Squirro Revenue & Funding (2024)

hello everyone my guest today is dorian sells he's the co-founder and ceo of squirrel before that he co he founded the swiss search platform local.ch and made it the market leader in four years prior to that he was partnering ceo at namix the largest ecommerce consultancy in switzerland in germany he holds a phd from the university of saint gallon and a master's in economics from the university of geneva dorian you ready to take us to the top sure all right so you're having big you bet so you're building squirrel today tell us what the company does and what your revenue model is how do you make money security is an augmented intelligence company what we do is we help companies do more with their data sets particularly with their unstructured data sets and for that we build an aya platform that is a liability to take these data sets to extract insights of them and get them to people um in the case of their workbench as an example integrated into salesforce or microsoft dynamics or other such systems okay business model series i was gonna say one time sorry what kind of data are people feeding you though so what are the inputs that feed your system that could be as an example textual data sets like earnings transcripts from for financial services as an example or research research notes that can be company internal data sets like as an example call notes contracts emails uh all types of sharepoint documents word documents everything that you and i nathan can read every day but computers have a hard time to do and deal with okay and your pricing model is it a pure play sas company it's a pure play sales company we price on the number of ctus or in some uh very rare situations repriced by the number of transactions you use the platform for okay and then help me understand on average what's the company going to pay you per year to use your technology um what we see over the past years and that i think called straightaway true for ai ai is still an asset industry there are not many really big operational cases out there so in many cases we see companies coming to us at the very beginning with maybe 50k 100k us in terms of a bit of services a bit of subscription mixed in year one and then year two it goes up and we have seen our largest customers in the multi-million dollar range okay just the pure place sas business excluding professional services or onboarding what would you say the average customer pays per month or per year per year um on average at the moment we have about acvs up by 150k us okay so this is very much an enterprise play do you have an inside sales team that's correct we do have an inside sales team it's very much an enterprise play it's very much play that tackles company internal business issues around as an example deal origination or service service insights and so how many people are on the team today total we have at the moment about 30 people on the team and where is there one major in zurich uh engineering is based here in zurich switzerland and then i have pre-sales post-sales sales teams in new york and london and munich okay so switzerland and remote locations and and during this on the timeline for me when did you launch the company uh with school we started in 2013-14 okay 2013 2014 and um and have you in terms of capitalization have you bootstrapped or raised we have the first two years completely bootstrapped that is my co-founders and i um have built private companies and then we put up the initial money and then we took a bit of business money back in 2016 17 and then back in 2017 salesforce joined us plus a dutch-based investor called finch capital okay so how much have you raised a date in total we have raised about 50 million okay five zero one five got it very good and um and all equity or is any of that debt or venture debt all of that is equity with a small token that we did in the early age days where it was a convertible debt drive okay makes good sense and walk me through so 2013 you're kind of leaving where was your head at that point did you just sell your your prior company or or where or did you quit your full-time corporate gig what were you doing my founding team and i we built back in 2004 to about 2009 a citizen's largest homegrown web platform by any kpi local search called docker ch um beat google at their own game in the local market here and that was acquired in 2000 by swisscom which is the incumbent's telecoms company um asked we hanged around a bit what was the acquisition price um about half a billion okay um and then my team and i my co-founders and i who go back together for about 20 years by now we started that back already in 2007-8 as a little side project a thing called online note-taking back in the days there was no evernote as an example onenote and microsoft was really kind of like a forgotten child of the office platform and we saw an opening with an online memory for you for me whatever we collect digitally we start to build memonic and then we'll face it a bit of financed american rival called evernote came up and in the b to c space very different from a b to c b to b space so in that b to c space every node overtook us and then we folded and back in 2013 started the first thing called sparrow okay very good so back um going back to 2013 or when you exited that first company before jumping into squirrel um how were you the founder at that company yes and what did you guys scale that company to in terms of team size the prior company local ch was scaled to about 600 people okay so fairly large and did you did you boot drop that yourself or raise there as well uh parts of it was raised parts of it was bootstrapped how does that work it's either one or the other isn't it well you know the beginning it was bootstrapped and then later on we started to inject commercial cap we started to inject um institution capital from a big media company in switzerland and eventually also from swisscom who eventually acquired a company okay very good all right and then so let's focus back here on squirrel so you launch in 2013 what have you scaled to today in terms of total customers on the platform we have today about uh about four or five thousand customers on the platform around the globe from asia to south africa to europe to the u.s and even south america but predominantly in the financial services space customers like we can talk about like investec as an example standard chartered but many other others that unfortunately always come with ndas they don't want us to tell anyone that we use that's a good thing dorian that means they really like you i don't know we'd love to talk about their success stories because at the end of the day all of these companies share one common trait they have so much data that they don't do anything with and i think over the past five years we learned the trick or two how to do more with unstructured data and it would be good to be able to tell those stories um here and there whether it's financial services or outside because there are so many other companies that simply don't use to the best extent possible their data so dorian you said you have 4 000 customers today and they and they all have four thousand i said four dozen for that oh four dozen okay got a dozen enter big bay enterprise customers i was going to say that something's something's not matching up here something doesn't work okay so about maybe 48 50 customers today that's right at the acv you gave me earlier that would put you about 600 grand per month right now in revenue is that about right that's about right yeah okay and it won't go into too much details we don't disclose our because the probably held company we don't disclose figures by the way i'm only i'm only multiplying numbers you gave me i don't want you to tell me numbers that you can't disclose that's okay well help me understand what growth looks like you've done this before so over the past 12 months what have you grown by the possible funds we've grown by about 100 okay good so if you're doing 600 grand a day that means you're doing 300 a month about a year ago yeah that's right where's most the growth coming from expansion revenue or new customer ads all together um we actually just did the math at a board meeting earlier today and if you break our numbers uh a good half of it is actually coming from expansion revenue from existing customers that actually go broader and actually we expect that to be a bigger bigger slice of the chunk um in 2019 because we see some phenomenal growth with some existing customers at the same time we have been selectively onboarded we have selectively onboarded new customers international services and insurance space and we expect the game to change late 2018 early 2019 because we also have now set up a number of worldwide distribution partnerships as an example with definitive the form of financial services and risk division of thomson archers that resell our stuff with salesforce was an investor in ours and we now see early tractions of that starting to kick in with bigger deals with newer customers so we expect that game to change radically over the next 12 months and the expansion revenue you're driving what pricing axes are you driving that expansion around is it really just number of seats or number of transactions or is there some other value based metric um most of our most of our product is used in conjunction with an existing workbench such as microsoft dynamics such as salesforce all those workbenches are sold on seed-based pricing and we simply adapt to that model for making it easy for a customer to kind of engage with us because it's simply then a portion of that workbench expense that they have and in that sense it's a model that they're used to so it truly is just your expansion revenue seed based most of our expansion remember when usc based that's great yeah that's great okay great and then um help me understand kind of what the team looks like today in terms of adding new customers what's the growth channel you're using you mean in where we acquire most of our new customers yeah walk me through how you get a new customer today we do a lot of outbound marketing we have a lot of inbounds through our own efforts plus what we also have done over the past 12 months we have created a number of distribution partnerships like with refinitive slash thompson reuters or salesforce tier one but also builder in the industrial space on the other side we have a number of implementation partners such as accenture as an example all of these three channels bring us customers once a customer is there we normally split the work in terms of professional services not with us but actually with a partner we direct all new customers to partners for the implementation side of it us we focus predominantly on the platform platform selling we have a small pre-sales post-sales team delivery team that in almost all cases supports an implementation partner in delivering the solution to an end customer as we deal here with company internal data sets in each case whether one likes it or not even in the cloud-based era you need to attach yourself to existing solutions and often these solutions are strictly on-prem so you need actually to make that step to go on-prem to do the dirty work of as an example connecting to an existing maybe aging contract system that you want to actually attach to our platform to as an example do insurance on the writing more efficiently so there is partners involved assist product and together we deliver a first-class service to our customers and durian how aggressive are you being today so to get a new 120 000 a year customer what do w what are you willing to spend on fully weighted cac we at the moment are on a lifetime value to cac ratio of about 2.5 i'd love to get that to about 3.0 ratio at the moment in that sense we pay slightly too much for the cost of acquisition which is about um we at the moment if i told you about our average average tax size we have about four years lifetime value what we see in those early stages so you can guess that i spend about 200 000 acquiring a new customer 250 000 acquiring a new customer you can calculate that that is still a bit too high frankly speaking but again it's enterprise customers with very long time ranges of being customers with us we have had over the past five years just two customers resigning from contracts one because they changed their total business they went out of the line of business that we supplied our software business software too and another one because there was a complete change of management that they simply want to have everything else what does that mean in terms of actual revenue churn annually for you we have at the moment kind of like in last year 2018 we had zero churn okay including every single customer we kept every single customer there was no customer going away every single customer crew year or year yeah but you can you can keep all your customers but still have revenue churn from downgrades you're saying there were no lost customers and there were no downgrades that's correct okay so when did you lose the two customers you're referencing uh i i lost one of them i lost one of them in uh 2017. i lost one of them in 2016. what does no churn tell you about a business are you priced too cheap that's a maybe a guess how you can say that that'd be priced too cheap i mean shouldn't you have a churn though well yes and no you know ai is an early stage thing what i'd love much more what we pride ourselves much more that in the exception of about three customers we saw expansion every single account so our our typical gauge model is what we've seen over the past year so the customer will come to us maybe in the first year i'll walk you through an an insurance customer here in switzerland an insurance customer interesting they came about two years ago with a small pilot about 50k that was two years ago 2017 2018 we rolled out to one of their divisions and within the division to one line of business in one country average contract value um annual contract value by 80 000. now at the end of the year they came back and they did two things first they declared us to be the de facto platform for every unstructured data analytics piece in that insurance company it's about 5000 people in that insurance company across europe number one number two they started now with us the plan of rolling that out from that one single line of business to the other countries that adds about another 200 acv in 2019 and they would have been discussing with us taking the platform and rolling it out into other use cases within the business so within the span of about three years we became a core component of their enterprise software infrastructure so zero percent gross revenue turn annually you said fifty percent expansion is pretty normal that would put your that put your net revenue retention annually about 150 percent is that accurate oh you're better at these kind of calculations i haven't done that i'm just adding two numbers during that you told me you said 50 50 ar growth comes from customer expansion and you said he had zero percent revenue churn that's right yeah so how is that complicated math that means you'd have 150 net revenue retention and fifty percent at twenty sorry i'd follow that it might be late over here it's 9 p.m i haven't followed that concept okay just so net revenue is just you take your churn revenue and you add back your expansion you're saying you churn nothing your expansion is typically 50 on the historical court so net revenue retention be 150 right okay yeah that's right okay interesting walking me through that well no but but i don't want to walk you through it just because that's my number clearly that's not a guide a leading indicator for you it's not something you're measuring yeah no it's not i can tell you what my leading indicator is what we at the moment we at the moment just look at two kpis we look at net new bookings from net new logos because that gives us an early indication what's going to happen 12 months 24 months down the road number one kpi and we look at net promoter score in our existing accounts because that tells us something how fast we can actually expand in in in year one in year two and three yeah very only kpis i look at that might be a bit un-american but that's the kpis no that's important that's not that's not an american at all um by the way net new bookings is is is is that's the um the percentage version of that would be net revenue retention i mean it's basically the same thing except net new bookings you'd actually measure in terms of what the actual arr is not the percentage um that's great no i think that's a great metric very good all right last question here before we wrap up if you sold your last company for i think you said half a billion dollars correct 500 500 million why would you your most valuable asset is time why wouldn't you go buy a platform right that already has these customers and then edit it so that the product matches your vision i mean why hustle and scratch and grind for four or five years when you can afford to just go buy something well go back five years ago there was text analytics around but the whole process of taking unstructured data sets processing them through an engine and down to a sentence level be able to identify future looking statements as an example about the financial markets transaction that was simply not existing in the marketplace it actually was automated it actually was automated insights which vista equity acquired uh done this exact same thing in the financial services market uh and that was five six years ago i'm just curious as it was someone i wasn't aware of that what i get at the end of the day my biggest dory my bigger question is a guy like you who's your biggest asset is your time you can't buy more of it and you have cash resources i'm just curious why you chose to build versus buy to save yourself time i love that stuff crazy things don't happen the straight route crazy things happen if you go there in yourself frankly speaking five years ago we had only limit and we know exactly where we want to go because i saw that i i've done the entrepreneurial exercise i've founded about four companies frankly speaking i don't know to do anything else with my time professionally speaking that's what i do i've been building companies look nice nathan um i i divide that in three aspects there is the zero to one challenge there is the one to ten challenges the the ten two hundred challenge and then come to bureaucrats that ruin 100 plus company right the zero to one challenge is the most interesting challenge because at the very beginning you just have an empty piece of paper and you need to make that empty piece of paper something that other people sing your song better than yourself aka your customers love you so much they're willing to pay money for that and that zero to one challenge is the challenge i'm after that's the challenge that motivates me to simply take something that is already won or maybe if uh to take your analogy it's already 10 and build it to 100 maybe there are people much better than me doing that okay very good over the past 20 years for that zero to one challenge that's the answer to the question it's that's what you're passionate about that's why you didn't use your money to save yourself five years of grinding you like that part of the grind makes sense that's right all right let's wrap up with the famous five number one what's your favorite business book uh good to great number two is there a ceo you're following or studying there is one here in switzerland called calvin greeter and he's a ceo of what he was the ceo of buhler a manufacturing company that owns about 60 of the food processing space so if you had a sandwich for lunch today they would be all john's have actually produced a flower for that sandwich bread and this is a company that has 150 years in its bones and reinvents today a manufacturing solid manufacturing business into a data-driven business i find that fascinating ceo very good number three what's your favorite online tool for building the company the one we use for about 15 18 years is atlassian number part of it yeah i know last year is great and by the way we had jay on who runs it lasting he's the president on a couple episodes ago you guys can go listen to that episode to hear about their growth story uh number four how many hours of sleep to get every night about six to seven and what's your situation married single kiddos married with a wonderful nine-year-old daughter oh very good and how old are you dorian i'm 47. last question what do you wish your 20 year old self knew not quit the pilot flying school to become a swiss bomber pilot don't quit it no i quit i left because of the first gold war and i thought that doesn't click with my brain but then again with 47 i sometimes think it would have been really cool to fly a mark 2 guys don't quit especially if you're trying to fly a mock tube plane now he's working on ai and intelligence specific to unstructured data building scoro started in 2013 now 48 customers paying call at 12 000 500 bucks a month usually about 600 grand a month in revenue up from 300 grand a month just a year ago so healthy growth the price on number of seats or transactions per year in rare cases 15 million dollars raised team of 30 in switzerland and remote locations paying up to 200 grand to get a new 120 000 a year customer so 19 month payback as he looks to scale dorian thank you for taking us to the top thank you nathan