748: How to Use Open Source Project As Lead Gen from $3m+ ARR Founder
Tomer Levy. He\u2019s the CEO and co-founder of Logz.io. Before co-founding Logz, he co-founded and was the CTO of Intigua, a company that innovated locker-like containers designed for large enterprises. Prior to Intigua, Tomer spent 6 years at Check Point, where he led its intrusion prevention system product from concept to market. He has an MBA for Tel Avi University, a BA in Computer Science, and is an enthusiastic kite surfer.
Famous Five:
- Favorite Book? \u2013 The Hard Thing About Hard Things
- What CEO do you follow? \u2013 Jeff Bezos
- Favorite online tool? \u2014 Grammarly
- How many hours of sleep do you get?\u2014 6-7
- If you could let your 20-year old self, know one thing, what would it be? \u2013 \u201cTake it easy, you\u2019ll figure it out\u201d
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Time Stamped Show Notes:
- 01:20 \u2013 Nathan introduces Tomer to the show
- 02:06 \u2013 Logz is a logins company
- 02:12 \u2013 Some of their customers are Kantar Media and British Airways
- 02:30 \u2013 Logz solves systematic problems in web servers and databases
- 02:41 \u2013 Logz is a SaaS business
- 02:52 \u2013 Logz caters to IT operations and security team of a company
- 03:24 \u2013 You can subscribe to Logz\u2019 website directly and pay monthly
- 03:29 \u2013 Logz has 2 main cohorts
- 03:32 \u2013 SMBs would pay around $10-15K a year
- 03:41 \u2013 SMEs would usually pay annually that can grow to hundreds of thousands
- 03:58 \u2013 Average pay is $10K-40K in annual contract value
- 04:10 \u2013 Logz was launched in 2014 and the product end of 2015
- 04:30 \u2013 Logz has an inside sales team
- 04:38 \u2013 Logz offers an open source platform like ELK which is around $500K a month
- 04:58 \u2013 Instead of libraries, ELK will be installed in the servers and take all the data
- 05:12 \u2013 ELK visualizes the data and Logz offer ELK with more capabilities
- 05:27 \u2013 Logz is based on the open-source community
- 05:55 \u2013 Logz isn\u2019t the developer of the open source
- 06:05 \u2013 Logz built a solution on top of the open source for log management
- 06:30 \u2013 ELK is like google search for all of your log data
- 07:02 \u2013 There are also other companies who are doing open SaaS
- 08:03 \u2013 Tomer has been writing content even before the launch of the company
- 08:14 \u2013 Logz is number for ELK search and they contribute the most in the open source community
- 08:43 \u2013 Open source has to be good and easy enough to get started so it will have mass distribution
- 08:51 \u2013 But it has to get to a point that it is difficult to scale and make it production grade
- 09:04 \u2013 Logz currently has a thousand companies on board
- 09:17 \u2013 Some are paid customers and some are on free
- 09:35 \u2013 Logz has raised money but they could have built a lifestyle business
- 09:52 \u2013 Logz raised $24M and the last round was $15.6M in October 2016
- 10:07 \u2013 Team size is 70
- 10:54 \u2013 Logz started in October 2014 and ran their first product by February 2015
- 11:05 \u2013 Logz started with 5 non-paying customers after shifting to paid model
- 11:38 \u2013 As your company grow, people will realizes your company\u2019s value and be willing to pay for it
- 11:49 \u2013 Logz has 0 revenue in 2014 and 2015 revenue was around 6 figures
- 12:44 \u2013 Logz has already broken a million dollar runway
- 13:02 \u2013 Logz competes mostly with engineers setting up their own open source
- 13:10 \u2013 The commercial side, Logz competes with AWS or Amazon Web Services
- 13:45 \u2013 Gross margin
- 14:12 \u2013 Logz pays $1-5M to Amazon for hosting
- 15:20 \u2013 Minimum MRR
- 15:46 \u2013 Team is based in Telavi, Israel
- 15:59 \u2013 Logz also has a team in Boston where Tomer currently is
- 16:11 \u2013 Gross monthly customer churn
- 17:07 \u2013 \u201cWe\u2019re very much a land and expand business\u201d
- 17:43 \u2013 Marketing team has 8 or 9 people and 7 sales people
- 18:10 \u2013 Fully weighted CAC
- 18:40 \u2013 Payback period
- 19:22 \u2013 Logz also invest in paid marketing with around $5k a month
- 19:50 \u2013 Logz invests massively in events this year
- 20:23 \u2013 Logz spends a few hundreds of dollars in sponsorships
- 22:17 \u2013 The Famous Five
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3 Key Points:
- When thinking about a business model, try and create on that is \u201cland and expand\u201d.
- Starting as a free service is fine, but you need to make sure you\u2019re built to offer your customers more value behind the paywall.
- Great content coupled with great keywords builds great companies.
Resources Mentioned:
- The Top Inbox \u2013 The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
- GetLatka - Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
- Klipfolio \u2013 Track your business performance across all departments for FREE
- Hotjar \u2013 Nathan uses Hotjar to track what you\u2019re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
- Acuity Scheduling \u2013 Nathan uses Acuity to schedule his podcast interviews and appointments
- Host Gator\u2013 The site Nathan uses to buy his domain names and hosting for the cheapest price possible
- Audible\u2013 Nathan uses Audible when he\u2019s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
Show Notes provided by Mallard Creatives