Upfluence Revenue & Funding (2024)

hello everyone my guest today is is kevin cruzy after launching three companies in e-commerce he identified an opportunity in the influencer marketing space he grouped up with three other entrepreneurs and became the founders of his current company called upfluence they then spent the next five years building the company into an industry leader we'll talk about it today kevin are you ready to take us to the top i am ready nathan okay so first off so industry leader is a big word how do you know your industry leader well i mean you have a couple of different ways to think about leadership right you have a technological leadership that we definitely have we've been in here longer than almost anybody else um and then there is a market share leadership which um according to service we are too so it's a very important tool according to service we are too i mean like client service we have a thousand customers and paying customers for industry most of them enterprise um that's not something most of our competitors can even get close to okay and and tech well actually let's back up here for a second so for people that are not familiar with influence or marketing help them understand what you do of course so i think a very easy way to understand what we do is think about coca-cola right they have a new product they want to launch on your drink and to talk about that drink today uh you want to go to social media influencers people on instagram people on facebook people on youtube that can talk about your product the same way celebrities used to do that 20 years ago baseball players and so on so they won't really find these people to do that today it's really finding a needle in a haystack it's really about finding the one person that matches exactly what you want them to say on the right network on exactly the right audience to do that manually is almost impossible so you need softwares to help you out you need a way to easily search for the right person amongst millions and millions of profiles find the right person go after them partner with them and then of course structure a deal to make them talk about you so if you're coca-cola we help you basically find the right guy we help you work with them we provide you with all the tools to draft a contract pay them in the end and monitor how good they're doing so it's it's really what we do as a as a software a foreign and just to be clear this is a sas model or is this something more like professional services agency model uh this is 100 sas so all our clients are independent they're actually um they're actually using the software on their own and using it to do everything they want and kevin give me a general sense here so in terms of what customers are paying on average per year we're talking you know 100 grand or a million or 10 000 what is it usually our alpine is close to 30 000 uh so it gives you one month per year yeah per year okay yeah so it's an expensive piece of technology uh but once i mean once again the oppa has been growing really a lot this year so people that came onto the software let's say two years ago would have had a much better deal let's say yup yup yup now that makes sense well well hold on so okay so it sounds like that is your that's your 30 000 acv is your starting price point today but if you look at your historical you see your entire customer base today on average you're saying they're maybe paying you more like 10 grand a year or something like that yes actually the overall the entire company over five years a thousand customers i believe the average the average card value of all our years was about nine thousand dollars still inexpensive software our smallest price that we have ever done was about four thousand dollars a year uh for a yearly contract which is how we sell uh our tools today the most expensive we've ever done is in uh in the high six figures yeah i mean yeah a little more than 150 000 bucks so an average acv across a thousand customers of of nine grand obviously we can kind of do backwards math there would just put you at about 750 grand a month in revenue or 9 million in arr is that generally accurate this is generally accurate correct if you take away the a few other factors correct what other factors well some of our users have one license that is used by let's say 16 different subsidiaries for example and it's not exactly structured the same deal we see them as one customer but as 16 users i see well if we ignore customer count and ignore our put generally speaking in terms of ar range you're right that nine million range today we're closer to six closer to six okay by the way thank you for correcting me i know it's always tricky to like correct lower than correct tire but listen a lot of people listen and they would know they go we know kevin was lying now they know they're gonna oh kevin's a good guy he's accurate we are pretty we're pretty proud of what we've done i i think the story of a prince is interesting too because we started as a tech company uh five years ago so we built the entire technology we have today but at the time and i think a lot of people can relate you had no influence on marketing it wasn't even a keyword on google right so we had to go and try to sell the tech but nobody wanted to buy it so we had to actually do service for three years build the service business from zero to three million dollars of revenue kind of like an influencer marketing agency powered by our own tech so only two years ago i actually asked my i was ceo of the company for that time i asked my co-founders to step up and and and take my job give me a budget and send me to new york where i would actually launch uh the software division of the company so what we see in software usage today is really two and a half years old which is great it's very new it's very 2016 last launch date correct yeah for the software actually yeah that's june okay and just be clear the 500 you just told her six million in er today that is pure sass there's not agency revenue built in there there is agency revenue about uh two million dollars and ar in size is four million so it's like uh yeah if we if we cut that out so if we i want to get a sense of just the sas component here right so 4 million bucks in ar that puts you about 330 grand a month today where was just the sas business a year ago in terms of mrr so we hope next year we're going to be to 8 million ar next year in 2019 uh pure uh only software licenses that's what we want to go for company as a whole a little higher obviously we still have service components especially for enterprise customers it's something they usually want to go for looking backwards though so if you're at 4 million say where were you a year ago actually if we were we just passed the 100k mr like 12 months ago so it's actually pretty fast growth okay so about 12 months ago then 100 grand a month now you're doing 340 grand a month or about 4 million bucks in ar so you're reacting forexing you're over here yeah i mean we hope probably not sustainable uh over the very long term but we hope we can double up next year a little more like three two yeah six to eight million is definitely the target that's great how are you walking through how you're getting these customers so signing up a thousand customers is not easy do all of them come through the agency or do any come directly into the sas product so 99 i mean maybe not i don't have the exact number we said 90 of our customers plus our new customers that find us online we have a bunch of acquisition channels that we use obviously cpc adwords you know all these kind of lead nurturing and lead acquisition strategies what's interesting is we actually structure the sales team that's completely automated in terms of calendar booking so i think when you have a sales team the hardest part is actually to motivate them to kind of always be on top of things like make calls like go close leads we actually took all that first part away so it's a team that's based in new york here actually right behind me and they had come up they show up in the morning and these leads have generated like eight to nine calls for them to do demos with people that want to talk to them they do these calls with these people and then they convert about ten percent of the people they actually speak to a lot of people are still interested in what convert them into a paying customer paying customers correct yes okay that's paying 10 grand a year or 30 grand a year yeah these days more 30 hopefully yeah that's great and what's that what's the team size today total company-wide uh it's going to be 62. i'm not if i'm not mistaken we have offices here in new york where we have 25 people and the rest are is spread out across um paris in france leo and switzerland where we do a lot of tech development over there and of course like european customers management and how many of the 62 are kind of marketing sales doing demos things like that i think it's 16 people brutal but i might be wrong that's right how did 16 220 when did you start kind of the inside sales model and did you start with a co-founder leading it or did you hire an external vp of sales or what so it's actually funny so as a european there is a big fear going to the us because we hear about the it's a new market rate you don't know anything here so i when i moved here i was really alone right i i just stepped down from being ceo to launch a software business inside the same company so startup and said startup and i met through a job offer on linge on england i met this former actor of shakespeare in the park that wanted to do cells and so he was this kind of funny guy i heard him and he's now he's our svp uh managing the entire team worldwide so i hired an american to help me with the sales i also sold myself i think you cannot delegate something if you can't do it yourself um so i actually worked with him to make sure that we could grow the business to to actually yeah the first hundred thousands of uh of multi-recording revenue i was here with him on the on the ground i thought and kevin when you started hiring external sales people and you have to put together a comp plan and you have to project you know what the quota is and how many months to ramp up i mean what is that number today how many months to ramp up and then how do you what's the ratio of their kind of base pay relative to what their quota is like 10 10 x or 5x or how do you think about that yeah interesting and yeah it's a really interesting question actually um basically today somebody follows the training program for about five days when they get in and right away we we throw them in the in the pit on our smaller value calls for three months they're going to be trainees after the third month we see that the old cab so a typical sales person at a company a senior sells about half a million a year a junior between 250 and 300 so junior is before one year senior is after one year so it's kind of by using the term little broadly here um and they used i mean the salary is about a third uh a fourth of themselves so yeah between oh it depends obviously how much you're doing because there is a a commission component and then there is a fixed component but yeah so let me repeat that back to you they come in there's a five-day training program there's three months we're on our on training calls with smaller acv kind of accounts and then the juniors where they start out they're expected to close about 250 grand in new ar each 12 months and when you go to this year two they'll go up to senior which is a 500 000 ar quota for the year correct uh and the sal their bases are basically one-fourth of whatever their quota is very true exactly perfect summer interesting very good have you bootstrapped the company are raised we bootstrapped everything until six months ago where we actually raised i think it was six seven months ago time flies but we raised a first series a round of uh four million dollars um that will help us speed up uh the growth process so we bootstrapped before that painful years how how many when you raised the four million how many months of burn were you raising for what was your runway that you had uh so actually we we were a cash flow positive company at the time uh we became a cash flow negative company after raising funds like most companies do so right now our bond rate is i mean pretty much two to four years depending on how we're doing depending on the month but yeah it's basically we burn between a hundred and twenty thousand dollars a month depending on really what we want to do that brings us to about uh two to four years yeah yeah that's great that's really great and then talk to me about some of the other economics here so cac to get a new paying customer what are you spending it's actually this is really interesting so i told you the uh the new customers we have it's about thirty thousand dollars uh the customer acquisition cost is only about a fourth of that which is actually and it takes everything includes so it's actually a really good model the one we built uh it's about eight thousand dollars to get a customer sign up of these values the the the cac is actually smaller for a smaller customer the low ac people but we stay around that metric so basically after the fourth month a client is is is bringing cash in yes that's great they're not positive no matter what size 30 thousand acv or a thousand dollar acv correct uh yeah my more like five thousand yeah yeah that's great what about churn what's what's revenue trainer over the past 12 months sean is between two and three percent a month uh it's not something like it's it's a little higher than most sas company you would have uh marketing is a complicated market because a lot of people come here especially in influencer marketing to test things out right they really are at the discovery stage so a lot of people come in uh buy the software test it out does it work with that product does it work with our market do they know how to do it um and then they come and go so yeah we have about like two to three percent of churn a month which is fairly high and we're working on that to be honest it's one of our key focus for 2019. do you have good expansion revenue it's so you know i think not yet uh to sum it up really quick uh i i think you know as an entrepreneur i we move in silos right so first we try to sell the software and then we move to second step which is okay let's take care of our customer really well and do cs and then we move to how can we upsell them how can we cross-sell them we are actually working on that these days we have about about the same amount of expansion uh as as we have in um contractions so we're getting like it's pretty neutral here the net revenue retention is about 100 on the historical cohort on contraction and retention and extension correct but then we have churn so people that just leave entirely so it's a different thing for us yeah but if you have 24 percent churn and 24 expansion i mean are you guys at about 100 percent net revenue retention on the cohort that signed up a year ago no no no or about 70 yeah 70 to 75 percent net revenue yeah oh interesting okay so i mean that that means you're churning if you so i i guess when you told me 24 revenue churn you're not including people that cancel entirely no i do i do so basically we have every month we lose about two three percent of our customer base uh in value in mr uh and these people are people that are trying things out and kind of moving on but are you adding back that same amount or no i'm adding that i'm adding everything when i give you the chart numbers so expansion uh minus uh churn minus people that leave the software minus contraction oh you're okay so you're not giving me gross numbers when you just told me that revenue that two to three percent revenue term per month that's not gross turn that's net correct oh i see i see okay got it so then net revenue retention annually will be more like 75 got it correct yeah got it very cool um that's great now when you raise the capital did you ever consider things like venture debt or did you just always want to do equity that's very interesting that's something we're looking into right now we're looking to venture that as we speak uh so we actually looked at equity for our series a for our future development that we're really interested in inventing that inventor especially for everything relating to maybe acquisitions uh looking into maybe expanding and so that's definitely something we're very very curious about uh i think it's a very interesting new model that's developing yeah we're gonna probably end up working like a silicon valley bank or hercules or tamiya or are you looking at some of the revenue based financing models like lighter capital sas capital etc right now we are a very happy silicon valley bank customer um and so probably that's where we're going to look first but you know it's an open market out there so yeah you know svb they take you know they take those warrants they sneak them in they do they do they do but they've been good to us for uh for a while yeah they're good i'm i'm joking they are great great people there all right very good kevin let's wrap up with the famous five number one what's your favorite business book probably the hot thing about hot things number two is there a ceo you're following or studying right now um yes uh do you want probably the name yeah yeah i like tony shea number is zappos uh number three what is your billing tool that you guys use we lose we use rick early and number four how many hours of sleep to get every night eight that's great in situation married single kids i'm married any kids no kids and how old are you i'm 30. last question what do you wish your 20 year old self knew uh it's going to take a lot longer than you thought guys it takes longer again launched the company uh back kevin launched the company back in 2016 spinning it really out of the agency up fluence and influencer marketing platform they've just passed 4 million bucks in terms of ar another 2 million on top of that in terms of professional services revenue uh they have a thousand customers currently that's what they just passed they just recently raised 4 million bucks in equities 62 people between new york city paris and switzerland net revenue retention about 75 percent annually spending about four months of acv to acquire the customer so a healthy payback period there they are burning about a hundred grand per month but again they have about two three four years of runway because of the money they just raised as they look to scale and maybe raise some additional venture debt kevin thank you for taking us to the top thank you nathan