SaaS Interviews with CEOs, Startups, Founders
1501 247.ai Passes $300m ARR, 10% EBITDA, No $6B Vista Sale
03 Sep 2019
Chapter 1: What financial milestones has [24]7.ai achieved recently?
24-7 AI, north of $300 million in ARR, flat year over year because they dealt with a cybersecurity kind of a breach issue. But again, well on track now to drive growth. They are profitable, only $20 million raised to date, which is obviously great. Taking 10% in free cash from the bottom line, helping to grow that to 20% monthly in terms of profitability here shortly.
10% churn annually on a gross revenue basis, but 10% expansion for 100% net growth.
spending up to call it 12 months of first year contract value to get the customer in the first place as they look to scale with our team of 800 again in the chat and customer experience space hello everyone my guest today is pb canady's the co-founder and chief executive officer of 24 7.ai a global leader and intent driven customer engagement he holds more than 30 patents issued and pending and has been featured in several books as cx thought leader in his new book the age of intent is now available on amazon pb you ready to take us to the top
Yes. What the hell is a guy like you doing, wasting his time writing a book? They make no money. They're a lot of work and they just take time.
All of them are true. But I think the world deserves to know how the customer service world can be fixed. And, you know, there's a lot of, you know, wrong information floating around. And I thought, let me just correct it by writing a book.
Okay, good. So tell us what the company does.
What we do is essentially use artificial intelligence to automate customer service interactions, right? So the conversations you have with brands, you know, today's on-demand customer wants, you know, resolution right away. They don't want to wait. They don't have patience and artificial intelligence helps and kind of taking, doing the heavy lifting.
Okay, good. And is it pure play SaaS? Yes, it is. Pure SaaS. Okay. Give me a general sense here of sweet spot. Describe like a sweet spot customer for you.
A sweet spot customer is, you know, a brand that has millions of consumers where it's really challenging to handle all the inquiries that come in through email, chat, messaging, you know, phone calls and so on and so forth. So anyone who's got, you know, over a million customers and they have to, you know, in a demanding industry, which is service oriented, we are a perfect fit.
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Chapter 2: How does [24]7.ai leverage artificial intelligence in customer service?
economy. So I started asking myself in this new age of digital, is there a better way to do this? You know, because what I noticed in the contact centers is chat is still being treated like a phone call, right? They'll say, how can I help you? And then, you know, go through the same script that they did if you were on the phone.
But if you think about the 800 number system, it was really designed for the 80s when nothing else existed, right? Today, customers are on web, on apps. They're like well-informed. So the old paradigm of how can I help you is kind of almost obsolete.
The new paradigm is you should already know what the customers are doing, leveraging AI in the backend in real time, be able to predict what they're attempting to do, right? And then be supportive of what they're trying to do online, not like trying to do the task for them. And customers love wanting to control the experience and do it themselves.
And especially when you talk about 2019, everything is pretty much on demand, right? Music, content, food, name anything. You can just click an app, order and get it. And the only thing that's missing and full of friction is customer service.
So this was your beachhead. 2000 is launch date. Help me understand this kind of size today, right? How many customers are you serving actively?
We're serving over 150 customers.
Okay.
And the company is roughly about 300 million in revenues.
That's great. So did you do this bootstrapped or decide to raise capital?
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Chapter 3: What defines a sweet spot customer for [24]7.ai?
And the $250,000 we're talking about is per year, right? Not everyone spends $250,000, right? So our average is, to do that, it's about $2 million a year.
Yeah, yeah, yeah. I was going to say that. That's exactly what I was building too, right? So that's how you get to where you're at. Now, back in 2017, you put out a piece on Reuters, right? Rashika published it, Saddam, that basically said you guys saw revenue crossing $400 million in fiscal year 2018. Why'd you miss that?
We missed it because we had a security breach. So, you know, we have we had to like pause and our sales pipeline essentially vanished. So it took about a year to recover. Now we are like we in our last quarter was our best quarter in the company's history in terms of new revenue bookings.
What was new revenue bookings growth like 10, 20, 30 percent in the quarter?
You know, it's about 20 percent growth.
Yeah. Well, I mean, at your scale, that's pretty impressive, right? I mean, I can only think of a couple other private B2B SaaS CEOs with your scale of revenues, right? So Reggie at Cvent comes to mind, and there's maybe only two or three others. Who do you talk to to brainstorm with?
The Sequoia portfolio is a very good portfolio. So we have events and other structured time. And I also spend time with other Sequoia partners, not just Mike Moritz. because they're all helping enterprise companies. So you kind of like, you know, lean on them to get advice and inputs as to, you know, what goes on. And I have my own network of CEOs here that I spend time with.
So, you know, like you said, you pick the right person for the right type of problem, because some folks that I talk to are very good with people issues. Some are good with customer issues. Some are good with talent issues, like what kind of talent do you hire?
Because, you know, as you grow the company for every stage, you need the right management team and the right people underneath to help scale the company. And we've seen it with whether it's Facebook or Uber, you see that, you know, as it matures, different types of leaders, different types of leadership styles start coming into effect.
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Chapter 4: How does [24]7.ai handle customer acquisition costs?
The technology side of the company is about 800 people.
Okay. Why do you say it like that? Is there another side of the company?
We also have a services business. So, you know, one of the secret sauce of what we do is we also employ human agents to teach AI. So, you know, we have a few thousand agents in that category as well.
Contractors or FTEs?
Both, the combination.
Interesting. Okay. When you look at the kind of the revenue over the past 12 months, what percent was pure SaaS versus some kind of other consultative professional service revenue? Now, you guys have heard me on this show interview a lot of people playing in the e-commerce space and they are crushing it.
In fact, if you guys are following e-commerce as a trend in general, you know that e-commerce brings in over $500 billion in sales each year and is expected to grow to 1 trillion in the next decade. You've got to be selling online. Now, here's the thing, it's very difficult to do this.
A lot of these platforms charge expensive transaction fees, which is fine if I'm an investor in the business, but it also means a small business has to pay more money. Right. Here's the thing. I found this tool called Volusion, which maybe their business model is not a good one, but it's great for the merchants because the merchants make on average two X more than on other platforms.
That's you, the seller with the e-commerce idea, the physical products you want to sell online. Again, great for you. This is Volusion, the easiest and fastest all in one e-commerce platform designed specifically for small businesses. You don't need any coding or design experience to check it out. So come see why Volusion is the number one rated e-commerce platform according to Trustpilot.
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