How Activedemand CEO Sean Leonard grew Activedemand to $1.3M revenue and 500 customers in 2024.

hello everyone my guest today is sean leonard he's the ceo and co-founder of active demand as an entrepreneur he boasts more than 25 years of success books experience launching owning operating and growing companies amongst other specialties are product marketing technology startups global sales expansion and many other items now playing in the marketing automation world with active demand sean you ready to take us to the top you betcha how are there so many companies doing so well in marketing automation i mean i can count multiple 50 60 70 million ar companies in the space where are you carving yourself out yeah so i think that uh if you also look at the stats i think there's even though marketing automation there's a lot of companies there the adoption of marketing automation is really low right there's very if you look at the amount of companies that are using uh marketing automation the uh the percentage is low and growing so i think it's a case that it's a big pie and there's lots of slices for everybody and uh the slice that we're taking is uh uh is uh marketing agencies so it's a case that we provide a platform for those people that uh are marketing for many interesting okay so you're selling your customer is the agency yes it is primarily agency or the pattern that we look for is those that are marketing for many like a marketing agency has many clients seniors care multiple seniors facilities automotive dealerships multiple locations franchises multiple locations that's sort of our sweet spot and i'm sure you have many different cohorts we can't don't have time to talk about all of them but on average what would you say that the average kind of one-to-many customer pays per year for your tech um one-to-many so sorry could you repeat the question like how many clients does one of our clients typically have no i'm asking on average what is one of your customers one of your one-to-many customers one of your agencies what do they pay you on average per year to use your technology oh boy on average i think it is um that specific cohort cohort i'd say well do your entire cohort that's why this question's a little bit challenging on your entire customer cohort right are we talking like a grand a year or a million year 100 a year per client you're talking about your your customer your take total revenue divided by total customers the average is what yeah so the average is i think five six hundred bucks per month okay fair enough let's keep role playing on that specific use case if i'm paying you 500 600 bucks a month how many customers of mine am i probably using you on um yeah so our average agency has 20 clients at the small end yeah average i'd say is 20. we have some that have 100 we have some that have uh 10 but usually we're not dealing with a lot that have 10 but usually 20 plus clients is what they do put this on a timeline for me when did you launch the company so we launched the company as an agency in 2012 and then we pivoted i think it's been i think it's four years three years ago so when did you write the first line of code for the sas platform 2012 okay was 2012. and when did you have your first dollar revenue on the sas platform ah boy uh so we were operating as an agency so it's we were allocating revenue from day one but we weren't selling the tech and they didn't know they were buying the tech it was sort of a line item so uh yeah i would say subscriptions starting at zero like when we said okay we're starting to sell the product because when we did the pivot so three years ago so that's what you're talking 2016 yeah 2016 2015 yeah yeah how much capital did you spend on the mvp for the sas side of things before your first subscription sale oh yeah um we were burning uh a lot of cash to to to write it so you know i probably in myself invested uh a million dollars uh in in in my money to to to write the software now is that essentially cash flow from the agency that you kind of redirected yeah a big portion of it was some of it was cash out of hand because uh cash out of my pocket because it was uh yeah it was it's a case that uh these things cost money is the reality right yeah many people will hear a million bucks and go oh my gosh this sean guy's rich of course he's having success where'd you get your money from um so my previous i was an executive at a another company and uh uh we sold and i had uh i had stocks so it was a case that i had money yep okay so you launched the agency now what size was the agency in terms of head count before you pivoted full throttle to sas oh boy um yeah that's a tough one because everybody is wearing dope yeah i would say just the agency side we were uh we probably had 10 people okay 10 folks on the agency side now today how many people are on the sas side of things so on the sas side of things uh it's we do a lot of outsource work for our development so it's sort of a why i'm pausing on this is because uh if i was talking full-time equivalents people that are uh on the payroll i would say we're probably at about 25 people but they're not all uh getting paychecks from the company as employees how many of the 25 would you consider to be engineers um i would say [Music] 10 and how many how many of them are how many of them carry any kind of quota sales reps with quota sales reps of quota four four okay now how did you place is always a big question when you're launching a sas company how did you how did you model those sales people in terms of what their quota was relative to your price point and things like that yeah and it's a good question um so we drove the initial sales as sort of a self-serve model so really it was but it was a longer sales cycle so it was uh we're feeding the sales people based on leads and uh they were really chasing chasing stuff so as far as uh how we model the quota i just look at contribution on mrr and each sales person i'm going to say has to contribute uh x number dollars per month in that new mrr to the company what is that x like you're talking 10 20 grand a month yeah so right now i'm saying five grand a month so it's i think it's something being uh yeah being nice but uh so over and over over their first 12 years over their first 12 months and if they're adding 5k of mrr every month they're essentially adding 60 000 a new mrr at the end of their first year one or about you know call it 600 000 in ar yeah so it's what is the number 45 times uh times that number is what their total rolling uh rolling revenue is 45 times what their net new mrr monthly yes yeah so five thousand number well i'm trying to figure out why you're multiplying by 45 well because um it's a uh uh if i bring in let's say let's say let's say the number is five thousand dollars by bringing five thousand dollars today tomorrow i bring in five next month i need to bring in five thousand dollars and now ten thousand dollars in mrr and then the next month i i bring in five thousand dollars is now fifteen thousand dollars mr that i'm that i'm that i am correct so that's what i was saying the first 12 months they essentially build you a 60 000 a month stream yep yep very which is 720 in arr so my question is at full quota at a sales person who hits full quota what is their full comp look like in terms of sales person profitability is like a 5x or a 10x or yeah i don't have that number okay did you did you model it that way or no that's not how you hot no i i didn't model like that i basically and i probably you know it's bad but it's uh sometimes we fly by the seat of the pace that's fine have you just put into leads yeah have you just put in your own money or have you raised additional capital that's good okay so bootstrapped i love that now that means you break even today right are you still covering losses with your own money um so we are uh so i think there's a ratio like it's like uh uh this 40 ratio where you know growth and uh and profitability totals 40 for health and so we're break even or a little bit below break even uh if if uh if but i get the growth as if i do a little bit below break even but it's yeah i'm i'm running the company at as close to break even as possible okay uh so just so let's go back 2012 you launched the company you have agency clients we're probably your first customers on the sas side of things how many customers do you now have today [Music] um yeah that's a again another difficult question um because we have a couple of very big oems that represent a do i count them as a customer or not how many are paying you about 600 a month oh boy um yeah i don't know that that number off top my head unfortunately it's it's a good question well when you guys talk about customer accounts internally what number do you use i mean everyone has a customer account how you measure it obviously differs but what's your customer count um so our customer account is about i would say 500 okay and that includes like an oem like if an oem signs up 10 people do you include 10 in the 500 or one of the 500. okay so minimum 500 customers paying 600 bucks a month you're doing about...