SaaS Interviews with CEOs, Startups, Founders
BounceX Breaks $100m in Revenue, 1000 Customers, Breakeven, 2020 IPO?
13 Jul 2020
Chapter 1: How did BounceX achieve over $100 million in revenue?
So you still have like basically 30 cash in the bank. You've raised 60 in equity and 30 has been spent to grow the business. Within, within 20% of that stuff. And let's assume that we'll, we'll end the year well north of a hundred million. You are listening to conversations with Nathan Latka.
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My guest today is Ryan Urban. He's the co-founder and CEO of BounceX, a marketing technology solution that brings a logged-in experience to logged-out website visitors across devices. Under the company, BounceX has been ranked number one for employee retention and career development by Computer World and named a best place to work by Cranes and Fortune. Ryan, you ready to take us to the top? Yes.
All right. So, yeah, right. We'll see. So, so first off, thanks for letting us host the CEO format, your spot. You had a nice, you had a nice big move. So where are you now? You're in the trade center, correct? And got to show people a view real quick. Turn, turn the computer, let them check it out. You're going to come with me. There you go. Walk us around. Look at this view, guys.
If you're not watching on YouTube, flip over to YouTube. A hell of a view, right? Yep. Good stuff. So, okay, Ryan, so when you, you know, you pivoted in terms of messaging. I don't know if the product actually pivoted over the past couple of years. I mean, how do you describe it today in kind of a sentence? Is that right? A logged in experience to logged out visitors? We evolved the messaging.
So we've been around about six and a half years, and we've always been focused on two simple things. So I had an e-commerce background, some of the other co-founders of BounceX, and we were just focused on just driving revenue and improving experience. So it's over time that the product mix kind of evolved.
So we started out doing email capture and being really good at that, and everyone knows our exit intent stuff. Then we're like, hey, we're clicking on those emails. Let's do some triggers. So we rolled out the product abandonment, and we started doing some trigger email and doing that at scale.
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Chapter 2: What unique marketing solutions does BounceX offer?
So the cohorts, I'd say there's three cohorts. So cohort number one is the big ones, the megalodons, as we call it here. And those are the seven figure ones. So those are the ones that are, they used to pay us between one and one and a half million dollars a year. Now we're getting some that in the two to $5 million range. So that's where we're moving on market.
But that cohort, you call them your megalodons, they're all paying more than a million a year. That's right. And then you have the bottom cohort, which is our minimum is 72K a year. So it goes 6K a month is the companies that we do in 5 mil, 5 to 10 mil online. And so the cohort between paying us between $6K a month and I'd say like $15K a month, that's like that mid-market cohort.
And then we have the enterprise cohort, which is basically the $20K to like that $50K, $60K. So you kind of have four. Megalons and then enterprise, middle, small. Yeah. I'd say three. There's strategic and there's the Megalodons, the big strategic ones. And those really do move a business. Yeah.
Now, if you just add up the revenue from just your Megalodons, does that make up more than call it 30% of your total revenue? It's probably about that. It's, it's, it's not heavily weighted, which is good. We, we sign a high volume deals. We're signing, um, almost 40, 40 deals a quarter. So, and maybe we're doing two of the big ones a quarter. So it's pretty, pretty diverse. Okay, good.
Now two of those, two of those big ones a quarter means you're, you know, new bookings per quarter then as well north of $2 million at this point. Our new books in quarter is approaching 20 million. Yeah, yeah, way bigger. Okay, very good. Now, when you look at the segment that's growing the fastest, are you generally focusing on- That's AR. Yeah, yeah, yeah, yeah.
When you're looking at what segment's growing the fastest, revenue the fastest, is it that top tier or no? Are you seeing a lot of movement in the bottom tier? It's end-to-end. So we should have moved to named accounts much quicker. So we mapped out our TAM and got that 4,000 named accounts. We used to have SDRs, and now we kind of have an elevated version of that role.
We call it a BDA, Business Development Associate. So they're paired on a one-to-one basis with a new business rep. And, well, they'll maybe 80% of the time one rep and 20% of their time with another rep to spread it out a bit. And they'll have like between 40 and 100 named accounts depending. Mid-market will be more towards 100.
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Chapter 3: How has BounceX evolved its messaging and product offerings?
Strategic will be more towards 40 or 50. And whether those are clients or not, their goal is to one, like use all the resources we have announced, which is themselves, the rep, our marketing team, our lines team. to break into the account at the appropriate level. So there's something called, we don't do leads. We have something called a sales accepted opportunity. It's the right company.
We will map out the org and we'll have a group, like three or four people that if the meeting is with that person and the meeting, went a certain way, then that's an approved kind of opportunity. So we have very high standards on that. So it's up to that business development associate to get in there.
And also like post getting in there, then it's when we're active opportunity, it's their job to move on the org, be on calls and meetings, kind of take notes, help facilitate the process. So it's like a farming system for our sales team as opposed to like there's some SDRs that are cold emailing and cold emailing email templates and hands over sales. It's not that. It's a very cohesive unit.
So as we did that and moved to named accounts, we are just ā it's not an and-or. It's an and-and situation of mid-market is growing, enterprise is growing, strategic is growing, negative is growing. And we're not at the point where we're default setting. There's a point in like a SaaS company where like say Salesforce is your CRM, there's the default.
And for email and for an e-commerce company, exact target was default for all demand where, which both these over Salesforce is kind of default. If you're a mid-market e-commerce company, Shopify is your default. So for us, we are for identifiers we default, but we need to make kind of one-to-one identity resolution a default. a really established channel.
And that once that channel is a default thing, then we're going to really start to see some, some, some, uh, special growth. You were serving 250 paid customers back in 2016. What do you got now today? Um, we're probably on about a thousand websites. So, uh, is that paid customers though? Yes, it is. So, uh, yeah, we don't do anything for free. Yeah. So, okay. So a thousand paid.
So I like this approach you've taken, right? So you essentially said, okay, I'm going to go look at all the e-commerce brands with more than X amount of GMV based off some, you probably scraped, got data from somewhere, obviously legally, but scraped it, whatever paid for it. And then you map out the 4,000 accounts and you say, we want to get all these 4,000 accounts.
You're at a thousand of them right now. Is that accurate? We have reps and BDAs to all those accounts. And then our marketing, and we just have there's incentives everywhere to break into those accounts at the right levels.
And then we have some other verticals, so we do a little bit of travel, and we have a separate publishing, which we've completely broke out his own business unit and had that team completely focus on its own thing. And the UK is also, it gets treated as own complete business unit. And those are, and that's been really effective for us.
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Chapter 4: What revenue growth can clients expect from BounceX?
For us even to have a product extension, which is basically a feature, it has to be 4x better than Criteo's whole business for us to ship something. And it has to improve experience too. It's not just, hey, let's go run more sales or send more emails. It's- You're talking about Criteo, C-R-I-T-E-O, correct, Criteo? Yeah. Yeah.
Now you had back, I know you chose not to go the bootstrapped route on this thing. How much total capital have you raised to date? No, I funded it myself at the beginning. And then the first year and a half, it was funded by the co-founders. So, and if you're going to join as a co-founder, I made you put in even 40K, like you had to put in 40K. So all the co-founders put in 40K? Yeah.
No, some put a lot more. One put in 190. How many of you are there? I'd probably put in 350 to 500, depending on how I look at it. Right. How many are there? There was four. Okay, four co-founders. So altogether, how much total did you guys all put in? Like a million, two million? No, that's like 600 grand. 600 grand. Okay.
And then we took, then after we got to about 70K in MRR, so we got to about the a million dollar ARR point. Then we, and we had good pipeline, then we raised a bit. We only raised, this was 2013, mid 2013, we only raised a million and a half bucks when we could have easily raised like four or five then.
And so, and then we basically went the first almost four years on that million and a half venture money raised. We did take a little venture debt too, like some MESDA from WTI, that was great.
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Chapter 5: How does BounceX measure attribution for its services?
Now we work at Silicon Valley Bank. What year was that, the WTI deal? I thought it was probably the next year, 2014. We've acquired four companies, so some of that's used to fund some acquisitions. I have a big prediction that five to 10 years from now, sonic brands are gonna be more valuable than logos, physical logos you put on your website. Why?
Well, as you guys know, the world has changed around us over the past several months. And many people, as they're working remote, they are doing more walking in the woods. They're spending more time with their families at home. They have more free time to reflect and just consume content.
And because of this, I think audio consumption will continue to increase, but nobody thinks about your audio brand. If no one ever sees your website, but they only hear you, Is there some little four second brand you have where they always know it's you that represents your brand? Most people don't have this yet. So I started getting mine set up.
What I do is I capture a bunch of sounds that I like and I put them in a little word doc. I then use a tool called Fiverr, which is basically a big marketplace of freelancers. Pricing's really clear, everything's upfront, so I'm never in the dark. I upload these sounds to people that do sonic branding on Fiverr. Some are as cheap as five bucks, some as expensive as a couple hundred bucks.
But I give the same product to a couple of them. I see what they all come back with. And then I'm going to pick one to actually use and put here live on the podcast. Now, I'm doing this right now. So it was a beautiful thing when Fiverr said, Nathan, we love to sponsor the show. So we are big fans of Fiverr already. We're thrilled they're a sponsor.
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I mean, can you go buy a company if the deal price is 10 million in cash? Can you get away with putting up a million in equity and the rest in debt? We can leverage about, depending on the strength of your business, somewhere between 0.8 and 1.2 times your ARR, and we can flex up a little more. Oh, wait, of your personal AR or the company you're buying? Your personal AR.
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Chapter 6: What pricing model does BounceX use for its services?
And then they're going to look at the company buying and how much money they're losing, et cetera. So you don't want to be too levered, but it's really underrated. And you give a minute. The market's really good for terms. Ryan, are you talking like 2% to 6% kind of interest rates, somewhere in that range?
There's going to be some that are 6%, some that are going to be more in the 10% range if you're looking at no interest for a certain period of time or very low warrant coverage. You might give up a point of equity. The ones that are taking a little equity, they might say there's no covenants or there's minimal covenants. Very friendly term. You might be paying more in the 10% range, but
that's still super cheap. So then you can raise your paid off or you can keep like rolling if you like, if you're doing well. Yep. You mentioned another venture round in 2017. What was that round for? Um, I, I, I don't think the, the venture questions aren't really the right questions.
It's, it's when, it's when you feel like you have product market fit or you have some marketing channels you can really explode on, that's the right time to do it. Well, no, I mean, by the way, Ryan, I asked because there, I mean, there are two very different models. Some people bootstrap the whole time. Sometimes you get on a VC track and a VC track is just very different, right?
So didn't you raise in 2018, didn't you raise 37 million from battery? Um, So a good amount of that went on the balance sheet, but not all of that. So some of the, some of that you used to like buy out some early investors. So, uh, we, we put, we put less than 30 on that, but we'll end the year with. What do you mean you put less than 30 on that?
Well, we'll put less, we put less than 30 into the business. Some of it went out to buy, some of it bought out some, um, or just there was some liquidity for some earlier, earlier initial. Yeah. So 8 million, 8 million went to secondary early founders, early investors, and about less than 30 went to the balance sheet. That's right. And our cash balance is going up now.
So we're close to profitability, but we're cash flow positive. So we'll bond a year with a good amount of cash. So not $30 million, but a lot of cash. So now we're in a position where we don't need to raise money, but we're coming off our two best quarters ever. And now we found some place where we can really hit the gas.
Now you did another $30 million round of Silicon Valley Bank a year prior, correct? That was equity? Yeah. That was a different deadline. It was a little less. So some was with Silicon Valley, some was with someone else. That's something that we have the option to pull some we want. So that wasn't actual dilutive. That was essentially like a terminal, like a revolver or something.
Some was based on ARR. Altogether we probably have about 60 into the biz and then you minus the cash and balance sheet and we've probably deployed somewhere in the 30s. Got it. So you still have like basically 30 cash in the bank, you've raised 60 in equity and 30 has been spent to grow the business? Some, some within, within 20% of that stuff.
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Chapter 7: What strategies is BounceX implementing to target new customers?
The rate is really high and it's bagging into a great return on, and spend number. But if their business doubled, they're just getting much more ROI. So, and that was helpful in the early days for us to grow. But we need other stuff that like, hey, as our clients grow, that there's going to be a step up as well.
And what's your overall, I mean, so if you break a hundred million in AR this year, where were you a year ago? Um, Well, let's talk about where we want to be. We can IPO at like 40% growth. Growth is something that you do have a lot of control dictating. So that's like we're cashflow positive.
So at the point where I feel really comfortable with product market fit on some of the new stuff we have and an acquisition we're going to make, we're probably going to make our first like, Maybe not nine for your acquisition, but an acquisition in the mid-eighths. Probably somewhere a company that companies we're looking at that have between 75 and 150 people.
We're still rolling up a lot of more tech. So you're talking like 10 and 30 million in ARR-ish kind of range? Between 10 and 40, yeah. Yeah. And it's going to be strategic tech, not opportunistic stuff. So stuff where we can put our ID tech on top of and just almost use it as a marketing channel too where we can then go in and like go to all their customers and upsell our stuff in.
Acquisition is a hell of a marketing channel. Yeah. Did you do any acquisitions last year? We did one. It wasn't announced. Okay. Were you less than you said you want to IPO at 40% year over year growth? I mean, were you less than 40% year over year growth the past 12 months? Yeah. It depends when you look at it. We'll probably finish the year more than that, I guess. But you have quarters.
You have different goals. Q4, Q1, that wasn't the goal. You've got to get the ships intact. For us, it was like having a scalable sales team. You've got to have the product market fit in your sales team. Now we have...
we, we always had like some real strong athletes, great performers, but like getting that enterprise mid market team to a place where it's a machine where you got the right people in the right process. And like, we, we got that down now. So we know we can like hit the gas there in a marketing standpoint for our top,
named accounts say our top even top 500 named accounts like we want to go in at the ceo level so it's like how do you create these these experiences where ceo will come out so we just spent about 200k we we rented a private suite of the u.s open finals we uh we
we choppered we choppered these ceos into our basically our suite was and uh and we also had other ceos out and like so they got to kind of meet some other like ceos or cmos of big companies they got to go to the nadal final at a private suite chopper so like you do and and we only have the top people from our company there so it's uh it's an amazing experience and then that way you can get
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