SaaS Interviews with CEOs, Startups, Founders
997 AI Company is Real Deal with 4x YoY Revenue Growth to $3m+ in ARR
17 Apr 2018
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.
Chapter 2: What inspired David Benigson to start Signal Media?
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, everybody. My guest today is David Benningsen.
He founded Signal Media in 2012 with the belief that artificial intelligence would fundamentally change the way businesses worked. As CEO, he's led Signal through multiple funding rounds totaling 8.2 million euros, most recently a $5.8 million Series A in December of 2016. He was named the Forbes 30 Under 30 Europe list in January 2017. David, are you ready to take us to the top? Sure.
Absolutely. All right. So very good.
Chapter 3: How did Signal Media achieve significant revenue growth?
So tell us more about kind of what Signal Media does and what's your business model? How do you make money? Sure. So, I mean, we founded the company four and a half years ago and really we founded it under the premise of two big problems and challenges that most businesses face today. One being the explosion of information accessible to large organizations.
The fact that companies have just never had greater access to information and yet never found it harder to transform that information into actionable insight. And the second kind of major challenge that most businesses face if you walk into them is the fact that, you know, knowledge is siloed. It's trapped in the heads of people who work at these organizations.
So we built a signal and we apply machine learning and AI to solve those two problems. We aggregate a lot of the world's information and apply machine learning to transform that information into insight.
And then we enable our clients to train up our systems with their domain expertise so that they can unlock all of that expertise and ultimately get the machine learning and the algorithms to deliver them better insights and better results and more relevant results. And it's a SaaS model? Yeah, it's a SaaS model. So our business model is ultimately to sell a software product and application to
that our clients license from us on an annual basis. And typically they pay for the number of seats, the number of logins, and therefore the kind of breadth of access that they would have within their organization. And what would you say kind of the average customer is paying per year?
So it's kind of starts anywhere north of kind of $20,000 a year, and then it can scale into kind of high six figures and even in some cases seven figures. So we kind of have a breadth of customers across that broad spectrum. And yeah, it really determines on kind of the number of use cases and the kind of number of seats that the organization wants to have access to.
And how have you scaled this thing over the past four years? I mean, tell me the story of how you got that first customer. Yes, I mean, we started the company in a garage, which I guess is where all good technology businesses are founded, of course, even here in London. Is that a garage? A garage, yes. Sorry, if you say garage, you say garage. I like carriage, but it's better.
Two years, we're building out that kind of underlying platform. And obviously, we are taking pretty cutting edge embryonic technologies within AI machine learning. And so a lot of it was about proving out we could actually do this at scale, that we could aggregate the world's information and use machine learning to transform that information into insights.
winning our first few customers is always kind of really challenging and probably one of the most kind of exciting memories that you have within the company our first client was in the financial services space and I remember sitting in our garage and trying to figure out what was the best way to price the product with my two co-founders and I think my chief data scientist said one number
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Chapter 4: What challenges did Signal Media face in its early days?
I guess that just kind of demonstrates when you're just starting out, uh, value pricing and understanding where your product can fit into an organization, uh, is really, really difficult. Uh, and so I guess it's a journey of iteration and kind of experimentation. That's important. And so from customer one to where you are today, how many customers are you at? What have you grown to?
We're at about 150 corporate clients now. We've scaled. I think it's been a very, very exciting journey, in particular over the last 12 months. It's taking on that Series A funding that you mentioned before. We've tripled the number of customers and almost quadrupled the revenue in the last 12 months.
Um, and so that kind of experience of scale and really seeing the business starting to take off, uh, has been very, very exciting for us. That's impressive. Yeah. I mean, look, you've mentioned earlier, your ACV is about 20 grand first year minimum, just minimum. You know, if I multiply that time is one 50 that puts you, I mean, what does that put you at?
Two 50, 250 grand a month at minimum, or about maybe what is that? 3 million annually. Um, uh, and you, you Forex that year over year. So if I go back to December, 2016, you were doing what? Around 62 grand, something like that. Yeah. So, I mean, we've, yeah, we've literally gone from about 40, 50 customers and more than tripled the customer base in the last 12 months.
So that's been really an exciting journey of scale for us. And, you know, not only are we kind of selling to more customers, we're also demonstrating we can kind of upsell and expand those customers. So that's been really exciting for us as well.
You know, we started in a beachhead of applying our technology into corporate communications and enabling those teams to use us for kind of reputation monitoring and analysis.
And over the last kind of year and a half, we've really started broadening out, selling into other departments across the organization, selling into compliance, selling into what we call horizon scanning, which is spotting investment opportunities earlier.
And so really, we've not only been able to kind of scale the number of customers and the ultimate kind of top line revenue, but also kind of deepen the relationships that we have with enterprises. And I want to make sure I give you the credit that you deserve. I mean, is that about right?
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Chapter 5: How does Signal Media's business model work?
You're doing about 250 grand a month right now or way more? Yeah, I mean, we don't typically share the kind of top line revenue number, but ultimately, yeah, that scale from 50 customers to 150 customers is really a kind of key metric that we're very proud of. Okay, but just to be clear, I'm just multiplying your numbers. The minimum you told me was 20 grand a year times 150.
It's fair to say you're doing north of 250 grand a month, right? Yeah, yeah, yeah. Okay, good. I totally understand you wouldn't want to put a top on that because you don't want people to know, but you could be significantly bigger if you have six, seven-figure contracts. Yeah, absolutely. Very cool. Why raise money? You mean venture capital funding? Yeah. Yeah.
So I think venture funding is all about trying to go faster and scale more quickly. And I think, you know, there's something certainly to be said for organic growth and, you know, taking your profits and your revenue and reinvesting them into the company.
But I think ultimately, if you think about the markets we're trying to sell into and the scale of ambition that the organization has, you know, we're going up against some, you know, relatively big, large incumbents who have been around for 10, 20, 30 years with, you know, hundreds, if not in some cases, thousands of sales reps on the ground.
and already deeply penetrated into multiple geographic markets. And so we have this ambition that this company could really be a game changer and a disruptor into these incumbent industries. And so I think for us, venture funding is a way to maximize our potential and move at the speed and with the level of aggression that we really want to. 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 in 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
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Chapter 6: What strategies did Signal Media use to acquire its first customers?
So these are really useful tools to be able to kind of measure yourself, not just on CAC, which is only one metric out of a suite, but everything from your top-line growth, your payback periods, your retention rates, all of those things, I think is really useful as an organization to be able to benchmark.
Are you generally getting more aggressive with acquiring customers or less aggressive in terms of spend? You know, sometimes people are willing to pay more because it's a hot time in the market. You want to get as much market share as possible. Others are trying to go towards profitability, so they want to decrease that. No, I think we're being relatively aggressive.
I don't think kind of unnaturally aggressive, but I think certainly we are looking at the market. We're very excited about the potential. We're very excited about the validation our customers have given us. And so I think our intention is to continue doubling down into the market and trying to be aggressive where we can.
And can you, considering the economics you've just shared with us, do you pretty confidently assume lifetime value is always greater than kind of 50, 60 grand on any account coming into you, or is it higher or lower? Again, I don't have the figures to my hand, but I think it has to be really if you want to make the long-term maths of the business work. Yeah, interesting.
And what are you at today in terms of team size? So we are today at about 65, 70 people. And it's broadly split between product engineering, data science, and then the other half of the business, the kind of commercial side. And location-wise, where are you based? We are located in London, co-located all together. Everyone? Everyone together, yeah. Oh, that's great. Okay, very good.
All right, let's wrap up here with the famous five, David. Number one, what's your favorite business book? Good to Great, of course. Number two, is there a CEO you're following or studying right now? CEO I'm following or studying right now. Look, I watch on with a lot of interest Elon Musk for various reasons. Number three, besides your own, what's your favorite online tool?
I would have to say Slack. Number four, how many hours of sleep do you get every night? At least seven. I get very grumpy. That's pretty good. And what's your situation? Married, single, you have kids? Single, no kids. Good. Signal babies. Signal babies. That's good. And how old are you? I'm 29. All right, last question. Take us back nine years. What do you wish your 20-year-old self knew?
Oh, wow. Just have fun and don't take life too seriously. There, you guys have it from David. Have fun, don't take life too seriously. He launched Signal back in 2013. Now up to 65 folks really playing in the artificial intelligence machine learning space. He undersold his first customer thinking it would be a lot. It actually closed really quickly, 10 grand there.
He's now got over 150 customers actively using the platform, paying a minimum of 20 grand per year. So they're over 250 grand in MRR and they have 4X that over the past 12 months. So really great growth, raised significant amount of capital, I believe over what, eight million, about nine million dollars, nine million euros, pardon me,
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