Mode empowers individuals within large and small organizations to do the work of a full-time team in regards to reporting, data analysis and answering ad hoc questions, increasing the bandwidth of your workforce so that more work is done in a shorter amount of time.
Nathan Latka sat down with Derek Steer, the CEO and Co-Founder of Mode. Key metrics of the company include:
- Over 600 customers
- Team of 168 people
- Over $90m raised, but still maintains a lean approach
Nathan Latka (00:00):
Hey folks, my guest today is Derek Steer. He’s the CEO and co-founder of Mode. Before joining Mode in 2013, he was a member of Yammer’s analytics team where he led sales and marketing analytics, drawing upon his experience on the monetization analytics team at Facebook and his background in antitrust economics. Derek, are you ready to take us to the top?
Mode Analytics CEO Derek Steer (00:18):
David, thanks for having me back.
Nathan Latka (00:19):
You bet. We recorded exactly almost one year ago today, so I’m not going to repeat stuff there, but for those of you that have not heard of Mode before, give us the quick 15, 20 second. What is Mode doing?
Mode Analytics CEO Derek Steer (00:30):
Yeah, so we make data analysis software. We aimed it primarily at analysts and data scientists to make them much faster at delivering analysis to their business. And in doing so, a big part of what they do is share with other people in their business. And so what we’ve ended up building is something that works for your whole company, a little different model than traditional business intelligence. But a lot of companies that are really forward thinking in the way they use data, like Lyft, Twitch, DoorDash, you name the folks who are really doing it well, use Mode to run their businesses.
Nathan Latka (01:03):
Now you told me a year ago your team size is 120 and we were talking about some changes you made to your AEs and BDRs and SDRs. So, what’s the total team size today? I know, let’s dive into the sales motion. What changes have you made?
Mode Analytics CEO Derek Steer (01:13):
Yeah. Oh, it’s hard to keep track of. We held relatively steady last year because big year of uncertainty, a lot of shifts in customer base, that kind of thing. We came out the other side really great and have been having an awesome year so far. We are at high 160s now, team size, and really trying to get over 200 as fast as we can.
Nathan Latka (01:38):
Why is that the goal?
Mode Analytics CEO Derek Steer (01:40):
Oh, lots to do. I mean, the short answer is the goals get higher and higher in every department in the business. But I would say I put it in two general places. So, there is a standard late stage company go to market scaling thing that happens that just requires bodies. And we can talk about the BDR AE structure, but that’s one of the places in particular where we found that we can win by having more people. The other one is, we’ve got a really technically complex product, and it used to be that engineers would join our team and they would say, “Wow, it seems like this team has done a lot of work. We’ve really produced a lot of stuff with a pretty lean technical team.”
Nathan Latka (02:27):
How many are on the team? How many engineers today?
Mode Analytics CEO Derek Steer (02:29):
I think the EPD org is in the 60 person range at the moment. Actually, I don’t have the exact-
Nathan Latka (02:38):
You’ve grown that then. You’ve grown that about 20 than since we last spoke. So, we had pretty lean engineering team for size.
Mode Analytics CEO Derek Steer (02:44):
And I think that’s right. We’ve grown it all over, like a little bit product. We have an EPD ops team now. We had a whole management layer that I think was missing before. We really learned how, we have a new engineering leader who runs engineering and product, and design, and arrived in, I think, April of this year. And so we’ve been steadily growing it behind his leadership and have pretty aggressive plans to continue expanding it.
Nathan Latka (03:11):
Just to get more product context here, but also get into your head a little bit about pricing and scale. You have, I think, three key products. Your SQL Editor, Notebooks, which touch on R and Python, and then Reports and Dashboard. You then choose to package those in unique ways across three separate types of pricing plans. Studio, Business, and Enterprise. But then you also have the Helix data engine, for example. How do these things all work together to make up a pricing plan for Mode?
Mode Analytics CEO Derek Steer (03:42):
I’ll back up and talk about just some of the basics of how we think about it, but the first thing is it’s really one product. It has a bunch of features that are tied together. But the important thing, and this will always be the case, I don’t ever want to separate SQL from Python in Mode because the point of the product is that you can move seamlessly between the two. If we break those into separate à la carte items, I don’t want our customers to have to choose. And a big part of the reason is folks don’t realize exactly what they’re going to use before they start using it. And a lot of what we’ve done with our interface enables people to level up into jobs that they didn’t know they could do, or hadn’t done before. In the Python world, if you want to set up Jupiter, the standard tool people use for Python for data analysis, you set up this Python notebook on your desktop.
Mode Analytics CEO Derek Steer (04:35):
The fastest way to do it is using a product called Anaconda. It’s still hard to do. It’ll take you half an hour with someone who’s done it before sitting next to you pointing out how to do it. Whereas, if you want to use Python to do a very simple … The example I always use is median. So, SQL is a really bad tool for calculating a median. In Python, it’s trivially easy. It’s just one line of code. So, if you want to do that, you can just go look up the line of code on Stack Overflow or wherever, click on the word notebook in the Mode interface and we will save you a half hour of setup and just take you directly to the notebook so you can get a median. So, that leveling up is really important. And we’ve always thought about that with respect to price. Most of our industry prices like editors versus viewers, and we get some pressure from our customer base to do that because we have customers that have 500 editors, 6,000 viewers.
Nathan Latka (05:33):
Is that your biggest account, 500 editors, 6,000 viewers?
Mode Analytics CEO Derek Steer (05:36):
I don’t actually know the stats on the biggest one lately. But the last time I checked that was about right. That company is probably bigger now.
Nathan Latka (05:45):
Yeah. You’re charging for Editors, Viewers are free.
Mode Analytics CEO Derek Steer (05:50):
Well, that’s what our customers want. No, but that’s not how we do it. We charge the same price for every single person. Look, in our overall history, we’ve tried both methods, and when we split out Editors and Viewers, the feedback we got was, “Well, I’ve got this product manager who’s not really an editor, they’re not going to spend all their time in Mode. So, I don’t want a full, I want to pay half editor price for them and give them access sometimes.” And it’s like, “Well, it doesn’t work like that. You can’t have a halftime license.” The important thing is there’s a total cost of ownership that has to line up generally with the market. This is a competitive market. So, we are beholden at least somewhat to what our competitors charge,
Nathan Latka (06:32):
Which would be what? Looker, Tableau, these kind of companies, or someone else?
Mode Analytics CEO Derek Steer (06:36):
Those are the two that we see most frequently. So, if customers evaluating all three products, they’re going to come in roughly the same range. And the question is how you get there and how it scales. The challenge with Editor Viewer is the editor seats need to be very, very expensive. And people don’t like that.
Nathan Latka (06:56):
Mode Analytics CEO Derek Steer (06:57):
When we did this, we charged $3,000 a year per editor. And I think today we might charge even more. So, we’ve gone through a bunch of models. I think the big thing, so you asked about Helix and what that does to pricing. Think about Helix. So, Helix for folks who have listened to my previous appearance on this show is-
Nathan Latka (07:16):
It’s going back by the way, we always appreciate return guests. Hopefully, you enjoyed the first one.
Mode Analytics CEO Derek Steer (07:22):
I did. That’s why I’m here.
Nathan Latka (07:25):
Mode Analytics CEO Derek Steer (07:25):
I like the directness of the show.
Mode Analytics CEO Derek Steer (07:30):
So, the thing about Helix is it’s an in memory data store, and what it allows for is I’m an analyst, I do some analysis, I pass it off to whoever it may be, let’s call it our Head of Revenue Ops. She can slice and dice, she can do any quick visual analysis operation without writing code after I’ve shared this thing with her. And part of what allows that to be fast and performant is that we’ve got this in memory data engine that can take up to 10 gigs of data. So, way beyond what Excel can handle or a desktop Tableau, or something like that.
Mode Analytics CEO Derek Steer (08:01):
So, I can put a really, really big data set in there for her to go analyze, and Helix is what’s going to enable that. But the challenge for Mode the company is that Helix adds a new cost for us. So, that cost is really big for some customers, smaller for others. And we try to limit it in a couple ways. The way that aligns to our cost. Because if it’s possible for someone to just put us underwater on our contract with them, pretty easily. So, the way that we manage it is we have two axes. The first one is throughput. So, we say, “Okay you, how much data do you even pull into Helix over the course of a month? We’re going to give you a range for what you’re allowed and then-“
Nathan Latka (08:49):
Measured by what? Gigs or what?
Mode Analytics CEO Derek Steer (08:51):
Yeah, exactly. Just storage amount. It’s all transitory. So, it’s coming in and out of memory, but the question is how much do you put into memory over a given period of time? So, that’s one. But it turns out to be really hard to reason about when you’re just doing analysis day to day, and it’s tough. We have to do something like that. I think people don’t have that in their minds like, “Okay, day to day I’m doing this.” I mean it’s bad for them because it’s hard for them to reason about how much they’re using. And it’s bad for us too, because when we’re selling to a customer and we say, “Hey, we think you’re going to have high throughput,” their answer is almost always like, “Well let’s see.”
Nathan Latka (09:33):
Yeah, let us start off on a small plan first. So, what’s the second? It’s throughput. And the second one is what?
Mode Analytics CEO Derek Steer (09:38):
The second one is the size of an individual data set. So, how big of a data set can I pull back? And we soft limit it at different tiers of service. So, the lowest one, I forget exactly what the lowest one is.
Nathan Latka (09:53):
Derek, I don’t think I understand this. So, the first one’s throughput, I don’t understand the difference between that and how much you want to pull back. Isn’t it saying you’re measuring gigs through the system?
Mode Analytics CEO Derek Steer (10:01):
We are, but we’re measuring how many gigs in one shot versus how many gigs aggregate over a month.
Nathan Latka (10:09):
So, it’s like per project based pricing versus monthly pricing.
Mode Analytics CEO Derek Steer (10:16):
The throughput one is we just look … There’s a lot of ways that people put data through Mode. The primary two are ad hoc analysis, like one off things. You write a SQL query, some data comes back, that contributes to your gigabyte limit throughput. But also, I write a SQL query, some data comes back. If that data set is more than 10 gigs in size, we won’t load it for you. And so we have a pricing mechanism that is like, How big is that data set? Can you bring back one that is 10 gigs? Can you bring back one that’s five gigs, one gig, and so forth.”
Nathan Latka (10:58):
So, just to put all this in a beautiful little package for my audience, tell me if this following statement is correct, your product based upsell is based off like XQ Editor, Notebooks, Reports and Dashboards. Your usage, your utility based upsell is based off throughput or one project going through and how big that is. And then you also have seat based upsell, which are Editors and Viewers. Are those the three main pricing axes?
Mode Analytics CEO Derek Steer (11:20):
It’s really just the two latter ones. Because the SQL, Python, R et cetera, that’s just the product. We’re not selling-.
Nathan Latka (11:28):
We have that included in your free plan.
Mode Analytics CEO Derek Steer (11:30):
The exception to that, maybe the correction that I would make is, from a feature perspective, the way that we upsell is on standard enterprise stuff like Okta SCIM, like-
Nathan Latka (11:41):
Mode Analytics CEO Derek Steer (11:42):
Yeah, yeah, exactly right. I mean real stuff. Which is probably the best differentiator or the best segmenting feature. Because bigger companies need it, smaller companies don’t. And it’s actually funny, I cursed this a little bit right now because we are going through … So, we bought mode.com.
Nathan Latka (12:06):
I was congratulate you on that. Congrats. More or less than a hundred thousand dollars?
Mode Analytics CEO Derek Steer (12:11):
Nathan Latka (12:11):
More than a million?
Mode Analytics CEO Derek Steer (12:13):
Less. A lot less.
Nathan Latka (12:15):
Between a hundred and we’ll call it $500,000. There you go.
Mode Analytics CEO Derek Steer (12:18):
Yeah, that’s the range. I actually feel pretty good about the price we paid.
Nathan Latka (12:23):
That’s not a bad price for four letter domain name.
Mode Analytics CEO Derek Steer (12:26):
Four letter, real word. I feel like the real business big house on the corner now.
Nathan Latka (12:32):
Now did you do that after the 33 million dollars? What was it? Series D?
Mode Analytics CEO Derek Steer (12:36):
We did. Well we did it after the round before announcing the round.
Nathan Latka (12:40):
I see. Okay, perfect. Yeah.
Mode Analytics CEO Derek Steer (12:42):
Which is the right time. Because you don’t want someone to be able to go look up the financing amount and be like, “These people can pay more.”
Nathan Latka (12:50):
Yeah. That’s makes a lot of sense.
Mode Analytics CEO Derek Steer (12:52):
The story of the domain is a really funny and interesting story. But to put the bow on the pricing thing, Mode overwhelmingly grows with seats because it is the natural part of the workflow. And I guess anyone-
Nathan Latka (13:11):
Can you share that? Can you share how many editors are on the platform today? Just across all the customers.
Mode Analytics CEO Derek Steer (13:16):
That’s not stuff that we share publicly.
Nathan Latka (13:20):
Is there a range you can share, Derek? Like above a million or above 10,000?
Mode Analytics CEO Derek Steer (13:24):
It’s is above 10,000. Not in the huge millions. I mean it’d be tough to get a million people with, you know.
Nathan Latka (13:30):
You could have viewers. Couldn’t you have viewers, editors plus viewers would be well of a hundred thousand?
Mode Analytics CEO Derek Steer (13:37):
I think the thing that’s probably interesting about this, or at least sheds light on the way that the product works, is the ratio of editors to viewers. And it varies from company to company because some companies have bigger data teams and so forth. But in general, you’re looking at, for most companies, even just a potential set of people, you’re looking at between 15 to 20 viewers per editor at a mature Mode organization. And it’s just based on team size and what’s happening. So, what I think about our customers-
Nathan Latka (14:14):
That’s more aggressive though than the one you told me earlier with your big customer, we had 500 editors and 6,000 viewers where we got 10 to one ratio. This is a 20 to one ratio.
Mode Analytics CEO Derek Steer (14:23):
So, 10 to one ratio is editors, but not necessarily people who are an analyst and data scientists. So, that’s going to be tech forward companies. If you were to look at someone who is not a super techie company, it’s going to be much higher. We have some media companies, for example, that operate differently where it’s a lot more viewers. And in fact, the viewership is so large that they don’t even do the viewing in Mode. They build a separate web portal and the data team will slot stuff into the web portal. It’s a totally separate think dedicated just to viewing. There are no Editor features even in that portal.
Nathan Latka (15:05):
But you’re still charging for those?
Mode Analytics CEO Derek Steer (15:09):
We do, yeah. Because those are people who get value and because the price is low enough-
Nathan Latka (15:16):
It’s not 3K a year charge for Viewers, is it?
Mode Analytics CEO Derek Steer (15:19):
Nathan Latka (15:19):
It’s not 3K a year for Viewers, is it? That’s just the editor price?
Mode Analytics CEO Derek Steer (15:22):
Well, the thing is that by charging for Viewers, we’re able to lower the Editor price too. So, we charge one price across everyone, which is 300. It’s a 10th of what I described to you. So, $25 per user per month is the list rate. And then especially as we get into these big many thousands of employee companies, we negotiate contracts that have that stairstep seat pricing, as I think most SaaS companies do this.
Nathan Latka (15:48):
Totally standard. Really standard. Yeah. But you mentioned 10,000 editors. I mean if you have that 20 to one ratio, I mean you’re talking then you’ve got maybe big, I don’t know, 200,000 viewers. So, an ecosystem’s pretty healthy here.
Mode Analytics CEO Derek Steer (16:01):
Yeah, there’s real usage of our product. I think the important thing, if I were teaching a course on this or whatever, my advice to other folks is this happened all through the natural workflow of the product. We attached ourselves to something that was inherently viral, and that enabled us, frankly, to trip all over ourselves. We introduced customer success as a department very late in Mode’s lifetime. And in fact that the first true customer success leader who actually had customer success experience has been at the company for two years.
Nathan Latka (16:39):
That makes a lot of sense.
Mode Analytics CEO Derek Steer (16:40):
Yeah. And this is an eight year old company, so we were for a long time without it because we just saw such incredible growth naturally.
Nathan Latka (16:49):
Obviously, I just talked about number of editors, but across how many logos now do you have using you? I think you’re at 600 last time we spoke. Are you above a thousand?
Mode Analytics CEO Derek Steer (16:55):
That’s still the number we have on our website. That’s still the number I’m going to give you.
Nathan Latka (16:59):
Interesting. Why have you stopped sharing that?
Mode Analytics CEO Derek Steer (17:01):
It’s not that we stopped sharing it, it’s that we just do it at milestones usually. Sometimes the milestone is we made a new website, sometimes the milestone is a big number.
Nathan Latka (17:12):
So, is the next milestone you want to celebrate a thousand customers? We’ll wait for that announcement.
Mode Analytics CEO Derek Steer (17:16):
I think that’s a very good sensible one. Probably wait till you get-
Nathan Latka (17:19):
You’ve got to be flirting with that right now. Yeah, I mean you’ve got to be flirting. You’ve got to be very close to that. By Christmas, I bet.
Mode Analytics CEO Derek Steer (17:27):
Well, I will say we had an interesting year last year where we had higher than normal churn, and we had a lot of companies. So, something about Mode that is a blessing and a curse is that we come in alongside analysts and data scientist or alongside traditional BI rather. So, we serve the analyst and data scientists who a lot of times is using a Looker or a Tableau and pulling their hair out. They just hate it for their own workflow. And so, for us, that’s an opportunity and we say, “Hey, we serve you.” We can come in alongside, but then we grow to all of the other non-analyst, non data scientists, just through this natural sharing mechanism. That’s like part of the analytics job. So, imagine it’s a pandemic, you got tightening budgets, you’re trying to figure out what you can cut, and you look at your data stack and you say, “Hmm, we’ve got two BI dashboarding products, one that is optimized for everyone at the company, one that’s optimized for the analysts and data scientists.”
And look, there’s a longer conversation here. I think Mode actually delivers for the rest of the company in a way that’s different and very effective. And we’ve shown that we’ve been tremendously successful in empowering entire companies over and over and over again. But if the person who makes this decision is ignorant to the process. If it’s like a CFO, for example, who cares purely about the numbers and is like, “This one costs a lot, it’s optimized for a small team. I don’t understand their website because it’s not aimed at me. So, I think we should get rid of it.” And that happened to us a fair bit. We had certainly our worst churn year ever last year as I think a lot of people had-
Nathan Latka (19:05):
You churn more than 20% of revenue?
Mode Analytics CEO Derek Steer (19:10):
I think about this in terms of customers. So, not more than 20% of revenue. We churn more than 20% of customer style.
Nathan Latka (19:16):
Mode Analytics CEO Derek Steer (19:17):
Yeah, which by the way, we have gone way the other direction. We are 12 to 13 percentage points better on retention this year than we were last year.
Nathan Latka (19:29):
Will your NDR, will your net dollar retention this year be well of like 110%?
Mode Analytics CEO Derek Steer (19:34):
Nathan Latka (19:35):
Mode Analytics CEO Derek Steer (19:37):
So, even churning more than 20% of logos last year, we still had net dollar retention above a hundred because-
Nathan Latka (19:43):
That’s incredible. So, there’s still expanding-
Mode Analytics CEO Derek Steer (19:45):
It’s because of the way that the product works. We’ve never had net retention under 100%.
Nathan Latka (19:49):
That’s incredible. Well look, if you’ve got, I mean I’m seeing right now these public valuations you’re seeing in private public markets and SaaS even more than revenue growth. The ones with higher net dollar retention, but even lower revenue growth are getting higher valuations than faster growing revenue companies. So, NDR is like I’m seeing at least just the most important thing if you’re raising right now. Would you agree?
Mode Analytics CEO Derek Steer (20:09):
Well, I don’t know about that. I don’t know what’s important raising. I feels like just hype, honestly, anything that looks like it could be a breakup company’s getting a mega round. And that’s all your retention I think is an important thing that contributes to that. Yeah, Mode has just always been good. Again, it’s not something that we had to engineer, it was just an inherent part of the process. And so it’s been frankly quite easy. I guess I’ll just say we’ll end the year way, way north of 110, in a true best in class net dollar retention.
Nathan Latka (20:44):
I’d say 150 is best in class. Are you around there?
Mode Analytics CEO Derek Steer (20:49):
Well, that’d be a little bit of a stretch.
Nathan Latka (20:53):
Okay. We won’t push further between 110 and 150. It’s all really good numbers. All really good.
Mode Analytics CEO Derek Steer (20:57):
Yeah, we’ll be closer on that to 150.
Nathan Latka (21:00):
That’s great. And obviously you probably can’t share actual hard numbers in terms of the revenue, but when you look at just your growth rate over the past 12 months on a percent basis, what does that look like?
Mode Analytics CEO Derek Steer (21:11):
I guess what I’ll say is this year’s growth rate will be double last year’s.
Nathan Latka (21:17):
So, if last year’s growth rate was 100%, this year’s growth rate will be 200%, hypothetically?
Mode Analytics CEO Derek Steer (21:24):
I’m not going to give you the exact-
Nathan Latka (21:27):
No, no, but I’m just trying to translate the ratio you just gave.
Mode Analytics CEO Derek Steer (21:29):
Yeah, that’s the type of thing that I am saying.
Nathan Latka (21:31):
I see. Got it, got it, got it. Okay, cool. My best guess in terms of your revenue is like you’ve got to be in 2020 close some around 20 million bucks in AR. I mean, can you guys break 40 million bucks in AR this year?
Mode Analytics CEO Derek Steer (21:45):
Again, I’m going to plead the fifth on that one. But what I would say, and we haven’t talked about the BDR piece yet, the most important thing is we, by accident, discovered the thing that is going to carry us through the next several stages of growth. And it has been an interesting journey because no one can learn anything from where we are in revenue, though it is interesting. But the thing that was really fascinating that happened last year, that has totally changed the trajectory of the business, is we had a small BDR team that was made even smaller by personal life circumstances. So, people were sick, they had family stuff, whatever it may be. In October, November of last year, so almost a year ago, we found ourselves in a pretty bad situation with respect to incoming leads.
And my philosophy on this has historically been the inbound leads are going to be high quality leads. At the time, we were a 95 plus percent inbound business. We’ve added some outbound into that since, but not a ton. It’s primarily an inbound business still. And my thought was, “Okay, this inbound business is basically going to close itself.” People if they want to try Mode, they’re going to try Mode. And so we don’t need to have a zillion BDRs to qualify them. We need enough, but a couple is enough. a term that is very, very wrong. So, going down to one BDR active at a given time was a big part of the cause of slowing that down. And our CMO so correctly identified this and made the correction, our BDRs report into marketing. So, she said, “Hey, we’re not going to make this mistake again. We are going to over hire from what we think we need.”
So, we had three or four, but we’re going to go up to six, seven. And we did that in January. We hired a bunch, onboarded them, and then in Q1, which for us starts in February, oh my goodness, things went the opposite way. And we realized like, “Actually, the leads we’re getting are proportional to the number of people that we have, who are even taking phone calls, doing qualification, now sending outbound emails, that kind of thing.” So, everything started to go the other direction. And then we just have kept growing BDRs and it works. We just keep adding more, we keep generating more leads. Everything about it seems to be scalable and it’s great, not just because it’s adding revenue to the business and feels like a thing that we can continue to invest in, it’s also great because our BDRs turn out to be the most successful sales people at Mode.
Nathan Latka (24:36):
Derek, this is great qualitative. Can we quantify? How many BDRs right now on the team, full time?
Mode Analytics CEO Derek Steer (24:43):
I want to say that our BDR team is 18 people.
Nathan Latka (24:46):
And how many SDRs?
Mode Analytics CEO Derek Steer (24:47):
That’s the same thing for us, but we split it into Studio. So, there are people who are trying to do upsell on our Studio audience. Then we have Corporate, we have Enterprise, which is a little bit more high touch for a given customer. So, we’ve essentially tracked it, and the folks who are running that team … This is a-
Nathan Latka (25:08):
Hold on Derek, so try and keep quantifying for me. So, there’s 18 there. How many account executives do you have?
Mode Analytics CEO Derek Steer (25:13):
We have eight right now, and one of them is not even doing new business really. She’s just doing strategic upsell.
Nathan Latka (25:21):
And how many account managers do you have working post sale?
Mode Analytics CEO Derek Steer (25:25):
So, there’s one for strategic … We’ve split this interestingly between CS and-
Nathan Latka (25:35):
Add those together. How many CS folks?
Mode Analytics CEO Derek Steer (25:39):
I don’t know the answer to this. This team has changed a lot. There has been a lot going on recently. We just hired four new managers for this team.
Nathan Latka (25:46):
Definitely more than how many?
Mode Analytics CEO Derek Steer (25:48):
I think that the CS team overall is 25 people, which includes customer support and sales engineering. The sales engineer team is pretty small.
Nathan Latka (25:58):
Let me repeat that back to you. So, you have 18 BDRs or SDRs, you have eight account executives, and then you have more than 25 customer success folks.
Mode Analytics CEO Derek Steer (26:07):
Yeah, but again customer success is inclusive of support. We let them support and solutions engineering and customer success altogether.
Nathan Latka (26:14):
Do your CS reps have an expansion, a dollar expansion quota they have to hit?
Mode Analytics CEO Derek Steer (26:20):
Yes. Well they do. They do for smaller accounts. So basically, we say for our smaller accounts there is a clean handoff between new business AE and CSM because it turns out that you can manage the relationship very directly there. Smaller companies tend to not need quite as much handholding. It becomes more complicated when we’re managing big training sessions and doing other things to drive engagement across a business of many thousands of people. So, in those cases, the enterprise CSMs are on the hook for retention but not growth, necessarily. And then we have people whose job it is to drive growth. And that’s especially relevant in a company where, as I mentioned, part of what drives our strong net dollar retention is just the natural virality of the workflow. It’s not even our product, it’s the workflow that we are attached to.
Nathan Latka (27:15):
It makes sense to me. On your AEs, the eight folks there, do they all carry this trip standard of million dollar quota?
Mode Analytics CEO Derek Steer (27:22):
They’re all at five times OTE, I mean that’s the benchmark that we use.
Nathan Latka (27:28):
That’s totally standard. So, you’re standard there. It’s usually $200,000 on target earnings against a million dollar quota.
Mode Analytics CEO Derek Steer (27:33):
Yeah, something like that. The actual numbers are slightly lower than that. I think a lot of that because we’re leveling people up from our BDR program, so a lot of our sales reps are entry level folks when they start.
Nathan Latka (27:45):
Got it. So, that might be a 150K on target earnings against the $750,000 quota, something like that.
Mode Analytics CEO Derek Steer (27:50):
But I mean we also have a guy who’s a few years out of BDR territory who did a 600K quarter.
Nathan Latka (27:58):
Wow, very cool. That system makes a whole lot of sense. I’m trying to think if there’s anything else here that I’m missing that we can learn from you. I mean, look, one thing I will say is you’ve decided this is going to definitely be a VC backed company, and once you’re on that path, you’ve got to always be on that path. Which means you have a funding announcement about every 12 months. We’re 12 months away from your last funding announcement. Is there anything you want to share with me?
Mode Analytics CEO Derek Steer (28:21):
Huh? No, not now, but what I’ll say is the market’s nuts, and there’s just a dance between how long do we think it will be nuts versus how much further can we get to raise our valuation. That’s the calculus that I’m doing. And I think the further we can distance ourselves from COVID, I just told you we have a high churn here, I think a lot of people did, this year is great. What I want to do is say, “Hey, we’ve got continued really awesome growth both from new and existing business the year we’re doing awesome. Let’s write this out for a couple more quarters before we raise because we’re just going to look that much better” So, that’s the math that’s going on in my head, but what I’ll say is we talked last time about bootstrapping versus raising and that kind of thing. And what I told you is that I believe in the austerity a little bit in the early days. I think that the hunger from having less cash makes you more focused and productive. And there comes a point where that is no longer true. And the two things for us that point to, actually I’m very excited to go raise more money and I think that the business needs to be highly capitalized.
Nathan Latka (29:35):
Just tell me that amount real quick. If you do go raise amount, what will the next amount be? It’ll be like 50 million, 60 million, break a few million?
Mode Analytics CEO Derek Steer (29:41):
I can’t. I mean it just depends on what’s out there. Honestly, I think the swings are so wide. I mean, look, so five trend is in our general space and just raised a behemoth 500 something million dollar round at a 5 billion dollar valuation. I could never raise that.
Nathan Latka (29:54):
Are they at your same revenue level?
Mode Analytics CEO Derek Steer (29:57):
They’re a little bit ahead of us, but not much.
Nathan Latka (30:00):
Interesting. So, you think your next round then could be at north of a billion dollar valuation?
Mode Analytics CEO Derek Steer (30:07):
I don’t know. I would love that, certainly. I don’t think it’ll be 5 billion dollars.
Nathan Latka (30:15):
I mean look, the press-
Mode Analytics CEO Derek Steer (30:17):
I also think the 5 schedule would be either.
Nathan Latka (30:19):
I was going to say, the press speculated back in 2019, your Series C 23 million was about a hundred million dollar valuation, and a little north of a hundred million dollar valuation, that your Series D, 33 million, I mean was that at around a 300 million dollar valuation?
Mode Analytics CEO Derek Steer (30:30):
We’re leaving these numbers behind is what I would say. The next one, this will be well north of those numbers.
Nathan Latka (30:37):
Yeah, I was going to say, so in theory, again, if you told me that you just grew two times as fast as you grew last year and your valuation last year at October was called 300 million, I mean there’s definitely a path where if you just stay focused on the numbers, getting good growth and getting people dig to the product, you could break a billion dollar valuation the next six, 12 months.
Mode Analytics CEO Derek Steer (30:55):
Companies with our metrics have. But again, people are not investing based on fundamentals and numbers right now. That’s not how these valuations get created. It’s hype, it’s a lot of things, but it’s like, “Okay, we’ve got a lot of money to deploy. Interest rates are too low, public markets seem super frothy too. Where are you going to put money? Let’s pick a company that seems like it has escape velocity and then overinvest in it.” And I think there is, to some degree, once you get into rounds that are as big as this five train round, 500 million bucks, part of that investment is defensive where you’re essentially declaring yourselves the winner of the space, and excluding other folks from going and taking meaningful market share.
Nathan Latka (31:45):
What do you think the revenue is, by the way?
Mode Analytics CEO Derek Steer (31:47):
Nathan Latka (31:48):
Mode Analytics CEO Derek Steer (31:48):
I won’t speculate on other folks. I think it’s somewhere between 30 and 100.
Nathan Latka (32:00):
Mode Analytics CEO Derek Steer (32:01):
I truly have no insight at all into that.
Nathan Latka (32:03):
Well, yeah. What I like about you, I mean look, I look at numbers all the time and one of the things that you’ve done in an interesting way, is let’s say you are between 30, 40 million run rate right now. With the team, 168 people, your revenue per employee is above $200,000. Which is more than 2x the average VC back company your stage, most VC back companies at your stage have only generated about $90,000 revenue per employee. So, you’re staying very capital efficient even as you scale.
Mode Analytics CEO Derek Steer (32:24):
It’s interesting that you say that, because I spent my last week with our CFO looking at this specific metric and planning our headcount. So, it’s interesting that you say 90.
Nathan Latka (32:33):
Do you agree with me? I mean, I know that for a fact is what private VC backs companies is, because I get all this data, you guys are killing it. Do you guys agree internally? You agree that that’s a strong metric for you guys?
Mode Analytics CEO Derek Steer (32:44):
I think it is an all right. Well it’s a strong for us now. I mean a lot of the stuff is efficient right now because we are just exceeding the targets that we thought we were going to. So, when your sales team, like in Q2, we beat our net revenue target by 30%. We invest to hit the target and then when you beat by 30%, you just look super efficient. So, there’s a lot of goodness happening there.
Nathan Latka (33:11):
I know. Congratulations. I’m excited for you. Very cool. Got it. So, let me just make what we talked about quota, we talked about churn, which is incredible. We talked about inbound. Look, I think I’ve hit on most of my main stuff. Let me ask you of a personal question. Are you the right CEO to take this all the way past IP? Are you using any like CEO coaches? How are you feeling about leading the team?
Mode Analytics CEO Derek Steer (33:29):
Oh yeah. So, it’s interesting you say that. So, I’ve hired coaches for different things in a number of places. Last time that I was on here, you asked me about mentorship and I was rewatching that episode and I realized I named a guy, Jim Benson, the CEO of course, who just sold out.
Nathan Latka (33:46):
Who just sold.
Mode Analytics CEO Derek Steer (33:47):
Yeah. And he was doing really well. He’s a little busy. I haven’t spent that much time with him lately. I have two guys I have worked with recently who I really like. One of them is Rick Hartwig, who right now he’s at a firm called Enjoy the Work, and they are just SaaS technology advisors. It’s a partnership of eight, I think, or nine advisors. I know a couple of the other ones too, and they’re all really talented and fantastic folks who will come in and do general advisory. Each one has a specialty. So, what Rick is great at is marketing and communications. I actually first hired him as a comms coach to help me with presenting. As the company got bigger, I realized that my communication was not going to be one to one, it was going to be one to many, and I need to get better at it.And so I hired him and he made me a lot better, both by providing frameworks and coaching on the execution. And then the other guy is someone that we hired pretty recently, a guy named Roland Siebelink. His website is midstage.org. Anyway, it’s the Midstage Institute, which could not possibly be better branding, but he was recommended to me by another founder in a Slack channel that I belong to. And he came in, we did a three month strategy session across our exec team, plus 10 to 20 other people, where we really examined what market we serve today, who is our core audience, what do we do for them? Is our strategy aligned to what we want to do for them? How we want to expand them and our tam? And really just took it top to bottom, culminating in a presentation that I gave to the whole company in August, and it’s probably one of the best things I’ve done.
OKRs are not my happy place. And this stuff, the facilitating process to get to these outcomes in the same way that you do with quarterly goal setting, is just not a thing I personally enjoy doing. I don’t think it’s a thing that I’m good at. And those go hand in hand very often. But hiring someone as an external facilitator to run that process has made us so much tighter on who we are serving and why. I think it’s been a big benefit to the whole company. It gives me stuff that I can repeat over and over again. And so, if you find yourself, I think it’s probably never too early for this, to really think deeply about the strategy and then codify that into quarterly cadence and goal setting. I would start maybe as early as 30 or 40 employees doing this kind of thing with a facilitator like Roland, unless you think that this is a thing that you’re already amazing at.
Nathan Latka (36:36):
Derek, I just realized we’re way over time, but this has been fascinating. Two questions here before you wrap up with the famous five. How many years did it take you since launch in 2013 to break the 5 million run rate? This is something I’m trying to standardize across the data set.
Mode Analytics CEO Derek Steer (36:48):
Oh, that’s a good question.
Nathan Latka (36:52):
I think you broke it in 2016.
Mode Analytics CEO Derek Steer (36:56):
Did I answer this one last time? I think-
Nathan Latka (36:58):
No, you said you broke 500,000 in 2015.
Mode Analytics CEO Derek Steer (37:01):
Yeah. Probably three years, maybe four years.
Nathan Latka (37:05):
Okay, got it. So, 2017, you were on a 5 million run rate, something like that.
Mode Analytics CEO Derek Steer (37:10):
Yeah. I don’t have it in front of me and I haven’t thought about it in a while.
Nathan Latka (37:14):
Yeah. Very cool. Okay, good stuff. Let’s wrap up with a famous five. Number one, favorite business book.
Mode Analytics CEO Derek Steer (37:20):
The Hard Thing About Hard Things. I think that’s the answer I gave last time too.
Nathan Latka (37:23):
You’re consistent. Yeah. Number two, is there CEO you’re following or studying?
Mode Analytics CEO Derek Steer (37:27):
I still like Jim Benton.
Nathan Latka (37:30):
He has a little more money now. Number three, what’s your favorite online tool, Derek, besides your own?
Mode Analytics CEO Derek Steer (37:40):
This changes all the time. I think Superhuman. I like Superhuman a lot.
Nathan Latka (37:43):
Number four, how many hours of sleep do you get every night?
Mode Analytics CEO Derek Steer (37:50):
Five to six now.
Nathan Latka (37:52):
Oh, that’s pretty good. And situation. Married, single, kids?
Mode Analytics CEO Derek Steer (37:55):
Married. I have a two year old. Just started preschool.
Nathan Latka (37:58):
Very cool. And you’re 36 now, right?
Mode Analytics CEO Derek Steer (38:01):
Nathan Latka (38:02):
Very cool. All right, last question. Something you wish you knew when you were 20?
Mode Analytics CEO Derek Steer (38:16):
I’ve been thinking about this a lot. One thing that I started … You don’t want a long answer for this.
Nathan Latka (38:20):
Well, you can spend a little time.
Mode Analytics CEO Derek Steer (38:23):
Yeah. I started using a service called Two Chairs over the last year, just like therapy. Teletherapy thing. And it has been really, really great. And is driven mostly by like, “Hey, I’m going crazy stuck in this room. And it’s affecting me in ways like things I haven’t had to deal with before.” And so I want some help doing it. And, I guess, surveys. Two Chairs sends out a survey all the time, and one of the questions is agree or disagree, or whatever, strongly agree. I’ve achieved everything that I want in my life, and I think I’m a strong agree. I feel really great about where I am and where my family is and everything. I think the one thing that I wish I had done differently, and I think this every time I do this survey, is I wish we had started a family earlier. Truly, I always felt like there was some professional thing that was getting in the way, but my parents were 75. They’re only going to get a certain amount of time with their granddaughter.
Nathan Latka (39:28):
When were you married? When did you guys get married?
Mode Analytics CEO Derek Steer (39:30):
We got married five years ago.
Nathan Latka (39:32):
Okay, so you got married when you’re 30 and you’re 35.
Mode Analytics CEO Derek Steer (39:38):
Yeah, but we were together for five years before we got married. I would’ve just hustled the whole process along and I probably would’ve thought more seriously about it. I see this with a lot of friends who, especially men, want to go and just have fun and have me time, and do whatever they want, and all that. This sounds great. And at the time, my twenties, I felt that way too. And I think the thing I know now as a parent is that none of that stuff matters once you have a kid. Like if kids are in your future, once you have a kid, you’re really not going to care whether you took that trip or did that thing, it just doesn’t matter. The only thing that matters is time spent with your kids.
Nathan Latka (40:15):
Mode Analytics CEO Derek Steer (40:16):
That’s probably the thing that I wish I knew.
Nathan Latka (40:17):
Family earlier. Family earlier, guys. There we have Derek with Mode Analytics now, mode.com. Congratulations. Spent between 100 grand and 500 grand, and grabbed that domain name after our last 33 million round. But he’s not all about funding. Actually, very capital efficient and business year, despite almost $90 million in funding, over 600 customers are now serving, turning analysts into superheroes with their team of 168 people. They’ve got over 10,000 editors on the platform, thousands and thousands and thousands of viewers using it. Ecosystems growing very fast with three key pricing lines, Helix growing quickly and, again, three individual use cases that are growing very fast. The net dollar attention is a result of those things all working together over 120%, but below 150, as they continue to scale. Derek, thanks for taking us to the top.
Mode Analytics CEO Derek Steer (40:58):