Nov 20, 2017 · 25m · top-founders
849: SaaS: Kinvey Acquired for $50m To Help Frontend Devs Be Backend Devs
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The Top Podcast, host Nathan Latka interviews Kinvey founder Sravish Sridhar to explore how the Backend-as-a-Service pioneer scaled to over $4.5 million in ARR and achieved a $50 million acquisition by Progress Software.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 36.4% of the talking time here. How this is scored →
Nathan as informed peer 4.8 Guest teaching 3.8 Guest disagreement 2.1 Nathan pushing back 3.1
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 14:14 Rejecting the aggressive term-sheet game
Sravish politely but firmly dismisses Nathan's premise that founders should bluff or play bidders off against venture capital term sheets, advocating a transparent human-centric evaluation instead.
Hardest push from Nathan ▶ 11:38 Host challenges guest on ARR arithmeticNathan refuses to let vague figures slide, multiplying the 50 enterprise customers by the $80k ASP and pressing Sravish to explain why his reported numbers differ.
Biggest teaching moment ▶ 20:52 Masterclass on RSU retention structuresSravish gives a clear, step-by-step breakdown of how restricted stock units vest without cash exercise outlays, contrasting healthy equity incentives against coercive retention handcuffs.
Nathan holds their own ▶ 18:28 Host calculates payback period on the flyNathan instantly evaluates the unit economics, calculating a 13-14 month payback period based on CAC and first-year contract values.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Introducing Sravish Sridhar and Kinvey's Core Product | 4 | 3 | 1 | 2 | Nathan introduces Sravish and asks him to summarize Kinvey's core backend-as-a-service offering. Sravish explains the value proposition clearly, and Nathan shows quick comprehension by summarizing the drag-and-drop SDK abstraction. | |
| Customer Segments and Pricing Architecture | 5 | 4 | 3 | 4 | Nathan presses Sravish to narrow down his multi-tier pricing into a single average selling price. Sravish initially deflects on revealing first-year revenue numbers before Nathan pushes him to share their historical revenue milestones. | |
| Sravish's Angel Investing Philosophy and Framework | 4 | 3 | 1 | 2 | Nathan explores Sravish's personal angel investment thesis and capital allocation criteria. The dialogue is collaborative as Sravish outlines his portfolio sizing and founder-evaluation framework. | |
| Enterprise Scale, Customer Retention, and ARR | 7 | 5 | 4 | 6 | Nathan directly calculates ARR by multiplying ASP and customer count, prompting Sravish to explain why expansion revenue and 98% retention make the true revenue significantly higher. Nathan immediately pushes back to confirm the ARR exceeds the $4M baseline. | |
| M&A Evaluation Framework and Choosing Progress | 5 | 4 | 3 | 4 | Nathan probes whether Sravish played hardball with buyers using VC term sheets. Sravish rejects the aggressive 'killer' framing, explaining his balanced three-vector M&A evaluation framework instead. | |
| Acquisition Dynamics and Strategic Alignment | 6 | 4 | 2 | 3 | Nathan drills into Kinvey's unit economics, calculating the payback period from CAC and ASP. Sravish validates the analysis and details how contract expansion and multi-year commitments drove LTV up to $2.2M. | |
| Deal Structure, Earnouts, and RSU Mechanics | 5 | 6 | 2 | 3 | Nathan inquires about potential earnouts or golden handcuffs in the acquisition deal. Sravish educates the audience on how Restricted Stock Units (RSUs) operate compared to stock options and conventional earnout structures. | |
| Promotional Segment: TheTopInbox.com | 2 | 1 | 1 | 1 | Nathan conducts a sponsor spot for TheTopInbox followed by standard rapid-fire Famous Five questions, which Sravish answers succinctly. |
Statements from this episode (15)
Sridhar: Kinvey coined and created the 'backend as a service' category
“We coined the phrase and created this category, and now it's a thing.”
Sridhar: Kinvey charges hobbyists either zero or $200 monthly
“The first is people that are building apps as a hobby or as a trial, and these customers either pay us nothing, so we have a freemium model, or they pay us 200 dollars a month.”
Sridhar: Kinvey Business Edition customers pay about $24,000 annually
“The next class of customer is what we call business edition, so this is a business that is typically just doing one app and these customers, because they have higher SLA requirements and more feature-rich requirements, They pay us on an average about 24,000 do…”
Sridhar: Kinvey charges enterprise clients six figures annually per instance
“And then we have large enterprise customers like Schneider Electric, Farmers Insurance, et cetera that have what we call enterprise edition, which is a pretty sophisticated version of the platform. And that's usually about six figures a year per instance.”
Sridhar: Kinvey's ASP is probably $80K to $90K annually
“Yeah, we have significantly more enterprise customers than we do business edition and startup customers. So it's probably in the 80 to 90 K a year is probably our ASP.”
Kinvey Raised $18 Million Over Six Years Prior to Acquisition
“So we raised a total of about eighteen million dollars over a period of six years before the acquisition.”
Kinvey Reached Millions in Revenue Starting in 2014
“We did about high six figures that year. And then we got into the millions of dollars starting in 2014.”
Sridhar: Targets four angel checks annually between $15K and $25K
“So I try to do about one investment a quarter. So about four, four a year. And it's usually anywhere from 15 to 25,000 dollars per investment. It's usually part of the first money that goes into a company, so it's super early stage. Yeah, it's, about 50% of th…”
Sridhar: Kinvey maintained a 98% retention rate
“So we had about 98% retention rate for our business.”
Sridhar: 80% of Kinvey customers expanded contract revenue within year one
“Revenue retention was all, was moving towards expansions where 80% of our customers expanded revenue within the first year.”
All 44 Kinvey employees remained following the Progress Software acquisition
“Everyone has stayed, and we're actually now, we've gotten more people from Progress on board. We've actually hired more people. We're actually closer to about 65, 70 now, actually.”
Sridhar: Progress matched the highest acquisition offer for Kinvey
“No, I think to Progress's credit, they matched the best offer.”
Kinvey sustained a $100k CAC against a $2.2 million LTV
“It was about 95 to a 100,000 dollars cost of customer acquisition costs. Yep. For about an 80 to 85,000 dollar ASP, but the lifetime value of the customer was about 2.2000000.”
Progress paid Kinvey shareholders at close, avoiding earnouts for retention
“I thought the thing that they did really well was treat the investors and the stock option holders as part of a payout on deal close, and then really be thoughtful about how to retain employees with retention mechanisms, like things like RSUs, employee bonuses…”