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A billion valuation, barely any revenue
Revenue at that point was somewhere around $2 million to $5 million, and the founder does not remember exactly. The valuation was north of a billion dollars, which he calls extreme.
Glean never went out to raise except for its first round. Investors came in through relationships built up over time, and one of them became the de facto choice to put the money in.
The company treated the round as a statement to prospective employees. It wanted the market to understand it was building something special, and the valuation gave that validation.
Investor names matter to candidates. With a firm like Kleiner Perkins, DST, or Sequoia behind a company, great candidates suddenly want to talk, because an investor's reputation directly impacts the company's reputation.
Why do investor names matter to job candidates?
Economist Michael Spence won a Nobel Prize in 2001 for work on signaling, which shows how people use visible markers to judge things they cannot check directly. A young company has little track record, so a candidate reads its backers as evidence that experienced professionals examined it closely. The signal also helps in the other direction, because well-known firms tend to be shown more deals. Candidates, customers, and later investors all use it.
How can a valuation run far ahead of revenue?
Venture investors price a company on expected future growth instead of current sales. The valuation is set by multiplying the price paid per share in the round by the total number of shares. A high price per share in an early round reflects a bet that revenue will grow many times over. If growth falls short, later rounds can price the company lower.
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