How Klean Leads Reached $20K MRR with 22% Monthly Churn and a Twitter-Driven Funnel (Interview with Founder Daniel Fazio)

Introduction and What Klean Leads Does

Nathan Latka

00:00Hey, folks. My guest today is Daniel Fazio. He's built an Instagram agency by sending cold emails and then transitioned into an agency that sent cold emails for other people, made a cold email course, and then made software apps for those who bought the course and other cold emailers. Daniel, you ready to take us to the top?

Daniel Fazio

00:16>> Yeah, man. I got you.

Nathan Latka

00:17Alright. So the software tool that you've built inside of this smart distribution system is called Klean Leads with a K, kleanleads.com. Help us understand if people pay you that SaaS fee, what are they getting?

Product Overview: Chrome Extension and Domain Scraping Tools

Daniel Fazio

00:27>> So what happens with Klean Leads is a whole bunch of tools, and the most important one is a Chrome extension that lets you scrape emails from any kind of LinkedIn search. It works on normal LinkedIn, works on Sales Navigator, so any of that. That's really the main tool of it. There's another tool that's extremely useful in that you can take a list of domains and select particular job titles that you want to scrape emails from. Say

00:50>> you have like a thousand domains that you wanna find the direct decision makers of. Plug that in, choose the exact strings of the job titles you want, founder, CEO, owner, Spit it out, click it in, and then bam, there you go. Like, just spits out the whole CSV.

Nathan Latka

01:04How have you set up sort of a server infrastructure to be able to scrape LinkedIn in this way without setting off their internal red flags?

White-Label Infrastructure: SellSaaS Partnership

Daniel Fazio

01:11>> So Klean Leads is a white label, and then Contact Ecom is pre built. Like, not pre built. We made contact we made Contact Ecom, and then we're also coming out with a mailing app, and we're making that ourselves too.

Nathan Latka

01:24Okay. To answer the question, my question is how are you pulling leads and information off LinkedIn without setting off LinkedIn? I mean, they they probably talk about they don't want people doing this. So when people are doing it, great. If you figure out a good way to do it, wonderful. But how are you doing it?

Daniel Fazio

01:37>> I have no control of the infrastructure of Klean Leads. Have no idea how it does it, just straight white label.

Nathan Latka

01:43Oh, got it. You bought someone else's software and you white label it?

Daniel Fazio

01:46>> Yep. Exactly.

Nathan Latka

01:47Oh, I see. Got it. Got it. Who are you white labeling? SellSaaS. Salessas.com. SellSaaS. Spell it.

Daniel Fazio

01:56>> S e l l s a

Nathan Latka

01:59a s. SellSaaS.com. Got it. So this is yeah. I've heard of these guys. This is basically they they will if you don't if you're a great marketer and you love the SaaS business model but don't want an engineering team, they'll give you a tool to go sell and that's what you're doing.

Daniel Fazio

02:12>> Yeah. But the only problem with that is your sale value is gonna be a lot lower.

Nathan Latka

02:15Way lower. Yeah. Because you don't because you don't but you could if you get enough, you know, commission revenue take eventually invest and just create your own replica to to this. Right? You sort of de risked launching a SaaS company. So let's talk about what I think you're probably really good at, which is distribution. How did you get your first 10 customers on Klean Leads?

First Customers: Leveraging Twitter and the Course

Daniel Fazio

02:32>> Yeah. So this was super easy because I built this Twitter account with 34,000 followers and I had a course. But what was happening was I was referring people out to other software apps that I didn't own. So I was like, why am I doing this? I could just make these SaaS myself. So I've been going down the line using the scrape emails, different kinds of niches to scrape emails, send emails. So just going down the line

02:49>> and picking up every single function of the entire cold email system.

Nathan Latka

02:55When did you launch? When did you get your first paying customer on Klean Leads?

Daniel Fazio

02:58>> That was in December.

Nathan Latka

03:00Okay, got it. So just it's, you know, 2020, but you know, that was at six, seven, eight months ago, basically. Mhmm. Okay. And, what are you doing today in terms of monthly recurring revenue?

MRR and Churn Numbers

Daniel Fazio

03:10>> Right about 20,000 MRR.

Nathan Latka

03:12Okay. Wow. So nothing to 20,000. Now I imagine churn is crazy high on something like this. What is your churn?

Daniel Fazio

03:18>> Yeah. Churn's at about 22%. Mhmm.

Nathan Latka

03:22And so what are your thoughts on that? Are you actively trying to decrease it?

Reducing Churn with Personalized Loom Onboarding

Daniel Fazio

03:26>> Yeah. So what I've been really focusing on is trial conversion. So we did this thing that I that's been working extremely well to increase trial conversions. And every time someone signs up, I have an account manager and he sends them an email. He says, hey. What are you trying to scrape? I'm gonna show you how to do it. So they'll come back with a niche. And what he'll do is he'll make a Loom video showing exactly

03:42>> how to do it. So that's increased trial conversion, like, a lot from 20% to 40%, something like that.

Nathan Latka

03:50And when you say 22% churn, that's monthly churn?

Daniel Fazio

03:53>> Yep.

Nathan Latka

03:54So you'll circle through your whole customer base basically every five months.

Daniel Fazio

03:58>> Mhmm. Yep.

Nathan Latka

03:59For the ones that when you sort by the ones that are sticky, that have paid you for more than four or five months, what are the patterns you see in that cohort?

Daniel Fazio

04:06>> Well, what I've been doing is I recently integrated Hyros. You know what Hyros is? Adult. Yeah. So Hyros is an ad tracking platform, and it lets you look at the LTV of all your customers and every single product they bought from you.

Nathan Latka

04:17You spell it? So what I like

Daniel Fazio

04:19>> h y r o s. It's owned by Alex Becker. So now what I can do is see, okay, you bought my course here, and then you bought this software app this many days after you bought the course. And then you bought this one, and then you bought this one, you could basically see the whole journey of each customer. Mhmm.

Nathan Latka

04:34Okay. Got it. So you're using Hyros. I see Alex's ads all over the place on YouTube. I did not know he was getting into the SaaS space, so this is kind of cool to discover. How did you get those first 100 customer? You said it was easy. I had 34,000 people on Twitter. Okay. That's not easy. Right? So like how did you build the audience on Twitter?

Daniel Fazio

04:51>> Alright. So Twitter is really interesting in that. So you start out with zero followers. Your first function is to do Russell Brunson's little Dream 100 thing. You need to post a lot of value, have threads, make a giant pinned thread on your profile just give an absolute ton of value. And now what you're doing is you're finding other big accounts that also post value and you're liking their stuff and you're commenting on their stuff and you're

05:12>> retweeting them and you're sending them a DM occasionally and you're trying to make friends with them. Because what happens is they start interacting with you back and then their followers see it and then you start growing and it compounds.

Nathan Latka

05:23And so what is your account on on Twitter? What's your name?

Daniel Fazio

05:27>> It's black hat wizard with two d's.

Nathan Latka

05:30Got it. Okay. Got it. Wizard. Cool. So so you use this and this is where once you signed the deal with SellSaaS and got Klean Leads set up, what did you do? How did did you tweet something? Was it an email blast? What?

Daniel Fazio

05:43>> No. So what happened was I just put it in the course. So as you're as you're getting the the course buyers and they're going through the course, then they'll receive, oh, you have to use Klean Leads to do this.

Cold Email Mastery Course: $500K in Sales

Nathan Latka

05:53And so let's go now into the course. Right? So how much does the course cost?

Daniel Fazio

05:57>> Course is $215.

Nathan Latka

05:59And when did you launch the course?

Daniel Fazio

06:01>> In May of last year, so it's been about a year.

Nathan Latka

06:04Okay. And how much total sales?

Daniel Fazio

06:07>> Just over 500,000.

Nathan Latka

06:08Okay. 500 k there. And how much of that do you pay back out to affiliates to drive traffic?

Daniel Fazio

06:14>> Affiliates aren't really a huge part of it. It's primarily all driven by me. So it might be like it's probably like 10% of total sales or something to affiliates.

Nathan Latka

06:22Okay. What was your cost on the revenue? Are you running ads or how did you sign up? How did you have 1,000,000 in sales?

Course Sales Driven Entirely by Twitter

Daniel Fazio

06:28>> No. No ads. That's entirely from Twitter. All 500,000 of that is from Twitter.

Nathan Latka

06:33Okay. People won't believe you when they hear you say that. Be more specific. More specific. Otherwise, are gonna go, this guy is full of shit. I don't believe these numbers.

Daniel Fazio

06:42>> Okay. If you go if you there's this guy in Gumroad, top course seller named Chris Johnson. He posts his sales numbers. If someone doesn't believe me, people don't understand the the sheer buying power that people have on Twitter. This guy makes $200,000 a month from his courses. I've made 500,000. And it dude, 34,000 people on Twitter, you only need so you get 3,000 of them to buy your course. That's a ton of money. That's that's not

07:09>> an unrealistic activity.

Nathan Latka

07:10I'm scrolling through your Twitter right now and I do not see you posting your sales metrics anywhere with a screenshot. Why haven't you done that?

Daniel Fazio

07:17>> I feel like that's kind of a scummy way to get sales for it and this is the first time I've ever actually revealed the amount of money the course has made.

Nathan Latka

07:27And and why is that scummy? You've retweeted other people posting their screenshots of their sales revenue like you did with Twitter user j underscore alexander ninety six called who?

Daniel Fazio

07:37>> Would you like me to send you a screenshot of my

Nathan Latka

07:41No. But I wanna understand how you drove the revenue because I don't believe you just put up a tweet and it came out. I think you're doing some very tactical things that I wanna learn. So so how did you actually drive those sales?

Testimonial Flywheel as the Core Sales Driver

Daniel Fazio

07:51>> Okay. So here's what happens. When you say you get a course buyer. Right, some amount of people are buying your course. And now what drives all of the sales are testimonials exactly like what you saw right there. Like I just retweeted that guy and he posted his revenue that he made. So what happens is you need to get all these testimonials and just pump them out. So what you do is you email your list and be

08:12>> like, hey, if you've got success from this course, could you please post a testimonial in exchange? I'll give you something of value. Whether that be like a consulting call or another course for free, And then people you have this flow of testimonials and you keep retweeting them over and over and over again. Now you leave your course link in the bio of your Twitter.

Nathan Latka

08:30So got it. So just to be clear, most of the sales, all the sales that you've gotten, the 500,000, if I put that Bitly link in your Twitter profile, it's called Cold Email Mastery on Gumroad. You have a bunch of different pricing plans. They've all come through here. Is that right?

Daniel Fazio

08:43>> Yep.

Nathan Latka

08:44Okay. Got it. And explain to me how you structure the pricing. 215 for Cold Email Mastery. You add on some scraping emails from Instagram. Now

08:50it's $285 and then you upsell from there.

Daniel Fazio

08:53>> Yep. So it used to be just an ebook. It was like 30 something dollars and the whole function of it was to get agency clients for done for you cold email. And then what happened was people were buying it just to do it themselves, which is fine. And then they had questions about particular things, hey, how do you do this? So I add a video and then raise the price, then add a video and raise the

09:13>> price, add a video, raise the prices, keep going over and over and over again.

Nathan Latka

09:16Yep. And so how many total people have bought?

Daniel Fazio

09:19>> Just over 4,000.

Nathan Latka

09:20Okay. Over 4,000. Interesting. I mean this is mean clearly you must understand that this is unique and interesting especially for SaaS founders that maybe don't understand the marketing. They're going this guy use Twitter account to get 500k of sales and 4,000 people purchasing. Just to be clear, you did not spend any money on ads driving traffic to this page?

Daniel Fazio

09:39>> Only retargeting ads and that's at $10 a day. And I didn't start doing that until three months

Nathan Latka

09:45Does Gumroad let you where are you pixeling the user?

Daniel Fazio

09:48>> In Gumroad, you can go to the settings in advanced then you can put a Facebook pixel and Google Analytics tag.

Nathan Latka

09:53I didn't know that. Okay. So Gumroad enables you to cookie the user?

Daniel Fazio

09:56>> Mhmm.

Nathan Latka

09:57Okay. Why only $10 on retargeting? I imagine there's room to scale that and still get a positive return on ad spend.

Daniel Fazio

10:03>> Yeah. But the sixty day the amount of people you can pixel now with iOS 14, it's not a lot. So it might be like, oh, I can get an audience of 3,000 and then the frequency is gonna be at like seven a week or something like that.

Nathan Latka

10:15So you

Daniel Fazio

10:16>> don't wanna make the frequency too high because then it's annoying people.

Nathan Latka

10:18Yep. And you really increase the pricing of this. Because if I take 4,000 sales divided into 500,000, that's an average ticket price of about a $125. There's nothing near that right now on the pricing, so you drastically increase these prices.

Daniel Fazio

10:30>> Yeah. Absolutely.

Nathan Latka

10:31What did you start at? What was the cheapest option at the start?

Daniel Fazio

10:33>> It was like $30. Something like that.

Nathan Latka

10:36Okay. So look, I like this, right? I mean, is a little approach of like, you're not paying for distribution, you've actually made a business out of the distribution channel. So what is the point where you say, okay, I'm now introducing Klean Leads, I'm introducing a software product?

Daniel Fazio

10:48>> So this is this is at this point, I was sitting here in like December and I was like, you're referring out all of these people to these other companies and they might give you really shitty affiliate deals. And I've structured this entire funnel just like Russell Brunson. So So it's like I said, Russell Brunson early with the Dream 100. I'm just doing exactly what he does.

Nathan Latka

11:07Okay. The the Dream 100 as described in his books is you go follow the top 100 people in your space on Twitter, Instagram, LinkedIn, wherever you wanna build an audience. You engage with them to build audience. That doesn't answer the question of where in your sales process after you sell a course do you introduce the paywall to go purchase the software?

Daniel Fazio

11:22>> Okay. So it's videos in the course and they might organically go to it and then I send emails after basically saying like, hey, here's all the resources that are in the course.

Nathan Latka

11:31I see. Okay. And how many folks are on your email list today?

Daniel Fazio

11:35>> That's just over four it's like 4,400 or something.

Nathan Latka

11:374,400. Okay. So just basically the sales?

Daniel Fazio

11:40>> No. Yeah. Don't like I don't like getting I don't like giving like free stuff and getting getting like a free lead magnet or something because then you have an email list of people who don't buy anything. Like if you're gonna if you're gonna make some kind of magnet, and it's like you might as well like make it like $5 because now you know they're buyers.

Nathan Latka

11:54Are you doing any cold emailing using your own tool to sell your own course?

Daniel Fazio

11:58>> What's that?

Nathan Latka

11:59Are you doing any cold emailing to sell your own course?

Daniel Fazio

12:02>> No, no. That's a strange way. The only thing you should send cold emails for is if you're selling some kind of high ticket B2B service. That's the only reason you should send cold emails.

Nathan Latka

12:10Interesting. Okay. Very cool. What are you more I mean, talk to me guys in a month. Right? So we know what you're doing on the SaaS side in a month, about $20k in MRR. What will you do in the next thirty days or what did you do in the last thirty days on course sales?

Daniel Fazio

12:22>> The last thirty days, the course has done like

12:26>> 20, 24,000. Now the next step is coming out with the mailing app and I've been working on that for like four months.

Nathan Latka

12:32You mean like Mailchimp or ActiveCampaign?

Daniel Fazio

12:34>> No, like Mailshake or Lemlist. So a tool specifically, email tool specifically for cold email. Mhmm.

Nathan Latka

12:42What is and Klean Leads, Klean Leads is not built into that?

Daniel Fazio

12:46>> No. No. Klean Leads is just for scraping emails and so is Contact Ecom.

Nathan Latka

12:50So when are you gonna hire your first developer so you can own more of the economics? Right? Build your own thing that you own a 100% of and build real valuation or, you know, real enterprise value.

Daniel Fazio

12:59>> Yeah. So I have a CTO and he just manages the dev team. So he owns 30% of Contact Ecom. He's gonna own 30% of the mailing app as well. And then he manages the whole dev team and I just do the marketing.

Nathan Latka

13:09How many people are working I mean, you don't need a dev team on Klean Leads. Correct? Because it's No. White labeled. So where is the developer where are the developers spending time right now?

Daniel Fazio

13:17>> They're all working on the mailing app right now and there's I think there's five of them right now.

Nathan Latka

13:22Okay. Will will the mailing app replace Klean Leads?

Daniel Fazio

13:26>> No. No. The mailing app is just for sending emails. So it's like a whole vertically integrated ecosystem of cold email stuff.

SellSaaS Fee and Customer Count

Nathan Latka

13:32Yeah. No. I understand that. But one of the parts of that ecosystem you do not own. I'm wondering why you didn't rebuild that first before building the mail sending tool.

Daniel Fazio

13:43>> Which part? Which part are you talking about?

Nathan Latka

13:46What do you pay SellSaaS to white label Klean Leads?

Daniel Fazio

13:49>> Oh, 20 percent.

Nathan Latka

13:51Okay. That's my point. Right? There's 20% margin there on all those sales. Right? So $20k a month in revenue there, 10% is two. So there's $4k a month in revenue that you could claim back if you built your own tech that replicated Klean Leads or the the version from SellSaaS? I'm wondering why you're not doing that first.

Daniel Fazio

14:05>> That's just sheer mental capacity. It just takes time. So like for instance, have this whole dev team working on working on the mailing app and it's like that's just what we're gonna focus on. Right.

Nathan Latka

14:13Yep. Does SellSaaS not have a mailing app that you can white label to?

Daniel Fazio

14:16>> No. They do, but it sucks. I hate it. It's absolutely miserable. So if you send cold emails, there's a very particular way it needs to be set up. And the one they have is just dumb, like it sucks.

Nathan Latka

14:26Interesting. Okay. So $20,000 in MRR, and how many customers are on the just SaaS platform right now?

Daniel Fazio

14:34>> Klean Leads 2200 something, Contact Ecom has like I think it's close to 200.

Nathan Latka

14:40Okay. So 200 customers paying about a $100 a month is where $20,000 a month via Klean Leads revenue comes from. Mhmm. Okay. And we already talked about churn numbers. Now have you done all those bootstrapped with course revenue? You just reinvest it?

Bootstrapped and Building the Mailing App

Daniel Fazio

14:51>> Yeah. All of this is bootstrapped. Absolutely

14:53>> all That's of great.

Nathan Latka

14:54Love that. And how old are you?

Daniel Fazio

14:56>> I'm 23.

Nathan Latka

14:57What do your parents think? They love this stuff?

Daniel Fazio

14:59>> They think it's really interesting. I was always selling stuff when I was a kid too, so it's just the natural progression of

Nathan Latka

15:05what what That is does not I can just feel your hustle on it. That does not surprise me at all. Got it. Okay. Cool. So you're building the additional application. We've understand this business. You're pouring on the course profits back into the new dev team. What anything else that I should have asked that I haven't already?

Advice for SaaS Founders: Course as Front-End Funnel

Daniel Fazio

15:25>> In terms of other SaaS founders growing their SaaS, I feel like a lot of them will spend an absolute ton of time making these giant support articles and all these videos when you guys could just package this up in a course and use that as your front end offer and then maybe break even, say, it's like a $50 course, you get $50 purchases. Now that you just paid for your ad spend, now you get free users. I

Nathan Latka

15:43>> don't

15:43know why no one else does that.

Daniel Fazio

15:44>> That's what Russell Brunson does. So just copy that. It works.

Nathan Latka

15:48Let me ask you another question.

15:51If you add up all of the refunds you've processed in the past year, what's just the total number of refunds on the course?

Daniel Fazio

15:58>> It's got it's it's extremely low. It doesn't happen a lot. And I give refunds for absolutely any reason. So I'll say, like, I'll say on the page, sixty day refund if you don't get a sale. But if someone asks for any reason whatsoever, I'm just gonna do it. And that's for every single product that happens. What'll happen is you don't give someone a refund, they might get mad at you and then they hate you and it's

16:16>> just like bad energy. So if someone asks for a refund, it's like, here's a refund, bro.

Nathan Latka

16:20Yeah. Yeah. And then are you having to go in and update this course like every month with new content to keep keep it fresh?

Daniel Fazio

16:27>> Yeah. Yeah. All the time. I always gotta go and change back pages. And that's the annoying thing about having a course. And then I'll have other people come on too and talk about their tactics.

Nathan Latka

16:33So let me I mean look, I'm just gonna post them here. Guillaume already has a great community at Lemlist. You've got Soojin with three kiddos running around down here in Austin and beautiful cars in Mailshake. He does not have a strong community as Lemlist. Why don't you just approach Sujin and say, let me basically run community, but I'm gonna get great economics. I'm gonna bring in basically my course into you, these tools into you and

16:55go together.

Daniel Fazio

16:57>> And then it's you guys versus Veone and Lemlist. That would be smart. That that's that's an angle.

Nathan Latka

17:04Have you talked to Sujan?

Daniel Fazio

17:06>> I've talked to him about affiliate deals. I have an affiliate deal with Mailshake right now. I don't know if he knows I'm making this one. He's probably seen on Twitter because he follows me.

Nathan Latka

17:13Yeah. And Guillaume might hear this and say I I wanna do this, but Guillaume is very good at building community. So interesting. This is great. Cool. Listen, rooting for you. This is a hell of a story. I mean, I'd be very curious to see like how you know, if you end up moving more exclusively in the SaaS space where the economics are better, churn hopefully gets lower over time. We'll see what happens. But in the meantime,

Famous Five Rapid-Fire Questions

Nathan Latka

17:31let's wrap up here with the famous five, Daniel. Number one, favorite business book?

Daniel Fazio

17:37>> Jordan Belfort's Way of the Wolf.

17:39>> Wow. I'm surprised it was not Expert Secrets.

Nathan Latka

17:42Number two, is there a CEO you're following or studying?

Daniel Fazio

17:46>> G.

Nathan Latka

17:47Number three, what's your favorite online tool for building business?

Daniel Fazio

17:52>> Hyros.

Nathan Latka

17:54Real quick on on g and Lemlist, would you have taken the $85,000,000 deal?

Daniel Fazio

17:57>> Yep. Absolutely.

Nathan Latka

17:59Number four, how many hours of sleep do get every night?

Daniel Fazio

18:02>> Seven and a half.

Nathan Latka

18:03And what's your situation? Married, single kiddos?

Daniel Fazio

18:05>> Single.

Nathan Latka

18:06Okay. And you said you were 24? 22?

Daniel Fazio

18:09>> No. I just turned 24. I don't know why I said 23. I'm stuck in that '23.

Nathan Latka

18:13Oh, you're good, man. Hey. Happy late birthday.

Daniel Fazio

18:15>> Thanks, man.

Nathan Latka

18:16What do you wish you when you were 20?

Daniel Fazio

18:19>> I wish I knew about this. I wish I read Russell Brunson stuff earlier. Wish I read it.

Nathan Latka

18:26Guys, this is the perfect example of building a distribution channel first, making it profitable, and then backing your way in a low cost way into SaaS business first by just white labeling someone else's tool and then basically investing in your own tool over time. We will see, can Daniel convert from one time course sales where margins are obviously slimmer and it's a one time deal into a SaaS play with a huge community that loves him and

18:49pays him every month and never churns. Daniel, thanks for taking us to the top.

Daniel Fazio

18:52>> Thanks, man. Appreciate it.

Nathan Latka

18:54One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday, 1PM

19:18central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big

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