How Brax CEO Mark Simon grew Brax to $480K revenue and 92 customers in 2018.

hello everyone my guest today is Mark Simon he's the co-founder of Brax where he helps performance marketers scale automate and simplify native advertising previously helped ecommerce and software companies acquire customers to organic and paid search he loves data visualization nutrition and everything outdoors which is his excuse for taking his kids on all kinds of crazy adventures mark are you ready to take it to the top I'm ready let's do it Nathan all right you told me before you've listened so you know what you're in for right I do all right good tell us about Bratz what do you guys do and how do you make money sure so we basically work with all the native ad networks out there so you can the core things is if you've ever created ads you have to create them look the same add like 100 times in maniac Network so what our system does you create it once and you can send it out to all the native mad networks so specifically out bring to Google Earth content those guys mm-hmm and walk me through that the revenue model is it a sass play here is that just a percentage of volume through that you're taken sure so it is a sass play we charge people on a monthly or annual subscription and the way we couldn't break that subscription down the value metric is a media spend got it so there's kind of a there's kind of buckets right have less than a hundred grand per month you're gonna pay us you know 100 bucks a month you're spending a million per month they're gonna pay us a grand per month something like that exactly yes I see so okay so you know the numbers what's the average most are paying you per month would you say yeah so one average it's about four hundred dollars is kind of the average the the entry level right now kind of starting price is 200 a month now if they do it we have a pretty aggressive we push people to an annual plan so there's a pretty aggressive discount I don't want to say it on the air in case it changes but did we push people to a 12-month plan for that's great now give me if someone's paying you foreigner bucks a month what does that mean in terms of how much they're spending with you per much typically sure yeah so if they're spending four hundred you know they're probably they're definitely over 50k a month and spend you know maybe you know up to around 50 to 100 km on okay god that's helpful to understand the reason I asked me so that's way cheaper there's a lot of the agencies that will charge you ten twenty percent of ads then you're you know charging 400 on 50 grand right which is less than one what is that less than 1% right or less than yeah yeah so exactly so we're under a percentage point you know about a third of a percentage point is about scale what we do so so the lower level plans it's anywhere from a tenth of a percent so all the way up to a little less than yeah and so it starts at about one percent you know our $200 a month plan is for 25 days and Mark how many customers are you serving today ninety two paying Custer's 90s you got it so that's about 36 grand a month at 400 right yeah it's a little higher than that that's why it's a you know we're 40km or are currently okay and and what were you at about a year ago so a it's almost a hundred percent growth when we look at it we kind of look at it annual revenue and run rates there so you know we're on track this year to probably grow anywhere from 75 to hundred percent got it but call it June 2017 last year may be doing 20k then you have a hundred percent year-over-year growth so now today you're doing about 40 grand per month and you think you're gonna grow that to how much by the end of the year so by the end of the year probably around we're looking to 70 80 K okay and how are you growing where are you getting these new customers from yeah so a lot of we get a lot of word-of-mouth to be completely honest account managers ad networks themselves we've even had a Facebook rep represent a recommend desk because you know at the end of the day media buyers spend less money because they run out of time you know usually that's one of the the limits of scaling is you either have to hire people or find technology so you can create more campaigns and spend more that's right now now that growth sounds great if you obviously keep that in customers we also have to keep your current customers what's your term look like today sure so we look at your own kind of two different well a couple different aspects but the main way we break it out is monthly versus annual customers so monthly we the about 4% sure and the annual its revenue its net negative logo it's about you know 1% or less got a pound net negative or ass differently what what yeah what's your revenue retention your net revenue retention annually do you know I don't know like exactly so we changed so we we changed our pricing let me say it that way so for most people it's an increase got a you know when you wear from $100 to sometimes devil I mean that's a hard conversation to have sometimes but actually the additional stuff they're gonna get offsets it yep and where is most the growth of coming from in terms of what you said it's word of mouth are you doing any direct paid spend yourself and if so what's your cat look like today sure so we just started actually direct spin this month so I don't have a map for you we have looked at it in the back pass just based on salaries of people working on fully meet fully weighted yeah yeah so when we look at that it's you know we kind of look at payback for than like time value since we're so young and so that's about one and a half months okay so that's that means your spend about 600 bucks to acquire the customer that they're paying for in our books a month yeah give or take so some of the self-serve we get for less than that some of them but that's what it a verge us out to about okay I love that you bring that up and that you know you're so young you look at payback period you know a lot of young companies they tend to focus on the the sexier metric which is LTV a cat grace you're the problem with that is you put yourself in a cash gap obviously right because you can have a very help people don't resist you can have a very healthy lifetime value to cat grace you know let's say a customers worth a thousand bucks to you you only pay ten the problem is if they're only paying you I make it up a dollar a month it takes you a hundred months right or a thousand months to get that thousand dollars of lifetime value which is my payback period is a much better indicator and from an operational perspective for young companies so this is a great payback period being 1.5 months yeah actually and another thing on that I think that people mess up with LTV so I call cam a good example I think there's like eight months or something before we ever had a customer churn so when you if you look at the formula like well L TVs unlimited until you have churned right I'm like well that's not real I was like yeah State Farm here with 20 years of data to make a prediction I was like you need at least five years of data before you start making those predictions yeah lifetime lifetime value is also I think a dangerous metric because of what you just articulated people tend to just divide by term then extrapolate and they assume a lifetime value of like infinity the truth about lifetime value in my opinion is it's a general soft indicator but it's a very weak indicator because look if you have a lifetime value of anything more than two years true-or-false mark you know in the next 12 to 18 months something's gonna come into your industry that you didn't know about and you're gonna have to adapt on the fly like yeah every six months yeah that could that could quadruple your LTV or put you out of business right I mean potential I'm making that up but worst case put you out of it you just don't know so a lifetime Iowa I think is always an interesting conversation tell me more about some of the the the team size what is that today sure so we're actually released small team so employees were free which is great we do have contractors first and stuff we were larger but we just scaled down it wasn't necessary was one of those like we kind of took the Silicon Valley ethos of like hire people you can grow faster and that proves to be false in our scenario we actually grew faster as we cut back why was that as it because you when you hired people they just weren't talented or you put them on the wrong tasks or you don't know what your growth drivers are I think it's a few things so one you know I still think even today with where we're at I don't think we're doing a little bit of you know helicopter circling to find product market fit you know I don't put us in that we found it category you know when we're doing 100 km RR I'll probably a little bit more confident about that but there are felt at least that point like in my opinion you just haven't found it before that point you know we certainly have traction and so you know I think that so that's part of it is you know hadn't you know it it's been about a year little less so we've definitely done better on a product where we fit in the market standpoint...