How Better Agency Reached $1M ARR and 260 Customers While Bootstrapped (Interview with Co-Founder Will Shaw)

Introduction and Background

Nathan Latka

00:00Hello, everyone. My guest today is Will Shaw. He's the co founder of BetterAgency, the first sales driven AMS and the industry's top CRM for independent insurance agencies on a mission to help agents issue a billion in new business premiums by 2024. He's an ex professional athlete, and his playing field is now the tech and software space. Will, you ready to take us to the top? Yeah, let's do it. What sport did you play?

Will Shaw

00:20>> I played football, so I played with the Steelers and Eagles.

Nathan Latka

00:23Oh, very cool. Which one was it? Which one do you enjoy more?

Will Shaw

00:26>> The Eagles because I lasted longer there.

Product Evolution and AMS Launch

Nathan Latka

00:29Good answer. Good answer. Alright. So talk to me about BetterAgency a bit here. So I obviously love niche specific businesses, we've had you on before, I'd love to understand sort of growth from then. Are you still the same product or have you released something major over the past two years?

Will Shaw

00:41>> Yeah, so we've kind of grown a lot. Yes, I know we talked previously, I fell into the insurance niche because I was customizing tools like Infusionsoft, HubSpot, Salesforce for the insurance space. What we found was, hey, we were using six, seven, eight different platforms to do the same thing. Wasn't working through antiquated systems and bad APIs because nobody's been really focused on the insurance industry. So towards the right at the end of twenty nineteen, we decided

01:07>> to launch BetterAgency, which was the first CRM specifically for independent insurance agents. And throughout that time we've really grown doing that. And then we recently just launched our newest feature, which is what we call the sales driven AMS. So that's actually connecting directly with policy downloads from the carriers. That's been something we've been working on for almost a year now. And it's really allowing us to offer a one true system to insurance agents instead of them

01:33>> having to use multiple different platforms.

Nathan Latka

01:35And you used to be, did you have a rebrand? You were called marketing connected, I think previously, right?

Will Shaw

01:39>> Yes, that was a previous company that I was kind of using as a placeholder, as I was figuring, as I was transitioning out of doing custom implementations and into what we launched at BetterAgency.

Nathan Latka

01:49I see, I see. Got it. Okay, cool. But same story there in terms of that was the, was the baby version you've now since changed, matured, etcetera.

Will Shaw

01:56>> Yep, exactly.

Pricing and ARPU Growth

Nathan Latka

01:57Okay, very cool. So let's jump into this a bit. On the CRM tool today, I think when you last came back on, I guess this would have been back again, 2019, you had just broken, I think a 100 customers and you were charging at that point, think about $300 a month, still the same price point?

Will Shaw

02:12>> Yeah, so our price point has gone up. We're a little over 400 now on our average customer. We've been able to add some different upsell opportunities. So we try to get people in around the 200 to $250 mark And now we're getting our average customer a little over $400 and we think we can get to $500 over

Nathan Latka

02:27the next twelve months. And what's driving your ability to get higher price points? Are they buying more seats originally? Are you upselling more features on day one? What's the story there?

Will Shaw

02:34>> Both more seats coming on. So as we're able to help solve more problems, we get more of the team on board to our platform. And the second thing is just adding more features. One the things we've been passionate about is trying to achieve that kind of net negative revenue churn, and that's been kind of helped drive our growth.

Customer Count and ARR Milestone

Nathan Latka

02:50Where are you now on that?

Will Shaw

02:51>> So I think when we spoke in 2019, we actually just launched in '20, at the end of twenty nineteen in October, November timeframe. So right now we're somewhere around two sixty customers and we just broke the 1,000,000 ARR mark.

Nathan Latka

03:03Oh, hey, congrats, man. That's exciting.

Will Shaw

03:05>> Thanks. I appreciate it.

Bootstrapping and the Angel Round

Nathan Latka

03:06Big deal bootstrapped or you raised?

Will Shaw

03:08>> So we bootstrapped to this point. We are tomorrow actually closing our first round. So we've got to this far bootstrapped and so we just are closing on our first round tomorrow.

Nathan Latka

03:17We love that. So you guys listen, you listen to the podcast, you get breaking news before it happens. Will, how much you guys have done appraising?

Raise Size and Valuation

Will Shaw

03:22>> So we're going to raise a total of 2,100,000. It's going to be at a $15,000,000 post. Yep. And we're pretty excited about that. So yeah, we were able to bootstrap to this point. And so that made fundraising pretty easy and it just made sense for where we were at.

Nathan Latka

03:3815.2 posts. So I mean, that's essentially 13 pre, right? Or about 13x your ARR. I mean, does that feel fair to you or do you feel like it could have driven a higher or lower? You know, what do think?

Will Shaw

03:49>> We could have totally have driven it higher. I mean, the market, you know better than I do. The market's pretty frothy right now and we could have driven it higher but we were really, my biggest problem with fundraising was telling people no. And the reason being is we wanted to be as strategic as possible. We were in a position where we had bootstrapped this. We didn't have to raise money. The only money we're, you know, we're

04:06>> burning is some of the original money we put in at this point are saved along the way and we're using that to drive some marketing. So we really wanted to raise money to start bringing our development talent, product team in house because that's been outsourced previously and to grow our sales and marketing team, and what we're doing there. So we wanted to be as strategic as possible, so that meant staying a little bit away from the

04:26>> VCs because we're not going the traditional fundraising route and going more towards angels, which is a little bit different valuation.

Nathan Latka

04:32So how many people are participating in 2.1 raise?

Will Shaw

04:35>> So we probably could have got away with doing it with two, but we ended up getting a, we have about 50% from our lead investor and the other 50% is divided between insurance specific, strategic investors and the other half of that would be through strategic other verticalized CRM founders or with some people that we know that, you know, have gone through whether it was Infusionsoft's fundraising or different fundraising events here locally in Arizona.

Nathan Latka

05:01That's very cool. Is Clate putting anyone in?

Will Shaw

05:05>> No, he's not, but I have had some conversations with him.

Nathan Latka

05:08Nice, nice. And then the lead that put in about 50%, did they set the terms or did you let the whole sort of like with a traditional VC or just a wealthy individual?

Will Shaw

05:18>> So that was an angel here locally. So we let them set the terms. We thought it was more than fair for playing with the, you know, staying out of the VC realm and coming in and staying with more angels.

Nathan Latka

05:27Priced round though, Not a note? Yep,

Will Shaw

05:30>> it's a price round.

Nathan Latka

05:31Okay. And so you mentioned burn, right? So before this raise, like last in June, how much capital will you burn?

Will Shaw

05:38>> About 10 or 12 ks.

Nathan Latka

05:39So not a ton. Okay. I mean, this isn't that bad. It's, you know, negative 10 to 12% EBITDA margins, horrible in SaaS. And what's growth look like? So, I mean, if you're at a million dollar run rate today, where were you exactly a year ago? Do you remember?

Will Shaw

05:51>> Oh man, I can look it up but my guess is we were at this time last year, we were at probably somewhere between 25 to maybe 30 ks MRR.

Nathan Latka

06:01So you were flat then because that's what you told me you were at in 2019 or late

Will Shaw

06:04>> twenty Yeah, so well, we talked to 2019, that was more about where we were expecting to get. We didn't make our actual, we had some commitments that were helping us get there.

Nathan Latka

06:12Okay.

Will Shaw

06:13>> But we didn't really make bring in our first dollar until I think November 2019.

Nathan Latka

06:17I see, got it.

06:18So your pre revenue up into that point.

Will Shaw

06:19>> Yeah, when we launched because we bootstrapped it, we pre sold quite a bit working with people. And so that's kind of what we were expecting. We got to that number just took us about six months longer than we thought.

Nathan Latka

06:29I see, got it. Okay, so got it $0 of revenue in July 2019, about $30,000 a month in July 2020 and now today past a million dollar run rate.

Will Shaw

06:39>> Correct, and then we're growing an average about 10% a month and we've kind of been consistent about that since about August 2020.

Nathan Latka

06:46Where's the growth coming from? How are you signing up new people? When you came on last, you said affiliates were a key growth driver for you.

Will Shaw

06:51>> Yeah, so about 30% are through our paid strategy, and about 70% are coming through either referrals or organic. So we spent a lot of time focused on the blog from start, and we're starting to see dividends from that now. A lot of it is our customer referrals and then we have some still coming in from referral partners.

Paid Advertising Strategy

Nathan Latka

07:09On the paid strategy, how much did you spend on paid ads in June this month?

Will Shaw

07:13>> So that would be almost all of our paid budget outside of SEO. If we, if we burn, if we spent $12,000 on marketing in June, about probably close to 10 ks of that was specifically to paid 9 to 10,000 probably specifically to paid through Facebook or Google.

Nathan Latka

07:29Facebook is all interesting. And how many new customers or leads will you get on 10 ks spend?

Will Shaw

07:33>> So on 10 ks and spend, we'll get about 25 net new customers. So we'll get a bunch of trials and we convert about 70% of those trials. So that'll equate to about 25 new paying customers.

Trial Conversion and Onboarding

Nathan Latka

07:44That's great. What do you have to get a trial to do to make sure they convert to paid?

Will Shaw

07:48>> Yeah, so there's a kind of key components that we look at. One is making sure that they engage with us. So kind of the first way we somebody else, somebody out is if they don't engage with our onboarding team, we look at a trial as an opportunity for a paying customer. So we immediately start reaching out and trying to onboard. They don't engage with us and they have no usage, we'll preemptively cancel their account and let

08:07>> them know to try to re engage them. So that's the first thing we do, but the main key things we're looking at is getting them started on our onboarding process. So we invest heavily on onboarding.

Nathan Latka

08:16You charge for it, is there a setup fee? What's that?

Will Shaw

08:18>> No, we don't charge a setup fee. We actually, I know everybody's trying to reduce our customer acquisition costs. We're trying to increase it heavily through increased onboarding. Our view is if

08:28>> we spend more on onboarding, can increase our LTV and we can spend more to acquire our customers. We go through a pretty heavy onboarding, we try to connect with them and our goal is to get them to either import data, connect to their lead sources, get their sales team in there. There's about four to four to six key objectives that we want to accomplish in a thirty day period.

Nathan Latka

08:47Mhmm. Yeah. It's interesting. It'll be interesting to see how that experiment pans out. I remember having Clate on many years ago and he told me how, you know Infusionsoft was seen when it was still Infusionsoft, now it's Keap, when they were seeing 8% monthly churn, he said, finally, the way they tackled it is they just charged a setup fee of about $300, which was equivalent to the, you know, an average of about nine months of the

09:05first year ACV on the SaaS side of business. And by charging that churn dropped and then down to about 2%, but your top of funnel was smaller because not as many people pay the setup fee. So it's the yin and the yang.

Will Shaw

09:15>> Yep. Yeah, for sure. Yeah, you can reduce the amount of people come in lower churn. But again, you know, it's just a change of the funnel.

Affiliate Program Details

Nathan Latka

09:2170% referrals or the organic or blog. Talk to me about your referral program. So how many affiliates made at least a dollar from you in terms of payouts in June? About five. Okay, so this is a very concentrated affiliate program.

Will Shaw

09:32>> Very concentrated, it's very small. I mean, we haven't, we, I mean, we have some good affiliates but we haven't gone large with it yet.

Nathan Latka

09:39Yeah. And what are your expenses each month on the affiliate payouts you're paying? Like, are we talking $10,000 a month, $30,000 a month, something else?

Will Shaw

09:46>> No, no, we're, we're pretty small. We're probably, we're paying on an average about 6 to $7,000 a month right now.

Nathan Latka

09:51Okay, got it. Got it. So five affiliates makes somewhere between maybe a grand and $2,000 each per month.

Will Shaw

09:56>> Yeah, I think one, know, one's probably taking the majority and the other three are, you know, making a couple grand here or there.

Nathan Latka

10:00Yeah, interesting. Okay. And what is that? What are you paying them? Is it 30% of the trial or the customers they bring in or something like that?

Will Shaw

10:07>> Yeah, so I think it's a tiered structure based on how many you're bringing in. I think it starts at 20%, and then it'll go up to 30% if you bring it in enough.

10:15>> 30% perpetuity, like per month if they stay active?

Nathan Latka

10:17Yep. Oh, wow. Interesting.

Will Shaw

10:19>> Do you ever worry about in the future? I mean, if a bunch of your revenues come from affiliates, your margins never gonna be higher than 70% because of the payment out to them.

10:29>> Correct. Yeah. So what we do is it's on the base application that they bring in and then we kind of take on charge of upgrading them and so we don't pay out the upgrades to the affiliates.

Nathan Latka

10:37I see. So as a percent of the total ACV of the account, the affiliate payout drops over time because you're upselling them.

Will Shaw

10:44>> Right, because we're upselling.

Churn and Net Dollar Retention

Nathan Latka

10:45I see. Let's talk about upselling. When you last came on, I think you said churn was up 36%, expansion was 36%, so 100% net dollar retention, where are those numbers today?

Will Shaw

10:54>> Yeah, so a little bit better. So we're hovering around 2% monthly churn and I believe on an annual basis, correct my math, what is that about? '24. Yeah. So that's our current and then we're upselling at almost not, not, when is our upsell rate? I believe we're somewhere a little bit higher than a 100%. I think we're between a 105, a 110% based off our upsell, but our goal is to get that to one twenty.

Nathan Latka

11:17Your net dollar retention? Yes. Got it. So if net dollar retention is one zero five and you first have to make up a 24% churn hole, your expansion is about 30% year over year on a historical level.

Will Shaw

11:28>> Yeah, that sounds about right based off of the last numbers I looked at.

Nathan Latka

11:30What are you upselling? Is it mainly number of seats or is it more feature based or utility based upselling?

Will Shaw

11:35>> So it's a little bit of both. A lot of it originally was user base or user seats and we just started doing that probably at the end of twenty twenty. And then with the release of our new features that have rolled out back in April and May, what we have coming in this later, we're getting closer to a fiftyfifty split and we're seeing the larger increase in cost because as people start adding more features, we also

11:56>> see along with that the seats that come along. So somebody that just upgrades seats, they just upgrade seats, but somebody that's upgrading features generally is upgrading seats as well.

CAC, LTV and Payback Period

Nathan Latka

12:04I understand the blog organic versus your affiliates versus your paid spend on Facebook and Google, they're all gonna have different sort of profiles. So they're different channels. Let's just focus on the pure paid stuff for a second. What are you willing to spend to get a new $400 a month customer?

Will Shaw

12:18>> So we're willing to spend, I mean, I look, I break this down in our marketing CAC as well as our all in customer acquisition costs, including our sales rep, including our onboarding and things like that. So our LTV right now is somewhere ranging between again, it's a guess because we're a young company, so this range is pretty significantly, but I would say we're steady between 12 to 14 ks in our LTV. So right now we're willing

12:39>> to spend upwards of $1,500 to get all in to get a customer because we can eat, we can keep that kind of 10 to one ratio. And that's what I was saying before, we're investing more into onboarding because we think we can get our own customer acquisition costs actually up, which is one of our goals, get it up with our onboarding to around 2,000, we think that can get us to a a closer to a 20,000

12:59>> LTV.

Nathan Latka

13:00Yeah. I know it's interesting, man. If spend 1,500, 1,600 bucks to get the customer, it's $400 a month, you still have a four or five month payback period, that's very manageable.

Will Shaw

13:06>> Right, we're not trying to push our CAC down. We're actually trying to push it up because if we figure if we can increase our LTV then we could just outspend any competition.

Nathan Latka

13:13Yeah, I mean, the only part, the only time where that math breaks down is if you're able to increase your CAC. So spend more on getting people more addicted early on and you drive your lifetime by up to $20,000. But if it takes you six years or ten years to capture the $20,000 your payback period is really long, it can be a cash gap issue, but you don't, sounds like from these numbers, you don't have any

Will Shaw

13:36of those issues.

13:36>> Not yet, but I'll loop back around with you and let you know down the road.

Nathan Latka

13:40Yeah, no, I mean, congrats. I mean, these things, I mean, it looks like you're moving the needle like in the right direction, all these things, and this is a tough space you're in now. It's obviously niche and insurance based, but it's still exciting. Will you with insurance for a while or do you think you'll expand other markets?

Will Shaw

13:51>> No, I think we're going to be hyper focused on being a vertical based SaaS company. It's an interesting market. The more time we spend in here, we figure we can spend more problems or solve more problems. There's a lot of things we run into where companies have been in this space since the eighties and nineties and a lot of them haven't, you know, a lot of our competition isn't even necessarily on the cloud. So we feel

14:10>> like we can make a real disruptor in the industry.

Team Size and Sales Rep Quota

Nathan Latka

14:13And what's your team size today? How many folks?

Will Shaw

14:15>> So we're at 16 and our goal is to be at about 20 to 25 by the end of the year.

Nathan Latka

14:19How many of the 16 are engineers?

Will Shaw

14:21>> Six.

Nathan Latka

14:21And how many sales reps with the quota? One. Oh, just one. Interesting. What's their quota target?

Will Shaw

14:26>> So their quota target is about is 20 to 25. It's it's a tier but on target earnings should be about 20 sales a month which will equate to driving about a $500,000 in new business at the end of the year. And right now we're exceeding that a little bit and getting closer to 25.

Nathan Latka

14:43Got it. So that one sales rep, if they do close a $500,000 in new ARR each year, what can they earn? What are their, what's their base plus commission total?

Will Shaw

14:51>> Yeah, so they're on target earnings would be about one, assuming they're going to close about 500,500 to 5 ks, they're on target earnings is going to be about 150 to 160.

Equity and Cap Table

Nathan Latka

15:00Okay. That math works. That's profitable. That's a profitable sales rep. That's great. Very, very cool. That makes a lot of sense. All right. I guess last question here. Talk to me about equity. Were you the sole founder here? Like how much equity do you still own post post this raise?

Will Shaw

15:10>> Yeah, no, actually great question. So I actually have three other co founders that are still on the company. We founded this as a group. So between all of us, we still control, close to 80% equity.

Nathan Latka

15:21Even after this 2,100,000 raise?

Will Shaw

15:23>> Correct. Yeah. Okay. We have a pretty aggressive employee stock option program too, but, yeah, we controlled about it almost, I think it's about 70, between 75 to 80% without looking at the cap table.

Nathan Latka

15:33For the whole team, this is the founder

Will Shaw

15:34>> Yes, for me and the three other co founders.

Nathan Latka

15:36Yeah. How big is the stock option plan for the employees? At least the allocation.

Will Shaw

15:40>> Somewhere between about five to 7%.

Nathan Latka

15:43Okay, that seems totally fair. Are new investors gonna require you to increase that number or no?

Will Shaw

15:49>> We did as part of that round, we increased a little bit more anyways, just because we want to, we're a small team and we want to keep kind of that family atmosphere and we like being able to be open about that stuff.

Nathan Latka

16:0075% owned by the four co founders, the new raise which you're announcing now to 2,000,000, they're gonna own about 20% and then the employees on the other five stock option pool.

Will Shaw

16:08>> You got it.

Famous Five and Closing Thoughts

Nathan Latka

16:09That's very cool. Great setup man. Hey congrats, let's wrap up here with the famous five number one favorite business book.

Will Shaw

16:14>> Favorite business book. Let's go with

16:20>> Oh man, just didn't wonder

Nathan Latka

16:22what you said last time. You said the upside of stress.

Will Shaw

16:27>> Let's go with play bigger this time.

Nathan Latka

16:29Play bigger.

Will Shaw

16:29>> Recreation and dominating the category.

Nathan Latka

16:33Nice. Number two, is there a CEO you're following or studying?

Will Shaw

16:36>> I wouldn't, at this time I would say more than a CEO that I'm following study is, there's a couple of people I follow, couple of authors that I actually follow on Twitter, Nassim Taleb who wrote The Black Swan and

16:52>> Antifragile. I'm a big time follower of.

Nathan Latka

16:56Number three, what's your favorite online tool for building BetterAgency?

Will Shaw

17:00>> Well, I'm not a developer. So for me, it's probably all I use Notion as my number one tool. So all of my personal notes, my work notes, all I keep track of everything is in Notion, whole life and probably our whole business is in Notion.

Nathan Latka

17:12Number four, how many hours of sleep do eat every night?

Will Shaw

17:14>> Eight hours.

17:15>> Eight.

Nathan Latka

17:16And situation married single kids?

Will Shaw

17:18>> Married with a one year old daughter.

Nathan Latka

17:20Oh wow. That's a development from since our last

Will Shaw

17:22>> Yeah, that's a big time development.

Nathan Latka

17:25How old are you, Will?

Will Shaw

17:26>> What was that?

Nathan Latka

17:27How old are you?

Will Shaw

17:28>> 30.

Nathan Latka

17:29Alright, last question. What's something you wish you knew when you were 20?

Will Shaw

17:37>> Something I wish I knew when I was 20.

Nathan Latka

17:40Football That years I imagine.

Will Shaw

17:41>> I really wish I would have had a backup plan after football. I struggled figuring out transitioning from football into what I was gonna do. And I really, I was that prototypical athlete that did not have that backup plan. I wish I would have listened to everybody trying to tell

Nathan Latka

17:52me Yeah, you see Brady building his own brand as he gets past forty and forty five and fifty, interesting. Hey, actually I have to ask on the end on this question. Who has a better record this year? The Eagles, the Washington football team?

Will Shaw

18:03>> Oh man, the loyalty in me wants to say the Eagles, but I'm a Ryan Fitzpatrick believer. We went to the same high school, I've known him for years. So I'll go with the Redskins.

Nathan Latka

18:13And the plus the beards, we got the beards going on that too.

Will Shaw

18:15>> Yeah, Epic beard over there.

Nathan Latka

18:17Do they take the East again or no? You think Cowboys or Giants sneak in?

Will Shaw

18:21>> You know, I'm kinda high on the Giants, but I, you know, the Cowboys you always think you're gonna be good, but they never pull it off.

Nathan Latka

18:29So it's

Will Shaw

18:30>> like they're like the team that could bust, but they could actually, they could actually be good. Have on paper, they look great but

Nathan Latka

18:35If that was I would roll with

Will Shaw

18:37>> Washington just because I don't, I can't trust the Cowboys.

Nathan Latka

18:40Yep, guys there you have a betteragency.com again, they are backing insurance providers helping them with a great CRM tool. He's gonna stay focused on that niche. They were doing $30,000 a month last year at this time now doing over $85,000 a month past a million dollar run rate. Had bootstrapped to that point serving two sixty insurance agencies to date. They're only burning about $12,000 per month as they scale and are announcing they just now say basically

19:01$2,100,000 raise at a $15,000,000 post money valuation. The Founder still owns 75, 80% of the business. New investors own, call it 20% and employees have call it five to 7% of the business. 16 folks on the team right now, they look to scale net dollar retention over a 100%. All good. Will, thanks for taking us to the top.

Will Shaw

19:19>> Yeah. I appreciate your time.

Nathan Latka

19:22One 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

19:46central. 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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