SaaS Interviews with CEOs, Startups, Founders
895 $10m+ Balancing Act Between SaaS and Variable CPM Revenue
05 Jan 2018
Chapter 1: What is the background of Erik Matlick and Bombora?
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. My guest today is Eric Matlick.
He is one of the founders of Bombora and currently guides vision and corporate strategy at the company, bringing over 15 years in founding board and executive management experience to the company.
And online performance marketing pioneers insights about the confluence of data analytics, media operations, ad serving technology, sales and marketing processes are the driving force behind Bombora's value proposition. Eric, are you ready to take us to the top? All right. All right, so 15 years, been there, done that.
Tell me about kind of the launch date of Bombora and what it does and your revenue model. How do you make money?
Yeah, so that's like three different questions. I know, sorry. That's fine, it's fine, it's all good. So the history is very interesting. For me, it's interesting. I've done a number of startups. Progression has gone from, pay-per-click back in the day before Google was auctioning clicks. We were the first to market there with a B2B product called Industry Brands.
As things evolved, I started to see that in the B2B space, there was a need for a platform for content syndication and lead creation. So after I sold Industry Brands, I started a company called Madison Logic. Then the genesis there was Really getting into the guts of B2B advertising and lead generation, I noticed that data was a very important piece. And we just did enough of it.
And we sought out to start building a data cooperative or data collective strategy. And that's where the concept of yet another company. And that's how Bombora got started. Which was what year? That was, we spun out about three years ago now. So we'll call it 2014. Bombora will be three years in October.
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Chapter 2: How did Bombora evolve from its inception?
And it'll continue to grow. They're both growing. But most importantly to me as a CEO and managing investors, I like the variable piece because there's a lot of upside on the variable piece. The most important part is that the SaaS piece drives more variable revenue. So in the variable piece to us is SaaS-like revenue. It's the same customers.
So to get into some numbers for you, we actually have almost 4,000 or approximately 4,000 customers of our data. many of which are not buying from us directly. They're buying through our distribution channels.
Does that mean 4,000 are paying you for the SaaS platform, or 4,000, whether directly or indirectly, are using your variable?
That's a combination of everything. The SaaS platform is probably in the hundreds right now, and we have an account-based strategy, if you will, where we're going after the largest companies first. So we have a key account list, and so we're going after the very largest B2B companies first.
CRMs might be the tool that I fight with the most. I just haven't found one that I really liked. I don't know if you guys are the same way, but they're just so tricky. And a while ago, I had a guy named John Lee on my show. He's the CEO of ProsperWorks. And he told me they just passed 40,000 customers and 24 million in annual revenue. So they're doing about $286,000 a year.
in revenue per employee. And I said, wow, why is this working? And I said, you know what? I'm going to try it. So I went to prosperworks.com forward slash love your CRM, signed up, and it immediately became clear why it worked. Those of you that love growth hacking, you should go to that link just to see how they do the onboarding. That's prosperworks.com forward slash love your CRM.
In short, it's like magic. You know, I'm not the guy that, you know, finishes the sales call and then takes the time to actually put data into the CRM. They have this magical way of just doing it. And it's a beautiful thing. So every morning when I wake up, I just go, okay, what leads are prosper works telling me to reach out to because they're most likely to close and it works so well.
And you guys know, I love money and I love only focusing on the leads that are going to close. So I encourage you to try prosper works or sponsoring the show. Check them out at prosperworks.com forward slash love your CRM folks. That's again, prosperworks.com forward slash love your CRM.
This is very similar to what a lot of ad tech companies are doing right now, where they were all built on kind of taking, it depends on their scale, like MediaOcean, it's less than a percent. Some people are taking up to 20, 30, 40 percent or 40 cents on the dollar of ad spend going through their platform.
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Chapter 3: What is Bombora's revenue model and how does it work?
There's a CRO, essentially. He worked with me for two different companies before this. I'm a product and tech. I also worked at Madison Logic. There's a lot of familiarity there. And I had a data acquisition who worked with me at one company previously.
So did I hear that right? There was you plus three others?
That's right.
Okay, got it. And now, I mean, to the extent that you can, because there are other people that are thinking about doing what you did. They're in a company now. They see something they can spin out. They have a little team they want to take with them. I mean, how, one, do you negotiate the spin out cleanly from the parent company?
And two, how do you, especially when you put in 78% of the capital, how do you have the equity conversation with your three co-founders?
That's a big question. So the first part is, I was in a good situation. I've had this conversation with other CEOs. And it really depends on your cap table whether or not you can spin out. I positioned it as it was better for everybody. And this goes back to why did we even spin out? We spun out because we were a media business. We wanted to start a data cooperative.
And in order to do that, I had to talk to media businesses and convince the other media businesses that if we collaborated and worked together, we would all win. The problem was that I was a media business. So naturally... they wouldn't work with me until I was a separate entity.
So it made sense logically, and I was able to go to the investors, my investors, and I said, we have an opportunity here. It's not a threat. There's an opportunity to spin out, create even more equity value for the investors if we have a separate entity that focuses on this market. And that's how that happened.
Is the parent company on the Bombora cap table?
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Chapter 4: What are the different products offered by Bombora?
So why would the parent, what was in it from the parent company then? What did they get out of all this? Did you buy this piece of tech from them or?
So again, so I actually, the cap table of the original company was very similar to this one. It was mainly you. Right. It was mainly me and a bunch of angels. We didn't have a complicated cash structure with preferred shares, all common shares. There was no VC or private equity or anything like that involved.
So I was able to do that and prove that it would make sense to spin it out as a separate entity. And at the time, by the way, we had no revenue. you know, we're really, it was in its infancy. It was a little bit more than an idea at that point.
So you left kind of kid number one for kid number two. What happened to kid number one? I mean, are they dead or are you bigger than them now?
No, no, they're doing great actually. So we, I hired a CEO at the time. I said, that was part of the plan was we're going to spin it out. I'm going to hire a CEO who's, Probably better than me at the current phase of the company to drive it to the next phase. I feel that I'm really good at the idea of a startup, bringing product to market phase. So I brought him in to be the CEO.
He then went on to run it for about two and a half years and then sold the whole business. Oh, great. And the whole business was sold. What did it sell for? Is it public? It's not public, and I can't disclose the price, but there are articles. I believe there's one in Fortune that talks about this.
Just to save me the Googling time, what did Fortune say? It's speculative, but what did they say?
They were speculative that it was ā they said something like it had to have been over $100 million because of the filings that we did.
Was it? Guys, I wanted to capture Eric's reaction to that question on camera so you can watch his face and judge for yourself. All right, so good. So that was obviously, whatever happened, successful. There was a good exit there. You're now focused on kid number two. It's scaling. Give us a sense of the company size today. How many employees?
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