How Chatmeter CEO Collin Holmes grew Chatmeter to $7M revenue with a 140 person team in 2024.

hello everyone my guest today is Colin Holmes he's the founder and CEO of a company called chat meter found that in 2009 before chat meter he was VP of Product Management and marketing at V enable which is now X ad his extensive experience in the local search industry both mobile online both online and mobile provides a solid foundation for the direction of the current company Colin are you ready to take us to the top yeah let's do it all right tell me about chat meter what do you do and what's your business model how to make money sure so Java is a reputation and SEO company so we help large chains of multiple locations improve their presence visibility and reputation on sites like Google Maps Yelp and all those reviews that people are reading and searching for every day when they're trying to find those local products and products and experiences we help get those businesses in front of consumers okay and I is this a mean is it a pure place a small or pay-as-you-go or professional services okay and are you doing kind of enterprise deals or high volume you know low are pukana deals direct and B model the enterprise space so now we typically change we don't talk to clients unless they have about 20 locations the average business have our average client has about 250 litigation so it really is that regional chain but we've also acquired some of the largest brands in the country like Kohl's and auto trader and Payless and large retailers as well and so just to round that out before we get more your back story that you mean general you know general contract value on these things over a year are we talking like a hundred grand ten million a million the average is about 50 to 70 grand a year okay got an hour are the the the metrics or the levers you pull to drive expansion revenue is it based off the number of locations or what or number of seats or what is it you got a yeah it's based on the location size the barrier chain the more you got a past interesting okay tied to location not like foot traffic or anything else and what they're actually paying for or just to get a sense of the platform a dashboard that aggregates and reports on all of this information then enables them with tools to be able to do things so a couple of those things would be great examples are responding to reviews so we're aggregating all of that content allowing them to see let's say I'm a regional manager I want to only look at my stores see what's happening what do I need to maybe fire the store manager for example or enabling the corporate office to respond to reviews in which there's a lot of communications going on between the corporate office and the local office figuring out what happened will require you to kind of track and manage all of that almost like a mini CRM if you want well if you will we're certainly not a Syrian company but that concept of being able to understand that customer experience know what happened you need you need tools really to be able to do that when you're someone that has two hundred stories across you know multiple review sites through talking about thousands and thousands of pages so we aggregate all that information allow you to see where you need to focus your efforts and provide you with the tools the will to do that effectively and bootstrapped of your race capital mostly mostly bootstraps come on Colin oh you're either you either get the bootstrap credit or you're not you've gone to the dark side and you're funded which one is it [Applause] for the first four or five years was bootstrap we basically built [Music] okay so that was between 2009 going to 2013 and 2013 you grew it's about two million in AR before you did a funding round 2013 2014 yep but they're pretty small and then in 2016 so give you a little history there kind of focus on pivoting toward the enterprise what's a little like give me real numbers how much did you raise and total team size today is was I'm sorry what do you I now today total team size is up to just approaching 60 people okay all in San Diego okay all round [Music] up the funding stuff functionality and we design the dashboard for that because it was a very simple SMB dashboard before and just crushed it in 2015 to quantify that somehow what do you can crush it like triple the business 5x to what it's time to go raise some funding to raise a million we're closer to two million we grew from about 15 employees to roughly 40 within three months so pretty rapid growth yeah well knowing you're growing your team just means you're growing your expenses so when you say rapid growth I mean it's more important obviously they're talking about customers and it is increasing your team size yeah growth revenue wise same for 2015 to 2016 the last over the last 12 months or the about 85% European revenue growth that's good that's good I mean so just to write just to actually it's actually round that out so you told me in 2013 you bootstrap for the first four years to about two million in ARR so if it was two million in 2013 a hundred percent year over a year that takes you to four million I believe in 2014 and then another hundred percent 2015 that's eight million so I mean are you guys what are your North you're north of 10 million at this point right okay got it fair enough and you've only raced you've raised two million total now right yep okay good stuff what about economics in this space so obviously churn is critical in a SAS business what do you guys in terms of churn [Music] in terms of logo or revenue they're okay they're about equal okay cool now so you haven't you haven't you haven't hit net negative revenue turn yet when you add it back in your expansion products and services that we offer in Garner's in a positive element like listing management you know as a service give clarity on what that is it's helping clients make sure that all their stores name address phone number that has photos basically highly optimized business listing profiles and all the local search sites okay interesting and then in terms of total customers you're serving today about how many are you working with so we have six figures in terms of customers across wait what do you mean is are I to understand that what do you mean sick what do you mean six figure customer count in terms of number locations okay but good got it but one customer could have hundreds and hundreds of locations right no I'm talking about individual location so we have hundreds of enterprise clients yep hundreds I'm sorry of locations hundreds of thousands of locations and just hundreds so-called between hun 100 and a thousand individuals brands you're working with your eye I assume most what you're giving me here as minimums which is totally fine it gives us a some sense of scale but if you're you know if you're north or around 10 million right now in ARR and I divide that by 12 that's about you know what 830 830 K a month and if you got an our pool of people paying on average 50 grand a year that's four grand a month ish if I just divide four grand into 830 that puts you right around 200 as customers or brands that make up those hundreds of thousands of locations all right good well well see I won't pay I won't put you down any more that that's fair enough to understand how do you scale the business even faster that we have that repeatable sales model which is what we did within the last year responsibilities and so we're now actually just put an offer letter out to a new VP marketing that's going to be starting with a couple weeks so very excited about that and having a big impact or increase I should say on our marketing spend is gonna drive major growth for us in 2018 what do you what are you spending right now in an average month on acquisition [Music] salaries just direct paid spend Google Ads Facebook Ads conferences things like that [Applause] okay come on that's pretty healthy so you must have a pretty good idea of cack what's your CAC right now and that's to get a new brand with that could have hundreds of locations right what got it and how quickly do you recover that 14 grand what's your payback period we're bad 10-month oh okay that's pretty a myth that's pretty healthy dangerous question here because you can lie to yourself really easily what do you assume one of these brands is worth to you in terms of lifetime value you can take your numbers and multiply that out which is I think for us forget the number off top my head I think it was close to about 300,000 I get a higher nor if you have 90 percent retention so that's 10 percent sure and 1 divided by 0.01 is a hundred months of lifetime value at what is that four grand a month that puts you at over 400 grand and that I value yeah interesting you don't you don't really do you use those though in any meaningful way into business or no obviously if you're new investors everybody looks at SAS and metrics to better understand the value your business so I think there from that perspective is important it does allow us to obviously reinvest a lot of that profits in business that's why we have been able to bootstrap for so long because being able to take those profits in that break-even point on a per client basis and reinvest has been you know allowed us to grow without having to raise five ten million which many of our competitors have done so you look at our competitors name two of them communes raised fifty million dollars we've got companies like moment feed is raised about sixteen million there's a company called fin - out of Canada that's raised about the same amount and I can proudly say and we win about 90% of...