The Exchanges

Q Should people think about that like, like a version of MuleSoft or Zapier or?

A Yeah, it's a great, I mean, uh, the fact that Talend was the acquirer is, is a really great kind of proxy for that, which is kind of in that, that data integrations universe. So making the plumbing that allows all of your cloud connected systems and, uh, on-premise systems to talk to each other, to have data parity, be correct, and to help your analytics have data flowing in the right places at the right time. Uh, so yeah. If you're a good example, too, is like, if you're using a tool like Looker as a business intelligence platform, the question is, how did the data get to Looker? Because Looker doesn't actually, you know, go out and, you know, manage hundreds and hundreds of little scripts that run and pull data out of all your little, uh, services and locations. That's the kind of thing that an ETL tool will do, and that's extract transform load, and that's what Stitch is. Stitch is this kind of core ETL. Um, so

AI assessment note: “proxy for that, which is kind of in that, that data integrations universe.”

Q And so how did you, I mean, was it literally like a Motley Fool kind of newsletter about here? So you should be watching and looking, I mean, walk us through how it actually worked.

A Yeah. So it was actually a, a interactive piece of software. Um, and it would basically allow you to input information about What cards you had been dealt, how many other people were at the table, um, what cards showed up in the community cards, uh, on the flop and the turn in the river. And along the way, it would basically give you statistics like you would see on ESPN about your probability of winning or, uh, your probability of catching that flush draw that you're going up after. Um, and a lot of people, uh, at my college who were really big into poker were spending hours and hours trying to memorize these probability tables and do a lot of this math themselves in their heads. And this was kind of a, A real-time interactive shortcut for people who wanted to have kind of a, kind of a cheat guide on the probability and statistics of the game at their fingertips while they were playing.

AI assessment note: “it was actually a, a interactive piece of software. Um, and it would basically allow you”

Q Wouldn't they be killing you right now if you're growing like crazy and you didn't let them in the business? Come on. Something's going on.

A Well, what's going on is that you got to understand a firm like Insight has billions and billions of dollars of capital under management. So the typical check that Insight writes, you know, you can go and look at the headlines for the deals they do. These days, it's a fifty million dollar check, hundred million dollar check, you know, multi hundred million dollar leverage by us. This is not a venture capital firm that invests in startups. Uh, or companies that have not made it to a very mature growth equity financing stage. So usually Insight's not getting involved until a company has tens of millions of dollars of revenue has dozens, if not hundreds of employees. Um, and we are growing really fast and we have, uh, you know, raised a lot of outside capital, but if you add up all the dollars that we raised in the entire history of RJ metrics, it would still be too small of a check.

AI assessment note: “if you add up all the dollars that we raised... it would still be too small”

Q Yep. Yep. Okay, cool. And what about things like churn? So you guys have been around a while now. Are people staying with you? 12 months on average, 24, 48?

A Yeah. So we typically see customers stick around for multiple years. Um, if you extrapolate out our churn rate, the predicted lifespan of a customer is somewhere in the three to four year range. Um, and that is, uh, The biggest source of churn for us, honestly, is because we sell in a lot of cases to small to mid-sized businesses and mid-market companies. Um, there's a lot of cases where companies just cease to exist. Um, and there's a, we, we call that structural churn. Um, it's just a component of the piece of the market that we've decided to go after, um, tends to have, you know, a bucket of, of losses happen because of that. Um, and that's probably the biggest driver of why we lose people.

AI assessment note: “predicted lifespan of a customer is somewhere in the three to four year range”

Q Wouldn't they be killing you right now if you're growing like crazy and you didn't let them in the business? Come on. Something's going on.

A Well, what's going on is that you got to understand a firm like Insight has billions and billions of dollars of capital under management. So the typical check that Insight writes, you know, you can go and look at the headlines for the deals they do. These days, it's a fifty million dollar check, hundred million dollar check, you know, multi hundred million dollar leverage by us. This is not a venture capital firm that invests in startups. Uh, or companies that have not made it to a very mature growth equity financing stage. So usually Insight's not getting involved until a company has tens of millions of dollars of revenue has dozens, if not hundreds of employees. Um, and we are growing really fast and we have, uh, you know, raised a lot of outside capital, but if you add up all the dollars that we raised in the entire history of RJ metrics, it would still be too small of a check.

AI assessment note: “if you add up all the dollars that we raised... it would still be too small”

Q And so how did you, I mean, was it literally like a Motley Fool kind of newsletter about here? So you should be watching and looking, I mean, walk us through how it actually worked.

A Yeah. So it was actually a, a interactive piece of software. Um, and it would basically allow you to input information about What cards you had been dealt, how many other people were at the table, um, what cards showed up in the community cards, uh, on the flop and the turn in the river. And along the way, it would basically give you statistics like you would see on ESPN about your probability of winning or, uh, your probability of catching that flush draw that you're going up after. Um, and a lot of people, uh, at my college who were really big into poker were spending hours and hours trying to memorize these probability tables and do a lot of this math themselves in their heads. And this was kind of a, A real-time interactive shortcut for people who wanted to have kind of a, kind of a cheat guide on the probability and statistics of the game at their fingertips while they were playing.

AI assessment note: “So it was actually a, a interactive piece of software.”

Q was obviously co-founder at RJ. Stitch sends you that at June six, that 10, 22 AM and you're going, ah, we messed up. So, so you've learned all this now you've launched cross beam, right? So how are, how you launched cross me in 2018, you raised, I think, 12, uh, fifteen million total mainly from first mark. What are you building in a cross beam that RJ didn't have?

A Yeah, so Crossbeam really is a platform to help companies build a go-to-market layer on top of these technology partner ecosystems that they have. So, um, you know, what RJ didn't really have was an ability to hook into other platforms in a way where it helped create value that flowed in both directions. RJ was almost like where your data went to die. Like, we pulled data in from all these systems, and we analyzed it, but the outputs of our system didn't really go anywhere. You just kind of came to RJ and consumed what RJ created. In the modern SaaS economy, that is kind of a very antiquated way to look at things. Stitch, on the other hand, is almost the exact opposite, right? It's all ecosystem, no glory. Stitch pulls data in from one SaaS tool and pushes it out to another SaaS tool, and it's just kind of like the plumbing in between, and ironically, we ended up building, you know, a lot more value at a much more rapid clip at Stitch, and it's because The maturity of the API economy and all the interoperability of all these SaaS platforms Has created basically a new channel, a new growth channel for SaaS businesses, which is selling through and building market through your partners and all the different companies that your technology integrates with that you help make their products more valuable and they help make your products more valuable through integrations, uh, and thro…

AI assessment note: “Crossbeam really is a platform to help companies build a go-to-market layer”

Q Okay. Let me, let me try and let me try and learn something here. So let's stick with video conferencing for a second. Uh, you would call Slack a super node or sorry, zoom a super node, right? Build a healthy ecosystem. Can you name a platform company that you think is a platform company in the video conferencing space?

A Oh, that's a great question. Um, I honestly, I, I jumped to saying no. And the main reason is like, when you think of that Bill Gates definition, The question is, are there companies that would literally would not exist if not for having completely been built on top of, uh, you know, Uber conference or, or, you know, you go to the big enterprise side, kind of the, the go to meeting side of the universe. And in that regard, I think almost by definition, the vertical of video conferencing is inherently an ecosystem centric product because what you have is sales enablement on one side, and then you have kind of communication and team collaboration on the other side. It's not that you build a whole collaboration suite SaaS products on top of a single video conferencing platform. Almost anybody that wants to build on a video conference and will build on multiple of them. And therefore none of them can be the platform with a capital P that they're built on top of. Um, when I think of platforms, I think of like, you know, Amazon web services. I think Salesforce is a platform, uh, because their, their app store is a true, true, uh, there are companies that are entirely existent because the only thing they do is provide technology on top of Salesforce. And that Those are platform-powered companies.

AI assessment note: “I honestly, I, I jumped to saying no. And the main reason is”

Q right now that wanted, they, you know, in their seed deck, they said, we're a platform, we're a platform because they thought it would juice their valuation, but they know deep in their hearts, they're not actually a platform yet. And they're going, shit, how do we actually build what we just sold? How do you actually become a true platform? Not just one that you use in your branding.

A Yeah. And I would like, I would also just challenge the idea, like, do you want to be a true platform? Like Bill Gates has this definition of a platform that I like, which is that the economic activity that gets generated as a result of you existing, um, in your partner ecosystem is actually greater than the economic activity that you generate for yourself. Like at that point in time, you kind of like the fulcrum has, has tipped and you are in platform territory, but in reality, you know, a platform in theory is this, this fundamental layer that stuff gets built on top of. What we're seeing out in the market is that the big success stories, you look at companies like zoom companies like slack, you know, the, the latest IPO crop in SAS, I would argue that very few of them are like true platforms. What they really are is super nodes inside of a really healthy ecosystem. Uh, it's not that people are just building on top of them. It's that they are building on top of people who are then building back on top of them. And there's a fluidity and a bi-directionality to how that works. That makes the whole platform metaphor kind of moot and kind of outdated. And I think honestly, VCs are getting skeptical of that. Like you see the platform word in a seed stage deck and I think an eyebrow gets raised.

AI assessment note: “I would also just challenge the idea, like, do you want to be a true platform?”