The Exchanges

Q drive significant expansion revenue. And that was a critical moment for them because that's how you get really incredible exponential growth. So for you, You know, I'm going to, I'm going to say I'm a sample customer. Let's say I sign right now for a 100,000 dollar ACV account over the next year. I mean, what, what, what would you expect me to expand to in my next year's contract?

A Yeah. So a typical customer, let's say they sign up for a 100,000 dollars. They would focus on making sure that they can understand and improve their experience for like the two or three key apps that they care about or the two or three key apps that they're having some concerns or problems around. And as they see value, they would add more apps or they would add more coverage from a monitoring standpoint, or they would say, hey, uh, security team, this is really cool and very useful. You guys should look at it as well. So our accounts would go from, you know, a hundred K to a few hundred K to a million dollars. The customers that are spending multimillion dollars with us, they all started in the 50 to a hundred K range.

AI assessment note: “our accounts would go from, you know, a hundred K to a few hundred K”

Q And so what's an action someone might take once they start using you? You've make the, you make the invisible visible. They see red spots. What do they do to correct the red spots?

A So oftentimes the most basic things people get into when there is an issue is gathering 10 teams, the app team, the server team, the network team, the infrastructure team, and nobody knows what's going on. So just the starting point of where do we even start? To look at where the problem is, is really important. So one of the first things we do is let them have a very clear understanding of the application is fine. The servers are fine. The network is a problem. So the rest of the guys can go. Now the network team, it's not your network. It's the internet. So, okay, now that we know that it's the internet, which part of the internet, and then you can understand How do you fix it? So for example, most online businesses would have multiple providers that they use at their data centers. And once they know where the issue is, they can move traffic away from one, move it towards another. If you're using a CDN, And, uh, one of the, uh, one of the areas that the CDN has, uh, is problematic. Then you again, help them understand what needs to be fixed.

AI assessment note: “once they know where the issue is, they can move traffic away from one”

Q Is that the AE that initially closed the deal that stays with the account, or there is a pass-off? Yeah.

A No. So we don't pass off entirely because we work with enterprise customers and all our customers continue to grow. So we need an ongoing relationship, but we would add a team to the team that would close the account, but then we would have an account management team that would add onto it and they would be the quarterback for the relationship while the sales team will continue to engage. And look, our sales team is not transactional where they will disengage if there is no deal. The idea of the sales team is they're, they're invested in the success of the customer. And, uh, oftentimes we don't have a customer that is buying in a quarter, but our team is still engaged heavily to make sure that they're getting the most value. And this is something that I think entrepreneurs should realize is you want to create some division of responsibility. So the, the account management can own the renewals. But you never want the sales team to be only focused on new dollars and forget the customer. Otherwise you, you're the team's responsibility is to make the customer successful.

AI assessment note: “we don't pass off entirely because we work with enterprise customers”

Q Yeah. And I think according to pitch book, that last valuation was about two hundred and seventy three billion bucks. So, I mean, look, that's nothing crazy, right? I mean, that's, it strikes me as someone that's, or a company that's being financially disciplined and not trying to be some unicorn with no revenue. Yeah.

A And look, we've had revenue since the first year, right? So we, we were not one of those companies that, that raised at a high valuation with a slide deck. And that's what I'm getting at is everything. The only currency we care about, we don't really even care about valuations. And the only currency we care about is customers, customer bookings and growth, and like really making an impact for their customers as well. Um, I was at an event, uh, where we announced our cloud report recently comparing the different cloud providers. And there was an engineer from one of the banks, one of the large banks there, and at the end of the event, he actually, he was one of our customers, he came and just gave me a hug and said, hey, there are so many times that you guys actually Uh, in the light on where the issues are when historically we would have just been yelled at for being the network guys that were, that were creating problems. And so those are the kinds of moments that we really, really feel good about making an impact on these lives.

AI assessment note: “we've had revenue since the first year, right? So we were not one of those companies”

Q actually make, why do you make that statement that that getting sooner and sooner payback is actually better? A lot of companies as they prep for IPO, they actually push their dollar based CAC up from a dollar up to say two dollars. When you look at the last 12 IPOs, a lot of them are in the dollar 20 to dollar 80 range for a new dollar of ARR.

A Yeah. And look, there's two models, right? So there are companies like Atlassian. If you look at them, they have actually gone some, got some really good organic growth, and then they have started to create a strong base and scale. And there are moments of company when you want to change the ramp rate that you invest in sales and marketing costs. And the returns of those costs are not in that quarter. They return like a year later or four quarters later or five quarters later. And this is why I'm saying that when we, when anytime I consider a model, For what our current expenses are and what our future expenses will be. They have to trend in the right direction. So the fundamentals of the company won't be good. If the dollar you spend to acquire a customer is getting worse and worse and worse, then that's not good for the business.

AI assessment note: “If the dollar you spend to acquire a customer is getting worse and worse”

Q on. I have to push you on this. Cause I was just gonna say, I really would have loved your story if it was just a million dollar grant and you were really smart and you figure out how to, you know, have VC in terms of vested customers and I, instead of actual VC and being diluted, but you've raised pretty significant capital. How much capital have you raised?

A Yeah. And so let's talk about that. Uh, the way we raised capital is when we believe that we can use capital to scale the company. And what I, what I want to point out, for example, is our last raise was in December, 2015, and we haven't raised since then. And so anytime we raise, it's not because we need the money, it's because we believe that capital infusion will take it to the next level. And that's the difference between companies that need to raise every 12 months, otherwise they actually end up not being able to operate, right? And that's not the mode. And what happens when you, when you raise a series A on a slide deck, And then you go and build a product. By the time you've exhausted your series A, you now have to raise your B because otherwise you can't take it to market. And so that's, that's different in companies. And this, this, we're not the only ones that are companies that are more organically built in the early days. Where the growth is slower in the early days, but it's more sustainable because your fundamentals are really strong.

AI assessment note: “let's talk about that. Uh, the way we raised capital is”