How Booker CEO Josh Mccarter grew Booker to $18M revenue and 10K customers in 2017.

this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per talk 5 and6 million he is H bent on global domination we just broke our 100,000 unit sold Mark and I'm your host Nathan Latka I just finished traveling Southeast East Asia for 41 days and I usually always get sick when I travel and quite frankly eating is difficult for me it's hard to find a restaurant and I'm spoiled in Austin with my personal chef well I took these little packets with me this time 30 of them in my carry-on suitcase they kept me totally healthy with 11 different secret ingredients you can see them at Nathan la.com juu I'll tell you more later on in the show that's Nathan la.com slj Nathan L here this is episode 625 and coming up tomorrow morning we hear from 30-year-old CEO of the not a CEO actually but man a senior editor at the Atlantic which Derek Thompson he's releasing his book which helps you predict popularity in this new age we live in the distraction age so why is he writing a book how much money do he make on a royalty and what's it mean for you tune in to find out good morning everybody Our Guest this morning is Josh mcarter he's the co-founder and CEO of Booker software a leading businessman man agement and Marketing Solutions serving over 10,000 Health and Beauty businesses small large medium you name it Josh has served in a variety of senior executive Bo and and board roles at various technology companies including arbitech spa finder and auto byel additionally they've got some exciting things happening at Booker we'll jump into it today Josh are you ready to take us to the top absolutely let's go all right so tell us first for those that are not you know working at a spa or a salon what does Booker do so Booker is a business management and marketing solution for health and wellness businesses and in a simple way you can think of it almost like a uh open table for health and wellness businesses where we not only manage uh the online bookings and and scheduling in general uh but really everything that the business needs to do to run its operations so that's everything from staff management uh time clock to CRM uh point of sale and then uh retention marketing and and talking about your business model how do you grow your business how do you make money so the the model is actually pretty straightforward it's uh it's largely uh consists of of subscription revenue from people that sign on to our platform uh we charge anywhere from call it 100 to 250 bucks a month for the subscription Revenue uh then we also make money on merchant processing we have several integrated merchant processing partners and then the third piece is we sell a add-on product called Frederick which we acquired last year uh that's in the marketing automation space so I want to get more into Frederick in a second and talk about kind of why you made the decision to acquire and what Frederick does uh first question though you know I first came across you when I was having conversations with Revolution uh you know the firm run by Steve case up there in DC and and Tig and many of the team members were very very excited about what you were building and I no I mean one of the big decisions that you made I talk to companies all the time that say oh we help small businesses manage their business right it's like they're not as specific as what you've done how big of advant Advantage is it for you to say specifically we're focused on the spa and salon management space yes so you know small and medium businesses are you know very fragmented so if you depending upon which study you look at they'll give you numbers anywhere between you know 20 and 25 million businesses and they each have very unique requirements and so we we started focusing on uh the spa industry because this technology actually started in another company uh called spafinder and then I led the spin out of the technology and started Booker back in 2011 and you know what you find is is that in health and wellness businesses that the use cases that they have for scheduling and staff management and customer management and point of sale um are really similar uh but if you compared that as an example to uh a retail business or a restaurant um they have some very very unique needs as well and so really I I think it's it's important to understand what type of customer uh you serve best uh because those are the type of folks that are going to be the most successful uh with your product and stay with you the longest and you know frankly we've had some ups and downs as we've learned that and have explored other markets uh and kind of come back just recently to really focus on the areas that uh that we do the best in and you mentioned the the year kind of average customer right now is paying you you said did you say 150 bucks per month yeah around there and then we have merchant processing and then if they they buy the uh the marketing product it's a similar at a similar price point okay do you see I mean let's say is more than 80% your Revenue subscription though yeah uh probably 70% of our R yeah sub and then Mark and then uh obviously imagine a chunk of the 30 a big chunk is the merchant and now you're just just getting scaling up Frederick right exactly exactly interesting okay so take us back for a second because you did something interesting this wasn't created from scratch rather this was inside of a larger Corporation and you managed to spin out in 2011 that's an interesting model to follow people are interested in how you do that how did you structure that from a cap table perspective from a money perspective how'd it work yeah so it wasn't simple um because the other company had uh you know a lot of Legacy shareholders it was a business that was around since uh well I think it was all the way back to ' 89 when it was orig founded that was my birthday Josh I don't want to make feel old but so yeah so you know obviously having been around that long there was you know a lot of different investors in and out of the business and so first of all just making sure that you've got you know the right right type of of structure when you spin it out so that um you're you know you're not harming the prior shareholders but at the same time that you're giving you know preference to the new shareholders and investors that are coming in that are building something you know that's fundamentally different than than what the business started as and so that you know that took probably you know six to nine months almost to get all the structure and the you know proper licensing agreements and IP assignments and all of that done and uh and then we went from there to your point you know Revolution LED our series a uh we got that done in November of of 2011 how much was that for uh it was a $15 million raise okay got it and was that really your initial working capital or did spafinder also put in initial Capital well spafinder had put in the initial Capital that built the you know base platform uh that we started with but at the time as an example you know it was a 25 30 person company um most of it on the technology side a lot of shared services back with spafinder uh that we really had to break out over time and set up you know the company a lot of 2011 going into 2012 was you know building it's our own infrastructure so that we weren't relying on spafinder and that's where some of the investment went and what what's you mentioned it was around 35 then what was your what's your team size today q1 2017 around 200 now 200 and you did 15 million uh in your in your a round just for for Booker how much in terms of total funding have you raised uh just shy of 80 million at this point we've done three three rounds of Finance got it okay and then so so I want to go back real quick to the spin out before we talk about the rest of the business so what it does spafinder have do you just give spafinder the company a chunk of Booker or and then revolution has some and then you have some as founder I mean is that kind of how the cap table works yeah more or less I mean there there was a you know you have to do all of the proper valuations when you do a spin out for you know obvious reasons and and so we did that and 409a or something yeah it's not it's it's like a 409a but it's not it's not exactly a 409a and uh you you wind up having a you know a value of the business and and a certain amount of that is ascribed to the original shareholders got it and and then you know obviously is with any you know kind of venture backed company when you're investors come in uh they get preferred stock in the company and uh so that's kind of how we've built up the cap table and do you remember back in that first year I guess that was what six seven years ago now back back in 2011 how much revenue did you do in that first year uh you know we were in the low low single Millions low single okay so that's still pretty I mean you were able the reason I asked is you were able to get then a fairly non-dilutive I guess round from Revolution if you already doing in the L Millions yeah yeah it was it was you know it was a well priced round and...