The Exchanges

Q Okay, got it. So what does that mean? You finished 20, 23 with something like 70 ish, 75?

A A little lower than that, in the mid, in the mid sixties. Um, what we made a conscious decision to do is redefine what we call ARR, uh, because our business changed. When we first started, we were selling things that were kind of borderline project slash recurring. And we took a hard look at our business and said, what is truly occurring? What is it? And kind of, because AR is not a gap Terminology. And it needs a lot of room for manipulation if companies want to manipulate. We never were trying to manipulate it, but we didn't really understand what was truly recurring or not when we started the business. So we took a step back at the end of 20, 22 and said, this revenue is really just more ad hoc project revenue, which reduced our AOR, but in turn increased our, our, um, our retention, which is really what we're focused on. But ultimately it's about having a clear view of what the business was so we can make decisions accordingly.

AI assessment note: “A little lower than that, in the mid, in the mid sixties.”

Q a new toothbrush, right? What's interesting though about Susie is you are, you are vertically integrated here. You actually own a platform that users engage on actively. And then that's how you collect some of these survey based feedback. When we last spoke, these gamified apps, you told me you had between 50 and a 100,000 monthly active users on them. What's that number look like today? Has it grown?

A Um, we haven't even focused as much on quantity, and you're talking about our CrowdTap consumer panel, um, which we have a million registered users on, and on a monthly basis, you are correct, it's anywhere between 50 and a 100,000. Our focus has really been on the quality of those users. One of the big problems we're solving with online market research is there's a lot of fraud and spam. So when people try to buy, um, an audience to respond to a survey from a programmatic audience provider, what they often find is it's a lot of bots that are answering the questions. So our focus on the audience size has been less about building more quantity of audience, because as long as we have a diversified network of people that deliver on the demands of our customers, we don't need to add more people, right? But we need to make sure that they are people and they're well intentioned and they're providing the right answers. And that's really been our focus. We've actually have a patent pending for a product called biotic, which is essentially a spam and a detection tool that's built within our audience. And with that, we have the highest quality audience in the industry and Quality is really the only thing that matters in online market research.

AI assessment note: “on a monthly basis, you are correct, it's anywhere between 50 and a 100,000.”

Q Yeah. I mean, that's up from our interview in 2019 of, uh, 60,000 years. So it's more than doubled. What's enabled you to double it?

A Land and expand. So essentially what we're building at Suzy, which is different than some of the more point solutions who I hadn't mentioned, but companies that just do one thing within market research is that we want to be sort of like a, a platform that goes horizontal. So I mentioned that product development life cycle. When you land a big CPG, you might first start with a company that's testing their advertising or packaging, But then we'll just go to the other departments that aren't using Suzy for research. And as long as there's trust and we're delivering, we just pick off first, you know, going from, uh, you know, brand brand, say Gillette, and they're using us for package testing. We can then use them for ad testing or use them for price testing. And then we could also go from going from Gillette to going to tide or another brand at Procter and Gamble by way of example. So there's kind of a vertical expansion and a horizontal expansion within an enterprise. And that's what's driving up the average contract value.

AI assessment note: “Land and expand. So essentially what we're building at Suzy”

Q And a lot of that twenty million dollar, twenty five million dollar burn of last year, I think you put towards a new product called Suzy Live. What is this product?

A Yeah, so Suzy Live is an example of why we invest in R&D, and Suzy Live is actually an example of an innovation we have that even the best companies in our space don't have, which is we have the ability now to connect quant to qual. So say you are selling dresses, and you're targeting millennial women, and you want to know what dress they like the best, the red, white, or blue dress, right? And say 70% say red. And then we ask them why, and they say, because it makes me feel younger, right? We can actually then take those, that subset of the people that like the red dress and say it makes them feel younger, and pull them instantly to a Zoom-like interface, just like me and you are talking, and do a live focus group or in-depth interview, and ask them why the red dress makes them feel younger, and actually have a detailed discussion all within the same workflow. So the ability to connect quant to qual in one workflow is something that traditionally has not been, um, Accessible or possible in market research, given the fact that most online market research tools do not have their own audience. So they can't keep going back to the same person. If they're buying a third party audience, they'll answer a question. They'll never see that person again. So Susie live is really a game changer for us because connecting the quantum call is kind of the Holy grail for enterprise researchers.…

AI assessment note: “we have the ability now to connect quant to qual”

Q So how might like Procter and Gamble use you then?

A So P and G is actually a customer and companies like P and G uses across the entire product development life cycle. So that's everything from what type of product extension should they come to market with? What should the packaging look like? What should they name it? What should they price it? What should the merchandising look like? What should the advertising look like? So if you think of any new product, there are so many different departments that touch it in a large enterprise and each department needs to have the voice of the consumer throughout that decision-making process. And that's what the role Susie plays. So it's not as much of a vertical solution like a user testing where it's for one specific, you know, point solution. It's really meant to be a system of record for consumer insights at large enterprises.

AI assessment note: “companies like P and G uses across the entire product development life cycle.”

Q That's a good, that's a good story. I can see you giving keynotes around the country using that as your, your, your, your lead in line. Okay, good. Okay. Now I'm on Suzie beta. This makes a lot of sense. So you said you had, I And sorry, I was so focused on the link. I missed when you said customer count. You said 70?

A About 75, um, enterprise customers who are licensing the product from us, and it is essentially, it, it allows them to uncover insights and data during the same meeting they ask the question in. So would women 18 to 21, like the blue dress or the green dress, they can learn with confidence during the same meeting and allow them to make decisions. So every decision a company makes on an everyday basis can be informed by data. And that's really what we're trying to accomplish with the Suzy platform. And it's using the same users that we had amassed over seven years for CrowdTap. The only difference is instead of asking these people, Hey, create content and share it, which could be rather spammy. It's just tell us what you think. So that's, so it's a pivot and it's not because we're using really a lot of the same technical infrastructure and, and the same user base just to, to essentially commercialize in a way that we think adds a lot more value to our customers.

AI assessment note: “About 75, um, enterprise customers who are licensing the product from us”

Q So let's just use a real example here. I'm, I'm, I'm Nathan's chocolate factor. I'm launching a new candy bar, and I want to test if my packaging should be yellow or brown. How do you help me decide that?

A So basically, as you mentioned at the onset, Susie had its own consumer network, uh, which provides statistically significant sample size across, um, the U S. So you want to make sure that your audience data isn't skewed, uh, to one particular population population or Uh, demographic profile. So depending upon who you want to test with, it could be the general population, or maybe you've done some work prior to actually understand, um, a little bit more closely. Who is your audience? Once that audience is identified, you essentially launch an action and actually can be a quantitative research study. So it could be a long form survey or just short form multiple choice questions or quality, uh, qualitative research, which could be a live one-on-one interview, or even a one-to-many focus group. And based upon that research, Our team helps you come up with, um, a better hypothesis of what packaging would be more successful in a retail environment. Uh, there's all sorts of different, um, approaches to research. It's way more sophisticated. The discipline of research that I even imagined when I started Susie, but we've been fortunate enough to hire a lot of people from kind of the legacy research, uh, companies to come on, um, teach us and our company how to do research at the highest level. So depending upon the budget, um, and how much companies want to invest in research, We can r…

AI assessment note: “Our team helps you come up with, um, a better hypothesis of what packaging”

Q Give me more examples of a vertical expansion inside the Gillette brand at PNG, right? So package testing, ad testing, price testing, what else might they use testing on? I mean, what about new products testing? Four blades on the razor instead of two?

A You got it. You got it. Innovation is one of the biggest areas. So a company is launching a new product. Is there a demand for the product? Who is the target audience for the product? We also do a lot of, uh, merchandising and retail testing in terms of testing in-store displays. Uh, we launched a product called Suzy Home, which actually allows our clients To ship physical products into consumers homes. They can try on clothing or try a candy bar and give instant feedback to it. So literally any design design decision that you make, um, in terms of the, a product rolling out and there's millions of decisions made a day, many of which in the past were just guesses. Susie can be there. And the reason that they would use Susie and maybe not use research in the past is that research traditionally has been done through agencies, which are slow and expensive. Where now you essentially have a direct-to-consumer channel to go to the consumers at Madeline and get instant feedback. Literally, within the same Zoom meeting, answers start flowing in from our audience that can help you reframe your decision or validate your decision.

AI assessment note: “Innovation is one of the biggest areas... We also do a lot of, uh, merchandising”

Q Exactly. Yeah. The first sales hire with a quota, the second, the 18th you're on now, the comp structure. Yeah. What's the quota target?

A I mean, we shoot for a five to one ratio. So for every five dollars sold, our seller gets a dollar and, you know, on target earnings, obviously it varies within our sellers. Uh, their quota increases. Um, as they continue to gain tenure at the company because they're pipeline built. Uh, we actually have two different teams at our organization. We have a net new team and an expansion team. Um, so some of our more seasoned sellers are on the expansion team because it's more of a strategic sell. When you're selling net new, you're talking more about your product because theoretically you don't know as much about the company. When you're selling an existing large enterprise like a Microsoft, we need to understand how to map the organization, you know, speak to their business terms and their KPIs. So it's really a job for a more seasoned seller to be able to expand.

AI assessment note: “we shoot for a five to one ratio. So for every five dollars sold”

Q It's like, would you do anything differently to try and preserve more now looking back or no, you're okay with five?

A Well, this business, if you'll remember, the orange of this business is an interesting one. We had incubated software within my agency, MRY, and I spun it out. Um, and then I went on to sell the agency and I put in a different CEO to run it, who basically, so he was theoretically the founder, even though I incubated it in my agency. And then I came in and we pivoted. So the origins of this business on the cap table is over 10 years old. So this isn't a traditional startup that was started in a garage in Palo Alto. So I don't think there was anything I could have done differently. You know, we're achieving tremendous scale. And to me, it's not about the ownership. It's about the outcome. And, and, you know, I'd rather have a smaller piece of a bigger pie. And that's really where we're going.

AI assessment note: “So I don't think there was anything I could have done differently.”

Q What's the name of the Qualtrics product that would come closest to Susie live?

A You know, I don't even know. And, and I don't, I don't really spend a lot of time thinking about competitors. And I was asked that earlier today. Um, I look at our business metrics in terms of what's our conversion ratio down the funnel, how are we growing year over year? And as long as that's going on the right direction, then I'm more focused on listening to our, our customers and NPS and what they're saying versus trying to chase what a competitor is doing. So, uh, you know, I know that they're their gold standard because they, you know, they had a huge exit. Um, and you know, they obviously sort of set the path for us. But that's sort of the extent of which I know about them. Um, and I'm much more focused on it.

AI assessment note: “You know, I don't even know. And, and I don't, I don't really”

Q What did you burn last year? All in would you say?

A We ended at a run rate closer to burning a million a month. Um, and we're going to be, we're going to be sub ten million burn in 20, 24, and then cashflow positive in 20, 25. Um, because burn is a 12 month thing and, you know, the world's changed so much. It's hard, you know, part of that cohort was 20, 22, um, up until the end of the year, which is why the run rate burn dropped, um, you know, consistently over the year. So we're going to be burning less than ten million this year. We could break even this year, but I think Um, it'd be penny wise, pound foolish. Um, so to speak, lots of pennies, but still penny wise, pound foolish, but, um, heading into 20, 25, we're going to be cashflow positive.

AI assessment note: “We ended at a run rate closer to burning a million a month.”

Q A lot of extra credits being sold, which is great. Touching on private equity, you just mentioned it. In October of twenty-twenty-two, Toma Bravo, Sunstone Partners got together, bought user testing. I wouldn't say directly in your space, but certainly adjacent for 1.3 billion and combined it with user Zoom. Have you had any conversations with Toma Bravo or Sunstone in the past two years?

A So I can't speak to specific companies that we've spoken to, but we have spoken to many of the late stage private equity buyout firms. Um, and you know, what companies like Toma Bravo and Vista and Insights have done Is really smart because they've combined companies. They look for efficiencies. They've accelerated the path to profitability. Um, and they're going to basically get these companies fit for purpose to either, um, you know, resell to a larger strategic or possibly take public once again. So I think what they're doing is fantastic. A company has to be at a certain stage and have the certain sort of operating model to do it. What, what's interesting I've learned over the last couple of years when companies talk about what your burn is, is that not all burned is created equal. If you have a high burn because you're overspending on R&D, you can easily turn that dial down and maybe you have slightly less product innovation, but it's not going to impact revenue. A lot of companies have high burn because they have bad unit economics when it comes to their customer acquisition costs, um, and their capitalized time value. And that, in that regard, when they take down their sales and marketing, their revenue follows with it, but they do that because that's the only way they can reduce burn. We were fortunate that when we had to cut burn, we were overspending in R&D. We just f…

AI assessment note: “I can't speak to specific companies that we've spoken to”

Q Now tell us about your business model today. So do people, I assume it's a SAS model. What do people pay you on average per month?

A So I, I'm, I can't disclose what clients pay per average per month. Um, what I can say is that we're going through a process right now of essentially Doing another spinoff. Um, we're essentially taking the people and the software and we're pivoting what the software does to being a business intelligence tool, because while the users were really great at allowing us to kind of create and share content on behalf of brands, what they were incredibly successful as giving our clients real time insights. There's game mechanics behind the crowd tap platform where if a client asks a specific Uh, segment of our audience, a question, they get answers back immediately. And that's something that is a pure play software, um, you know, a business model, because it doesn't involve people. It doesn't involve creative, et cetera. So we're taking our creative, um, and our kind of influencer business, and that's staying as crowd tap. And it's gonna be more of an agency model. And then we're rebranding our software platform, Susie as a business intelligence tool, which is kind of funny. It's cyclical, right? So we spun off a software company from the agency and then we're spinning an agency off the software. But I think that's what you have to do is the market evolves.

AI assessment note: “I can't disclose what clients pay per average per month. What I can say is”