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Daisy’s plans to reach $17 million dead, CEO happy with $8 million revenue target (+15%) this year
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Company expects to burn through $10 million Series A cash to beef up economics
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Temporary layoffs are almost certain, CEO says
Gary Saarenvirta was a rocket scientist for 25 years. So if you think his AI-based pricing platform ‘isn’t exactly rocket science,’ well, think again. Our host Nathan Latka went to investigate the science behind Daisy Intelligence’s rapid takeoff.
Sales teams rely on intelligence for their decision making. How are the competitors pricing their product? What’s the optimal promotion to run at any given time? To answer these questions, you’d need an army of mathematicians and data scientists working full-time on your payroll.
Daisy Intelligence, the CEO says, gives insight ‘beyond human capability.’ In retail, for example, a combination of products you run every week on your promotions is far more important than the actual products. People buy solutions, Saarenvirta reminds, not products.
“So if you’re making an Italian dinner, you’re buying ground beef as a promoted item, well, customers are gonna buy pasta, tomato sauce, bread, milk—the combination matters,” says Saarenvirta.
Small retailers can get away with common sense: it doesn’t take a rocket scientist to figure out spaghetti carbonara ingredients. “But when you have 50,000 products, and 2,000 to promote, that’s 1,036,000 combinations. That’s more than the number of atoms in the universe,” the CEO explains.
Instead of relying on historical statistics, Daisy Intelligence runs an incomprehensible number of simulations to determine optimal product combinations. “The vast majority of companies, what they call AI, they just really mean statistics.”
The platform also helps insurance and retail customers gather insight in supply chain management, inventory and forecasting.
25 Companies Pay Daisy $250,000 a Year, New Bookings On Pause
Back in October 2018, Daisy Intelligence had 17 customers. As of April 2020, the company serves 25 enterprise customers paying $250,000 per year on average. In the past 18 months, the company almost doubled their annual revenue to $6.9 million.
Not many companies run promotions during Covid-19 times, so short-term revenues are inevitably going to take a hit, Saarenvirta says. But in the long term, the CEO is happy to serve retail and insurance customers, as these industries are to be “less affected than others.” That being said, Saarenvirta expects to keep net revenue retention above 100% this year.
Daisy Intelligence was on track to hit $17 million in annual revenue by the end of 2020, but new bookings are “on pause,” and the CEO is happy to sail towards an $8 million mark this year.
Source: https://getlatka.com/companies/daisyintelligence
Daisy Intelligence Cuts Spend By 60% to Extend Runway Until New Raise
The company did a $10 million raise in September 2019, which Saarenvirta thinks is enough to weather the storm. He plans to do another raise by fall of 2020, so keeping numbers strong is a priority for the CEO.
Prior to the coronavirus, Daisy Intelligence was burning $500,000 a month to beef up for the next funding round. Today, that number is down to $200,000.
To cut the monthly burn, Saarenvirta expects to do “temporary layoffs at some point” this year. Minimizing spend, preserving cash and growing modestly is the CEO’s plan of action during the times of pandemic.
Outbound Calls to Keep 65 Employees on Payroll For Now
While traveling to conferences is no longer a viable marketing option, Saarenvirta focuses company resources on outbound calling. “We’ve had a lot of active deals in the funnel, so I think the ones that were very active and close to closing, we’re still working with those,” the CEO explains. “Fortunately, we’re a tech company, so doing video meetings is not a big deal.”
Alternative revenue sources are on the table as well, CEO says. Among them is Covid-19 intel analysis for retail: “help them forecast the supply chain, maybe reduce their assortment in the short term so they can have stock on the shelves; how to win back customers that you’ve lost through the discounters.”
Some companies are seeing doors shut by their credit lines. Saarenvirta is not worried about that, expecting a healthy conversation to beat short-term panic.
Daisy Intelligence employs 65 people as of April 2020, 22 of whom are engineers. The company has 8 quota-carrying sales people.
Nathan Latka’s 5 Questions with Daisy Intelligence Founder and CEO Gary Saarenvirta
- Favorite business book? “Built to Last, Good to Great by James C. Collins.”
- Is there a CEO Gary is following or studying? “Elon Musk. I used to think he was a bit of a doofus.”
- Favorite tool to build Daisy Intelligence? “Salesforce.”
- How many hours of sleep does Gary get? Married, single? Kids? “6-7 hours of sleep. Married with 3 kids. I’m 54.”
- What does Gary with his 20 year old self knew? “Start a business a lot sooner.”
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2020: $8M (CEO expects, interview)
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