The Exchanges

Q 40 folks. And over the years, you know, 2012 to 20 16, they grew, then you've driven more growth between 2016 and today. What are you at now in terms of total customers using the platform?

A We have, you know, close to a hundred customers using the platform. Our growth mainly so far has been international. Um, every country on the planet right now is racing to build out their Zillow, their Airbnb, their Uber, their DoorDash. So we're just, the growth we're seeing outside the US right now is phenomenal. Um, we're starting to see growth in the U.S. as well now. The growth in the U.S. is much more verticalized marketplaces. So, you know, we're not a jobs marketplace, but we do jobs just for the gig economy, for example. Or, you know, people who are saying, hey, we're going to try to do, uh, like a marketplace for doctors, for example. So there's a lot of verticalized ones in the US, but there are massive land grabs happening in every other part of the world. And Kavuna has got, you know, leading customers in Asia, leading customers in Latin America. And so we're, we're just systematically, uh, uh, building out a pretty wide berth.

AI assessment note: “We have, you know, close to a hundred customers using the platform.”

Q So give, give us an example for Uber. Let's say they onboard a thousand new drivers in New York City next month that obviously then they're, they're the, they're selling their services. I'm the buyer as the consumer that wants that Uber trip in New York. How do you work with both sides?

A So if you're on a, you know, so I'll use Curb. Curb is a customer of ours. They do Right Taxi Labs in New York. They use Kahuna. Uh, the idea here is, uh, you spend a ton of money on both sides, which a typical business doesn't have if you're not a marketplace, right? In the marketplace, you've got to sell money to fire up sellers and fire up buyers. Um, you spend all this money bringing them to your site, getting them engaged. Kahuna picks up the ball right from that point when they land on one of your properties and guides them through Step one, step two, and whatever that step is by your definition to say, loyal buyer, loyal seller, right? So we'll, we'll get them, we'll nudge them through the registration process. We'll make sure that if your definition is if a drug, if a passenger doesn't take 3.45 rides, they're not a loyal, uh, uh, customer. Kuna will stay on them till we get you to that place. Right. Uh, if someone's dormant, they came, they signed up, they used it once, they haven't come back for 30 days, we'll wake those people up. Yep. So, you know, if you're a marketplace right now, you, it is supremely expensive for you to go and get people to pay attention to what you're doing and to come to your site. But once that happens, you need somebody to really get your customer acquisition costs covered. You need to drive them through a very, very systematic process. To g…

AI assessment note: “Kahuna picks up the ball right from that point when they land on one”

Q You mean your net, your net retention, not net churn?

A Right. So yeah. So if you're, I mean, whichever way you want to go with that, but yes, for the idea of being that our internal growth within each customer in this business is something that is, you know, because we, we grow and we charge based on their usage, right? As they grow, we grow, and it's not a per seat kind of, it's a per, you know, it's, it's events and it's a volume at which they use the, use the product that drives it. So as their businesses go, many of them enter new markets. They take us along with them, right? Much like a lot of marketing automation platforms, you know, have done in the old school world of e-commerce. So we follow some of those same dynamics.

AI assessment note: “Right. So yeah. So if you're, I mean, whichever way you want to go with that, but yes”

Q Um. Why'd they come to you though? I mean, was they, were they raising a VC round and they said you got to bring in a CEO, go find one?

A No, I think, I think, I think at the point where Kahuna was four years into its life, it was, you know, there'd been, there'd been tremendous technology build on the, on the, as far as the company was concerned. The question now was, how do we find someone who can help them figure out a market that we go after, that we can actually own, dominate, own the thought leadership around, own the technology space around, know exactly how we build stuff. Kind of what I love to do. And so, uh, you know, when I walked in and I started going through the interview process, I quickly realized that, You know, I did have a bit of an unfair advantage. Uh, the work that was done before I came up on the technology side was actually unique, was different. Um, you know, the pedigree of Kahuna, uh, the, one of our co-founder on the technology side was the co-founder of SugarCRM.

AI assessment note: “how do we find someone who can help them figure out a market that we go after”

Q And how aggressive are you being in terms of acquiring customers? Are you happy with like a 12 month payback or 20 month or six month? Where are you trying to target payback period at?

A Definitely less than a year. Um, you know, definitely less than a year. I think we've gotten our, our lead gen machines down to a place that we're feeling really, really good about in terms of understanding what are the troughs of customers that fit within, you know, uh, different average ARR values and what is the cost basis to go acquire some of those customers? I think the other thing that, um, is pretty germane and one of the reasons why, you know, this is also part of sort of the decision of figuring out which markets to go after. Um, you know, as you can imagine, there's this land grab I mentioned earlier around marketplaces. The good news is that these are all customers who have to make decisions fast. So whether you're spending 20,000 dollars ARR or 250,000 dollars ARR, it doesn't follow the usual tax economics of, well, a 300,000 dollar deal should take nine months to close. Not true. Nobody has nine months in this market. If you're trying to like keep Uber out of your country or Airbnb out of your country, you don't have nine months to make any decision. So the good news is that the market, you know, that the decision cycles move Really, really fast compared to, you know, I've done this for HR. I've done this for all sorts of categories. I feel like where, you know, these markets move much faster because nobody has time to sit around.

AI assessment note: “Definitely less than a year.”

Q Can you break, can you break fifty million before 20 20?

A Um, Yeah, we could. You know, I think we could. I think it's a lot of, there's, there, if you look at it more as a function of the available TAM out there, um, I don't think there, I don't think, you know, custom market size is going to be our limitation in any way, right? So it becomes inbound factors that we can control, right? I rather, you know, this is why we moved to market that we feel like there's a lot of headroom above us, right? And it's just a question of how fast can we scale and, and, but we got to keep customers happy through this. Like there's no reason to just then have to start to pull back and do all those nasty things, right?

AI assessment note: “Yeah, we could. You know, I think we could.”

Q Well, can you name some, actually quantify those pricing axes? So Brian Halligan, when he came on with HubSpot said, you know, hey, we have number of seats, we have number of contacts, we have a product upsells as well. Actually trying, when you say volume, what do you mean?

A Volume is, look, if you're a fast growing business, you're trying to engage more buyers, more sellers more often, right? Kahuna is that platform that lets you engage more buyers, more sellers, as much as you need. As you're growing more, you're going to need to engage with them more. There's more buyers, more sellers. Kahuna charges you based on the usage of the platform. So as your business is growing, you know, we'll come to you and say, look, you know, this is kind of the estimate based on what you bought, right? Um, Uh, it looks like your usage is trending in different direction. Uh, you know, there's obviously a facility for you to pay for overages, but at some point it's better for you to just consider what your new ARR should be. So you're not paying at an overage rate. It's just sort of a flat budgetable forecastable thing and customers like that. So, you know, we'll, we will try not to go to them six months later and say, here's a bill, right? We try not.

AI assessment note: “Kahuna charges you based on the usage of the platform.”

Q All equity. Okay. Very good. Um, good. And then, um, let's kind of understand, I want to understand more about kind of how you driven this growth. So economics and a SaaS company are obviously very, very critical. What is your churn today and how do you manage that?

A Uh, I mean, I think, you know, it's no different from any SaaS company, uh, on the churn side. I mean, I think, I think in our case, it's a function of, you know, having to do a lot more due diligence on, uh, the viability of the customers we're going after. Remember, we are going after a slew of marketplaces. Some of them are early stage, some of them are mid stage, late stage, and just like, you know, they're all, many of them are venture backed companies as well, at least at the lower end, right? So the same venture economics that apply to any other company apply to them as well. So we, uh, You know, we've been fortunate to align ourselves with companies that are right at that point where growth matters. Um, you know, and we're not, we, we have to figure out exactly when we get into those companies to manage that because the last thing we need is Our entire customer base following the usual SAS economics of, you know, one in 10 will survive, right? We don't, we don't need, that's something we don't want to be chasing.

AI assessment note: “it's no different from any SaaS company, uh, on the churn side.”