How Yotpo CEO Tomer Tagrin grew Yotpo to $213M revenue and 4K customers in 2024.

hello everybody my guest today is tomorrow to grin he is the ceo and co-founder of a company called iato the leading commerce marketing cloud for d2c brands having raised over 100 million dollars yatpo has a global team of 350 and 4 000 plus clients that include glossier steve madden mvmt think and away travel tomorrow was the chief designer for intel and graduated from tel aviv university all right tomer are you ready to take it to the top yeah all right all of you x israeli defense folks you're always making hundreds of millions of dollars so when do you hit a billion dollars in revenue yeah it's a good question i would say a billion dollar probably we need like six seven eight years something like that at work very good all right let's jump into the business so so what's the company doing are you pure play sas yeah so we are pure play sas and what we're trying to do is we think the shift of amazon created the world of a lot of direct to consumer brands and everybody's going right to consume and we think the most important thing that they need to have is their experience or their marketing effort because nobody buys a nike shoe because nike is the most comfortable shoe in the world right products are becoming commodity and it's only about like how can you create an experience to bring consumers and get them buying again and again and for that we're trying to build like an integrated marketing stack that's going to give you everything that you need in order to build the best experience for your consumers yep okay so so give me a brand i mean you mentioned thinx and some other brands in the in the bio but can you tell me a story of how one of these brands is actually using it to me increased lift or average cart price or whatever the utility metric is you're driving definitely actually one of the brands i like the most is sol digenero and it's a small brand of cosmetics that i just love the founder she's great and like the killing it and not a lot of people know about them so my favorite brands are actually when i'm telling about brand are the brands of the tomorrow like chubbies i don't know if you're familiar with them yeah man's like really cool so i think we're doing a few things one we have like four products currently our entire strategy and i'm sure we're gonna talk about it like product expansion but we started as a reviews platform okay so we really help those brands generate content from their customers think about like product reviews site reviews and then we enable them to deploy it on the website email marketing social marketing search marketing to both increase like conversion rates retention rate and decrease customer acquisition cost and we can talk about exactly how we have a integration with google shopping and we also have tons of widgets that you can put across the buyer journey to convert them better then we launch another product yeah sorry go ahead no no i want it real quick before you go to the other three products um i talked to a lot of multi-product companies and a very telling kind of question and answer is always what percent of your current paid base is currently paying and using for more than one of the products in other words how good are you at cross selling inside a product what is that number for you do you know yeah so now it's like 57 that's pretty good 47 and 42 are more than three products that's very good oh three products and more sorry three products and more well you only have four right yeah yeah you'll have more well let's come back to that yeah let's come back to that later in the show so so on average you know this because you listen to the show but on average you have companies paying for one two three four uh or even four products sometimes what's a brand gonna pay you caught per year to get started on the platform yeah so even we have a free product and a self-serving that you can start with like 29 or 19 dollars a month it's actually our best legion it's less as a revenue driver for us it's more about a collision because we believe that in commerce you have to serve the smaller players because the glossier wasn't glossier like five years ago right so we actually like to support those so on our free product we have like 60 000 brands that are using our free product so that's a been very very good for us as well how have they found the free product is this an seo player what's the play there yeah so in commerce it's not a some of it is seo but to be honest it's more about like you have a few ecosystems so the biggest one is shopify then you have magento or now adobe commerce cloud you have salesforce commerce cloud you have sap hybris you have b commerce woocommerce so what we did is we built a really really intimate integrations with those we really walk in a lot to increase presence there so from education to marketing dedicated in those ecosystems and that's like the number one i'll say another thing that's working for us really really well is the agencies currently we have a few hundreds of agencies that are deploying europe on their customers so think about like e-commerce dev or marketing uh agencies that are leveraging your for their customers so tomorrow all the revenue you added last month what percent was through your agency channel 26. okay that's pretty good now now are your margins naturally worse than that channel because you pay cake back to the agencies or no yeah yeah on the first year yeah but unroughly like our margins are like 80 and a little bit i'd say 81.82 and so like we're actually enjoying like really high gross margins so that's something that we are more than fine doing that's good okay i want to get more your back story but first so um ignoring new customers and kind of how you're using the free product to drive the lead gen the average customer you have today what are they paying per year for the platform yeah so again it's really really very the variance is really really big so averages here is like can be confusing i'll say yeah and but i will say like we look at this like two tiers or three tiers we the smbs on average are paying around 15k a year and the mid markets are paying around the 45k a year and we have a handful of enterprises we haven't started going after enterprises we have a handful that are paying like around 190. okay um okay interesting um and when you break down the revenue split between smb mid and enterprise would you say it's like you know 20 40 you know 40 or what does it look like no no no so smb is where we started and we are very very focused i will say smb is around like 50 to 60 percent okay and mid market mid market is our fastest growing part of the business but it's still of the total revenue base i would say between probably 30 to 40 and enterprise is another 10 interesting okay so you have really perfected the model of moving people from a fifteen thousand dollar plan to a forty five thousand dollar plan by cross selling products it sounds like that's your biggest growth driver right now yeah that's one and also we live in industry that we are lucky that a lot of those businesses are exploding right they're growing themselves yeah one when you look at it was public but when you look at like a kylie cosmetic right one of our customers like massive growth like amazing growth because of like their the kardashian brand so i think those businesses are growing so we are growing with them and definitely the the second driver that the massive one is the multiple product without a doubt how have you made sure to align your product pricing axes so that you can capture more wallet share as these brands grow or do you tie directly to gmv or number of skus or what is it yeah so it's a great question i don't think we like master it yet we're walking on it and i think like pricing is a never-ending uh like it's always evolving right and so i think it really depends on the product and there's some product that's like it's different so you think about like reviews it's more about like how many consumers we're gonna engage with how many consumers we're gonna send review requests photo requests etc a loyalty and referrals it's more about like how many customers are in loyalty club or how many customers did the referral and so it's we try to basically align it to usage per product yeah okay but it's generally tied to some activation metric related to the customers of kylie cosmetics how many reviews can you drive for kylie from her customers how many can you get into her loyalty program for your other product things like that so then kylie specifically not using our loyalty but again you can go back to like steve madden right let's use our loyalty and uh our reviews yeah yeah okay interesting put this on a timeline for me when you launch 2011 we launched something completely different end of 2011 like completely different we can talk about that as well then i think the first product went live like end of 2012 okay probably the real product and we started monito monetizing 2000 end of 2014 or beginning of 2015 we actually started monetizing okay and how many customers have you scaled to today so now we have around like 4 000 paying customers okay and we have like i mentioned like another 60 000 on the like three products and that they're using the platform as well so let me ask you you talked you kind of hinted here at a pivot so between 2011 and 2014 when you launched your pricing how were you paying yourself did you guys raise capital on day one yeah yeah it was the joker that i'm telling internally that we thought would be...