How Trendkite CEO Erik Huddleston grew Trendkite to $10M revenue and 1K customers in 2017.

hello everyone my guest today is eric huddleston he's an expert in pr analytics and big data before leading his current company trenchite he ran product for sprinkler after the merger with social analytics firm docus group he brought to market daka's group's platform that enables brands to optimize paid owned and earned tactics through the lens of earned media eric are you ready to take us to the top awesome all right so let's start first at sprinkler we just had our g on actually very recently shared with some revenue numbers you know doing a well over 180 million bucks a year now interesting lawsuit just filed against him 50 million dollars we'll see i'm sure he'll be fine there but what did you do at sprinkler and why leave to launch trend kite yeah absolutely so i ran product for raji and they are doing a phenomenal job after they acquired a duchess group which uh uh i built a big data analytics platform they analyzed social data that helped brands and their agencies to optimize their paid under activities and that was acquired uh by sprinkler to to really get uh a core of an analytic engine uh and then some deep benchmarking we had uh we had built uh a map of about 50 000 companies in their brands across all their geographies their social footprints and then uh did deep benchmarking of uh the performance of all of those so while you know sprinkler is is obviously going to be a phenomenal success the real lure uh of uh of trinkite really is firmly uh entrenched in earned media if you if you back up and you talk about the the way that that cmos think about about media they think of it in terms of paid owned earned and shared you know so paid you can think you're buying you know display ads etc you know if you own this is like your blog post your website uh even to an extent your your own social presences shared this is conversations taking place on social media and then earned you're really talking about the the high credibility uh endorsement that comes from third parties so eric when did you launch trend kite uh i was employee number seven uh got here in the middle of 2014. uh and the company uh was started uh a year earlier by a couple of guys that went through an accelerator called dream it okay so is 2013 launched now did dream it strategically place you at the company after demo day or how did that happen so after demo day uh they uh they pulled together an investment from uh a austin focus firm called silverton uh and i was very familiar with the silverton guys uh i i are there i was not uh but uh their uh their founding uh partner uh invested uh in the company i did all the way back in 1993 so we we knew each other for a while and uh we uh you know so they introduced me i put them in a couple of customers the customers loved it uh and so was it a contingent financing though was your partner at silverton he was only going to do the deal and write the check in the trend kite if you joined a ceo all right yes that's exactly how these work yeah exactly and at the same time uh mercury fund which at the time was a dfj affiliates now independent uh also uh invested uh to to build that round and then you know we got uh momentum uh spent 2014 figuring out the unit economics uh on the business uh attracted an investment from battery ventures how much have you raised to date uh we've raised about 37 million 37 okay and what is the so let me go quick back to the early story and then i want to get kind of fast forward to where we are today i mean when you come into a company like that a year after the kind of the founders created how do you do that in a gentle way right like how do you i mean you know what you know what i mean you know what i'm asking how do you do that gently yeah we were radically aligned and the company was very small i was employee number seven uh and you know we had a handful of customers uh so it was early enough that you didn't have a lot of the the the pain of of an external uh ceo okay but still i mean there was a financing it was contingent on and you coming in as ceo that means they didn't think the current founders could i mean there's hard conversations there right so the reason i'm asking this is for other founders right now maybe going through demo days and they're looking at rounds where there's a ceo contingency right from outside coming in how should they handle it how should they view it yeah you know i'll look at it two ways in the trinket case i think the guys probably could have kept going uh i think they made the conscious decision that they could accelerate the pace of success and innovation uh if they brought in an external ceo now then for for founders that may may not have you know that option or even those that that do you know they really they really need to look at it at a trade-off of the enterprise value that they can create over what time frame uh and you know if they're confident that you know they can kind of eke it out uh with less capital uh and have a fantastic outcome in a time frame that that works for them then they they should say no uh but if they're either not confident in their own abilities or if they're confident that uh that an external ceo could radically accelerate you know time to you know kind of critical mass uh then then it makes makes total sense okay let's let's now focus on kind of where you are today so you know pr plus analytics put together give us a story a customer story how they use you absolutely uh so you know uh customers uh leverage us name one though can you tell me a specific story sure uh let me let me think of it of a great customer so you know like uh uh you know nike leverages us to uh understand the impact of their image uh across you know geographies you know because it's it varies radically based on you know what sports are hot in those countries you know who the endorsers are there the you know the footwear uh and accessories that uh that's that are in vogue uh in in those geographies and you really want to understand uh how people are talking about uh though that uh you know your your brand image uh at at a high level and what i mean it sounds like this is gonna a high touch high acv kind of model but i mean what are customers paying you on average are we talking 10 bucks a month or a million or 100 000 uh you know it's actually pretty you know it's pretty transactional for uh in the grand scheme of things so you know five figures to low six figures annually or monthly uh annually annually okay got it so i mean we'll say conservatively 50 all the way up to well over 100 grand i imagine you have some outliers up there we do um okay great and and you mentioned you spent a long time well not a long time but you spent a full year figuring out unit economics so so before you put a focus on that like first off what made that a priority was churn really high or something no it's just you know it's what i'd encourage any entrepreneur to do when they're starting out you know once you you kind of understand what you're building and and how it's going to be valued uh your very next task is you've got you you need to figure out a model where you can efficiently scale uh your distribution model uh and and so you know our value prop to our customers uh at that time was you know quantifying the impact that the pr had on their their media outcomes and then helping them to optimize that that was very well understood uh and you know so i had confidence in that what i didn't have confidence in was you know how we could efficiently scale uh our sales engine uh to hit the growth rates that we wanted to hit which was you know sustained triple digit growth rates you know sort of bad infant items so uh we spent all of our time ensuring that we understood uh the cac payback period what are you optimizing the payback period for right now what's up what are you trying to optimize payback period for right now uh eight months on a gross profit basis got it so you must i like that you said it like that a lot of people don't multiply by gross profit in the at the end of the equation but you do so it's a true it's a true it's a true measure well it's because what you really want to know is two things you know you want to know how much cash it's going to take to acquire the customer and you want to know how much of that's going to be left over for you to reinvest in getting the next customer so you know how long is it going to take and i actually look at uh at payback period both on a revenue basis and a cash basis uh which are you know if you have you know any kind of payment term variance uh can be very different yeah paid up front versus not paid two years up front whatever yeah interesting so on an eight month payback and minimum acv in that 50 grand range you said five figures up into the six figures i mean you're paying north of 33 grand to acquire these customers or at least you're comfortable paying that much maybe you get some lucky deals but we actually we have phenomenal unit economics so so our cac is very low that's great well i mean yeah that is i mean with an eight month though and a 50 000 acv i mean that would be about your cat right 33 grand at a minimum uh you know i i won't go into what our our actual deal sizes are uh so just be clear eric i'm multiplying your numbers you said earlier your minimums are in the five figures and you go into the six figures and then and then you decided it was 50 grand so i'm just saying that's not a that's not a subject that i'm getting oh god i got a guy these are well i mean so five figures i mean so okay it could be as little as 10 grand all the way up to 90 grand right so there's a big range there so i mean what i hear what i hear you saying is you know you're not going to spend 33 grand on a 10 grand right per year customer yep yeah got it sorry my misunderstanding there um okay take me back to some of the kind of team orientation so what do you have today in terms of size and how are they oriented we've got uh over 200 employees now uh which is up a lot uh from seven in 2014. uh you know it's uh the classic breakdown for a month for you know b2b sas company that does a lot of you know inbound outbound telesales uh so you know we've got probably 75 uh you know quota carrying reps uh 75 out of the total 200 wow that's a big chunk of your team our sales folks and that's bdr sdrs inbound qualifiers prospectors like the whole there's a lot of people in that but yeah that's great and then and then are they i mean so you're running you're running a pretty typical playbook like what do you have a ratio of kind of sdr to ae like account executive or what are kind of internal ratios look like for your machine yeah so you know that uh that that depends on the uh you know the quota capacity of the reps so the more senior you are the more marketing support you get on on from an outbound standpoint the more inbounds you get allocated to you so we actually do something uh that i call dynamic cac allocation so uh we'll actually bias more support resources to our most efficient closers and then we'll also build kind of a portfolio an account portfolio that has a different mix of you know high value mid value low value uh uh accounts depending on how effective they've been executing interesting it depends and at what frequency do you tune that machine is that a quarterly kind of review or annually or uh weekly well you do you do that bi-weekly yeah you you'll change your whole team infrastructure bi-weekly uh what what you're really doing there is the your you're tuning the account allocations and the amount of support that they're getting interesting okay good and where's everyone based where's home uh we're headquartered in austin we have folks in the bay area we have an office in london those are the three big ones those are the three big ones okay and then dogs cats and then take me in i mean you've done this before you've mentioned in economic unit economics many times where are you at now today in terms of either churn or retention whatever you want to talk about whatever you kind of watch closer uh you know kind of industry standard okay so north of 90 in terms of logo retention and now have you hit negative you know negative net revenue churn uh yeah we're close churn rates aren't something we talk about although you know that's that's obviously you know where we like to be okay i mean most companies i mean many of the folks i've had on that are in the 100 million ar range they've nailed that negative ar turning i have to hit that really in most cases so it's fair to say you know you're getting there it sounds like you you're very sophisticated in terms of how you're set up your sales team so expansion revenue is probably something you've also nailed do you have pretty predictable uh a pretty predictable kind of year one to year two to year three expansion uh cohorts and you know how those are gonna perform year one to year two i mean you think about it 2014 to 2017 um you know we uh we're like a toddler uh stuck in a teenager's body right so um you know we really started to figure out expansion you know literally in the last 12 months got it yep and what are the levers you're teaching that team to pull to drive expansion is it additional feature sets or additional seats or some other utility or numerical value uh so you know part of it is identifying accounts where there's expansion opportunity you know one of the things about our install base is you know we work with you know virtually every uh vertical in every geography enterprise into mid-market there's some like you know smb-ish kind of things you could be like a pr agency with two guys and a dog but you've got like you know coca-cola is a client or something uh but you know that's very austin by the way [Laughter] yeah so you know the the uh you know that aside if you can identify where in that account base there's geographic expansion brand expansion uh business unit expansion you know subsidiary parent company relationship expansion then you can do land and expand and then we've got like a very large very brutally uh efficient uh development organization that uh that cranks out uh new products uh at a pretty fairly healthy rate so we've we've launched two major products uh this year and you mentioned you like to kind of go year over year at least in the triple digits at least at your current size until numbers get you know you know you know 100 million kind of ish range where it gets harder um you think you'll hit that in 2017 you'll be in the triple digits uh we we should and we should be able to in 2018 and then the law of gravity will kind of take it back three x three x three x two x two x two x two x ipo right yeah yeah all right good stuff and then um what do you have now today in terms of customers how many folks are on the platform a few thousand okay couple thousand that's good can we say below ten thousand but above a thousand oh yeah is that enough for a good enough range yeah i want eric i wanna give you i wanna give you enough credit but also let you hold on to some vagueness so that everyone doesn't know what your p l looks like you know what i mean all right good so we'll say again with a thousand customers and you corrected me earlier let's say you know minimum acv is 10 grand right you guys are north of kind of 830 grand a month in revenue potentially well north of that because you've got contracts significantly yeah significantly bigger do you want to put a cap on that or just leave it at that minimum well we'll just leave it we'll leave it at that middle again out there that's fair so well north of 833 grand a month or said differently well over a 10 million dollar run rate healthy uh healthy growth there eric let's wrap up here with the famous five number one what's the last business book you read oh my goodness uh ray dalia's uh new book principal phenomenal yeah is a good one number two is there a ceo you're following or studying right now that's actually that's actually a good one you know if i were talking about the home team uh here in austin uh you know you've got heather bruno over at wp engine who is you know kind of uh our our big sister so i always watch closely what those guys do uh so uh they're like a full a fullback uh you know making all the tackles making all the blocks for us uh making it easier uh and you know and then i've been uh i've been watching you know pretty closely the you know kind of the uh the the nuanced uh work that apple's been having to do here that's uh you know as they uh has it kind of matured the product line and uh you know i think that that's that's been fascinating particularly what do you talk eric what are you talking about talking about uh you know kind of this the stagnation of of of apple uh radical innovation you know from a scale where's the growth going to come from after the iphone exactly yeah okay number three what's your favorite online tool besides your own whoa um i'm a huge uh mind mapping guy so i love mind meister love asana uh it allows me to to scale up on the team and then uh we're massive slack users number four how many hours of sleep to eat every night uh between five and six that's pretty good and then what's your situation married single you have kiddos married with four kids four holy mackerel how old are you i'm 42. 42 last question eric take us back 22 years what do you wish your 20 year old self knew holy cow i wish my 22 year old self would have decided to graduate in seven years instead of two what do you mean by that oh i uh i ended up getting involved in technology uh very early on and uh so i evolved out of college versus you want to say you think you should have stayed in longer oh yeah really most people say the opposite they say i wish i would have started earlier yeah no stay in college longer there guys have it from eric did a lot of important work at sprinkler before he branched out joined the company back in 2014 the company was founded in 2013 it's called trend kite went through dream it adventures acceleration or accelerator program then did a round of funding contingent on really eric coming in helping the founding team grow the company scale it they've done just that they raised about 37 million bucks in total they've passed 200 folks between austin san francisco and london combining pr and pr analytics super healthy economics he optimizes for an eight month payback period with minimum contract values in the 10 grand range rain and then also going well up well north of the six figure range again a thousand cust well over a thousand between a thousand and ten thousand customers currently doing well north of ten million bucks in arr with healthy healthy growth year every year eric thank you for taking us to the top really appreciate it