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Sep 10, 2017 · 27m · top-founders

778: SaaS: With $80M Raised, He Left Salesforce to Bring Finance Departments to The Cloud

Nathan Latka · 11m spoken Dave Kellogg · 11m spoken
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Host Nathan Latka interviews Dave Kellogg, CEO of Host Analytics, exploring how the enterprise performance management company scaled past $40 million ARR, raised $85 million, and capitalizes on corporate finance departments migrating to the cloud.

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 50.4% of the talking time here. How this is scored →

Nathan as informed peer 4.5 Guest teaching 3.8 Guest disagreement 1.3 Nathan pushing back 2.6
05100:0010:0020:003:07–5:58 · Nathan as informed peer 5/10 Host Analytics Overview and SaaS Pricing Structure Nathan probes into Host Analytics' pricing structure and how unit economics scale across enterprise tiers. Dave explains that seat count in finance software depends more on corporate centralization philosophy than overall company headcount.5:58–8:34 · Nathan as informed peer 6/10 Scaling MarkLogic and Managing Startup Equity Nathan and Dave discuss equity management and option vesting strategies when exiting high-growth startups. Dave educates on using 83(b) reverse exercises to avoid alternative minimum tax issues, while Nathan challenges the financial risk of exercising unproven shares early.8:36–11:13 · Nathan as informed peer 4/10 Salesforce Leadership and Joining Host Analytics Dave details his transition from Salesforce GM to Host Analytics and his diligence process for taking CEO roles. He explains why reaching $10M ARR validates product-market fit and significantly de-risks a startup compared to $1M ARR.11:13–13:42 · Nathan as informed peer 5/10 Revenue Growth and Guerrilla Marketing Tactics Nathan asks for unconventional growth tactics, prompting Dave to explain their 'I heart EBITDA' sticker campaign. Dave illustrates how cheap targeted stickers generated closed deals in bars and restaurants with qualified CFOs.13:42–17:10 · Nathan as informed peer 7/10 Customer Segmentation, Churn, and Acquisition Economics Nathan and Dave delve deeply into SaaS unit economics, ARR per customer, and churn metrics. Nathan pushes back when churn seems high, prompting Dave to clarify that the figure was gross churn pre-upsell and that net retention is negative churn.17:10–21:40 · Nathan as informed peer 6/10 Team Distribution, Cloud Adoption, and Services Margins Dave highlights the market reality that finance departments are 10-15 years behind sales in cloud adoption, requiring long lead nurture cycles. He also justifies their lower blended gross margin by framing EPM implementation as a 'knee transplant' requiring hands-on professional services.21:40–26:11 · Nathan as informed peer 3/10 Sponsor Break: TheTopInbox Acquisition and Income Report After an ad read for TheTopInbox, Nathan runs through the Famous Five rapid-fire questions. Dave shares reflections on working with Marc Benioff, reading Jeff Pfeffer's book on power, and enjoying Nathan's quantitative interview style.26:11–27:14 · Nathan as informed peer 0/10 Interview Conclusion and Masterclass Episode Promotion Nathan delivers the outro monologue summarizing Host Analytics' metrics and promotes the upcoming Masterclass episode.3:07–5:58 · Guest teaching 4/10 Host Analytics Overview and SaaS Pricing Structure Nathan probes into Host Analytics' pricing structure and how unit economics scale across enterprise tiers. Dave explains that seat count in finance software depends more on corporate centralization philosophy than overall company headcount.5:58–8:34 · Guest teaching 6/10 Scaling MarkLogic and Managing Startup Equity Nathan and Dave discuss equity management and option vesting strategies when exiting high-growth startups. Dave educates on using 83(b) reverse exercises to avoid alternative minimum tax issues, while Nathan challenges the financial risk of exercising unproven shares early.8:36–11:13 · Guest teaching 4/10 Salesforce Leadership and Joining Host Analytics Dave details his transition from Salesforce GM to Host Analytics and his diligence process for taking CEO roles. He explains why reaching $10M ARR validates product-market fit and significantly de-risks a startup compared to $1M ARR.11:13–13:42 · Guest teaching 3/10 Revenue Growth and Guerrilla Marketing Tactics Nathan asks for unconventional growth tactics, prompting Dave to explain their 'I heart EBITDA' sticker campaign. Dave illustrates how cheap targeted stickers generated closed deals in bars and restaurants with qualified CFOs.13:42–17:10 · Guest teaching 5/10 Customer Segmentation, Churn, and Acquisition Economics Nathan and Dave delve deeply into SaaS unit economics, ARR per customer, and churn metrics. Nathan pushes back when churn seems high, prompting Dave to clarify that the figure was gross churn pre-upsell and that net retention is negative churn.17:10–21:40 · Guest teaching 6/10 Team Distribution, Cloud Adoption, and Services Margins Dave highlights the market reality that finance departments are 10-15 years behind sales in cloud adoption, requiring long lead nurture cycles. He also justifies their lower blended gross margin by framing EPM implementation as a 'knee transplant' requiring hands-on professional services.21:40–26:11 · Guest teaching 2/10 Sponsor Break: TheTopInbox Acquisition and Income Report After an ad read for TheTopInbox, Nathan runs through the Famous Five rapid-fire questions. Dave shares reflections on working with Marc Benioff, reading Jeff Pfeffer's book on power, and enjoying Nathan's quantitative interview style.26:11–27:14 · Guest teaching 0/10 Interview Conclusion and Masterclass Episode Promotion Nathan delivers the outro monologue summarizing Host Analytics' metrics and promotes the upcoming Masterclass episode.3:07–5:58 · Guest disagreement 1/10 Host Analytics Overview and SaaS Pricing Structure Nathan probes into Host Analytics' pricing structure and how unit economics scale across enterprise tiers. Dave explains that seat count in finance software depends more on corporate centralization philosophy than overall company headcount.5:58–8:34 · Guest disagreement 1/10 Scaling MarkLogic and Managing Startup Equity Nathan and Dave discuss equity management and option vesting strategies when exiting high-growth startups. Dave educates on using 83(b) reverse exercises to avoid alternative minimum tax issues, while Nathan challenges the financial risk of exercising unproven shares early.8:36–11:13 · Guest disagreement 1/10 Salesforce Leadership and Joining Host Analytics Dave details his transition from Salesforce GM to Host Analytics and his diligence process for taking CEO roles. He explains why reaching $10M ARR validates product-market fit and significantly de-risks a startup compared to $1M ARR.11:13–13:42 · Guest disagreement 1/10 Revenue Growth and Guerrilla Marketing Tactics Nathan asks for unconventional growth tactics, prompting Dave to explain their 'I heart EBITDA' sticker campaign. Dave illustrates how cheap targeted stickers generated closed deals in bars and restaurants with qualified CFOs.13:42–17:10 · Guest disagreement 3/10 Customer Segmentation, Churn, and Acquisition Economics Nathan and Dave delve deeply into SaaS unit economics, ARR per customer, and churn metrics. Nathan pushes back when churn seems high, prompting Dave to clarify that the figure was gross churn pre-upsell and that net retention is negative churn.17:10–21:40 · Guest disagreement 2/10 Team Distribution, Cloud Adoption, and Services Margins Dave highlights the market reality that finance departments are 10-15 years behind sales in cloud adoption, requiring long lead nurture cycles. He also justifies their lower blended gross margin by framing EPM implementation as a 'knee transplant' requiring hands-on professional services.21:40–26:11 · Guest disagreement 1/10 Sponsor Break: TheTopInbox Acquisition and Income Report After an ad read for TheTopInbox, Nathan runs through the Famous Five rapid-fire questions. Dave shares reflections on working with Marc Benioff, reading Jeff Pfeffer's book on power, and enjoying Nathan's quantitative interview style.26:11–27:14 · Guest disagreement 0/10 Interview Conclusion and Masterclass Episode Promotion Nathan delivers the outro monologue summarizing Host Analytics' metrics and promotes the upcoming Masterclass episode.3:07–5:58 · Nathan pushing back 3/10 Host Analytics Overview and SaaS Pricing Structure Nathan probes into Host Analytics' pricing structure and how unit economics scale across enterprise tiers. Dave explains that seat count in finance software depends more on corporate centralization philosophy than overall company headcount.5:58–8:34 · Nathan pushing back 3/10 Scaling MarkLogic and Managing Startup Equity Nathan and Dave discuss equity management and option vesting strategies when exiting high-growth startups. Dave educates on using 83(b) reverse exercises to avoid alternative minimum tax issues, while Nathan challenges the financial risk of exercising unproven shares early.8:36–11:13 · Nathan pushing back 2/10 Salesforce Leadership and Joining Host Analytics Dave details his transition from Salesforce GM to Host Analytics and his diligence process for taking CEO roles. He explains why reaching $10M ARR validates product-market fit and significantly de-risks a startup compared to $1M ARR.11:13–13:42 · Nathan pushing back 2/10 Revenue Growth and Guerrilla Marketing Tactics Nathan asks for unconventional growth tactics, prompting Dave to explain their 'I heart EBITDA' sticker campaign. Dave illustrates how cheap targeted stickers generated closed deals in bars and restaurants with qualified CFOs.13:42–17:10 · Nathan pushing back 5/10 Customer Segmentation, Churn, and Acquisition Economics Nathan and Dave delve deeply into SaaS unit economics, ARR per customer, and churn metrics. Nathan pushes back when churn seems high, prompting Dave to clarify that the figure was gross churn pre-upsell and that net retention is negative churn.17:10–21:40 · Nathan pushing back 4/10 Team Distribution, Cloud Adoption, and Services Margins Dave highlights the market reality that finance departments are 10-15 years behind sales in cloud adoption, requiring long lead nurture cycles. He also justifies their lower blended gross margin by framing EPM implementation as a 'knee transplant' requiring hands-on professional services.21:40–26:11 · Nathan pushing back 2/10 Sponsor Break: TheTopInbox Acquisition and Income Report After an ad read for TheTopInbox, Nathan runs through the Famous Five rapid-fire questions. Dave shares reflections on working with Marc Benioff, reading Jeff Pfeffer's book on power, and enjoying Nathan's quantitative interview style.26:11–27:14 · Nathan pushing back 0/10 Interview Conclusion and Masterclass Episode Promotion Nathan delivers the outro monologue summarizing Host Analytics' metrics and promotes the upcoming Masterclass episode.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 100% · guest 0%0:00 · Nathan 100% · guest 0%3:00 · Nathan 44.3% · guest 55.7%3:00 · Nathan 44.3% · guest 55.7%6:00 · Nathan 34.3% · guest 65.7%6:00 · Nathan 34.3% · guest 65.7%9:00 · Nathan 15.6% · guest 84.4%9:00 · Nathan 15.6% · guest 84.4%12:00 · Nathan 59.3% · guest 40.7%12:00 · Nathan 59.3% · guest 40.7%15:00 · Nathan 45.9% · guest 54.1%15:00 · Nathan 45.9% · guest 54.1%18:00 · Nathan 32.1% · guest 67.9%18:00 · Nathan 32.1% · guest 67.9%21:00 · Nathan 62.6% · guest 37.4%21:00 · Nathan 62.6% · guest 37.4%24:00 · Nathan 50.3% · guest 49.7%24:00 · Nathan 50.3% · guest 49.7%27:00 · Nathan 100% · guest 0%27:00 · Nathan 100% · guest 0%
Sharpest disagreement ▶ 16:24 Dave corrects Nathan on CAC efficiency ratio framing

When Nathan expresses surprise at a dollar-fifty CAC, Dave firmly clarifies that he operates on a cost-per-dollar of new ARR standard rather than raw customer acquisition cost.

 Hardest push from Nathan ▶ 15:57 Nathan challenges Dave on equal logo and revenue churn

Nathan refuses to accept equal logo and revenue churn for a $40M ARR SaaS business, pressing Dave on why expansion revenue is not outpacing logo loss.

 Biggest teaching moment ▶ 19:48 Dave schools Nathan on the 5% cloud penetration in enterprise finance

Dave educates Nathan on why enterprise EPM customer acquisition is uniquely difficult, noting finance lags sales adoption by over a decade and requires extended nurture pipelines.

 Nathan holds their own ▶ 18:28 Nathan synthesizes LTV:CAC ratios and payback velocity

Nathan instantly converts Dave's qualitative ratio responses into precise unit economics, citing a 15-month payback period and a 5:1 LTV:CAC benchmark.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Host Analytics Overview and SaaS Pricing Structure 5413 Nathan probes into Host Analytics' pricing structure and how unit economics scale across enterprise tiers. Dave explains that seat count in finance software depends more on corporate centralization philosophy than overall company headcount.
Scaling MarkLogic and Managing Startup Equity 6613 Nathan and Dave discuss equity management and option vesting strategies when exiting high-growth startups. Dave educates on using 83(b) reverse exercises to avoid alternative minimum tax issues, while Nathan challenges the financial risk of exercising unproven shares early.
Salesforce Leadership and Joining Host Analytics 4412 Dave details his transition from Salesforce GM to Host Analytics and his diligence process for taking CEO roles. He explains why reaching $10M ARR validates product-market fit and significantly de-risks a startup compared to $1M ARR.
Revenue Growth and Guerrilla Marketing Tactics 5312 Nathan asks for unconventional growth tactics, prompting Dave to explain their 'I heart EBITDA' sticker campaign. Dave illustrates how cheap targeted stickers generated closed deals in bars and restaurants with qualified CFOs.
Customer Segmentation, Churn, and Acquisition Economics 7535 Nathan and Dave delve deeply into SaaS unit economics, ARR per customer, and churn metrics. Nathan pushes back when churn seems high, prompting Dave to clarify that the figure was gross churn pre-upsell and that net retention is negative churn.
Team Distribution, Cloud Adoption, and Services Margins 6624 Dave highlights the market reality that finance departments are 10-15 years behind sales in cloud adoption, requiring long lead nurture cycles. He also justifies their lower blended gross margin by framing EPM implementation as a 'knee transplant' requiring hands-on professional services.
Sponsor Break: TheTopInbox Acquisition and Income Report 3212 After an ad read for TheTopInbox, Nathan runs through the Famous Five rapid-fire questions. Dave shares reflections on working with Marc Benioff, reading Jeff Pfeffer's book on power, and enjoying Nathan's quantitative interview style.
Interview Conclusion and Masterclass Episode Promotion 0000 Nathan delivers the outro monologue summarizing Host Analytics' metrics and promotes the upcoming Masterclass episode.

Statements from this episode (10)

Insight
EPM software seat counts depend on centralization philosophy, not company size
“Corporate finance departments don't actually scale that much with the size of a company, and the number of users of our kind of software actually varies much more with the corporation's centralization philosophy. So some big companies are super centralized, an…”
Dave Kellogg Sep 10, 2017 ▶ 4:29
Assertion Not checkable as stated
Host Analytics had roughly $10M ARR when Dave Kellogg joined
“So, so I think it was, let's just say plus or -10 in ARR.”
Dave Kellogg Sep 10, 2017 ▶ 10:32
Insight
Startups can hit $1M ARR with bad ideas, but rarely $10M
“You can get to one million with a bad idea. It's hard to get to 10 with a bad idea, right? So, so it's kind of a rite of passage to say there's a lot of risks taken out of it. If you can, you know, get to order a magnitude ten million in ARR there's a lot of r…”
Dave Kellogg Sep 10, 2017 ▶ 10:36
Assertion Not checkable as stated
Host Analytics grew ARR roughly 4x during Dave Kellogg's tenure
“So I'd say grow it four, four X plus or minus over the timeframe.”
Dave Kellogg Sep 10, 2017 ▶ 11:20
Assertion Not checkable as stated
Host Analytics won CFO deals using 75-cent 'I heart EBITDA' stickers
“And we've won business literally for the cost of a 75 cent sticker. I met a CFO of a public company in a restaurant. One of my guys met a CFO of a public company in a bar. People just come up and start talking to you and wow, 75 cents.”
Dave Kellogg Sep 10, 2017 ▶ 12:44
Assertion Not checkable as stated
Host Analytics maintains an aggregated average selling price around $70,000
“If you do the math on what I said, the ASP aggregated is around 70 K a year.”
Dave Kellogg Sep 10, 2017 ▶ 14:46
Insight
Discounting multi-year prepays below your churn rate creates a win-win
“If you're giving a discount smaller than your churn rate for a multi-year prepay, everybody wins.”
Dave Kellogg Sep 10, 2017 ▶ 15:30
Assertion Not checkable as stated
Host Analytics spends approximately $1.50 to acquire $1 of new ARR
“You know, buck 50, I'd say typically in a bad quarter, two bucks. In a good quarter, we can beat the buck 50.”
Dave Kellogg Sep 10, 2017 ▶ 16:25
Assertion Partly supported
Cloud penetration in enterprise performance management software is only around 5%
“If you look at the cloud penetration of this market, it's around five percent.”
Dave Kellogg Sep 10, 2017 ▶ 19:37
Assertion Not checkable as stated
Finance departments lag sales by 10 to 15 years in cloud adoption
“Like the finance department is like 10 to 15 years behind sales in adoption. If you take the two endpoints, right, sales was the first department to go cloud, and finance is really the last department to go cloud.”
Dave Kellogg Sep 10, 2017 ▶ 19:56
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