SaaS Interviews with CEOs, Startups, Founders
1534 With $10m in ARR, He Left Amazon to Help F100 Brands Sell More on Amazon
06 Oct 2019
Chapter 1: What is the main topic discussed in this episode?
Founded this one in 2012 after stints at Amazon and eBay, helping big brands really understand how to drive higher returns on their e-commerce products. Moving right now, kind of focusing, doubling down on larger brands. They've got about 36 customers doing, call it 10 million bucks today in ARR. They've raised 20 million bucks to drive this growth.
Net revenue retention annually, call it in the 110 to 120% range. Willing to spend up to one year of ACV on acquisitions, so call it 100 grand there. A team of 80 people between California and India. Hello, everyone. My guest today is Guru Hariharan. He founded Boomerang Commerce with a vision to empower intelligent commerce.
Formerly a leader at Amazon, he worked in the inceptive stages of Amazon's supply chain and merchandising organizations. He co-founded one of Amazon's cloud businesses, established Amazon's first B2B marketing channel, and invented Amazon's selling coach to help brands and sellers be successful with Amazon.
At eBay, he was GM of Marketplace Experience, led the global team that launched eBay's fast shipping program as well. He earned his MS in computer engineering from the University of Texas in Austin and his MBA from the Wharton School. Boomerangs Commerce IQ powers growth automation on Amazon for Kellogg's, Kimberly-Clark, Logitech, and numerous other top-tier brands.
Guru, are you ready to take us to the top? Yeah, let's do it. Hey, it takes some balls to leave Amazon when they're growing so fast. What convinced you to do it? You know, you follow your dream. So it was it was time at some point it was I was doing the same thing again and again. And you can either be you can either follow the money or you can follow a dream.
So at some point in your career, you got to you got to choose a path. And was eBay before or after Amazon? It was right after Amazon. OK, so it was Amazon, eBay, then quit eBay. Yeah. That's right. Yeah. So I wanted to get myself into the Silicon Valley and move to the Bay Area, get to know the place and all that. So I spent a short stint, about a year, at eBay.
Well, Guru, just to be clear, it's probably a little easier to quit eBay than it is to quit Amazon, right? It was, definitely. Amazon was a harder choice, for sure. All right. So describe what you're doing for me. I mean, what it looks like you're doing is helping some of these bigger brands merchandise effectively via Amazon as a channel. That's right. Yeah.
So again, as you mentioned, our vision is to power intelligent commerce. What does that mean? Building intelligent applications for retailers and brands to win market share online. So why do we need to do that? So if you look at the way that e-commerce or the modern retail is working, it's It has completely changed the game for consumer brands. Take, for instance, Amazon as a poster child.
Double click into Amazon. It's an algorithm and it's a machine that you need to figure out how to work with. The age old techniques that you as a consumer brand used to use to work with brick and mortar retailers like Target or Kroger just does not work. You need a machine to work with a machine called Amazon.
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Chapter 2: What motivated Guru to leave Amazon and start Boomerang Commerce?
It's about three quarters in that we're doing this. But one of our early customers has just doubled their ACV with us. From year one to year two? Yes. But then it's, again, very early signs. We do expect to sort of have a high upsell rate. In our retail business, we've enjoyed a very good net retention, net and gross retention rate. How high are you, if you don't mind me asking?
Well, it's above 100% in terms of the gross retention rate. If you look at- Wait, hold on, hold on. Gross retention can't be above 100%. Net retention can. I'm sorry. Yeah. So net retention rate is above 100%. Yep. Yep. How far? Like 110%, 120% or lower?
Somewhere in that region, it's a little bit complicated given that the retail market has been a little challenged in terms of just the existence of the business. There are some customers that we've had in the retail market who've gone bankrupt. So if you sort of back them out, then it's way above 120%. Interesting. But that's a that's a challenge that we had to face with.
And in fact, that was the reason why we had to expand our market and get into a newer market, which is more a tier one and provides an ability for us to scale sales linearly. Guru, when you mean when you mean kind of pivot into a new market, you basically what I mean that you're codifying this, you're moving upstream to Fortune 100 brands. That's right. Yeah. Yeah. Interesting.
Put this on a timeline for me. When you launch. We started the company in 2012 and took our series A. We were in TechCrunch Disrupt. We were one of the finalists in New York in 2014. And right after that, we raised our series A. And two, three years in, we raised our series B. And the first inaugural product was the retail product, Dynamic Pricing.
where we would help retailers change their pricing online depending on demand signals. And we recently launched our Commerce IQ product, which is the product for the consumer brands, which helps them grow on e-commerce channels. And that was in 2018. So total in the company today in terms of funding is how much? A little over 20 million. Okay, a little over 20 million.
And when was the last round you said? It was a couple of years ago. Okay, a couple. So like what, 2015, 16? 2016, yeah. 2016. Okay, so that means, I mean, once you raise venture capital, you're on a flywheel. Every about 18 months, you got to be raising or you're in acquisition talks. Which one is it? Well, I may not subscribe to the idea of constantly raising.
We, as a company, have always been very careful about what is the right pace at which you grow. We've sort of moved away from the concept of growth at any pace, which is really followed in the Silicon Valley, or at least it was a couple of years ago. to really a growth at the right pace.
For instance, one of the tenets that we have in financial models for any year is our cash burn has to be equal to or lower than the new ARR that we add that year.
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Chapter 3: How does Boomerang Commerce help brands succeed on Amazon?
So from that standpoint, we've always been sort of a very cash efficient company. And I don't know if I would want to raise a lot of capital in building this company. I think this is a very A-class market. The retention rates are very high. ACVs are very solid. The customers are top tier.
And if we can continue this path, this should be a very good cash efficient business with an inherent growth rate that we can enjoy and grow at a very good pace. Guru, are you profitable, cash flow positive today? We are not cash flow positive. But as I said, the nature of the SaaS business is in such a way that you have to invest in sales in order to get your revenue for the next year.
So from that standpoint, our cash burn every year is equal to a lower than the net new ARR that we add that year. Yeah. Well, by the way, that's why if you're a fast-growing SaaS company, you raise more because you clearly identified where to spend money to then drive ARR.
So if someone tells me they're not raising in a SaaS company they haven't raised for a couple of years, it actually tells me growth is probably flatlining. Well, so I think there's also an aspect of taking a step back to expand our target market. So we had to sort of, in this year, we worked very hard
hard to market our time significantly increased uh we were going after target market about uh three to four hundred prospects uh in the in the in the us and now we are uh we are chasing a time of over five thousand consumer brands uh in the us so we had to sort of take one step to build r d and build a new product and launch it into the new market now is the time for acceleration
But as I said, I think it's a while I completely respect the ideology of growing, putting money and raising more to to grow. We think we have figured out a very good sweet spot where we can we can enjoy a double to even triple digit growth in in the coming years without having to really raise a lot of capital. Yeah, fair enough there. What have you said?
You've addressed the total addressable market. What do you say in terms of total customers on the platform? We are an enterprise market, so our company sort of looks more like, say, a Viva Systems or something like that, as opposed to a Salesforce.
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Chapter 4: What unique challenges do consumer brands face in e-commerce?
Sure. So we are a little over a couple dozen customers at this point. Okay. I mean, so like 36 is a fair number? Yeah, somewhere around that. Okay. I mean, and then you gave me kind of minimum ACV earlier of 100 grand. So can I take 36 times that? You guys are doing about 300 grand a month right now in revenue? We are over 10 million in ARR at this point. Oh, okay.
And just be clear, that's pure SaaS? Yes. Okay. So that would mean you're doing closer to like 830 grand a month. That just means your ACV is a little higher on the 36. The average is higher than 100 grand. It's kind of a bimodal distribution that we have.
There are some modules where which are sort of land modules are at a smaller ACV, but our larger customers are the ones that have stuck around for a while and we've been able to upsell them some pretty good amount over the years.
So it's got an inherent sort of growth rate built in because of the way we are able to upsell ourselves into these customers with the three dimensions that we just talked about earlier in the call. But it's a very bimodal distribution, I would say. Yeah, yeah. By bimodal, you mean you very much see power laws. Your top 10% of customers make up more than 80% of your revenue.
I would say by buy model, what I meant was we have two cohorts. One cohort of companies are ones where the average ACVs are around 100 to 200K. Another cohort where the average ACVs are somewhere around 500 to a million. And we're essentially trying to do our job well so that we can move a lot of this cohort in the early stages.
So the 100, 200K range, show them really good success with us and inherently grow them into the larger pool. Yeah.
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Chapter 5: What is the business model of Boomerang Commerce?
Guru, just to be clear, though, I mean, if you're doing 10 million bucks in ARR, you've got one account at that million dollar mark you just said, that's 10% of your revenue right there. That's what I was trying to get at saying. You've got, you know, your top customers make up a significant portion of your revenue. Yes. So that's absolutely true.
I think there'll be there's certainly sort of that that mechanics that are built in. There'll be some customers who are actually making up a good portion of our revenue. Yeah. And talk to me about growth. So if you're at a 10 million run rate today, where were you about a year ago, October 2017? So we're a private company and we're not discussing growth rates and all of that in public.
But having said that, until 2016, early 2017, we were in this, the way that I look at the company and we've been building the company is to sort of be the winners in the market of growth. of retailer and dynamic pricing. And we were able to go out and win some very good deals and have some top tier customers like say Staples or Best Buy and Home Depot and Nordstrom and folks like that.
And then 2018 was all about expanding ourselves to the new market. So the company building, the formula for company building has not just been purely growth in ARR at this point, Yeah, by the way, Guru, I wasn't expecting that. I was expecting you to say growth is probably like 20% year over year right now because you're repositioning. But I wanted to hear you say it.
I mean, it sounds like you actually are a little, you have like a, maybe it feels weak to you, but you are repositioning. So it makes sense. I mean, what was your growth? Like, was it in the 10 to 30% range? It was definitely double digits. But on the other hand, it's the way we are measuring them.
Again, the reason I was describing that to you was the fact that our measurement of growth in the retail business was slightly was a different way for us to as was as versus the brands within the brands business. They're both SaaS though, right? Both of them are SaaS. The consumer brands business, we've been doubling every quarter. But again, it's very early days.
It's just the third quarter that we've been in business in the consumer brands business. But it's been enjoying a very strong growth rate. Yeah. So a year ago, you had no revenue really coming in from that product is what you're saying. And you're excited about that product. But I'm going to make an assumption here.
What I'm hearing you say is if you add in the old product that maybe wasn't growing as fast, it's why you invented a new product. your average, when you put them all together, your growth rate maybe doesn't feel as impressive as you think it should right now, but you are excited about the new product. That's right. I think, yeah, so that's a way to say it.
That's what people will think though, Guru. I'm just going to point out, I mean, like I'm looking at signals or haven't raised in two years, you've already raised. So like there's a time bomb there, no matter what. You said it yourself. If a company is growing, you're going to spend more upfront because of your CACs upfront and you're going to bet on the LTV.
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Chapter 6: How does Guru define the company’s growth strategy?
So a little right around there. I do expect our CAC to go up, but our ACVs are also going up. Yeah. You know, that makes one. It sounds like you have healthy expansion revenue. You cited a customer earlier that doubled their ACV year over year. So that allows you to spend more on CAC. That's right. Sure. Talk to me about team size. How many folks on the team today?
We're currently about 80 FTEs spread between here and India. We've got our engineering center in India where our sales, marketing, customer success, finance, and GNL is all over here. Very good, Guru. Let's wrap up here with the famous five. Number one, what's your favorite business book? Well, I've just ended. I've just stopped reading the the the Challenger sale.
I thought it was a fantastic book and long overdue. I couldn't believe that I hadn't read it in such a long time. Maybe it's because we subscribed to the idea and did not find a need to read it. But a great book and I highly recommend it. Number two, is there a CEO you're following or studying right now? Jeff Bezos has always been a role model.
So definitely sort of look at his not just the way that he he's growing the company, but a big fan of the cultural aspects of things, the hiring practices and all those things. Number three, what's your favorite online tool for building the company? Well, right now, we've been using this email list very interestingly. It may not be a tool.
I don't know if it qualifies to be a tool, but there's a really good email list that Peter Casanti drives or owns and moderates called Modern SaaS. It's an email list that CEOs and heads of sales are subscribed to. It's been just a phenomenal tool for us to just do some peer networking and bounce off ideas from peers. And sorry, who writes that?
It's a it's the email list is called Modern SaaS and it's been moderated by Peter Kazanji. Where do I get that? Like if my audience wants to sign up for that, I'm going in right now. Nothing obvious pops up. Modern SaaS, Peter Kazanji. Modern SaaS at Google Groups, but I think if you- Oh, co-founder of Talentbin. That's probably it, yeah, yeah. Yeah, yeah, yeah, yeah. Okay, good, yeah.
I'll put a link to that. That sounds like a really valuable resource. Okay, good. Number, where are we at here? Number four, how many hours of sleep do you get every night? About six. And what's your situation? Married, single, kids? Married with one child. One, all right. And how old are you? He's seven. You? Oh, me. I'm 39. 39. Last question. What do you wish your 20-year-old self knew?
Well, 20 years old, I would have probably started the company a little earlier and maybe worked with a startup before starting a new company. Boomerang Commerce said he would have started a company earlier, founded this one in 2012 after stints at Amazon and eBay, helping big brands really understand how to drive higher returns on their e-commerce products.
Moving right now, kind of focusing, doubling down on larger brands. They've got about 36 customers doing, call it 10 million bucks today in ARR. They've raised 20 million bucks to drive this growth. Net revenue retention annually, call it in the 110 to 120% range. Willing to spend up to one year of ACV on acquisitions. So call it a hundred grand there.
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