Talkdesk Revenue, Valuation & Funding (2024)

this is the top where 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 talk 5 and6 million he is held on global domination we just broke our 100,000 unit sold Mark and I'm your host Nathan lka this is episode 677 coming up Tom tomorrow morning I talk to alesandro if you're creative who needs work you don't want to miss this she launched zupa with $8 million raised and 4 million plus in Creative projects that they've processed good morning everybody my guest this morning is got shamia he's the chief operating officer at a company called Talk desk the world's leading call Center Software platform it's backed by dfj storm Ventures and Salesforce Ventures talked to screw eight times during or 8X sorry over the past two years and has over 250 employees along with a thousand customers including box Shopify Dropbox and weather.com Pride talk desk ad founded a company that was acquired by sap and now generates $500 million in global business and was a senior BP at sap and a general manager at reach local G are you ready to take us to the top uh absolutely was that sap Company echosign by chance no Echo sign was acquired by Adobe ah got it what was the one that went sap uh the company called name was top manage and the product that sap sells today is called sap business one very cool okay so you're in a unique spot at talkest so your Chief Operating Officer they were founded in 2011 I think you joined in 2015 is that right yeah I joined a little over two years ago okay so I want to get into kind of how you came into the business but first tell us what talk Des does and what's the business model how do you make money so talkest is a cloud-based uh actually b a cloud call center solution so it's an fully integrated uh with Voice SMS uh and agent management call center Solutions so companies can um literally log in and within uh minutes or days have a fully operational call center that can power companies with five 10 employees or5 with hundreds and hundreds of of Agents serving customers 24 hours a day and what's the business model how do you make money uh we like many other Enterprise software companies we charge um uh users for license fees and we also charge for the telepone component uh so the advantage of of talk is is you have one vendor that provides both the software and telepone SMS Services get one bill and one company to work with so is this I mean is this a SAS company yes it's absolutely ass company and so I want to avoid going into every like individual customer cohort you guys are working with but on average what's the average business paying you guys per month it's it's really dependent all over the place so a company with say 50 users um who pay let's say $5,000 a month or or $7,000 a month uh for the service so again give me an average just so we can get a sense of like your average customer fit I I think I don't have an average on my head it's so we have customers with three users and we have customers with 850 users so it's really hard to aage them out can you normalize around seats around users so what's the per user cost per month on average yeah the per user cost months is between $65 to $125 depend on the uh depend on subscription then typical customer will spend another 30 to $40 on telephon a month got it perfect now as a telephony aspect is that that's really usage based right that goes up and down based off the data yeah okay got it absolutely okay good that's helpful so tell me about why you join talk desk it's kind of unique I mean do they see you as a founder or what's your role you know how how talk sees me we need to ask Thiago is the founder of the company you know I don't think of myself when you join three years in and I I did found the company myself when you join three years in you're not a Founder anymore and you have to acknowledge that um I join genuinely because I really like the space and I really like Thiago the founder uh so it was two combinations of really interesting Market the uh the call center space is$ 22 billion Market it's still dominated by old players like Avaya and Cisco and Genesis uh that sells the same system for for 20 30 years so one side of it was here's a market which is huge and ready for disruption the other was we already had a proven product Thiago and team although the team was very small build a very impressive product that had um couple hundred customers uh even by the time I I joined really like the product and and continued using it uh for over a year by the time I joined the third go ahead sorry and the third was I really like Thiago when you join a CEO you cannot look not like the CEO and you cannot not want to engage with the CEO I really thought we can have we can be really good partners I think that the fact I'm still here over two years after proves to you that probably correct was that is D is Diego the sole founder or were there co-founders uh Thiago was a co-founder uh he had another founder that uh after four four and a half years uh left to do her own thing what what happened I mean that's always like an interesting people never talk about this but very rarely when you have two three four person co-founding teams very rarely do all co-founders make it to you know the promised land or the end what was the conversation around that exit were you there for that or no yeah I was there and and you know I think a is a personal issue so I don't want to get um into the specifics of this situation but I can tell you what I know from experience with other companies in the best of companies uh as you mentioned Founders uh some Founders leave and they usually do because either they don't find what they do exciting enough or they couldn't find themselves in a position where they can make the same impact they did in the early stages and the worst situation is when a Founder stays and I know companies were two Founders that that didn't didn't speak with each other and stayed all the way until the end and this is devastating for the company so it's really healthy for a company to be in situation where a Founder can actually say I've done I've done great job I build this company and now I'm ready to take on uh you know my next task or maybe be a CEO in a different company and what uh that makes sense so this this all kind of happened around when you joined right around 2015 2014 uh actually happened a year after I joined okay and what did uh you said the company when you joined sizewise was a couple hundred customers I mean had it broken the million dooll AR Mark when you joined or was it still earlier than that no it it did break the million dollar AR which was amazing to me seeing such a small team um doing so well was again one of the other attractive attracting points to uh to talk this because what was the team size would you say small team um I think it was 20 people when I joined um and you know Thiago and the very few Engineers we had really built a compelling product that spoke for itself uh in the first two years of the company or year and a half after start selling the product because the product was actually sold maybe from the mid 2013 not from the first day of the company Thiago was the only salesperson he was running around uh positioning the product showing it to customers and was able to uh uh to get remarkable Brands to use to use thect and were you the relationship around you uh and dieago I mean was this something where you were like an eir at dfj and they put you in with their round of financing or what did you come in kind of before the financing how did you two meet I came before the financing so uh I actually met Thiago through my friends at Stone Ventures I was an ER at St Ventures seven eight years ago so um lifetime ago and I'm still in very good very good contact with all the investors there and um you know they to they told me I think in and uh in the midst of uh 2014 that I should meet Thiago he's just an impressive guy and I went on and and met him and and we met several times during uh 2014 and towards the end of 2014 we said you know we like each other enough we can help each other and I decided to join did you lead storm Ventures round in in talk to $3 million series a or or C no storm was there before so storm you um Talk Des through the investment relationship they had got it okay and then so take forward let's talk more kind about the the the the macroeconomics about the industry so when you guys are growing well first off how many customers are you at to date fast forward 1,200 okay and is that seats or businesses using you no this is businesses using using us okay let's talk about the bigger number how many people how many seats inside of those 1,200 companies I think it's about 50,000 okay 50,000 and I mean can I can I you you gave a seat range earlier on the low end of 65 bucks a seat can I mean can I do 65 bucks times 50,000 to back into the mrr number uh because can try I don't know which number you're going to get to and I'm not really good at the quick math well I mean is is that I mean so that number comes out to about $3.2 million in monthly reiring revenue is that basically accurate or is that math wrong um you know I don't we don't know about finances so uh well just I'm just doing I'm just doing the math right you said 65 bucks on the lowend arpo Range seat wise and then you just said 50,000 seats so I'm just doing math based off the numbers you told me is that accurate basically your math is not wrong um sound but it's more complex than this sound the C seasonal um some of them are come and go but the matter is not vastly wrong okay so so so the 50,000 customers when you mentioned seasonal tell me about that how do you guys manag turn so this is a little different seasonal customers are C so a lot of our customers are e-commerce customers and they um they will have to ramp up towards the uh the hot season which is November December January and then R down so when customers come to us we usually come up with a solution given Bank of users that they can use towards the um uh the end of the uh of the Year ramp up their business and then ramp it uh back down so they're not locked into you know 300 users or 200 users they don't have to use um so nug growth happens and this is where customers will add users but many of our customers do need a seasonality aspect to their business and we we work with them to to offer this flexibility so they're not stuck with unused licenses so are you guys I mean have that sounds like a big obstacle in the way of trying to get to like a net negative Revenue Churn number um have you guys hit net negative Revenue churn yet and if not what are some things you're trying to do Toop drive more than just seasonal usage so we are definitely in a net negative turn um uh world and if you think of it we look if you look at the business on an annual basis this isal will reoccur so if if a customer went uh from say 200 agents to 500 agents in year one they're likely to go from 250 to maybe 600 in year two so cality reoccur so on an AR basis it doesn't really create oh I see turn especially when you build it into the annual contract so what we we learn to do with customers is we talk about up front about the seasonal needs and we build it into their annual contracts from revenue perspective we don't really see this Revenue fluctuates but from user users using the platform we definitely see more users in December than we see in like February couple of months after despite our natural growth but then it's comes back again and next year is even larger so are we talking about like net revenue expansion year-over year like 120% 150% 110% you know we don't just numbers but it's not it's very healthy and comparable to some of the great SAS companies in the industry G give me the number one of the other great SAS companies you respect uh we you know we respect many of them for different reasons uh we really like workday for how Innovative they are in a pretty boring business we love Salesforce what yeah uh we love Salesforce for what they do and and uh how they actually train the market to um to really work the Salesforce way we love the way they manage their ecosystem and we have great relationship with them um we work now um closely also with service now it's another great company that came through a very um very small Niche but then building out of this Niche and and building more products out there but really get to got to be dominant in the IT services Niche and and build a billiad dollar Revenue company from this one small four billion dollar Niche so you know personally when people ask me who which person I'm inspired by I always say there's no one person I think I think of the same from companies I like many companies and and we can learn something from every one of them yeah you anchored to those companies as kind of what you aim for in terms of in terms of Revenue expansion year-over-year so like oh I don't know this number off the top of my head work day on Salesforce these guys what are they aiming for in terms of year-over-year net revenue expansion I think best of breed companies uh do over 100% so they don't lose revenue and and the best companies and the best companies will get to um typically 110 to 120 it's pretty hard to get much more than this um just because of natural growth of companies uh Etc it also depends on follow me I think we're um uh in a great time uh where uh most companies that work with us benefit and and grow we have customers like uh door Dash to start was us like 40 seats door Dash Okay the start was us we probably 40 seats and then now it's 800 wow uh this is a little bit because of us because we've done a great job helping them out but at the same time D is just a phenomenal company and what so for for a company like door Dash I mean that kind of growth makes sense I'm curious though kind of your teammate make up in terms of how many of them are inside sales people calling into your customers like door Dash so what's your current team size and how many of them are doing sales uh as you said we about 250 um people in the company about half of them are in R&D so if you ask where we invest a lot of our effort is R&D uh we truly believe there's so much to do in this space that we have to continue investing in in uh in our engineering team uh it's also very different than anybody else in our space most of our competitors uh in the co Center space wouldn't invest more than 15% name of who who do you compete with name two or three uh you know 59 in contact Genesis AA are the main competitors most of them are more in maintenance mode than in Innovation mode um the rest of our employees are are split between sales uh customer service customer success and Professional Services how many sales of the 250 how many are just sales just sales probably 80 including sdrs um sales operations AES everything that makes up a saly and are you if you look at if you look at your growth I mean and you had to credit you had to pick one of these to credit the majority of your growth to would it be new customer signups or seed expansion in your current customer base uh new customer signups is larger um seed expansion helps to uh kind of amplify the growth that's great now tell me uh uh gy in terms of funding so obviously companies have to make a decision at some point to raise capital or not raise Capital we know you guys have raised Capital how much total have you raised uh 24 and a half million okay and when was the last round almost two years ago uh July of 2015 all right so so give me the details right now you're either raising a monster round or you're selling to Salesforce for a lot of money which one is it neither come on look at this guy's smile no neither honestly so H our investor Joe Stein was was speaking at at our sales G of meeting and one thing I'll quote him on this he said I'm Amazed by how uh couple efficient doct this is and how fast it grows how much cap it spends yeah um we are as a company we really focused on building a real business this is something that Thiago is um is very is very focused on we don't want to be this company that um burn its way into growth so everything we do has to have our Roi which means we still have a lot of the money we raised before we're not running out fumes uh and we are not in any uh any urgent need to raise a c raise round we're definitely going to raise round sometime this year but uh we don't need to when're not pushed against the wall and any way shape or form because we're not wasteful when we move to a new office we didn't invest 2 million and and make this office really pretty um knowing that we're going to move out of this office in the year and a half or two what' you invest in your current office you know I don't even remember the number not not big enough for me to remember yeah uh what is the so okay good good interesting feedback are you I assume you guys aren't Break Even you're still burning cash per month right we're still burning cash but we're very um good about burning relativ low low amount of cash uh every month and also remember when you grow fast customers also help your growth uh you don't have to only use an a normal business don't use investors to to fund the growth startups do that and we do it to some extent too but a lot of our growth is driven by great customers making long-term commitments to us are you pulling that cash forward are they paying up front many of our customers will pay most of our customers pay anual up front good stuff and this is good for them and good for us they they don't like to uh to pay us monthly and we would love to get the money up front and be able to fund the cost of sales and and um invest back in R&D Etc yeah and got you have to fund great new coo hires right uh I was many of you know I am buying companies that I really really like and there's no quicker way for me to get to the bottom of what is happening on that website than using this tool called naa.com hotjar h o t j a r it basically will give me a recording okay when anybody lands on the website it give me a recording of where the viewer is scrolling and obviously does the basic stuff like heat Maps 2o but I learn so much about where the users are scrolling and clicking on my site using that tool it helps me increase conversion rates make more money and grow those businesses faster and we'll have to see what happens with those businesses but I'm buying them I'm buying them very quick and I'm using Nathan la.com hotjar for all of my website analytics you can too I work with them it's totally free you can go to Nathan lat.com hotjar no credit card required again use it as much as you want Nathan la.com hotjar I'll see you there all right gy let's wrap up here let's wrap up here with the famous 5 number one what's your favorite Business book my favorite Business book you know it's hard there's so many great ones it's exactly like uh uh my answer about about uh companies but I think the books that mostly influen me it's really old is the innov Dilemma it's an old book it's 20 years old and I think that that U it has such a meaningful content for me it's helped me to think about product Innovation um throughout my career number two is there a CEO that you're following or studying currently um again I I study follow many and I think that um you know I just watched um uh you know Jeff loon from twio on stage today and I love how how down to earth he is and how hands on he is about what he does I really admire what Mark benov does um really driving a um hard driving a company hard and driving everybody in s us to grow grow grow but at the same time have his compassionate side of him and and the community side of him so I love what he does again I think there's a lot of great CEOs out there and there's no single one you can learn from number three what's besides your own what's your favorite online tool my favorite online tool wow you asking hard question you should have sent me this question Dan like easy compared to the ones I've been asking you yeah but again there's so there's so many of them at the end of the day I spend most of my time in Gmail and I really like what what uh Google did for the efficiency of of um managing emails I spend a lot of time on slack which uh I found disruptive and um Innovative at uh at the same time so I guess between the two of them that's again super boring but it is what I use a lot number four G how many hours of sleep do you get every night um six and a half okay so not bad and what's your situation married single you have kids uh yeah married um another tech uh an um um executive uh working for stitchfix and um I have two kids two two little now are they super young or what they're super young one of them is almost 20 and the other is um is it 16 I have two teenagers at home uh one of them is on home is in college almost empty nester and how old are you I'm 48 okay last question question good take us back 28 years what do you wish your 20-year-old self new you know 20 um you're blowing my mind with his questions um you know I was very at 20 maybe not 20 but 22 23 um you I said five years in the Army so I really start my life at uh at 23 24 uh so back then I probably really wished I knew what I'm going to do when I grow up I was very stressed about that I I um uh I was really concerned about my not being successful as as my parents I guess as many kids are and I wish I knew I it would be fine I wish I knew that I would be fine and I would be less stressed about that I see my kid going through the same uh level of stress right now well good thank you for your service again he wishes he was at more ease about his future when he was younger again now join talk desk they've raised a significant amount of capital about 24 million bucks serving about 1,200 businesses making up about 50,000 seasonal seats those seats paying between 65 and 125 bucks per seat they've got a team of 250 folks about 80 of them focused on inside sales again focused on bringing the call center online and making it significantly more efficient for everybody everywhere goody thank you for taking us to the top thank you very much if you enjoyed G's story today go back and listen to Mike wi yesterday he's raised $30 million with this company called drone deploy I think he might be the first drone trillionaire it would mean the world to me if you guys got any value from this episode if you would go leave a review on iTunes right now and then subscribe you know I hustle like heck to get these episodes out every freaking day for you guys and trust me I love it I would do it with no listeners but boy oh boy it makes my day and makes my team's day when we see great reviews and get your feedback so thanks so much okay top tribe I love giving away free money I feel like o we're giving away cars and I have something special for you today how many of you have heard our super sharp guests talk about success they've had with Facebook and Google ads well all of you listening right now yes if you're listening you get $100 in free AdWords here's how you get it okay again thanks for listening get the free $100 from Google right when you sign up with my website poost provider HostGator go sign up now to get your free money hostgator.com Nathan again that's hostgator.com Nathan [Music]