Founder Interview
How BrightLocal Reached 3,500 Customers with 2% Monthly Gross Logo Churn in SMB Local SEO (Interview with Founder and CEO Myles Anderson)
- Interview Date
- June 11, 2018
- Interviewee
- Myles AndersonFounder and CEO
Company Metrics at Interview Time
Active Customers (2018)
3,500
ARPU (2018)
$100 per month
Gross Logo Churn (2018)
2% per month
SaaS Revenue Growth (2018)
About 50% year on year
Team Size (2018)
120
Historical Snapshot
These numbers were reported by Myles Anderson during the interview recorded in June 2018 and are a historical snapshot, not current figures. See BrightLocal’s current numbers.
Key Takeaways
- 01BrightLocal had approximately 3,500 active subscription-based customers as of June 2018
- 02Average revenue per customer was around $100 per month
- 03Churn was around 2% per month (gross logo churn), which Nathan called fairly low for the SMB space
- 04SaaS revenue grew about 50% year on year as of mid-2018
- 05Customer acquisition cost was approximately $150
- 06Customer lifetime value was north of $1,000
- 07Total revenue was $550,000 in the month before the interview, about 65% from SaaS and 35% from services
- 08At the time of the interview, BrightLocal had been profitable since 2012 and had never raised outside capital
- 09Total team was about 120 people across the UK, Ukraine, Philippines, and the US
- 10The company was founded in 2009 and began generating product revenue around mid-2010
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Year Founded | 2009 | Founder interview, June 2018 |
| Active Customers (2018) | 3,500 | Founder interview, June 2018 |
| ARPU (2018) | $100 per month | Founder interview, June 2018 |
| Gross Logo Churn (2018) | 2% per month | Founder interview, June 2018 |
| SaaS Revenue Growth (2018) | About 50% year on year | Founder interview, June 2018 |
| Total Monthly Revenue, incl. Services (2018) | $550,000 | Founder interview, June 2018 |
| Revenue Mix (2018) | About 65% SaaS, 35% services | Founder interview, June 2018 |
| Customer Acquisition Cost (2018) | $150 | Founder interview, June 2018 |
| Customer LTV (2018) | North of $1,000 | Founder interview, June 2018 |
| Monthly Marketing Spend (2018) | $27,000 | Founder interview, June 2018 |
| Paid Marketing Share of Marketing Budget (2018) | 10% | Founder interview, June 2018 |
| Team Size (2018) | 120 | Founder interview, June 2018 |
| UK Team (2018) | 16 | Founder interview, June 2018 |
| Ukraine Engineering Team (2018) | 20 | Founder interview, June 2018 |
| Philippines Team (2018) | 85 | Founder interview, June 2018 |
| US Team (2018) | 4 | Founder interview, June 2018 |
| Profitable Since | 2012 | Founder interview, June 2018 |
| Outside Capital Raised | $0 | Founder interview, June 2018 |
Growth Breakdown
Revenue
BrightLocal's total revenue in the month before the interview was $550,000, combining a SaaS component and a services component. SaaS accounted for roughly 65% of revenue and services for 35%, with SaaS growing about 50% year on year as of mid-2018.
Customers
The platform had approximately 3,500 active subscription-based customers at the time of the interview, paying an average of $100 per month. Customers range from self-serve SMB marketers to enterprise accounts with negotiated pricing.
Team
BrightLocal employed around 120 people across four locations: 16 in the UK headquarters, 20 engineers in Kyiv, Ukraine, 85 in the Philippines delivering a service that manages local businesses' presence on sites like Yelp and Google My Business, and 4 in the US. None of the team was outsourced.
Profitability and Funding
At the time of the interview, BrightLocal had been profitable since 2012 and had never raised outside capital. In the early years Myles put pretty much all of his day-job income into the business; since turning profitable it had reinvested its profits. He called the company self-funded, but said it was no longer bootstrapped by his own definition of the word, a business that cannot afford significant investments to grow, because it had money in the bank.
Growth Strategy
Blog Content Marketing
Marketing ran at around $27,000 a month, about 10% of BrightLocal's costs, and only about 10% of that was paid marketing. The rest went mostly on salaries, with a lot of it going into content marketing.
Free Tools as a Marketing Device
BrightLocal started with a free tool, designed as a marketing device and a link builder, and ran it for about six months. That built a very large list of potentially interested customers before the first product revenue came in around mid-2010.
Productized Services
About 85 people in the Philippines delivered a service that manages local businesses' presence on sites like Yelp and Google My Business, supported by BrightLocal's own software tools, which made it productized. Customers bought it because the work is essential to local visibility but time-consuming and mundane, and services made up about 35% of revenue.
Niche Focus on Local Search
BrightLocal concentrated specifically on local businesses with physical customer interactions, a niche Myles identified as underserved in 2009. Finding nothing in the marketplace, and hearing from peers who were struggling to get the data they needed, Myles and his business partner built their own tools; about a year into the business they were 100% focused on the product.
Reinvesting Profits for Sustainable Growth
Rather than raising outside capital, BrightLocal was funded by the founders' own money, including Myles's day-job income in the early years, and, once it turned profitable in 2012, by reinvesting its profits. Myles said the company stayed cost-conscious, as all good businesses should be, but had money in the bank to make the investments it needed to grow the platform and the team.
Best Quotes
“We actually have a big operation in The Philippines. We have about 85 people over there, and they do a very kind of specific service to our particular niche, which is basically helping local businesses get more visibility online by managing their presence on sites like Yelp, for example, or all kind of Google My Business.”
“Our churn is around 2%.”
“We probably spend about about a $150 per acquisition. … And our, you know, our kind of LTV is, you know, it varies on the kind of type of customer and whether they go to the sort of service side of what we do, but it's kind of north of a thousand dollars.”
“We haven't raised capital. So we're self funded.”
“We've been profitable since 2012.”
“So we got about a 120 people. We're headquartered in The UK. There are 16 of us here, and that's essentially an operational and kind of management hub. We all do all our web development out of Kiev in The Ukraine, and that's about 20 people. And then we have 85 in The Philippines. We've got four in The US.”
“I actually had a day job for the first, I think, the first two years of running this, and I used to kind of run BrightLocal in the evenings and on the weekends.”
What Happened Next
At the time of this interview in June 2018, BrightLocal was a profitable, self-funded local SEO platform with 3,500 customers, a 120-person team across four countries, and roughly 50% year-on-year SaaS revenue growth. Myles Anderson and his business partner had built the business from a free tool, used as a marketing device, into a combined SaaS and productized services operation without raising any outside capital. This page captures the company as it stood at that moment. Visit the BrightLocal company profile for current figures.
View BrightLocal’s current profile and metricsFull Transcript
Chapters
- 0:01Introduction to BrightLocal
- 0:20What BrightLocal Does and How It Makes Money
- 1:44Customer Count and ARPU
- 2:21Total Revenue and Services Mix
- 3:37SaaS Growth Rate Year on Year
- 3:52Funding Status and Bootstrapping
- 4:58Founding Story and Early Days
- 6:36First Customer and Early Revenue
- 7:47Churn, CAC and LTV
- 8:55Team Size and Global Locations
- 9:24Famous Five: Favorite Business Book
- 10:26Favorite Online Tools
- 10:59Personal Life and Final Advice
Introduction to BrightLocal
Nathan Latka
00:01Hello, everyone. My guest today is Myles Anderson. He's the founder and CEO of a company called BrightLocal. He's worked in the local search industry since 2009, has been a and has been a contributor to the local search ranking factors study. He's written a regular column for Search Engine Land and spoken at SEO conferences in both The US and The UK. Myles, are you ready to take us to the top?
Myles Anderson
00:19Yeah. Sure.
What BrightLocal Does and How It Makes Money
Nathan Latka
00:20Alright. Tell us about BrightLocal. What are you doing? How do you make money?
Myles Anderson
00:24Yes. So BrightLocal is a SMB SaaS platform. We help digital marketers and local businesses, essentially understand how they're performing online and how they can improve their visibility so they can win customers. The thing that is of slightly different process to operate in a niche, You might call it a niche. And that is essentially in sort of physical, physical sort of space. So we operate a lot in terms of businesses that want to have physical interactions with
00:48customers. So people will give them a call, they might walk into the door, or they will have some sort of physical relationship with those sort of customers as opposed to let's say a credit card company like American Express where their sort of customer relationship is essentially pretty kind of virtual. So typical businesses that our customers would work with are solicitors, plumbers, builders, accountants. You know, that's not necessarily small businesses, you know, kind of single sort of
01:13location local businesses. It could be large, sort of, you know, kind of enterprise scale businesses like Home Depot, for example, that will, know, an enterprise scale business, but with 2,000 local kind of locations where they interact with their kind of customers kind of walking through the door. So our platform is primarily used by marketeers, either working for themselves, working at agencies, working in house at multi location businesses, And we provide them with kind of data analytics
01:39and insight so they know how they can essentially drive more physical customer interactions.
Customer Count and ARPU
Nathan Latka
01:44And what are these customers paying on average per month for that kind of product set?
Myles Anderson
01:48I mean, we're an SMB platform primarily, although we do scale up to kind of enterprise. So we've kind of got customers that kind of loosely fall into kind of two brackets. We've got customers who can sign up self serve and use our standard plans, And then we have these kind of enterprise customers who we negotiate particular deals based on what their particular need is. We've got around three and a half thousand kind of active kind of
02:11subscription based customers at the moment. Probably the kind of the kind of average sort of monthly, you know, kind of RP per customer is around a $100.
Nathan Latka
02:19Okay. A $100 per month?
Total Revenue and Services Mix
Myles Anderson
02:21Yep.
Nathan Latka
02:21Okay. So I mean, can I take that times the 3,500? You guys are doing about $350,000 a month right now?
Myles Anderson
02:27Last month, we did $550,000. We also have a service component to our business as well.
Nathan Latka
02:31I see. The pure play SaaS business last month, that was... Was that about $350,000?
Myles Anderson
02:36Yeah. We're about that.
Nathan Latka
02:37Okay. That's great. Where does the self serve... The professional services side come in? Are those, like, setup fees and things like that?
Myles Anderson
02:43No. We have... So about 65% of our revenue is SaaS, 35% is in service based. We actually have a big operation in The Philippines. We have about 85 people over there, and they do a very kind of specific service to our particular niche, which is basically helping local businesses get more visibility online by managing their presence on sites like Yelp, for example, or all kind of Google My Business. And so we kind of deliver that sort
03:09of service. It's kind of productized in a way. We put a lot of kind of sort of software tools that support the sort of physical solution that our guys over there kind of deliver. But people buy that from us because it's an essential kind of component in your getting good online visibility if you're a kind of local business. It's also quite time consuming, and it's quite it's quite mundane. So people, you know, they like to kind
03:31of outsource that to us, kind of get it off their plate, and they kinda... We go and do that in a very efficient manner for them.
SaaS Growth Rate Year on Year
Nathan Latka
03:37And, Myles, give me a sense of growth. So just on the SaaS side of things. So $350,000 today per month. What were we at a year ago and call it June 2017?
Myles Anderson
03:45We're probably about 50% up year on year.
Nathan Latka
03:47Oh, wow. Okay. That's good. So call it what? $275,000 ish, something like that about a year ago?
Funding Status and Bootstrapping
Myles Anderson
03:52Yeah. Yeah. We've we've been in business since 2009. You know, we we we work on a bootstrap. We've never taken outside funding.
Nathan Latka
03:59You're still bootstrapped?
Myles Anderson
04:01We're not bootstrapped anymore. I mean, it depends what your kind of definition of sort of bootstrapping is. I mean, we're kind of cost conscious as as all kind of good businesses should be, but, you know, we have money in the bank. You know, we're able to, you know, to kind of make the investments we need to make to kind of grow the platform, kind of grow the team to kind of support it. Well, so
Nathan Latka
04:18how much have you raised, Myles?
Myles Anderson
04:20We haven't raised anything.
Nathan Latka
04:21Okay. Wait. So then your boots... You're... Usually, it's it's pretty black and white. You're you're either bootstrapped or you... Or you've raised. So you are still bootstrapped.
Myles Anderson
04:28Well, my definition of bootstrapped is that you're kind of becoming cost conscious and you can't afford to make significant investments to kind of grow the business.
Nathan Latka
04:35Well, yeah. But even companies that have raised capital are still gonna be cost conscious. They're not just gonna go flush you down the toilet. Some do, but not all do. Right? So so, I mean, have you raised traditional capital or have you not raised capital?
Myles Anderson
04:44We haven't raised capital. So we're self funded.
Nathan Latka
04:46Okay. Got it. So you put in your own... You guys have put in your own capital. The founders have put in their own capital to grow the thing.
Myles Anderson
04:52Yeah. We've been profitable since 2012.
04:54Got it. We've just been reinvesting the profits back in the business instead.
Founding Story and Early Days
Nathan Latka
04:58Yeah. That makes great sense. Okay. Good. And then give me a sense of where we're... I mean, what were you doing in 2009? How'd you get the idea?
Myles Anderson
05:06The kind of story comes from a pain point, actually. I was was working for a kind of large sort of kind of last sort of SaaS product, but sort of more kind of consumer rather than sort of business. And I actually got kind of made redundant, and at the time I had a couple of kids, and I was thinking, you know what? That's a really painful experience and not one that I want to go through again.
05:24And I kind of looked my kids in the eye and thought I need to do something that gives me kind of security and control, and also something that they'll be proud of kind of down the line. And so I started to start my own business, and I teamed up with my business partner, you know, who's a kind of very long in the tooth sort of web developer. And we started looking around kind of opportunities. We've collaborated
05:43with kind of local market project before. I kind of liked the the kind of industry liked the idea about helping local businesses who are really struggling to understand how to use the Internet to acquire new customers. I had lots of lots of friends of mine who are in various sort of businesses from building to owning pubs and bars and restaurants, for example, really kind of focusing a lot of offline sort of marketing. Really didn't understand online
06:03and struggling to get their heads around it, so there's an opportunity here. But given our kind of background in in... My part is back at it in web development, we decided to pretty kind of quickly into the sort of, you know, the sort of agency side of what we were doing, decided to go and build our own tools, looked around. There was nothing really in the kind of marketplace. Also spoke to kind of contemporaries of ours
06:23who were struggling to kind of get the data they needed to kind of really grow. And so that's when we kind of started off building the kind of the product side of what we do. And then from about probably about a year into into kind of starting the business, we became, you know, kind of 100% focused on the product.
First Customer and Early Revenue
Nathan Latka
06:36When did you sign your first customer? How how long after you quit your job and you started writing code did you did it take you to sign them?
Myles Anderson
06:43We started off actually with a with a with a free with a free tool. It was designed as a sort of marketing device and a link builder back in the day, sort of thing that actually would be considered kind of, you know, unacceptable and spammy these days, but worked worked back then. So we probably we probably operated on that for about six months, and that allowed us to build a very large list of potentially interested customers.
07:04I think we got our first revenue in the door probably in kind of mid two thousand and ten from the kind of product side, and we landed our first significant customer, maybe significant, know, someone who's gonna pay us more than a thousand dollars a month, probably around the start of 2011. Okay. So we were very, very kind of bootstrapped. I actually had a day job for the first, I think, the first two years of running this,
07:29and I used to kind of run BrightLocal in the evenings and on the weekends. And I was working at a crazy kind of eighty hour week doing my day job, putting pretty much all the income I had from my day job into the business to, you know, pay it and expanding to the field of freelancers and sort of freelance developers to kind of sort of build the product.
Churn, CAC and LTV
Nathan Latka
07:47And so, Myles, what do the economics look like today? Churn is critical in this kind of space. What's your churn?
Myles Anderson
07:52Our churn is around 2%.
Nathan Latka
07:54That's gross logo churn per month?
Myles Anderson
07:56Yeah.
Nathan Latka
07:57Okay. If you could... And that's actually fairly low for this kind of kind of space SMB space. What do you spend to acquire these customers? What's your CAC?
Myles Anderson
08:06So, I mean, these customers kinda cut me up. So marketing month on month is around 10% of our kind of costs. It's around $27,000 at the moment. Only about 10% of that is spent on paid marketing. The rest is in full salary. So a lot of it is on kind of content marketing. But we probably spend about about a $150 per acquisition. K. And our, you know, our kind of LTV is, you know, it varies on
08:35the kind of type of customer and whether they go to the sort of service side of what we do, but it's kind of north of a thousand dollars.
Nathan Latka
08:42Got it. So if you've spent a $150 to acquire a customer and they pay on average a $100 per month, your payback's south of two months, which is really healthy.
Myles Anderson
08:49Yeah. Pretty much. And they'll see... I mean, we haven't looked... You know, because we have a service side as well. We have a lot of coming customers who buy into that.
Team Size and Global Locations
Nathan Latka
08:55That's great. You mentioned you have 80 folks in The Philippines. What's your total team size today, where's everybody based?
Myles Anderson
09:00So we got about a 120 people. We're headquartered in The UK. There are 16 of us here, and that's essentially an operational and kind of management hub. We all do all our web development out of Kiev in The Ukraine, and that's about 20 people. And then we have 85 in The Philippines. We've got four in The US.
Nathan Latka
09:17Okay. Good. So so fairly remote team, actually.
Myles Anderson
09:20Yeah. Yeah. And it's all it's all... None of it is none of it is outsourced. It's all offshore.
Famous Five: Favorite Business Book
Nathan Latka
09:24That's very good. Alright. Let's let's wrap up here with the famous five, Myles. Number one, what's your favorite business book?
Myles Anderson
09:31Probably two I enjoyed. I love the book called Influence, which is What's it called? Influence.
Nathan Latka
09:36Influence?
Myles Anderson
09:37It's essentially a study of psychology and the impact of that on marketing. You're... Sorry.
Nathan Latka
09:41Did you say Influence by Cialdini?
Myles Anderson
09:43Yes. Okay. Yeah. Got it. Yeah. Very well. I love that. I just... I found it's... I find it kind interesting sort of drawing on it on sort of psychological influences from a whole different sort of set of fields, not just from business, and then how you can apply that to your kind of marketing. We're, kind of marketing driven driven business, particularly around sort of persuasion side of things. And there's really big load with Lost and Founder,
10:03which is a guy by the name of Rand Fishkin, who started a company called Moz. And given that we kind of operate into the same field, it's a very kind of warts and all
10:12insight into how he kind of grew Moz, pitfalls they had. There's an incredible amount of honesty in the book, but it's a very interesting read as well.
Nathan Latka
10:21Number two, is there a CEO you're following or studying currently?
Myles Anderson
10:24Not at the moment. You're not interested. Don't have enough time to do that.
Favorite Online Tools
Nathan Latka
10:26Good. Number three, what's your favorite online tool for building a business?
Myles Anderson
10:30Well, obviously, I enjoy... I I use my tool, BrightLocal. Two things that are probably really helping around sort of finance side. So services like ChartMogul, which help us get great visibility on our MRR, and you can kind of sort of visualize that. It's incredibly kind of helpful. And also Xero is a kind of accounting tool. I always struggle with kind of old school accounting tools. It never made any kind of sense to me. So having sort
10:52of solution like that provides really intuitive reports really really kind of helps me kind of understand the kind of business is great.
Personal Life and Final Advice
Nathan Latka
10:59Number four, how many hours of sleep do get every night?
Myles Anderson
11:03Probably about six or seven.
Nathan Latka
11:04Okay. That's good. And you mentioned kiddos. So so what's your situation? Married, single, how many kiddos do you have?
Myles Anderson
11:09Married with four kids.
Nathan Latka
11:10Four kids. Oh my gosh. You're a busy guy. How old are you?
Myles Anderson
11:13I'm 41.
Nathan Latka
11:1441.
11:15Last question. What do you wish your 20 year old self knew?
Myles Anderson
11:19But, you know, I could tell myself a couple of things. It would be focus on results and not effort. You know? The world will result and not not effort alone.
11:29Have fun now because because by the time you get to 30, it's gonna be bloody hard work.
Nathan Latka
11:33Guys, have fun now. It gets harder as you get older. Coming from Myles. Launched company BrightLocal in 2009. Now a 120 people all around the world again helping these folks specifically sales and marketing folks where there's physical locations all around the world. 3,500 customers using the platform. They're bootstrapped. They've used their own money to grow it. June 2017, doing about $275,000 in pure SaaS revenue. They have a service component on top of that, $275,000 pure
11:57SaaS, about 50% year over year growth. They're now doing about $350,000 a year, sorry, a month in SaaS revenue. These customers paying on average $100 per month, 2% gross logo churn per month, which is really impressive considering the ARPU on the SMB space, spending about $150 to acquire these customers for a two month payback and a $1,000 lifetime value. Myles, thank you for taking us to the top.
Myles Anderson
12:17Okay. Alright. Thanks a lot. Have a good day.