Katie Perry (00:00):
I'm Katie Perry.
Austin Hankwitz (00:01):
And I'm Austin Hankwitz. And this is After Earnings, the show from Morning Brew and Stakeholder Labs that brings investors up close and personal with the executives behind the world's most interesting companies.
Katie Perry (00:13):
And today we're talking to Ryan Barretto, president of Sprout Social Sprout offers a cloud-based platform or businesses can centralize social media management, analytics, and engagement across all the major platforms. Customers include Fortune 10 companies and not to mention Stanley, the breakout social media darling of 2024 so far.
Austin Hankwitz (00:33):
Yeah, and we covered a ton of ground digging deep into their AI product. They're $1 billion annual recurring revenue goal for 2028. Their acquisition of the influencer management platform, tagger, all the creator marketing they're working on and the role of social media in upholding democracy. Fun fact here, we're actually going to see 244 elections in 2024. We're going to have a hell of a year. Alright Katie, let's jump into the interview. Ryan Barretto, thank you so much for hanging out with us on the After Earnings podcast.
Ryan Barretto (01:07):
Thank you so much for having
Austin Hankwitz (01:08):
Me. So I saw on your LinkedIn that you live in Nashville, Tennessee. I also live in Nashville, Tennessee. It's quite the place to live. Oh my gosh. I think Garth Brooks is opening up another bar here in a couple weeks. But dude, how long have you been in Nashville for?
Ryan Barretto (01:22):
We have been here three years and we should have done this in person. So next time we're go to Garth Brooks Bar. Let's go to the second.
Katie Perry (01:31):
Can I also come to Garth Brooks Bar?
Ryan Barretto (01:33):
You're invited.
Katie Perry (01:34):
Okay, perfect. Let
Austin Hankwitz (01:35):
Me hear the stage. Well, I could stop this conversation a little bit more casually talking about social media, right? Sprout Social is a social media management platform. Social media is kind of new. It's been around for 12, 15 ish years. So one, Ryan, what was your first social media platform that you used and two, do you remember your at sign?
Ryan Barretto (01:54):
Oh God. I mean it would've been Facebook and it was probably Ryan Baretto. It was probably something super basic, nothing creative,
Katie Perry (02:04):
But back then you could get the handles. If you were early adopter you could grab your name on a social platform. It is wild how that's changed.
Austin Hankwitz (02:14):
I feel like that was probably pretty hard for you Katie Perry, wasn't it?
Katie Perry (02:17):
It was very well, yeah, I spelled a little differently. Yeah, that's a whole other can of worms. But yeah, Ryan, it's so interesting because Sprout launched in 2010 and that's when I was starting my career in digital marketing. And I remember there was this inflection point where all of a sudden all the big companies were like, whoa, we got to figure this out. It's interesting time to be in the space. Curious, do you have any favorite websites or perhaps now defunct social platforms from that era that you personally would want to see come back?
Ryan Barretto (02:51):
Wow. From that era? I'm kind of like the tried and true old Gs I think is kind of Twitter and Facebook that have continued to, I spent a lot of time on those and have stuck with them. Yeah. How about you
Katie Perry (03:08):
Tumblr? Tumblr. I even got back into it when they got bought by somebody and I was back in the mix and then, yeah, no one's really there in my circle, but loved it.
Austin Hankwitz (03:20):
Yeah, I don't know how to answer that question. I feel like I'm torn between, I feel like MySpace was cool. You could publicly have your top friends, right? It's like you can just tell everyone, these are my friends and you're not on the list. But also, I mean I don't dunno if you guys remember on MySpace, but maybe this was just me trying to make my profile look cooler, but we had songs, right? So like a profile song. Could you imagine a profile song on Instagram or Twitter right now? That'd be so cool.
Ryan Barretto (03:46):
The digital walkup music. Yeah, I like that.
Austin Hankwitz (03:49):
Alright, let's jump into some earnings information here, Ryan, when your recent earnings call and I quote here, you said something very interesting that stood out to me and so I want to give you the opportunity to elaborate on it a little bit. You said we've moved away from the inefficient growth anchor at the low end of our category and accelerated our momentum into the fastest growing tiers of our total addressable market. Where the unit economics are strongest and where we believe our competitive differentiation increasingly stands out. What does that mean? Talk to us about how your strategy has sort of shifted as a company in 2023.
Ryan Barretto (04:25):
Yeah, I think the biggest thing to highlight is, and maybe it's helpful to give a little historical information, if we go back in time, I've been at the company now almost eight years and when I joined in 2016, the business was very focused in on SMB and can you use this for a while? We started in 2010 and back then we didn't know that we were going to have salespeople. So the product was built to be the best salesperson. It was meant to be a product led growth where anybody could come in and they could sign up for a trial and start using the product. And so you fast forward six years when I joined, it was very SMB focused, which was awesome. Customers could quickly get into the trial and start to use the product and start publishing campaigns and engaging with customers. What we started to see over the years as the product continue to get more and more sophisticated and as consumers had different use cases for social and brands were expecting more was there was a lot of demand on what our customers wanted us to build.
(05:25)
And as we added that sophistication into the platform, you think about analytics and reporting and social listening, it started to be really clear that our biggest opportunity was in the most sophisticated parts of the market. So mid-market and enterprise. And as we looked at the dynamics within our business, we were starting to see a real divide between customers that were just starting on social and many of them were not born social or it wasn't a core part of their strategy. And then the folks that were really investing that were social first organizations, but from a customer success perspective, very different to try and serve those customers. On one side you're literally trying to teach people how to do social on the other side. You're helping them to ensure that they're finding all the key value points within your platform. And so for us, we realized that the inefficient parts were holding us back from the opportunity in front of us and who was our ideal customer profile and these sophisticated customers. So it was really just a focusing in on saying those customers that are social first in investing is the best place for us to be investing where our product is perfectly aligned. And we changed some of our pricing strategy and we changed our coverage strategy to focus in on those customers.
Austin Hankwitz (06:38):
So as a quick follow up there though, I'm curious, as a publicly traded company, you're essentially telling me right now you're slowing down to speed up. We could be a product that just brings everyone in and it's product led and that's part of the equation. But we also realized that maybe that's not our long-term vision that we should really double down on the people who one, have the money and two really care about our product from an underlying business perspective. So how do you approach telling shareholders, telling Wall Street guys, I mean Palo Alto Networks just had to do that recently, I'm sure you saw as well. So how do you approach like, hey guys, we're going to slow down, but it's an effort to speed up over time.
Ryan Barretto (07:19):
So in the end of 22 going into 23, we made a really concerted effort to forecast it to our investors and analysts. The strategy shift that we are making in the area of focus, we highlighted that they should expect to see a reduction in the number of customers. In fact, in many places our ads are actually negative because the customers that are those customers that were sort of trialing the product, they're month to month, they're trying to figure out social, they're no longer customers and they're not coming in. That's not where we're fishing anymore. And so we really worked on highlighting for folks that there was going to be a big change there and at the same time highlighting for them the growth that we are going to see in ACVs annual contract value and the size of the customers that we're working with. So we shared a lot around how our ACVs are up 40%, how our 10 K and 50 K customers continue to grow, 30 and 40% plus.
(08:21)
And really helping people to see also just the logos if we started to talk about companies that were in the Fortune 500 and Fortune 10 and tell more stories on our earnings calls around the size and scale that they're landing and growing with us. So that's been part of the journey, but I definitely think it's one of those things where you need to continually share the feedback to investors and share the strategy and help them understand that this journey isn't going to be one that immediately overnight you get to the place that you want to go when you've been building a business for 14 years. But over time, for us it's in the short term getting to the place where the ideal customer profile of sophisticated customers is. The vast majority of our base is pretty close to upon us now.
Austin Hankwitz (09:07):
Absolutely right. And you mentioned a CV average contract value being around 12 and a half thousand dollars, it's up 40% year over year. Something I want you to sort of double click on though is the premium customer spend, right? I mean you guys expanded from 6% to 7% quarter over quarter premium features, annual recurring revenue increased 50%. How did you do that?
Ryan Barretto (09:27):
Yeah, so a lot of kudos to our product team. Our product team's done an awesome job listening to customers and really investing in places that we are getting great feedback about the opportunities that existed for our customers to do more on social. And so over time we've added, in addition to the core marketing functionality, we've added more customer care functionality, we've added analytics and social listening and employee advocacy. And then most recently with the acquisition last August Tagger, our influencer marketing platform. And so I think it's a combination of making sure that you're listening to your customers, that you're building against the opportunity, that you're doing a good job, driving awareness from a marketing perspective and then doing a good job with sales enablement to make sure that your team understands the true value of these products and that we're doing a good job helping customers see how it's going to solve problems for them. So a lot of credit to a bunch of folks across the team, and you mentioned it, the 7% stat is actually the number of customers that have two or more products where 30% of customers have one or more products, sorry, lemme rephrase that. 7% of customers are customers that have two products and then the 30% have attached at least one.
Austin Hankwitz (10:44):
Got it. Very cool. Yeah, that's awesome. And I saw on your investor presentation you have this really cool sort of pie graph showing only 7% of people have two premium products that leaves a lot of runway and it just open skies for opportunity in the future. So congrats.
Ryan Barretto (11:01):
Thank you.
Katie Perry (11:02):
In that same vein, Ryan, I'm curious, as you all have evolved and moved up in terms of the organization and where social sits from marketing maybe to perhaps a level up, has the buyer slash user personas for the product changed over time in another way? How the core buyer of your product was, I assume formerly marketing people, is that still the case and then you expand from there or do you now have a different persona you're going after?
Ryan Barretto (11:32):
Yeah, and Katie, you probably saw some of this just through your own journey in digital. When I started back in 2016, oftentimes we'd be spending time with someone in the marketing department who tended to be the youngest person in the room that they've just handed the keys to social for and said have at it. And you fast forward to where we are today and it's teams of social media managers, there's VPs of social, I mean one of the folks, Marissa at Salesforce is the VP of social. When we started working with Salesforce, she had just shared part of her goal and her strategy is to make sure that executives were getting a seat at the table from a marketing strategy perspective. And so for us, it has evolved in that these teams have grown. The level of people getting involved has changed. We are in front of chief marketing officers and chief digital officers more than ever before.
(12:23)
In many organizations, you're seeing CEOs demanding that they're getting data on social on a weekly basis. You're seeing them leverage social strategy and data in their own personal handles and how they're communicating. And you see this a lot from a public company perspective. More and more these public company executives have really big personas and you've got investors that are following them and customers that are following them and their presence on social matters more than ever. So it has evolved in terms of the level of folks that we're getting a chance to engage with. And then the other piece that's been really, really fascinating is when I first started social was considered a MarTech. It was a MarTech company, social was a MarTech company. And what we've seen, and so much of this is driven by consumer behavior, it now cuts across the organization. It's the first place we go when we need customer care. We don't pick up the one 800 we tweet at or we go to someone's Instagram page, we DM them. And so you're seeing it go into customer care. We've had sales organizations involved, there's folks from a strategy perspective who are consuming the data. So it is gone up a level and it's gone across the organization.
Austin Hankwitz (13:35):
Ryan, as someone who's seen just the transformation of social demand and inside the organization all of that, what types of organizations are you surprised have not just doubled down and gone all in on social yet? What's like, what are these people waiting for? Do you have any examples of that?
Ryan Barretto (13:53):
The funny part is in almost every industry you'll see the lidars that exist. And then by the same token, we've got folks that are in logistics and transportation and deep in manufacturing who you're shocked are becoming social first organizations. We were laughing last year, one of our reps closed two or three logistics deals and we we're joking that that should be our next hot vertical. But actually I'm really fascinated by how it's evolving so quickly. And that was something that I was personally excited about when I joined Sprout was that the total addressable market was so huge and you were hard pressed to think of any organization that wasn't really going to need to figure out social now in the near future. And so I would say it's actually more dependent on the organization than the industry. Certainly anybody that has high B2C customer bases.
(14:52)
If you think about retailers, you think about anybody who's in entertainment or travel hospitality, they tend to be very deeply on social because the consumers are there all day long. But even in B two Bs we see this more than ever, you're seeing B two Bs leaning into TikTok. They're realizing that at the end of the day, their buyers are consumers like all of us, and they're spending time on all these social networks. And so they're thinking about how do they evolve their own strategy to make sure that they're showing up where their customers might be.
Katie Perry (15:20):
I think in 2010, a lot of people perceived Sprout as where you publish across multiple handles. What always fascinated me that seemed to evolved over time was the social listening aspect and what you can unlock if you have a line of sight into all of these conversations across different platforms. And that's why I was super excited to read about the Reddit integration. So I would love to have you voice that over and talk about how that pulls in a new and different data type that these companies can use alongside everything else
Ryan Barretto (15:54):
You, I'm just so excited about the listening data that exists and I think it is one of the most rich sources of data that not enough companies are leveraging on a daily basis to drive their business, to transform their business, to make decisions based on these really informative insights. And so we look at our opportunity in our business as one where we want to democratize the access to this data and we want to help organizations more easily surface these insights so they can make better business decisions. And so Reddit fits in there clearly. They have an incredible amount of data. There is oftentimes we refer to it as the voice of culture that exists in places like Reddit. There's these unfiltered, unbiased, real time conversations that are happening and there's so much rich data that sits behind these conversations in these subreddits. And so we're really excited about it.
(16:55)
It's an important part of the data that exists within our listening solution. And more and more you're seeing organizations, businesses realizing that tapping into those conversations are really helpful. A lot of brands don't personally get involved in those conversations today, but listening provides so many unique insights that they can leverage that might tell them about ways that they need to evolve their customer success strategy. It might give them really good indications on the ways that they need to evolve their product strategy or innovate on their products. It might tell them a lot about who their competitors are and what people are saying about their competitors. So that data source is just one that we're continuing to be really excited about. I mean, in your world we see this a lot, right? There's a lot of subreddits that are specific to fins and financial information. We're seeing a lot more public companies leaning into Reddit and trying to pay attention obviously at the Wall Street bets trying to pay attention to the conversations that are happening on Reddit. We've even seen folks that are actually hosting sessions on Reddit in a way to get a chance to engage with retail investors. So there's just a lot of rich interaction happening that I think is a huge opportunity for brands.
Katie Perry (18:05):
And real quick, let's clarify for people how the data is used because it's different than how a meta we use data in terms of ad targeting. When we're talking about social listing, we're talking about aggregate and anonymous to some degree collective insights that are being used to drive action, whether it's an idea for a new marketing campaign, a Super Bowl ad, something like that. Is that sort of how people should think about how data is positioned within your product versus maybe the standard sort of social media platform?
Ryan Barretto (18:38):
Yeah, I think that that's a really good framing of it. At the highest level, we do think about the data on the macro in giving really interesting insights about things that might be trending that are interesting to you. And so what that often means is for a lot of our customers, for example, actually I'll give you a great example. I was speaking to a president of a tools company a few weeks ago, and they're leveraging the social listening data because they really want to understand the voice of the customer, both their own customers and their competitors' customers and the way that they talk about their tools and they're specifically looking at new products that they've released and they're trying to figure out from the conversation that's happening, what is this sentiment behind it? Is it positive? Is it negative? When folks are complimenting the tool, what are they saying specifically?
(19:28)
What features of that tool stand out when they're criticizing it? What are the things that they dislike about it or they're having a challenge with and they're leveraging all this macro data to inform a point of view around the things that they want to do. So you're right, that is how we use the listening data compared to some of the networks. If I think about Facebook or an Instagram or YouTube or some of these other places where there might be places where you're marketing and you're pushing campaigns and customers might be commenting or engaging on those posts, oftentimes that's more of a one-to-one direct engagement versus the macro data behind it that might give you some really interesting insights that might change your behavior and your area of focus.
Katie Perry (20:10):
And it goes back to that saying, a brand is what people say about you when you're not in the room. And a lot of times on social, unless you're an airline and somebody's going in, it is kind of that moment where you're overhearing in aggregate and it could be very interesting. So thanks for clarifying that for us. Next. Redo that. So shifting back to company goals. In terms of goals, you all know to 1 billion annual revenue target in your latest earnings report, what do you think it's going to take to get there both within the walls of your company as well as in the industry at
Ryan Barretto (20:46):
Large? Yeah, we're really excited for us. We're just under 400 million in annual recurring revenue now, and that milestone of billion is the one that we put out there for 2028. There's a few things that we're thinking a lot about and working on executing against right now that the first thing that I'd highlight, we talked about it a little bit earlier, is just product leadership. We are a product led company and we take great pride in G two naming us as the number one software product for us. We want to lead with the product and continuing to develop the product matters a lot. Having something even as we add sophistication that's incredibly approachable and well-designed and elegant and intuitive matters a ton to us. So we continue to think about how do we do that in the areas that we're choosing to invest in. So you've seen us with the marketing side and now adding customer care and analytics and social listening and influencer and advocacy.
(21:41)
It's continuing to make sure we're going deep enough in those products so that we're really solving all the problems that customers need us to solve and looking for opportunities that might be on the fringe of the things that we do. So that's one piece from a product strategy perspective. The second one that we care deeply about is just a winning culture. And so for us, we've been very fortunate that over time what's differentiated our company has been that we've been an employer of choice. We're a values driven organization. We continue to have incredible scores in places like Glassdoor. I think our employees will tell you that the culture that we have at Sprout enables them to do their best work. And if you think about it, if you take great care of your employees, they're going to take great care of your customers. Those are the folks that are building the products every day.
(22:28)
The third piece that I'd highlight is the partner ecosystem opportunity for us for the longest time as we get started, especially as you're a small business, a small company, you're insular, right? You're building your products and you're trying to get to a stage where you've got product market fit and that you're driving a lot of success with customers. And over time, if you do a good job, you start to be in a place where you become interesting as a partner. And so for us today with 30,000 customers where we are very focused in on being the social platform for businesses, it's really clear what our goals are. And so we end up being a great partner for organizations that are thinking about how they get the full 360 degree view of their customer. So you think about places like CRM or marketing automation or help desk or BI tools Sprout and social media management fits so nicely within that whole equation. And so for us, leaning into the ecosystem is going to be really important. We have a partnership that's well known in the industry with Salesforce that we've been working on for the last couple of years, and that's a great example of the partnership at play where we've got deep product integrations that are really enabling our customers to get more value as they think about their CRM and their social media management. You
Austin Hankwitz (23:45):
Mentioned the product leading a lot of that. You also mentioned your culture, right? It seems like you guys have quite the culture of speed. I mean, you mentioned 150 product updates in 2023, which was up 25% year over year. How are you balancing sort of quality and speed in, I mean, how does all this come together with that long-term vision of a billion by 2028?
Ryan Barretto (24:09):
I think one thing that's really important is we have a belief that you can move fast and have great quality, and two things can be true. We definitely believe that. Now, what does that mean? It means that you have to have really great focus and you need to be very clear on your priorities. If you do that, you can root yourself of some of the noise that distracts and you can really deliver excellent products. So I think a big part of it for us is this idea that velocity matters. Moving with a bias for action matters and delivering high quality really matters. And I'll give a lot of credit to the way that the product's being architected. The majority of what we do as a single code base, we've been mostly organic through our 14 years in terms of building. And when you think about what we do, we are stitching together data from dozens of other platforms and we are putting it in a place that is one ui, one UX for our customer base and the speed in which we're able to do that because of the architecture allows us to update in one place for all 30,000 of our customers.
(25:22)
So when we release something like we did with TikTok, probably now this is probably a year and a half ago, we did it for all of our customers. The moment that TikTok gave us the green light to go live with that, and that's just so powerful. And That'ss not necessarily the case everywhere. So that's one of the things that's enabled us to move fast and deliver really high quality products.
Austin Hankwitz (25:42):
Well, staying on this sort of topic of this long-term goal here for 2028, I'm sure you're doing all you can, right Natalie, the groundwork so that you can continue to build upon your momentum. I saw that you've hired a new CMO and a new CTO. Is there any sort of what happened there? Can you tell us a little bit more about the new leadership change?
Ryan Barretto (26:04):
So our new CMO is Scott. We are incredibly excited to have Scott join us. Scott is coming in and he's taking over for Jamie. Jamie had been with us for five years. She's been my partner in growth for many years and she retired to spend more time with the family. I feel very, very lucky that as we were going through this, she worked with me for the last year to go find her successor. And so we had awesome opportunity to have her lead the CMO search and then to actually have a transition where she onboarded Scott for us. So that has just been an amazing opportunity for us. Scott's wonderful. He gets to build on the foundation that Jamie created. He was previously at Zendesk for five years, was interim CMO before he joined us. And then before that, I think it was 13 years at Adobe. So just really, really great SaaS and tech experience and he's selling to his peers. He's spending a lot of time serving the folks that have the exact same job as him. So he's been just a great addition to the team. And then our CTO is Alan Boyce and Alan was actually one of the first engineers at Sprout, so it's just a really, really close story. 14 years later, somebody
Katie Perry (27:26):
Wow, Alan.
Ryan Barretto (27:27):
Yeah, Alan's a man. Alan is a man. So he's just been a wonderful leader for us throughout the journey. So much of what we have built has been driven by Alan and his teams. And so it's just awesome to see him getting a chance to have even more impact at the company now
Austin Hankwitz (27:43):
That is very cool.
Katie Perry (27:45):
And also that ramp up ramp down on the CMO side just for folks at home, that is very rare, I would say, and to have that coordinative of a handoff. So really interesting insight just on the logistics of how that happened. Sometimes it's not that new coordinated and that's challenging as well.
Ryan Barretto (28:05):
Yeah, very grateful for Jamie's leadership and for her. And then I think this also speaks to, certainly to Jamie, but also this route culture. It was critically important for her to make sure that the team was in a fantastic place and that she left Sprout better than she found it and that she got a leader that was going to come on and help us go to the next level. So that was just a real blessing for us.
Austin Hankwitz (28:32):
That's awesome. Well, you dig into some client testimonials in your recent earnings report, you've got a bunch of awesome logos, fortune 10, fortune 100, fortune 500 companies here. I'm curious. AI kind of took us all by surprise, at least it took me by surprise in 2023. I didn't know we were that close to a chat GPT as sort of humanity here. You guys acted quickly, I think it was just in April of 23 you announced the AI sort of product integration and launch that you guys have done. And from the listening side perspective and just everything else, you guys are crushing it. How has AI transformed your relationships with some of your clients, right? I'm sure that there are some clients success stories around. Yeah, we were able to leverage artificial intelligence in such a way that got us a massive win or avoided a crisis. I feel like your AI tools are very sophisticated.
Ryan Barretto (29:23):
Thank you. It is funny because, and I am in the same boat as Hugh in that it came like a storm with AI
Austin Hankwitz (29:33):
Everywhere, right? Oh my gosh.
Ryan Barretto (29:34):
But the funny part about it, especially actually we were talking about Alan, if you talk to Alan about this, Alan will sticker about this because we've been doing AI and machine learning for years in the background. It just wasn't fancy to talk about it. It wasn't sexy to talk about it. But if I go back to something that's been really important for us is we have a ton of data and our ability to be able to leverage that data to make our customers better is a superpower. And so even going back in time, we had something, it was our viral post technology and it was proprietary. It's built off of machine learning. Essentially what it did is it allowed a brand to know exactly when the right time was to post for them. And that was based on their followers, it was based on their audience.
(30:24)
And it's funny, if you go onto social right now and you search best times to post on Instagram or TikTok or whatever, it's one of the most popular pieces of content. But the reality is anybody who's close enough to this knows there isn't a generalized answer even for a vertical. It's all very specific to who your audience is for the actual best time to post. And so we built in through machine learning this proprietary technology that allowed each brand to be able to select that for themselves. Great example of getting way more value and getting better engagement when you're leveraging the AI built within the platform. We've added onto that our AI assist products, and there's three areas that are probably really the most interesting for customers today. Number one, from a content creation perspective, and we're probably all feeling this a little bit ourselves, right?
(31:12)
Instead of taking the blank canvas, you have the ability to leverage the AI to help you in crafting, and it's going to get smarter over time from a brand perspective. More and more as you're creating content, it will be helping you write in your own voice. And then from a customer care perspective, responding to customers. We know, especially in high volume call centers, there's so much that's coming in and a lot of the answers are pretty close. And so if AI can help you in getting an answer faster and making sure that it's aligned to the right answer, you can really speed up your time to serve your customer base. And then the last one I'll give you is the amount of data that we have. The idea of summarizing data for folks is really, really valuable. And you think about the idea, especially in social listening of having all of this data, if the AI can actually give you some of the headlines, some of the bullet points and the things that you should be looking out for, instead of having to rely just on an analyst, you're so much faster to being able to actually take action on that data.
(32:18)
So those are all things that are either live in the product right now or on the roadmap, but we're getting great feedback from customers because they're able to create content faster, able to respond to customers faster, and they're able to act faster with the data that they have.
Katie Perry (32:31):
And it seems like a lot of what you're building towards is not only aggregating all of these work streams, but how to make it actionable. And as ai, it started as there was an AI Drake song, and now to your point, we're all talking about operational efficiencies and the more serious stuff, but it seems like it is all about, at the end of the day, how do you drill into what data matters, separating the signal from the noise and how you can play a role in that for customers so then they can actually use it to make tangible business decisions.
Ryan Barretto (33:07):
Yeah, I totally agree with you. The way that we think about this is AI should operate in the background of everything that you do so that it just becomes part of your workflow. So if you're in content creation and you're a marketer, it's just this tool that turbo boosts your ability to be productive and create great content that's going to resonate with your audience. If you're a customer care agent, you now all of a sudden it can double the amount of customers that you're able to touch in a helpful way because the AI is supporting you. If you're responsible for analyzing all this data, how do these insights jump off the page so you can move quicker to, okay, great. Actually, what I'm seeing here is we have to change this on our product and it's clear from the feedback we're getting from social listening, I need to get that over to the product team to make sure that they're really clear on this feature that needs to be added. So you're right, it's all about how do we do this, but in the context of the workflow that people have today. Well,
Austin Hankwitz (34:06):
Speaking of new products and all that fun stuff, let's talk about Tagger, right? I'm a content creator. I have a profile I think on Tagger somewhere. I don't know what it might say about me, but I think I'm on there somewhere. You guys mentioned that your goal is a hundred million a year in a R for Tagger as a business segment here. Can you talk more about this and what you're doing now to help catalyze some of that growth?
Ryan Barretto (34:27):
Yeah, we had been looking at this space for a little while and what we had seen as brands were really intrigued by the opportunities here. And you've always got the folks that move faster here and they're testing, and I'm sure the two of you have had a chance to work with some of those brands in the past and really smart. They have these awesome opportunities in front of them where there's really credible people who have incredible knowledge that can help a brand. And so what we saw from these brands that we were talking to is the idea of influencer and creator was a massive opportunity, but it was so manual. How do I figure out who the right creators are for my brand that actually have overlap with my audience? If I can even find them, how do I actually connect with them? How do I actually try and figure out is a way to work with them?
(35:22)
How do I pay them if I'm able to do any of those things, how do I actually measure and see if this is working? And so when we looked at all those and we started to look at the software that was in the market, tiger just jumped off the page as one where they were similar to us product led software first, and we saw great feedback from creators and brands on the platform. And so a lot of it for us right now is we've got 30,000 customers and we want to make sure that we're bringing this solution to them and we're enabling them to be able to actually go out and build a creator strategy and then execute against it. We're seeing a couple of things in the market. We're seeing that early adopters are doing this in a very manual way. Literally we're talking about spreadsheets.
(36:06)
They've got spreadsheets of creators, they're trying to keep track of 'em, they're sharing them on a Google, they're trying to keep track of the posts and the campaigns and they're trying to measure performance, but it's all very manual and so clearly it can help them. And then we get a bunch of folks who really want to do more with creator and they didn't know how to get started. And so our platform can help them build out the strategy and then execute against it. And so it's this combination of enabling the marketplace and our customer base and then making sure that our team is excellent at being able to help customers see where this product can fit into their strategy. And
Austin Hankwitz (36:40):
Just as a quick follow up to that a hundred million dollars goal, where are you on that? I mean, I don't know if this is public information or not. I didn't read it. Where are you guys on that sort of trajectory right now?
Ryan Barretto (36:50):
Yeah, it's not disclosed information today. I'd say they're a small business when we bought them. We're early stages right now, but when we look at the 30,000 customers, when we look at the 30% attach rate, when we look at their ACVs or three to four x, our average A CV, there's a tremendous opportunity for us here.
Katie Perry (37:12):
Is this thesis also somewhat similar to the core product in that this is a space that's maturing, therefore measurement is needing to evolve and better measurement seems to benefit both the creators who can then use the data and insights to make sure that they're getting the best rates, the Austins of the world, but also on the brand side, being able to justify this kind of spend moving away from sort of a vibes based decision into something where you're like, this person did this henceforth X, Y, Z business impact. And that seems to be kind of like how the core product evolved. Is that how you see Tagger evolving as well?
Ryan Barretto (37:49):
Yeah, you nailed it. We see it being both sides of the equation. I think this is an amazing opportunity clearly for brands to be able to find work with creators and then actually see what's working. And we're seeing in many cases, they're supplementing this with the traditional paid spend that they had, and it's been a huge opportunity. We're seeing a lot of actually similar to the comment that you made where they were hiring celebrity influencers or endorsers and it was sort of a gut vibe feel of this person has a really big following. If we just get them to talk about our products or services, this will be good for our brand. But the ROI on those have tended to be not very good. And oftentimes the folks that you're hiring have an amazing brand, but it has nothing to do with what you do.
(38:42)
And so there's no authenticity behind it. And so we're seeing that those folks are looking at it and saying, Hey, this is a great opportunity. I was actually at an event last year in Atlanta and there was an organization just sharing with me that their CEO had decided to hire someone from e-gaming as a celebrity influencer for them. And the social team were sitting there going, we know we're spending seven figures on this and is literally making no impact on our business right now. But it was like a vibe and a feeling. This person aligned to their business model. And so we had this amazing opportunity now with data and analytics to help those teams actually get better returns and be really efficient with their spends. And then on the other side, we do think that a huge part of our success is making creators more successful.
(39:30)
What we want to create tools that allow them to clearly see the value and impact of their work, to have them have a better understanding of what they can be asking for within the marketplace from a compensation perspective, and to help them see what are the right brands given the brand affinity that they have and the topics that they talk about, who are the brands that make the most sense for them to be connected with? So having both sides in the marketplace and helping both brands and creators is going to be a big part of our story.
Katie Perry (39:59):
By the way, Austin's campaigns always have great ROI. I've been on the other side of them, just got to plug that. Oh,
Austin Hankwitz (40:05):
Great, Katie, let's go. I'm going to talk more about that, I'm sure over beer sometime soon here in Nashville. But no, my follow-up question here for you was around the data, right? You guys are sitting on a lot of data. Do you have any weird insights that you've seen over the last several months or quarters now as it relates to some of these creator integrations or just any interesting data points that you're like, oh my God, that really surprised me considering this industry or really surprised me considering the product?
Ryan Barretto (40:31):
I think the biggest thing that we have seen and we've spent time with brands on is oftentimes there's creators that offer a huge opportunity that they would never think about. And so we've seen organizations where there's, you think about straight down the middle of folks that could be really interesting for you. For example, we are working with a sporting goods company and in that sporting goods company, they're thinking a lot about just really big athletes. But then when they start to dig in and they start to look at from a geography perspective and they start to think about beyond just the professional leagues, there's folks that are perhaps just really big in the community and they could be coaches in the community. There's just a lot of brand affinities that exist that aren't what you would normally think about that have overlap with your audience. And so seeing more of that, I think that part is the part that's probably the most exciting is when you spend time with a brand and you highlight different influencers or creators that they would never have looked for on their own but have perfect overlap to their audience. And by the way, oftentimes what happens there is the cost to go work with those creators is much less than the cost of the traditional path where all of your competitors are going down the same road trying to do the same thing.
Katie Perry (41:57):
I think the athletes is such a good example for helping people think about this. And I think about if you took a list of the most popular NBA players without a layer of data onto the personalities of these athletes, and you really see their personalities in the league, I think of a Luca, and then I think of the social layer adds this piece where it's almost a very unique insight to see the nuances and how people interact and experience the athlete just based on what's going on in social. And I think for everyone, that's probably a good way to frame up how to think about that next layer and what it can kind of uncover.
Ryan Barretto (42:39):
Yeah, I totally agree with you. You made me also just think about Stanley, like the Stanley mugs as an example. So their customer of ours, and I just didn't think of it. There you go. Yeah. Wow. My daughter, Isla would be very proud of you. She walks around with a mug that's bigger than her
Austin Hankwitz (42:58):
One's bigger than my head for sure,
Ryan Barretto (42:59):
But I think about them and I think about the fact that they leaned in to these moms groups that were really into their products and they started leaning into feedback happening within their community and in social and understanding the different color palettes and the things that people are looking for. And obviously there's so much signal that exists there that you might not normally think about as a venue, but oftentimes there's just so much untapped opportunity when you can lean in there.
Katie Perry (43:31):
So cool.
Austin Hankwitz (43:32):
Couldn't agree more. So let's wrap up this interview with two more questions, one from myself and one from Katie. My question is, did anything change for your company after Elon bought Twitter? Did y'all have to scramble and find some new APIs or just figure have a new contact at Twitter after they got fired from Elon? What happened?
Ryan Barretto (43:53):
Yeah, I mean, I think for most people in the industry, there was a lot of watching and seeing what was going to transpire for us. We were definitely on high alert to make sure that we understood everything that was evolving. Certainly our work with the social networks is the lifeblood of our organization and our customers count on us to have deep relationships and deep integrations, so we're paying very, very close attention. For us, we consider it a competitive advantage. One of the things that Elon and X really did is they got very focused in on the key partners that they were going to be working with, that they were going to be investing in, and that they really wanted to reduce the long tail of partners that were not productive for them. So Sprouts sitting at 30,000 customers where those are the brands that advertise, those are the organizations that spend a lot of time on the platform. Those are our customers. So for us, it was definitely one of those things. We're paying close attention and we're grateful that the partnerships continue to grow and evolve, and we shared more about just our renewed partnership with them this past summer. So that has been a place that we continue to see as a competitive advantage for us. Very
Katie Perry (45:02):
Cool, man. Very cool. My question for you, Ryan, is the societal conversations around social media similar to ai, is it good, is it bad? Is it the end of the world? Is it the start of something beautiful and amazing? As someone who's operating deeply in this space, when you hear concerns like election interference and things of that nature, what are you most concerned about as someone who's building in this space and also what are you most optimistic about?
Ryan Barretto (45:32):
Yeah, I think for us, the way that we view our responsibility is one, we're working with brands For us. We really believe that having the networks well lit and having strong safety protocols built into the platforms and having these be a healthy place for conversation is all really positive. And our work is really focused in on that. Our work is focused in on helping brands connect with their customers, and that might be in marketing to them, it might be a lot of times now, and just taking care of them from a customer service perspective. And so we think about those elements of how do we ensure that as we're partnering with folks, that we're seeing those things and that the work that they're doing there cascades down through the work that we do with our brands and that we're bringing those point of views back to our customers as we're learning how the social networks are addressing some of these things.
(46:31)
What can we share with our customer base? Certainly with the elections, that is something that I think everyone is paying close attention to. Certainly governments are going to need to pay close attention to. Social networks are going to need to continue to really invest and make sure that their strategies are up to speed to protect democracies. I think I read a status, we're going to have 244 elections worldwide this year, which is going to be the most we've ever had in the next 24 years. And so it sounds like a disaster. Yes. Even outside the us, right? It's happening everywhere. And I've been reading a little bit about what the networks are working on, and they're building in protocols like removing the ability to do ads close to the election. They're tagging things that have been created by ai. So there's work that's going in, and I think that you continue to need to make sure that the investments are really there and that you're continuing to find ways to limit disinformation.
(47:34)
So I think those parts are going to be really important from a healthy and productive side of the equation. And I think about this personally as well. I've got so much value from the folks that I follow on social. I mean, obviously you two provide a lot of amazing advice and information for folks that want to understand about investing in finance. From my standpoint, I lean in pretty heavily. I'm a parent of two daughters and one of my daughters has a DHD, and I get so much information. My wife and I are always sharing stories about things that we've picked up on social that allow us to be better parents. And so I think so much of this is also dictated by what you're doing on social and what you're trying to get, and we're seeing audiences going to social now for news and information and education, and I think that is a really positive part of the work that we're doing.
Katie Perry (48:27):
Love that.
Austin Hankwitz (48:28):
Ryan, what an awesome conversation, man. We really appreciate you joining us here on the After Earnings podcast. I really, really appreciated you walking through the roadmap, the products, the ai. I mean, there's so much that I learned during this conversation, so hopefully we'll have you back again very soon. Definitely when you guys hit that $1 billion mark in 2028, but hopefully before that, right,
Ryan Barretto (48:51):
I would love to be there. And maybe we'll do it at the Garth Brooks bar.
Austin Hankwitz (48:55):
Yes, that is right. We will record our next episode together at the Garth Brooks Bar on Broadway. Thanks so much, Ryan.
Ryan Barretto (49:03):
Alright. Thanks so much.
Austin Hankwitz (49:04):
What a guy. I mean, that guy was an absolute killer. Seemed like he knew all his numbers, all his figures. What was your standout moment for that interview?
Katie Perry (49:13):
Very cool background. I must just get that out of the way. He had a very sick background on his Zoom, so if you're not able to see that, head over to YouTube and check that out. I really loved how he articulated the culture of the company. We talked about speed of shipping product and how integral that is to their business, and also a people first point of view. In fact, sprout has been named a best place to work on Glassdoor for several years, and if you've ever seen Glassdoor, you know how difficult that can be. So I thought that was super fascinating and exciting to hear that layer of the business on top of the financials.
Austin Hankwitz (49:50):
Yeah, I totally agree. I've never started a company that ended up on Glassdoor, but seems pretty hard to keep employees, especially the disgruntled ones from writing bad things on there. So yeah, shout out to Sprout. From my perspective, I can really appreciate how they sort of transformed as a business over the years. This was started back in 20 10, 20 11, I think, and they started rocking and rolling. Things were going great. They were very much focused on product-led marketing, small businesses where their bread and butter, and then they said, wait a second, we might not make as much money as we thought. If we only focus on these customers, there are customers like large enterprises that really want to double down and focus entirely on social. Let's take a year, AKA 2023, have that sort of be a transformation year for us and kind of move away from catering the product to be every single thing for a small business, but instead really build the product for the enterprises that are investing in social. I thought the way he articulated that, especially how he sort of walked through that transformation to Wall Street other shareholders, was very interesting. What a great guy and a great interview
Katie Perry (50:56):
Land and expand over at Sprout. I'm Katie Perry.
Austin Hankwitz (51:01):
And I'm Austin Hankwitz.
Katie Perry (51:02):
And this was the After earnings podcast brought to you by Stakeholder Labs in Morning Brew.
