SaaS Interviews with CEOs, Startups, Founders
862 With $150m+ Revenue, Plus New Product, Can Anyone Catch Sprinklr?
03 Dec 2017
Chapter 1: What is the main topic discussed in this episode?
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 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. Good morning. My guest today is Rajeev Thomas.
He's the CEO and founder of a company called Sprinklr, the world's most complete social and customer experience management platform serving more than 1200 enterprise brands. He's a technology visionary entrepreneur investor has played an instrumental role in the evolution of two business critical channels for the enterprise social media and email.
Prior to founding Sprinklr, he was the president of Epsilon's, which is obviously on the NYSE at ADS, Interactive Solutions from 2006 to 2008, and the CTO of Bigfoot Interactive, an email marketing leader that was acquired in 2005. Rajeev, are you ready to take us to the top? I'm ready. All right, Sprinklr, interesting story here. People have seen it.
Chapter 2: How did Sprinklr achieve over $150 million in revenue?
You've made some small acquisitions. You've been in the press every now and then. What's the company doing? How do you make money? We are the most complete social media management platform for the enterprise. What does that mean?
It means that if you're a large company, we work with 1200 large brands like McDonald's and Nike and Dell, we give you one unified platform to do your marketing, to do your advertising, to do your research, to do your commerce engagement and do your customer care across 24 social channels. So that's what we do.
If you're a large company wanting to do customer care on social, if you want to do marketing on Twitter and Facebook and 23 other global channels, you can put your marketing team or your customer care team on Sprinklr and do that from one platform. Walk me through in terms of helping us understand customer stuff.
Obviously, you have Hootsuite playing kind of in the much lower kind of ASP range than you are. You also are probably being attacked, I would say, pretty directly by the likes of kind of Adobe and Salesforce. Your average customer, are we talking, you know, $100,000 annual contracts on average, million dollar on average? What's the general range so we can get a sense of customer size?
Yeah, so our average is, you know, it varies by quarter, but generally around 150 to 200,000. And the contract ranges that we try not to do engagements below 100 grand. And on the high end, it goes annualized over $10 million a year. And what are the key levers you're pulling to drive, even if it's just initial price or revenue expansion year over year? Is it number of seats?
Is it number of product add-ons? Is it utility and API calls? What is it? So we go to market with six primary clouds and you can buy the whole thing and you can just say, I'm buying the Expedience Cloud and you can have an enterprise agreement for the entire platform. But typically you can just go by the social cloud or our marketing cloud or our advertising cloud, our research cloud,
or commerce cloud or care cloud. And each one of these then have products underneath it. So if you're buying a social cloud and you don't want to buy the whole thing, you can buy social listening, you can buy social publishing, you can buy social automation. It's really by cloud you got these products and you can buy them
a la carte, or you can buy them as a cloud, or you can buy the whole thing as a enterprise license. And walk me through kind of, I know they understand kind of the business and the general customer size. Give me some of the backstory here. So what year did you launch the company in and where was your brain? Where was your life at that point? This is 2009, right? I was, life was good.
I was an executive at a public company. Which one? You know, at Alliance Data Systems, right? Epsilon's a division of Alliance Data, and I was running a division of Epsilon called Epsilon Interactive. At that time, arguably Epsilon Interactive was the world's largest email marketing company. And we had blue chip clients, credit card companies, pharmaceutical companies, retailers as clients.
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Chapter 3: What unique offerings does Sprinklr provide to its customers?
I just write it off, move on. But I just didn't want to face someone whose money I had lost. Social pressure. Yeah. It was just very personal. And I don't want to associate with morality. I just want to say that I was more comfortable losing my money and not having to answer to anyone. So that's a reason why raising money was not a priority.
And I also realized that if you go to the venture community with an idea that's not proven, it's a tough balance and a tough thing to get in and get their attention. On the other hand, if the company is successful, they're all scouting people. for successful companies. So they're going to come find you. So that's just the logic behind what I did in the first couple of years.
Now, how much capital have you raised to date? $240 million. It's like rounding up, yeah. Yeah, okay, good. So $240 million raised so far. And what is that? Series D, E, F? F. You're getting up there. You're going to have to invent some new letters in the alphabet. Yeah. All right, Rajiv. In all seriousness, though, so you've raised capital. You're doing some interesting things to fund growth.
You've done many small acquisitions. Walk me through, when you're looking at an acquisition target, what are you looking for strategically? We are filling out our portfolio of capabilities against a vision that's super clear. Our vision is to create the world's first customer expedience management platform. That's purpose-built for the front office.
So we are architecting an integrated holistic approach that should allow large companies to work across lines of business, markets, and customer facing teams on one platform. And we've got all the components mapped out. So we've done 11 acquisitions. And every time we've done one of those, it was to go bring in a specific capability that we didn't have at that time. Now, that's one.
The second interesting thing there is every one of these acquisitions that we've brought on, we have practically thrown away the code. In most cases, we've written down the revenue. And I get this question most of the times when I see this, like, why did you buy these companies? We buy these companies for what I think of as a domain expertise.
There's a lot of things that you learn when you go create a company from scratch, and usually it goes through one or two generations before the big picture emerges. So what we do, for example, we bought a company in social advertising space.
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Chapter 4: What challenges does Sprinklr face from competitors?
Which one? It was called TBG, was based out of London. And what we did was we brought in those hundred people who knew the advertising space, who knew how to work with agencies, who knew how to sell to a media buying audience. And we literally took the engineers and rebuilt that entire capability on our stack.
And because our platform is very generic, 70% of what they need is already there in terms of automation and analytics and governance and everything. All of that, right? So all you have to then come in and build are the specific capabilities for that area, which could be budgeting or ad execution. So we can rebuild faster than attaching or merging it.
And so what are you, obviously through acquisitions, through just general recruiting, what do you got now in terms of a total team size? Over 1500 in 23 offices around the world. Okay, so 23 offices. And where's your main office? New York is headquarters. Big offices in the US are San Francisco, Austin, Texas. We've got a fairly big presence in London, in Bangalore, Delhi.
In 2012, when you're seeing this flurry of activity in the form of a buddy media $600 million exit, a wildfire $300 million exit, an Involver exit, a Vitru exit, all in the hundreds of millions of dollars, you're three years into your company at this point, how are you feeling? Are you feeling like, crap, we should ride the wave and exit too?
Or why did you decide to go, oh, kind of ignore that hype and keep focused on your long-term vision? Yeah. The latter. Ignore the hype, keep focused on the vision. But how, in the moment, how were you able to do that? It's very difficult. Yeah, it's very difficult. But when you go through difficult times, I always look for patterns from history.
So my experience living through the email marketing wave gave me absolute clarity and confidence in what we were pursuing. If you think about email marketing as an industry, in 1999, there were publicly traded email marketing companies. None of them made it past the dot-com bust.
what happened was as Epsilon Interactive, we ended up acquiring DoubleClick's email solutions group, which had a bunch of companies. We acquired a bunch of email companies. So I've watched how that industry goes through an early peak, then actually the wave really starts. And when we exited in 2005, by all accounts, we thought we were on top of the world.
And we were way bigger than responses or exact target as Epsilon Interactive. But they went on, these companies stayed on for another, whatever, five to six years. And they all exited at, you know, what exact target sold for two and a half billion responses sold for a billion and a half or something.
So what you learn from history is a lot of the times at the top of the wave is not what you think it is at that point in time. So those parallels gave me very high degree of confidence that I got to keep up with the vision and always validate it against the market needs and the market reception and not get carried away with the noise in the marketplace.
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Chapter 5: How has Rajeev Thomas's background influenced Sprinklr's strategy?
I mean, I want to live my life without an agenda. My goal in life is, is not to cry aloud to get your attention. My goal in life is to create so much value that you can't ignore me. Let me rephrase this question that I think might work better with your brain and how you think, because you definitely think differently. There's a customer that you know is a fit for you.
It's one of those eight, 9,000 you haven't got yet. What is something weird you might try to help them speed up the discovery of you? I tell them in great detail, what I see in the future of customer experience management. I tell them what I see. I talk about customers that are connected. I talk about people experience being the new brand.
I talk to them about how marketing is foundationally now flawed because 80% of your budget, if you're spending into what to say to people and 90% of people are making the decision on what others are saying to them, you're off. So I try to point out how marketing and advertising and research and commerce and care can foundationally be different.
And then I try to help them understand the economic impact of not catching up to where their customers and their competition is. And I leave it up to them. You're not pitching. They find you. You're leading through thought, leadership, and vision. They finally find you.
Obviously, SaaS company, two critical numbers, obviously, you know, logo churn, and then obviously net expansion of revenue year over year. You have a lot of different product suites. I imagine you have a playbook for that. But generally speaking, logo churn annually, what does that look like for you? Again, we track it quarterly, and we... between 90 and 100% is where we keep it. Quarterly.
And it fluctuates up and down depending on, you know, if we acquire companies. Rajeev, that's quarterly, correct? Above 90% retention quarterly in logo? Absolutely, yeah. Got it. Now, your playbook on expansion revenue, I obviously have a big team. How many of those team members are focused on inside sales, specifically driving expansion revenue? So that's not how we're doing.
And we're going through an evolution as we kind of go through these different stages of growth, right? In our early years, we were just focused on customer success. And I would submit to you publicly that this is the year we're finally launching version one of our end game product. Like we had to live inside the social box for the last seven years. Why? because the market was not ready for us.
And I'm 44 now. When I was 20, I wanted to change the world. I was 35, I think, when I started Sprinklr. You're wise enough to realize that you want to be ahead of a world that's changing. and you don't want to spend your time educating the market that's not ready for you, because that's just paving the road for the next company to take advantage of that education.
So we stayed in the social box, we stayed in the social engagement box, we stayed in the social SMMS box, and whatever box the market would give us, Up until now, when I know the market's ready for the customer expedience management platform, the ERP for the front office. And we're doing what SAP did in the late 80s with supply chain and ERP.
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Chapter 6: Why did Rajeev decide to bootstrap Sprinklr initially?
And you've done so many. The last one was the $105 million recently, right? That's right. Okay, got it. And that was reported at a $1.8 billion valuation. Is that accurate? That's accurate. Okay, got it. So you did release those numbers. Interesting. So last set of questions here before we wrap up with the easy famous five.
If a company like, I mean, I imagine you're frustrating the hell out of Adobe and Salesforce. And I think you probably love that. And there's, I love that about you. We're not. Oh, come on, Reggie. I don't believe you for two seconds. You're a competitive beast. Listen, listen. Look at this guy's smile. I don't believe him. Let me explain. We compete with two sets of companies, right?
The first set of companies appoint solutions. That's an open and shut statement. You should not be buying ankle-biting point solutions. If you're a large company, please, even if you don't buy Sprinklr, don't go buy a listening solution, an advocacy solution, a publishing solution, a calendaring solution, a reporting solution, an influence. I mean, don't do that.
Name a point solution in the reporting space, just to give a real example. On the social reporting? Social bakers, for example. Okay, great. It's a company that does reporting. I think Simply Measured, there's Unmet, there's a whole bunch of companies. He took a bit of a shot at you, didn't he, in that Forbes article?
I don't like, honestly, man, I, um, I've got way too many things to worry about the future that I don't worry about, uh, point solution. Don't buy a point solution. What else? Yeah. So the, in the other space, right. You think of the big companies that play in the space.
We believe in our own assessment, there are seven legitimate, um, options for you to look at when you're choosing a CXM, a front office partner. And I think they are the usual suspects, you know, um, Microsoft, Adobe, Salesforce, SAP, IBM. Who am I missing? There's one more I'm missing. Oracle. There's a reason you couldn't think of Oracle. No, no, no. Sorry, man.
This is, you can go through the list, right? And yours truly, which is we're very tiny companies. but we're purpose-built with the architecture. And out of these six companies, right, we are partners with Microsoft. We are, they're a client and a partner. We are partners with SAP. They're a client and a partner. We are partners with IBM, right?
And look, truthfully, we just got the Salesforce partnership. We're working with Adobe. We actually think that clients should be going from a best of breed point solution approach to a best of suite, where you should be using Microsoft and Adobe and Sprinklr. We don't overlap. And that's the clarity we want to bring to the marketplace and leverage Sprinklr architecture to connect those together.
Rajiv, let's wrap up with the famous five. One word answers here, super easy. Number one, favorite business book. The one I'm reading right now, it always changes, right? It's always learning. The one I'm reading now, it's called Four Steps of Execution. Number two, is there a CEO you're following or studying currently? Again, I believe in patterns.
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Chapter 7: What is Sprinklr's approach to acquisitions?
Many, many years ago, they raised over $200 million, serving over 1,200 very large customers, paying on average 100 grand, really looking at, again, focused on the social box. He's got a very interesting announcement coming up related to Niagara, where they're going to expand. He's focused long-term, ignored the hype in 2012. He's obviously paying off now at over a $1.8 billion valuation.
Rajee, good luck, and thanks for taking us to the top. Thank you, brother.