SaaS Interviews with CEOs, Startups, Founders
How ThreeKit Plans to Grow into their $300m+ Valuation, Break $10m Revenue This Year
10 May 2022
Chapter 1: What is the revenue model for ThreeKit?
So 220 customers paying on a low end between 18 grand a year on the high and half million a year. I mean, if we assume a $3,000 average ARPU, that puts you guys at something like $600,000 a month or about $7 million run rate today. Is that in the right range of where you're at?
We're going to exit much higher than that, above 10 this year.
This year you'll break 10, you think?
Yeah. Yeah.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey, folks. My guest today is Matt Gorniak.
He's the CEO of 3Kit, 3D and augmented reality visualization software for products.
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Chapter 2: How does ThreeKit plan to achieve $10 million in revenue this year?
He leads the company by building effective go-to-market strategies, teams, and partnerships. Prior to 3Kit, he served as CRO, Chief Representative Officer, and was co-founder of G2, a leading marketplace for business software reviews that has raised over $100 million.
He's also head of global sales leadership positions at Steelwork and Big Machines, Cloud, Configure, Price to Currency, to key platforms that were acquired by Salesforce and Oracle, respectively. Matt, you ready to take us to the
Let's do it. I'm amazed how much you can compact into this. This is great, Nathan.
Chapter 3: What is the background of Matt Gorniak and his role at ThreeKit?
Yeah, no, we'll have fun. So what got you go from software reviews to visual commerce? Explain that leap for me.
Yeah, I mean, there's actually, as you met my business partner, Goddard Ebel, and there's actually a couple of us who've done companies together, led by him, you know. Anyway, but there's actually two threads, you know, G2, as you spoke to him was, I won't go deep into that, but that was more like scratching an itch of like, hey, how come this is happening this way?
And I know you're really keen on the entrepreneurial stories. And that's one of those like, wow, why is this not fixed? Why is this not fixed? But there's another thread in parallel as we like to build companies, which is company big machines got sold to Oracle and Steelbrick to Salesforce. Those were basically product configuration companies. So kind of like, how do you sell complex products?
And that's kind of where 3Kit falls in.
So who's paying for the product today? Give me a customer example, if you can.
TaylorMade, let's say. TaylorMade golf drivers. Let me give you the insight of what happened to us because I find the best ideas come from seeing things. I also talk to entrepreneurs and And ideally, it's something you have an understanding of, right? You don't have to be an expert, but you see some patterns.
And the pattern we saw in the configuration space, so think of our customers with big machines as like manufacturing company. They need a quote for a very complex product, right? This is like 2005 and 2006 with big machines, right? Okay, you put this together. Well, what's it look like? Well, we can't show you. It's too complicated. Okay, that's early. You're like dismissive.
You're like, hmm, maybe one day people want to see the product. But it was sort of like not a must-have. And then when we got into Steelbreak, we got into Salesforce. I was there for a couple of years with Goddard integrating this. You start seeing this demand. This is really obvious, Nathan, honestly, but it's one of the things you have to need signals. People start to demand to see the product.
Let me give you a specific example. When you go on e-commerce websites, right?
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Chapter 4: What motivated the transition from software reviews to visual commerce?
How come I still see the stock one? And that's kind of the thing we're solving.
Understood. So yeah, just to be clear, you're buying $1,000 Aries stuff on Crate & Barrel. There's a bunch of metrics you can change. How big are the cushions? What's the fabric material? What's the hardware finish? What's the color? You change all these things and 3K enables Crate & Barrel to show you an accurate visual representation, which ideally increases conversion rate.
What are these brands paying you, Matt, to use the software today on average, maybe per month or per year?
Yeah, it differs very much. I mean, we have an SMB segment. We want to democratize this. And so it's really primarily based on scope. Our SMB customers are much smaller. They have one product, let's say. And they're typically starting points 18,000 a year. Big brands, just in general, where the scope is just massive, you're talking 100 to half a million.
So your biggest, your biggest customer paying around half a million a year, how many, like, are they, are they paying based off number of SKUs or like what's the utility metric?
It's like a total transformation. Like, yeah, it's SKUs mostly like basically the scope is just giant, right? Whereas like an S&P customer, They have one product, right? You could have one, you know, not even microphone. A lot of them make like, let's see, a dog crate. We have a great customer making dog crates. And how do you sell a high value?
Usually these are high consideration items because you kind of want to understand, you know, if I'm changing things, what does it look like? It's a high consideration. So in that case, they impact dog crates, right? They're wonderful dog crates in that case to bring them to life. They're a very small startup, really. You need digital. But that's on that end.
To democratize, you get started at about $1,000 or $2,000 a month, all the way up to you're paying $500,000 a year who are total change management, hundreds of SKUs, thousands of options, etc.
That's right. Millions, actually.
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Chapter 5: Who are ThreeKit's main customers and how do they utilize the software?
And then in 2015, he met... a couple of folks from a small company called Shopify who joined the company and they said, hey, let's make this for e-commerce. So the knowledge, the sort of the IP has been built over many years, but the platform itself is three and a half years old.
So we kind of, when myself and Goddard got into the company, we brought in with us, you know, the family, and now we're 120 people. We decided that, hey, let's cuddle, you know, basically let's create a brand new platform, Headless. Let's reimagine all this.
So the code is written three and a half years ago on a platform, although the IP, like the math, how to do that, it's been building up for a while.
So that's really cool. And Ben would say founding date is 2005 even. So he's been thinking about this for a long time. It sounds like. That's right. That's right. Okay. Interesting. So is Ben still active at the company?
Yeah, he's our CTO, our founder, and that's kind of the marriage, right? You need the product complexity, which we brought from us from all these years of experience, all the companies I mentioned, and this beauty, like the ability to generate picture-perfect representations at scale. That's where the platform came together. Yeah, so he's very much with us here. He's a thought leader, by the way.
You should have him on a show, talk about where this whole world's going. It's really cool, too. I mean, he's got an angle completely from visualization, which is really fun to listen to.
And then it gets getting, you know, fast forwarding to today, right? So how many total customers are you serving today across these four or five different segments?
220 and obviously growing. And what we're seeing is really interesting. Again, I'm telling you no news here. With pandemic, this is starting to become like major FOMO because...
um yeah i think people are realizing like my product just doesn't exist and the metaverse and nfts by the way just to give you some fun buzzwords that's obviously like way out there but it's really challenging the brains and the infections to think like wait a minute if i don't if i don't have a digital product version it's better to send a real product i mean if you can experience it online place it in the r and then get it shipped that's awesome
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Chapter 6: What is the pricing strategy for ThreeKit's software?
You can create. But if you want these products to exist in the metaverse, they have to be very specific. With that, you have to visually configure them. That's sort of what we're finding. So the metaverse is an amazingly big vision. At first stage is e-commerce. Are you ready for that? And 99% of the companies we work with, Nathan, are not ready for even e-commerce.
They have e-commerce presence, but they don't understand how to bring the products to life right now.
I mean, I just think for this though, for like where I think this is very interesting is the product isn't actually the physical wood crate and barrel uses for the bottom of their couches. What's interesting is if I buy in Snoop Dogg's metaverse, the land next to him, and I now want to furnish my house,
I'm actually just buying the licensed Creighton barrel design generated by 3Kit, picking my cushion cover the distance and sticking it in my living room next to Snoop Dogg and his metaverse. That actually becomes the product, right?
So there's two paths, right? You do have a digital product. Maybe you want it shipped, right? I mean, it could be. Or it's a pure digital for digital, which has like... teeth on the side of the couch. It becomes a pure digital brand, but still there's configurations, options, and maybe you want to personalize it. Maybe you want to make an NFT out of it. And so millions of options create.
That's what we're seeing, right? Digital to real, because the brands and manufacturers have one advantage, they can make you the product. So if that's a strategy, right, which is you're in Stu Block's house, You're configuring whatever you're configuring. And then, by the way, I want to buy it or buy an NFT of it. Or it's totally like random, right? Like a table with fur on it, right?
And something wacky. And you'll never, ever buy that. But it's cool. It's your digital brand. It's your digital asset. And that's the interesting thing, I think, about the... Again, 99% of folks haven't even done Web 2.0 yet in our world. But when you go into that world, it's like... Who are going to be the brands that should rule that?
I mean, you could have, as you're already happening, you and I can come up with the brand that's digital. And that's like considered a luxury watch for all I care, you know? But it's a digital watch. And that's kind of the fascinating thing about that world. Like who's going to own, who's going to have a brand?
We'll see what happens. In the meantime, though, one or two more questions here before we wrap up with the famous five. Obviously, net dollar attention is critical when you're selling to the enterprise. Are you guys above 110, 120% today?
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