Sprig Revenue & Funding (2024)

hello everyone nathan here my guest today is ryan glasgow he was previously on the early team at weebly obviously acquired by square also at verb which is required by snap he was also at extra bucks which required by ebates a life fire by adobe and graph science by centro you can probably guess he's based in san francisco that's how you get that kind of history ryan now you're working on user leap you're ready to take us to the top yeah usually a sick startup here now and helped quite a few other companies get started and really grow and launch and and build out their customer base and you know one thing that i always found particularly at weebly is that companies at scale it's always this continuous journey of understanding those gaps between what your customer wants with your product and that marketing product experience that you're delivering yeah and it's not something that just early stage companies need to figure out it's a continuous journey you know even beyond ipo and it continued to grow from there and just found out that you know it was incredibly difficult particularly for companies at scale you know more or less even the early stage as well but companies of scale very very difficult so it was a problem that really resonated with me ryan we jumped ahead of the problem here so tell tell people what user leap does and and are you pure play sas like what do you think the revenue model is going to be yeah we are at sas business what we do is we help companies understand using micro surveys their product and marketing experience and how it actually is able to fulfill the customer need and what that customer is looking for with that product or service yep and now you told me before the hand so you're just now launching so you're pre-revenue right uh we do paying customers we are live we're launched um with you know we are live with customers okay now right now we're still staying low and really focused on delivering amazing customer experiences um and so we're you know gonna be sharing more details publicly in the future yeah no that's great so so okay i guess put this on a timeline for me and then i want to get more into patterns you've seen at the experiences you've had so you launched the company in what year started user leap last year early last year in around february and since then building it out we you know really started working with customers last summer okay and they went live with the product they started to see a lot of value out of it and starting to build out that an initial early set of customers as we continue to build out the product offering okay that's great and then what have you i mean how did you know it's a beautiful moment to go kind of figure out your initial price point you're going to market with and this is very much like an art i'd say not a science you've done a lot of pricing being at you know six different companies so what price point you decide to go to market with for user leap you know early on it was really about asking people to pay something that was meaningful to them for every business it was different you know there are different sizes different revenue points and it was really a one-on-one conversation with all the companies and you know a lot of it was through my personal network saying hey how big a problem is this for you how much would you pay and it started with there this is i mean it sounds good though in theory but these are this is very difficult to actually quantify right you're going hey nathan i'm going yeah i want to use leap brian i love you i work with you a weebly man i want to support you and you're going great how big are you know how big a problem are customer surveys at your company i'm going right i don't know how the hell to quantify that but i want to pay you to support you right it's like i mean how are you actually quantifying that yeah in terms of quantifying our goal is to actually help drive funnel conversion from home page to churn and so what we can do with our pilots is actually hopefully not churn right what do you mean by that so improve churn yeah their conversion funnel you know including churn and actually preventing churn um and so you know what we do is with the pilots and a lot of times even leading up to a subscription is saying you know what does this mean for you you know what if we can increase that conversion by five percent what if we can reduce churn by two percent or ten percent and you can start getting the numbers and actually model out what the impact is on their business and actually you know we'll it'll hold us accountable to what we think that we can do yeah you're basically arguing take the mechanics of how a funnel work right and if you change even a couple percentage points increase at certain things because of how a funnel works you actually get massive output in terms of value if you improve these things that's essentially the sales pitch is that accurate yes that is it interesting okay so are you i mean give me a general price point right i mean it sounds like you have a couple customers here are you talking kind of 10 bucks a month or like 10 grand a month or what space do you think you're gonna be playing in small medium or enterprise yeah we're very focused on the enterprise i mean contract values are an annual basis between 50 000 up to you know 500 000 you know that this is really the top of the market that's where the unmet need is in the market and that's what we're focused on as a company that okay so yeah so that's by the way congratulations i mean that surprises me a little bit that you're able to convince people to spend this kind of money on these things it sounds like you've done a really good job at actually modeling the value the funnel is losing because they don't have this kind of thing installed i mean is that really a one-on-one kind of coaching call where you're articulating the potential losses or do you have some tool like website grader that says your seo sucks now pay us to do your seo yeah you know it is really those one-on-one conversations a lot of times we'll get under nda they'll share their numbers they'll know exactly how their business is doing and then and then from there we can dig into specifics and say you know what would a few percentage points look like if we move the needle here or if we made this type of impact on your business and you know on our site it's really around just a spreadsheet and modeling it out and coming back to them and saying this is that revenue impact and here's what we think we can do um talk to me a little bit about history so far it sounds like you have fundraised why'd you make the intentional decision to fundraise instead of bootstrap yeah you know with every company it's really around finding the right talent and with san francisco it's a very expensive place to live wanted to really bring on people who you know were the best at what they do i mean our data scientist has a phd he has eight years of experience with ai and you know when you want to attract the type of kevin yes yeah kevin and joe you know joe's over 20 years of experience he's our our lead architect and came from another ai company down the street from here you know when you want to attract this type of talent you know they want to see investors bought into that vision and that business model and it really you know gives a stamp of approval for that a lot of these people in silicon valley to move forward and take that step and join particularly early stage companies so how much did you end up raising how much in the company to date we did technically what's called a pre-see the terms keep changing you know every couple years but we did a pre-seed right around 700 000 and i put in some money myself as well and it was really getting people who are committed to that enterprise story you know if you look at smb surveys and smb it's you know there's a lot out there if you look at product you'll see a lot of survey tools you know we're not really focused on that and so is finding the right investors who are saying hey we actually understand there is an opportunity at the top of the market it's going to take a little bit longer to get there but we believe in you and we really want to invest in what you're doing yeah i mean by the way survey monkey's been on and i mean you see a kind of type forms beyond what you could argue is kind of in the space i mean there are all kinds of kind of whether they're starting off at freemium 10 a month plans i i haven't heard of someone i will say this i haven't heard of a product like this starting off enterprise so it's i'm excited to keep chatting here for another five ten minutes to figure out kind of kind of the thesis here and it sounds like you actually saw that opportunity i mean this is like a very intentional thing yes yeah the enterprise space there are a few customers that top into the market the enterprise survey tooling and you know the challenge though is that if you take the same product like survey monkey and you add a sales model and you really bring that to market you know the companies at scale have very specific needs and they have millions and millions of users using their product and so what does it look like to actually help run and conduct surveys and analyze all that survey data at scale across you know hundreds of thousands or millions of users it's a very unique challenge that a lot of the small businesses don't face and so that's why for us our strategy was entirely at the top of the market for the largest software companies and we're currently onboarding some of the largest software companies in san francisco right now who came to us and said we have you know 10 million monthly active users we want to understand why they're coming to our homepage and not signing up or canceling their subscriptions or you know where we're not meeting their needs with our core product offering can you help us do that and that's really what we're focused on solving yeah no it makes a lot of sense and i know you're early but what it sounds like you've onboarded what like one or two kind of customers today are you closer to kind of ten or a dozen um you know it's it's uh it's over a dozen right now we have a yeah a small handful of uh you know customers that we're working with and it's really at this point just making sure they're happy you know our pitch is that we're an extension of their team i'm always at their offices it's great being in san francisco to you know just walk over or take an uber and stop by and you know ask what their goals are what are they looking to accomplish this quarter what are they looking to accomplish in their upcoming sprint cycles or what are those questions that are top of mind in their funnel and we look to take on those those and tackle those challenges with them so serving as extension of growth teams product managers user research teams you know whatever those challenges are we get in the trends with them we use the platform that we've built to help solve those challenges yeah yeah i mean by the way if you've got more than a dozen folks you gave me you told me 50 000 acv earlier i mean that puts you over 600 grand in terms of run rate in ar today is that accurate or were you discounting aggressively early on there were some early discounts um but you know and don't want to get too much into the revenue but you know we're certainly on track to to end the year in a really good spot and do you feel like we can break the kind of the million run rate at that point uh yes yeah we're certainly you know training that direction and it's looking very positive at this point you know no come on ryan i'm trying to get you to open up a little bit here does does that goal freak you out or does it feel very attainable it feels very attainable okay yeah yeah first feels very attainable the contract size you know it's it's you know typically six figures and you know the the interest and demand that we're getting are from a lot of the top players and you know for us it's really around you know being able to control the destiny of the company you know have the funding a lot of these companies do pay up front so it puts us in a very favorable cash position yeah how um i mean look getting paid upfront is great that means you could on a gaap basis stay cash flow positive uh and and still spend one year of acv to get the customer and if you argue that whoever can spend the most to get the customer wins the customer that puts you in a favorable spot um how are you managing your payback today are you comfortable with the 12-month payback period the you know the payback right now it's less of a focus you know we are still early stage it's really those customer success stories you know building up those testimonials and and making sure the people we work with are really happy you know the economics we're starting to it's you know starting to think about that a little bit more and ensuring that the margins are there and that you know we can support the full sales cycle but that's still you know early in what we're starting to figure out what's the team size today how many people you know it's a mix of full-time and contract and i've seen a certainly a big shift for you know companies of any size being more open to working with contractors working with remote workers you know we really leaned in in that model as well uh we're over 10 right now but three full time uh it is more than three full time uh but you know the total team size is is uh right around a dozen for us okay good sorry how many full-timers four uh full-time we have right around five okay good yeah by the way i love the contractor model i mean i i i'm hoping somebody soon you know goes public with one employee right i mean that would be that would be amazing because have so we you know the sharing economy allows us to leverage so many global resources to build these things so i think that's great um too early to talk about things like gross uh churn and expansion revenue yeah a little bit early for us on you know those numbers and and you know at enterprise when you you do make that commitment it's typically a longer time view as well um let me talk to you about about something different the hit on san francisco is always like they raise too much money they're doing no revenue they burn a bunch of cash use other people's money it never works out i mean it sounds like you're actually driving some nice revenue here with not a ton raise and the way i like to measure that is as the founders can keep kind of their arr to funding ratio generally close to one to one you hold leverage you're not going to get diluted out of the wazoo on your next round that being said you want to obviously burn some capital invest in growth engineers are expensive how do you manage your burn i mean or you know you know i assume you're still burning obviously to drive growth yeah yeah certainly you know still uh you need to keep the lights on you to pay the team um but you know with the contract size with the customers that work with we're revenue generating with the insights that we create so we come to these businesses saying we will actually identify ways for you to increase revenue for your business we'll contribute to your bottom line and you know when we're creating that type of value with our customers it puts us in a good position as a business um and so in in terms of the burn you know it's not something that too worried about i mean you're right companies do raise a lot of funding here i think for us you know it's been a very light funding model given that we're you know heavily using artificial intelligence there's a lot of really interesting innovations that we're bringing to the market in the the customer survey space and you know the talent is expensive uh but you know knowing that these contract values and this revenue is helping support that and drive that growth that it's not something they're too worried about yeah i mean so ryan it sounds like are you comfortable i mean are you kind of around 5k burn 10 gay per 100k burn per month or more than that you know it's it's uh it's less than a hundred okay yeah you're comfortable with anything less than that yeah yeah right now anything less than 100 is fine and and your early stage it's not necessarily the cushy salary that i used to get uh in previous jobs but you know it certainly pays the bills last question there are point solutions right for what you've described raising just again way too much capital breitback is a good example 18 million specifically for the churn funnel working with pilots on big enterprise accounts like netflix they actually have similar acvs to you how do you try and beat these people that are focused on a very specific point in the funnel doing what you're doing yeah you know different companies are focused on i think different types of problems and also be embedded in their in their uh you know in the teams differently you know with us really focus on user researchers and helping them actually better understand you know those customer experiences at scale and so it's really around how can we have a flexible solution that can actually move around uh to focus on different problems that companies face if you look at a large software company you know one quarter they'll focus on churn but the next query they'll focus on acquisition the following question the folk you know the following quarter the focus on retention or activation and so for us building that flexibility into the platform to ensuring that we're continuously meeting the needs and answering the questions that those product teams have yeah very good let's wrap up here with the famous five number one what's your favorite business book business book good strategy bad strategy i think one highly undervalued and underrated concept in tech is strategy we live in an increasingly competitive environment anyone can create a company these days you need to know how to compete and you need to know how to win yep i agree number two is there a ceo you're following or studying no one in particular right now uh you know i'd say generally enterprise businesses is one that i've any type of enterprise business i've really been focused on and but no particular ceo comes to mind number three is there a favorite online tool you have for building your company we have a pretty standard stack right now and so nothing that would uh that would really surprise you i will say though that keeping it as simple as possible always is best and you know trello is something that we use that verb you know and helping build that company and now we're continuing to use trello as well and yeah i think just keeping the tools simple and the information accessible number four how many hours of sleep to eat every night last night i got around five i typically wish i could get more but uh you know it's it's something that keeps it's a problem that keeps me up at night and i'm busy really excited about and and it's something that it's it's also difficult to go to sleep what's your situation married single kids uh single right now i have a girlfriend in los angeles okay and no kiddos running around no kids all right and how are you ryan 31 last question what do you wish your 20 year old self knew 20 year old self i think it's really around continuing to you know i think early on i joined a lot of really early stage companies a lot of times they're at the idea phase i took some big bats and you know i think that's something that uh you know has worked out for me i think that isn't always true for a lot of people but even if those come those you know ventures did not work out and they did flop and they you know did fail i think it would be you know it's just a rewarding experience and i think it is a really staying big picture keeping in mind that you know the the things that don't work out actually uh become the best learning lessons and always keeping your head up guys there you have it user leap working with 12 enterprise customers helping them understand at different parts of the funnel uh what questions customers are asking really with the goal of increasing but you know percentage points here or there whether it's preventing churn increasing trout of conversion etc uh again 12 customers payment average cost 40 400 bucks per month or about 50 000 acv so caught 50 grand a month right now on revenue with a million insight hopefully this year we'll see what happens seven hundred thousand dollars raised to date five folks on the team too early to talk about the other economics but ryan sounds like you're growing fast man thanks for taking us to the top all right thank you