How Sendbird CEO John Kim grew to $40M revenue and 422 customers in 2024.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is john kim he's the co-founder and ceo of senbird a y combinator w16 class is a b2b startup providing a messaging solution for enterprises the platform currently serves tens of millions of monthly active users and many of the best known logos around the world like yahoo sports hinge and one of the most active websites in the world john is a serial entrepreneur and expert in the messaging space a little known about john is that he was korea's number one pro gamer for unreal tournament john you ready to take us to the top yeah all right that's good let's do it i'm not as cool as you so what does what is the unreal tournament uh real tournaments one of those uh earliest uh generation first person shooters uh like overwatch but just generations earlier so you were in like a massive competition in the finale and you had to message one of your teammates through the gaming platform and it broke and you said i'm gonna launch senberg to fix messaging once and for all right yep something like that all right in all seriousness so so what takes you from a gamer to a software entrepreneur when you come up with the idea for sunbird yeah um we actually started sun bird around the beginning of 2013 uh back then we were we actually started out as a species company we were building a community app for moms and uh we were trying to add a chat feature for our own application that's kind of when we realized there wasn't a decent like modern sdk which we could just plug in and play so we ended up building the entire chestnut ourselves and then started selling that on the sideline and that actually generated more revenue and more customers than our main b2c application so we had to pivot and then we fully launched at the y combinator so when was the mom site launched what year it was 2013. oh it was 2013. okay and is is like if i look up your llc right now for sun bird will it say like you know mom's org dba sandberg in other words the same cap table same company or no yeah same company uh same cap table we started out as small family and then uh we actually changed our name to sandberg inc uh many many years later i think around uh after series b okay it's been a like smile family for almost four years five years did you did you apply to yc as the mom kind of community or had you already pivoted so we first applied to i was a wood demon's application uh we didn't get in that time um but we after pivoting we applied again into the in late 2015 and that's when we were accepted as sunburn okay so give me some context at that moment in time so in 2015 uh or was your product basically what it is today at least the origins of it yeah so we started building what became sunburn around 2015 and then we were kind of doing the private you know access you know friends and family uh self-defense and families in the industry then we um fully popular product at the end of 2015 that's when we applied to yc with that idea that launched in january of 2016. okay now a lot of my listeners will be very familiar with obviously intercom like these kind of companies right that are kind of you know whiskey wig drag as you drop true or false you're essentially an enterprise version of this that's more like acts more like an sdk than a kind of javascript plug-in on a website is that accurate yeah uh two way to look at it one is it's a plug-and-play sdk an api for developers so we don't sell to marketers or sales or contact centers we sell to product managers and engineers and two our primary use case is user-to-user communication and that user could be two people chatting on a dating app or seller talking buyer in the marketplace food delivery person talking to the customer on their application so it's that easy to use or communication is what we do yeah me texting my uber driver saying i'm wearing a black cat standing on the upper level of the airport come find me yeah when when do you win the uber account uh we're we haven't yet won the uber account but we pretty much work with uber light companies all across the world uh we practically work with the number one companies in almost all countries except uber yeah so stay tuned stay tuned there you go okay let's dive into your pricing model so so what are companies paying on average per month or per year to use this technology it really depends on how uh how much volume you're uh buying so are primarily uh it really depends on how much and um yeah so if you have a couple thousand users the price per user would be relatively more higher than let's say if you're if you have tens of millions of users on a monthly basis and today we currently power about 100 million uh users that chat through a platform every month okay uh just because you have i'm sure you have so many different cohorts you probably have smbs mid-market and then large enterprise accounts give me kind of a sweet spot here right are we talking like a ten thousand dollar your account is pretty average or a hundred 000 a year you know very enterprise um so overall uh acv i would say is in the tens of thousands but as small as a couple of thousand bucks a month a year all the way up to millions of dollars a year yep so let's see let's uh the reason i want to do this is to use a real example so let's say that i'm signing up for your platform and i'm going to pay your sweet spot let's say it's 30 000 per year how many messages am i likely paying for going through my platform over that year so we don't charge per message so we highly encourage our customers to send as many messages as possible it just purely um depends on the monthly active users so usually our customers know their monthly active users numbers by heart so so what would my ma monthly active users probably be if i'm paying you 30 grand a year really depends on what kind of premium features you're picking could be 10 uh could be hundreds of thousands of users wait tens of thousands of dollars a month no no let's say i'm in your sweet spot you said your sweet spot acv is probably you know tens of thousands per year so let's say i'm paying you 30k per year that customer how many how many users do i probably have on my platform so it's a little bit more complicated than uh three shoot but uh basically it could be tens of thousands of monthly active users going up to uh a hundred thousand uh monthly active users okay fair enough got it so you're price you're up selling against two pricing verticals the your customers monthly active users uh along with any feature based upselling you're doing yeah things like if you have hipaa compliance or if you want to private dedicated servers instead of being on a multi-tenant servers if you unlock advanced moderation capabilities and so forth so there are certain features that a certain type of customers would prefer that are not really relevant to the entire customer base they will actually create a bespoke plan for them so 2013 mom site pivot in 2015 start writing lines of code for this sdk you get into yc with this idea uh when was your first dollar of revenue on the new idea um that was around may of 2015. uh 50 a month a small gaming studio uh then we had like 20 pain customers uh all over different pricing points by the time we applied to yc because it was our first time doing b2b we didn't know what we were doing yeah so 2015 it 20 customers total by the end of the year applying to ic getting in uh and then help us understand where you've scaled to today how many customers we have 422 paying customers 422. uh okay great 43 000 applications free applications yes so there's a lot of these 422 customers are like brands like maybe iac that run many you know social you know you know fishbowl uh tinder and another app so they'll pay you for those three and so that's the three thousand applications yeah yeah yeah okay very good so 422 customers uh okay nice growth here um help me understand how you went from 20 customers in 2015 to 400 today in other words what's your kind of go-to-market strategy is an outbound strategy inbound something else so it has evolved quite a bit since the year uh since the past couple of years so uh in the beginning we started out with content purely seo and targeting a couple of developer websites for the presex overflow and things like that so still to the state a majority of our revenue do come from inbound inquiries from developers around the world uh geo distribution wise we have customers in u.s about 40 percent come from u.s about 30 percent confirming yeah 30 coming from apex so it's very globally distributed now since uh a couple of years back when we start building the internal sales team we also started building the outbound engine so um i believe for the past about two years outbound engine has been continued to grow grow growth so right now i think it's a really we're in a pretty good spot of balancing that out with inbound and outbound how many folks are on the team today that do carry a quota roughly 20 people working on reps okay and what's your total team size everybody uh about 200. okay and how many times 200 how many inches of engineers okay 100 got it and then so 100 engineers 20 quarter carrying reps and then 80 that are kind of admin miscellaneous something in the middle yeah marketing there's also just general management um um yeah now john you're in san francisco you're growing fast and you've also done all this completely bootstrapped right well-known investors uh here in the bay area uh shasta ventures and obvious capital letters there's a of 60 million dollars and then series b we were able to raise a 102 million dollars from iconic capital and tiger global management yep so total raise to date is how much uh a little bit over 120 million okay 120. and where is most that capital going is it truly kind of engineering head count or is there some other big cost structure we don't know about uh bitcoin and amazon i know probably not amazon maybe not a bad investment right now yeah well so majority obviously goes to uh hiring people and hiring entertaining the talented people and then obviously we do actually uh pay a lot of cloud vendors uh and then we started to uh invest a little bit into marketing as well uh into marketing yeah okay so walk me through uh that series b i believe when was that it was uh what we announced in may of last year yeah yeah and that i mean that's obviously a fairly large round uh most companies kind of in your in your space once on the venture track you're raising every kind of 12 to 18 months how are you thinking right now about the virus in terms of your burn rate right are you trying to extend runway where you're in the middle of a raise that you have to like to you know delay now how are you thinking about it yeah so we've been very cognizant of where we invest our capital so one of the um i guess corporate almost like a cultural methodologist to be really just capital efficient uh how we think about you know spending money so we still have majority of the money we raised uh from csb so we're not in a rush to raise any money anytime soon but uh we've been creating multiple different uh plans and scenarios based on you know how this year is gonna uh pan out because i think we haven't really seen a lot of slow down in q1 but potentially there could be some impact to our customers in q2 uh throughout the year so we want to really uh be flexible in terms of how we respond to the market but overall we believe we have created a pretty conservative plan when it comes to financing but with that said we are also looking at other strategic opportunities to you know potentially acquiring companies to accelerate our product worldwide so for a couple of those like strategic reasons that we may end up raising sooner than uh later yeah uh a couple of follow-up questions on that when you did do the last raise and your brain how many months of runway were you raising for uh i mean back then we weren't really spending a lot i think theoretically we had like 80 plus years of runway but uh now we've uh did add a lot of you know people to the company uh you know typically when companies raise they raise for what uh 24 to 36 months if not 18 months uh we do have a lot more friendly than those and we want to make sure that we continue to control our destiny by just having more runway than difficult companies yeah you strike me as a math guy based off how intentionally you're you're giving answers so when i when you say hypothetically 80 years of runway i assume you're taking kind of 102 million divided by your burn and saying you know what we're only burning like a million a year maybe 2 million in a big investment year so we have plenty of runaway is that fairly accurate yeah yeah back then yes that was accurate yeah fahrenheit obviously have ramped a bit since then considering the current kind of macroeconomic trends again with the virus things crashing you know general fear in the markets uh how comfortable are you driving and how comfortable are you driving are you in driving burn up i mean let's say i mean would you be comfortable sleeping at night at a million dollars a month and burn well this uh that's a good question so again we have multi multi kind of faceted approach to this there's definitely that aggressive accelerated plan then there's a base plan there's also the kobit 19 plan so we have different kind of approach to how we control our burn but you know we do have a pretty extensive dashboard built out internally where we can monitor metrics on sales marketing engineering headcount all those things into one single data platform at our company that's all being monitored in real time so based on some of these leading indicators we can always like move up scale up let's say go spend a little bit more on the marketing side or slow down the hiring and things like that so it is really a very very flexible uh plan with multiple variables of being considered yep uh now is a great time to buy obviously if you're sitting on cash you're in a fortunate position to be sitting on cash it sounds like you know 80 90 maybe even 100 million worth of cash how do you tactfully go out and kind of probe the market to see if you have competitors or tech stacks that you really would love to acquire but not do in a way where the founder goes oh he's reaching out because shit's hitting the fan right now and he wants to take advantage of me yeah so um we're not in a rush to buy anyone but uh thankfully after announcing that round the company of all ships and sizes did reach out to us for their strategic partnership opportunities and um i mean i've been i sold my previous company before so i've kind of been there in the shoes of you know being a position to sell the company understanding why we are doing what we're doing so building a thorough rationale on potential acquisitions and then what we do internally was uh for instance we are actually in the process of acquiring a company uh right now a small studio and then the process we went through was we basically did a create a long list of companies out on crutch-based angel list and a long list and then we applied qualified qualifying filters we hunkered down to about 450 and out of those 48 were contacted and then we met with a team of of 10 companies and we ended up doing due diligence on four companies and we gave a term sheet to one company so it is a very very rigorous process and all that process was run in about a month so we try to keep it efficient and very very methodical so by the time companies are talking to us we know they have intention to sell and we know why is it out of morale or is it actually they built something that's highly technical but they didn't really get to product market and so forth so by the time we are working with them sitting down on a table we our rationals and motivations are pretty well aligned now yeah no it makes all good sense now when you're doing these acquisitions are you mainly looking for again talent and tech or buying revenue and something that looks good that you can upsell to your current base yeah that's another excellent question so we always want to like crawl walk and then run so we had opportunity to acquire companies with you know a lot of revenue but also there's a purely purely equihire place right now what we're looking for is somewhere between aqua hire and talent and then the ip acquisition if they built a software that can really accelerate our product roadmap that would be our sweet spot but if you do have a product that's highly highly aligned to what we do like api driven model with subscription uh that's really uh really related to communications real-time communications and that'd be actually a worthwhile uh conversation as well if they do have some some uh revenue yep very good so 2015 again you get this thing going now today 100 you know 100 odd million raised a team size of you know 200 just shy 200 folks 422 customers average acv you caught 3 grand a month or 30 grand a year but obviously again some people north of a million a year some people less than you know maybe five thousand per year um with fat and math 422 customers at that ac i mean that puts you somewhere at like 1.4 1.5 million per month have you guys broken kind of the 20 million run rate uh mark at this point 20 million uh i'll run it yeah we have certainly broken broken the milestone we will i won't mention the specific traction but that's good math okay thank you i appreciate that can uh can you talk a bit about if that's generally where you are at today i mean you go back 12 months from now i assume you're way more than doubling year over year to do the kind of round you did last year is that accurate yeah so we've been on the path of that you know triple triple double doubled up double some years we've been faster some years we've been probably a little bit slower but roughly on that path okay so roughly i mean can't can we back into this a bit 2018 probably somewhere around kind of 5 million an aor ending in december 2019 you know you pass or you're flirting with the 20 million ar mark and you feel like this year depending on what plan you go with your covid plan your conservative plan or your aggressive plan you would love to get about 50 60 million bucks in arr ooh that'd be nice yeah we're kind of looking at so the way we look at it is again it really depends on how the market is responding uh how fast because like with this kind of market sales cycles tend to slow down uh so we want to just really understand the leading indicators and based on those we'll be adjusting our plans uh accordingly but yeah very good last question here before we wrap up the famous five um churn is obviously critical in any sas company and there's a lot of ceos i interview where they tie the pricing to something that is actually not the key value metric i think you're in a very unique position where it i think it's pretty crystal clear what your value metric is right it's you know you decided not to do number of messages because you don't want to disincentivize messages being sent but you said let's tie it to number of users they have on their platform which obviously is smart so so how um how good is that metric and that's measured obviously by churn so if you look at your gross revenue trend over the past 12 months where's that coming in at yeah oh again i won't spec uh answering specific numbers but um yeah our turn uh because we are api sdk company uh the insurance tend to be quite low uh the only caveat is that most of the return we see is a just small startups shutting down their applications or shutting down their business yeah that shouldn't impact revenue turn that that one that one and that won't impact revenue churn much though yeah yeah so our local churn tends to be higher than the um dollar sure dollar return is pretty healthy i would say it's definitely in that top quartile kind of sas category for sure yeah i would say based off like when i sort my data i'd say top quartile is less than five percent revenue churn annually on a gross basis is that fair to say um i won't comment comment on that but um i i would say we're in a pretty healthy state is it a fair statement to say that when you add back your expansion revenue from your historical accounts net revenue retention is greater than 100 percent that dollar retention yeah yeah absolutely yeah very good and are you what is more impactful in driving your ability to upsell customers uh your ability to upsell them on a feature basis or your ability like they're growing organically because they're adding more users themselves yeah definitely ladder because um either they already have an existing user base and they roll out to more of their users or simply then they themselves are growing so it happens pretty organically yep very good all right let's wrap up with the famous five number one favorite business book uh right now i'm reading this book the great ceo within oh very good the great ceo within who recommended that to you uh let's recommend it on twitter by a multiple ceos from yc oh very good all right and number two is there a ceo you're following are studying oh i think uh he was on your podcast eric i really like yeah yeah i've known him for for some years now we're following him for some years now and i just love his philosophy on happiness and just general conscientiousness and grit he did such an amazing job like he came on 18 months before they filed the s1 where they had about 150 million raised and they had already hit about 130 million in arr and what's fascinating i mean a one-to-one ratio between those is just remarkable not only that but he resisted the urge to do like a big round before the ipo but still doubled revenue to 300 million on 150 raise just incredible numbers that you know right now you took a big big i mean look it's a risk but it can also be a big reward where you raise you know a massive 100 million dollar round and you're in the 20 to 30 million aor range and you have to now figure out how to deploy that to kind of you know obviously grow revenue did you consult eric on that raise and what was his advice on raising so much on a smaller stack of ar no um well no we i didn't get his advice on raising but uh this round kind of uh happened also kind of happened organically we didn't set out to raise 100 million we went out to raise 30 to 40. i just ended up getting a lot of interest from the investor community and we were given a term that we thought it was uh aligned with what we believe where we could be and then i think we finally kind of earned the evaluation and probably potentially more so we feel pretty uh confident with where we are today where we're headed very good number three what's your favorite online tool for building your company different online tool well i actually might be zoom uh but also like i just generally like any kind of software would it be uh confluence or just g suite or slack number four how many hours of sleep are you getting every night i just measured today i slept uh five hours and 16 minutes typically somewhere between five to eight hours okay very good and what's your situation married single kids uh married two kids two kids very good and how old are you oh 39 39. last question what do you wish your 20 year old self knew things will work out don't give up just keep on focusing and uh life will be kind of okay guys oh by the way yes you you made it to silicon valley guys there you have it senbird a complete chat solution sdk ip api based approach instead of you know a javascript you know embed kind of intercom like approach uh they're serving over 100 million uh messages uh now i john you said monthly right or annually monthly active on the active users monthly activities oh wow okay over 100 million monthly active users across the 422 customers that are paying them anywhere between you know small amounts up to you know some customers more than a million per year but average call it a 30 000 acv uh raised 120 million bucks to continue to drive growth still sitting on most of the last round of 100 million in the bank right now looking strategically at acquisitions in a time of you know financial panic does acquisitions make sense uh do they hold it to drive burn he has plans for all of these things over 100 net revenue retention though as they look to continue to scale john thanks for taking us to the top yeah really i enjoy speaking with you these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it more so if you want to get more of this stuff make sure you subscribe up here and then additionally go check out one of my other ceo interviews right now