SaaS Interviews with CEOs, Startups, Founders
1195 3 Metrics Automated Insights Focuses on as a Private Equity Owned Company
01 Nov 2018
Chapter 1: What is the main topic discussed in this episode?
He's been in and out of SaaS companies many, many times. Most recently hooked up with Vista and jumped in one of their portfolio companies. That basically helps really with automating a lot of content creation, right? Whether it's sales scripts going out or helping the AP write posts all based on data. So significant time or time costs, right? On humans that used to write these things themselves.
Automated Insights is the company. Now at several hundred customers, 65 people between Durham, New York, Seattle. many other locations, less than 9% gross logo churn annually. It's not unrealistic to see their customers doubling their ACVs year over year, which is great. LTV definitely north of 250 grand.
Again, average contract value first year, about 24 grand with triple digit year over year growth. This is the top entrepreneurs podcast where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines.
We went from a couple hundred thousand dollars to 2.7 million.
I had no money when I started the company.
It was $160 million, which is the size of many IPOs.
We're a bit strapped.
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Chapter 2: What is Automated Insights and how does it operate?
We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Mark Zions.
He's had a successful career leading companies since 1987 and is currently the CEO of Automated Insights, a Vista Equity Partners-owned company. He's the independent board director for Pivot3 and many other companies along with Friends of the Earth. Besides enjoying time with family, he is an avid outdoorsman and accomplished bicycle racer. Mark, are you ready to take us to the top? I am.
All right. Thank you for having me. You bet. Give us the story here. So let's start from the beginning and go from there. What does automated insights do and what's your revenue model? How do you make money?
Yeah. So automated insights is a leader in natural language generation or NLG. And essentially what NLG is, is that we take structured data as an input and we can create from that data, a story or a narrative or a report that sounds like it was written by a person, but we do that through software. The business model for this is it is a subscription service.
So it's a enterprise SaaS software subscription in which our users with a basic subscription can create an unlimited number of use cases, have an unlimited number of users, and then they're picking how much production they want per month. Basically, how many outputs? If you want 500 stories, 5,000, we have customers that do over 20 million a month.
Is it based on stories or the word count per story? Not word count. It's based actually technically on an API hit, which equates to each output. But we really don't care if that output's a sentence, a paragraph, or three pages. It's all the same. Oh, it's all the same in terms of cost structure and output for you? Yeah, it is.
it's just a matter of how many outputs you create but the length of the output doesn't matter okay so paragraph is going to be one api call and so is a single word that's correct okay so if someone writes a bit you know you know i mean it's a 10 paragraph long piece of a piece of work via your tool they're going to pay the same as someone that types one or you generates one word yeah yeah nobody's going to generate one word but that's the point a sentence is the same as 10 pages
For most people, the kind of output that we create is anywhere from a couple sentences to a paragraph. And at the most, typically, it's going to be a couple pages because that might be some sort of a report.
I see. Okay. And you used the word enterprise. So give me a general sense here. People are paying, what, $10,000 a month, $100,000 a month? Or are you higher than that even?
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Chapter 3: What is the revenue model of Automated Insights?
How did that work? I mean, did you most private equity firms or people in-house always looking for deals? And sometimes when that person kind of leads the deal internally, they end up actually running the company post deal. Was that the case with you at Vista or no? Like how did how did Vista say, oh, we got to get Mark on this company?
Yeah, so I knew a number of the Vista CEOs and Vista people. So you're right that sometimes that happens where an operating partner looks at the deal and they take over. In this case, I was a known entity to Vista and I was very, very interested in working with Vista because they're quite unique. And that uniqueness is that they exclusively invest in enterprise SaaS companies.
So when you think of private equity, there's some niche firms that are very vertically focused, but they tend to be smaller. Vista is very large, but vertically focused on software businesses. You see other companies in their size, they may invest all over the place. They don't necessarily have an expertise in the industry. So I think the Vista model is quite unique.
I think it brings a lot of advantage to our customers. I also think it's very attractive for our team because it provides them with a tremendous amount of development and how to operate a business with best practices.
Okay. So So 2008 was founded. You joined about a year ago. Avista bought them in 2016. You joined in 2017, obviously via Avista. The founder, original founder, I think you said chairman, so still involved to some degree. I think we understand the products nicely. What have you guys scaled to in terms of total customers?
I don't have a total customer count, but it is several hundred customers that are active. And what's really interesting is that our sales team is in the US, so we're based in Durham, North Carolina. We now have people on the East Coast, on the West Coast. We're expanding the team outside.
We don't have anybody outside the US, but we actually have customers now in 40 countries that are creating their use cases in over 25 languages. So that's something else. You can create this output in English or Mandarin or French, whatever you want. So our reach is quite large for the size. And what's also really interesting is that we have Fortune 100 customers.
And we have customers that have 10 people that are just growing their entire business using technology and leveraging technology so that they can punch way above their weight. Yeah. So it's really fascinating to work with that range of customer sets.
Well, yeah, and it's certainly not at a $24,000 minimum ACV on year one. I mean, obviously, it's not an SMB play, but yeah, you could still be stay pretty scrappy with that budget and really save a lot of times. You know, you think about it. The CEO is usually one running that sales report on a small team every week. If they can automate that saves a lot of time. Right.
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