Nathan Latka Venkat Nagaswamy Interview

[Nathan 00:00]: Three years ago he launched the company, uh did very little revenue his first year, 2014, actually zero. 2015 did 155 grand, 2016 grew to 550 grand in sales. He’s now doing last month 80 grand in monthly recurring revenue. Each customer, which there’s 20 of them pays about four grand. Again, he’s helping these customers like Zendesk more effectively do account-based marketing. Super healthy unit economics, just at his pre-series A raising $2 million on a $10 million post money valuation.

[Nathan 00:28]: This is the top. I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You’ll learn how much revenue they’re making, what their marketing funnel looks like, and how many customers they have. I’m now at $20,000 per top. 5 and 6 million. He’s hell bent on global domination. We just broke our 100,000 unit sold mark. And I’m your host, Nathan Latka. Many of you listening right now don’t have time to listen to every B2B SaaS CEO that I’ve interviewed. If you want to get access to the database I’ve created with year-over-year growth rates, customer counts, margins, and many, many other data metrics and data points, you can go to get laka.com. Here’s the thing though, this database, I keep it to myself. It’s so freaking valuable. And to preserve the quality of the data and make sure that the people that have access to it have a true advantage, I’m only letting 10 companies on each month. So we’re full this month, but you can go to get laka.com to get on the waiting list for next month. And look, there’s big people on the waiting list. I mean, the biggest VCs you’ve ever heard of. You’ve probably heard of them. They’re big private equity, billions and billions under management. So it’s an impressive waiting list. Go get on now at get laka.com. This is episode 773. Coming up tomorrow morning, I talk to Creative Lives, Chase Jarvis. And I said, if LinkedIn offered you $200 million, would you sell creative live? His answer will surprise you.

[Nathan 01:53]: Hello everyone, my guest today is Venkat Nagaswamy. He is the CEO of Mariana IQ. He brings a long and diverse background in high technology to bear on applying artificial intelligence and deep learning to help marketers make the count-based marketing and at scale reality. Big Cat, as he was nicknamed by his friends and colleagues, has led his teams in creating analytics, technology, and business development solutions at McKenzie, Juniper Networks and GE Plastics among others. He’s worked with an enterprise and digital consumer hardware, SaaS, corporate and business unit strategy, market entry strategy, product development, along with many, many other spaces. He’s a proud graduate of the University of Michigan and the Georgia Institute of Technology. Also has and holds an MBA and a masters in aerospace engineering. Venkat, are you ready to take us to the top?

[Venkat 02:38]: Yes, sir.

[Nathan 02:40]: Okay, so that was a That was a mouthful, but thanks for joining. Tell us what Mariana IQ does and how you make revenue.

[Venkat 02:47]: Okay. So, uh, you know, this is the problem that we’re looking to fill is the problem that I faced when I was at Juniper trying to uh implement ABM or account-based marketing. Uh the key problems that people have when trying to implement account-based marketing is, how do you figure out which accounts to go after, how do you figure out who within the account to go after, and how do we engage them? How do we capture them uh through multiple channels? And that is the problem that we’re looking to solve. How do you figure out which accounts to go after, let’s find the specific people within those accounts and surround those individuals on various channels like Facebook, Twitter, Google, AdWords and so on. And that’s what the software does. Uh people buy a subscription, uh a monthly subscription to the software, which allows you to run campaigns targeting the same set of individuals on all uh uh on all of these different platforms.

[Nathan 03:36]: So it’s a SaaS business model.

[Venkat 03:37]: It’s a SaaS business model.

[Nathan 03:38]: Okay. And what do people pay on average per month?

[Venkat 03:40]: So right now we’re doing about 4,000 bucks a a a month on an average per customer.

[Nathan 03:46]: Got it. And then take us give me more of the back story here. So what year did you launch the company in?

[Venkat 03:51]: Yep. So I started this company what, three years ago along with two of my co-founders. Uh prior to that, I used to run uh enterprise marketing for Juniper Networks. And so I come at this at the as a as a user of the technology, not just from the technology side. And back in the day I implemented what was then the latest and greatest in marketing analytics, which was uh uh Lattice engines. And I felt that there was still a whole bunch of tools that marketers needed uh to start this uh to to to be successful, right? And my co-founder also felt the same thing having done product marketing and product management and that’s how the team came together.

[Nathan 04:29]: So that was 2014 about three years ago when you launched. Do you remember what your first year revenue was?

[Venkat 04:35]: Uh the the first year revenue was zero. I mean, we we started making our first revenues in uh late 2015. Uh we were doing, we did for month of, for the year of uh 2015 we did 155,000. Uh 2016, we did about uh uh 550 uh thousand and hopefully we’ll do four times that this year. We’ll see.

[Nathan 05:01]: So, are you on track to do 2 million this year?

[Venkat 05:04]: Yep, we’re on track, you know, by touchwood. Um and and uh we should be able to hit that.

[Nathan 05:10]: And what is so I’m trying to do the math in my head, but save me the time. So, what was monthly recording revenue last month?

[Venkat 05:16]: Uh, so last month it was uh 70, 80, 80 about that part of about, essentially uh tracking close to a million. Yeah. Yeah. So you did about you did about 80 grand, you did about 80 grand last month, multiplied by 12 gets you about to about a million dollar run rate.

[Nathan 05:29]: Yup. You did about 80 grand you did about 80 grand last month, multiplied by 12 gets you about to about a million dollar run rate.

[Venkat 05:36]: Yep, that’s basically it.

[Nathan 05:38]: Got it. So, with a $4,000 ARPU and and 80 grand in in MRR, you have what about 20 customers?

[Venkat 05:45]: Yep, yep. It’s actually slightly more than that, but yes.

[Nathan 05:48]: Okay. Okay, good. So, so we just got kind of your revenue numbers, that’s really, really helpful. You took us up you have 20 customers. Tell us a story about one of these customers. Like how they’re actually using it, a real name.

[Venkat 06:00]: So Zendesk is one of our foremost customers. As you know Zendesk is uh uh is a big player in the SaaS world and they’re well known as a good B2B marketer, especially inbound marketing. They came to us saying, hey, we have a uh we’re doing great in inbound marketing but we need to target larger companies and go after a list of accounts uh which are larger than what we normally do. Uh and so they they gave us a whole bunch of their historical data. We used our AI platform to find more companies like the ones that they were successful with and found more people within those companies that we found that they’re successful with. And we created this audience for them on Facebook. And they’ve been running campaigns on that for the past 10 months or so. Um and and and they’ve had great success, right? Uh to put this in context, these guys are people who spend something like 50 bucks a click to all the way up to 100 bucks a click on uh on Google AdWords uh for something like health test soft software. And they were able to uh increase their lead volume like four times based on Mariana while holding the cost while uh uh improving their success rate. Now, they didn’t tell us how much their success rate improved by because we would then increase the price.

[Nathan 07:16]: Hell yeah, you would. But

[Venkat 07:19]: Uh uh uh but uh uh uh but they said they it improved increased that uh increase their uh quality. So we got better quality, four times the volume while keeping the cost the same. And all of this is because of this AI that underlies what we do.

[Nathan 07:30]: That’s great. And have you bootstrapped this company or have you raised capital?

[Venkat 07:36]: We did raise capital from first, we did a seed round in 2014. Blumberg Capital led the round and we also had prominent angel investors like Cogle and Raja Ram. Did you say Blumberg Capital or Bloomberg like Michael Bloomberg?

[Nathan 07:49]: Did you say Blumberg Capital or Bloomberg like Michael Bloomberg?

[Venkat 07:53]: It’s Blumberg, single it’s BUM. Who runs who’s who’s behind that?

[Nathan 07:56]: Who runs who who’s behind that?

[Venkat 07:58]: So David Blumberg is the main guy. Uh Bruce is my is the guy on my board, he’s my man. Uh these guys were behind, I mean, they’re they’ve been around for 30, 40 years. They were they were the original investors behind RSA, Whootsweet, Vertinx, these are some of the names that you might know.

[Nathan 08:03]: Got it. And was that a was that like a a a convertible note or a price equity round?

[Venkat 08:15]: It was a convertible note round. 2 million uh uh note was what we issued. What was the cap?

[Nathan 08:19]: It was a convertible note round.

[Nathan 08:24]: What was the cap?

[Venkat 08:25]: Uh no, what the cap was uh six.

[Nathan 08:28]: Okay, six. So 2 million raise, 6 million cap and what 8% interest, 25% discount

[Venkat 08:34]: 20% discount and I think 6% interest. So fairly standard. And then And you said that was uh 2 million to raise and it sounds like you’ve done around after that as well.

[Nathan 08:38]: So fairly standard. And then And you said that was uh 2 million to raise and it sounds like you’ve done around after that as well.

[Venkat 08:45]: Yeah, so we did another round uh in mid last year, about a year ago. Uh Exfinity Ventures from India which is made by uh uh leaders from Infosys and Wipro. Uh those guys led the round. It was a convert, it was a priced round and we converted everything at uh essentially 10 million post.

[Nathan 09:04]: Okay, got it. And how much did you raise?

[Venkat 09:06]: We raised 2 million.

[Nathan 09:08]: Okay, so you raised a total of $4 million. That second series at series A price round, you raised 2 million at an 8 million pre, 10 million post.

[Venkat 09:16]: That’s correct.

[Nathan 09:17]: Got it, very good. And and so that’s actually, I mean, that’s an impressive post money valuation for a sub $1 million run rate. I mean, you’re basically got a 10X valuation. That’s I mean, that’s pretty healthy. Do you ever get nervous about your ability like, for example, if Salesforce came to you, Mark off and pulled out a checkbook and wrote you a check today for $3 million. That’d probably make you some good money. You’d be tempted to maybe take that, but you can’t because of what you’ve raised, right? You have to sell for more than way more than $10 million. Do you ever worry about growing into your valuation?

[Venkat 09:48]: Uh not necessarily. So in terms of, I mean if you look at the valuation of uh what we raised 10 million post at four million raised, relatively speaking, it’s not that big of a valuation jump based on the where we are or even where we were, right? So there’s a lot of, I mean if you and we by the way, the way we priced it was based on uh uh what we were seeing in the marketplace at that time. And at that time, a lot of people in our range would go for, you know, would have converted at or would have done something like at 12 million or 14 million post money valuation as opposed to 10. So we believe that we are actually relative to what uh what we would have gotten at that time, we’re actually on the lower side. So I’m not, I don’t feel too worried about the the the valuation creep as people call it. Uh had we done it at 15 or 14, then that would worry me especially when we go in for the series A, the series A investors would be more worried. But uh uh, you know, the preliminary feelers that we’ve put out for series A, which we are not ready for yet, we’ll be ready for it later this year. Uh but when the preliminary feelers that we put out, the people have said

[Nathan 10:51]: Oh wait, real quick, Venkat, so that that 2 million on a 10 million post, that was like a pre-series A price round.

[Venkat 10:57]: Exactly. Got it. Uh so the actual series A we do only later this year. And uh those that what people are telling us, they’re like, okay, your valuation is okay. It’s not too low, it’s not too big. It seems to be around uh uh uh what what people are seeing. So, we’re not, I’m not too worried about it, but then, you know, ask me in six months and I’ll tell you what it what it is.

[Nathan 11:18]: Yeah, yeah, makes good sense. Um, take me into, first off, it’s impressive. It’s rare that I see a company that has your run rate with um, this isn’t a bad thing, so little customers. In other words, usually what I see in SaaS is high volume, low ARPU. You have low volume, high ARPU, which is I’m curious, how did you get those first 20 customers to pay so much when you had such little kind of background and historical data?

[Venkat 11:46]: Yeah, so, uh, you know, we were in the under stealth still uh till something like May of last year. So first. Okay. So for the first year that we were getting revenues from people, they were all beta customers based on the contacts that we had and the investors had and so on. But since then, uh we’ve attracted a lot of attention simply because of inbound marketing that we’ve been doing. Uh all the the the press coverage and other coverage that we’ve been able to get in various places, that’s attracted a lot of people to come to.

[Nathan 11:53]: Okay, May of 2016.

[Nathan 12:18]: No, Venkat, tell me, tell me about like tell me about like the really weird thing you did that if you admitted you did it, people would go, that’s genius. Why does nobody else think of that? So, like what’s something that’s not conventional, not an inbound marketing, something that’s really not conventional that you did that landed customers?

[Venkat 12:34]: So, uh I took off, I showered in the uh in if you go to my there’s a video of me in YouTube.

[Nathan 12:42]: Showering? Stop, stop.

[Venkat 12:44]: Okay. So you asked me for a weird thing. You did. Okay, give it to me. Give it to me. Uh and and we took that video and then my you know, my wife and kid are also there in the video, not in the shower but elsewhere. And and and that video we put it out on on Twitter and that got like a million hits or something or views or something like that. So anyway, you asked me for a weird thing and that was a weird thing that we did.

[Nathan 12:45]: Okay, give it to me. Give it to me.

[Nathan 13:14]: Did you land a customer from that? Can you track one of your new customers back to that?

[Venkat 13:18]: So, I don’t know if they were customers, but I can’t I will tell you, something like 60% of the meetings that I’ve had or at least when that was running, the people would would say, you know, this is the first time I’m seeing some guy who actually sang Bon Jovi or whatever and filmed it for. And by the way, I should say, I am the worst singer on the planet.

[Nathan 13:39]: I was just going to ask you to sing so we could get a sense of if if you were like a rock star or not.

[Venkat 13:43]: No, it it it is pretty bad. It’s pretty bad. You don’t want to hear me sing. It’s awfully bad. Even my mom wouldn’t say I sing well.

[Nathan 13:51]: That’s funny. Okay, last few questions here before we wrap up. Gross margin. Are you in typical SaaS range, 85, 86%?

[Venkat 13:57]: Yep. 80 90. Yep. Okay. So you don’t have any weird kind of above the line expenses or costs?

[Nathan 13:59]: Okay. So you don’t have any weird kind of above the line expenses or costs?

[Venkat 14:02]: Nope. Okay. usual SaaS uh uh uh uh stuff. Yeah.

[Nathan 14:07]: Gross customer churn per month.

[Venkat 14:11]: So, per month it’s doing trifle high right now. We’re about 3%.

[Nathan 14:16]: Okay, that’s not so bad. And what if you did that in terms of revenue churn?

[Venkat 14:21]: So, some of these the people that we’re churning are actually people uh that that we signed at really low numbers. And some of it is is by design. So, even so it’s 3% on a on a company basis, but on a revenue basis, it’s more like one it’s it’s about half, I would say of that. I don’t remember the exact number but it’s about half of that.

[Nathan 14:42]: Got it. And that’s because you’re upselling current customers and you’re getting rid of lower ARPU older customers. Okay. What about CAC? What are you spending to acquire a new customer? Do it fully weighted, so include your content people, take their salaries divided into new customers per month, etc.

[Venkat 14:48]: Basically, yeah.

[Venkat 14:56]: So, the exact number we just did the math last week. Uh it’s like 22,000 bucks per customer.

[Nathan 15:02]: Okay. And what do you assume lifetime value of a customer is?

[Venkat 15:06]: So, we are assuming right now that they would lie. So, we assume at least for a modeling looking ahead, we assume 20% per churn per year, uh uh is the total number. We’re doing slightly higher than that right now. So, that essentially translates to four, five years of

[Nathan 15:22]: 200, 250 grand lifetime value?

[Venkat 15:24]: Exactly. Yep.

[Nathan 15:25]: Very cool. Okay. Now, talk to me about payback period real quick. Now, obviously, if you spend 22 grand and you’re making 4 grand per month, your payback period is about five months. Do you like that? Would you spend more? Would you spend less?

[Venkat 15:36]: So, the if you look at the projections that you’ve done, we’re actually going to start spending a lot more on sales and marketing and actually increase the the the customer acquisition cost to increase the volume, right? So, until now, until like February, I was the only sales guy in the company. We’ve since added one sales person. We’re going to add two more sales people. So, any sales people listening to the call, call me. So, uh we’ll be increasing our our our sales and marketing expense almost doubling it over uh the next six to one six months to a year so that we can increase the the the scale, right? To your point, we have fewer customers but bigger dollar value. We want to increase increase that size.

[Nathan 16:17]: What are you spending like last month, what did you spend on just paid marketing?

[Venkat 16:21]: Uh so, we spend you know, 2K on just Mariana on Mariana just doing the ads uh for ourselves. Uh beyond that we haven’t done we didn’t do any other paid stuff.

[Nathan 16:32]: Okay. And what’s total team size today?

[Venkat 16:34]: The team size is 12.

[Nathan 16:36]: Okay, top tribe, I have to tell you, many people go, Nathan, you came out of nowhere, your website’s growing so fast, how’d you do it? The answer is simple. So, I use Hostgator. I don’t know if you guys know this, but I use Hostgator. And the reason I do, they have like about 4500 free templates I can use ‘cause I don’t code. They’ve got a great e-commerce plugin and guys, I bug the heck out of their support. They’ve got 24/7 support which I love. So, what I’ve done is I’ve worked with them. You guys know I make great deals. If you go to hostgator.com/nathan, you can sign up, get your own domain for 30% off and a 45 day money back guarantee. Okay, again, I make great deals for you guys. Go to hostgator.com/nathan to grab that now. That’s great. Venkat, let’s wrap up here with the famous five. Number one, what’s your favorite business book?

[Venkat 17:22]: Uh good to great.

[Nathan 17:26]: Number two, is there a CEO you’re following or studying right now?

[Venkat 17:29]: Uh I do look at Benioff and uh Zuckerberg. Those are two people that I follow a lot.

[Nathan 17:35]: Number three, besides your own, is there a favorite online tool you have, like Acuity Scheduling?

[Venkat 17:40]: Um I love uh Calendly, which is a scheduling tool. Um which is when you said scheduling, it reminded me of that. Uh the second app that I use every I take the train. So the apps that I really love are Twitter and Feedly because they keep me connected to what’s going on.

[Nathan 17:48]: of that.

[Nathan 17:57]: Number four, how many hours of sleep do you get every night?

[Nathan 18:00]: And what’s your situation? Married, single, do you have kids?

[Venkat 18:03]: I’m married with one kid, three years old.

[Nathan 18:05]: Oh, wow. And how old are you?

[Venkat 18:07]: Oh, I’m not going to tell you that.

[Nathan 18:08]: Oh, come on.

[Venkat 18:10]: I’m 47.

[Nathan 18:11]: I was going to say you can sing in the shower, but you can’t tell me how old you are. Okay, so 47. Last question, take us back 27 years. What do you wish your 20-year-old self knew?

[Venkat 18:20]: Um, being diligent and hard-working counts for a lot more than being smart and clever.

[Nathan 18:26]: Ooh, I love that. Being diligent is way more important than being smart and clever. There you guys have it from Venkat. Again, founder of Mariana HQ or IQ. Back uh about three years ago he launched the company, uh did very little revenue his first year, 2014, actually zero. 2015 did 155 grand, 2016 grew to 550 grand in sales. He’s now doing last month 80 grand and monthly recurring revenue. Each customer, which there’s 20 of them, pays about four grand. Again, he’s helping these customers like Zendesk more effectively do account-based marketing. Super healthy unit economics, just at his pre-series A raising $2 million on a $10 million post money valuation. Venkat, I’m rooting for you, man. Good luck and thanks for taking us to the top.

[Venkat 19:09]: Thanks a lot, Nathan. Good luck to you too.

[Nathan 19:12]: If you enjoyed today’s episode with Venkat, go back and listen to yesterday’s episode with Jeremy Payne. Jeremy is Grant Cardone’s secret weapon. Many big influencers have spent a lot of money on Jeremy as they look to get more followers on social media.