How Core-Apps grew to $6.8M revenue and 1.5K customers in 2019.

hello everybody my guest today is jato Kashi's a technology entrepreneur he likes to transform ideas into working business models with multiple revenue streams today he's the CEO of core apps a technology software provider for the event industry the Krebs brand is well recognized as an innovator of software technology for the events space Jay you're ready to take it to the top yeah let's let's do it all right so first of all you guys a pure place ass company or know you're like per event based pricing we're prevent pricing it's a way that we do it yeah because each event is a little different so that kind of made sense to go that way yeah we've had a bunch of people wanting the event industry all the way up like Reggie from see event came on to the social table see you who you probably know cuz they're in your area and it's like not quite SAS because it's like one conference in July then cancel till next July and then come back to July after well it's not only that you get the situation where some are big trade shows and others are just educational conferences and don't need all the bells and whistles that the big trade shows do yeah okay so help us understand what you do that's different than other event kind of management software yeah so what we do is is we take and we control the mobile app space from that standpoint so having all of the information that would normally find in a product guy but then also interactive maps that will route you around the trade show floor we have it set up so that we can handle very complex data that you might get into for medical events with posters and abstracts and multiple presenters and and all that good stuff and then on the event management side what we do differently there is so when you go to a trade show someone has to manage the booth sales for that someone has to manage that floor space and control all of that and that's what our software does there interesting okay and then the average event pays you how much so you'd be used at the event oh it just depends I mean we could be anywhere from a couple of thousand dollars up to say you know fifty thousand dollars it just depends on all the functionality and features that they need and what's the reason so Jay just cuz we don't have time to get on every cohort would you say like the sweet spot is probably in the in in that 10 to $15,000 range okay and for 10,000 bucks what am I probably getting at that event you're getting a you're getting a mobile app that will have a interactive trade show floor that will route you around and to have pretty much most of the bells and whistles that you need the event organiser pays for this and you give it for free to consumers that are attending the trade shows so they can navigate easier that's exactly right yeah that's the model and setting up the data and giving it back to the event organizer yep exactly all the analytics exactly then there's also some sponsorship opportunities inside of there where we both make money and and things of that nature 10 when did you launch the company what year 2009 so we're going on our 10th year anniversary here in Monde grass that's great now happy bootstrap Jer did you decide to raise capital bootstrapped it this is the core EPS was my six company and I've been you know familiar with starting and getting things going and then selling them off and normally I do that in about a 5 to 7 year range but we we love this industry so much that we've kept it on and stuck it around it's great so over the past 12 months how many events did you work with Oh last year well we have a little over 800 clients and we did probably in the neighborhood of a little over 1500 mobile apps ok 1500 mobile apps that's great now I mean can I take 1500 times that price point just gave me right average of call it 10,000 but you can't so so you know from the mobile app standpoint let me give you the range so we have one that's like 30 to 50 you know three thousand two hundred fifty that's more for a smaller event that's very education focused no exhibitors just straight sessions and speakers all the way up to fifteen thousand dollars that could be your you know big-time trade show having you know something like a show case of products and not ads so what did you what do you mean again we you have a ton of different cohorts here I can't go down every one of them so last year 1500 events how much money did you make from those events last year we did like seven mill okay that's pretty good so your average really is I mean looks I'm actually gonna figure that out real quick right so 1500 events yes you you dude about 4500 ish per event that puts you at 7 million bucks do you have any major costs on that or no no the good news is is that while we're not really SAS software we are using a template so it is the same software that we're using across the board for all of them it's just how we tweak it to make it work you know what things we turn on and what things we turn off yep if you compare the you know 2017 a mental events to the 2018 events how many of them churned meaning they'd used in 2017 but not 2018 well the good news is is that we have a really high retention rate so we're about 95 percent retention rate that's pretty good on a local basis a revenue basis that's one it's on a revenue basis as well as the other because it kind of corresponds with each other but yeah we don't lose a lot of clients we have a good customer retention rate and that's because of the people who work for us really know the industry well and work well with the industry people yeah so I mean you I mean look you do have a SAS business it's just not you can't measure it monthly you have to measure on an annual basis you do you do and and and we do have a SAS business in that it is the same software that's being used over and over again it's just not always used the same way every single time like a typical SAS right and so before 28 I wanna get growth right here so 2807 what you'd hear before we're at we had double-digit growth we were at about 5.4 okay that's great okay so 5.4 up to seven that's again nice growth and again I love that you're doing this bootstrap so um where are you getting this growth from how are you signing up new customers you know we we we took we went back in 2017 towards the end of 2017 and 2018 and we went back into our customer base and you know with a very definitive narrow look at our customers and said there's a lot that they're not using that we provide and we need to make sure that they understand all of the offerings that we had so we really had a big growth spurt within our own customer base we had our normal growth that we get with signing up new customers but honestly in 2018 that growth spurt really stay within our customer base mm-hmm now that makes good sense now when you go in I mean your first five customers tell us the story of how you hustled and scratched your claws and landed those guys oh my god that this is a good story so in 2009 I had this idea of doing a mobile app I we were actually at CES and we were trying to find CES as a massive show consumer electronic show massive show and we were trying to find some particular exhibitors and I was with one of my business partners at the time we weren't business partners at that time but we were there we couldn't find him and I said you know if there was a mobile app and I had my Apple 3G with me and I said if there was a mobile app that could locate this these people that would be fantastic and through the rest of that time and we designed up what it would look like and decide to move forward with III I funded the company we got it going we brought in one of our other who became one of our other business partners into this to develop it he had done mobile apps before and we got that started the first customer I signed and I thought CES was our big was the big show that was out in it it still is a very very big show but there's one that happens every three years that's a little bit larger and just a little bit bigger called connect spoke on AG with the association of equipment manufacturers and I met the woman at a trade show and she loved what we were doing and she said I'm gonna give you guys a shot let's do it and I was doing it with smoke and mirrors baby I mean we were doing screenshots on a big display and showing it and talking about where it was gonna go what it was gonna do and she loved it and she said yep we're gonna have you do the smaller show which by the way happens to be still be very large in the industry it's still in the top one many people how many's oh that show had 60,000 attendees okay so what was and what did she pay you to do that first one that first one I think we charged her in total $15,000 for the two shows we were so happy to get the business and what timeline did you give yourself from selling the vision which didn't exist but ealier sang the idea to test it and she says okay I'm in then you're like oh have to build this thing how much time did you have to actually get it damn built so we sold it in the April May time frame and we had to deliver it in October okay and how many people were on the team just the one found in ocoa if I see I see oh there were at that time there were two developers who fortunately like I said because of the screenshots we were well on our way but yes they had to get that done and had to deliver it that's crazy and then that January was their big show which was three million square feet over a hundred thousand hundred and twenty thousand people on our second app that's crazy and what's so what's your team size today team size today is 50 people 5-0 yeah we run around the we run anywhere from 50 to 52 people just depending and but that's our team saw in Maryland no we're a virtual company 100% virtual everyone works from home that's so all across the u.s. that's great now what pricing Axia do you use to get people to you know pay a little bit more than they paid you last year's are just number of attendees they have our square footage the event covers or vendor booths or what you know we done we actually keep we've actually been able to keep the pricing about the same it really comes down to more features or functionality is what they want to go for what's happened in for us is is that when we started out everybody was happy for us to just deliver an app or software that replace their product guide and now they're coming to us recognizing that technology can solve a lot of issues for them and they're asking for more for us to do more and more complex data so that's where we're sort of getting our increases interesting okay and to get a new customer that pays you call four thousand five hundred bucks for their first conference what's your fully weighted CAC look like today fully weighted so like including your marketing and sale cat customer acquisition cost yeah yeah so it's somewhere in the neighborhood of about 2200 bucks okay so you get paid back on that first payment that's that's decel yeah absolutely no it's really good and where's most that money going towards the sales team commission or PPC ads or Google or what well yeah I mean we have sales team commission obviously because I like to pay people based on performance so I'm big about that but it goes back into a lot of it goes back into Rd for the next piece you know right now we're working very hard on augmented reality within the app and within a single app itself and that's taken up a lot of that's taken up a lot of R&D but it'll we estimate that will do another million two million to this year just alone in augmented reality sales that's great very good all right Jay let's wrap up here with the famous five number one what's your favorite business book my favorite business book is what does it call works three work rework that's it yes verification Frank I pull it up and read it all the time it's a great read I can do it on a plane in about two hours number two is there a CEO you're following or studying you know I think I really kind of admire be so sand and what he's done there with Amazon because when I when it started I thought it would never make it that's so funny all right number three what's your favorite online tool for building the company you know I don't want to say it's my favorite but it's the one that I use the most is Salesforce yeah number four how many hours of sleep to get every night I try to get at least seven seven ok actually the last question here before we wrap up I social tables sold this event see van has unlimited capital behind them um it would shock me if you have not had conversations with him why haven't you sold them yet you know Stephen is kind of like the big boy and we've kind of been that independence so I'm not saying that we're not talking to someone yeah I mean the reason is like I know what's even in terms of multiples Vista likes to pay I mean you look at the Marketo deal you look at other deals they've done it's usually like between 7 and 10 X which means for you I mean that would be like 50 to 80 million bucks or something I imagine are you married yes I imagine you're curious what your wife's reaction to me if you said honey I just not an 80 million dollar acquisition offer today yeah yeah she would slap me no question about that but yeah no I mean listen hey we're absolutely willing to talk to Cvent I've had discussions with Reggie yeah years ago they didn't work out but you know we're all we're always open to it yeah that's smart okay good and then so married any kids yeah I have three boys two of them work for the company one is my top sales rep amazing okay three boys in how are you I'm 57 okay last question what he was your 20 year old self knew oh my god I wish my 20 year old self was as confident as I am today guys have more confidence earlier on coming from Jay again lunch many different things and said you know what I'm gonna do this core apps thing pre-sold a vision off screenshots right to you know an event that he said he could build an app for has 60,000 people there they only like five six months to build it anyways he got the deal closed that was a start of everything now 1500 event organizers basically put their mobile apps through him every single year they pay on average 4,500 bucks for those apps so they did seven million bucks last year they did about 5.3 to year before that so healthy growth and I love this totally bootstrapped 50 people completely remote five percent revenue turn annually so about 95 percent net revenue retention because there's not a ton of expansion revenue yet 22 hundreds to acquire a customer for about a six month payback period as they look to continue to scale Jay thanks for taking us to the top hey thank you appreciated Nathan