SaaS Interviews with CEOs, Startups, Founders
Granulate Breaking Records in Cloud Computing Savings Space, $30m Revenue Next?
14 Apr 2021
Chapter 1: What is Granulate and how does it help with cloud computing costs?
I'll give you the real number, which is on average, Granulate customer, if they choose to take all the benefit into cost reduction, see about 75 to 80% of net savings that they keep. And Granulate is paid around 20 to 25% of the net savings. For every $20 that you pay Granulate on average, you save $80 that you would have paid extra on top of that 20 to someone else.
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My guest today is Asaf Ezra. He is a TAO PIOT program alumni and continued his IDF service as a commander in the LEED 8200 Intelligence Unit. Previously held positions as R&D team leader and project manager, where he led 30-plus researchers, engineers, and analysts in large-scale projects. Today, focused, he's a co-founder at Granulate.
He helps to democratize performance and to build a world without performance loss, speaking specifically about the cloud. Asaf, you ready to take us to the top? Sure thing. All right. So help us understand who you're selling to and sort of how do you bill? Are you paying sort of percentage of cloud savings saved or how do you price it?
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Chapter 2: How does Granulate's pricing model work for customers?
Well, that depends on the customer. If they choose to take that into cost reduction, sometimes they'll start with a very small service just to test Granulate out, see that it works for their own services, not in general for someone out there. And then we have customers starting at 30 machines going all the way to 3,000 in two weeks. So that depends on the customers themselves.
And how many cores is your largest customer managed on your platform? Oh, that's around 250,000. So see, definitely power laws happening here, huh? Yeah. All right. Very good. What's the backstory? When did you launch the company?
So we launched almost three years ago. We actually started completely differently. We started with load balancing opportunities. We've seen a huge, huge potential in the fact that load balancers today don't even have any knowledge of what happens on your backend system. So you can think of gRPC or HTTP load balancing where
Pretty much the only heuristics today is like least connection or least outstanding requests. But the truth is... it doesn't mean how loaded the machine actually is, so how much the resources are utilized and for what purpose. And so we started there. Unfortunately, it didn't go as planned.
We realized that a lot of people are not very enthusiastic to replace their own very easy to use, infinitely scalable, AWS-backed load balancer. So we switched to something else that you can start with a single VM. But the worst case and the cost benefit is like, I'm risking a single VM with this unknown company and I can gain 30, 40, 60% on my performance improvements.
Yeah, interesting. Now, you just went in 2018, you pivot a little bit, you're obviously not scaling today. You have, again, a varying use case based off maybe 30 cores on being on board or 250,000 for your largest customer. But just for the sake of focus, help me understand your sweet spot, right? So what's like the average maybe customer paying per month to use your technology?
Again, that depends on the customer. Yeah, give me an average. Just because it's a short episode, I'm going to try and really focus here. I understand there's a massive range, but what would you say your sweet spot is on average?
I think our, let's say, median to average customer would be around a few hundreds of machines to a few thousands of machines. Okay.
And if I'm managing 500 machines on granular, what am I probably paying you per month to do that? That's a good question.
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Chapter 3: What challenges did Granulate face in its early days?
And we started gaining that momentum, understanding how many customers each rep actually can carry themselves and how many they would need some customer success help, some SE help and everything. And we realized that number is pretty high. But the truth is, we want to make sure that we also hunt for new customers, not just manage our own customers in our existing ones.
And we started at about 10, 20 a month. I think we're triple that since then.
But what's the actual quota target? If I'm joining you as your first rep, you're saying, Nathan, you need to close a million dollars in new AR in your first 12 months, or what's the quota target for that first rep?
Yeah, it's around that.
Around that, okay.
That number.
Okay, and do you see most of these 12 reps that carry quota hitting that quota metric, or what percent do you want to hit quota? Yeah, I think we're over 65% at this point. Interesting, okay, very cool. Now, have you raised capital to scale this? Yeah.
So we've raised almost $50 million in total. Last round was a Series B in December.
Got it. And how much was a Series B in December? $30 million. $30. Got it. So $20 prior to that. And when you raised the $30, what was the general use of funds there? Was it scaling the sales team or engineering or something else?
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Chapter 4: What is the typical customer profile for Granulate?
This is when we switched it. We gathered all the use cases that we talked to these customers with. We tried to segment these. When we had something working for one segment, we came back to all of them and started working with them. Unfortunately, as with everything, we realized that our segmentation was a little too general.
So it always took like two to three iterations to actually get something going with a customer.
That's how you learn. That's part of the process. So from your first five customers, what do you know today? How many customers are you serving?
Over 10 times that.
Okay. So over 50 customers today, 5-0. All right, fair enough. And what do you think is going to drive your 6X growth year over year? Is it going to be adding more customers or getting more sort of units managed, more cores on your current 50 customer base?
Both. It has to be both because a customer, as we discussed earlier, could lend you a deal of just a few hundreds of dollars, and that's great. They're getting the confidence. They know that you can give them the value. And then it's up to them to start scaling it with the organization, obviously.
It's up to you to qualify everything and make sure that you help them progress as you move forward and to find the right candidate. But it has to be both because it's sort of like a 70-30 base model that at most you're going to get 30% of the infrastructure on your landed deal because no one's going to risk all the most sensitive workloads or the most important ones
You mentioned earlier a $500 a month customer falling in love with you and expanding to $3,500 per month. That obviously is a really good indicator for a healthy net dollar retention mark, assuming you're keeping churn fairly low. Over the past 12 months, what was your net dollar retention?
Um, it was obviously it in those areas, by the way. Um, I think, I think that the average customer value tripled, uh, from existing customers over the last year.
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Chapter 5: How has Granulate's revenue grown over the past year?
I would try and guess it, but there's literally dozens of startups in that space right now. So I don't know which one you're using, but we'll take that as an answer. Number four, Asaf, how many hours of sleep are you getting every night? Really? Yeah. On average, around five to six. Okay, fair. And what's your situation? Married, single, kids?
married but we live in different continents so uh oh wow any any kids no no kids and how old are you 31 all right last question what's something you wish you knew when you were 20 uh
Probably learned a lot more about what a startup actually requires. I think we got into this with almost no knowledge and it's definitely different than you expected, but I'm glad we did it and I would never not do it.
Guys, Granulate.io, real-time continuous optimization, reducing your computing costs, launched in 2018. They've raised well north of $30 million in their last round, selling a little more than 10% of the business, but raised over $50 million to date. They're scaling fast, team of 50 right now. 35 engineers, 12 quota-carrying sales reps scaling that this year, hoping to 6x year over year.
Last year, across their 50 customers, they saved them over $30 million in cloud computing costs. We'll see what sort of savings they can clock in here for them in 2021. Asaf, thanks for taking us to the top.
Thank you, Nathan.
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