Retain & Category Creation
By: Kent Goldman
Tags: Customer Success, Startup, Venture Capital, Seed Investment

There’s a trope common to fund raising pitches, “We’re building X for Y” where X is an admired company and Y is a new market or a newly targeted geography. This formulation quickly communicates what a company does and simplifies the act of understanding the size opportunity. For an investor, this shifts market sizing to a quick act of calculation from a more involved act of imagination.

I prefer the latter.

For pre-seed and seed investors, these companies can be tougher to spot. It’s also a fair expectation that their initial ramp may take longer, after all building a product while simultaneously developing a market takes time and iterations. But when they do, their brands become synonymous with their space.

Retain is one of these companies. A few weeks back they announced their Series A financing led by Emergence. As new board member, Gordon Ritter, describes the company and its product:

Retain provides customer-facing teams the data-driven insights they need to ensure they are focusing on the accounts and activities that matter most. It does this by providing a unified view of customer engagement across teams, processes, and applications. Unlike self-reporting or rigid integrations that provide incomplete data, Retain seamlessly integrates with every browser-based application to create a detailed picture of customer engagement on a one-to-one level, allowing companies to optimize revenue growth and mitigate potential churn — all in a privacy-rich way.

Do you know your team’s cost to serve a customer? Retain does.

Retain is a product resonating with the market. Their customer base has 10x’d in the past 12 months with enterprise contracts (not lightweight team sign-ups) with Salesforce, Google Cloud, Nielsen and others. ARR is up 8x. Seat licenses are up 36x on average.

Back when I first met the founders, Eric Chernoff & Vlad Shulman, seeing a future like this present took some imagining. Eric was just leaving LiveRamp and beginning to turn his focus to Retain. He had previously been an advisor to an Upside Partnership portfolio company and asked the team there for guidance on raising a Friends & Family round. As later described to me, that team had told him that he should consider having an institutional investor too, and if he were going to go that route, that investor should be Upside.

Eric and Vlad had been struck with an idea they couldn’t shake. While they were working together at LiveRamp, they kept wondering how they could apply technical concepts from the ad tech world to help people be more productive with their work, ultimately deciding that customer success was the right place to start. The opportunity seemed big but hard to define as a specific TAM. But knowing that customer success had long stopped being a cost center for most companies and had instead become the major driver of new revenue made it easy to get comfortable with the opportunity. Quick data point, in 2020, 76% of new revenue at Salesforce came from existing accounts. And both Eric & Vlad diligenced very well - Vlad, in particular, was known for building great engineering cultures.

Upside quickly became the first institutional investor to commit to the company’s pre-seed round and we ultimately co-lead it with our friends at Afore Capital. Between then and now, we worked with Eric & Vlad to support their recruiting, sales, and market research. Along the way, we introduced them to the Global Head of Customer Success at Slack, who was so excited by what Retain was building she became a formal advisor to the company. Later, knowing how strategic customer success is to Salesforce, we connected Retain with people who would later champion the adoption of Retain across the company. And, we introduced the Founders to Steve Anderson at Baseline Ventures who led the company’s Series Seed and joined it’s Board.

With the progress of the past few years, and with a terrific firm leading the company’s Series A, it’s easy to think it always looked easy. But that’s the way it is when a company becomes synonymous with a new market.