Closem Revenue & Valuation (2024)

hey folks my guest today is richard miles he's a serial entrepreneur executive leader seasoned by global experience adaptive controls which sold to ingersoll rand he was vp of sales at polaroid and mag media and then founder of relaunch which he sold to an investor group he's author author of official software channel sales guidebook founder free software club ipo he's a non-profit exec ceo of big brother sister san francisco area very active guy but now i'm building a tool that helps you increase your sales at closeumapps.com that's close mapsmapps.com all right richard you ready to take us to the top sure all right so what tell us what the company does and maybe give an example of a customer that's using you today okay great so we built closum to uh to help especially small businesses solopreneurs entrepreneurs people who are providing services to people and are usually go from feast to famine they're hungry they go out and hustle get some business then they're busy servicing their clients then they're hungry again we wanted to build a tool that was simple easy to use that folks could automate the process of sales follow-up and keeping in contact with all their leads and prospects and customers and things like that um so that's what closum does simple easy to use tool it's a contact manager with an automated follow-up uh messaging platform and so what do customers on average pay to uses per month it's 99 bucks a month perfect simple to the point we love that when did you start building the platform do you remember what year you were at first line of code nothing like launching in the midst of a global pandemic 2020. yeah but actually launching the global pandemic was really cool because uh the pandemic taught us two things taught us how to get really good at zoom and it taught us how to use qr codes right those are both very true right so one of the things that closeum does is it lets you automate the process of sales follow there's a lot of tools that do that they send emails you know email autoresponders there's some that do sms some do sms and email we do sms email and voice and postal mail and that's one of the breakthrough things that's that's really elevated closing for us with our users is the ability to send postal mail with the same interface that you would type a an email or type in sms it's the same interface nothing new to learn no setup fees no minimums no hassle you want to send somebody a piece of postal mail you do it the advantage to postal mail these days is that your inbox is stuffed full and your goal is to get the inbox zero which means delete delete delete delete delete so the average lifespan of an email is 17 seconds so richard sorry just to just because we're short on time you your closing will also help customers send via an api direct physical mail to users absolutely where do you get the addresses from what's the database you sync to well it um it's the customer's database so they have to bring you the physical address if they don't have that you can't help them no okay how do you verify the addresses you're sending to is there a database you're comparing them all to the you know when your customer gives you a list it's our customer database so they have their list of of leads and that they're getting from their facebook lead ads or their lead funnels or their webinar registrations or whatever they're getting and so we have built into the system an email verification so it will you know richard i'm talking about the physical mail so how do you verify the physical addresses before they pay you to send it um we don't i mean if you have an address in that's bad it's not going to get delivered that that said there is an address lookup feature so i mean if you you're sending an address to some place that doesn't exist it won't get sent but if if it was supposed to go to 13 pan oak street and it went to 1301 there's nothing we can do about that oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founderpath and we're thrilled to bring it to you all right we're gonna go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview yeah yeah no no fair we ship magazines every month and so we are build per magazine shipped and i send via my linkedin ads i send all the addresses that people that purchase the physical address and then smart press who i use to print will tell me which ones are valid physical addresses versus not valid and i can i can go back and do a follow-up to get accurate addresses from people that smart personally were not real i'm sorry yeah we do have that we could have got it that's what i was asking we balance it yeah cool so you get going you write the first line of code in 2020 when you sign up your first customer into 2020. um okay so pretty quick two years ago yeah where did you pre-sell in those early days was it a facebook group or how did you get that customer oh so i have a partner uh her name is laura betterly she's been she and i have known each other since the 90s um she's a very innovative entrepreneur she developed a course called mobile local fusion she has about 30 000 um followers who bought her course and learned how to do local marketing and so we launched soft launched the product to her list i see and so how did people never understand they go soft launch affiliates how's it work so when you say partner what was it an affiliate agreement or she owned equity i don't know she's she and i are 50 50 partners in the in closing in closing i see okay so how many folks were on that list in 2020 the initial send i think it was about 30 000. and tell us how it did did great i mean we didn't help us we look we've bootstrapped this company so uh no richard details details remember open rate click-through rate number of sales from the first email uh from the first email i don't remember from the first time you remember the number of sales that was an exciting time uh yeah we did it well we we we gave it at a really steep discount i think we generated about uh i don't know uh somewhere around 25 30 000 in sales that's awesome from that one email yeah that's amazing okay so how do you go from a partner with distribution one shot sign of a bunch of people you're selling how many customers you have today uh over 1200 wow okay so yeah how do you go from that initial email to how are you scaling today how do you add customers so we uh we we did do a uh a lifetime deal on appsumo ah okay hold on are you counting those in that 1200 number uh yeah okay well they're not paying you anymore right so how many how many are like paying you on a monthly basis they do pay us because we have other other product other in in-app purchases that they that they that they buy you've up sold all the lifetime deals into a monthly record and and you know the appsumo users are a lot of people are just they buy it's fear of missing out they buy it they park it they don't use it they have a lot of active users from there though and they were it was a good it was a good launch strategy for us because it gave us a lot of really good very quick hard uh feedback about hey it ought to do this and it ought to do this and i want to do this um that really helped us iterate and get to the state that we're in today um now we're doing uh we're we're not on that platform we don't do lifetime deals anymore um we do so how many how many customers say are paying you something monthly uh several hundred several hundred you said or 700 several hundred several hundred okay so maybe two three hundred something like that stuff like that what did you use because the interview a lot of people do have sumo and they always struggle with how to move a one-time lifetime deal someone who loves a deal by the way right these are coupons right they want discounts that's why they do it they really struggle moving them to a monthly recurring plan that actually helps you build a real business right that doesn't just drain your support right so how did you do that um i can't say that we succeeded massively at moving the all of the lifetime guys um i mean there's just a whole cadre of people that are just like we want a lifetime deal we don't want to pay for software and you're like but you want me to be here to support you don't you you want me to be here to keep innovating and to keep offering products um so uh those people that that uh some of them are still really active users and they've referred other people to us and they've been they've been you know um it's been a good user base can you you know i don't have a secret sauce that says here's how you move that guy that that is completely deal-based wanted to pay once for software and never pay for it again into paying you monthly um well the trick is you have to understand what your software with the activation metric is so if it's number of leads reached out to per month the lifetime deal closes down once they hit 100 and then you upsell once they break 100 but if you've got a bunch of people buying a lifetime deal that then sit on the sidelines and never activate they're never going to hit that usage metric to allow you to upsell them which becomes a drain on your customer support i i know we we offered it as with unlimited and um we didn't have this sort of like tier that was like yeah here's this really great lifetime deal but it really kind of sucks and you got to pay us more money to get it well does it have to suck if you have a cap on it you make it sound like and if you're gonna have a cap on something it has to suck no but it's sometimes it's it's you know a lot of these deals are here's 37 lifetime but then it's really 297 dollars to get it to work and then another 500 and then well not get it to work not get it you make it see you you phrase this in such a negative way there are plenty of very successful companies with 150 net dollar retention where they give you a lot for free people pay a lot of money for the free thing and once you hit a usage metric you pay more because you get a lot of great value yeah no i agree what that is what is that value metric for you that's really what i'm getting at um i'm not sure what you mean what's our value metric how do we get what's your value metrics for snowflake it's an amount of storage for pendo it's mau's per month for hubspot its number of contacts oh um well we've been we we offer an unlimited plan so um what we've done is um where we make money outside of selling the software is you you pay for postal mail um email is unlimited and is free included we used to charge for sms but we've gotten out of that and you set up your own sms account um and you pay for postal mail and uh we make a little bit of margin on the postal mail how much on postal well a first class postcard is 90 cents under 100 we don't care we make a little bit of money on that um we've just offered a new product called lincoln which is a short code you know turns long urls into short links that are trackable creates qr codes um that we both offer as a standalone product but it's also uh completely integrated inside closum so that if you're typing an email or you're typing a text message and you want a short link you can create it right there and it's trackable or if you're creating postal mail and you want to drop a qr code into it you can create it right there and again it's trackable and customizable and put your logo in and stuff like that that's extra um so you know part of our our model moving forward is offering extras we're about to offer a product called bookem which we're a few weeks away from from uh taking the wraps off of which is a calendar integration thing so built into them is obviously in terms of the follow-up is you want to set an appointment with somebody or you want a reminder to follow up somebody so we built this whole calendar integration so richard sorry before we keep going down new product stuff i mean if you have 300 customers today paying 99 bucks a month you're doing about 30 000 a month in monthly recurring revenue is that about right yeah about right okay and where were you exactly a year ago so we can calculate growth do you remember yeah uh so we're about 227 ahead of last year okay so you were doing what about ten thousand dollars a month this time last year something like that a little bit left okay and i guess so how do you make and actually maybe it's because of how you've set up your engineering team so let me ask that first how many folks are full-time at the company and who's doing the coding uh we have um we have four or five five and a half people okay five people and are you one of the engineers nope nope neither my partner i or technical we have two two great developers uh yeah those are full-time we've outsourced when we needed to but we've got a really good team and they're pounding out good stuff how do you i mean there might be some people listening right now that would argue that you don't yet have product market fit right at 10 10 you know 30 grand a month is a lot of revenue but you just mentioned three four five new other products and add-ons and extras how do i mean you only have two engineers how can they build a best-in-class product when they're building four different things um you know software's magic what can i say software is what magic i don't know about that you have to make the magic happen how can two engineers work on postal api calendar api email api because we don't have to do everything like i i don't have i don't have printing presses and you know the whole infrastructure it's it's via a service partner you know i don't have a you know a massive text messaging back in that i need to maintain i think people use twilio um so we have to build the front end from personality and part of our core user experience is to make it just super easy to use for anybody but i don't i don't you know we don't have to maintain smokestacks full of of of code i mean just for context you have 20 integrations listed on your integrations page many people have for 20 integrations you've got at least a full-time engineer dedicated just to keeping the integrations working full-time all these platforms change their api endpoints you've got to keep them updated every month yeah um but so that's via zapier okay so when i see google sheets google forms linkedin facebook ads click funnels lead pages none of these are actual integrations they're all just basically going through that they're connect to zapier connection yeah or greatly or connect it or padley so thanks for folks who have been building integrations for our product and you know you can hook it up to anything i um we do have a couple direct integrations um we uh we have a direct integration with groov which is a you know great online funnel uh platform and shopping cart platform uh and that's direct so they can you know people right there there's no zapier integration um and we're building some others uh as we go um uh yeah i mean you know it it's funny i i've been around for a really long time this is not my partner or i this is not our first rodeo and you know many years ago when i had relaunched you know one of my one of my clients was computer associates and they would acquire a company and you know people would come in and say like we need more engineers and charles wong the founder would say like no we need to cut the number of engineers in half we'll get twice as much work done that way no richard what i'm arguing is you're trying you're doing too many things with two engineers i mean look in your if i look in your footer automate follow-up text messaging email messaging voice messaging post mail message campaigns managed context message templates qr codes complete system with two engineers but you're stuck at i mean you're at 30 you're three years in you're 36 months in with 30 000 bucks an mr which by the way it's commendable and great and bootstrapped i'm just trying to get a sense of what's your product focus going to look like moving forward well our product focus moving forward is to have a complete suite of tools that people can use to boost their sales that see that is just so so so generic though right what you just said could be the definition of hubspot versus if you said we are specifically built for click funnels people to when they get some sentimental clickfunnels to send a direct piece of mail to someone in the united states like it's very specific yeah i hear you one of the things that uh that i say is you know the good news about closing is anybody can use it the bad news about closeup is anybody can use it fair enough on that point you are still bootstrapped right absolutely we'd love that if someone came to you today you're doing 360 000 a year in revenue about if someone came to you today and offered you 700 000 all cash upfront would you sell no you said that quickly no uh we think the value look again this is not my first rodeo okay the value of this company is not what is worth today um it it the value of this company is what it's worth over the next couple of years and where which is what well i think we're going to build this into something that's worth multi-million dollars just multi-million yeah no i this we're not going to be the next billion-dollar thing um what we do is we service a really nice niche of of small businesses meet you know to medium-sized businesses you know we're not trying to compete with hubspot in terms of you know you can do anything and no matter the size of your team but you just described it as that you literally said the good news is a lot of one can use it and you can do anything a lot of our users come to us from hubspot because it's too complicated and too expensive and so our our our thing is is is is satisfying the needs that we have from the feedback that we have from the customers that we have fair enough on that point let's wrap up with the famous five number one favorite business book um favorite business book is uh good grade and numbers and also wait there's two also ideas that stick number two is there a ceo you're following or studying uh no number three what's your favorite online tool for building closum uh well we use slack and i i really like slack to be honest number four how many hours i sleep to get every night i try to get eight okay and what's your situation married single kids married kiddos grandkids grant grant how many kids do you have i have i have two children and i have one grandchild oh that's amazing okay and how old are you how old am i yeah yeah i'm old school man i've been around for a long time okay well i ask because then we can do the math and i can say take us back x number of years to when you were 20. what's something you wish you knew when you were 20. uh then i'm not as smart as i thought i was at 20. guys there you have it closeum.ai helps you close leads faster really meant for for smbs right that you all do direct marketing postal text email they've got you covered did 10 000 bucks a month exactly a year ago now up to about 30 000 a month nice growth here they've got 300 customers paying average 99 bucks a month totally bootstrapped with a team of five which we love richard thanks for taking us to the top hey man thanks a lot one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses 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