How Delivra CEO Neil Berman grew Delivra to $5M revenue and 500 customers in 2016.

this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per top 5 and6 million he is help bent on global domination we just broke our 100,000 unit sold Mark and I'm your host Nathan lka okay top tribe this week winner of The 100 bucks is none other than Derek rodenbeck he is an artist and he's looking to increase his Revenue if you want your chance to enter and to win 100 bucks each Monday on the show simply subscribe to the podcast iTunes now and then text the word Nathan to 33444 to prove that you did it again text the word Nathan to [Music] 33444 many people ask me what tool I used to sell my first company heo the answer is the top inbox.com I used it to send emails schedule emails to be sent out later and sent reminders inside my inbox so I would know when potential buyers were actually interested and I easily remember to follow up with ones that hadn't replied to me you can try it for free at the top inbox.com Nathan lka here this is episode 522 coming up tomorrow morning you're going to learn from Usman of X IQ he's using AI to power sales teams and has raised 1.1 million bucks to do it Top Drive good morning Nathan L here and our guest today is Neil Burman this guy know sass he launched his company called deliva many many years ago back in 1999 in the email marketing space Maybe invented email marketing but Neil let's have some fun are you ready to take us to the top let's do it Nate all right walk us through the business what does deliver do and how do you generate revenues oh deliver is a email marketing software tool that helps our clients sell more stuff and where we uh the way we make money is uh you know we're we're a high Break Even business with a a low variable cost so the more customers we can sign up uh the better and how many current customers in December 2016 are paying you uh 500 direct paying clients and we have a couple thousand extra through resellers oh great okay so what are the what's the kind of the average customer pay you per month uh so they're paying us 10,000 a year so I guess that's what but somewhere between $8 $900 per month yeah so about 833 bucks per month is what they're paying you uh and then is it fair can I back into to kind of an mrr number by just doing the 833 times 500 should that math work properly puts you about 4 let's try that yeah puts you at about 4 416 Grand in Mr let's see we're doing 4.8 million a year that's last year or this year that's what we're going to do this year okay so four you're GNA do 4.8 million so if I do just the 4.8 million divided by divid by 12 that puts about 400 Grand per month and kind of average monthly requiring Revenue so yeah if you're currently doing 4166 Grand per month uh that uh annualized comes out to about your 4.8 number perfect very good okay so 4.8 million in 201 16 is what do what June 2015 re total revenue uh I think we did 42 to 43 so we've had uh you know reasonably good increase over the year okay and walk us through the growth where are you finding these new customers from uh we're finding them uh three ways uh three marketing buckets uh you know one inbound marketing uh two outbound marketing and three event marketing and then we have an eight person sales team that backs that up and you know writes the order what's your total team size today uh we have 40 something uh 40 some people 40 some and spread across our area in one location or are you spread out uh almost everybody's in one location uh we've got a couple of folks down in Louisville Kentucky but the rest are here in Indianapolis very good Indianapolis and well let's finish out some of these economics so what's your gross customer turn per month okay let me look that up uh this year it was one 1.5% and our goal for next year is 1% that's great so 1.5% and then if I'm C how many months on average does a customer stay with you or years if that's easier uh so that would be uh 3.5 years or 42 months yep 42 months and then in order to get lifetime value can I take the 42 months times your 833 bucks in RPO to get about 35 Grand in lifetime value per customer uh I thinkk you there okay good and then Neil this is a a big kind of a CEO question what are you willing to spend per C on a custo to acquire a customer that's worth 35 Grand you I just happen to know what that number is uh we're we spent a doll eight this year and our goal is $1 so we're getting pretty close uh so we want to get our our our money back uh first year wait what do you mean you spent you spent a dollar 80 cents to get what Revenue a dollar uh and eight cents okay to get $1 of ACB Revenue annual contract value got it okay so on a $10,000 per year plan you spent uh you spent that uh you said times A8 so about what 10,500 bucks something like that uh that would be correct okay got it so see yeah so you're so look this is interesting so how do you manage how do you man well and I said that wrong by the way it's 10, 800 bucks but how do you manage kind of the cash Gap Neil if it takes you if you're putting out 10 grand today to get a new customer and that doesn't pay back till 12 months from now aren't you constantly trying to figure out like cash Gap issues in fact the faster you grow the more cash you lose right uh yeah that's correct so there's a limit to how fast we can grow organically uh because at some point when that that line gets too steep you run out of working capital that's right have you raised we have not and we're currently debt free but we're looking at options okay very good tell us more there in an Ideal World how much would you raise well I'm not an expert at raising money because I've never done it y uh but I've been advised that your first raise should be debt because it's cheaper than Equity so that's the direction I'm going to take and how you obviously you don't have to have it but in an Ideal World how much are you raising in this first round a million 5 million 2 million what is it well I think we're going to back into that number based on our growth rate so you know we're looking at a 30% plus annual growth rate and however that ends up um you know our our spreadsheet formula is going to tell us what we're short I don't have that number off the top of my head Neil what does growth though have to do with debt that might have to do with Equity if you're trying to get valuation but debt there's just typically an 8% interest rate you know maybe a 20 25 % discount uh and maybe a cap um can you relate those together or do you do you have like an investment banker that does most that for you well uh again we've we've only grown organically and you know I'm just sticking my toe into the water when it comes to debt and equity and I've probably got a lot to learn and you know we're talking to people that know more than I do and hopefully sometime next year uh you know we'll have that nailed down and uh understand what the uh the next level of activity will be have deliver them for folks listening in right now that maybe are just like you they're they don't they're not familiar with this process they're looking to hire people to come and maybe help them who who are you hiring to help through this process did you find an investment banker or what uh so we bank with Key Bank they're out of Cleveland Ohio and they've got a division called key Capital markets uh that are investment bankers uh so our local Banker uh is has contacted the uh the capital markets team and we're scheduled to talk with them later this month or early next year okay got it if somebody do if somebody came to you today and I just said hey uh uh Neil we'll give you we'll give you 4 million bucks uh we're going to Value the company at $16 million before we put in that Capital so 4 million would basically buy you know 20% of the business uh that would be obviously Equity not debt but is that something that you would do or think about uh you know I would think seriously about those kind of numbers not not knowing everything I need to know yeah know I hear you the reason I'm trying to I know it may sound like I'm just interrogating you um I actually am trying to help because you do have very healthy numbers uh and you have something that's very valuable which is time you've been around a long time doing this uh so people will be listening right now and VC's listen all the time and one of them may surprise us and reach out especially now we have some more concrete stuff on the table and I can always facilitate an intro for you oh well I appreciate that very much thank you for the offer of course of course all right so let's uh let's wrap um up here with uh kind of a few last things we got kind of right into the numbers tell us more though about the story maybe of a customer that's using you guys on a on a monthly basis how are they using you uh well our customers uh AR...