Suzy.com lets customers establish an end-to-end insight platform solution which integrates the high quality with the quantity necessary for your audience to stay connected within a single research cloud.
Nathan Latka sat down with Matt Britton, CEO and founder of Suzy. Key Metrics of this SaaS company includes:
- 65 engineers
- 350 customers
- Near 4m run rate
Nathan Latka (00:00):
Hey folks, my guest today is Matt Britton. He’s the founder and CEO of enterprise software platform, Suzy at Suzy.com. It’s an enterprise market research software. Matt, you ready to take us to the top?
Suzy CEO Matt Britton (00:08):
Let’s do it.
Nathan Latka (00:09):
All right. As software permeates the world, everyone needs to do better user testing and get better market research and all those sorts of stuff. Are you serving mainly SaaS companies doing research, or is this enterprise research for anybody?
Suzy CEO Matt Britton (00:19):
Well, we service primarily large enterprise brands, consumer packaged goods companies, food and beverage companies, consumer technology companies, et cetera.
Nathan Latka (00:27):
So how might Procter and Gamble use you then?
Suzy CEO Matt Britton (00:30):
So P&G is actually a customer. And companies like P&G use us across the entire product development life cycle. So that’s everything from what type of product extension should they come to market with? What should the packaging look like? What should they name it? What should they price it? What should the merchandising look like? What should the advertising look like? So if you think of any new product, there are so many different departments that touch it in a large enterprise, and each department needs to have the voice of the consumer throughout that decision making process. And that’s the role Suzy plays. So it’s not as much of a vertical solution, like a UserTesting where it’s for one specific point solution. It’s really meant to be a system of record for consumer insights at large enterprises.
Nathan Latka (01:06):
And you think you’ll stick to consumer insights for the foreseeable future?
Suzy CEO Matt Britton (01:10):
Well, ultimately we are about connecting the asker, which is large brands, with the tellers, which is our proprietary consumer network, in aggregate, to allow companies to make decisions. So that is our business model and that’s what we’re going to continue to do. You can call it whatever you’d like, there’s so many different iterations and use cases. But the world’s changing so fast, and 99% of decisions that are made at companies are not made with any data. They’re guesses, they’re hunches, they’re based upon myopic thinking. So we really want to make market research accessible the same way the iPhone made the camera accessible because the best camera’s the one you have on you, right? It’s kind of how we look at our tool.
Nathan Latka (01:44):
Matt, when we chatted back in September, I think you were serving about 250 enterprise customers. Where are you at today?
Suzy CEO Matt Britton (01:49):
We’re about 350.
Nathan Latka (01:51):
Wow, okay. Where did most of that growth come from?
Suzy CEO Matt Britton (01:54):
Just expanding to new industries that we’ve rolled out to, as well as identifying new use cases in existing companies. And we’ve also expanded our sales and marketing team dramatically.
Nathan Latka (02:04):
I was just going to ask that. So what’s the team size today?
Suzy CEO Matt Britton (02:06):
We spoke in September 2019.
Nathan Latka (02:09):
Was it 2019?
Suzy CEO Matt Britton (02:10):
Yeah. I don’t think we’ve spoken since the pandemic. We may have, but-
Nathan Latka (02:13):
Oh, you’re totally right. Yes, you’re right. It was 200 customers back then. And you’re up to 350 now?
Suzy CEO Matt Britton (02:18):
Nathan Latka (02:18):
Yeah. And your team size back then, I think you told me was 65, right?
Suzy CEO Matt Britton (02:22):
Yeah. And now we have 200.
Nathan Latka (02:23):
Holy cow. How many engineers?
Suzy CEO Matt Britton (02:26):
About a third of our team are engineers. So 60-ish.
Nathan Latka (02:28):
And how many sales folks?
Suzy CEO Matt Britton (02:31):
We have 18 ramp sellers. And then we have a team of SDRs almost at a 1:1 ratio to support them.
Nathan Latka (02:38):
So 36. The 18 that are carrying quota. How did you set that up? A lot of founders have trouble scaling that sales team.
Suzy CEO Matt Britton (02:44):
How did we set it up in terms of their comp or how did we set it up-
Nathan Latka (02:46):
Exactly. The first sales hire with the quota, the second, the 18th you’re on now, the comp structure. Yeah. What’s the quota target?
Suzy CEO Matt Britton (02:52):
I mean, we shoot for a five to one ratio. So for every $5 sold, our seller gets a dollar on target earnings. Obviously it varies within our sellers. Their quota increases as they continue to gain tenure at the company because they’re pipeline built. We actually have two different teams at our organization. We have a net new team and an expansion team. So some of them are seasoned sellers on the expansion team because it’s more of a strategic sell. When you’re selling net new, you’re talking more about your product because, theoretically, you don’t know as much about the company. When you’re selling an existing large enterprise like a Microsoft, we need to understand how to map the organization, speak to their business terms and their KPIs. So it’s really a job for a more seasoned seller to be able to expand.
Nathan Latka (03:33):
How many of those 18 folks on the net new team versus the expansion team?
Suzy CEO Matt Britton (03:38):
Seven are on the expansion team right now and 11 are on net new. And we’ve got a 60/40 mix in terms of our ARR growth each year. Net new 60%, 40% expansion.
Nathan Latka (03:51):
40% expansion. And so there’s a lot of people, there’s a lot of founders at your level, your ARR that are starting to seriously ramp. They call them a CSM team, an expansion team, whatever, but customer success with an expansion target. So how do you split your expansion team?
Suzy CEO Matt Britton (04:05):
You got it. So our customer success group is compensated on net revenue retention because some of their customers return, some will expand. And in terms of direct revenue correlation, they’re more focused on upsell versus cross sell. So for example, if we have a license with Gillette for a hundred thousand dollars and the CSM renews them to 110, that 10,000 of ARR is upsell. But if we go from Gillette to Tide, which is still in the P&G portfolio, that’s a cross sell. So that’s more what our sellers do.
Nathan Latka (04:36):
Does a CSM make commission on the 10K additional revenue or 50K additional revenue?
Suzy CEO Matt Britton (04:39):
It’s more of a bonus type structure. But yes, they’re compensated on it.
Nathan Latka (04:42):
But not as a direct correlation that you would see in like an AE?
Suzy CEO Matt Britton (04:45):
Yeah, because we want them to be real partners of our customers. I mean, if our customers get the most value out of the product, then the customers are going to stay, they’re going to tell their counterparts about it, they’re going to expand their spend. So we really want them to be more of a partner of the customer, the CSMs, versus just being so revenue focused that they might lose sight of that.
Nathan Latka (05:03):
With this new expansion, you have seven, and the CSM team. Your ARPU back in the day was about 5,400 in 2019. I imagine it’s probably expanded. What’s your monthly ARPU?
Suzy CEO Matt Britton (05:11):
Are you talking about on an annual basis?
Nathan Latka (05:13):
Monthly. Monthly basis.
Suzy CEO Matt Britton (05:14):
So you’re talking about 65,000. Right now it’s at 110,000.
Nathan Latka (05:17):
Wow. Okay. So this is working then.
Suzy CEO Matt Britton (05:20):
Yeah, we’re going upstream. So if you look at some of our competitors, the publicly traded ones, they talk about wanting to go to the enterprise, wanting to go to the enterprise. We’re where they want to be. And I see our company at a 100 million AOR, having a 250,000 to 400,000 ACV, and maybe even having less customers. Because what we’re finding is there’s basically four quadrants of customers, small companies, small spend. Small company, big spend. Big company, small spend. Big company, big spend. The big company, big spend companies do about 145% net revenue retention. While the small company, small spend companies do about 58% net revenue retention.
Nathan Latka (05:56):
You’re looking at your last 12 months of history?
Suzy CEO Matt Britton (05:57):
Yes, exactly. So we made a conscious decision that if it’s a small company not spending a lot, we’re just not going to prioritize it because the unit economics aren’t there. The LTV’s not there. The logo retention, the expansion. But on the flip side, if we are already doing a lot with large companies, we’re finding that the sky’s the limit.
Nathan Latka (06:13):
Yep. Can I take 350 customers, say at 110 ACV average, you’re doing about 3.5 million a month?
Suzy CEO Matt Britton (06:20):
We’re doing a little less than that because there’s customers and there’s licenses. So our ARR is this year going to be between 35 and 45 million.
Nathan Latka (06:33):
And right now you’re around 40, right?
Suzy CEO Matt Britton (06:35):
A little less. A little less than 40.
Nathan Latka (06:36):
And what does that mean in terms of growth rate year over year?
Suzy CEO Matt Britton (06:39):
This year we’re shooting for growth rate of around 70% to 75%. I think next year could accelerate. It’s accelerating this year. Last year was like 68% because we weren’t funded to invest in the business, and now we are.
Nathan Latka (06:50):
Yep. So if you hit 45 in AOR at the end of this year in December, that means you finish December or 2020 what? Around a 35 million run rate?
Suzy CEO Matt Britton (06:57):
No, because we’re going 75%. So we’re in the twenties.
Nathan Latka (07:01):
Okay. 25. Got it. So then, 27 million run rate, something like that then?
Suzy CEO Matt Britton (07:07):
Nathan Latka (07:08):
Interesting. Okay. This is great growth. Now you used this growth to go out and do a new series D round. Tell me about that.
Suzy CEO Matt Britton (07:13):
So there are a couple of things driving it. Originally we didn’t want to raise money until the end of this year, maybe early next year because we had raised last year. We put about 20 million on the balance sheet through a series C and a series C extension round. The series C closed in March 2020. The extension round closed around September 2020.
Nathan Latka (07:29):
And the total of that was 35 million or 20?
Suzy CEO Matt Britton (07:31):
The total that went on the balance sheet is 20. There was some secondary to take out some more investors. So there was 20 million of new capital that went into the balance sheet. We didn’t burn that, because we’re pretty capital efficient. We do above a 1:1 ratio of annual burn to new ARR. So we had a decent amount of capital on the balance sheet, but it’s a frothy market. It’s a competitive market. You have companies like Qualtrics and Medallia. Medallia was publicly traded, they just got taken private. Survey Monkey, you mentioned UserTesting, UserZoom. It’s a busy space and we need the firepower to go against these companies. We’ve executed incredibly well, but at a certain point, you need to invest in the engineering, the sales and marketing, support, et cetera to really compete if we want to reach our goal, which is to take the company public. Since we had a good investor, we had the right valuation and we just thought now was a good time to strike and allow us to be even more aggressive. And that was what was behind the round.
Nathan Latka (08:20):
Was the post money valuation above 500 million?
Suzy CEO Matt Britton (08:22):
Nathan Latka (08:23):
Okay. You can be there. I mean you’ve got to be really close.
Suzy CEO Matt Britton (08:26):
Yeah, I mean our growth rate, it’s funny, the West Coast VCs want 100% growth, literally. The West Coast VCs didn’t care that we weren’t burning a lot of money. They just want 100% growth. And it’s kind of silly to me because we could have spent a lot more money and got there, and it could have even been with the wrong customers. We don’t service other SaaS companies. I think a big house of cards in SaaS right now is SaaS companies who have a customer base that is other SaaS companies basically.
Nathan Latka (08:49):
Funded SaaS companies burning money.
Suzy CEO Matt Britton (08:51):
Exactly. In a down market, that’s the first to go. Our clients are Proctor and Gamble, Johnson and Johnson, Microsoft, Coca Cola. We have blue chip companies who aren’t going to go away. But I don’t think the West Coast VCs value that at all. And that’s why we ended up doing a deal with an East Coast private equity firm who was, I wouldn’t say equally as aggressive, but aggressive in terms of valuation, and really understood and believed in what we’re building.
Nathan Latka (09:15):
When I hear private equity, I think secondary. Did all the 46 million go on the balance sheet?
Suzy CEO Matt Britton (09:19):
The majority of it did, yeah.
Nathan Latka (09:20):
Okay. Interesting. And can you share the valuation?
Suzy CEO Matt Britton (09:23):
I can’t. No. Because if I share with you, I have to share with all the other shareholders, blah, blah, blah.
Nathan Latka (09:27):
Yeah, yeah, yeah. I know. Fair enough. Fair enough.
Suzy CEO Matt Britton (09:28):
To be honest, I don’t even know what I can share. This is all new territory.
Nathan Latka (09:32):
If you’re asking me, everything.
Suzy CEO Matt Britton (09:34):
Nathan Latka (09:35):
Let me ask you a different question. Obviously as a founder, putting your founder hat on, you just want to be sensitive to dilution. Now, you’re okay with a much bigger pie, you want to IPO. So I get it, you’re going for the gold. But how much equity do you still own?
Suzy CEO Matt Britton (09:46):
Let’s just say it’s less than 15% and more than 5%.
Nathan Latka (09:49):
Would you do anything differently to try and preserve more now looking back? Or no, you’re okay with five?
Suzy CEO Matt Britton (09:54):
If you’ll remember, the origin of this business is an interesting one. We had incubated software within my agency, MRY, and I spun it out and then I went on to sell the agency and I put in a different CEO to run it. So he was theoretically the founder, even though I incubated into my agency. And then I came in and we pivoted. So the origins of this business on the cap table is over 10 years old. So this isn’t a traditional startup that was started in a garage in Palo Alto. So I don’t think there was anything I could have done differently. We’re achieving tremendous scale. And to me, it’s not about the ownership, it’s about the outcome. And I’d rather have a smaller piece of a bigger pie. And that’s really where we’re going.
Nathan Latka (10:30):
You’re at five-
Suzy CEO Matt Britton (10:31):
You always would like to own more, right? Anyone would say that.
Nathan Latka (10:35):
Of course. You’re at 5 to 15. Does the agency sit on the cap table as well of Suzy?
Suzy CEO Matt Britton (10:39):
No, the agency shareholders did. So the shareholders of the agency, which at that point we had already sold the majority stake to private equity. So basically there’s a private equity firm that was the majority shareholder of the agency who then became a majority shareholder of Crowd Tap, which ended up becoming Suzy. And they were actually one of the ones that liquidated last year as part of the secondary, because they’ve been in it as part of a 10 year old fund. But they already made a 3.5X times return when I sold my agency. This is just cherry on top of the cake, so to speak.
Nathan Latka (11:08):
Fascinating. What’d you sell the agency for again?
Suzy CEO Matt Britton (11:10):
I sold the agency for 50 million.
Nathan Latka (11:12):
In what year?
Suzy CEO Matt Britton (11:14):
Nathan Latka (11:15):
Okay. Yeah, that was right before this. Interesting. Okay, cool.
Suzy CEO Matt Britton (11:17):
Now here we are raising 50 million of capital. I mean, times have changed, and it just goes to show you how much better of a model SaaS is than an agency model, because that took me 12 years to get that exit. And we are probably 10 times as valuable or close after only being in business for three and a half years. So we’re much more of a disruptive product, but just goes to show you, if you can get product market fit, how much value you can create.
Nathan Latka (11:41):
Yep, this makes a lot of sense. Okay, cool. What about M&A? You have capital now, are you going to go buy some companies here?
Suzy CEO Matt Britton (11:46):
We are. We’re looking at companies in a variety of different categories, whether it’s syndicated research. We have our own audience, our own consumer audience. So we have interest in expanding that around the world, as well as getting into other niche verticals, whether we have panels of IT decision makers, information workers, things like that, partnering with publishers, et cetera. So we’re very inquisitive right now. We also have access to a debt facility to go after additional acquisitions if we want to.
Nathan Latka (12:10):
How cheap can a company like you get debt today?
Suzy CEO Matt Britton (12:14):
Fairly cheap. I mean it depends upon how you define cheap. I mean it’s not credit card debt. You’re looking at probably 8%. We can get that, especially with the cash on our balance sheet.
Nathan Latka (12:24):
And I was going to say, how much can you get relative to your AR, like 2X AR or 1X AR line, or what?
Suzy CEO Matt Britton (12:29):
Well, we haven’t tried to push the limits of that yet, so I couldn’t answer that question. But Apple is not really a concern for us right now, thankfully. But you can never rest on your laurels.
Nathan Latka (12:37):
Matt, as we wrap up here, I want to talk a little bit about the marketplace. You have a bunch of these consumers on the platform ready at any instant to test a P&G product. How many of those people are in your network?
Suzy CEO Matt Britton (12:45):
So we have 1.4 million registered users of Crowd Tap that are on gamified apps on both iOS and Android. On a monthly basis, you have anywhere between 50,000 to 100,000 that are active in some way, shape and form because they’re targeted by our clients based upon the first party demographic data we have on those users.
Nathan Latka (13:01):
And what do you pay them every time they test a P&G product, give you feedback?
Suzy CEO Matt Britton (13:04):
They earn points which they can cash in towards rewards. We have a reward store within Crowd Tap where they can get digital currency like a Spotify gift card or an Amazon gift card or things like that.
Nathan Latka (13:14):
So last month, how much did you spend just on gifts for your consumers exchanging points?
Suzy CEO Matt Britton (13:19):
It comes out to around 10% to 15% of our revenue. That’s our biggest fine item COGS.
Nathan Latka (13:24):
Yeah. So is that bad or good? I don’t know.
Suzy CEO Matt Britton (13:26):
Well, I mean I look at it, what’s the gross margin of our company? And our gross margins are in the mid seventies, which is good for SaaS. It’s not amazing for SaaS, but it’s right down the fairway. So it’s COGS. So to me, as long as we can maintain our gross margins, we’re in good shape. It’s better than any other market research firm that we compete with because none of them have their own audience.
Nathan Latka (13:42):
You own those gamified apps though, right?
Suzy CEO Matt Britton (13:45):
Yeah, we own the app, we own the brand, we own the users. Every other company actually has to buy users from a programmatic audience platform if they want to provide an audience. We’re the vertical model. We have our own users and our own front end platform, which makes us unique.
Nathan Latka (14:00):
Nice arbitrage. And so how do you keep users active on those apps when really they’re just answering surveys all day long? Is it literally like they’re playing a mini version of Settlers of Catan and then a little ad for P&G pops up?
Suzy CEO Matt Britton (14:11):
It’s not even an ad. They’re not playing a game, it’s just the questions are the game. People love giving feedback. And the difference is, you’re not filling out long form surveys. It’s like, “What’d you eat for dinner last night?” “Chipotle.” “What’s your favorite color?” “Blue?” It’s very quick and it’s a quick hit, so people will do it when they’re online at Starbucks instead of playing Words with Friends or something. And we have a great team. We have an entirely different team in our company that’s just a Crowd Tap engagement team that focuses on engaging, acquiring and retaining these users.
Nathan Latka (14:36):
That’s a huge deal. So you’ll sneak a question in there. After the Chipotle answer, you’ll say, “Did you use Dial or Irish soap last night?” Something like that?
Suzy CEO Matt Britton (14:43):
And during the fundraising process, a lot of VPs had a hard time wrestling with the fact that we also had a B2C product and a B2B product. It didn’t fit right in their template, which took a lot of explaining as well.
Nathan Latka (14:55):
Yep. All right, Matt, let’s wrap up with the famous five. Number one, favorite book.
Suzy CEO Matt Britton (14:58):
I like Blitzscaling right now. That’s what I’m reading right now because we’re about the Blitzscaling.
Nathan Latka (15:02):
You are Blitzscaling. Number two, is there a CEO you’re following or studying?
Suzy CEO Matt Britton (15:08):
I always follow Ben Horowitz really closely. I just love the way that he thinks about business. I also love his book as well. Hard Things About Hard Things.
Nathan Latka (15:15):
And number three, what’s your favorite online tool for building a business?
Suzy CEO Matt Britton (15:17):
InsightSquared, which is a tool that sits on top of Salesforce, that allows you to obsessively check your pipeline and your unit economics of sales. I check that all day long.
Nathan Latka (15:29):
I meant to ask you this. Qualtrics is a big player, a lot of cash in this space. You must have had acquisition offers. What’s the largest acquisition offer you’ve turned down?
Suzy CEO Matt Britton (15:36):
We’ve had people throw around between 10 to 12 times revenue. Not recently, because we haven’t even entertained the ARR revenue. But we haven’t even entertained the offers as of late. I want to take the company public. I don’t want to sell it. I mean obviously never say never, but I’ve already sold the business. To me, that’s the NBA championship of business, is taking a company public, and that’s what I want to do.
Nathan Latka (15:58):
And you fit the model perfectly of these rockstar founders because you already have your life stuff taken care of from your first sale.
Suzy CEO Matt Britton (16:05):
I’m old. Which means also the people I know are old in business, which means they’re senior, which means they can make big decisions. That’s another thing, Silicon Valley VCs, I think there is ageism going on. I can’t believe I’m talking about it. But it’s like, we’re not the young graduate from Stanford, but I’ve been around the block, I’ve been through the financial crisis, I’ve been through 9/11, all this stuff. And because of that, I think you can weather more storms, you’re just more experienced.
Nathan Latka (16:29):
I’m looking closely. I don’t see any gray hair yet.
Suzy CEO Matt Britton (16:31):
Nothing against young guys like you.
Nathan Latka (16:34):
I’m pushing my 40th year soon. Give me a couple years.
Suzy CEO Matt Britton (16:36):
I saw you’ve upgraded your kitchen as well. So good for you.
Nathan Latka (16:39):
Little bit of an upgrade. Yep.
Suzy CEO Matt Britton (16:40):
Real nice, real nice.
Nathan Latka (16:41):
Number four, how many hours of sleep do you get every night?
Suzy CEO Matt Britton (16:44):
Six to eight.
Nathan Latka (16:45):
Six to eight. And situation? Married, single, kids?
Suzy CEO Matt Britton (16:47):
Married. Three kids.
Nathan Latka (16:48):
Wow. Okay. And how old are you?
Suzy CEO Matt Britton (16:50):
I am 46.
Nathan Latka (16:51):
- Take us home, something you wish knew when you were 20, Matt.
Suzy CEO Matt Britton (16:54):
That your network is everything. Don’t just be at a conference or a virtual conference looking for the person with a Nike or P&G badge because you never know where the person with a company you’ve never heard of will be in 20 years. And try to really create connections with as many people as you can and hold onto those connections for dear life, because your network is everything, especially when you want to start a business or change jobs later in life.
Nathan Latka (17:14):
Guys, Suzy.com. Great user research tool for a CPG brands like P&G. Did a 46 million raise earlier this year. We’ll say flirting with a half billion dollar valuation. They grew revenue from 27 million in ARR at the end of last year to over 40 million, or flirting with 40 million right now. I think they’ll finish the year about a $45 million run. We’ll see what happens. Scaling the team big time. 200 people on the team, 65 engineers. And again, 350 customers they’re serving out today at an average HCV of 1:10. Net dollar retention going through the roof as they keep scaling eyeing that IPO date. Matt, thanks for taking us to the top.
Suzy CEO Matt Britton (17:45):
Thank you. Love your show. Talk soon.