SaaS Interviews with CEOs, Startups, Founders
Premise Breaks $20m Revenue, $400m+ Valuation in Two Sided Marketplace Play for Consumer Data and Feedback
15 Mar 2021
Chapter 1: What is the main topic discussed in this episode?
but whoever performs best in our sales team this year, how much could they make? A million dollars. Oh, wow. You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatka.com.
Chapter 2: What is the background of Maury Blackman and Premise Data?
When you subscribe, you won't hear ads like this one. You'll get the full interviews. Right now, you're only hearing partial interviews. And you'll get interviews three weeks earlier from founders, thinkers, and people I find interesting. Like Eric Wan, 18 months before he took Zoom public. We've got to grow faster. Minimum is 100% over the past several years.
Or bootstrap founders like Vivek of QuestionPro. When I started the company, it was not cool to raise. Or Looker CEO Frank Behan before Google acquired his company for $2.6 billion. We want to see a real pervasive data culture, and then the rest flows behind that. If you'd like to subscribe, go to getlatka.com.
There, you'll find a private RSS feed that you can add to your favorite podcast listening tool, along with other subscriber-only content. Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests, no questions asked. Hello, everybody. My guest today is Maury Blackman.
He's got 20 years of experience leading mission-driven high-growth tech companies that make an impact by connecting communities and providing a more transparent world. In 2016, EY named him Northern California's Entrepreneur of the Year for his work as Accela's chairman and CEO.
In 2018, he took the helm at Premise Data, a San Francisco company operating a software platform for empowering the world's highest-impact institution and companies to track and comprehend ground truth. Maury, you ready to take us to the top? I'm ready. Let's go. Data space is hot. Help us understand where premise fits. Well, we're a market intelligence platform.
And so this space, when I first took over the business, I was blown away by the tech stack. And at the same time, the tech vision, the tech stack, at the same time, when I looked at the space and the different players in there that basically serve large organizations and global companies and their market intelligence need, I found them to be very dated and antiquated in their processes.
And so what Premise does at the highest level is we recruit contributors on a global basis. We're in 100 different 20 countries. And we find these individuals, they're ordinary individuals, through social media. They download our app. We run them through some training exercise.
And the output of that, they can enter into a task marketplace where our clients have posted small data collection jobs that, once completed and all conflated together, provide very powerful insights about their brands, their campaigns, their policies, whatever it is they want to measure. to help them understand their businesses. Very interesting mousetrap.
Obviously, we see ZoomInfo and what Henry's done with the Discover org, ZoomInfo acquisition, the market cap there is incredible. You also have up and comers like Enigma really taking off in this space, all different data traps. I haven't heard somebody doing what you're doing, which is essentially something like Mechanical Turk almost, but you're only posting data capture jobs.
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Chapter 3: How does Premise Data recruit and utilize contributors for market intelligence?
They'll try us out in a POC. So maybe spend, you know, $10,000, $20,000. And then once they see the power of this and they just, you know, the floodgates just open up. And so I would expect that to normalize over the next, you know,
24 36 months and to have you know maybe something around 120 like you suggested yeah it's still impressive i mean early on having you know 250 to 300 percent expansion year over year even after churn that's great number now can i take 80 customers times the acv average you just gave me 100 grand you guys are flirting with an 8 million run rate right now um what's higher than that okay
You know, I'm averaging it out for you. But we do have some customers that are paying considerably more. So right now our run rate's around $20 million. Oh, thanks for sharing that. That's super helpful. The reason I'm asking is because you have a very interesting profile when you look at the timing of the VC raises you guys have done.
There's a very long gap between 2015 and the one you guys just recently did. Help me understand how and why you got involved with the company. Yeah, great question. I came on board in 2018, as you mentioned. I started interviewing in late 2017. And I love the concept and the TAM. The TAM for this space is $45 billion.
But what was really challenging for me is even though the company had been in business for several years, they raised a bunch of money. What year was founding? Say again? What year was the company founded? 2012. 2012. And so between 2012, 2013, up to 2018, when I joined, there was really no commercial activity. And so what I had to do is come in and, you know, this is a horizontal application.
It can serve almost any industry. And so what I did is really focused our efforts in three Cree verticals because we had limited resources. And what I wanted to do was find a what I would call an initial founding customer set that we could consolidate around and build from there. And who was what was that consolidation? Yeah.
Well, I've mentioned AB InBev, Western Union, Facebook, Gates Foundation, US government, the UK government. That was really the initial phase that we were focused on. Now, I mentioned to you, you know, these customers would spend on the average when we first signed them up somewhere between 50 and 200K.
But that, you know, once we got through the initial year and proved out the business and people got addicted to the data, they got addicted to the insights we were providing to them. On average, they spent 500 percent more. Interesting. Now, help me understand a little bit about growth rate here. Right. So 20 million right today. Where were you about a year ago? Do you remember? 10. 10.
Okay, I mean, this is impressive growth. The question that I have is how on earth did the initial founders convince Baylor to put in 50 million, right back in 2015, with such little revenue, and it sounds like not great growth until you sort of joined and changed things.
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Chapter 4: What specific problems does Premise Data solve for its clients?
You know, this whole new world that we're living in these days is kind of crazy. I need to learn how to turn all this stuff off. Well, Mark, the reason I'm asking these questions around valuation is you're clearly a talent. I mean, I just read your bio before you came on live here with me. They must have put the freaking silver platter in front of you to come in and do this.
You then raised another $85 million. I mean, hopefully that wasn't a down round. But how did they incentivize a guy like you to come in here and turn the ship around? Well, when we came on board, we needed to raise more capital. We knew we were going to need to raise more capital. So effectively what we agreed to do is that we would do a quick inside round.
And I'd had some success in the past and been very fortunate. So they offered me the ability to invest in that round with them, which I did. And then they gave me a pretty good slug of equity to get it going. I see. I mean, it's almost like I founded the company from that standpoint. So do you own more than 10% now? Yes. Oh, there you go. Okay, cool. And then what was the Series D?
How much did you guys raise when you joined? We raised $15 million. Interesting. And when you did that, there was, I imagine, a big debate between you and the insiders about how much you needed to raise to get X amount of runway. How much runway were you negotiating for? One year. Okay, just one year. Interesting. And then, obviously, it panned out. You grow 100% year over year.
You go do $85 million with, what is it, Westcap, I think?
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Chapter 5: What is the customer profile for Premise Data's services?
Correct. What are they like working with as partners? They're great. I mean, these guys, you know, Lawrence Tosi is the man. I mean, I... this guy has tremendous operating experience and tremendous investing experience. You can't beat him. And when you go out and tell that story, obviously you're trying to get a much larger valuation to minimize dilution.
What valuation story were you able to tell? Well, essentially what I was able to, you know, it was, there's, there's two parts of it. There was obviously the big vision about where we were headed, but also the, the financial traction that we had, we went, you know, so the first year I was here, we did, We did $4 million in revenue, which was, you know, that was exciting.
We hadn't had revenue before. And then, you know, kind of following on the back of that, we did 10. And then we had a clear line of sight to 20. And the way the world looks today, it looks like we'll be able to double again.
Chapter 6: How does Premise Data measure success and customer engagement?
So we're really excited. You think by December 2021, you'll break $40 million, $35, $40 million in ARR? I do. Yeah. Yeah. You know, being a SaaS business, I mean, obviously, one of the things that we love about it is that we're able to predict what our revenue looks like. And if we... You know, we have an opportunity to do much better than 40 million.
But I think, you know, given what we see today, that that's a strong possibility. You know, but back to you ask about we bought we bought ourselves a year with the 15 million. But one of the unforeseen circumstances, of course, was covid. So I listened to a couple of your other podcasts before you, you really like bootstrap companies. And I just like founders getting rich.
And usually that means stay bootstrapped. Yeah, that's true. But I think, I think it's really interesting. You know, what, what happened is that we got, we got to that year and, you know, I was, you know, I'd planned on kicking off the fundraise in April, May timeframe to finish it in July so that, you But with COVID, I thought, hey, this thing's going to be over in three or four months.
We might as well put the fundraise on hold until we can really hit the road and do a strong raise. And obviously, the world didn't work out that way. So we had to get pretty aggressive and do a raise over Zoom, which had a lot of interesting challenges. But at the same time, what we were able to do is we ran very lean operation. until this last raise closed.
And then most people in their Series E, they're selling somewhere between 10% and 20% of the business. Is it fair to say you are in that same range? Yes. Got it. What's the next step? If you go up to break 35, 40 million run rate this year, what's next? Well, I think that we've got a pretty big war chest right now, a lot of dry powder.
And so we want to propel ourselves into the $100 million range as quickly as possible. And then what? Do you like SPAC, direct listing, or regular IPO? Yeah. God, what a great question. I've always been so averse to SPACs. It always seemed to me kind of like a backwards way of getting public. But these days, it's really exciting.
So I feel like that I'm going to give you that very canned answer that we're just going to build shareholder value here and see what happens next. Talk to me. I mean, we've talked a lot about numbers and the story, but what about the product? I mean, where do you see what's happening with the product over the next 12 months? Well, we're really aggressively rolling out in the US.
One of the things that we did initially is, you know, kind of we figured out what's our, you know, what's our core competency here? What is it that we do really well? And we found that we had an extraordinary opportunity to help brands reach the, you know, all places in the earth that they didn't typically have access to. And so that that really helped us out quite a bit in the early stages.
But now that we're starting to mature as a business, we want to do is expand rapidly here in the US. And so that's going to take some significant investment on our part. We're probably going to be plowing 10 to 20 million of our raise into building out network and infrastructure here in the US. But we think that that will give us five to five to six times return in pretty short order.
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Chapter 7: What are the key metrics Premise Data tracks for growth?
Talk to me about the team, the most important thing. How many folks are on the team? We have 120 employees. I'm very proud to say that that's up from 50 this time last year. And so we've hired all the way through the pandemic. But we have a great group of individuals and we're continuing to hire. We think by the end of this year, we'll have close to 400 people. How many engineers? We have 70.
Wow. Okay. And what about quota carrying sales reps? We have about, well, that's where we've been a little bit light. We have somewhere between five and 10, depending on how you count it. We look at government sales or public sector sales a little bit different than commercial sales. So on public sector, we do it more as a team.
So you have a team-based quota versus in the commercial sector, it's individualized. You run triathlons and I assume have extreme rigor. You calculate everything down to the second. Same thing with your sales team.
When someone is onboarded to the sales team member and they're selling these commercial contracts, what ratio do you like to set up for them in terms of the total amount they can earn on base plus commission relative to the quota targets they're hitting?
Well, I think that when you're at a company of this size, what you want to do is you want to make it very clear and easy for your sales team to make a lot of money. And so we will typically set up like a 50-50 plan where 50% base, 50% on target earnings.
But I really put a lot of kickers in their plan so that if they overachieve, they're going to make an outsized return on what they would if they just did as we expected them to. Whoever performs, you don't know who it's going to be, but whoever performs best in our sales team this year, how much could they make? A million dollars. Oh, wow.
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Chapter 8: How does Premise Data's pricing model work?
Interesting. Okay. And that means they're going to be bringing in, what, at least four or five million bucks of new ARR? Yeah, I would say that's probably fair. I haven't put a million, I haven't put the math to it yet, but that's what it would look like. Again, before we wrap up here, any other metrics you're tracking that I haven't asked about?
I mean, you just strike me as a guy that's very precise, whether it's from sports and triathlons or business. Is there anything I'm missing here? Well, I think that we're a two-sided marketplace. So we have, you know, the contributors on one end, these are the data collectors, the people who are finding, capturing the information for us. And then on the other side, we have the customers.
And so we have to measure the funnels on both sides. We have the funnel for the contributors and how much spend we have to get to get what we would call an engaged user. So an engaged user is someone who goes on on a weekly basis is using and making money with us versus... How many of those are there currently?
We have, I would say, on a daily active user basis, we have about 50,000 daily active users. Engaged users, it's probably north of one and a half million. And that's engaged means monthly? Like they're active in a month? Weekly. Weekly. Yeah. And then people who have come on board and cashed out. So they did some tasks. They made some money. That number is a little bit north of $3 million.
How much last year of total kind of expenses went to paying out these folks that are going out and collecting the data, the $50,000 or $1 million that are active? Well, I'll give you the total number, but then I want to give you another number that I think is really cool. So about $5 million. Okay. And what's the other number that's cool?
We're the only company that I know that pays for service in Bitcoin. So last year, I just love this, man. I just love it. We paid out a million in Bitcoin last year. Well, so now that's what? Two and a half, three, four million? Yeah, it'd be crazy. Yeah, you just don't know. Because remember that earlier in the year, I mean, Bitcoin was what? Around $10,000, $12,000. Now it's at $50,000.
So I'm looking for that one contributor somewhere who... made all that, you know, got paid in Bitcoin and then sat on it. And now as a multimillionaire. So when does the premise token come out? When does this whole business move to blockchain? You know, that's something that I'm really thinking about and exploring because I think it could be a really interesting opportunity for premise.
You'd be one of the first. I mean, someone that has raised over $140 million transitioning from a pure, like a SaaS model to on, I don't think it's been done before. You'd be one of the biggest. I want that story. If you pull the trigger, I want the story. You got it. Let's wrap up with the famous five. Number one, favorite business book. Oh, geez.
Well, my favorite business book is Good to Great. Number two, is there a CEO you're following or studying? Well, I love Elon. He's my guy. I mean, he's just so crazy and awesome. I mean, you got to give the guy credit, man. I mean, he takes on the biggest, most hairiest, audacious plans. and turns them into gold. We all love that about them.
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