LeadCrunch CEO on their unique pricing model and how it has helped them achieve industry leading YoY growth.

Powered by RedCircle

Episode Outline

[00:10] Olin’s background

[01:14] How Olin knew when it was time to evolve between business models

[05:27] Two important things you need to know to get a good customer profile

[07:45] What Olin wishes he understood about starting a venture-backed company before starting LeadCrunch

[10:46] Why Olin chose not to run a subscription model

[18:19] How Olin unwinds


Olin’s Inspirations

Tom Peterson

Grady Burnett

Marv Langston


Connect with Olin

LinkedIn

Twitter

Website

Elias: (00:35)
Hi everyone. Welcome back to another episode. I am thrilled per usual for you to listen in on this conversation, but before we get into it, if you're a regular listener and you enjoy the discussions, do me a favor and let us know by rating and reviewing us on Apple podcasts. It helps other folks find the show and it helps Apple realize they should feature us on new and noteworthy. So that would be awesome with that enough of my blabbing. Let's get on to the episode. Alright, this is Olin Hyde. I'm the CEO and co founder of lead crunch.ai. Hey Owen. Great to have you on the show. Um, I mean your background, super impressive. You've you've already sold two companies in your career, and now you're working on an exciting third one with lead crunch. Um, but you know, we've had conversations in the past that I'd really love to just share with the, with the listeners today. You didn't start off with the focus you have today, which was kind of this fresh take on AI and account based marketing. So we'll get there eventually, but can you share with us, I mean, you started off as a research company and then you were helping the Navy with, with targeting, take us through the trip.

Olin Hyde: (01:48)
My wife tells me all of my intelligence is artificial, so I wish I was clever enough to figure out this particular market that we're in right now, uh, at the onset. But, uh, as Winston Churchill said, success is nothing more than going from failure to failure without the loss of enthusiasm. And, uh, I'm a very enthusiastic guy. So yes, we started off as a medical research company. So what was, I mean, what was the process like? I think as time goes on those of us who have started a lot of companies and had a lot of failures and a few successes, find it easier to know when to pivot when something isn't working, what are some of the patterns that you were seeing that made you realize it was time to call that and move on to the next iteration? Great. Let me start with giving a little context of how we did pivot.

Olin Hyde: (02:43)
We went from a medical research company where we had technical success in helping to find a possible link between type one diabetes, which is an autoimmune disease and the herpes virus. And that research was published a $11 million of fast track funding, uh, was granted, uh, the research careers of the scientists were got a big boost. Uh, we failed to find a market for that technology. We took it to over 300 research and we had found a solution to something. No one cares about. We found a tool to data, mine, medical research to have medical discoveries and what the market really wanted was a better tool to get funding and publish papers. And so we pivoted from that, uh, we were actually ready to shut the company down and, and an advisor, a friend of mine is the former director of DARPA and I was having breakfast with him and he said, well, it sounds like what you've got is a targeting technology.

Olin Hyde: (03:48)
Yeah, pretty much most artificial intelligence is, is really around the identification and prediction of patterns. And so sure that you can think of that as targeting so, well, why don't you sell it to the military? Well, I don't know how to do that. And he made some introductions and, uh, less than a month later, we had beaten Palentier and IBM Watson to win a research and development contract for the United States Navy, uh, with Lockheed Martin. And we did that project. Uh, it was successful. It kept the company alive long enough for us to discover that we'd never wanted to work with the government ever again. And that started a journey where we did a lot of experimentation to try to find a market that we wanted. That was highly scalable, where we could have a big commercial success and really build a large profitable, fast growing company that made a difference to our customers.

Olin Hyde: (04:49)
And, uh, we went, landed upon demand generation business to business demand generation and, uh, ink magazine and listed us as the third fastest growing company in California last year. Uh, we expect to be ranked in the top 100 fastest growing companies, uh, this year. Uh, we believe we're one of the fastest growing marketing technology companies. And the reason that we are growing well is that we really just use our own technology to grow. But your question is why did you pivot or how did you know to pivot between those, those three major business, different business models? I think that, I think that that's a it's if you don't, I have economic value where you think you do, you need to pivot. And, and in the first case, we solved the wrong problem, a problem that didn't have economic value as evidenced by a good college, try to go out and sell it.

Olin Hyde: (05:47)
And we couldn't in the second one, we were not a good fit between the personalities of the, uh, of the founders and the nature of the industry. Uh, I am not well suited to sit in a conference room, filled with people who don't make decisions and speak in acronyms. Uh, that's not how I want to spend my day. So I think in both cases, it was pretty evident. We needed to pivot because I was not going to fund the startup forever without revenue in medical research. And I was not going to spend my days being miserable, doing government contracting. And then when we got into demand generation business, business demand generation, I wouldn't call them pivots. I would call them evolutions. We knew there was a big market. We knew who the competitors were. And our insight was to look at a very fundamental problem of what industry is a company in.

Olin Hyde: (06:48)
Uh, that is a very simple question. And there's been surprisingly little evolution on it. Uh, in the past hundred years we have, uh, SIC codes and Nate codes. And these are used by marketers to think about what companies to sell, to, to segment a market. And a market segmentation is kind of the old technology. The new technology is really call it account based marketing where again, oftentimes people fall back to the familiar industry codes to say, okay, we sell to aluminum, the aluminum industry, or we sell to the car industry. And I would argue that as companies evolve and get more competitive and more differentiated what industry they are in becomes increasingly less clear. For example, what industry is Apple in? Are they a retailer? Are they a phone company, a software company, computer manufacturer, maybe they're a music publisher. The fact of the matter is they're all of that and a lot more, but if you're selling to them, they, you can think of them as having a

Speaker 3: (08:00)
DNA, a genetic code of the day,

Olin Hyde: (08:02)
Different industries. They're in, they're in different industries, different degrees, but as you selling into Apple, you need to know specifically the buying group that is interested in your particular solution. And that is not going to be answered with an industry code. It's going to be answered by understanding the operational profile of a company and their business focus. And a company can have multiple businesses, business, folk, eye, and they can have multiple operational profiles. And you have to know both for your particular product or solution, uh, to get a good, what we call a good, uh, ideal prospect fit or good customer profile. So the last year, your last two venture backed companies were acquired. I'm curious what, you know, once you were onto this idea had this thesis

Elias: (08:56)
And it was your, the third iteration, what were some of the kind of lessons you've learned in the past that you called upon to kickstart the growth of lead crunch and begin to get it to the place that it is today?

Olin Hyde: (09:09)
Yeah. Point of correction. Uh, this is my first venture backed company. All of the other companies I started were bootstrapped. Um, so that's a much different mentality of bootstrapping. The very first company I started, I was, uh, 25 years old and I could barely spell real estate. I think I got it right on the fourth or fifth time. And we built a real estate, uh, administration system for companies that lease a lot of properties. Uh, the product, uh, was very successful. We sold 50 of the fortune 100 within the first 18 months of product launch. And, uh, that company went on to get acquired and go public and is now part of a private equity portfolio. So the lesson and, and I had a lot of things that were a lot less successful between then and now, uh, I would think, you know, the main thing that I think venture backed companies fail to understand is it's really important to, to have your customer lifetime value to your customer acquisition costs.

Olin Hyde: (10:17)
You have to have that those unit economics well understood very early and constantly work to optimize them. And that's typically called the CLV or LTV. That means the same thing divided by your CAC and in software as a service businesses, you typically want to see a ratio of three to one. When we did our series a, we were at five to one. So, uh, and we had trouble getting our series a because we were not a subscription model. And as you know, uh, the venture community tends to run as, uh, as our herd, which is kind of interesting dynamic considering they make money on the exceptional, uh, unusual companies, but they tend to fall into group think. And I think that a lot of that's driven by where they get their money from. Everybody has a boss, including a VC and VCs bosses, the limited partner. And a lot of times it's very comfortable to think about subscription models as being more reliable. Uh, you know, in terms of particularly today, I think you could probably argue that they are in a downturn that you know, where your revenue is coming from. But the thing that I wish I understood earlier that probably would have helped me not have as many failures along the way is really deeply understanding the mechanics of the, of what drives unit economics for your acquisition costs and what drives your customer lifetime value.

Elias: (11:44)
So, you know, you, you just brought up an interesting point, which is you chose not to be a subset priced as a subscription. So

Olin Hyde: (11:54)
Walk us through that. I mean, that was a big decision, I'm assuming, uh, did you first, or how did you land on that? You know, it's a great question. Um, I love subscription models. I love SAS. Uh, however, uh, it is dogma to think that SAS apply. The pricing model of PSAT is really a pricing model. Not a business model applies to all situations. I was actually having dinner with one of our seed investors and angel investor, who I really have phenomenal respect for. He was a, the early investor in lending club lending club and had a number of big unicorn exits. And he encouraged me to have the courage to think differently about our pricing model and business model. And he pointed to the, at that point, there was probably 5,000 MarTech companies. Now there's probably more than 8,000 MarTech companies and they all try to sell a subscription and he invested into us because he believed the thesis of that. If we can understand operational profile

Speaker 4: (13:11)
And business folk guy

Olin Hyde: (13:13)
Focus at scale across the entire web, then we've got something that has value beyond demand generation, but we're actually building something you can think of as a representational model of the economy that can explain and predict who's going to buy from whom. So if you have that, why would you price it the same as, you know, going out and buying a subscription from 6 cents or a zoom info. And it troubled me for months. It really was hard because we really wanted to be have a subscription model because that's what Silicon Valley was telling us was most valuable. And I met, uh, Jeff Green and Dave pickles who were the two founders of the trade desk at a conference. And ironically, uh, it was at a SAS conference put on by, uh, Jason Lemkin called Saster. And, uh, Jason, I was one of Jason's first tenants in a co-selling space that they set up in San Francisco called the Saster co-selling space.

Olin Hyde: (14:14)
And, uh, the insight was if you're selling relationships, each relationship is priced should be priced differently because some relationships are very valuable. Like I would pay infinite amount of money to meet my wife, because I love her. And I'm happily married, no offense Elias, but I probably wouldn't pay an infinite amount of money to meet you right out. She had to go, I had to go there. So why price? That is a subscription, a fundamentally we're building and predicting relationships. Why not price them the way you'd price, something that has a variable value and price optimization. And that was a tough decision. It, uh, it was tough to get everybody on the team to go along with it. Um, customers actually loved it. And that's one of the reasons why we stuck with it is that I believe it's a big reason why we grew so quickly so early was we didn't ask anyone to find a budget for a new subscription. You know, marketers, don't sit around with extra budget laying around, Oh, I want to buy another subscription today. And we also looked at the technology stack with these thousands and thousands of marketing technology offers and thought, you know, the technology stacks can get so complicated. We need something that's easy to try, easy to buy and it worked. And so we stuck with it that said, I think subscriptions are awesome.

Elias: (15:43)
The, uh, it's, it's wild to see the MarTech landscape evolve and to hear this pricing model of myths that I was catching up with, um, Megan Eisenberg yesterday on the show, and, you know, her stack involves just on the MarTech side, not even crossing into any of the sales kind of blended between marketing and sales tools, just 30 separate vendors, that power

Olin Hyde: (16:08)
Staff. Yeah, we it's it's. I think if you talk to a lot of smart CMOs, they're fatigued with SAS, uh, and I believe that that will go away because I believe the industry is ripe for consolidation, and we're already starting to see signs of that. Uh, I'm thrilled that the zoom info IPO went so well. Uh, you know, they're trading at 50 times revenue, uh, which is awesome. And I believe that there will be some consolidation. There will be fewer, we don't need 8,000 marketing technologies. We really don't. And if you go in at 10, you know, back in the old days, when we'd go to conferences, remember that we actually met people in person, you go to a marketing conference and there would be hundreds of these little sass companies that had a better way to generate leads or a better way to do content marketing or a better way to do this, or a better way to do that.

Olin Hyde: (17:04)
And we looked at it and we're like, wow, you know, how do you stand out of this crowd? And so, you know, we didn't plan on it, but it turns out that the transactional pricing amount of we call it a retention model. You know, we encourage our, uh, our company to sell only to people that are gonna buy from us four times in a year. And that's was really driven by conversations. I had with the guys at the trade desk. The trade desk is not a subscription. Uh, and they're trading. I last, I checked something like 130 times earnings, which is awesome. Show me a SAS company that does that info does that these days, but it's, it's awesome. It's a great success story.

Elias: (17:44)
I remember, uh, I remember meeting Henry at Dreamforce year and

Olin Hyde: (17:50)
It wasn't even that long ago. I mean, it was like 2015, maybe or 2014. And he was, he blended right in to all of the other startup vendors because of how humble he was and just really low key back when it was discovered org it's amazing and inspiring and see how successful he's been at leading that company to what it is today. He's awesome. Um, and that's a great company that said, uh, you know, we do consider them as kind of a competitor. Um, you know, what we try to do is try to position ourselves as a synthesis of data, predictive analytics and outreach, that if you use lead crunch, you don't need a CDP. You don't need to go to, uh, Ziff Davis or IDG. You don't need to buy as much data from zoom info turns out that most of our customers have ZoomInfo have elements of all of these because a smart marketer is not going to put all of their eggs in one basket.

Olin Hyde: (18:47)
They're going to look at marketing as a portfolio play. And I think that that's something that will mean that it will never be a winner take all industry the way some consumer like Facebook is clearly a winner. Take all, uh, LinkedIn, I think is a winner. Take all. I don't think marketing will be marketing. Mark B to B marketing will never be a winner take all, but it will be a few take it all that's for sure. Completely. So now I'm curious, uh, you know, you, you are running a very fast growing ship. What do you do to take your mind off at all and unwind outside of work? It's so funny you bring that up is that's. One of my biggest concerns for our team is, is that, you know, during this weird period where a handshake is suddenly an incredible life threatening act of intimacy, uh, where everyone's socially distanced, it's really important for us to have some alone time without being on zoom or without constantly working.

Olin Hyde: (19:51)
And, you know, I'm, I'm very fortunate to live in a place where I go out and do a lot of hikes and bike rides. Um, I'm, I'm a fortunate guy that I got, uh, my kids around a lot. So that's really, really fun. I call them my kids. They're actually my nieces. And I actually think I have a pretty nice balance. Uh, you know, last night was a little unusual because I got up and I had some ideas I just had to work on. So I was working at 4:00 AM this morning, but most days I get a solid eight hours of sleep. And I wish all of my team took a little bit more time to screw around. Uh, cause I think that it's particularly in this environment with a social distancing, it's really important for people to do what they need to do to charge their batteries and exercise eating right.

Olin Hyde: (20:39)
Getting outside, spending time with family, spending time with friends, this is what life is about than work orders from the top screw around more. Yeah. Yeah. Um, and then lastly, who are some of the folks who have, whether it's, you know, official mentors or just people who have inspired you to do what you're doing, uh, professionally, who are some of those influences in your life? Gosh, there's many. Um, I think it takes a village to raise a CEO. Um, I'm very grateful that I have such a strong board of directors, uh, Tom Peterson from rally ventures and, uh, Grady Burnett from Bo capital, both bring just so much experience. Uh, you know, Tom's had something like six or seven unicorns. Grady was a global head of sales for Facebook before he, he joined, uh, uh, Bo capital. So I'm really fortunate to have people in my network that I talk to very regularly.

Olin Hyde: (21:43)
Um, the gentleman I referenced early on, I had a call with this morning. His name is Marvel Langston, he's the former under secretary of defense. And he was also a director of DARPA. Uh, you know, he was one of people that I always find inspiration, uh, from him. Uh, I would say the people that I really inspire me the most actually are placing you to and you wouldn't expect it. Um, my, my two best men in my wedding, I couldn't pick one. So I had to are both physicians and I find both of them very inspirational because one's in medical research and the other one's in healthcare policy. I like to be around people that are a lot smarter than I am. And I like people that are encouraging good, respectful debate. I think that every idea should be torn apart and reexamined. I love that. Well, Olin, thanks so much for taking the time. It's been a really nice conversation and I'm sure that our audience learned a thing or two, both about the future of the MarTech stack and some of the lessons you learned along the way. So thanks for sharing. Thank you. Bye. Bye