SaaS Interviews with CEOs, Startups, Founders
UserZoom Eye's 2022 IPO, $100m Run Rate in User Experience Management Space
28 Sep 2021
Chapter 1: What growth metrics does UserZoom currently report?
When we spoke to you, we were growing at almost like, I would say 45%, 40 to 45. We're now growing at 55. So it's not a hell of a lot more. It's not like we're doubling in growth, but we are growing more.
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 Alfonso De La Nuez.
He's building a tool, you've probably heard of it, called UserZoom.com, the experience insight management company that helps businesses gather and manage the insights they need to design and deliver an exceptional digital experience. They've raised over $150 million and backed by Silicon Valley investors, Sunstone Capital, and Owl Rock. Alfonso, are you ready to take us to the top? I am.
Thank you for having me again. So, hey, real quick for people that missed our last interview from April, where you shared, I believe that you had just passed out an $80 million run rate and a thousand customers, correct?
Correct. Yeah.
So help me understand, you know, this is a very frothy space, like user feedback in general. How are you positioning yourself? I mean, there's a clue in your bio where you used a very specific word, right? Experience insights management platform. Is that what you're trying to brand and own?
Correct. Yes, we are. To be honest with you, experience insights management is a little bit of a visionary way of positioning ourselves in a market where right now there's a bunch of companies specializing in UX and a bunch of companies specializing in CX. And then there is other companies that are talking about experience management. such as the case of Qualtrics.
There's Momentive, which is the new SurveyMonkey, also providing feedback. There's a lot of survey tools out there. And then there is others like UserZoom, which focuses on the product experience. And user research and user experience research usually takes place in the pre-production stages.
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Chapter 2: How does UserZoom define experience insights management?
So you don't actually need to ask us for anything. We just give you the login and password. And you as a company, you have probably multiple products or properties, digital properties. You can test your properties or you can test any URL, competitors or any other website that is accessible through a web browser.
If you take off and you crush it, who do you kill? Does Pendo go out of business if you do well?
No. In fact, Pendo, funny enough, this very morning we were discussing this, Pendo is a great ally or partner because they're very much specialized in product analytics. They do provide feedback, but it's a very simple feedback. Do you like it or not? But their core business is analytics, product analytics. That's more specialized in the what's going on. We use Pendo, by the way.
Our product team uses Pendo and uses UserZoom and a bunch of other tools. But that's more analytics and what's happening. the visits, the monthly active users, like activities that we call cold data.
It is very important, but that's different than user research, which is when you actually engage in a conversation and you ask people to complete certain tasks and you record everything they're doing. So we're not just saying what, we actually focus a lot more on the why and the how they do what they do.
Yeah. So very, very compliment. Very much. It is. It is. It just, it feels so like you feel so close to Pendo and you both feel so close to like hot jar and smart look. I just, I wonder why there hasn't been a mass sort of like merger between all. It's happening.
Nathan is happening. Look, tell me about it. I consider the whole thing this product experience, digital experience market. I see that as a digital product cloud and research insights cloud. That's the category I can see. That's why we call it experience insights management for digital.
There are more of what we call passive insights, which is analytics, those that will collect information and data, cold data, once the product is live.
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Chapter 3: What differentiates UserZoom from other user feedback tools?
And then there's others, including UserZoom, that are more active research platforms. These are products that allow you to connect to your users. and ask questions and probe them and have conversations. So what is more analytics dealer is user research. And as I said earlier, customer experience is all about feedback management and asking people once you go live.
The other one, user experience research is more about design and understanding how to build a digital experience, a digital product. All of these guys right now, all of these vendors, all of these solutions are kind of separated. And there's little categories for each. But what's happening in the market, and I can see it happening, is that there's going to be convergence.
So, for instance, ContentSquared just acquired Hotjar. I think the news hit this morning, right? Then you see... you know, you see the qualitative and you see customers, I talk to customers all the time that think that qualitative and quantitative, they need to be paired up and they don't look at customer experience and user experiences, two different, completely different categories.
They actually like to see it as an experience category, right? You see Qualtrics, which is one of the leaders, if not the leading company is doing, you know, brand research and market research and And they're also doing product and design research as well. We offer a whole lot of UX tools, UX solutions for user testing and user experience research.
But we also offer surveys for more marketers and e-commerce and quantitative analysis. So I think what we're seeing is that over time, we're going to see convergence. We're going to see that you're not going to have separate teams working on separate things. but everything is going to be about the experience that end users have.
How much revenue do you think Hotjar had?
You know, the press release this morning actually didn't say, you know, they didn't specify the terms of the deal, which kind of leads me to believe that it was a fairly small deal. I don't know, maybe one, but so don't quote me on that. But, you know, clearly under 100 million, right?
Based on what I knew and the fact that Hotjar was much more focused on SMB, you know, I think they probably were somewhere in the 10 to 20 million is my guess. Were you looking at the deal at all? No, because Hotjar, again, is analytics. Hotjar would be the basic tool that you need to understand what's happening with your website.
So you have Google Analytics, you have Pendo, you have Hotjar doing some things and some behavior with heatmaps as well. So they wanted to kind of take it to the so-called advanced analytics, just a little bit more. But they're not really in the user research space the way we are positioned. Again, you're not having direct conversations with users.
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Chapter 4: How does UserZoom gather user insights during product development?
I mean, we're seeing some Our NRR, for instance, I think last time we spoke was 120. We're looking at 125 right now. So we're doing even better in that sense.
But we also want to see more companies come in kind of in the starting point or the low end, 12,000 or below per year to come in and start working, maybe doing some basic testing and then upgrade them in the future as kind of a land and expand strategy. So we want to see both of those growing right away today.
Walk me through how you're actually practically doing that. Do you set up individual teams to focus on the higher volume, lower ARPU and another set to go drive expansion revenue to your biggest accounts? We do. Walk me through that. How does it actually look?
Well, so it's a different go-to-market strategy, right? And so what we did is we have the pricing models, and then we have the different products. In our case, we actually have even different products. So if you go to our site, you'll see there's a users and go. which is the former Validately that we acquired two years ago.
This was a very simplified, kind of like a light version of our enterprise solution. And it's cheaper, it's more affordable, it's easier to use, and it's less feature rich. All those things are there. And so we use a tech touch approach or semi tech touch approach where we have a team of people that will sell that type of license and that type of product with a pricing model.
It's still an annual subscription. So we still have the same in terms of how we engage with customers, but it's going to be the starting point. And we assign a team of people in marketing as well to work on those opportunities. And then we have the enterprise team that works on higher deal, higher value deals. And they often work together, of course.
I mean, we're seeing, that's actually one of the things that I like the most about, and our CRO speaks about this, talk about an escalator, right? And we see that we have a lot of companies that started in UC Go are actually moving up because they're maturing or they want more or they want more capabilities, et cetera, et cetera.
And you mentioned last time you had 50 quota carrying reps. What is their quota annually, right? I like most of the reps. I'm sure there are some that are just starting where their quota is smaller, but when they're at full capacity, what is the quota target?
I think we're at 1.4 million or so, somewhere around that, yeah.
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