Interview
How Sumo Logic Reached 1,300 Paying Customers and 30,000 Users With Over $160M Raised (Interview with President and CEO Ramin Sayar)
- Interviewee
- Ramin SayarPresident and CEO
Company Metrics at Interview Time
Total Funding Raised (2017)
$160M
Users (2017)
30,000+
Net Dollar Retention (Mean, 20 Cohorts, Lifetime) (2017)
Well over 150%
Team Size (2017)
250
Historical Snapshot
These numbers were reported by Ramin Sayar during the interview at the time of recording and are a historical snapshot, not current figures. See Sumo Logic’s current numbers.

Key Takeaways
- 01Sumo Logic raised just over $160M across five rounds from investors including Greylock, Sutter Hill, Sequoia, Accel, DFJ, and IVP.
- 02The company had well over 30,000 users in its system at the time of the interview.
- 03Net dollar retention mean across 20 cohorts on a lifetime basis was well north of 150%.
- 04SMB customers (1 to 250 employees) paid between $3,000 and $80,000 ARR; mid-market and mid-enterprise customers (up to roughly 1,000 employees) paid between $50,000 and $150,000 ACV.
- 05Sumo Logic had well over 1,300 paying customers, about 51 to 52% of them enterprise, with the remainder in mid-market and SMB.
- 06Sumo Logic had approximately 250 employees headquartered in Redwood City, California.
- 07The company was founded in 2010 with seed investment from Greylock, making it about seven years old at the time of the interview.
- 08Ramin Sayar joined Sumo Logic just over two years before the interview, brought in to help scale the company and eventually take it public.
- 09Pivoting toward DevOps and modern app use cases reduced cost of sale by more than 40%.
- 10Payback period was between one and two years; sales cycles for new logo lands ran three to five months.
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Total Funding Raised (2017) | $160M | Interview, 2017 |
| Funding Rounds Completed (2017) | 5 | Interview, 2017 |
| Year Founded | 2010 | Interview, 2017 |
| Team Size (2017) | 250 | Interview, 2017 |
| Users (2017) | 30,000+ | Interview, 2017 |
| Data Analyzed Per Day (2017) | 100+ petabytes | Interview, 2017 |
| Net Dollar Retention (Mean, 20 Cohorts, Lifetime) (2017) | Well over 150% | Interview, 2017 |
| ARR per SMB Customer (1 to 250 Employees) (2017) | $3,000 to $80,000 | Interview, 2017 |
| ACV Range, Mid-Market and Mid-Enterprise (Up to About 1,000 Employees) (2017) | $50,000 to $150,000 | Interview, 2017 |
| Enterprise Share of Paying Customers (2017) | 51 to 52% | Interview, 2017 |
| Cost of Sale Reduction After Pivot (2017) | More than 40% | Interview, 2017 |
| New Logo Sales Cycle (2017) | 3 to 5 months | Interview, 2017 |
| Payback Period (2017) | 1 to 2 years | Interview, 2017 |
| Paying Customers (2017) | 1,300+ | Interview, 2017 |
| Expansion Timeline After Initial Purchase (SMB) (2017) | 1.5 to 2 quarters | Interview, 2017 |
Growth Breakdown
Revenue
Ramin Sayar declined to give an ARR figure, noting Sumo Logic was a privately held company. Contract sizes ran from $3,000 to $80,000 in ARR for SMB customers (1 to 250 employees) and about $50,000 to $150,000 in ACV for mid-market and mid-enterprise customers (up to roughly 1,000 employees). On an ACV or ARR basis, spend tilted a little more towards enterprise customers than towards mid-market and SMB.
Customers and Users
Sumo Logic had well over 30,000 users in its system and well over 1,300 paying customers at the time of the interview. Paying customers were split roughly 51 to 52% enterprise and the remainder mid-market and SMB, with customers consistently expanding from one use case into additional use cases within one to two quarters of their initial purchase.
Team
The company had approximately 250 employees at the time of the interview, headquartered in Redwood City, California. Ramin Sayar joined just over two years before the interview to help scale the business and lead it toward an eventual IPO.
Funding
Sumo Logic had completed five funding rounds totaling just over $160M, backed by Greylock, Sutter Hill, Sequoia, Accel, DFJ, and IVP. The company was founded in 2010 with seed investment from Greylock and had been operating for approximately seven years at the time of the interview.
Growth Strategy
Land and Expand Selling Model
Sumo Logic's primary growth engine was a viral land and expand model. Customers typically started with one use case and one data set, then expanded into additional use cases within one to two quarters, driving strong cohort growth and a lifetime net dollar retention mean well north of 150% across 20 cohorts.
Pivot to DevOps and Modern App Use Cases
When Ramin Sayar joined, Sumo Logic was heavily focused on security, which carried longer sales cycles and higher costs of sale due to displacement of legacy SIEM tools. Pivoting toward DevOps, tech ops, and modern app use cases reduced cost of sale by more than 40% and shortened average new logo land deal times considerably.
Multi-Year Customer Commitments
Rather than pushing customers into multi-year contracts, Sumo Logic historically focused on annual deals to prove value each year. Over time, customers began voluntarily committing to multi-year agreements as Sumo Logic became a strategic platform across security, operations, and DevOps use cases.
Segmented Go-to-Market by Employee Count
Sumo Logic segmented its market by company size, offering a free tier for startups and small shops, paid SMB plans for companies with 1 to 250 employees, and a dedicated mid-market and enterprise motion for companies with up to and beyond 1,000 employees, each with different contract sizes, buying processes and payback periods.
Democratizing Machine Data Across User Types
The founding vision was to give developers, DevOps teams, and security professionals access to machine data that had historically been siloed. By building a single platform for full-stack visibility across security, operations, and DevOps, Sumo Logic was able to consolidate multiple tools and expand its footprint within each customer organization.
Best Quotes
“So if you look at our mean across 20 cohorts, we've been well north of 150.”
“the small mom and pop shops, the startups, we provide them with a mechanism to use our search for free. So we have quite a bit of community users that aren't paying us anything frankly and they're using the free service. Then we have zero to two fifty employee segment or one to two fifty employee segment Anywhere from a $3,000 ARR to $80,000 ARR.”
“The ASPs tend to obviously increase, they're anywhere around fifty to one hundred and fifty ks.”
“So you fast forward all the way to today, we have well over 30,000 users in our system on an average day we're analyzing well over 100 petabytes of information.”
“I quickly realized that a lot of our users tended to be DevOps and tech ops, site reliability engineers, and we pivoted a little bit towards core competency to really address that modern app use case and the public cloud use case. Lo and behold, our cost of sale decreased considerably by more than 40%.”
“we have to get reelected every single year. We have to prove value as a software software as a service company, you have to constantly fight to earn the business every single year.”
“I joined just over two years ago, so I was not one of the founding, best founding members. And really, was brought in to help scale the company and take it to the next level and eventually take company public.”
What Happened Next
At the time of this interview, Sumo Logic had raised just over $160M across five rounds, and Ramin Sayar said he had been brought in to help scale the company and eventually take it public; the company was tracking to the metrics required to do so. The figures and plans described here reflect what was reported during the recording and should be treated as a point-in-time snapshot. Visit the Sumo Logic company profile for current information.
View Sumo Logic’s current profile and metricsFull Transcript
Chapters
- 2:20Meet Ramin Sayar and What Sumo Logic Does
- 3:55Business Model: SaaS, Pricing and Licensing
- 4:27Net Dollar Retention and Customer Cohorts
- 5:16Customer Segments and ACV Ranges
- 8:08Capital Raised and Investor Syndicate
- 9:14Founding Story and Vision to Democratize Machine Data
- 11:39Customer Stories: Visa and Medidata
- 13:53How Sumo Logic Works: Data Ingestion and Use Cases
- 16:15Brought In as CEO: Aligning Founders and Investors
- 18:30The ARR Question and the Move to Multi-Year Deals
- 20:39Sales Cycles, CAC and Payback Period
- 25:30Team Size and Headquarters
- 27:12Famous Five Rapid-Fire Questions
Nathan Latka
00:00This is the top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per talk. 5 and 6,000,000.
00:19He is
00:19hell bent on global domination. We just broke our 100,000 unit sole market. And I'm your host, Nathan Latka. When I do webinar interviews or I give big speeches to thousands of people all over the world, I usually will talk about data and sometimes show my dashboards, like my SaaS dashboard as I'm growing my SaaS company to top inbox, or my website dashboard, which shows how I take impressions, taking work them into email leads, and convert them
00:44into customers for nathanlatka.com. The funny thing is, guys, I build these dashboards with myself, no developer, and it's basically free. And I use one tool to do it. You can see the tool at nathanlatka.com/analytics. I'll you tell more later in the show. This is episode six seventy four coming up tomorrow morning. Andrew Yates comes on. His company, Artesian, has passed $700,000 in monthly recurring revenue and has raised $40,000,000. And I asked him a question. I said,
01:12Andrew, would you ever acquire Mattermark or any other company? Listen to how he thinks about acquisitions bright and early tomorrow morning. And every morning, remember, there's a new episode that comes out live at 6AM eastern.
Meet Ramin Sayar and What Sumo Logic Does
Nathan Latka
02:20Good morning, everybody. My guest this morning is Ramin Sayar. He's currently the president and CEO of a company Sumo Logic, an industry leading SaaS based cloud analytics company backed by really some great VCs and has an impressive list of customers and partners. We'll jump into that. Now previously, he was a senior vice president and GM at VMware, where he developed the product and business strategy and led the fastest growing aspect of that business. Previously, he held
02:46multiple executive roles with leading companies such as HP Software, Mercury Software, TIBCO Software, iPlanet Software, AOL, and Netscape. Ramin, are you ready to take us to the top?
Ramin Sayar
02:56Let's do it. Let's do it.
Nathan Latka
02:58Dude, your history is like a who's who of, like, the SaaS industry. You've been around a while.
Ramin Sayar
03:04Yeah. I've had a pretty fortunate career, and obviously that's helped put me in the position here at the wonderful company, Sumo.
Nathan Latka
03:12So tell us what Sumo does, for those not familiar, and what's your business model?
03:18How do you make money?
Ramin Sayar
03:18Sure. So simply put, we are trying to take advantage of the massive disruption that's taking place with this digital transformation. And so in a nutshell, what Sumo helps our customers do is build, run and secure modern apps in
03:36a simple, secure and easy to consume service possibility, right? And we do that through a variety of technology means but also taking a lot of complexity out of how they're really building and running these security as modern apps today.
Business Model: SaaS, Pricing and Licensing
Nathan Latka
03:55And what's your business model?
Ramin Sayar
03:57So obviously we're a software as a service company and so therefore it's subscription based and we price and license based on how much data you're ingesting, how long you want to retain it and we have a couple different versions of
04:11our products depending on your capabilities.
Nathan Latka
04:15And so give us just, obviously we could probably jump into every different customer cohort, it's gonna be different. But if you just average across your customer base, we can get a sense of customer size. What's the average customer paying you per month? What's your ARPU?
Net Dollar Retention and Customer Cohorts
Ramin Sayar
04:27The average varies, right? Because we have quite a different segments and therefore cohorts across the twenty plus quarters that we've been selling. I can tell you that we track all the net dollar retention statistics from every firm that's out there. And obviously you're probably very familiar with that. And the median, or sorry, the mean tends to be about 103 to 105, the best in class companies tend to be 110 to 115. We've averaged
Nathan Latka
05:00You're about annual net revenue expansion?
Ramin Sayar
05:04Correct, net dollar retention for each cohort. So if you look at our mean across 20 cohorts, we've been well north of 150.
Nathan Latka
05:13Got it, year over year.
Ramin Sayar
05:15Correct, and lifetime not year over year.
Customer Segments and ACV Ranges
Nathan Latka
05:16And what is lifetime, okay. And what is the, Ramin, what is the, just give us a sense of average customer size. Like, I know it varies, but are we talking a $100,000 annual contracts on average or 25,000 So, or less or
Ramin Sayar
05:30I guess the best way
05:30to answer that first is,
05:32we have a massive service that's available to our customers. And so the small mom and
05:39pop shops, the startups, we provide them with a mechanism to use our search for free. So we have quite a bit of community users that aren't paying us anything frankly and they're using the free service. Then we have zero
05:55to two fifty employee segment or one to two fifty employee segment Anywhere from a $3,000 ARR to $80,000 ARR. And typically what we see the buying pattern there is pretty consistent. They'll start off with
06:14one use case and one data set and usually within a quarter and a half
06:19to two quarters after the initial purchase there's already an expansion of that original use case and then into another use case. As we tend to move
06:28up market and we segment everything by employees, when you're in the mid market or mid enterprise for us that is all the way up to roughly about a thousand employees.
06:39The ASPs tend to obviously increase, they're anywhere around fifty to one hundred and fifty ks.
Nathan Latka
06:46That's annual average selling price?
Ramin Sayar
06:48Yeah, that's the annual contract value or ACV. And so that usually means that there's more than one constituent also involved in that process whereas the SMB market tends to be the same decision maker user is also the economic buyer. Whereas we move mid market or enterprise, it stands out to usually three to five people involved in that buying process. Who do we typically target then is probably the next question you're asking, right? Or thinking.
Nathan Latka
07:17Yeah. Well, what is the I'm curious what for each of those cohorts and I imagine you have sub cohorts in both of those but the SMB and then the mid market up to 1,000 employees in each of those segments. What's I mean, how many customers do you have? Are we talking thousands or hundreds in each of those segments?
Ramin Sayar
07:33Yeah, so we have well over 1,300 paying customers and typically what we see is about 51%, 52% of them are enterprise, the other 60% are mid market SMB. It's a good split. ACV basis or ARR basis, it's a little bit more tilted towards the enterprise than it is obviously mid market SMB. Just the amount of spend they typically would do with a public cloud, let alone a SaaS company providing services for public cloud usage.
Capital Raised and Investor Syndicate
Nathan Latka
08:08Yep, good. That makes good sense. Now we've kind of teased a little bit about where you are today and I wanna talk about where you see this industry going. Tell me real quick though before we go back and kind of get the launch story, where are you guys at right now in terms of capital raised or have you bootstrapped?
Ramin Sayar
08:22Well, you mentioned earlier we have the who's who of investor syndicate, right? So we're pretty well capitalized. We've done about five rounds so far and we've raised just over about 160,000,000 in capital
08:38And it runs the gamut of Greylock, Sutter Hill, Sequoia, Accel, DFJ, and IVP, and a few others.
Nathan Latka
08:48Yep. And, guys, I I... The reason I came across Sumo Logic is because we actually had... Ramin just mentioned DFJ. We had Tim Draper on the show back in episode one twenty nine at nathanlatka.com forward slash the top one two nine. And Tim is obviously the guy behind DFJ or one of the many people behind DFJ. So good. You raised about 150, $160,000,000 in capital. Now take us back to launch date. Ramin, when did you launch?
Founding Story and Vision to Democratize Machine Data
Ramin Sayar
09:14Yeah. So the company is just about seven years old and the vision when the company was initially founded and that was seed investment from Greylock back in 2010 was and still remains to democratize machine data. And so you might wonder what that means. Well, our founding roots came from really the security world where only a subset of users get access to all this data that's being generated and that time inside the enterprise and inside the data
09:46center. And our founders fundamentally believe that there has to be a simpler way to be able to expose more than just a subset of users to this massive amount of data. There's got to be a simpler way to be able to deliver this as a service versus requiring everything to be run and managed with traditional hardware and software and people. The third premise was there had to be an easier way to allow for analyzing this data
10:15in real time versus presupposing rules and correlations and look in the rearview mirror for this massive amount of data that was typically oriented around security analytics. So what was the point here? The team initially felt that there's gotta be a competitive advantage and technology innovation and innovative way to deliver machine data analytics as a service to not only the security professionals, therefore the security ops team or CISO and the analyst, but also a plethora of users
10:54that don't get access to that information, most notably developers and DevOps teams. So you fast forward all the way to today, we have well over 30,000 users in our system on an average day we're analyzing well over 100 petabytes of information. And every few
11:09days I'm adding another petabyte to storage. So you can only imagine how much I'm doing with AWS, right? So And what the purpose here is our vision was always and remains to democratize machine data. So we're constantly looking at innovative ways to reduce the complexity, reduce the cost, and improve the way and access to a plethora of users across our customers' organizations to be able
11:33to share, collaborate, and communicate more effectively with all this machine data running these modern apps.
Customer Stories: Visa and Medidata
Nathan Latka
11:39And Ramin, so can you tell a real story? Like I know Orange uses you guys. Can you tell a real story about how Orange uses you on a daily basis?
Ramin Sayar
11:47So we'll tell
11:48you a couple of stories. You know, one is a credit card payment processing company called Visa. So they've been a customer with us for a few years and we actually
Nathan Latka
11:58Small company, you know.
Ramin Sayar
12:00Yeah. And the interesting thing with Visa, they actually started in a in a cyber security use case and fraud detection use case. So they're extracting all of this occupying my data from the CDNs and looking at logins from around the world and looking at patterns because of our machine learning algorithm in the system. And couple years ago,
12:24they actually if you may recall, they launched a service with Apple around Apple Pay. And so, they actually were using us for business insights to look at activations per second, per minute, per hour, per day that's generating revenue, but at the same time, they're looking at patterns around, you know, how does this user from this location suddenly try to request multiple credit card applications at the same time. So those are fraud detection type of algorithms they're
12:53looking at while they're looking at the service. Let's use another example. There's a company called Medidata and Medidata is trying to disrupt the pharmaceutical industry in the clinical trials process. And they felt that there had to be a simpler way to provide a simple, secure and scalable service so that they can expedite the clinical trial process. And they tried for well over nine months with traditional on prem tools. And they ultimately came to Sumo and they
13:22realized, hey, we're gonna move to the cloud.
13:24We're gonna
13:24be using the public cloud infrastructure service. We need the way to guarantee and segregate this data so that we can pass our audit and regulatory requirements, but we can also improve the cycle times for how we analyze this data for our companies. So that's a great example of a different nontraditional tech company using tech and innovation like what Sumo provides to help transform an industry like clinical trials and pharmaceuticals.
How Sumo Logic Works: Data Ingestion and Use Cases
Nathan Latka
13:53So would you, I mean, Ramin, I wanna understand this. It sounds like, I mean, are you guys the plumbing that connects a lot of these applications together to make the data even possible or are you just helping people analyze the data once it comes out of the system so that they can do things like fraud prevention?
Ramin Sayar
14:07Good question. So at the lowest level, we assimilate or collect and ingest and analyze a plethora of different sources of data. Most notably is log data, it's event data, it's telemetry data and time series data. Okay? Then what we've done is we've purpose tailored the analysis in our ML or machine learning algorithms to really address three distinct use cases today. The first one is how developers, DevOps teams, tech ops teams, site reliability engineers, improve the way
14:40that they actually build and release their code to production. Okay? And so typically a lot of companies talk about DevOps and about this notion of continuous integration, continuous deployment. We help accelerate.
14:54CI. Okay?
14:55So how do we do that? Well, we tie into all the various tool chain vendors from your source code control system to your CICD tools and process and your downstream monitoring tools and we provide one single platform that analyzes all that information and provides the in context, the developer to the tech ops team, and even to security to get a holistic three sixty view. So we we refer to that as full stack visibility. Okay. So that's
15:20one use case.
Nathan Latka
15:20Yep.
Ramin Sayar
15:20The second use case is actually on the other side of the house, typically with the CISO, the security admins, the security analysts, and it's either because of audit regulatory requirements, fraud and risk, or security analytics states. So we're analyzing a lot of patterns. Why is this user logging in from multiple locations at the same time? We've never seen this pattern from these types of IP addresses. We've never seen these sets of nodes
15:49in the infrastructure connect outside. You know, we've never seen this type of activity with this application and, you know, what's real and not real or what's normal and abnormal. So our algorithm starts to look at the
Nathan Latka
16:02You're you're the reason you're the reason when I travel through Europe and I buy something in Spain on my BB and T card, and I've never done that before. BB and T shuts my account down and says, call us for fraud prevention. Right?
Ramin Sayar
16:12We're one of those platforms and services that use that.
Brought In as CEO: Aligning Founders and Investors
Nathan Latka
16:15Damn you, Ramin. Damn you. No. Just kidding. It's important. No. It is important. Good to understand. Hey. Let's transition because we've only got a couple minutes left. I wanna transition to some of the economic stuff because you've built an impressive business here. You've raised a significant amount of capital. Real quick on context, were you one of the founding folks or were you brought in by the investors as a CEO?
Ramin Sayar
16:33So actually, I joined just over two years ago, so I was not one of the founding, best founding members. And really, was brought in to help scale the company and take it to the next level and eventually take company public.
Nathan Latka
16:48Sometimes those transitions can be rocky. So for someone listening right now at that stage where they're raising around and the VCs are going, we need to replace you as CEO. How would you recommend based off your own story they approach that?
Ramin Sayar
17:01Great insightful question. You know, it really comes down to understanding what the core values are and what the culture of the company is and how does that relate to what the founders wanted in terms of the core values and culture of the company that created. If there is that odds there, then the first thing you need to do is make sure you address that. The second piece is making sure there's alignment between the investor syndicate and
17:29the founding members in terms of what the likely outcome will be for the company. Right? Sometimes CEOs are brought in to flip things. Other times CEOs are brought in to help scale the company. Other cases are brought in to turn over the team or change direction of the company, whatever it might be. You have to as a first time CEO or even as an experienced CEO, make sure there's clear alignment across the investor syndicate and the
18:00founders and executive team as to what the outcome and destination, the reason for bringing someone new in.
Nathan Latka
18:06To So are founders still at the company or have they moved on?
Ramin Sayar
18:10Yes. One of our two founders are... I say two of our three founders are still here. And I spent a lot of time talking to the founders of that time and trying to assess and understand what they really saw the vision and come the company and how does that match or not match or align with what the investors want. Fortunately, was a good alignment.
The ARR Question and the Move to Multi-Year Deals
Nathan Latka
18:30I mean, it sounds like you were brought... Yeah. It sounds like there's good alignment. You said you were brought in really to take this thing public. Right? And a lot of folks I've had on who are in the same situation, they're saying, Nathan, yeah, we're flirting with a $100,000,000 in ARR. We gotta be between kind of a 100, a 150,000,000 in ARR really to make a splash and go public and have it be successful. If I'm
18:48doing the math correctly, you said 1,300 paying customers, 50% are your, in your enterprise slug, which you said it has an annual contract value about a $100,000. A $100,000 times against 700 customers paying that puts you at 70,000,000 just on that cohort. That doesn't even account for your other cohort, which you said is about 50% on your user base. So you guys have to be flirting with that a 100,000,000 mark, am right?
Ramin Sayar
19:08We're somewhere in that range. Obviously, we're a privately held company. So,
Nathan Latka
19:13come on, Ramin. Give it to me, baby.
Ramin Sayar
19:13Yeah.
19:16We know we haven't had our fair share of bankers here lately. I'll leave it at that. But the other thing to also consider is that, we don't try to make customers consume more than they can initially. And that's the flaw with a lot of traditional software companies and particularly in enterprise companies. You know, we have to get reelected every single year. We have to prove value as a software software as a service company, you have to
19:46constantly fight to earn the business every single year. And so historically, we've done a lot of annual contract deals intentionally. Now what's happening is customers are, committing and signing up to more multi year deals themselves versus Sumo pushing for that. Okay?
Nathan Latka
20:04Because they're consuming so much in terms of utility.
Ramin Sayar
20:07Because we're become a strategic platform for them and they see the value for the, using Sumo Logic not just in one isolated use case like in security or operations, but also obviously in DevOps and public cloud. So while we land in one use case, we quickly expand another use cases and start to consolidate other tools out and start to align the teams and help provide better collaboration across those teams. And they want to commit to a
20:36longer period with us as a result.
Sales Cycles, CAC and Payback Period
Nathan Latka
20:39Makes good sense for me. Let's I have a few just last few questions here before we get into kind of the wrap up segment. So in terms of growth, you've raised a ton of capital, which means you have to have proven that you know how to spend money to acquire new customers. Let's just focus on your, on your money cohort, which is it sounds like that enterprise cohort with about a $100,000, you know, ACVs on average.
21:01What are you spending to acquire one of those kinds of customers?
Ramin Sayar
21:06So some of that varies by geography, to be honest with you. And, the enterprise segment for us is so broad. I mean, it's a thousand employees or more.
Nathan Latka
21:06Yep.
Ramin Sayar
21:06And so it it really depends with respect to the... Also the use case. Right? And when I first came in, were really focused on security. And these were longer sales cycles, therefore, the cost of sale were long... Was longer because we were doing displacements of traditional tools like
21:35SIEM tools, security information event management tools. We... I quickly realized that a lot of our users tended to be DevOps and tech ops, site reliability engineers, and we pivoted a little bit towards core competency to really address that modern app use case and the public cloud use case. Lo and behold, our cost of sale decreased considerably by more than 40%. The average new land deal also considerably decreased in terms of time. And so my point here
22:04is if it's security related versus IT ops related versus dev ops related, there's a different cost of sales associated with that initial land.
Nathan Latka
22:13So talk to me again about... Yeah. Talk to me again about CAC. You mentioned that you took something, it was high and then you decreased it by 40%. And what'd take CAC? What was it before you implemented that and what'd you decrease it to?
Ramin Sayar
22:24Okay. So obviously, for a SaaS company, LTV to CAC ratio that modern investors look for is a, the payback period and b, the magic number, s b three o and more. And so we're tracking at that number plus. So obviously, you know, we're tracking to that same number, but the other metrics we typically pay attention to obviously is gross margin and operating margin. And we've looked at all of our industry peers, we looked at all the
22:55companies that have recently gone public as well as historically gone public and we're tracking to those metrics that are required to eventually take Sumo out.
Nathan Latka
23:06Sermin, you mentioned your LTV to CAC ratio you mentioned is three which is a good industry standard, meaning you're spending one third of your total customer lifetime value on acquiring that customer. But you also mentioned payback period is being important. What is your payback period right now? Is it months or years?
Ramin Sayar
23:19It's months. And for enterprise software, it's very rare to see anything less than two years typically is the average that we're seeing.
23:31You know, obviously we're tracking below that, but it's based on the fact that we have this very viral land and expand selling model. Our sales process tends to be anywhere from three months to five months for a new logo land and expansion happens typically within a quarter to two in terms of that same use case and then eventually even to additional use cases as we cross sell. That's what's driving a lot of our cohort growth and
24:00cohort expansion.
Nathan Latka
24:03And so what, I mean, do you mind me asking what is your payback period? Is it six months or five months or nine months or what?
Ramin Sayar
24:09It's somewhere between that one and two year mark. I'll tell you that.
Nathan Latka
24:13One and two year mark. Got it. So, so between twelve, so again, your, your lifetime that your contract value on this enterprise space is somewhere around a $100,000 per, per year. So $200,000 over two years. And what you've said is your payback period is somewhere between a year and two years. So that helps us kind of understand, you know, you're spending maybe call it, you know, close to 6 figures for one of those enterprise fit kind
24:33of customers or new logo lands.
Ramin Sayar
24:35Yeah, the other thing you have to be considered of here is that, you know, we spend a lot on our infrastructure because we're having to analyze a lot of this data, right? And everything we do is real time and it's based off of in memory technology. And so initially our cost to acquire is a little bit higher in terms of, you know, addition of a new customer in a cohort, but the tendency to upgrade and expand
25:05really is fueling the, improvement in a lot of those ratios. So while we look at the enterprise segment or the mid market segment or the SMB segment, they all have different payback periods. They all have different land deals. They all have different ASPs, but average across them were tracking well at or above what's industry norm and what's required to take a company public as we've looked at all
Team Size and Headquarters
Ramin Sayar
25:30the comps in the industry.
Nathan Latka
25:30That's that's great, Ramin. Last two questions here on team. How many team members are you guys at, and where are you based?
Ramin Sayar
25:38We're about 250 or so employees. We're headquartered here in sunny Redwood City, California, right
25:45South of San Francisco.
Nathan Latka
25:45When I was recently in New York meeting dozens and dozens of you that listen to the show, I showed many of you guys my SaaS analytics dashboard. I also showed you my website and a conversion dashboard from impression to free trial to paying customer along with many other dashboards I use in my business like my social media command center and a few others. Now all of these are built with one tool. I
26:08just dragged and dropped them together. You can see how I did that at nathanlatka.com/analytics. That's nathanlatka.com/analytics. Now these dashboards guys are critical to my business. You know, I refresh them on my mobile phone right when I wake up in the morning, I roll over and boom, refresh. I'll refresh them right before I also take up on a flight because I'm just addicted to data and numbers. They drive my business. So I think they probably drive your
26:31business too. You can see my dashboards, how I use them at nathanlatka.com/analytics. Now if you go to the regular website, that's... The tool is called portfolio. You only get fourteen days free. You go through my link, you get ninety days free. So I got a great deal for you guys. It does expire. So you gotta go there now. Okay. Top tribe, I have to tell you many people go, Nathan, you came out of nowhere. Your website's
26:53growing so fast. How 'd you do it? The answer is simple. So I use HostGator. I don't know if you guys know that, but I use HostGator. And the reason I do, they have, like, about 4,500 free templates I can use because I don't code. They've got a great ecommerce plugin. And guys, I bug the heck out of their support. They've got twenty four seven support, which I love. So what I've done is I've worked with
Famous Five Rapid-Fire Questions
Nathan Latka
27:12them. You guys are gonna make great deals. If you go to hostgator.com/nathan, you can sign up, get your own domain for 30% off and a forty five day money back guarantee. Okay. Again, I make great deals for you guys. Go to hostgator.com/nathan to grab that now. Awesome. Alright. Let's wrap up here, Ramin, with the famous five number one. What's your favorite business book?
Ramin Sayar
27:36Good to Great.
Nathan Latka
27:41Number two, is there a CEO you're following or studying right now?
Ramin Sayar
27:44Quite a few, particularly big data space. Obviously, my friend, at Cloudera, and I wish them the best of luck as they recently filed to go out, mister Tom Riley.
Nathan Latka
28:00That's a good one. Number three, besides your own, what's your favorite online tool like Acuity Scheduling?
Ramin Sayar
28:04Online tool. Well, I'm a social media guy, so I tend to still use obviously Twitter, LinkedIn, more than anything. But I would say that
28:22I probably would argue that would be my most favorite because I use it most frequently.
Nathan Latka
28:22Twitter?
Ramin Sayar
28:22Twitter and LinkedIn, correct.
Nathan Latka
28:32Great. Number four, how many hours of sleep do you get every night?
Ramin Sayar
28:37That
28:38depends on the month and the quarter,
28:41typically around six to seven.
Nathan Latka
28:46Alright. Six and a half. And what's your situation? Married, single, you have kids?
Ramin Sayar
28:49I'm married to a wonderful woman, Samantha. We have two boys that are 11 and nine.
Nathan Latka
28:57Boys. And how old are you, Ramin?
Ramin Sayar
28:58I'm gonna be 45 this year.
Nathan Latka
29:01Alright.
29:04Take it home for us. Last question. Take us back twenty five years. What do you wish your twenty year old self knew?
Ramin Sayar
29:10I think that, if I was to look back and tell myself
29:17when I was 20 years old, the slow and steady path, the ability to absorb experiences through different companies and stages of companies,
29:29as well as refraining from jumping to the new thing and being patient to learn the skill as well as experience will pay off in the long run.
Nathan Latka
29:40There you guys have it. The slow and steady path will pay off in the long run from Ramin. He joined Sumo Logic two years ago. They've since gone on to raise again about $150,000,000 in total have 1,300 paying customers have a very healthy, three LTV to CAC ratio. Their payback period is between one and two years. Team of two fifty people based in Redwood City, California potential IPO candidate here in the next several years. We'll
30:06have to wait and see, but they're certainly helping thousands of customers again when it comes to data and data analysis, not only connectivity, but analyzing patterns and trends via their tool, Sumo Logic. Ramin, thank you for taking us to the top.
Ramin Sayar
30:06Very much.
Nathan Latka
30:06If you enjoyed Ramin today, go back and listen to Jerome from yesterday where he breaks down how to get your first 100 customers for your software company. It would mean the world to me
30:30if you guys got any value from this episode if you would go leave a review on iTunes right now and then subscribe. You know, I hustle. I have to get these episodes out every freaking day for you guys. And trust me, I love it.
30:42I would do it
30:43with no listeners, but boy, oh, boy, it makes my day and it makes my team's day when we see great reviews and get your feedback. So thanks so much. Okay, Top Tribe. I love giving away free money. I feel like, oh, we're giving away cards, and I have something special for you today. How many of you have heard our super sharp guests talk about success they've had with Facebook and Google Ads? Well, all of you listening
31:06right now... Yes. If you're listening, you get a $100 in free AdWords. Here's how you get it. K? Again, thanks for listening. Get the free $100 from Google right when you sign up with my website host provider, HostGator. Go sign up now to get your free money. Hostgator.com/nathan. Again, that's hostgator.com/nathan.