customer data space for a number of years before cdp's kind of got hot on the b2b side at the end of the day what we're doing is we're taking through either native integrations or through an open api that we have available ingesting merging matching normalizing customer data whether it's from first-party systems like crm or marketing automation or third-party systems that they're buying data from say done in bradstreet or info group or some of the other major players and basically leveraging our infrastructure uh to create that single source of truth for that single customer view with the idea that you can then um pump that that that kind of single source of truth out across the organization so it's not just for marketing but for marketing and sales and ops and even in i.t for data um you know analysis or um or data science so help me understand single source of truth is an interesting concept in the data space and the reason i say that is because when i talk to so many of these providers ranging from small sub 10 million ar players all the way up to 100 200 million dollar range it's very incestual kind of everyone buys everybody else's data and it's hard to understand who truly has a moat around the data set so so when you're capturing this data is it unique data that nobody else can get a hold of yes our model is it's based on two different kind of two different approaches so one is we do have our own core data assets so radius has its own proprietary b2b dataset uh domestic only today we cover approximately 18 million businesses in the u.s and summer neighborhood of 25 to 30 million contacts uh we've got partnerships we just announced a big partnership we're doing some co-selling with the folks over at dunn and brad street so the dmb global file is part of our ecosystem as well but the nice thing about our model is that it is somewhat of a consortium so clients that are working with us the you know enterprise clients we do have some ability to leverage the data that their sales and marketing teams are generating as part of their normalities to do data validation standardization even even in some cases suppression so it is a crowd-sourced type model we're not doing enrichment on it but it's more from validation and suppression but it's leveraging you know our customer base uh comcast sam's club first data you know large large enterprise clients with large sales teams and large marketing team so they're generating a lot of exhaust data as part of just normal business processes so that's our moat at least the way that we've defined it today is that that network contribution side of the business so joel how might how might exhaust data or we'll call it sawdust at the sawmill from first data influence the value that customers like infusionsoft get from radius yeah for sure so i think the usually the use case that i go to pretty quickly is let's assume that you've got you know an eloqua or a marketable instance that's got 10 million contact records in it you know you can leverage uh you know there's a lot of email validation providers but there's a subset of emails that are just not verifiable right the the email admins go out of their way to make it very difficult to um to be able to test those but you can imagine when you have a large number of customers that are all marketing to you know different populations you're going to get some overlap so what we're seeing is a you know an email campaign that may go out by comcast there's going to be a population those that are open there's gonna be population that bounce within 30 minutes of that balance happening it's available uh for our purview and then we can go look across the customer base and say who else has this email address it's bounced let's go and actually scrub it interesting you can leverage that type of exhaust it works not just for emails but for phones um we help on the ranking logic because you've got you know n number of sources that are available within our ecosystem um as well as what the clients bringing on board you know being able to choose the right revenue choose the right head count for that client that exhaust data becomes extremely valuable if their sales person is putting in the head count of the revenue you know you have potentially can make some more assumptions on the machine learning side that that number may be better accuracy than something that you got from six months ago it looks like you guys are serving a pretty wide cohort of customer show but if i forced you kind of into an average just so we can focus the discussion what would you say the average company would pay per year for this kind of data set so we do we sell into three different uh tiers so we've got a mid market uh offering it's typically in the you know the 50 to 60 000 range annually that's correct yeah it's a sas product uh we don't charge for data so when you purchase our platform as part of that you get unlimited access to our standard data offering so that 17 million business uh data set is just it's kind of a free a freebie that we give away as part of the relationship uh the second group they're going to be the the enterprise clients uh somebody within say 750 employees or less um that one you know getting to the you know the 100 to 200 000 range and then we have some that are you know that exceed the 2 million acv yep that's great and is there any cohort that you have concentrations in or it's really fairly equal yeah i would say the bulk i think 80 of our revenue comes from our top 20 customers so it's fairly well concentrated they're large strategic deals multi-year in most cases and then we have a you know a decent volume in that mid market um mid market 500 to 750 range yep fair enough put this all on a timeline for us when did you guys launch the company and help me understand your involvement uh were you one of the early founders or you were kind of leading product at the beginning and now your ceo how's that all work yeah it's uh it's been an interesting journey um i joined the company about three years ago on the product side my background was in more on the on the data data space so i came out of healthcare data enterprise data management for one of the boston hospitals uh so i was actually more interested in some of the data challenges as opposed to just like the marketing and sales aspect of what we do at radius so joined the company three years ago on the product side um with vp of platform for a number of years and then uh uh moved into a cto role almost a year ago now um and then over the last year or so darien and i who founded the company um have been talking about you know what it would potentially look like for his transition he was looking to move more out of the operational side of the business he's now moved into chairman of the board um as of the last couple of weeks when i transitioned into the ceo role mm-hmm and company was founded in 2012. companies found in 2012 yeah the company was there's two there was an initial company that was more of a data provider called fwix and then that was uh that after one of the i think the series a they um they rebranded as radius and that's kind of the path that we've been on since and total capital into the company today how much have you guys raised about 100 million okay 100 all equity or is that some of that debt uh so some of it was debt but vast majority of it was equity okay were you there when the decision was made to use some debt uh i was not actually so that happened um trying to think i was at the company but at that point i wasn't involved with any of the fundraising got it and i was gonna ask strategically why that dinner didn't make sense but we'll skip that for now um and focus on things that you might be closer to so okay good so you joined about call it three years ago and what have you guys scaled to today in terms of total customers using the platform so there's around 100 customers today um as i said the bulk of the revenue comes from the top 20 logos yep yes 100 customers yeah so this is very much kind of obviously you know high touch uh high rpoo kind of accounts what's your team breakdown today and what does the sales organization look like yeah so team the company is around 75 employees right now sales is around 20. yep that's broken down we've got a sales leader there's three rvps that cover different territories um they've each got you know a handful of people that's just a total sword size around 20. engineering is 23 today combination of folks that work on either data engineering data science and then we have our platform team that are writing the apis and some of the um the microservices as part of that and where is everyone based on san fran yeah ask all of engineering product is based out of san francisco uh sales is we've got some folks in the west coast but majority of them are just based on where they're what the regions that they're covering so some in the east coast uh new york new jersey and some of the midwest as well yeah that's great help me understand and again i'm sure this is different across each of your cohorts but if we just look at a macro level net revenue retention each year when you factor in that gross revenue churn bus ad back expansion i assume you guys are probably north of 100 how far north of a hundred so in term without getting into specifics uh north of 100 okay can we put it can we put a cap on and say between 100 and 150 is that fair uh that would be close okay got it fair enough got it okay good well then we'll say north of 150 then i won't push you any i won't push you any harder there sorry sorry about that um where their valuable lesson here though is how you think about driving expansion revenue typically there's very well pricing axes and that gives your sales team a lot of leverage what are those axes for you um so i think there's a few things that come into play on our side so one is obviously the the size of the brand large logos we typically there is a value-based pricing as part of it uh by what though team size uh so both on the total headcount size but more more typically is based on the number of records that were going to be records under management how many sources is it are they large sources small sources we look at aggregate based on the type of source um a it influences what our infrastructure costs are to just provide the cpp offering um and at the same time we also there's the validation components and things that have um you know there's uh there's costs on our sides cost of sales that get incorporated so we look at total number of records under management number of discrete sources just holistically is it salesforce plus marketing automation plus you know 10th third party or what um and then the other piece is going to be how much of it is going to be professional services so we've got some api offerings where we're helping the clients do some onboarding comcast is a great example where we're we're running some of the stuff on their behalf the large data sets that they may be getting from third-party providers just faster for us to do it internally and then how much of it are they going to be doing themselves so there's an api volume based metric that goes in as well interesting um did you were those always really clear or how did how did you kind of evolve your pricing to get to those um so the unified offering is fairly new uh the offering the unified offering the cdp offering from a platform perspective uh we we released it the first client got on about a year ago um we were in limited release for six to nine months and we actually gave it right around dreamforce this year so it's only been fully ga for uh a few months now in terms of the banding we experimented um you know obviously we initially started with how many sources are you going to onboard to the platform that works okay if the sources are all around the same size but we'd had somewhere maybe 20 million records in crm in 5000 records in a third party so we started to move away from having just the sheer number of sources have as much influence on the pricing and more towards how large and where the total number of records in aggregate um the velocity is another big one so the enterprise part of the enterprise b2b cdp is really important here um the scale and the volume of records that were what do you mean sorry what do you mean velocity that's number of number of records process per day per second because we're a second okay yeah so we've got some customers that are doing you know upwards of 200 million records over the course of uh say four or five days so we're dealing with large large lines of transactions uh infrastructure-wise and again we look at what the cost to serve is um that is the single most uh expensive thing for us to be able to scale is how many requests per second do we need to be able to index into our platform so we have a standard offering which includes you know somewhere around 15 to 20 requests per second uh and then it obviously scales up based on you know the size of the client and what the velocity that they want to send those records at last few questions here just because we're out of time uh how aggressive are you being in cac and maybe you said specifically how many dollars are you spending to get a new dollar of ar today um so similar thing without getting into too many specifics a bulk of our business is coming from field events today so we spend we do a decent amount on the marketing side it's not huge but field events exact dinners we get a lot of referral slash uh relationships from folks that have worked for one of our customers and then they change into a new role at had another business and then they come back to us to try to um to uh to sign up so it's it's been manageable right now to just avoid the cac number since you don't go into that can you i just wanna get sense of again how aggressive you're being can you talk to me maybe in terms of payback period i mean are you happy with the 12 month are you being more aggressive at 18 or 20 yeah so we definitely discount uh more heavily on the multi-year both from a uh implementation it takes you know somewhere around 30 days for most clients to be able to um you know get full start seeing full roi from the system just it's just how long it takes for clients to a lot of times get their sources together and ready to go um but sorry your payback period sorry on your cat oh got it i'm sorry uh we make money after the first few months okay yeah it's not too bad i mean that's i mean that's actually that's a very surprise that's very surprising to me most companies that have raised your level they're pushing 12 16 24 month payback periods because they have to yeah now our margins are actually pretty decent okay so you're caught maybe some six months payback that's obviously healthy one of the reasons i was looking for this interview is because it's actually rare that i see someone with a capital makeup of radius especially in the space and what i mean by that specifically is you guys you know the founders got on the kind of the funding road early on right no seven and they did a damn good job at it and growth looks like it was there considering what you raised but the last round i think was 2015 or 2016. uh and so you've come in and kind of you've had to make some obviously serious changes to continue driving growth without additional capital and uh so so you know thanks for being transparent there yeah for sure i mean i think um we it's not to say that we're not opposed to raising additional money if we need to i think one of the things that i'm looking at here as we as you know transitioning into this uh into this new role is you know where are there some optimizations that we make um in terms of just startup cost for us we did raise a sizeable amount of capital we grew the team you know fairly quickly in order to be able to uh to push out a lot of new product um when you're going fast you know sometimes you may not necessarily make decisions that are quite uh as economically friendly so we're doing a full kind of top to bottom review making sure that we're spending our money wisely obviously bc money is really nice but it comes at a you know in a lot of cases a fairly significant cost so if we can get away with not having to fundraise again we are expected to be casual positive uh at the end of next year right that will at that point you know obviously fundraising would be more if we wanted to accelerate growth but at the clip that we're on right now i think the business feels pretty comfortable um with uh you know if we raise again it wouldn't be a huge amount that's great and then look one of the big metrics in terms of like super healthy companies that have raised at your scale is when they start to really approach a one-to-one ratio in terms of funding raised relative to arr do you have that big beautiful 100 million dollar run right kind of in your sights you feel like or it still feels like a stretch goal two to three years out uh so two to three years is probably about right i mean i think yeah that's probably a good estimate um we i guess i'll answer that by saying there's decisions that we can make as a business to get there faster um and we're weighing right now whether it makes sense for us to do that you know we we could go down market a bit more and just push more sales volume to grow top line the downside of that is you then have some significant uh costs associated with customer success um you know in the support side of the business so we're we're trying to grow it at a at a clip where we don't need to grow the company to 150 people in order to get 100 million dollars i think we can do 100 million dollars in revenue with potentially 15 you know plus 15 of where we are today yeah that's great if you could do 100 million on 100 employees that's pretty good revenue per employee where industry averages call it 187 in arr exactly yeah that's great um and then look i mean you gave us some numbers earlier in terms of scale today 100 customers you kind of said middle price point was called 400 500 grand acvs i think that puts you like 40 million ish run rate today is that generally correct uh sure i'm not as i said it's it we've got some large clients that pay us a lot of money and we have a fair number of smaller clients as well so it did there's a pretty wide band in terms of what the um you know what the uh the customer base looks like and what do you hope to grow in terms of growing year over year at slow growth healthy growth not crazy cash burn growth yeah i think the the not crazy cashmere growth is certainly you know something that we're looking at um we fortunately as a business we've just never had trouble raising money um dairy has done an amazing job of fundraising um we've got a really strong board we've got a really strong investor base so it's not that they're we if we don't if we wanted to go out and raise some additional capital we certainly could um we're trying to grow at a um at a fast rate but at a smart rate what is that joel i mean you're taking 30 percent year over year your scale or 90 somewhere between i would say 50 and 90 at this point okay yeah it's still i'd say still pretty healthy growth i mean considering you haven't raised in a couple years so good stuff all right let's wrap up with the famous five number one what's your favorite business book oh man um or last one you read [Music] yeah i'm trying to think of a good one um so the jack welch book i think was probably my favorite book high alpha management yeah so i read that it's been probably six nine months since i read that one but that was i think the last one that was um at the end of it i felt that i may want to read it a second time that's that's rare and a good sign number two give me an under the radar uh ceo joel that you that you're learning from right now oh interesting um so uh on the ceo side actually uh not a ton right now i think i've been more working with the ceos because that's a area of the business where i needed some additional capacity um i think the you know some of the financial side of things is where i had a little bit of a gap our old co actually at radius so david obrand one of our board advisors has been extremely helpful um through this whole transition process so great and i talk you know fairly regularly and number three besides your own what's your favorite online tool for building the company uh so i think if it wasn't for slack i don't know i could if i would be able to survive i think if you look at the slack statistics for radius i am number one by a fair margin number four how many hours of sleep to eat every night as of late it's been a lot fewer than it used to be um my wife tries to get me to make sure i go to bed by like one o'clock okay so what does that give you like six seven hours a night uh probably around five five okay so and then what's your situation obviously you're married any kiddos yeah yeah i've got a son who's um just about two actually turns two in a couple of weeks oh wow okay so one kiddo and joel how old are you i am 36 36 last question what do you wish your 20 year old self oh knew um take more chances i think i uh followed the more conservative path throughout my career i think um over the last couple years i've been more aggressive in terms of some of the opportunities that have presented themselves i wish i had done that you know 10 years ago guys take more chances from the current ceo of radius joel again company launched in 2012 he got really active called a year year and a half ago in terms of being in on the executive team they raised about 100 million bucks again helping with you know data management specifically customer being a customer data platform in the b2b space they really focus on a tight number of customers called 100 customers high acvs targeting 50 to 90 percent 90 year-over-year growth moving forward 150 net revenue retention annually because they have very clearly defined pricing axes and again less than a six-month payback on most of their acquisition strategies right now team of 75 based mostly in san francisco joel thanks for taking us to the top yeah thank you for having me