How Upfluence Reached $4M SaaS ARR and 1,000 Customers in 2018 (Interview with Co-Founder Kevin Creusy)

Introduction and Industry Leadership Claim

Nathan Latka

00:00Hello, everyone. My guest today is is Kevin Creusy. After launching three companies in ecommerce, 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 spend 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?

Kevin Creusy

00:18I am ready, Nathan. Okay.

Nathan Latka

00:20So first off, so industry leader is a big word. How do you know your industry leader?

Kevin Creusy

00:24Well, I mean, you have a couple of different way to think about leadership. Right? You have a technological leadership that we definitely have. We've been in here longer than almost anybody else. And then there is a market share leadership, which according to service, we are too. So it's a very...

Nathan Latka

00:41According to what?

Kevin Creusy

00:42According to service, we are too. I mean, like client service, we have a thousand customers and paying customers for industry. Most of them enterprise. That's not something most of our competitors can even get close to.

What Upfluence Does: Influencer Marketing Explained

Nathan Latka

00:52Okay. And and tech... Well, actually, let's back up here for a second. So for people that are not familiar with influencer marketing, help them understand what you do.

Kevin Creusy

00:59Of 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 wanna launch a new drink. And to talk about that drink drink today, you wanna 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 twenty years ago, baseball players and so on. So they wanna

01:23really 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,

01:46partner 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 for influencer marketing.

SaaS Model and Pricing

Nathan Latka

02:04And just to be clear, this is a a SaaS model or is this something more like professional services agency model?

Kevin Creusy

02:09This is a 100% SaaS. So all our clients are independent. They're actually they're actually using the software on their own and using it to do everything they want.

Nathan Latka

02:19And, Kevin, give me a general sense here. So in terms of what customers are paying you on average per year, are we talking, you know, a $100 or a million or 10,000? What is it usually?

Kevin Creusy

02:27Our our pie is close to $30,000. So it gives you a

Nathan Latka

02:27Per month per year?

Kevin Creusy

02:33Per year.

Nathan Latka

02:33Per year. Okay.

Kevin Creusy

02:34Yeah. So it's an expensive piece of technology, but once... I mean, once again, the RPA 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.

Nathan Latka

02:48Yep. Yep. Yep. No. That makes sense. Well, hold on. So... Okay. So it sounds like that is your that's your 30,000 ACVs 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 $10,000 a year or something like that?

Kevin Creusy

03:02Yes. Actually, overall, the entire company over five years, a thousand customers, I believe the average the average contract value of all our years was about $9,000 if you

Nathan Latka

03:02I see.

03:14Interesting.

Kevin Creusy

03:15Still an expensive software. Our smallest price that we have ever done was about $4,000 a year for a yearly contract, which is how we sell our tools today.

Nathan Latka

03:15Mhmm.

Kevin Creusy

03:15The most expensive we've ever done is in in the high 6 figures.

Nathan Latka

03:27Yep.

Kevin Creusy

03:27I mean, we got

03:28a little more than a $150,000. So it's And it can price you.

Nathan Latka

03:33An average ACV across a thousand customers of of $9,000, obviously, we can kinda do backwards math there. It puts you put you at about $750,000 a month in revenue or 9,000,000 in ARR. Is that generally accurate?

Kevin Creusy

03:44This is generally accurate. Correct. Okay. If you take away the... A few other factors. Correct.

Nathan Latka

03:50What other factors?

Kevin Creusy

03:51Well, 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.

Nathan Latka

04:03I see. Well, if we ignore customer count and ignore our put, generally speaking, in terms of ARR range, you're right in that 9,000,000 range today?

Kevin Creusy

04:09We're closer to six. Closer to six.

Nathan Latka

04:11Okay. Yeah. By the way, thank you for correcting me. I I know it's always tricky to like correct lower than correct higher. 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.

Company Origin: Agency to SaaS Transition

Kevin Creusy

04:23We are pretty we are pretty proud of what we've done. I I think the story of Upfluence is interesting too because we started as a tech company 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 influencer marketing. It wasn't even a a keyword on Google. Right? So we had to go and try to sell the tech, but nobody

04:45wanted to buy it. So we had to actually do service for three years, build the service business from 0 to $3,000,000 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

05:08would actually launch the software division of the company. So what we see in software usage today is really two and a half years old, which is

Nathan Latka

05:08That's great.

Kevin Creusy

05:08It's very news. It's very new.

Nathan Latka

05:17So 2016 was launch date?

Kevin Creusy

05:19Correct. Yeah. For the software. Actually, think our first contract is June.

Revenue Breakdown: SaaS ARR and Agency Revenue

Nathan Latka

05:23June? Okay. And just to be clear, the the 500 you just told her, 6,000,000 ARR today, that that is pure SaaS.

05:28There's not agency revenue built in there?

Kevin Creusy

05:30There is agency revenue about $2,000,000 and ARR and SaaS is 4,000,000. So it's like, yeah, it's 6

Nathan Latka

05:36if we cut that out... So if we... I wanna get a sense of just the SaaS component here. Right? So $4,000,000 in ARR, that puts it about $330,000 a month today. Where was just the SaaS business a year ago in terms of MRR?

Kevin Creusy

05:49So we hope next year we're going

05:51to be to 8,000,000 ARR next year in 2019, pure only software licenses. That's what we wanna go for. Company as a whole a little higher. Obviously, we still have service components, especially for enterprise customers. Something they they usually want to go for.

Nathan Latka

06:07Looking backwards though, so if you're at 4,000,000, say, were you a year ago?

Kevin Creusy

06:10Actually, we were at... We just passed the 100 k MRR, like, twelve months ago. So it... It's actually pretty fast growth.

Nathan Latka

06:18Okay. So you're... So about twelve months ago then, a $100,000 a month. Now you're doing $340,000 a month or about $4,000,000 in ARR. You're both three x ing, four x ing year over year.

Kevin Creusy

06:26Yeah. I mean, we hope... Probably not sustainable over the very long term, but we hope we can double up next year a little more. Like, three to... Yeah 6 to 8,000,000 is definitely the target.

Customer Acquisition Channels and Sales Process

Nathan Latka

06:37That's great. How are you... Walk me 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 SaaS product?

Kevin Creusy

06:45So 99%, I mean not. I don't have the exact number. I was at 90% of our customers plus are 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 of lead nurturing and lead acquisition strategies. What's interesting is we actually structured a sales team that's completely automated in terms of calendar bookings. So I I think when you have a sales team, the

07:10hardest 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 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 wanna talk to them. They

07:30do these calls with these people and then they convert about 10% of the people they actually speak to. A lot of people are still in...

Nathan Latka

07:36Convert into what?

07:37Convert them into a paying customer?...

Kevin Creusy

07:39Paying customer. Correct. Yes.

Nathan Latka

07:41Okay. And that... That's paying $10,000 a year or $30,000 a year?

Kevin Creusy

07:45Yeah. This is more 30, hopefully.

Nathan Latka

07:47Yeah. That's great. And what's the what's the team size today total?

Kevin Creusy

07:51Company wide, 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 Paris and France, Lille, and Switzerland, where we do a lot of tech development over there and, of course, like, customers management.

Nathan Latka

08:09And how many of the 62 are kind of marketing, sales, doing demos, things like that?

Kevin Creusy

08:15I think it's 16 people total, but I might be wrong. That's right. Could be 16 to 20.

Nathan Latka

08:22When 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?

Kevin Creusy

08:29So 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. Right? You don't know anything here. So when I moved here, was really alone. Right? I I just stepped down from being CEO to launch a software business inside the same company, so a startup inside the startup. And I met through a job offer on Linde... On on Linde, and I met this

08:52former actor of Shakespeare in the Park that wanted to do sales. And so he was this kind of funny guy. I hired him, and he's now... He's our SVP managing the entire team worldwide. So I hired an American to help me with the sales. I also sold myself. I think you cannot something if you can't do it yourself.

Nathan Latka

08:52Mhmm.

Kevin Creusy

08:52So I actually worked with him to make sure that we could grow the business to to actually...

09:21Yeah. The the first 100, the thousands of of monthly recurring revenue, I was here with him on the on the ground effort.

Sales Team Structure, Quotas and Compensation

Nathan Latka

09:27And Kevin, when you started hiring external salespeople 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? Is it like 10, 10 x, or five x, or how do

09:43you think about that?

Kevin Creusy

09:44Interesting. Yeah. It's it's a really interesting question, actually. Basically, today, if somebody follows a 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 cabs or a typical salesperson at our company, a senior sells about 500,000 a year, a junior between $250,000 and $300,000.

10:12So junior is before one year, senior is after one year. So it's kind of... By using the term little broadly here. They use... Mean the salary is about a third, a fourth of their salary. Between now it depends obviously how much you're doing because there is a commission component and then there is a fixed component. But yeah.

Nathan Latka

10:33So may I 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 junior is where they start out. They're expected to close about $250,000 in new ARR each twelve months. And

Kevin Creusy

10:33Correct.

Nathan Latka

10:33This year two, they'll go up to senior, which is a $500,000 ARR quota for the year.

Kevin Creusy

10:33Correct.

Nathan Latka

10:33And the... Their bases are basically one

10:55fourth of whatever their quota is.

Kevin Creusy

10:57Very true. Exactly. Perfect sum up.

Fundraising: Series A and Burn Rate

Nathan Latka

11:00Interesting. Very good. Have you bootstrapped the company or raised?

Kevin Creusy

11:03We 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 $4,000,000 that will help us speed up the growth process. So we bootstrapped before that. Painful years.

Nathan Latka

11:21How how many... When you raised the 4,000,000, how many months of burn were you raising for? What was your runway that that you had?

Kevin Creusy

11:28So, actually, we we were a cash flow positive company at the time. We became a cash flow negative company after raising funds like most companies do. So right now, our burn 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 100 and $200,000 a month depending on really what we wanna do. That brings us to about two to four years.

Unit Economics: CAC and Payback Period

Kevin Creusy

11:54Yeah. Correct.

Nathan Latka

11:54Yeah. No. 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 what are you spending?

Kevin Creusy

12:01It's actually this is really interesting. So I told you the the new customers we have, it's about $30,000. The customer acquisition cost is only about a fourth of that, which is actually... And it takes everything good. So it's actually a really good model, the one we built. It's about $8,000 to get a customer sign up of these values. The the the the CAC is actually smaller for a smaller customer, the low ACV people, but we stay

12:27around that metric. So, basically, after the fourth months, a client is is is bringing cash in.

Nathan Latka

12:34Yes. That's great. They're net positive no matter what size. 30,000 ACV or a thousand dollar ACV?

Kevin Creusy

12:39Correct. Yeah. My... More like 5,000. Yeah.

Churn and Net Revenue Retention

Nathan Latka

12:42Yeah. That's great. What about churn? What's what's revenue churn over the past twelve months?

Kevin Creusy

12:45Churn is between 2 and 3% a month. It's not something like... It's it's a little higher than most SaaS company you would have. Marketing is a complicated market because a lot of people come here, especially in in influencer marketing, to test things out. Right? They really are at the discovery stage. So a lot of people come in, buy the software, test it out. Does it work with their product? Does it work with their market? Do they know how

13:08to do it? And then they come and go. So here we have about like two to 3% of churn a month, which is fairly high and we're working on that to be honest. It's it's one of our key focus for 2019.

Nathan Latka

13:19Do you have good expansion revenue?

Kevin Creusy

13:21It's... So, you know, I I think not yet. To sum it up pretty quick, I I think, you know, as an entrepreneur, I... We 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're actually working on that

13:42these days. We have about about the same amount of expansion as as we have in contraction. So we're getting like... It's pretty neutral here.

Nathan Latka

13:54The net revenue retention is about a 100% on the historical cohort?

Kevin Creusy

13:58On contraction and retention and and expansion, correct. But then we have churn. So people that just leave entirely. So it's a different thing for us. Yeah. Yeah.

Nathan Latka

14:06But if you have 24% churn and 24% expansion, I mean, you guys at about a 100% net revenue retention on the cohort that signed up a year ago?

Kevin Creusy

14:13No. No. No.

14:14We are about 70%. Yeah. 70 to 75%. Yeah.

Nathan Latka

14:18Net revenue?

Kevin Creusy

14:19Yeah.

Nathan Latka

14:20Oh, 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.

Kevin Creusy

14:29No. I do. I do. So basically, have... Every month, lose about two to 3% of our customer base in value in MRR. And these people are people that are trying things out and kind of moving on.

Nathan Latka

14:41But are you adding back that same amount or no?

Kevin Creusy

14:44I'm adding that. I'm adding everything when I give you the churn numbers. So expansion minus churn minus people that leave the software minus contraction.

Nathan Latka

14:53Oh, you're... Okay. So you're not giving me gross numbers. When you just told me that revenue, that two to 3% revenue churn per month, that's not gross churn, that's net.

Kevin Creusy

15:00Correct.

Nathan Latka

15:00Oh, I see. I see. Okay. Got it. So then net revenue retention annually will be more like 75%. Got it.

Kevin Creusy

15:04Correct.

Venture Debt and Banking

Nathan Latka

15:05Yeah. Got it. Very cool. That's great. Now when you raise the capital, did you ever consider things like venture debt or did you just always wanna do equity?

Kevin Creusy

15:13That's very interesting. That's something we're looking into right now. We're looking to venture debt as we speak. So we actually looked at equity for our series a. For our future development that we are really interested in invent for us, especially for everything leading to maybe acquisitions, looking into maybe expanding, and so that's definitely something we're very, curious about. I think it's a very interesting new model that's developing.

Nathan Latka

15:36Yeah. We're... Are you gonna end up probably end up working like a Silicon Valley Bank or Hercules or Timia, are you looking at some of the revenue based financing models like Lighter Capital, SaaS Capital, etcetera?

Kevin Creusy

15:44Right now, we are a very happy Silicon Valley Bank customer. And so probably that's where we're going to look first. But, you know, it's an open market out there. So

Nathan Latka

15:54Yeah. You know, SVB, they they take, you know, they take those warrants. They sneak them in.

Kevin Creusy

16:00They do. They do. They do. But they have been good to us for for a while now.

Famous Five: Books, CEOs and Habits

Nathan Latka

16:04They're good. I'm I'm joking. They are great great people there. Alright. Very good, Kevin. Let's wrap up with the famous five. Number one, what's your favorite business book?

Kevin Creusy

16:12Probably The Hard Thing About Hard Things.

Nathan Latka

16:14Number two, is there a CEO you're following or studying right now?

Kevin Creusy

16:20Yes. Do you want probably the name?

Nathan Latka

16:22Yeah. Yeah.

Kevin Creusy

16:23I like Tony Shay.

16:25Number is Zappos.

Nathan Latka

16:26Number three. What is your billing tool that you guys use?

Kevin Creusy

16:30We lose... We use Recurly.

Nathan Latka

16:32And number four, how many hours of sleep do get every night?

Kevin Creusy

16:36Eight.

Nathan Latka

16:37That's great. In situation, married, single, kids?

Kevin Creusy

16:39Married.

Nathan Latka

16:40Any kids?

Kevin Creusy

16:41No kids.

Nathan Latka

16:42And how old are you?

Kevin Creusy

16:43I'm 30.

Nathan Latka

16:44Last question. What do wish your 20 year old self knew?

Kevin Creusy

16:50It's going to take a lot longer than you thought.

Nathan Latka

16:52Guys, it takes longer. Again, launched the company back... Kevin launched in the company back in 2016, spinning it really out of the agency, Upfluence, an influencer marketing platform. They've just crossed $4,000,000 in terms of ARR, another 2,000,000 on top of that in terms of professional services revenue. They have a thousand customers currently and that's what they just passed. They just recently raised $4,000,000 in equity, 62 people between New York City, Paris, and Switzerland. Net revenue retention

17:17about 75% annually spending about four months of ACV to acquire the customer. So a healthy payback period there. They are burning about $100,000 per month, but again, they have about two, three, four years of run rate 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.

Kevin Creusy

17:33Thank you, Nathan.