Versium Revenue & Funding (2024)

hello everyone my guest today is Chris Maddie he is leading a company called versum which delivered which delivers automated predictive analytic Solutions which provide actionable data intelligence faster more accurately and at a fraction of the cost of hiring expensive data science teams or Professional Services organizations Chris are you ready to take us to the top I'm ready all right we're gonna talk everything versum today tell me about the company what do you guys do and what's your Revenue model how do you make money yeah so we are we're a data technology company we help marketing organizations become highly data driven what that means is we help them use data more effectively to drive all their marketing initiatives uh ultimately to drive significant improvements in marketing RI okay and how do you so there's a lot of tools out there that will do the Predictive Analytics the biggest challenge is churn goes through the roof because you can't get them to actually take the data you give them and make actionable insights on it that improves their bot you know their top or bottom line so what what do you have to do in the first month to make your your new users sticky yeah you know the first step is and there's really three blocks to what we do but the very first thing any organization has to do is fix the existing data they have for example 40 to 50% of data in a CRM is not usable it's old it's outdated it's not formatted properly there's errors there's missions so there's a data is a mess lots of times data resides in Silo so the first step is you got to get in and fix the data that makes it more actionable it allows you to reach your existing customers and Prospects better and it's the first step before you can do anything that has to do with Predictive Analytics machine learning or or arf intelligence because if you got garbage going in you get garbage coming out so the first step is fix the data the next step we do is we enrich the data so we own over 1.5 trillion data attributes and we're able to Overlay that onto the existing data the organization has that helps the company understand who their customers are better makes that it helps them understand their behaviors their characteristics we use clustering to create new segments that were previously not uh known or identified that have common characteristics this then allows you to personalize your messaging and then the last thing is we take those combined data sets and we train our artificial predictive models so that we can determine uh or build a predictive model to predict who's most likely to buy the products and services of our customers in the future and we use those models to guide the marketing effort so first we fix it and clean it then we enrich it and then we model it great and give me the backstory here so so actually before I go to that in terms of when you launch the company customers that are paying for this are you talking kind of no touch high volume sales model or very much Enterprise based what's the average customer paying per month we've got two different tiers right but small medium well three different small medium and large we've got a self-service tool with the average price point is a thousand then we go to sort of mider per month yeah per month mid-tier Market which where it's five to seven and then the big Enterprise grade which is you know 20 to 30 grand based upon volume of exercising our platform which would generally ties to volume of customer records okay got it so so I mean if I was if I was to just because I don't we don't have time to go on every customer cohort but if I forced you into an average is it closer to a grand a month or two grand a month 10 grand 10 grand a month 10 grand a month okay so this that's very much that's a price point where you can afford to have an inside sales team you can afford to have them spend six to 12 months closing the deal it's a very different model than a you know thousand a month no touch sale that's right done we've productized this so we've automated the ability to do all of these things automation is a key theme here so we're not doing Professional Services we run a high gross margin and so we've we've set out to productize uh all of these different data Technologies which allows us to operate at scale very effectively and cost effectively to our customer yeah sorry what I meant in terms of putting touch on each sale was was before they've purchased right so what the sales organization looks like what is your team size today and how many of those folks are focused on sales we got a pretty small team uh on the sales side right and so primarily because we're using a channel strategy to go to market we're working with marketing agencies and helping them to help their clients become more data driven so that they Ure their spend goes through the so we are the data technology partner to agencies so we launch a business development effort to work with agencies as well as consulting services companies to help take our solutions to Market we do have a small direct sales team but uh we're seeing substantial growth using Channel strategies and partners to get to Market and so Chris what is the team size today uh six people six people okay great and then when was year one year one was 2012 2012 okay very good and then have you bootstrapped this or have you raised Capital we've raised two seed rounds so a very capital icient uh $4.2 million over two years the last round was two years ago and we've just notched our seventh consecutive quarter of being profitable so we pretty much bootstrapped it we didn't take big institutional money hey Chris congratulations I'm I wish more people celebrated folks like yourself you need your own Tech crunch headline you know we turn down a billion dollars of VC money because we're profitable right that's that would be much better well you know you control your destiny when you're not burning so that's right okay good so bootstrapped you raised how many customers are you working with today oh gosh we've got hundreds of customers we got 300 companies using our apis directly we've got 250 to 300 on a monthly basis that are the small mid-tier folks and then we got about 50 Enterprise clients that are paying us the bigger bigger money okay so so if you just add it up just because I adding all those together in my head I can't do quickly if you have just total customers you sounds like about 400 500 something like that 500 per month roughly yeah 500ish okay and I mean can I take that 500 times the $10,000 month number you just gave me and kind of back into a revenue figure of about five million a month or no no you'd have to go lower than that so when you think about the volume of numbers uh the the the lower end skews that considerably so when I said 10,000 that's probably not accurate average on on a per per customer basis okay got it well if we go back down even to your minimum right of a grand per month it sounds like that was what you got to spend to get started that's still about 500 Grand in revenue is that more accurate in terms of your monthly it's pretty pry pretty accurate we're 7even million run rate right now oh great targeting about n million 8 to n million this year that's great and take me back give me a sense of growth so you're at 7even million right now where were you in July of 2017 in terms of run rate so we pretty much we've grown about 50 to 60% year-over-year so if we go back about a year ago we were probably I don't know four or five million run rate got it so call it maybe 280 something like 280 Grand a month yeah maybe 300 yeah yeah that's good and where do most that most that growth come from is it coming from expansion revenue on accounts you already had or brand new accounts coming in it's coming from working with agencies and the reason being is that the agencies are getting beaten up by the Consulting Services Company right centure is the fastest growing digital agency now the reason for that is that they're going in and solving these data problems and using data to guide the marketing effort we see two three 400% Improvement in marketing Roi when we start helping organizations become datadriven and so what's happening is that these you know cognizant Whi Ros entur cap Geminis are going in solving data problems but all those organizations that created digital agencies now so the traditional digital agency is getting beat up pretty bad we come in and we say we will be your data technology part we will solve data problems solve data silos and use our engine to drive your marketing targeting and uh it's a great winning strategy and they're embracing us quite quite rapid Chris what I was trying to get up there though is are you driving more growth over the past year from expanding customer accounts you already had upselling them or bringing on brand new accounts from Channel Partners brand new accounts abut brand new from Channel okay and what's the kickback you give the channels why do they do it oh they make couple of reasons right in the casee of the the consulting services company they make avilable hours wrapping Professional Services around around our capabilities but we also provide a revenue share on an annuity basis for everything that comes through the pipe right so when you hit the versan platform for data data cleansing or for data enrichment or for prot targeting you know it's it's ongoing SAS based recurring Revenue model and we're able to share in that Revenue ongoing with those Partners so what is that like 30% what's the percentage 30 to 50% yeah 30 to 50 okay so if I back into your CAC right if you're acquiring a 12 Grand a your customer or a grand per month you're willing to spend up to 3,000 or 4,000 in terms of the kickback to the channel partner to acquire that customer uh you know I'd have to look at you know I don't know I have to get our CFO to look at the ca numbers to be able to answer that fully accurately but we're definitely willing to invest in the partners to grow the business because it's an ongoing Revenue stream so early on with some of the new adopters we're just launching a new Dev portal that allows Dev developers to access via API we'll be a bit more aggressive on the revenue share initially but we fig it'll settle out around 20 to 30% because they're also making money writing to those apis or they're making money on the creatives that drive through the channel so it's very it's a very synergistic partnership so we don't have to be too aggressive on a revenue share sure well I mean I would say if you give him 50% that's pretty aggressive 30% is you know a little obviously more less aggressive but maybe the first year right to get yeah what's turn today churn is very low it's like below five to seven percent and that's Revenue churn net per month uh you know I don't know if that's on a logo that's going to be on a revenue basis not logo basis okay but monthly or annually uh annually oh Ann okay good yeah that's really healthy good and that's net or gross you know that's a financial question I get my CFO to answer that I don't really I'm not sure what are you are you it's a big difference though right so five to s% re you know turn annually basically are you adding back expansion revenue or not do you know we're adding back expansion Revenue okay got it got it so so good that's helpful to understand um so five five to 7% Revenue uh churn annually and that's on a on a net basis that's great I mean what do you think you have to do to get to kind of net revenue retention annually of over a 100% net revenue uh sorry sorry what that would mean is you would build an inside organization to basically drive more expansion Revenue the only way to get to net revenue retention like higher than 100 is to basically Drive significant expansion Revenue it sounds like you've got some pricing axes that allow you to drive upgrades pretty easily but you don't have an inside sales team built yet to drive that you that adoption well you know the interesting thing is as we start getting in the attech space and start having our AI engine Drive recurring Revenue in the digital spend that's where the expansion grows substantially because the the it then it correlates to the ad spend of the business and so where we're doing some interesting things is in the B2B adtech Arena the B2B adtech arena in terms of digital has been pretty nent because most of the the targeting in the digital adtech is tied to Consumer entity data we have the unique ability to Overlay consumer entity data onto business data that allows us to Target an increase reach by 4X so we're seeing big growth in B2B digital spend and that spend is a ramp up which is how you get to you get to expand revenue on a per logo basis yep I'm in Enterprise I just signed up with you uh Jane freshworks dcom is in my CRM uh she I don't know this but she moved jobs to you know a year ago and has a new email address I just signed up for you how do you know that she's moved that's not her email anymore what is your source of Truth oh we're con we we pull in so we've got literally 10,000 files so we've got 60 or 70 different sources that we're pulling in uh in a from a a business data standpoint as well as we're doing our own crawling and indexing looking at resume websites things of that nature so unstructured unstructured data on kind of crawlers web scraping all of the above right and so there are different types of sources you have now you're not going to be 100% accurate with any uh you know any one file but we will be industry leading based upon all of that as well as applying ml-based models to predict certain things now um that's all in the business data now you start what gets really interesting is when you're able overlay consumer perspectives on top of that as well so that gives you Insight if all of a sudden you see a physical address from the household which is a non-consumer based attribute and that changes now you might have an indic Cas SP if it changes City there's probably likelihood that's been a job change right so that's an example how you get insights from something that might be more of a consumer attribute IE household where are you getting that consumer data from same thing unstructured data it's same type of thing we've got uh over 20,000 different fields of data Columns of data we can over overlay both business and consumer and so you think about it when you're building a consumer model who you are as a business person uh there's signal there right if you're a CPA at a Fortune 100 company no because I get I get the product I get the value I'm just trying to understand where where you're unique let me ask a different question um how much are you spending per year on your own data sources data you're ingesting so what's interesting we own all of our data right so we're not licensing data from the AXS and dmbs in fact we Supply data to companies like like that what about full Conta the clear bits things like that discover orgs um talk to all those folks Supply data to some of those folks get data from some of those folks Natures right so that's the problem that's where I get confused in this market Chris sorry I hate to cut you off we're running out of time though but this is the problem like it seems so ancestral everyone buys everyone else's data or if they don't want to use the word buy they trade it you give and they get the problem is like there's what is the source of Truth like what is your unique data capturing thing that I would pay you for versus I wouldn't get from anybody else if everyone just shares the data anyway so data is a commodity that's the fact of the matter unless you have a very unique source so there are some unique Source I certainly wouldn't probably share that on the airway sources are or how we get those we apply certain technologies that allow us to do some things but even if you have a unique Source I give that a a you know somewhat fraction of value because eventually becomes a commodity it's about the technology you wrap around the data our identity matching engine which is you know leveraging 30 years of experience dealing with the challenges of consumer and business entity data our our Auto automated etail processing and data hygiene engine that cleans up uh you know data very rapidly our automated pipeline I'll give you an example right uh one of the competitors in the space to quote one of our customers it takes them nine years to build a predictive model they may have meant nine weeks or even if they meant nine days we can build a predictive model in a matter of a couple hours and that's that takes the Daya end it cleanses it it standardizes it it enriches it with our proprietary data and then it pops it into an automated AI based modeling pipeline throughout that entire process process I mean that's six years of work we've done productizing and automating a technology layer around the data so the differentiation yes data is unique yes data is powerful um I can I can we'll go head to-head against anybody that has axim data or any other data source any other data source even if we gave them our data source we would beat them because it's what we do with the data with technology layered around it so data is a commodity if you're just a Data Business you're going to be treated as a commodity if you're a technology company you're going to get the multiples let's wrap up here second two quick questions before that though are you raising Capital right now uh we are uh in process looking at various ways to grow the company uh Capital raise is certainly one of them and um you know we've got some good things coming down future if you are considering a raise you've modeled kind of where you would spend the money so so I am curious right so if you did raise today how much ideally would you be looking to raise to fund your growth plans yeah so where this whole industry is going uh there's a lot of companies that are being features I should say being run as companies uh you're either the platform or you plug into the platform so we believe that the future is this is the customer data platform which is going to be the centralized uh data storage within the Enterprise from which all marketing is driven if you want to achieve the benefits so that's the direction we're headed uh we we believe we'll have a unique solution in that in that uh in that direction you know 20 to 30 million gives you the funding you don't need to go raise 50 60 70 I mean 20 to 30 gives you enough to build out the team on the tech side but mostly invest and sales and marketing is that what you're aiming right now you're going to go raise about 20 or 16 to give you a total of 20 20 somewhere between 15 to to 25 depending on structure of the deal okay and you'll sell somewhere between call it 10 and 30% of the business something like that Target 20% yeah yeah very good okay good let's wrap up here with the famous 5 number one what's your favorite Business book oh my favorite Business book uh let's see um or when you read I said I don't have much time to read books to be honest but um you know the subtle art of not giving F there you go that's a good one number two is there a CEO that you are or studying right now you know I kind of find Elon must be pretty interesting yeah number three is there a favorite online tool that you have to build your business besides your own favorite online tool oh that's email need everything done from through you use you didn't have email you'd be dead what do you g Gmail yeah gmail number four how many hours of sleep are you getting every night oh five or six and what's your situation married single kiddos I got two boys 11 I got three startups verum Jack and Nick good so 11 and 13 so between running around a soccer and uh being a single dad and a CEO I got my hands full I was about to say you surely do have your hands full and how old are you uh shoot I forgot that's bro that's not I think I'm only as old as my as relative age of my kids right I just turned 50 50 okay last question take us back 30 years what do you wish your 20-year- old self new what do I wish my 20-y old self knew um wow geez when I was 20 I didn't know a whole lot um that means you can answer almost anything and be right you know I think um my 20-year-old self what did my you know I think I think this question is a deep philosophical one I don't know whether I make it personal or business I think um give me personal extreme confidence have extreme confidence success will come guys there you have it if you're conf passion if you're confident you move with passion success will come coming from Chris launched versum back in 2012 ended up raising about 4.2 million bucks to service about 500 customers paying a grand per month doing about 580 Grand per month right now about 7 million bucks per year that's up from about a four or5 million run rate just about a year ago so Healthy Growth a lot of his growth right now is coming from Channel partners he pays 30 to 50% they're turning about five to seven per five to seven perent of the revenue annually again and what they're doing is basically again you connect up your data source with them your CRM they first make sure the data is accurate but more importantly he's really focused on wrapping proprietary technology Tools around the data so you can get more value out of it faster potentially going out right now raising call it you know 20 million bucks or something like that selling call it 10 20% of the business Chris thank you so much for taking us to the top thank you very much