SaaS Interviews with CEOs, Startups, Founders
920 SaaS: Chorus.ai Enters Sales Call Tracking Wars
30 Jan 2018
Chapter 1: What is Chorus.ai and what problem does it solve?
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 Roy Ranani. He's the CEO of Chorus.ai and an engineer with a passion for business and sales.
He spent his career working with startups and advising technology companies on strategy and operations. He started his career at Bain & Company and holds an engineering science degree from the University of Toronto and an MBA from Stanford.
Chapter 2: How does Chorus.ai's business model work?
He was the first hire at Eric Schmidt's Innovation Endeavors. Roy, are you ready to take us to the top? Can't wait. Thanks for having me. Very good. So, you know, we were joking before the call. You're in a hot space, call tracking, specifically in the sales and marketing kind of tech stack space. So what's your angle on this? What's Quorus.ai and what's your business model?
How do you make money?
Yeah, it's a great question. I would say that over the last couple of years, there's become more and more of an interest in calling. And so there was the original kind of group of companies that were making it easy to record calls, do more dials. They were more focused on the activity side of things. And in sales, that started with the outbound prospecting.
Chapter 3: What insights can Chorus.ai provide from sales calls?
So the guys that had to do 100 dials a day more efficiently. And the opportunity that we found, and we were, I would say, one of the first that started doing this about three years ago, was that there was an opportunity for the actual quota-carrying salespeople, right? So not just the 22-year-olds that are the heart of building pipeline.
in sales organizations, but the folks that are actually closing deals and renewing deals. And so those people are doing less calling, but they're doing meetings. They're doing discoveries. They're doing demos. They're building consensus. They're negotiating. They're upselling. They're renewing. And sales teams will do thousands of those meetings a quarter.
And those meetings just happen and they essentially disappear, right? There's no record of what was discussed in There are so many of these things happening that managers have no idea what's happening.
Chapter 4: How does Chorus.ai help improve sales team performance?
And so you essentially have this black box around what is the most important thing that any salesperson does. Right. And what we found was that in every other part of business, you look at the fundamental drivers of performance, you measure them and you improve them.
And when it comes to closing revenue and renewing revenue, that most fundamental activity is a conversation and there was no data on it. So what we wanted to do with Chorus was help businesses realize that a conversation is the most valuable thing that anybody on their team does, make it easy to record and capture those conversations, and then understand them at scale using technology.
And by doing that, help people close more business, help reps make more money, help businesses better understand their customers and their markets so that they can build better products.
Now, do you dive into actual kind of voice things, i.e., can you tell a sales manager or a CRO that their number one sales rep who always beats quota says the word price three minutes in versus everyone else waits until minute 18, they should change what they're doing?
Yeah, absolutely. We focused a lot on making those types of insights really actionable to folks. So it turns out that, you know, you picked up one around pricing, but it turns out that discounting is something that happens on, you know, we've analyzed over a million calls at this point, and it'll tend to come up on maybe 25 to 30% of conversations.
And what you find is that the way that discounting is brought up is very, very different depending on if you're a very experienced rep or less experienced rep. So everybody offers the discount, but very few people get something in return for it. Right. And some people offer the discount very, very early on in the sales cycle.
Some people wait until they know that there's a real deal in place and they understand the timeline and they're using the discount to get something concrete.
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Chapter 5: What are the pricing strategies for Chorus.ai?
So what we try to do is build algorithms that are going to surface very actionable, very hard ROI types of moments for sales teams. So that as soon as you start using Chorus within a week, we're going to hopefully find moments that cover the cost of the platform for your entire company for the entire year.
Which is what? What's the average customer paying you per month? I know you have cohorts, but if I forced you into an average, what would it be?
Yeah. So the first thing that I would say is we can't we don't want to talk about pricing until we've looked at value. But what I would say is we are competitive with any other core piece of the sales stack. Right. So competitive with something like a Salesforce dot com.
So let me give you a hypothetical because I'm going to align the hypothetical with my audience members because they're obviously, I want them to obviously evaluate Chorus. If someone has a team of 10, right, they're doing, I'm going to make this up, a million in ARR and they're going, yeah, we're bringing on two. We have like two salespeople. We're bringing on a third and a fourth.
Maybe they're doing a seed round of funding.
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Chapter 6: How does Chorus.ai differentiate itself in a competitive market?
What should they expect to pay for the platform? Are we talking 100 per month, 10 grand per month, a grand per month? Yeah, it would be more around the 100 per month range. Okay, got it. And is that an accurate description of the majority of your customers or are they typically bigger or smaller than that?
I would say there's a range. People will buy Coors for very different reasons depending on the size of the business. So if you're a smaller team like the one that you described, the number one reason that people will buy is because they'll all have that one account executive that's been around for two or three years that knows the product inside out.
They know how to position it versus competition. They know how to create urgency. They know how to do all of those things. and you're buying an insurance policy. Because if that person decides to leave for whatever reason, there's a family emergency, who knows, they decide to go to that shiny startup around the block, you've now lost all of that gold around what they're doing that's so effective.
And so, typically, if you're that startup, it's incredibly important for you to hit your numbers to continue to show growth. And so...
Chapter 7: What challenges did Chorus.ai face in its early stages?
It's very difficult to ramp up a new rep if you don't have those call recordings. And then in addition to that, making it very easy to find the 10 out of maybe hundreds that are really important to listen to because they deal with a certain competitive situation or a certain part of the sales cycle or a certain objection.
This is basically you're auto creating a training manual for scaling a sales team just by recording these calls in a worst case scenario.
Yeah, I think I think that that's the simplest thing, right? The simplest thing is this is this is a data set that you want. More and more, what we're finding is managers and VPs of sales are starting to use chorus as a way to manage their day to day business. Right.
And so we have some customers that tell us that they spend more time in chorus than they do in Salesforce dot com simply because Salesforce is a lagging it's a lagging system. Right. It requires sales reps to go in and update certain fields. And it's based on the reps
interpretation of what happened in that meeting and so for a lot of managers if there's a deal that they care about they can pull it up in chorus with one click and immediately they'll be able to see everything that was talked about what was or wasn't discussed whether or not this deal is actually going to come in you know end of month as the rep is forecasting and so what we're trying to do is find out more and more how to take it away from just training and coaching which is a very high value use case into something that is a part of your day-to-day
That sounds like a sales pitch to Salesforce. Are you in acquisition talks right now?
If we had to sell, we'd be really disappointed.
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Chapter 8: What are the future goals for Chorus.ai and its growth?
Yeah. You've practiced that, Roy. That was very smooth. That was a very good answer to that question. Take me back to the start. What year did you launch the company in? We launched it in 2015. And have you decided to bootstrap or have you raised capital?
No.
No, so, you know, pretty early on, we, we realized that if we wanted to tackle this market, and you know, the way that I talked about it with my team is that there's a billion dollar enterprise value company, five to seven years from now, that's ours to lose.
And it's simply because this data set of customer conversations and meetings is so valuable and so core to a business that there's no way that every company in the world isn't starting to record and track and learn from and act on the insights in these meetings. And so when we started out, we had a decision to make about whether we outsource the technology or whether we build it all ourselves.
And we decided to build it all ourselves, to do a couple of things that you can only do when you build this technology yourself. So very early on, we spoke to investors and we were fortunate enough to close a seed round, a pretty substantial $6 million seed round that was led by Emergence Capital. Was that priced or was that a note? Um, it was actually, it was priced. Yeah, it was priced.
So we did, we actually did a friends and family round, um, that was based on a safe. And did you go through YC? Uh, we did not, but we decided to use the safe, um, just to keep things simple. And, uh, what was funny was that we were actually planning on doing a seed round based on the safe, but, uh, things went so well with Emergence that they decided to price it immediately.
And so all the friends and family that had come on the safe immediately got converted into the price round. So the answer is it's both.
How much have you raised to date total?
Over $20 million. Yeah. So we had the seed round that was led by Emergence and then Redpoint came in and led the A. And what are you at today in terms of team size? We're a little over 40 people, equally split between research and development and the go-to-market side.
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