SaaS Interviews with CEOs, Startups, Founders
1361 Adthena Passes $7m in ARR, 80% YoY Growth
16 Apr 2019
Chapter 1: What is the background of Ian O'Rourke and Adthena?
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He would have, you know, had a little more patience, not got as hot headed as maybe he did back in the day. But look, it seems like everything is working now. 2012 launched Adthena. Again, really competitive intelligence, results driven, enables people like call it clothing manufacturers to understand what's going on and maybe certain states if they want to drill down.
But again, unique, unique competitive intelligence for search specifically Adthena. The company is now over 200 customers paying 3, 4, 5 grand per month, doing about 600, 700 grand per month right now in revenue, 7.5 million run rate, hoping to break 10 million in terms of AR by the end of the year. They're growing about 115%. That's 1, 1, 5% year over year in revenue from 2017 to 2018.
90% revenue retention annually. That's on a gross basis. Net revenue retention flirts with 100% when averaged out. Willing to spend up to 30,000 bucks on CAC, which is about a nine month payback period.
cacked out to be about 4.5 so 140 000 bucks in lifetime value or about 36 months is what he assumes his team of 80 people based in austin london and sydney 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 of 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. 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 Ian O'Rourke.
He's been involved in technology and businesses and startups for over 22 years and has built businesses in Australia, Taiwan, Silicon Valley, and the UK. Today, he's working on Athena, and he's been doing that since 2012, building it to its current position as the premier global provider of competitive intelligence. Well, Athena itself has won many major industry awards.
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Chapter 2: What is the customer acquisition cost (CAC) and payback period for Adthena?
Around about $5 million. Okay, $5 million USD. And where would you say most of that has gone? An engineering team or user acquisition or both? Um, you need to get spread really engineering and sales sales and marketing. Okay. Break, break down this kind of machine. It sounds like you, you mentioned inside sales a few times.
What's the team size today and how many of them are focused on the inside sales? Good question. So the team overall, uh, we have offices in Austin, Texas, London is the headquarters in Sydney in Australia, and we're probably 80 plus people. Um, who's in inside sales, I think there's probably 15 to 20 people.
Okay, so pretty healthy, call it 25, 30% of the company have dedicated to inside sales, that's great. When did you hire your first inside sales rep and how did you work out the initial economics of what the ramp should look like, what quota should be, things like that? That's a good question. I found it very useful to have benchmarks.
So I think Insight Benches does a periodic table of sales when field and inside. And so you can look at the benchmark ratios on that and then places like SASTRA. I have a whole lot of blog posts about how to structure comp plans. I have a sales background. I used to be a director of sales running a whole Asian operation out of San Francisco.
So I had a reasonable idea of it, but then I had to translate my old-time on-premise sale, perpetual license selling to SaaS model. Selling SLAs and maintenance contracts, right? Exactly. Selling a big bubble up. and then moving on to the next one. but you know, SAS is SAS is a better arrangement than that.
And, and yeah, there's a lot of thinking and a lot of testing that has to go on into, uh, how you design those comp plans. And then we've had to revise them as well. Uh, you know, each year we look at, are they, are they fit for purpose? Are they doing the right motivations and so forth? So we're getting better and better every year.
So when a salesperson, one of your sales field today is fully ramped, what's their target in terms of new AR they add and call it a given quarter or given year? I have to translate this into dollars. They're probably doing a bit north of a million dollars. Okay, that's their target. Yeah, in a new business environment, yeah.
Yeah, so over a year, you want them kind of closing a million bucks in new ARR. Yeah, and it's different for different segments of the market and so forth. So we're working more on multiples of on-target earnings. Tell us what that means. So if you come in and you say, look, I want to earn a hundred grand. So you're going to be 50 base 50 on target.
Then we're going to say, all right, we need you to deliver five or six times that at least. Yep. So you let them set their own. They'll come in and say, I want to make a 250 grand a year. You're going to say, okay, here's your 50% base. If you agree that they're worth it. And then you're going to say, in order to get the other 50%, here's what you need to close a new ARR.
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Chapter 3: How does Adthena generate revenue as a SaaS business?
So we can tell any advertiser everything that's relevant to them at any point in time so that they know everything. their whole competitive landscape, whether or not they knew about it or not. We do a lot of gap analysis and exploit that.
We've now brought to us so you can look state by state across the US if I'm only really interested or maybe I'm only licensed to do business in New York state for an insurance product, for example. then we can drill down on that now. Or maybe I'm running, you know, we've got a big retailer running swimwear campaigns. They want to look at Texas, California, Florida, and New York.
Then we can break down that view of the whole market in each one of those states. Ian, churn is critical in this kind of business. What's your churn today? So we retain a bit north of 90%. And that's revenue retention annually? Yes. Okay. Okay. That's gross. Sorry, that's gross, not net retention. So net retention can be as much as 100% or more if we add it in upsells and things like that.
So we look at those two figures, gross dollar retention in the 90s, and then net dollar varies quarter to quarter depending on upsells, quite sensitive to upsells. Are you generally above 100% though? I mean, that would be meaning your expansion more than makes up any losses? Uh, yeah, not well 18 months of, uh, doing much upsells. It's still bumpy.
We don't have a fleet of people doing the upsell. So we might do a really great quarter of upsell. So that quarter will be well over a hundred. And then we might do a really slack quarter of upsells and that'll be, you know, that'll be under a hundred. Walk me through fully, uh, kind of fully diluted CAC. What are you spending to acquire a new customer?
Fully diluted clack, last count in dollars, probably, I think it's roughly $30,000. Okay, good. So your payback period there is about eight or nine months if the ACV is $50,000. Yeah, yeah. I think last I saw, the last figure I saw was around $4,500.
uh ratio of ltv to cac okay but but payback so four and a half ltv to cac that's great uh uh so-called 120 you're assuming about 120 140 grand in ltv something like that yeah yeah what what how do you use that number so if you know lifetime value is 140 grand do you use that at all in business decisions or just a number you have to have because everyone asks about it It's a bit of both, right?
It's a bit of both. I like to look at it and see the improving health of the business, right? We just want to make sure we track all of the traditional SaaS metrics that people recommend and they're
and we want to make sure that we're within the boundaries of sensible there, that we're not overspending on marketing and sales, or we're not under investing in it, that we've got, you know, growth rates that are going to get us at the right models of patient. When, uh, we've, uh, By the end of this year, we'll have been reasonably successful adding several million dollars in the U.S. market.
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