How Velocidi CEO Paulo Cunha grew to $36M revenue and 500 customers in 2017.

$15 million raised serving under 500 customers again pay paying you know call it they're doing well more than $3 million per month he won't admit that but the big smile confirms it over 90% annual retention rate again helping these agencies these marketing folks these analysts better understand how to capture use and gain insights acual insights from the data sets they're pouring over every day this is episode 729 coming up tomorrow morning we'll learn from cam Miller and how he and his co-founder left a AP Morgan job to sell $600,000 Plus in baby clothes how' they do it but first here's today's episode this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per to 5 and6 million he is H bent on global domination we just broke our 000 unit sold Mark and I'm your host Nathan lka hello everybody Nathan here my guest today is David Dunn he's the CEO and co-founder of velocity a marketing intelligence company that harnesses data for leading Brands and agencies in the seven years since founding velocity has enabled marketers to make datadriven decisions that optimize marketing spend D is current currently leading the firm's next chapter into artificial intelligence David are you ready to take us to the top thanks Nathan very nice to meet you and thanks for taking the time you bet so people throw around Ai and artificial intelligence all the time right now because it's sexy why are you convinced that's the direction your agency needs to go in yeah so um as a company we're focused on how artificial intelligence can speed up insights know path to insights and so our technology is has always been enabling that process but up until now it's been analysts who derived the insights and what we realize is there's the amount of data is just growing exponentially so the need to help those analysts walk in the door in the morning to a set of insights that are based on the things they're looking for will greatly speed up their work and in turn speed up optimization describe to me what one of these analysts might be doing so like first off are they here or they based over ceas somewhere I think it's both but um there's there's a lot of high-end analysts and uh data science folks across the US and Oh I thought these were your own you're talking about your customers correct yeah got it yeah no platform is a a a technology platform that customers licensed to use with their data scientists data analysts okay and is it a SAS model or an agency model it's a SAS product got and we we license it and uh we do provide some manage services for certain customers who have very special needs but for the most part it's it's out of the box can I translit that to the ones that pay the most sure all right good and what is the average kind of customer paying you uh customers start about 3,000 a month and go up it varies greatly depending on if a customer has a global footprint we have customers operating with us in over 20 countries with a lot of Brands and so obviously that that increases the cost significant and before we go back to kind of the the founding story and how you got into this though what would you say the averages across your entire customer Bas in terms of you know monthly arpo I would probably say it's about 6,000 a month okay cool and and is that pricing uh people pull different levers to get more you know get customers paying more based off utility what are some of those levers you pull like number of seats or additional products what are those levers yeah so so unlike a lot of the folks in the industry who charge by the line of data or by seats we choose not to do either of those things instead we charge by the data uh Stream So how many sources of data and how many specific streams you might pull so for example if you're pulling in Google uh data you you might have 20 brands that would be 20 streams of data um same Source but 20 different streams for 20 different brands and why do a stream versus like an API API call or number of seats or these other metrics well the API call is how we bring in the data so so we use API calls our customers can also manually upload load the data bring it in from email bring it in from many other ways FTP calls and whatnot but but um regardless of how you bring it in it's the number of data streams determines the volume of data that you're ultimately going to have in the platform how much is moving around and therefore how much it should cost got it now take us back to the founding story you said seven years ago so what was it 20 20 2010 something like that yeah we we we started my kitchen with sketching it out at the end of 2009 and then we launched in 2010 and like a lot of young companies we we started with a very clear idea that we want to use data to make marketing smarter better faster but um you know we had to kind of find our way to the right product that the market would actually uh adopt and um and the way we did that was to work very closely with customers over a period of of years to actually develop a product that met their was tailor made for them really who who is we by the way do you have co-founders I have a couple of uh folks who've been here from the beginning yeah yre who's a Norwegian chat has been here from the very beginning and then series of people came in in 2011 and 12 you laughed when I asked that why yeah well we've been grinding the sausage for a long time together got it got it what does that mean like were you at your previous company together or how' you meet yeah he and I worked together uh he he I ran a global business prior to this for Edelman I built their digital Business from The gr up and uh couple years prior to starting this business y came in we we had bought a couple of businesses mer and I merged three or four different businesses together over a fairly short period of time he came in to help me to get everybody on the same H sheet that's so funny and why I mean that sounds like a pretty sweet gig at Edelman what was the final plug for you why give all that up good question I get asked that quite a lot uh yeah it was a great gig I loved it I was there for 11 years um that that was uh then and continues to be their fastest growing business um and and you know it was it was a role in which I probably reinvented myself every couple of years um what what was fascinating to me however was um the way technology was going to change the way we conduct marketing and I you felt at the time I'd helped a lot of young technology startup companies uh by being their first customer there and companies like buzz metric uh radiant 6 buddy media others we were literally among the first customers you should have took Equity yeah seriously and uh but but as as I was doing that and helping them uh build their businesses the role they played was to help us to different iate our services right so we use technology to really get a jump on the competition and it worked very very effectively for us so um at some point I thought you know this be really fun to do on my own um and I'd had a couple of startups previously so I thought let let me try that and so that's how bosi got born so how old were you when you left your Edelman job oh we don't disclose age here it's come on give me give me a Range if you're not comfortable Century on the planet so I'm over half a century on the planet now well what I'm curious because we have listeners of all age types and they like to kind of compare to get a sense of where you are in life compared to them I mean do so how seven years ago how old were you 43 43 okay perfect this is a you should celebrate age it's a beautiful thing are people laughing around you are you lying to me no not at all not at all I did my first start up when I was in my uh early uh late 20s and then early 30s I did I did three Al together and then started the Edan digital business which was really starting a business inside of a business so I suppose I've always been doing startups and and uh now you know I guess it's a little unusual to see uh but actually more frequently you see folks like myself who are actually still doing early stage businesses as we enter you know our midlife and so un usual but but yeah some of the bigger ones and I think it's it's a kind of a different mindset you know you're either an entrepreneur you know who who is you hear this term of of Serial entrepreneurs I always think it's a very strange term but but people who actually for whatever reason go back and do it again and again um and they find patterns and things that they find work and and they just keep doing that and I suppose to some degree I've done that as well inside large companies and outside them as well so where did you give me a sense of where your brain was at when you launched this company like had you already a lot of people say your first kind of million in terms of personal wealth is the hardest and after that you kind take big risk because you're set had you already kind of had a financial event whether it was an exit of one of your first startups or your Edelman salary and saving or whatever did you already have a financial event where you felt like you had kind of the cushion where you could go take another risk or do you like to put everything on the wall and go for it all with nothing in savings well I think every entrepreneur uh you takes risks um and the question is how measured are you you know to your point do you throw it all against the wall and hope for the best um yeah I'd say You' be hard hardess to find an entrepreneur who who hasn't ended up taking more risk than they originally planned I want to know for you though because you're unique you have your own unique story for you how did you handle risk sure well for me I had always separated my personal uh assets from my work um and even when I'd done early stage startups uh previously which i' built and sold a couple of businesses I my my goal was always to try not to impact you know my personal situation so if I had a house or an apartment whatever it was I try to keep those separate so for me that was the first criteria um but when we were doing this business over the course of time we've bought a couple of businesses and we've expanded in different ways and so that it was quite a capital intensive first couple of years um so I I was fortunate to have had some success earlier as you mentioned both at edman and with prior startups and stuff and then and and as also I'd been doing some real estate investing so i' built up you know some personal assets that I was able to put to work and then friends and family came in and also invested in the business and that's how we kind of really got going in the early stage capitalizing it was not just my my own effort this time around but with with other what money did you bring in to capitalize it when you started and how much have you raised to date so um we we friends and family probably put in about 3 million into the business in the early years and then uh we we just closed an Institutional round for about 12 million uh at the end of last year beginning of this year so are those the only two 15 million total yes and why did you decide to do the recent one the12 million one um really to accelerate our growth we we got to a particular scale um and we we had a lot of ambitious plans for how to grow the business both domestically and overseas we wanted to bring new product Market faster um we we have ambitious plans on on both corporate development uh you know our organic corporate development but also our view on what we can acquire to help accelerate our growth and so having more Capital allows you more options it's really that simple and and more Runway to get them done y now did you have a good sense a lot of times a reason people raise capital is they really understand like what it costs them to acquire a customer and they know that their lifetime value is higher and their economics are sound what's it cost you to acquire a customer on average it it's a great question uh we don't generally reveal that information but but what I would say to you is that make me feel special David yeah but our model is Shifting so so whereas we've been really a channel-based business so our all of our customers historically were large Global agencies uh and they continue to be our our big customers um we're increasingly working with Brands and Publishers and uh other folks outside of the agency ecosystem and and we have uh a bunch of new channel and partner types for example um data science businesses and and uh uh Consulting companies to name a couple of examples and so the way we go to market has changed quite a bit and and the model and cost for acquiring a customer any one of those verticals is a little bit different um and so for example if if if I want to acquire a new Global agency client uh that could take a year and and it could cost you know couple hundred thousand dollar to to go through that process by contrast I might acquire a new customer from networking and that might cost me a couple 100 bucks or I might advertising and and and therefore it might be you know 50 bucks for a lead or it might be David you obviously you have cohort analysis going on which is I mean every every SAS company has different cohorts perform very very differently right in in each cohort I imagine you have some ratios you like to live by so let's maybe talk about those instead of definitive numbers uh is there an LTV toac ratio you like to live by no matter what cohort you're looking at um you know again I'm not totally comfortable to just like blurt out the numbers that we live by but um generally speaking um you know when we're when we're looking at our business we're we're trying to compare ourselves to some of the classic businesses out there it you we live in an era where there's no rfps for the work that we do so we're still very much charting a course so the kind of analysis that you're describing would make sense if I had a very high volume of customers or I had you know Global footprint or I was able to say to myself hey I got 100 customers in these five major Geographic areas and what's my you know cost of acquisition in each of those areas and how does that compare and contrast and what's my media mix and but we're not at that level no no no I'm I'm more interested in pulling lessons out that like tidbits of information that are applicable to anybody listening right now running their own SAS business right so like there there must be an LTV CAC ratio you like to try and stick by or that you use like a gauge just like an airplane pilot would use their tools to fly the plane properly um don't tell me your numbers I mean they don't have to be your numbers exactly I'm just curious for you like what what feels good for you it doesn't have to be the actual number in your business currently yeah um you know I I think what I would say to you is um I we we we look at we look at the first first things we're trying to deliver for our customers is is what's the value to them as opposed to the customer lifetime value to us you know so so I think a lot of entrepreneurs focus on what they're getting but if we first focus on what we're delivering to our customers and that's true of all of our upcoming products you mentioned or AI product you so for example if I was to say to you you know that that our product pays for St in the first month we derive those kinds of analyses with our customers where we actually work with their analysts to say okay you know what level of efficiency can we help you achieve in your first month your second month your third month and so for example can how much of your time can we give you back so you can spend that time on other tasks or how much of your time can be spent deriving insights which lead to to optimization which leads to you know better performing media and what's the value of that to you and to your customer um so those are that's where we begin um in terms of the customer lifetime value for ourselves you know when we deliver those kinds of metrics to our customers that makes us very sticky right so so we think about ourselves as can you quantify that what is very sticky you know customers who've been with us for five years for example and are not going anywhere okay so you have less you have less than I mean you have like over 90% annual retention then yes yeah and then have you reached kind of the holy land yet which you know very well which is kind of net negative uh uh in terms of Revenue expansion because you're really good at driving upsells and additional value uh we have a long ter long way to go before we reach the point of Dimension Returns on on new business development but but look I mean not new sorry the question I was just asking was on expansion into your current base current clients yeah I mean some of our clients have thousands of customers and we're maybe working with dozens of those customers so there's plenty of of room to grow uh with our existing clients um but one of the things that has changed is the way you know as I mentioned earlier we sort of we're evolving how we go to market our product is evolving very significantly so for example um you know for some of our large customers we we work with them very closely to create things that are very unique to them to help them be more sticky with their customers again going back to what's their customer lifetime value if it's good for them it'll be good for us um what we're how we're evolving now is we're in ating at a much faster Pace in our own product and bringing that to our customers every quarter so that they're literally tapping into a stream of of innovation and the you for example upcoming release of artificial intelligence which we release next month and and we have a series of then rolling releases that are occurring those Innovations are are geared all geared based on customer Insight what do the customers want from these types of products uh versus you to your point everybody's using the word AI but what does that actually mean and so so again when we think about the customer lifetime value it's really you know aligning those two things and then and then bringing product that allows us to scale globally with those customers so that so that we don't rely just on humans to scale but we can r on product to scale so let me give two examples this year we've uh greatly expanded our um automated uh self- sered platform so now our customers can go in and load in you know over a hundred different data sources David where where by the way so we can get a sense of scale here how many customers today are you serving uh in the hundreds okay got it so so I mean can we call can we say more than 300 but less than 800 Le less than 500 less than 500 perfect great and and so uh you know today though as we talk to our customers about how we can service them differently we're we're bringing product to the marketplace that they can scale at their Pace into their customer base they don't rely on us do that scaling whereas maybe in Prior years we'd have had to help them to do that scaling yep sure so it's more cost effective scaling right you don't have to put it you don't have to put touch on that VI inside salesperson correct but in order to get to the point where we knew what it was that we needed to bring to Market we had to work with those customers to see what their barriers were and help them overcome that so self-service means two different things right it connotates hey I'm going to point click drag drop and enough I go do it myself but it's more than that it's also about being able to self serve your training so you can on board new staff uh administer those staff somebody leaves the company you can deactivate them you don't need to call us to do that um so all all those kind of uh process things that that are very important to customers that we help them to think through and and anticipate and then and then I think the second thing that we're bringing to them is uh also in response to their requests which is our artificial intelligence release will uh actually begin to speed up the process of of arriving at Insight so um the overused term uh the paradigm shift but you know the analysts up until fairly recently and even today uh often use Excel and PowerPoint and they're manually Gathering data running pivots inside that data to to derive their insights um very very highly manual task and what we're doing is those same analysts instead will arrive in to a dashboard full of insights those insights will be based on criteria they've set and they will then be able dive into the data behind those insights so it's a complete reversal of the way that they work whereas an analyst what if they don't set the right criteria and as a response that they don't get any value from your platform how do you handle those scenarios well we deliver all the core criteria and then they have the ability to tailor it so so for example there would be standard looks that they may come into they may come in and say okay what are the top performing media assets what are the top performing Publishers what are the top performing kpis what are you know so all that stuff's available in drop down menus they can can just click and point but but then um they have the ability to Wi create their own custom metrics So in theory if you're giving that let's say you have 100% Market penetration right you're giving perfect data to all these people who wins let's say two competitors use you who wins uh that's a great question I think that comes down to the Quality the media buy and the uh and of course the the quality of the creative and and frankly that product's attractiveness to the marketplace but if we're talking about Pepsi versus Coke you know we're not ever going to be working with those two Brands side by side but but uh I think the answer to the question is you know uh if we were working for one of those Brands and we have uh then we would think that brand has a better chance of Performing competition because we're going to give it better information faster uh to the right people so they can make better decisions yeah this is what I struggle with AI right is like all these platforms that say they're doing Ai and maybe they actually are assume that they keep growing as a business what any business wants to do it becomes less because if my competitor has the exact same data that I have assuming we're rationally smart business people we likely will make the same decision the more complete data set we have this comes back down to why I believe creatives are actually going to rule the world very soon because it's going to be people that do creative things with the perfect data that everybody else has that's going to ultimately determine who wins and you can't automate that and that's not AI well um you can speed the path okay so if we if we live in a world do you agree with that by the way I I agree the creativity rules I but but I think that creativity underpinned with great data is better creative so if if you for example but assume everyone has the same data let's say you grow you kill it you crush it it's a we're talking in a year and you're a billion dollar company about to go public right you have people in industries that are competitors that both have your exact same data your exact same tools the one that's going to win is not going to then be reliant on your tool it's going to be who has the more creative thinker around your tool sure yeah think that data data informed creative is is better is better creative look again same same concept if you start off put two creative directors in a room and you say one creative director this is the start of a good book I can feel it you put two creative directors in a room you give one creative director you know no data and and and but they're both equally talented and you give the other person a set of data that tells them all about their customer what's working of course the one with more data is going to win no my assumption is if you kill it and everyone has access to this data who wins right I'm I'm foreshadowing a little bit yeah that you're right that point will be come down to the creative come down to the quality and if that happens you're ruling the world so that's that's a good thing for everyone right we'll take it and you're and I get a steak dinner burned it all right all right David last question here so you said uh you said under 500 customers earlier in the interview you said you know around a $6,000 arpo average so I can assume you're doing less than three million in monthly recurring revenue is that accurate we have customer you know so when you ask about the average uh just to be clear we have customers who are spending quite a lot more than that I know that's why it's an average but when I think about the average what I'm trying to create a picture of is that you know for a lot of the brands that we work with the especially with those who are on our self sered platform they tend to be smaller Brands midsize Brands uh but we work with some of the largest advertisers in the world and those customers spend an order magnitude more than that as you can imagine so if you're you know some of the global agencies or their customers and we're working 20 30 countries pulling in they're huge 100 data sources those are major account yeah yeah separate those two things maybe the better answer to your earlier question is what's a large customer versus a small customer and and so if I think that the average is probably more applicable to our you know average smaller customer but but 6,000 is more related to your your average smaller customer then that's correct so so it's you're doing more than that come on own it you can say you're killing it you're doing more than 3 million per month okay you guys can look at us smile they're doing great doing all right thank you I I won't pin you down more than that but it is helpful to understand some context of how you're doing it sounds like you're doing just fine I mean look our our business is doing well and and our customers are doing well and that's what we care about the most and you know obviously you don't attract a large amount of investment from people like newberger Burman and pl growth unless you've done something with your business Edelman is jealous they lost you they're reading about your success they're they listen to the top Entre or podcast they hear you about doing all this and they write you a $200 million check to sell to them do you take it do the Snapchat right hold that for more The Disappearing question all right guys I talked about this earlier but I schedule like so many meetings that would blow your mind I mean all my podcast interviews right hundreds of Bure owners I talk to monthly I schedule and you know what I do it so efficiently I get them all to agree to my calendar so all the calls are back to back to back that means I'm not switching in between tasks all day long I get them to batch so I can be very efficient it's so critical I use a tool called Acuity scheduling to do this at Nathan la.com schedu it eliminates back and forth between me and people I'm trying to meet with it makes it very simple and most importantly they help me keep my noshow rate very low because they send out reminders helps you look very professional so go to naa.com schedu to sign up and you get great deal you know you guys know this I hit people hard I make great deals and gabin the CEO has given us a great deal if you sign up like normal people okay on their website you only get a 14-day free trial you use my link na.com schedu to get 45 days free okay it's the best it's free go to Nathan la.com schedu right now to sign up and I'll see you there D David let's wrap up here with the famous five number one what's your favorite Business book oh I I think it has to be selling the invisible Harry be with uh it's the first time I actually read a book that described the the the marketing advertising business uh selling the invisible Great number two is there a CEO you're following or studying H you know I admire quite a few different people over the years um somebody that I admire who is just has always been an innovator is is Richard Branson um because he all he's such a believer in brand and such a believer in you know the customer so why is he let virgin go to Alaska Airlines a aircraft carrier well I am a little puz I hope Alaska is not one of your clients Alaskan is not but I actually like quite like Alaska but n oh my gosh upst you on everything well yeah I haven't been on them in a little while but there you go I'm more more of a Delta kind of a guy but anyway virgin don't know but he did sell half a Virgin Atlantic to Delta so I benefit from that one all right curious move number three is there a uh is there a fa besides your own is there a favorite online tool you have um uh I would have to say um why am I blanking uh certainly you know the tools that I use that I like the most it's probably going to be title title TI t l e TI d l oh oh got it got it that's like what the music app yeah very cool number four how many hours of sleep do you get every night five to six okay and uh what's your current situation married single you have kiddos married two boys oh great and you said your your 50 years young last question take us back 30 years what do you wish your 20-year-old self new hurry up things are changing fast you got to move faster there you guys have it from David things are changing fast you got to move faster hurry up again had many startups before joining Edelman stayed there for many many years and then back in 2010 launched his marketing technology company velocity just now getting into AI they've got a team oh David how how big is a team by the way 52 today in that's amazing so 52 people again they've got about $15 million raised serving under 500 customers again paying you know call it they're doing well more than $3 million per month he won't admit that but the big smile confirms it over % annual retention rate again helping these agencies these marketing folks these analysts better understand how to capture use and gain insights actual insights from the data sets they're pouring over every day David thank you for taking us to the top thank you if you enjoyed today's episode with David go back and listen to Aon yesterday he's raised $24 million but my question is why is he building a financial technology company on the back of advisers which are going out of fashion