SaaS Interviews with CEOs, Startups, Founders
1468 How Moat Picked $100k ACV, Grew to $50M+ ARR, Exited to Oracle for "$850M"
01 Aug 2019
Chapter 1: What is the background of Jonah Goodhart and Moat?
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He launches company mode back caught 2010 really to help make sure what advertisers were paying for is exactly what they were getting in the long run. Think of it almost like just double checking internal systems at Google and Facebook and other kind of big ad platforms grew that to a healthy degree said, you know, we're going to go after $100,000 ACV accounts.
There are several hundred people that can pay that. They grew to over 500 folks paying that kind of account, that kind of money. So over 50 million bucks. call an ARR, really one of the first, I would say, ad tech companies that was truly not fake, but a real SaaS company, really ushered in, sounds like in 2012 with a Mayfield exercise.
Since then, sold to Oracle for a reported $850 million, now building and working at Oracle inside the data cloud with a much longer time horizon and timestamp that he's thinking about. 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.
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Chapter 2: How did Moat achieve $100k ACV accounts?
So we've spent the last I would say seven or eight years at Moat prior to being acquired by Oracle, really asking questions about how people pay attention and about how we can maybe understand that attention and how ultimately we can help people figure out effectiveness of their stories. Because at the end of the day, I believe that advertising is simply storytelling.
And so that's what I've spent a lot of my, I guess, last seven or years of my professional life focused on.
So 2000 was founding, or sorry, 2010 was founding date for Moat?
2010 was founding day. Yeah. So I had been, I had been in the world of, of marketing and advertising for many years before that, going back to the late nineties when I was in college at Cornell, um, started a company with my brother at the time, led to a couple other companies, led to angel investing, uh, and a handful of other things. And then we really got started with moat in, in 2010.
Okay. 2010. Then you build it, you scale it. I believe you raised significant capital there, 60 or 70 million.
Yeah, we raised just under $70 million. So we had self-funded the first $3 million ourselves. So my brother, Noah, myself, and one other partner, Mike Walrath, the three of us co-founded the company. I was the CEO, and we put in $3 million of our own money. And that lasted us a little over a year, almost two years. from 2010 to the end of 2011.
We then took about a million five from friends and family. So it was, we called our angel round. It was SV Angel, Lair Hippo, Founders Fund, but then- It was equity. And we had individual CEOs that wrote checks. So Dan Rosenzweig is the CEO of Chegg. Greg Coleman, who's an advisor to BuzzFeed, was the former president of BuzzFeed, et cetera.
A bunch of sort of interesting people that we were sort of impressed by and thought were great leaders in the space decided that they would invest in us. And so we raised $1.5 million in the end of 2011. And then 2012 was when we raised our first institutional route.
And so we went out to Mayfield, and Mayfield led what ended up being about a $13 million, what we called a Series B. Our numbers were, our lettering, I guess, was sort of funny. So we had- Pre-seed, seed, you know. It was weird. So we, well, we'd raised $3 million or put in $3 million of our own money. And then we raised a million five in, in friends and family and angel.
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Chapter 3: What strategies did Moat use to grow to $50M+ ARR?
It was real recurring revenue.
Yeah, so let's talk about this because I'm passionate about it. So first of all, when I talk to companies and they say that they're SaaS, I say, okay, do you have 70, 80% gross margins? Can you predict what your revenue is going to be for the next year or two? Do you think of things in terms of churn and MRR
And you'd talk to me about cogs and talk to me about how you think through what goes into that number. And that's how you figure out oftentimes whether people are real SaaS or not. We certainly were a real SaaS company. We were actually one of the only companies in sort of focused on the world of advertising that actually priced in that way. So we priced based on an annual contract commitment.
We had recurring revenue deals.
Did you have expansion levers to pull? I mean, what was net revenue retention?
Yeah.
So we looked at it. We didn't play the churn games that people play in terms of the net revenue attention. So I got very into SaaS and SaaS metrics over the last five or so years prior to being acquired. And one of the things that people do is they come up with this sort of funny thing where they say, well, we'll look at churn, but then we'll look at how much money was added on top of it.
And the total will somehow be more than 100%. I never liked that way of looking at a business. I liked the idea that a hundred percent of your customers staying with you is the top that you can have. And then what are you lower than that? Cause some people are going to cancel for a variety of reasons. And that was how we always looked at Jonah.
Why is that more? So I'm curious why you looked at the actual logo and, versus here's a story a CEO might tell me on a show, right? Nathan, we're transitioning to enterprise. We've churned some customers we can't serve well anymore at lower ARPUs, but we've added people that are paying five, six times that. So of the cohort that signed up a year ago, 10% gross revenue churn, but 40% expansion.
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Chapter 4: How did Moat maintain a strong customer base before the acquisition?
Perhaps. But honestly, at the end of the day, I felt like, well, the team, there's a lot of people in this company that this is either their first job or their second job in the industry.
their eight hour day working on this and the difference that this will make in their life is pretty phenomenal and so uh i i remember going through this sort of matrix of what's the upside of selling what's the downside of selling what's the upside of not selling what the downside of not selling.
And the only conclusion that I had come to that the downside of selling was that maybe we're leaving some, some value on the table. Maybe we're leaving some money on the table. And I felt like, well, that's, that's okay.
Because in the end of the day, the upside is that a heck of a number, a heck of a lot of people are going to do really well by this, including our employees, our shareholders, and, and, others and if the downside is only well we could have made quote-unquote even more money then that would, it's a pretty silly way for me, I think, to look at the world.
I felt like, all right, these guys are going to do great. Everyone's going to be really happy. We should do it. The downside of, of course, not selling is that something could change. The market could change. The business could fundamentally change. It didn't, luckily, and I think we would have been in a great spot, but you can never tell the future.
I go back to my time at a company that I started called Colonize. I started it in 98 with my brother, Our first full year of business of Colonize, totally different company, we did 15 million in revenue and 10 million in profit. Our second year of business, we did 30 million in revenue, 20 million in profit. Absolutely insane numbers that turned out were definitely too good to be true.
We didn't know that though. We didn't know that 2000 and 2001 were about to change the world. We didn't know that the bubble, quote unquote, was gonna burst.
we didn't know that the companies that were spending money with us were going to go away we didn't know that the economy was going to change obviously we didn't know what was going to happen on the 11 and the rest of what happened and so i think my sort of takeaway from that was wow we had this crazy situation which we could have looked at and said hey we should have kept running this company colonized my first company forever but we made a decision at the time not to sell and i looked back on that and felt wow
In hindsight, of course, it's 2020, but that looked pretty silly. Had we sold, the only thing we would have done is maybe left some upside on the table. That's pretty good. Life is too short to worry about that sort of thing.
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Chapter 5: What was the process of raising capital for Moat?
I feel like in the end of the day.
When Oracle came to you, you obviously do the deal. What was the sale price and the end price?
So Oracle doesn't announce what the prices are that they do deals at for private companies. So there's been some reports of what the range was, but Oracle doesn't. to talk about the numbers specifically.
Okay. I mean, Recode, which is, I mean, pretty reliable folks, you know, said 850 million bucks. You're saying you can't make a comment on that?
I mean, unfortunately, Oracle doesn't talk about pricing, but it was reported by a couple of different outlets in a couple of different ranges. But yeah, unfortunately, I work now at a public company and have rules that I have to live by there.
Yeah. Let me ask it in a different way. New York tech scene is kind of up and coming. Kind of the bigger exits in this kind of space might have been like Buddy Media, etc. Fair to say that whatever the price of this exit was, it was meaningful for the New York tech scene?
Absolutely. I mean, I think our team and employees and investors, I think everybody felt very good by what this deal ended up being, but also not just because of the money. The money, of course, is great, and that's huge, and everyone's happy about that, but by the company that we were going to get a chance to partner with.
Oracle is a storied company that's been around 40 years, literally 40 years, and We talk about Silicon Valley and we're sort of blasƩ about it, I think, sometimes. Oracle is one of the companies that helped sort of create Silicon Valley, that helped create what I think we're all sort of leveraging these days in terms of software and business models and figuring out how to scale companies.
And I think for me, the chance to work with and at and be a part of a company like Oracle was exciting. I had never worked at a big company. And so I was excited about taking on that as a new opportunity for learning, as a new challenge. And it's been tremendously rewarding from my perspective. I'll tell you one thing that happened post Oracle is that I lost 70 pounds.
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