SaaS Interviews with CEOs, Startups, Founders
1613 Can He Build a $100M Company Selling $100k ACV Plans to So Few Customers?
24 Dec 2019
Chapter 1: What is Streamdata.io and how does it relate to high-frequency trading?
launched stream data back in 2008 now serving out 17 enterprise accounts doing less than 100 grand per month in revenue but hoping to break that threshold sometime in 2019 uh next year they raised 10 million bucks to build this company team of 15 based between paris and other remote locations in the states five percent annual revenue churn so net revenue retention obviously opposite of that 95 percent
spending about three months of the customer's value on acquiring the customer in the first place. But right now, a fairly long sales cycle because they're hyper-focused. Again, streamdata.io. Banks using them to understand and basically get data flows to help them better understand their customers and their data sets. Hello, everyone. My guest today is Eric Horsney.
He's the CEO of Streamdata.io. He's also the founding team member at Internet Way, which was a French B2B ISP, sold to UUNet, then Radians, a global finance cloud, which was sold to BT. He's a high-frequency trading infrastructure expert passionate about fintech, IoT, and cleantech. He looks after three at home and has worked in San Francisco, New York City, Mexico, and now Paris.
All right, Eric, are you ready to take us to the top? Yes. Ready to go? Yeah, ready to go. All right. So what is stream data? I mean, is this tied back into your high-frequency trading roots? What's the company do? Well, actually, when I was a high-frequency trading engineer, I was helping my customer make money by being faster than others.
Chapter 2: What is the customer acquisition cost for Streamdata.io?
So people would buy solutions for $1 million a year. And when I would catch up with them six months later to check whether everything was okay, they would say, yes, I made it up with the trade. Um, so that was, uh, surprising. And then after, after that, I realized that what we were doing was not necessarily good for the ecosystem. And I became repentant and started to focus on.
What do you mean repentant? Like you went to church or what? Uh, pretty much, uh, not church, but, uh, let's say I would regret the fact that I had helped people make money, um, in the backup others, and I wanted to try helping retail consumers so that they could get access to data and transparency of data. So the focus of StreamData is about transparency and real-time data sharing.
Okay, and so who's your customer? What's your pricing model? Is it a SaaS company? So it is mostly a SaaS company. Customers are typically banks and brokerage firms. They consume data through us. And we also distribute our technology through partners, including Exignite. Okay. And give me a general sense.
I'm sure you have a lot of different kinds of customers, but on average, what's the customer going to pay you per year to get access to this technology?
Chapter 3: Who are the primary customers of Streamdata.io?
It's around $100,000 a year. And what will they get for that? And for that, they would get access to data for, let's say, a million devices receiving data in real time. What kind of devices? Any mobile device, any Apple, Android, anything. Like of their own team, of all the bankers that work at the bank, or that's CP consumer data they're buying? That's data for the consumers.
So typically they buy the technology so that they can stream data from the market to mobile devices. And so my next question is, so where are you getting your data? We're getting data either from the customers themselves, some of them generate the data, or from partners like Xignite. Sorry, you're saying from podlers?
Either from banks themselves, they generate data themselves, or through a partner. Oh, partners. Got it, got it, got it. Now, do you pay these partners, though?
um we made it simple so that our technology is included in their technology and they typically are the ones contracting with those customers i see okay very good uh put this on a timeline for me when did you launch the company what year um 10 years ago 10 years ago okay so 2008 is a heck of a time to launch a new banking tool did you get laid did you get laid off No, no, not at all.
And actually in Europe at that time, the situation was not as bad as in the US. But there was already a need for mobile applications in trading to leverage whatever Apple was bringing to the market. So 2007 is the launch of the iPhone.
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Chapter 4: What is the pricing model for Streamdata.io's services?
So a year later, we started to focus on the subject of real-time data for mobile devices. So it's been early on. So over the past 10 years, how many customers have you scaled to? So we're, um, we're focused on very large companies and, uh, we have 17 customers. Yeah. Yeah.
Very, very, I mean, at a hundred thousand dollar ACVs, you can afford to only focus on a very tight niche and still build a big business, right? That's, uh, that's the subject. Yeah. That's great. And I mean, can I take, can I take that 17 number times, you know, a hundred thousand dollar ACV, you guys are doing 1.7 million run, run rate right now. Nope. Okay. And why are those numbers wrong?
Because some of those numbers are actually based on contracts that were signed early on, so not necessarily in terms of recovering revenue. Oh, got it. So some of them maybe were early pilots, people you maybe brought on at a lower price point because they were early customers and you needed them early, things like that. Exactly. Okay, so let me ask a different question.
When do you think you break $100,000 a month?
Chapter 5: How did Streamdata.io evolve since its launch in 2008?
um next year like early in the year or later in the year you think later and and how how are you getting these new customers uh mainly through partners and uh yeah mainly through partners we're being uh distributed right now by uh all the major uh cloud vendors and the we're also distributed as a complement to some solutions from my ASV vendors. Okay.
So, so since you're, it sounds like you're under a hundred grand today, obviously you're hoping to get towards that towards the end of 2019. I mean, is it fair to say you're closer to maybe kind of 40, 50 grand per month right now today? Is that accurate? I cannot disclose that. Okay. Well, you've, I mean, we already know it's less than a hundred, so we're not getting that much more specific.
Here's the reason I'm asking. Maybe you can help me here. I'm trying to figure out growth rate. Growth rate. We doubled, our revenue this year and we plan to quadruple next year. Okay. Well, if you're going to quadruple next year and your plan is to break a hundred grand by the end of next year, that means if I take a hundred grand about it by four, that's 25 grand a month. So, right.
So if you triple, if in order to get to 25 grand, you trip, you doubled then. Not in SAS.
Chapter 6: What challenges does Streamdata.io face in customer retention?
The calculations in SAS are different. I don't understand if you're going to quadruple year over year and your target for the end of next year, when you quadruple is a hundred grand, you divide a hundred grand by four, you go down to 25 grand today. If you quadruple that, you get up to a hundred grand. Well, it depends on the cards of revenue you're getting during the year.
So it is not because if you get, if you quadruple your revenue on your MRR at the end of next year, then your revenue for the year may not be quadrupled. I'm not asking for revenue for me. I'm talking about run rate. Oh, okay. All right. Yeah, sorry. I'm not talking about like cash accounting. I'm talking specifically about like run rate, right?
So today, 17 customers, you know, paying, you know, if you're doing less than $100,000 a year, obviously they're paying, you know, less than, you know, $100,000 ACVs. And what you're trying to say is you're going to scale up over the next 12 months to hopefully break $100,000. And the way you plan to do that is adding new logos or expanding customers you already have? Adding new logos. Brand new.
It's all in the banking sector still or are you expanding your verticals? Most probably. Most probably in the banking sector.
Chapter 7: How does Streamdata.io plan to grow its customer base?
We just signed an agreement with Salesforce. They're going to distribute us in the AppExchange. So this is massive in terms of logos that we should bring there. And we're signing other distribution agreements right now. Why do you have so much confidence in the Salesforce AppExchange bringing you deals? I mean, you're a small player for them. Why are they going to give you prime location?
They selected us as part of a program they created called Salesforce Accelerate for FinTech and we were one of 10 companies they selected to accelerate. That's great. Well, congrats on that. Have you bootstrapped the company or did you decide to raise capital? We raised capital. Oh, I was liking you, Andrew. I was liking you so much, Andrew, and now you're on the dark side.
How much have you raised to date? Uh, we've raised nearly $10 million. Okay. By the way, I mean, that's, that's, it's not a ton. I mean, uh, but, but I mean, obviously it's enough. Where did you, did you raise that right at day one or did you recently raise that?
Chapter 8: What insights does the guest share about raising capital for startups?
No, there was a very gradual, uh, starting with a seed and then, uh, and then some bridges. So it's been a gradual as we're growing the business. All equity or is there a venture debt built into there? Uh, All equity. All equity. Okay.
And I mean, are you working with the traditional VC firms or these are like wealthy banker friends who used to help operate in dark pools, shave milliseconds off their trading time? Traditional VCs. You say with a very large smile. All right. Well, you would expect that those friends actually put their money in those VCs. That's the easiest way to do things efficiently. Yeah, usually.
If the VC is competent, yes. What's the team size today? How many people? We're 15. All in Paris? No, we're between France and the US, east coast and west coast. Oh, great. So Paris and remote. And then, you know, churn's critical in any SaaS business. How do you think about your churn, especially when you're dealing with kind of a very small number of very large customers? Yeah.
We're lucky to be, let's say, in the very large or in the fairly large opportunity arena. I think the sales cycle is really long. It takes up to two years between the start of a concession and the start of a first payment. But then customers tend to stay with you for years. more than seven years, 10 years. So that's a, the journey is not issued. The challenge is on the sales cycle.
Anything we can do to reduce the sales cycle is great. So of all the people over the past, you know, you know, since you launched over the past 10 years ago, of all the people that have paid you over the past 12 months, I mean, what's revenue churn per year? Um, Weighted, it should be around 5%. Okay, so 5% revenue churn, and then how much do you expand? Yeah, okay.
Oh, sorry, 5% annual revenue churn. In that same time frame, how much do you expand those same accounts? That's a very good question. Each account is pretty stable. Okay, so it's kind of staying flat. Yeah, yeah. Okay. Typically, the first year is typically... typically with a significant growth, and then it's pretty flat year after year. Okay, got it. So interesting.
I would have thought, because it's a lot of work to land these big accounts, that one of your big growth drivers would be, well, you did the hard work, you landed them, now expand them, add a million bucks on their contract. What we managed to do is to use them as advocates for them to recommend us to people they know have similar issues.
And in some instances, we can extend the contract within the firm to other entities that would want to count on me, but we can do that. Yeah, that's good. When you're signing these customers up in the first place, you mentioned a long sales cycle. I mean, what's your fully-weighted CAC? It's way too much. How do you know that? How do you know it's too much? Because it's too long.
Two years is a long time. Two years is your payback period? No, no, it's typically, let me think about numbers. Let me make it an easy question. I would say three months. Okay, so if someone signs up for $100,000 a year account, what you're saying is you're willing to spend up to three months of that to acquire them. Mm-hmm, pretty much. Okay, got it. Which include sales and marketing.
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