Buzzbuilderprorevenue

hello everyone my guest today is Jake out of what he's the founder and CEO of buzz builder he's also an author and speak keynote speaker who's focused on helping companies discover new ways to attract customers and grow their business he enjoys disrupting the status quo and his ebooks and blogs have been read by more than 500,000 people worldwide Jake are you ready to take it to the top I almost have some fun all right what is buzz builder and how do you make money buzz builder is a tool for sales reps that helps them find new customers so for both entrepreneurs and sales people who don't like to cold-call don't like to prospect are frustrated chasing leads it uses a combination of cold email campaigns and website analytics to help you locate the customers that want to buy from you and then it helps you connect with them and it's just like okay I want to connect with the head of a headed or Forbes type in for calm and you'll spit out all the emails on that domain that and then we help you identify people based on certain trigger events that might have a higher likelihood of meeting your products so if you're a recruiter we can find companies through certain search tools that are currently hiring for positions on indeed.com that you can fill and then we'll give you their contact information and then help you with messaging through various email campaigns to reach out to them and connect and then start the conversation interesting and what's your revenue model is it pure place asks it is per seat and it's basically a recurring revenue model front a monthly basis okay I don't average what do people pay per seat average is about a hundred and fifteen dollars per seat and about fifty one percent of our user base are solo entrepreneurs the other fifty forty nine percent are our small and mid-sized sales teams that's great and how many how many them are you serving today in terms of paid customers we've got about 350 companies plus another 350 or so entrepreneurs okay and so give me that in terms of seats total seats is just over about 1500 seats today got it okay well some pretty healthy business now I mean can I take the 115 times 1500 seats and generally back into them up through current revenue of about a hundred seventy grand or is that not accurate not quite because we we can't publish our exact revenues today because we were after some VC but you know we've got some folks who grandfathered and obviously from several years ago a lower price I'd lower price points of course yeah are you generally can we generally say you're north of a hundred grand a month we're close okay yeah you'll break it this month yes come on Jake yes or no you're gonna bring this mess with you all right break it this month yeah next month in the month after it's good how do you how do you use some of your kind of ebooks and your public persona to drive growth so we've created ebooks around this certain buyer personas while we've actually mapped a lot of our customers to certain buyer personas using a tool called crystal nose and it basically can scan people's social comments their LinkedIn profile and give you a disc personality for each person you're selling to or this Klein allottee so a disc personality profile basically it measures people's personality in four quadrants without going into detail are you more of a get it done just to the point type of person any more of a analytical person are you more of a social person and based on that profile we know number one were to find them and then number two how to communicate with them most importantly interesting what are you growing out right now you're over here so we've got grown by 300% in the last three years so just over you know a hundred percent a year you're over here okay got it so if you're doing around a hundred grand today what you're doing fifty grand twelve months ago and 25 grand twelve months before that about that yeah I mean that's that's that's pretty darn good growth yeah yeah and it's all been from cashflow and it's all been just grinded it out to now we're at the point we're gonna go up to some venture capital why are you boot strapped right now we are boot strapped and you know it's it's not a good thing to be under capitalized and now we've got to the point where we've got the sales model figured out the business model figured out it's time to pour some gas on the fire it's churn under control churn is under control could always be better of course right it is it it's it's roughly we've got about a seventy-five percent retention rate where when you're talking to entrepreneurs and sales reps that's actually much higher than average yeah so you're turning about 2% of your logos every month yeah interesting and why are they turning a number of reasons I mean there's the obvious reason such as I haven't used the tool or my business has changed you know there are times when an entrepreneur might start the program and we give them all their help in the world but you know certain people I think just have a tough time adopting new technologies new ways of thinking mm-hmm and what is you know a lot of people they look at onboarding and churn that they've identified a few things they know they have to get a new signup to do to be sticky what is the one thing you know you've got to get a new buzz builder user to do so they stick the most important thing is they they need to create their first campaign within the first seven days and we know if they built their first campaign the rest is gravy and we help with everything we help with the messaging with templates to make sure they've got their first campaign built and then there's all sorts of places they can grab contact list from so they can then load those in and so the first campaign out so ideally we like to see them launch their first campaign within seven days and what's your team look like today and what percent you know how many people on your team are dedicated to that onboarding so we've got two people dedicated to onboarding we've got a client success manager that handles a lot of the training we've also automated a lot of the training so we do weekly public training sessions we've got a whole video library we've got what's called video or buzz builder University and we launched that recently where it's not just the technical training but what we learned that people need and the number one reason they were failing with a tool like buzz builder just failing to implement it is because they lacked a process and especially a lot of entrepreneurs they really don't have a cohesive sales process and so that was the goal is to help them understand okay not just the content but when do I launch a campaign how many people how do I follow up effectively how do I work through the objections I'm hearing and so forth so what's your total team size today so we've got ten people on the team that are dedicated employees then a number of contractors and and folks we outsource to Dada and year one when do you launch we launched officially the beta went on for a few years actually I was a consultant in 2008 we launched the beta and we officially launched the product four years ago okay got a suit a lunch know what 2013 yeah so what the hell happens between 2008 and 2013 that's like six years yeah so I was a consultant basically I was building the product for myself initially and it was an idea I was a product under the umbrella of a company called ovation and I was a consultant I'd go out and I do a sales consulting job coach them on how to generate leads more effectively and one day I had the idea for the software and I just hired a developer to kind of toy with it and we kind of just kept working on and tweaking it over the years I mean put it in front of a few clients and say okay why do you like it what do you like what don't you like and I really built it through input from clients I learned early on the idea of build it and they will come only works in field of dreams so we wanted to build a product that had a lot of input from clients and then there came the day when I knew that I couldn't be doing the consulting and buzz builder so in 2013 is when I closed on ovation as a consulting business I heard my first official intro we had a consulting business done before you shut it down um I was at about Percy about 350 a year okay and consulting you know that it was just me I was a solo consultant he basically took that to your face that's how you're given up yeah and you know it was a leap I it's always one step back before he can take two steps forward it seems like so now today in terms of getting new customers what's your CAC what do you spending to acquire these guys not much you know the thing is we drink our own kool-aid our cost of acquisition is less than $200 per client okay and because eat know that's per customer so that would be it's it's a little less for going after solo entrepreneurs is more automated our cost for acquisition for entrepreneurs typically right now is less than hundred and fifty dollars and you said you said it's split 50-50 right so 50% of your of your users you which you have let's see fifteen hundred of our solo folks and in the rest are fifty kind of enterprises that pay what could be like four or five seats on average each for it's actually that yeah four to five seats on average last year as a month yeah so last year average customer between multiuser and solos was forty nine hundred dollars ideal annualized yeah yeah so you're getting if you spent 200 to acquire those guys you're getting paid back in like less than two months it's healthy payback period it is and the majority of our leads come either from referral from website leads through SEO and then a large percentage of them come from outbound cold email campaigns that are team launches so again we drink our own kool-aid that's great and with the 2% gross or logo we're sorry logo turn monthly that means the average customer do one / that stays with you for about 50 months do you back into the life cycle or life's lifetime value so right yeah like value yeah not so much we're more interested in what the cost per acquisition is during the first month we know that the gravy really is in month route rather in year two and year three the land so I'm asking what do you assume lifetime value is on these guys we assume we can keep the average customer for between eighteen months to two years and you know we're actually running another whole study on that because you've got some customers that have been with us for since day one for several years and others that are on board for two months and leave and we don't know why yep yes sir 24 months and a hundred fifteen bucks a pop that's you know almost a $3,000 you know lifetime value per seat obviously yeah yeah and as a result we're actually now looking to spend more money we're willing to spend a little bit more money for customer acquisition cost especially going up to the new the solo entrepreneur market a bit more aggressively so are you raising why are you reaiiy mean some is your cashflow positive right we are I are you how much do you want to raise and how did you come up with a number where would you spend it well we've done an amazing job developing a robust platform with with a very small team of developers and so the first goal is going to be hire more developers because I've got a list of ideas on a developer roadmap a mile long at the current page will take years to get there right yeah and that's number one and number two is we need to hire more sales reps and beefed up our marketing you know right now I don't want to say we're the best-kept secret out there a lot of people know about buzz builder but you know we know there are some major competitors that are getting 30 and 40 million dollars in VC and you know if I look two years out you know if we want to stay ahead of them that's ahead of the game we need to we need to have more capital Jake so how much do you want to raise in an ideal world so we're gonna do two rounds I don't need a lot you know we're pretty scrappy we can do a lot of damage with the lobe small budget so we're looking to do a half a million dollar first round and it'll probably lead to a second round of anywhere from three to five million and that first 500 will be dead or you'll do it as priced equity you think no we'll do it as equity we're gonna do initial crowdfunder round it sounds like we'll probably have $100,000 coming in from two or three investors that are private and then we'll bring those on board the next couple of months it looks like and then at that point we're gonna do second like seed round for additional $400,000 at a bit higher equity God and what about are you right for these early guys getting in what have you valued the company at how do you have that conversation so the valuation is is based on roughly a 4x multiple on revenues and then when we do the second round it'll be based closer to the to a 6x multiple X would be I mean I'm taking a hundred grand a month multiplied times 12 1.2 million you're talking about a four or five million dollar pre-money valuation exactly so let me ask you interesting question if someone came to you and said hey I'll write you a four million dollar check to buy the whole company right which makes you I think it's pretty interesting life event for you yeah yeah why not just take a deal would you take a deal like that well my wife about and have that concur we've had that conversation a couple of times she said no a year ago maybe but you know we've we've talked about this and the industry is so big and it's still in its infancy that the upside is is enormous and for my god it's very competitive though it's very competitive it is so you know I think in five years it's gonna be a very different field of the industry so our that's the other reason we're raising capital we do have a plan to grow this up explode it and then in five years have an exit strategy or potentially sooner if we get something that comes along that gives us a really really good price interesting so you would not talk - sure thing you would not take a 3/4 million dollar offer today no I gotta think big interesting I tell you what there's a lot of people have worked with they'll say Nathan I didn't want to take the 980 million dollar offer because I wanted the billion dollar thing to put on my LinkedIn profile and you what they did ten years later they're selling for five million bucks because it failed miserably so I mean I'm always a fan of hit the singles hit the doubles because it requires way too much luck to go be the next Mark Zuckerberg yeah and we don't have aspirations or any desire to go to a billion dollars I've got a number in mind that once it gets past that number and that number from come on Jake what is it probably not having fun anymore you know let me just say we we know of a couple companies that have sold for between thirty and forty million dollars in our industry recently named one and that's got a good well-child app for one so get out apt and not sell for between 30 and 40 they sold for $5,000,000 after raising 16 million it was a total wash for everybody total wash okay so I was given misinformation so you know this is where it's interesting we're growing fast we're very competitive I feel like we're doing a good job out selling the rest of the industry right now too and at the point where we've see that it's it's gonna be a different game it's pretty - it's time to sell interesting well we'll see we'll see what happens we'll have you on hopefully once per year between now and then and stay up-to-date all right yeah all right before - all right Jake let's wrap up here with the famous five number one what's your favorite business book I'd say how I raised myself from failure to success in sales I think any big businessman really knows how to understand sales that is a long-ass title for it's a long long name and he was written a hundred years ago - how I raised myself from failure to success in sales it's about selling itself perseverance it's about entrepreneurship yeah number two oh and where you based again location wise Minneapolis okay you know name the last CEO you went out to dinner with in Minneapolis uh actually the last CEO was April Davis actually and of all things she owns an executive matchmaking service Oh Andrew are you are you well you said you have a wife right yeah I'm helping her with their business so what we taught it formed an executive roundtable and I don't like to surround myself with just people that run businesses exactly like mine I want to have some diversity and it's amazing how you pick up ideas from people that sell to a completely different audience and you do okay it's not it's not trying to match up single executives are you married it's to facilitate Rose got it right right number three besides your own with your favorite online tool right now I'm just really loving using well there's a number of tools gosh crystal nose is got some really interesting things are doing with buyer personas right now and that's gonna be the in road to the next level of hyper personalization with messaging I think number four how many hours of sleep to get every night six that's good I know what's your situation when my three-year-olds not waking us up for this one kid we've got two actually but the nine-year-old she's good to go alright and how are you Jake I am 43 last question take us back to your 20 year old self what he was she knew ah I wish I knew how to focus better be hyper focused because I was a guy with a million ideas and it's not about having the ideas about having the execution focus better there you guys have it from Jake launched buzz build are back in 2008 as an idea for himself when he was consulting finally got serious about it in 2013 quit the firm a $50,000 consulting gig launched his own company himself now he's up to ten people totally bootstrapped he's serving about fifteen hundred customers paying one hundred fifteen bucks a seat so doing about 100 grand per month in revenue 2% logo churn per month twenty four percent obviously annually spending out 200 grand sorry two hundred bucks to acquire a customer really healthy payback period now looking potentially at going on a raising company but it raising capital but again bootstrap today again helping folks with outreach automation and conversions to drive sales Jake thank you so much for taking us to the top Thank You Nathan been a pleasure