ABOUT THIS EPISODE

I'm the CEO of Apptimize! We're probably installed on your phone right now because we work with top 10 apps in every category in 100+ countries. Prior to co-founding Apptimize, I led the Fixed Income Quantitative Strategies team at GETCO after studying Math with CS at MIT.

English
United States
explicit content

TRANSCRIPT

00:00:00this is the top entrepreneurs podcast we're founder share how they started their companies and got filthy rich or crash and burn each episode features revenue numbers customer accounts another insider information that creates business news headlines we went from a couple hundred thousand dollars to two point seven million
00:00:24money when they started to come it was a hundred sixty nine dollars which is the sign the Europeans perfect strapped like at twenty two thousand customers five million downloads in a very short amount of time major outlets like in car calling us the fastest growing business show on
00:00:42iTunes I'm your host Nathan Lafayette and here's today's episode live on my guest today is Nancy washes the CEO of optimize and they're probably install on your phone right now because they work with over ten there with ten apps in every category in over a hundred plus countries
00:01:00of the top ten apps practical founded the company she led the fixed income quantitative strategies he might get co after studying math and CS at MIT Nancy are you ready to take on the topic yeah definitely all right tell us about the company what do you do and
00:01:12how to make money okay so I would ask my is all about is we work with mobile teams I'm anyone with an apple and be let them do AB testing and feature fighting for their products so they can make different versions of their apps and send them to
00:01:25different users to measure what's gonna do better and on our margins my intonation strategy is pretty straightforward terms as being a sass company so we charge based on like two axes of a monthly active users and the features answer is that you get with our products so it's
00:01:44a yearly contractors like pretty straightforward terms of building out our enterprise he'll see which is banned the main focus for at least the last few years I want to talk more about that we know yet forty people are forty seven I think you said today was talking about
00:01:57the growth there give me a sense of average size so like what would you say the average customer pays you per year and it's our easy is gone up to a little more than thirty five K. now %HESITATION per year and but our biggest customers are paying more
00:02:11than three hundred hits per year and we have to stress the past like subprime paper you're too but a lot of those are on the website and what axis is a is a higher leverage point for you for driving additional kind of expansion revenue number of monthly visits
00:02:24or them out again feature sets them because a lot or lever allow and definitely the most active users our biggest month after users are like we were in on some of tops in the world like by birth that's one of the top ten acts in the world and
00:02:41they have more than I mean I don't know how to look at it like they have you know hundreds of millions of monthly active users so that's huge and to support that kind of scale we've had to do a lot things arms structure but same time that like
00:02:53massively can grow as well other unlike services side there's not that much more that I can grow yeah side interest other companies though that are tied to %HESITATION some variable like that when customers originally signed up there always nervous because they don't want their fate they want the
00:03:07cost to be fixed not to scale with their growth did you have an objection when you're signing up customers and if so how do you overcome that objection especially via your enterprise sales team yeah we definitely don't to scale the nearly so the more they where they add
00:03:20on month active users the the like more economical to get her monthly active user and then I think there's a lot of the big ones like and if you're if you're a barber's scale like it is hard for them to buy a lot of products so they will
00:03:34find pricing for a lot of company is prohibitive so it has to make sense in terms of how you market it architected your products that you're not like each additional month active user is that much more expensive you can still like to allow the processing yep I want
00:03:47him with the Backstreet here in the growth but let's start from where you are today how many customers have you scale to a few hundred combined yeah we're it feels like it's a grind when login eat you know like he's always like our it's always getting harder and
00:04:02like the count calories coming I'd like talk with the team about the that blog post a lot where he talks about how eventually it'll feel like there is is when you are the only and there are whatever like you then there is this end in sight or something
00:04:16like that and I know in terms of scale you mean in terms of a RTL gringos are you close to ten thing there but still like I don't feel like it that much easier it's I think a lot of it is that the market is a ball to
00:04:31you because with and when we first started very few people had apps that they were about to teach about I'm and very few people were doing any kind of a B. testing %HESITATION I think that it was something that everyone aspire to but not something that people view
00:04:46this really normal and now it's like really normal so that the landscape has totally changed now we're selling and said companies like I mean our customers are now Starbucks in like the last journal staff writer early customers where will the first companies like hotel tonight and strata so
00:05:01that's a pretty different C. on profile so I think that because this like have a lot of learning and just it's not like a Bahamas it's not like the same scale as the earlier sales you know if you had to have all the time what currently a growing
00:05:14a year over year or are always forgetting into exterior growth rate that would be great great lake and on seventeen I don't know how I can say like well our year ends on tomorrow actually because our fiscal year is on it and at the end of January so
00:05:33everything depends on like these two deals that are literally getting approved right now so inner racking and that'll be great that'll be great for growth rate on but if they slip a little bit I mean obviously it's not that big of a like I'm not gonna discount anything
00:05:45to get it done a week early but it is it does always come down to the White House is like the last day of the quarter of glass in the air those are the same if these two deals close you'll be up at your two X. target if
00:05:57they don't you'll be a little below is that fair to say will be a lot below a lot yeah that's like that that's how big these deals wow so like if you two deals in as you do you have any customers that make up more than ten percent
00:06:07in revenue now we're still pretty balanced in terms of like an still having a bunch of a bunch of like Diversey and the customers that but I think that's our goal though like for the next year we do want to close a million dollar deal and stuff like
00:06:24that and that'll let's re aspirational for us right now because it's like it's already in the pipeline exactly right so we know how to close one of these deals where that amount money that's not me that's great I love and and is it fair to say I mean
00:06:37you said a hundred you said hundreds of customers might just take a minimum of a hundred and then take your ACV that you mentioned earlier thirty five I mean you guys are north of three hundred grand a month right on right now yeah yeah have you broken five
00:06:46hundred and that we're very close to like we're we're right around there right now and they'll be like really depends on that think thanks thanks for sharing that I know a lot of people's sometimes they do sometimes they don't but it helps my audience better gauge kind of
00:06:59where you're at so good so about five hundred out about five hundred right now a couple her customers some big doesn't pipeline scaling enterprise sales team you've dealt with this past twelve months give us we are today in terms of your total team size how many are they
00:07:11sales people and what's been the challenge in getting up to speed and there's five sales people and there is no actually now there's six sales people there's also success the ours %HESITATION and then the rest of team is like you know investment company is customer success in marketing
00:07:25and engineering size what I'm it's forty something like it fluctuates a little bit and I think like everything the sales team is really new I think that's up a lot of it and we had two people who are pretty experience in sales for a lot of it is
00:07:43and people who are moving into sales from other areas that they were in and learn to do sales for the first time an optimized so I think I'm you know they're like super smart and hard working but we need a lot of training in terms of the basics
00:07:54of sales selling objection handling things like that yeah and dislike pushing it with our good the deal is lake and I think we've had we had a lot of success with generating enterprise pipeline %HESITATION earlier this year I think it was just a market shifts where there were
00:08:09a lot more like I described there's a lot more interest from an established companies that are not mobile first and making sure that their digital strategy is really solid so a lot of them just came to us and and a lot of our content on to start generating
00:08:24a lot of pipeline around there so then we had to give enterprise deals to a lot of sales people would never done any cells before you know and that's like a lot of work and then they kind of just thrown in there so I think a lot of
00:08:35it was the senator Feinstein on a little bit in some ways I think it's more I want I want to make sure that the sales per people and feel like I'm motivated to do it and don't feel like they're just in over their heads you know because I
00:08:50think that's the whole thing like this runs on brown I guess ill company does to some extent discussing has to feel like they're gonna kill it you know and %HESITATION if they don't know what they're doing at all or they just feel like it's very confusing they're not
00:09:00in control of the deal that I think that's hard do you have on quotas yeah Chris about how many months is a taking new sales person a ramp up to the point where they're pretty consistently hitting quota and they can't rants their author there on the ramp put
00:09:12it for the first quarter and then after that they're on a full quota on and I think like three months three months ramp yeah they start with a Nancy are aggressive with the mid market deals I think you can see like really early on that like you know
00:09:27just how qualitatively to have the conversations are going so you can see like if they're picking it up and if they know and if they can talk to our market and have a lot of empathy for the user base which is product people yet and generally what you
00:09:38said full quota at and I think right now Mr Marek on around indicate for your quota okay and and you know it's like fifty fifty basin but us yeah and and I think you mentioned earlier with a thirty five thousand dollar a CV I mean that kind of
00:09:52thing out of by that a hundred grand are having a close what twenty deals a month state that or corner not yeah I had to get twenty twenty twenty deals times thirty five thousand dollar ACB gives you around eight hundred mark I'm just curious if that's over a
00:10:08month they have to close at over a quarter over a half a year I know that's over a year let's over full okay a whole year to hit that quota yeah got it okay got it that's in that's it's interesting okay good I'm so that scaling and and
00:10:20give us a sense of what date when day one was when you watch and we've actually launched in January twenty fourteen we want ten techcrunch and I don't like it yeah the different news outlets most of our lease of always been in bounds so right and how much
00:10:37time is it now I'm not sure if you like I've been more out of the loop on what is really cool a lot of hunters that I don't know better they go I guess I just get on techcrunch every is gonna change but then people who have done
00:10:46it like almost overnight we see a spike in we got like no new customers I think it depends on your target audiences for us %HESITATION for mobile force companies they definitely look at it which are early customers but for we were selling until like you know the Starbucks
00:10:59of the world they don't really read techcrunch that much yet unit economic stuff what you're trying to like today well we've heard a lot there actually is a little while we had on just I think we just did stuff in the order of the final that it was
00:11:11coming and select the first optimize onboarding random we optimize like similar such and then lay leader on were optimizing the success that we hadn't even track like usage very properly were like look at any of the stuff which is the main leading indicator turn so now I'm usage
00:11:27is one of the key company metrics like one is happy metrics the whole company looks at and we all are trying to improve and so our turn is sub ten percent in terms as like not counting crows and then our goal is I'm sure Nancy a revenue charm
00:11:42on notes revenue turned honestly and that's over a quarter over quarter century about forty percent of your revenue annually so I don't think it's that high okay man I feel like you know the Sask math way better than me we are looking at no I think it must
00:11:58be annually than because not that high it's like when we yeah I think it is reported like quarterly has everything like comes at the end of the course we see what the term numbers are ten percent annually revenue churn seem them yeah that's about average for this kind
00:12:11of space yeah I think it was it was like worse than that and last year why he was like twenty eight percent a little more than twenty percent even I'm remembering it was because we weren't like doing anything we were tracking it that hard and it was like
00:12:27every company that turn would be a total surprise you know because we talk with them periodically but we weren't really looking to see if they were using the products you're like well they have long been in three months no one track and we we would discover that like
00:12:39some of them had never properly installed it or different things like that and that was just bad was about on us and so we started tracking usage in different adoption metrics and that it was we were leading indicators because turns alternate lagging indicator rear like you feel safe
00:12:53just ignoring it for a long time because it doesn't come up until finally like during a lot of the yeah a lot of the bigger customers like they are just always seem really happy you know or like they're just they they say they move really slow so they're
00:13:08just making excuses for why they haven't done anything for awhile see feel kind of safe but now we're like that we don't trust me that something really until I start using it now metrics yeah that was revenue turned with low turnout annually do now is about the same
00:13:21on I'm not sure what it is I don't think the track will return because we have on all the self serve customers to that aren't on annual contracts and so that turn is just something that we haven't paid attention to yeah I think we started moving towards more
00:13:34gap metrics so the way we're like we're focusing more on like the stuff that is really standard restaurant is not you know I gotta try self serve stuff makes up what percent your annual revenue would you say less than what and it's around fifteen percent right now is
00:13:47really low on yeah but it's still like I feel and attention to those customers a lot though because they're kind of the most they get the most pure our product experience because we never talk to them and they don't talk to a sales person so they're just like
00:14:00what you with what you don't do nothing no tension now yeah yeah it's just like can they figure out how to use our product without us doing anything yet and in some cases knows okay what happens you and like what did you end up doing what do you
00:14:12like to optimize your pay that period for on your thirty five thousand dollar ACV cohort well I don't know your money back I think it's like %HESITATION we're just looking to make sure that as that equation that like LTV is greater than three times CAC or whatever is
00:14:31true yet so I'm not exactly you know you spend a choir customer it's pretty estimate yeah like right now on it's like a few thousand dollars or something really is less five grand yeah that's I think that's a may I mean super low if someone can you thirty
00:14:47five grand a year you're getting your money back very quickly yeah I think that was because for a long time we we do very little adwords or anything and we were doing a ton and on the marketing side and very recently like started with our STR team so
00:15:00now have to see what it is now yeah I'm but a lot of ours is wrong time is like inbound from your blog which is kind of leverage thirty thirty five grand a year comes out to about I think three grand a month so if your pain five
00:15:10six grand in CAC emits a two month payback and that's assuming people are paying this annual contract monthly I assume probably some of them are all annual up front right yeah we are moving to like we change the way were %HESITATION commissioning you know campaign the sales people
00:15:23so they're more incentivized to pay to get paid up front now and that's made a big difference our cash flow here's a dangerous question what do you see my time I was on these customers and based on what we're measuring it like we haven't had enough turn that
00:15:37it looked like it was lower than you know playing nine years later it was on average it was really weird so we just assume three because that's what it is standard we want to be conservative in our operating model to thirty five grand times three years as the
00:15:49conservative press about a hundred grand yeah that's conservative though since you said you're working deals now and help to close a million dollar deal soon yeah I mean it our product is pretty sticky when it went to the doctor and because when they start integrating us into their
00:16:03product they'll use us to make all the changes in their apps so any new feature will go through Actimize in everything that they're doing becomes targeted and measured and that becomes pretty hard to pull out after awhile so as they're actually using us for the version of the
00:16:17product to make sure that there are accelerating what they're learning about their user base then hopefully we were with them forever and we can you know become this tool that helps them learn everything that they want to know about their users yeah any opposition candidate you probably testing
00:16:31many for accessing channels are you testing conferences at all conference sponsorships we started doing a little bit that were unattended hell it's hard to tell I think are on meeting tell like demo conversion rate is really confusing so I need to look at is we're looking at it
00:16:46and I think that %HESITATION we're starting to probably decide to measure at conferences just based on acceleration of a deal instead as new deals as it was getting too weird interesting like a lot of customers are already here you can meet their knock out twenty meeting where the
00:17:02prospects at least I think we are at conferences I don't know if it's just the way we're doing it but somehow it's arty people crying RD in our people and we're getting that sank last two questions before we wrap up with the famous five growth rate will be
00:17:14going out he said it's too at you you're doing to ask about your over a year and you said about five and a grand today so worried about what to two hundred ash twelve months ago yeah it was yeah I think wrong is a little about that okay
00:17:27right now I would like a lot depends on these details are cuts coming into the weird when I go back twelve so data you already have to go back twelve months you it was some around two ten to twenty something like that when I think so okay this
00:17:42feels like so long ago I know it sounds crazy as you just heard my finance guy so money Willis and now we've got we've got a bunch of data here %HESITATION I'm gonna love you so much if you say your bootstrap and have a say I haven't I
00:17:55haven't ideas you're gonna about is that you're not how much of your race we raised a little more than twenty million Nancy up daggers in my heart and I'm just getting okay to raise twenty million Bucks obviously you kinda have to do that especially here in San Francisco
00:18:08with friends and the growth strategy as a pursuing but the growth is there and that your finalizing sales teams that all sounds good when was the last one was last round %HESITATION RB was in twenty sixteen okay are you raising right now no we I when I raise
00:18:23the B. as very like I'm never gonna do this again yeah I mean it was not a good time to raise two I think it was I mean it we got like it with the rounds really good to us but we might end I'm glad we raise more
00:18:36than we and that too and it was oversubscribed everything you Asian or just more money %HESITATION both both like because when in twenty sixteen it was them this vast populace thing was happening anywhere and you were saying various start ups were being over valued I remember that if
00:18:52it was getting like him around like they had a weird drama like I'm Linden and sales force even in the public markets were getting hammered lots of things are happening so that the stock market's weren't that good and like a lot of the scenes weren't even really out
00:19:05there looking so I got a lot of advice that we should be raising then but we like so I did you end up raising I'm in last round it was almost fifteen million okay and and was it where you have like two were you %HESITATION free money were
00:19:21you more or less than twenty five million dollar valuation where more your markets grace I mean you were doing back then about two and a half million air are so well over ten X. multiple pre money yeah definitely that's great but I think these multiples are just like
00:19:36really random they're just kind of like in sassy seen anything from like of like a five next to like a forty X. food is like yeah me too but I know I'm a good answer why they vary so much outside of just the charisma of the founder and
00:19:49and sometimes it there some rationality in the numbers I mean why do you think you commanded a great valuation which nobody to raise that capital and only give up you know less of a company that you would have what would you credit to I mean it just about
00:20:01negotiating and having other alternatives and stuff so it's like how much they can tell how much you need the money and then they can also tell like you know if you have other term sheets is that and I don't know I just kind of set the price yellow
00:20:11just the negotiation yeah are you contrapositive today are you still spending that money investing we're targeting that pretty soon so that's what it when I raise last night it was very late we're gonna target going cash flow positive with this that we don't have to raise again and
00:20:24control our destiny and not do this experience again and you think you three this year I'm now the target it sounds like it's gonna take like to the beginning of next year there will be a pretty half a positive but it the the model also still assumes that
00:20:39we're only collecting quarterly %HESITATION if we do succeed in getting everything over to up front annual then that'll make a huge difference and so yeah hopefully good stuff Nancy that's right here with the famous five number one what's your favorite business book my god am I feel like
00:20:54everyone says the hard thing about hard things and I did just re read that again I think like every once in awhile you need to you know just read something that you find really inspiring on that one yeah gonna number two who is your favorite C. on San
00:21:08Francisco to go to dinner with well actually see your friends they really like debate on all the last friend that I had dinner with was %HESITATION Brad from talk a little use I think you would love a lot you should have in your show blind basically wraps and
00:21:26%HESITATION they make a lot of money and I mean I think they're just really good at the fundamentals and killing in their space your last round did you take any my optimal yourself or was it all going operations out all those operations and I'm already you know fine
00:21:39like my previous great everything is going to make sure that our companies do really well that's great number three what's your favorite online tool to build your business side you're on so I you so many tools I mean I see a lot a lot in just like how
00:21:53banning said everybody I still like do a lot of nasty our work because now I am fine it's fun number four how many hours of sleep to get every night earn seven okay and what your situation married single have kiddos I know I have a I have a
00:22:07boyfriend okay so not married no kids no kids I a first my eggs last year a womanizing so I'm laying which companies used to do that and I just wanna UCSF interesting interesting and Nancy I'm asking how your I am thirty two thirty two to think about that
00:22:27last question take us back twelve years when he was your twenty year old self no well the MIT quant what you wish she knew I didn't know anything then I think and then I didn't think I was ever going to be an entrepreneur is really surprising that I
00:22:47start my own company so I think it's that you know I had good instincts about the type of people I wanted to be surrounded by and I think that's like the first actor what led me to best where if all inspired by the people that I was meeting
00:23:01who had done their own companies and stuff like that and you must have so much fun everyday it's like talking with and I love my life has come in and say I just do this all the time I left can you tell that I love it you're good
00:23:12at it all right guys are gonna from Nancy again sounds of a mentor's early on she wishes may be sure to start the company earlier on clearly she's having a lot of fun and optimized again helping folks understand and do AB testing at scale at to the tune
00:23:25of you know hundreds of millions of monthly visits in the apps there all the way down to a self serve model makes about fifteen percent of the revenue they launched company twenty fourteen and raise about twenty million folks sorry twenty million Bucks serving hundreds of customers that pay
00:23:38on average thirty five thousand Bucks a year in terms of HCV there doing around five underground right now in revenue up about from to intern twenty grand just %HESITATION twelve issue months ago so healthy growth less than ten percent revenue turn per month for their team of forty
00:23:50five people based out there in San Francisco I they double down on scaling their sales team Nancy thank you for taking us to the top I think they've been

Transcribed by algorithms. Report Errata
Disclaimer: The podcast and artwork embedded on this page are from Nathan Latka, which is the property of its owner and not affiliated with or endorsed by Listen Notes, Inc.

EDIT

Thank you for helping to keep the podcast database up to date.