Better Agency Revenue, Valuation & Funding (2024)

hello everyone my guest today is will shaw he's the ceo of marketing connected and co-founder of venta commerce capsule five agent up and others he was born and raised in baltimore and at his and his passions are traveling and snowboarding he originally started capture capsule five before moving on to marketing connected back in 2015 to help struggling entrepreneurs organize their sales and marketing strategies and execution will you ready to take us to the top yeah let's do it all right ma'am so talk to me a little bit about about the company well focus on marketing connected what's the company do and is it a pure play sas company yeah so marketing connected is kind of the overall brand of where we started our new sas company so and kind of what you were talking about we have a company that was called agent up that we launched previously in 2017 as a as a sas company in the insurance network uh or the insurance industry providing uh marketing automation for insurance agents um and so what that has evolved into is we're actually rolling out our second generation of that application and under a new brand called insurtech and uh we're currently actually launching that uh as we speak we're launching it this week okay so help me understand who is paying for the technology on average what are they paying per year to use it yeah so the the client that is the client type that is paying for this is an individual insurance agent or what we call an independent insurance agent um so you kind of have two classes independent and captive um so it's usually an insurance broker that usually has somewhere of a team of three employees up to 20 or 30 employees on their team and they're paying anywhere on average uh on the low end for like a single user would be about 150 a month upward to a little over 500 so our average mrr is about 300 a month okay 300 bucks a month and when'd you launch this company what year uh we originally launched the company in 2017. oh good okay and then how many customers have you scaled to today uh to date we've scaled to uh slightly over 100 okay and with this relaunch we're hoping to take that to the next level let's talk more about the relaunch in a second but first i mean getting your first 10 customers is not easy how did you get your first 10 yeah you know to be honest we when we first rolled this out we really prep practiced a lean startup model and kind of threw out our minimal viable product or what i call minimal sellable product to get in the hands of users and start singing so we were able to fortunate enough um we're really big in the affiliate marketing space we had partnerships lined up we were able to throw out some offers to get uh clients onto the application we had our first i think 10 users within the first uh first week that we had what was the affiliate kickback uh our affiliate kickback was a 20 model okay so you pay if someone signs up for 100 bucks a month you're paying 20 bucks a month back to the affiliate in perpetuity as long as that customer keeps paying for the first 12 months and after that the perpetuity is over okay got it very cool um so let's take out your first 100 and look i can take 100 customers times 300 you're about 30 000 bucks a month right now in revenue correct and where were you exactly a year ago do you remember uh a year ago i don't know i i'd have to i'd have to go back and look we actually shut down signing up on this application about almost about a year ago before we decided what we want to do with it and about six months ago we redid our whole development team and relaunched the next generation application okay but if you had i mean are we talking like you think 10 grand a month a year ago or five grand a month or yeah we were probably i want to say we i would say if i were to put a number on i'd say we're somewhere between 10 to 15 maybe a year ago got it okay good so you're kind of doubling your over a year on it correct okay great um why relaunch um we wanted to we wanted to expand the the tech platform of it we were very limited it was simply like a zapier type of integration marketing automation not much customization what we're rolling out now we'll be able to take um what it'll be able to it's a more we've added the crm element to it we've added a more customizable marketing automation element to it and we've tailored specifically even further to the insurance network to dial in their processes okay that sounds interesting so have you trapped the company or raised we've bootstrapped it completely it's all self-funded love that that's great when you and how many people are on the team today uh right now we have uh five full time running on this right now and then not including our development team we have about three full-time developers now on it okay so you have eight people total eight people yeah hey so how did you i mean when you started the thing did you always fund it with revenue you just pre-sold people or how did you fund it in the early days i always believe in pre-selling um so i try to pre-sell whenever i can and we've used our our marketing companies kind of as a as they hold over essentially to help fund the business yeah that i mean that's look that's how a lot of people do it now how much from the marketing agency in terms of cash flow would you say you've sunk into the business um at this point for the for the our initial application we didn't have to sink much into it we're talking about our our minimal sellable product that we originally launched we stopped about less than less than twelve thousand dollars into um to get that to market since then and to go through this relaunch we're probably somewhere about 50 000 into it okay fair enough and um are you profitable today or are you burning cash still we are no we are still burning cash but not at a high rate we should be profitable by the end of july soon you say burning i mean you're talking five grand a month or more yeah we're burning right now less than five grand a month so we're currently burning i think uh i think we're currently at a burn rate of about uh 3 400 which we have enough cash reserves to handle that burn rate through the rest of the year but we should be profitable uh by the end of july so you have about six seven months of runway which means you got about what twenty thousand bucks in the bank correct yeah i think right now i think we have about 25 grand left over for additional because you have additional developments that's good so i mean what's the next step you do the rebrand are you then going to go after i mean how many customers you want to get to by the end of the year are you going to go and do a traditional fundraise what's the next step yeah so our our our next step we kind of look at this as two stepping stones we have a group that we're relying on that we're launching to we have our kind of our strategic alliances if you order relationships how many affiliates do you have so currently we have about four hype for what we consider four big players in the affiliate space one of which includes access to groups of insurance agents so most of these people have their different groups that they're associated to so our big goal is when we look at stepping stones is 250 net new customers over the next three to four months and by the end of the year our goal is to reach about 500 new customers okay you say net new and that makes me go okay what's churn look like so what's your turn look like over the past you call a month or two yeah our churn has traditionally we've been running at a churn rate of about three to three and a half percent okay so caught 36 40 percent annually yeah do you have meaningful expansion revenue yet on old cohorts or no yes we do so that's well that's part of what has shaped the redesign of the application what we're launching now in hopes that a less insurance and b add in additional revenue so we were just a very small piece of the pie now we're adding on elements like crm scheduling software some other things like that to help bring in more of the rev share that our clients seem to be using so what is expect so of the customers to sign up exactly a year ago what have you been able to expand them to like on a percentage basis uh do you know yeah i'd have to i probably don't know that off the top of my head as well as i should does it more than make up for the 36 percent of lost revenue from the same cohort yeah it does so we've been able to add in some features like sms um task management basically allowing us to take our on the old app we were able to take like if we look back to a year ago our average mmr was about 197 and we've been able to move that up to 300. but is that because new customers are coming in paying more because you upgraded older customers we've upgraded everybody here along each step of the way we've upgraded past customers to pay more for those additional features okay so if i just look at the core that signed up a year ago ignore new customers between now and back then you're saying you turn about let's say was 10 grand a month in revenue you'll churn 36 percent of that so you're down to what is that 60 400 bucks a month from that cohort you're saying but that same core you'll expand by 3 600 or more so that still cohort is still paying 10 000 or more like it was a year ago yes very cool all right uh let's uh let's wrap up here with the famous five number one what's your favorite business book uh but it's usually whatever i'm currently reading right now uh right now i'm currently on my desk right now i have the upside of stress they're number two is there a ceo you're following or studying uh you know i uh my background i actually um i got my start into the digital marketing game from infusionsoft that actually worked there directly um so i'm really close with uh clayton mask with some of those guys i really expect them a lot yup number three what's your favorite online i actually have to ask you uh he said when they did the 50 million from goldman he came on the show recently that he offered all early stakeholders the ability to exercise their options and kind of get liquidity did you have options and did you take that offer i did not i knew people that did and a lot of people did take that offer why didn't you take it i didn't come on early enough okay so you didn't have meaningful equity yeah i actually started working with them back in 2014 right after the funding of goldman sachs what was the cut-off that he put so he said anyone that joined the company before this year you can take advantage of this i i don't remember i wouldn't notice i didn't do it yeah i am you okay so but you were basically in the court of employees that were after whatever that cut-off date was right yeah number three what's your favorite online tool for building your company uh you know i that's a really good question uh i'm we run everything off google but we run everything through asana as well we utilize zapier to automate everything so rt really maximizes zapier essentially number four how many hours i sleep to get every night uh i get seven hours and what's your situation married single kids uh married no kid two don't okay and how old are you uh i am 28. that's good and what's your uh actually no last question take us back eight years what do you wish your 20 year old self knew repeat that question what's something you wish your 20 year old self knew i guess you probably would have been what playing with the eagles at that point yeah i wish i would have appreciated i wish i would have appreciated living in the moment at that time in my life and really had the emotional uh maturity that i have now guys marketingconnected.com helping insurance agents build their businesses they currently have about uh 100 customers paying 300 bucks a month for 30 grand a month in revenue from 10 grand a month in revenue just a year ago they got a team of eight people building this bootstrapped burning just 3400 bucks a month the way they cover that burn is by investing cash from their marketing agency to keep feeling the sas growth networking retention about 100 as they look to continue to scale will thanks for taking us to the top for sure i appreciate the time one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 pm central 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 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