How Adzerk CEO James Avery grew Adzerk to $830K revenue and 100 customers in 2022.

hello everyone my guest today is James Avery he's the founder and CEO of AD zerk and API company that powers native ads promotions and sponsored listing for companies like Ticketmaster Wattpad imager and many others prior to ads our James co-founded tech pub which was acquired by plural sight James are you ready to take it to the top yep absolutely all right tell us about ads urk and are you a pure place ask platform or not yes we're I guess 98% pure place s we have a couple of a couple of parts of our business that can be more kind of revenue you know rev-share focus but our really our goal is is to be a hundred percent SAS api company that helps these different publishers and e-commerce companies really build innovative ad solutions okay and yeah give me an example so Wattpad how do they use you or take I should use Ticketmaster how do they use you yeah Ticketmaster is very example so when you go to Ticketmaster do you see different shows that are on the site so basically they'll have like a sponsored show promoted show maybe you know I don't remember where you live but you know let's say you're in LA and then you would you know you'd see that oh you know there's a there's a game tonight a Lakers game and there's also you know Justin Timberlake's play and or something like that those actually those shows and how you decide to show those like which one you show is based on using our API so our API can help optimize and and show the right you know the right venue and the right you know targeted show for the right person at the right time yeah similar to the way that Amazon has a recommendation engine an internal API you've essentially built that API externally then sold it to these companies that are using it internally like Ticketmaster Wattpad etc yeah absolutely and so we actually work with a number of e-commerce companies that use this exactly whether Amazon does promoted listings so you know if you go to Amazon you search you actually see promoted listings those are powered by our API as well so really it is you know you see all the cool stuff Amazon does and you want to do that but you know why go build the whole solution you know build the whole stack when you can use our API to do it a lot quicker and how do you price do you sell black bulk API calls per month or what yeah I mean basically it's like it's SAS so it's a it's a monthly recurring fee based on the number of API calls you make okay got it and I wanna bet on every customer cohort but on average what's customer pay you per month average is probably around five to six K ok got it so you're very much in the enterprise space yeah absolutely yeah all right and then let's put time line when did you launch the company originally launched it back in 2010 ok 2010 and and have you bootstrapped erase so we raised back in 2011 2012 we raised about 1.7 million across like two different seed rounds but we haven't raised any since then we've been kind of breakeven slash profitable that's great and what's the team size today our 20 people and what have you scaled to in terms of total customers on you now we're a little bit over 100 hundred okay that's it I mean so look health healthy growth now can I take a hundred times at five thousand dollar price point you just mentioned and kind of back into five hundred grand a month in revenue yeah we're right around there okay when what is your next goal by the end of this year December 2018 what do you wanna grow that to it's good question I think getting the right customers in so it's been a lot on getting larger enterprise customers who are actually hoping to get that number up you know even higher than it is now but we're looking to add you know we're looking to grow about 40 percent this year okay and what historically what we're used to if you're five hundred grand a month today where were you a year ago in July or August of 2017 yeah I think well back then we're probably around 350 or so so like we're getting decent growth you know it's different than the the VC growth curves that you see when you go raise 40 million dollars but yeah but who the hell needs that you got a 40 out of 40 percent growth rate cashflow positive you're good yep exactly okay great and where is most the extra revenue coming from is it driving additional usage at Ticketmaster or landing brand-new customers it's mostly both but it's mostly new customers you know I think a lot of you know we see yeah we do see growth in existing customers but you know the the majority of the new growth is adding in you know large new names like Ticketmaster and are you keeping historical ones in other words what does your churn look like and how do you measure that yeah churn is really low so I mean I think churn is you know we try to make sure it's under 2% a year and yeah we haven't really had a problem there and that's that's on a local basis a revenue basis that's on our revenue basis okay and gross or net gross gross okay now net if I if we look at net revenue retention annually is that over a hundred percent it's actually I think it's right well all right it's basically like ninety nine yeah like our goal is actually get that up to like you know 102 percent on back we can see the growth that current customers I think we're just shy of Andra right now okay good so we'll call it maybe 98 percent net revenue retention annually still healthy and most the expansion revenue is that only coming from them using more API calls or do you have other levers you pull the drive expansion yeah no it mostly its usage but it's actually not just you know you have like a natural growth like as a customer gets larger they use us more but we also see that we once we get into a customer there's a little bit of that land and expand where they use us for one project and then they'll go and use us for you know another couple projects yeah and walk me through your sales process what are you spending right now to acquire these new customers fully weighted yeah I don't have that answer off the top of my head you know we have a pretty hands-on enterprise sales process so you know our our sales guys are working with companies for you know a lot of times two to three months working through their project figuring out what they want to build you know we have a lot of expertise around how these projects work and how they should best build them so it's very hands-on very you know we get people using the API first get them you know get them success before they sign a contract so you know it's it's it's pretty hands-on enterprise sales but we're also pretty light and the sales side I mean we only have a sales team of like five people so it's it's pretty lean about 25% of your total team of 20 yep well let me ask a different question um what payback period you try and optimize for yeah I mean our payback we pay back in less than a year okay so that's that's yeah I mean as a break-even company like you can't you can't like you can't you know plan it out too much further than that other words you have to go raise capital that's still pretty long on a company that's breakeven if you're able to have a 12-month payback and so but no are you pulling any of these contracts forward a $5,000 a month full forward and getting you know collecting 70 grand up front no we don't we don't do that too often like we started trying to do that more because I think that it is good for kind of being breakeven but I mean when I say less than a year like it's really I mean it's way less than it's you know now that I'm when I'm thinking about it you know it's it's you know cost of acquiring a customer it's probably a couple months you know covers that yeah yeah Commission salary you know any marketing expenses so really it's probably three or four months got it so four months at five grand a month that's call it a $20,000 CAC and then obviously a four month payback you think that's more accurate yeah yeah and most of that is going towards what the salesperson commissioned their travel all that or he's spending on direct paid Google Ads things like that yeah I mean we do some direct paid but it's pretty minimal just because we're you know we grow mostly still on customer referrals you know customers you know project manager at this company talks to another project manager tells them about using ads or you know we get customers that way that's that's been most of our growth that's great and where's everybody based your team most of us are in Durham North Carolina oh great yeah yeah yeah and then we have we have a couple people who were remote and we have one person out in San Francisco that's right now are you raising additional capital today no we aren't you're not you just keep stay bootstrap do your own thing grow organically yep absolutely are you in talks to exit to anyone right now no no not at all no interest no now right now I think we've been growing healthily we're at you know doing it without raising money there's no reason to no reason to try to exit when we when things are going well that's good besides of the obvious growth metrics or of revenue and customers it sounds like your next most important were like number of API calls many per customer how many API calls are you processing now in like a given month yeah yeah I mean so we're we're over a billion a day oh wow in API calls yeah so there's a lot of there's a lot of calls going through it's a well-oiled machine yeah absolutely yeah that's been fun to scale that right I mean like there's a lot of engineering challenges with scale and stuff of that scale name one of them I mean the biggest one was getting used to zero downtime like I think a lot of SAS companies are used to you know if they have to do maintenance in the middle of the night on Sunday night it's okay but you know working with these global brands and their you know their website like you can't be down ever and so we really had to architect our system to always be up and always go to handle that kind of load ya know it makes good sense let's wrap up here with the famous five James number one what's your favorite business book favorite business book is good great number don't number two is their CEO you're following or studying I think the one I followed mostly guy named Brian Hanley may not be super well know but he's here in Raleigh who's one of our early investors and he's had a lot of success number three what's your favorite online tool for building your business favorite online tool you know the one wah we've been using a lot lately that I'm really happy with is lattice so lattice kind of lets you do goals and 360 review and things like that and number four how many hours of sleep are you getting every night I mean I were to sleep oh I get seven pretty good in what situation married single you have kids married with kids how many too good does it say not wives kids all right two married two kids in how are you James I am 39 39 last question when he was your 20 year old self knew I wish let's see what looks like lots of things I think the biggest one is that you should hire people who are smarter than you you should hire people that challenge your assumptions that will come in and who are experts in their field I think early on I didn't do that enough not to just anybody that hired early on but I think really reaching for the stars and hiring like really really expert VPS in the areas where they are has really helped adds earth move toward higher folks smarter than you there guys have from jane's james launched again back in 2010 now scaled up to about a hundred customers like Ticketmaster helping them make recommendations or promoted products you know at the bottom of you just bought a ticket to X you should go check out Y Z and Q as well they've now they're now doing about five hundred thousand dollars per month up from three hundred fifty thousand dollars just a year go so healthy growth under 2% per year revenue churn in terms of net revenue retention they are flirting with a hundred percent mark currently at about 98% he's totally healthy with about a four-month payback period so about spending about 20 grand no higher a five to get a $5,000 per month customer bootstrapped or sorry cashflow positive now which I love they raised 1.7 million bucks many many years ago but again now in just healthy growth phase at add greets James thanks for taking us to the top yeah thank you