How UserZoom CEO David Murphy grew to $75M revenue and 1K customers in 2021.

hey folks my guest today is alfonso de la noes he's building a tool you've probably heard of it called userzoom.com the experience insight management company that helps businesses gather and manage the insights they need to design and deliver an exceptional digital experience they've raised over 150 million bucks and backed by silicon valley investors sunstone capital and al rock alfonso are you ready to take us to the top i am thank you for having me again so hey real quick for people that missed our last interview from april where you shared i believe that you had just passed about an 80 million dollar run rate and a thousand customers correct correct yeah so help me understand you know this is a very frothy space like user feedback in general how are you positioning yourself i mean there's a clue on your bio where you used a very specific word right experience insights management platform is that what you're trying to brand and own correct yes we are um to be honest with you experience insights management is a little bit of a visionary uh way of positioning ourselves in a market where right now there's a bunch of companies specializing in ux and a bunch of companies specializing in cx and then there is other companies that are talking about experience management such as the case of qualtrics um you know there's momentive which is the new surveymonkey also providing feedback there's a lot of survey tools out there and then there is others like user zoom which focuses on the product experience and user research and user experience research usually takes place in the pre-production stages nathan which is where you're kind of in the discovery stage when you're designing and your prototyping and you know solutioning as we like to call it and then you do some validation and some testing and across all these stages of the life cycle of the product development product design development life cycle you want to be in touch with those users before they become customers now once you become customers there are multiple ways to measure and track experience and so we come in with specific methodologies and metrics that provide more much more than just a survey you know much more than just a feedback mechanism but you know you can also do qualitative research you do one-on-one interviews you can do unmoderated sessions where you ask them to complete certain tasks not just questions but tasks and we record everything they do so we combine kind of attitudinal and opinions with behavior data and video is this a marketplace though like can i as a sas tool pay you to go find people to test my software and you record them testing it doing an action i asked you to do it or are you enabling me to get this data from my customers directly you can we our customers use the product as a self-service so you don't actually need to ask us for anything we just give you the login and password and you as a company you know you have probably a you know multiple products or properties digital properties you can test your properties or you can test any url uh you know competitors or any other website that is accessible through a web browser so so who do you like if you take off and and you you like crush it like who do you kill i mean does pendo go out of business if you do well no in fact pendo funny enough this very morning you know we were discussing this vendor is a great ally or or partner because they're very much specialized in product analytics right they do provide feedback but it's a very simple you know feedback you know you do you like it or not but their their core business is analytics product analytics that's more specialized in the what's going on like what are we use pendulum by the way our product team uses pendo and uses user zoom and a bunch of other tools but that's more analytics and what's happening the visits the monthly active users like activities that we call cold data it is very important but that's different than user research which is when you actually engage in a conversation and you um ask people to complete certain tasks and you record everything they're doing so we're not just saying what we actually focus a lot more on the why and how they do what they do yeah so very very compliment very much you know it is it is it just it feels so like you feel so close to pendo and you both feel so close to like hot jar and smart look i just i wonder why there hasn't been a mass sort of like merger between all it's happening nathan is happening look tell me square just well let me tell you so uh first of all the the whole thing i consider the whole thing this product experience um digital experience market right i mean i see that as a as a digital product cloud and you know research insights cloud you know that that's the category i can see okay that's why we call it experience in science management you know for digital um there are more of what we call passive insights which is analytics those that you know will collect information and and data uh code data on on um you know once you're live once the product is live and then there's others like including user zoom that are more active uh research platforms this is when these are these are products that allow you to connect to your users and ask questions and probe them and have conversations right so what is more analytics dealers is uh is uh user research and as i said earlier um customer experience is all about feedback management and asking people once you go live the other one uh user experience research is more about design and and understanding you know how to build a digital experience right a digital product all of these guys right now all of these vendors all these solutions are you know kind of separated and and there's a little there's little categories for each but what's happening in the market and i can see it you know happening is that there's going to be convergence so for instance um content square just acquired hotjar i think the news hit this morning right um then you see um uh you know you see qualitative and you see customers i talk to customers all the time that think that qualitative and quantitative they need to be paired up and they don't look at what customer experience user experiences two different completely different uh categories they actually like to see it as an experience category right you see uh qualtrics which is one of the leaders if not the leading company is doing you know uh uh brand research and market research and and they're also doing product and design research as well we offer a whole lot of ux tools ux solutions for for user testing and user experience research but we also offer surveys for more marketers and e-commerce and uh you know quantitative analysis so i think what we're seeing is that over time we're going to see convergence we're going to see um you know that you're not going to have separate teams working on separate things but everything is going to be about the experience that the end users have yeah how much revenue do you think hotjar uh hotjar had you know uh the press release this morning actually didn't say um you know they didn't specify the the terms of the deal which kind of leads me to believe that it was a fairly fairly small deal i don't know maybe wrong but so don't quote me on that but you know clearly under under 100 million like like right based on what i knew and the fact that hotjar was much more focused on smb you know i think they probably were somewhere in the 10 to 20 million it's my guess were you were you looking at the deal at all no no because hodger again is analytics hotjar would be the the the basic tool that you need to to understand what's happening with your with your website right so um you know you have google analytics you have pando you have uh hotjar doing some things and some behavior with heat maps as well so they wanted to kind of kind of take it to the so-called advanced analytics just you know a little bit more but they're not really in the user research space the way we are positioned again you're not having direct conversations with users and you're not using hotjar before it goes live before the product goes live so that's why we were not looking at people people will use you as they're doing product research before they launch the product to do to do testing in fact most of the times most of the times they'll test with prototypes with wireframes that's a great that's a great sort of way to delineate like pre-product versus post product that's exactly how i explained that's sorry if i didn't explain that more uh correctly to you or more in detail i'm just slow i'm just slow no that's okay but you know you're not alone trust me i'm telling this story to a lot of people but actually the one way to make it very simple to delineate or differentiate is that one is a lot more uh used and dedicated and and you know positioned in the pre-production stages versus the post-production stages that's one way to look at it yeah yeah yeah really interesting okay so when you came on you're doing about about four or five months ago you had done about 6.5 million i think and like recognized mrr in april what are you guys up to now today um we are i mean i'll give you the basic the the numbers in terms of run rate and for for the year i mean right now we're looking at clearly uh surpassing and the 80 million dollar run rate because we grew when we spoke to you we were growing at almost like i would say 45 40 to 45 we're now growing at 55 so it's not a hell of a lot more it's not like we're doubling in growth but we are growing more will you break dollar run rate by december so eight point three million dollars yeah revenue this december no i think we will buy i think we will well i mean run rate maybe but i think we will be actually we will be over a hundred million by q1 is what we're anticipating yeah that would be i would be surprised if we don't do that do you want to look at you getting there by you growing your your acv above that 80 000 average or will you move down market and try and widen your top of funnel more mid market smbs actually both uh it's a great question and we're talking about both we need to do both by the way how do you do both aren't those very different paths isn't it distracting yes but it's it's what is it's what it takes to scale uh you know we we want to go public next year by the way so that's our target right and if you want to go public you need to show that you're able to grow in both expansion dollars as well as new bookings or new logos so what we have is as a strategy right now go to market strategy that up until now we've been focusing quite a bit on you know really expanding our current accounts i mean we're seeing some rnr for instance i think last time we spoke with 120 we're looking at 125 right now so you know we're even doing even better in that sense but we also want to see more companies come in at the in the you know kind of in the in the starting point or the the low end you know with 12 000 or below per year to come in and start working you know maybe doing some some basic testing and then upgrade them in the future you know kind of a land and expand strategy so we want to see uh we want to see both of those growing uh you know um like right away today [Music] walk me through how you're actually practically doing that do you set up individual teams to focus on the higher volume lower rpo and another set to go drive expansion revenue to your biggest accounts we do we do how does it actually look well so it's a different uh it's a different go to market strategy right and so what we did is we we have the pricing models and then we have different products in our case we actually actually have even different products so if you go to our site you'll see there's a uc musician go uh which is the former validate lee that we acquired two years ago this was a very simplified kind of like a light version of our enterprise account uh enterprise uh solution and you know it's cheaper it's more affordable it's it's easier to use and it's less feature rich all those things are are there and so you know we we use a tech touch approach or semi-tech touch approach where we have a team of people that will sell that type of license and that type of product with a different with the pricing model right it's still an annual subscription so you know we still have you know um the same uh in terms of how we engage with customers but it's going to be the starting point and we assign a team of people and marketing as well to to work on those uh on those opportunities and then we have the enterprise team that works on higher deal you know higher value deals uh and they often work together of course i mean we're seeing that's actually one of the things that i like the most about and our cross speaks about this talk about an escalator right and we see that we have a lot of companies that are started in uc go are actually moving up because they're maturing or they want more or they want you know more capabilities et cetera et cetera and and you mentioned last time you had 50 quota carrying reps what what is their quota annually right i like most the reps i'm sure there are some that are just starting where their quota is smaller but when they're at full capacity what is the quota target i think we're 1.4 1.4 somewhere around that yeah pat and how do you handle giving your csm your customer management manager is a book of business do you give them like a million and say you're responsible for hitting 25 expansion in this or how do you do that yeah very good question i'll tell you i'll tell you i'll answer the question telling you where we came from and how we're doing it now right so we used to have a leader in customer success and a leader in sales for new for new sales right and they were both reporting to me and to be honest they tried really hard but they didn't really work that well the retention wasn't where i wanted it to be and they didn't talk to each other that much keep in mind that most of our business is high-end high-value high-touch okay so what we discovered is that the csm you know is more like an account manager and work and should work together with the accounting executive that sells the deal and should be kind of like in the same team i felt like what we needed there is a consultant we call them research we call them research partners to come in and help them in the more of a domain expertise and advisory work so we call this two in a box the sales guys and the experts and that's how we set up the the accounts now we used to have a separate and it didn't work now we have it everybody's reporting to the cro um there's account managers that have a quota they have a book of business and they're responsible for that they work together with the account executive and you know obviously their core counts their account managers are quote occurring uh and the con executive is responsible for the expansion uh dollars but they work under the same uh leader and same culture same everything they're not separate teams interesting talk to me about capital have you raised i lost you are you mute oh nope can you still hear me can you hear me now i believe i believe your airpods i think your airpods died we'll keep we'll keep shooting this one i can get you back hold on while alfonso is doing that guys um as they prepare for ipo i'm curious when he came on last time he said they raised about 100 million bucks at a 500 million valuation uh from uh their new partners private equity firm he's working on the audio right now switch out switch turn your airpods turn your airpods off can you hear me now bluetooth off you should be able to hear me alfonzo if you turn your airpods off there you go can you hear me now i can hear you now yeah sometimes if airpods die in the middle of the interview that happens no big deal but my question to you is going to be capitalization-wise is the last hundred million dollars you raised do you think that's the last you'll need to raise pre-ipo or we should we expect another round for you the next six months one of the things that we did uh in this last few months since we spoke to you is actually generate more more profit more ebitda than we need it or we want it uh the reason why is because it's hard to hire you know and it's hard to uh uh to hire the speed that we want so we actually have more cash than we than we need or that not that we need but we that we expected uh you know and we are we foresee uh not needing any additional rounds okay okay of that hundred million how much went on the balance sheet i know a lot of it was secondary yeah i can't i know we talked about a little bit i can't comment though okay that's okay yeah some of it was but i can't comment on the details sorry tell me more like i'm always curious when founders are preparing to go public you know you look at henry shuck who is able to keep about ten percent of zoom info there's others like aaron at boxing like two percent right so and then there's some like eric that wanted zuma owned 35 40 you sold i believe the majority of the business back in 2015 when you did the 34 million dollar round at a 50 million valuation how much equity do you still own and how do you keep your team incentivized with the extra pet partners financial partners yeah so i i can't comment on the very details but i can tell you that between between the management team you know there's plenty of equity there right still to really you know be a a home run here right i mean the two founders for instance you know together you know almost 10 percent we have a couple i mean there's there's plenty out there uh still and um you know i mean with the right valuation we could all make some good money mm-hmm so remind me too so you you are not one of the founders you came in a little bit later are you also at around ten percent or are you less than them no no i i'm one of the founders okay one of the the other co-ceo that i have with me dan fishbach he is not a founder he came in later he came in in 2015 together with uh investor with a private equity firm private equities you know sometimes they use these models some use this model right where some you know first-time ceo like myself you know provided someone to help them um and in this case we gave dan quite a bit of stock um to help with this and uh it's worked out really well because he's brought up he's brought a ton of value to the business did sunstone keep any or did a rock buy out all of sunstone no no samsung went uh from a majority to a minority but i think they have they still act actually the biggest uh shareholder uh sunstone is still the biggest shareholder on just on a pure basis it just went down in terms of the majority to less than 50 yeah yeah yeah well look i'm i'm not going to put words in your mouth but these will sort of be representative what you're saying is like sunstone might still own 40ish percent which is down from 60 because they sold twenty to al rock right now maybe a total of thirty so they own seventy and then the management team and you guys still own like thirty something like that the management yeah the two investors together own close to about sixty five percent and then the rest of the top management team and employees yeah is any of that still an employee stock option pool that's unallocated where are you gonna be bringing on more talent before ipo uh the only talent that we're thinking right now in terms of uh uh you know management team is it's a cmo cmo interesting so you'll stick with your same whoever your cfo is right now they'll they'll take you through ipl you think yes very much so the cfo is one of the highest one of the new hires this year and he's a rock star amazing all right anything you want to touch on offense that i missed before we wrap up no that's it experience insights man that's that's what it's all about all right let's wrap up here famous five number one favorite book uh last time we spoke i gave you uh good uh i actually have to talk about sapiens um different than business books you know that i really like to read i'm really working backwards right now but sapiens is a history of humankind tremendous tremendous number two alfonzo is there a ceo you're following or studying i gave you richard branson last time um you know and i have so many that i follow uh are you following garish at fresh fresh books by chance do you think they're overbooked or fresh work sorry do you think they're overvalued or undervalued on there on the ipo day s1 not following i'm sorry i'm not following them no you know um i would say that uh you know i like i like what ryan smith did with qualtrics i mean he's no longer the ceo but i i admire what he did very much you know he also bootstrapped the business so i would say that he's another guy that i admire number three what's your favorite online tool for building a business i told you about user zoom already besides your own yeah yeah but um uh who do you use to manage your team and you're hiring got so many i mean we're looking for for hiring me for for hr yeah hr stuff do you use like remote.com or anything like that uh we're using namely and we're using workable and a lot of these it's kind of hard for me to pick one i mean i have to say that that you know i i just love to use g you know uh google apps i mean google apps i just keep getting impressed on how well designed they are and how they work on ux and they're also a great customer so there you go there you go all right uh and how many hours of sleep to eat every night yeah i told you about six last time um i still i'm at six but you know i'm trying to get seven at least that's good and still married with two kids yes very much so we're having fun did you have a birthday or you're still 48 um yeah my birthday's on february so i'm still 48. all right very cool and uh last thing you talked about culture being more important than strategy as 20 year old advice last time anything else you'd recommend to your 20 year old self you know i i would stick to that because we're seeing how you know this whole pandemic and what everything is going on in the world uh how important this culture has been you know so i think that i would say um i would say stick to culture um you know as an advice um you know and uh from a leadership perspective you know define define your leadership culture not just your general the company culture but your literature culture i'm learning a lot from the working backwards book and leadership from bet jeff bezos guys here how about alfonso from user zoom they're hoping to ipo next year hopefully to break 100 million dollar run rate in q1 next year caught around 75.80 right now with a healthy 40 50 year over year growth rate they want to define and own the experience inside management space this really means you can start using them even pre-product when you're trying to figure out what to build next along with after you build it making sure you refinance the product that customers want alfonso thank you for taking us to the top thank you for having me have a good one one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push 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Introduction hello everybody my guest is alfonso de la noez he's the co-founder and co-ceo of user zoom the experience insights management company that helps businesses design measure and deliver the best digital experiences fortune 500 brands like google amazon att walmart and intel power and automate the ux and cx research of all their digital properties through user zoom's agile and scalable platform he's got 20 years experience in the fields of marketing web design and user research alfonso you ready to take us to the top i am very happy to be here thank you for inviting me all right you bet so super crowded space it sounds like you're sort of monopolizing the fortune 500 brand space here did you come from a fortune 500 brand uh not really to be honest with you well i guess my first job was dell computer so maybe you know i don't know if you would include them there but yeah i was it was a two-year out-of-school uh experience and then right after we went to smaller companies okay fair enough so give us the origin story here again you're playing a crowded space we'll get into the products here in a bit but take us back to year one when did you guys launch 2007 okay um yeah the background the story is we actually came from the old school way of doing user experience research and and experience insights management which was in a physical lab and i don't know if you've ever participated or seen you know one of these kind of focus groups likes focus groups like uh research projects and studies where you sit and you do kind of one-on-ones uh in a in a physical uh lab with the one-way mirror you know you have some people observing what's going on um that's what we did in the first startup that i started in back in 2001 and so user zoom was born out of uh you know kind of like software is eating the world uh for user research right we wanted to automate and scale um you know uh the research the tedious process of doing this type of uh user research and that's why we built the product so user zoom is kind of like right after that experience first hundred customers first million in revenue is always the hardest did both those happen for you in 2007 or did it take a little bit longer no it took a little bit longer of course you know um you know the the crisis hit in 2008 so that was a that was a tough year um and initially to be honest with you we bootstrapped this business and the way we were uh kind of getting the mvp uh in place and kind of growing is through the um profits that we were making with the previous consulting company so we had like a couple of years of both businesses uh together and no i don't think we hit 1 million probably until 2011 or something like that the agency to sas model is in the dna of a lot of most successful sas founders today so i always like to dig a little bit here how what year did the agency do the most revenue and how much revenue was that i think if i'm not mistaken we had a three to three point five million dollar agency model before user zoom and then within user zoom you know it must have been a half a million or not even not even that you know we went quickly into as as soon as possible we moved over to sas yeah what so what year was it 3.5 million do you remember oh but this is again prior to user zoom right this is the previous startup this must have been 2006 2007. so how did you have the conviction to shut down a two three million dollar revenue stream to go all into sas that's where most folks who are going to be great cecios eventually they get stuck in the agency because they don't want to give up the sunk cost but we i thought it's a great point that you're bringing up nathan and to be honest one of the reasons i always say we were successful is because instead of just jumping in to a sas model and building an mvp and trying to finance that we actually it was a very very tough time for about two to three years to keep both businesses kind of running parallelly and um you know it helped us finance the mvp and also helped us do actually actual uh market research because we were working with customers that needed this type of insights and we were working in a lab but at the same time we were working and offering them a product to do it remotely do it online like it is today and so it was very tough i gotta say because on top of this we also had it in different markets uh one was in spain where users almost born and the previous startup as well and the other one obviously is the u.s where i moved over in 2009 to roll out the u.s market so very very complicated very tough thing to do interesting now how many customers are you serving now today on the sas model Currently serving 1000 customers about a thousand okay and here's my big question some of the larger sas companies that scale against their vc's wishes because of the margin hit you take professional services they will touch agency account big accounts with sort of agency-like services and you see typically net dollar retention on those touched accounts go through the roof because there was a big setup so your agency guy to sas you raise vc now do you put touch and big agency contracts as set up fees on these accounts we look at so we look at the professional services and the consulting you know we call them actually manage services at userzoom as as a real value to our customers you know um and it is true that those customers that use us for both product or they license our product and use us for professional services actually have the highest retention and the highest net retention yes however it's also related to the maturity of the market some customers just need that and they they need hand-holding or they need you know we actually provide more of a advisory uh type of services um you know we help them we always say we help them uh fish versus fish for them right we help we enable them and teach them how to fish so we found that in the beginning we dropped the agency model so to speak or the consulting completely because we didn't want to go back to it over time we learned how to manage it with a good gross margin by the way uh so it's not uh you know first of all about only it's only about 20 of our of our revenue is coming from you know other than license other than product subscription um and second of all we're doing a good job at uh selling the value and getting some good margins for them as well sorry what's good margin on managed service well i mean back in the day for us it was like a 20 to 25 but right now in user zoom we're sitting at close to 30 percent wow okay interesting thirty percent margin yeah interesting and growing and growing that's it that's impressive yeah it's impressive okay so so help me understand if if i'm gonna sign up if someone's listening right either an enterprise brand they want to sign up for user zoom on average what's a customer gonna pay you to use your toolset actually there's we've gone uh down market because initially we were really focused on the enterprise and so most of the customers in the enterprise are somewhere in the 100 to 150 000 a year uh and growing by the way but then we have this other cohort we acquired a company called validately a couple years ago and they were actually focused more on the smb and kind of a different persona so we go all the way down to you know below twelve thousand dollars as well right now i think if you look at overall business it's sitting somewhere in the 80 000 or so per year yep interesting okay and and um i want to sort of capture one story so usually what people do they start smb and they move enterprise you sort of the opposite you've had entertainment you're moving down now and so you know if you're moving enterprise and moving down obviously the enterprise you should see some obviously really helping that dollar retention i mean are you guys above if you look at the whole business on a dollar basis are you above like 130 140 that dollar retention last twelve months uh more closer to 120 yeah we're about we're around 120. depends on the cohort once again uh nathan if you look at some cohorts the enterprise some of them are around 130 135 the very large ones uh and then the others are lower right so overall total is about 120 right now it's really good so you want to you want to basically you know invent new mousetraps at the top of your funnel to bring in smaller sized customers right and then obviously except expand them and excel them across your other product lines what mouse traps for you right now are working the best to drive more top of funnel product wise well what we want to do is we want to we know that there is a an smb market that doesn't require the belts and whistles and the advanced uh features that we have for the enterprise and they just want to do some basic interviews you know kind of like what we're doing right now we have a product that uh you know it's kind of like a purpose-built uh zoom for research you know for testing for interviews and then we have um others that are you know uh unmoderated so without somebody just you know asking questions and uh maybe they just want to run some quick you know studies with 10 users or 10 participants and they don't need a lot of um again the advanced or belts and whistles that you add when you have behavioral data or surveys and logic and condition and a lot of things that you need for more quantitative analysis so those those products are ideal for smbs or for immature customers that don't want to pay they don't have the budget uh the enterprise wants something like more like an xim right experience insights management solution and platform that gives you all sorts of different types of research methodologies and and insights related to user experience and customer experience and so on and so forth yeah surveys interviews live intercepts usability testing you're touching all these things your current product line that's right that's right you you you are taking an aggressive acquisition approach in terms of buying other companies we'll talk about that in a second uh talk to me about how you finance the business so from the agency revenue how long are you able to stay bootstrapped well actually you know um we we started doing sas uh pretty early so even though we did have the agency you know if you look at user zoom only uh it was a couple of years and then in 2009 we started selling a whole lot of licenses uh and that was very much you know pure pure sass um so i would say your question was how many how many years i think you know two to three years until we started really seeing growth in sas and we felt like we had a sas business for real you know versus a hybrid so when was the first fundraise that you did oh well so we raised friends family and fools so to speak back in 2007 and eight and then we didn't and that was about a million and a half altogether and then uh we got the company all the way to about 12 million in revenue 16 million in bookings well it's 2015. okay uh the first few years uh nathan i mean after the crisis and trying to figure out the product market i mean the first three years really we're just testing waters right it got it started getting Raised interesting around 2011 2012 um and then we grew and the most important thing we grew profitably by the way you know uh yeah we were actually 14 even the profitable uh in 2015 and that's when we raised you know sort of a first round that was fairly large which was 34 million dollars with sunstone uh partners and that's a big moment so 34 million raised in 2015 why was sandstone the right partner well they've been following us uh in our our our trajectory you know uh we have good culture fit uh gus alvarez and i have been talking for years and you know i think honestly they believed in the market because today everybody would say oh experience insights and ux is important for products of course and customer experience but we're talking in 2013-14 you know these were still very very early early years right so sandstone was a boutique uh firm a boutique private equity that came in and said hey guys you know we believe in this market we believe in the team and the opportunity uh let's do it and we yeah we had we had a wonderful um few months of conversation until we finally closed the deal what valuation was the 34 million raised up well so this is the story about about this this is approximately about 50 million uh the idea there was that uh yes no no uh post so they actually got a majority you saw a big chunk then we did a majority yeah and i you know we explain this openly to to people you know think about this we are three founders coming out of spain you know um hustling like crazy and being and able to build a company all the way to 15 million you know and again cross-border so um i'm the only one that came over to the us my two co-founding partners and the whole engineering team stayed in barcelona so it was it was very tough i think we did something amazing you know and i'm very very proud of that by the time we got to that uh 2015 year we knew that we had to race we knew that we wanted to grow a big business and sunstone came in and said look we can give you a smaller check and continue going or we can give you a bigger check uh you know use some for secondary uh the investors and the founders you know you guys deserve uh you know some to take some money off the table and we'll help you continue growing my co-founding partners who were in spain you know they felt like they were gonna you know the the company was gonna change completely including myself right so we felt you know what this is a good thing to do uh it was a good story and you know i always say that you know it was not a on us a complete sale it was a majority investment which is very different than selling um and sunstone has never really operated or or or or worked in a way that is it is our company we're going to do whatever no we actually partnered with them the same way that if we had partnered for a 40 for 25 or 30 percent of the business i'm a big fan of secondaries i think it's a great way for founders to take some equity off the table early employees as well but a lot of people don't understand how to structure it how to think about it how much of your 34 million was secondary oh boy i want to say about 70 percent of it i don't remember right now it was a good chunk yeah i mean like uh the investors the family office that came in from spain and the and the uh business angels were very happy yeah now did the angels i assume you basically said here's an exercise price angel if you want to take it take it if not you'll stay on the capitol or you force them to take the secondary to be honest with you we i mean force is a big word but you know everyone was so happy and there was there was a good deal for everybody i think only one uh state which i think was my my brother who had invested early on uh but everybody else the idea was really to recap and kind of start fresh nathan you know we wanted to start fresh with a company that had a headquarter in headquarters in in in california versus barcelona a new board here but yet spain and the barcelona team have become have remained absolutely critical for the success of the business so really it was just a necessary step to professionalize the business and uh we were all very happy with it 2015 you break 12 million Monthly recurring revenue in terms of run rate where are you at today uh we're uh we're actually in a run rate of 80 million okay so uh yeah we did about 50 almost 52 last year um and with the run rate is 80 right now obviously the valuation you know i don't really want to talk about it to be honest with you but it's you know is i would say uh well clearly more than ten times uh what what was it back in people that's a big moment offense right i mean more more than ten uh well more than well i guess maybe it's not right so i mean you tell me if you can share this are you part of sort of unicorn club have you passed a billion dollar evaluation yet or no no i don't i think we'll get there pretty soon i'm very confident and it's very exciting of course but no we're not there yet let's be realistic no that's fine that's fine now have you uh i think you've raised additional capital on top of 34 what was last fundraise yeah we just did this one that was on the news um we actually closed around december uh 2020 it was about 100 million um and uh yeah the idea there was that um you know um we have we have a big market opportunity ahead of us and so owl rock came in and said hey we want to be part of this journey we love the team we love the vision we love the market so they came in and um i i can't give you much details around exactly what the 100 million was about but i can tell you that you know some of it was also used to you know get back return the um uh you know return on investment for sunstone and some of it is obviously for us to grow but i can't i can't give you the details on that no problem um look i mean you were in a space where if someone could be a hub there's a lot of spokes to go acquire right i mean if i just look at your live forms form feedback you have bootstrap companies out there question pro with some scale you've got sort of type form which is you know grown pretty effectively inside of barcelona and bar out of barcelona very effective i mean are we gonna am i gonna be interviewing you in a year and all of you guys are coming together and you're gonna have 300 million of private arr and you're going to be looking at stacking this thing or something or what yeah i'm not so sure about that i do believe and yes you've seen the uh our our uh m a record is actually pretty good you know we've done four actually four with the angel hq recent deal uh you know we believe that there is an organic and an inorganic way to grow and this is yeah this is a very fragmented market uh so we think that there's a lot of point solutions out there that could be part of our platform you know we have both uh we have we have both the the collection the data collection as well as the analytics within our platform and then let's not forget the whole panel and sourcing business that we also offer so it's a it's a very broad solution um within within those three buckets of collecting sourcing participants and analyzing the data there are tons of little companies out there that could help but to be honest with you right now we're very focused on what we did with enjoy hq because we think it's a phenomenal um fit for our vision of you know providing a broad experience insights management solution and uh you know i'm gonna be focusing we're gonna be focusing uh a lot of that uh for the next year for sure i'm gonna wrap up here with some quick questions team size total team size today about 300 and how many engineers uh about 80 to 90. how many quota carrying sales reps somewhere around 50 true or false that's a key way for you to drive growth they have expansion revenue targets and they're they're hitting it sure it's a good it's it's a key we are we are the vast majority of our growth comes from expansion yeah yeah that makes a lot of sense so if you said 120 percent in your top cohort in terms of net revenue retention peel that onion for us what's gross revenue churn look like uh gross revenue is somewhere in the gross retention is somewhere in the 86 okay got it so then you're expanding 34 to get to 120 together yep expanding quite a bit really impressive very impressive okay let's wrap up with the famous five number one favorite business book good to great by jim collins number two is there a ceo you're following or studying alfonso you know i follow a lot of them to be honest with you it's impossible it's like picking one of my kids but you know i really like richard branson uh his style and his inspiration is positivity besides your own what's your favorite online tool for building user zoom user zoom no besides no well we use user zoom to build user zoom and it's our it's our main source of insights of course but no i mean we clearly love all the cloud you know collaboration tools uh we love um uh google and slack and uh you know a company called like chorus also he's doing a phenomenal job for us okay great uh how many hours of sleep are you getting every night i'm good with six okay and situation married single kids you mentioned kids i'm married and i have two kids one thirteen year old who was born in spain in madrid and is a boy and i have a very american five-year-old girl busy guy how old are you alfonso 48 last question what's something you issued when you were 20. i think culture eats strategy for breakfast guys there you have it user zoom launch of an agency that did 3.5 million back in 2007 they scaled finally broke that million dollar run rate in 2011 when they raised from some family and friends prior to that then the big year in 2015 break a 12 million dollar run right do a 34 million raise at a 50 million dollar evaluation it was a majority sale majority investment but now they're scaling rapidly uh past 52 million bucks in ar last year now at 80 million run rate brought in another 100 million from a new partner at more than a 500 million dollar evaluation has looked to scale in the space with their team of 300 alphonso thanks for taking us to the top thank you nathan for having me one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2pm central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan laca.com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you 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