How Delivra CEO Neil Berman grew 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 range across all Industries and verticals uh they uh all different size of businesses as well from you know $75 a month customer to tens of thousands of dollars a month uh but our customers are sending email there sending text messages they're connecting to postal uh with our uh marketing automation you know drip marketing tools uh they're connecting to Social and to call centers so this this multi-channel approach is what our customers are finding brings the best return on investment and that's how we're coaching them that's great well Neil where's the as you keep growing this where's the best place for people to connect with you online if they want to follow along uh the the website is deliver.com D is and dog e l i v is victor.com so many of you have heard me talk about wanting to take a company public by the time I turn 30 I'm 27 now and I have identified what I will build and take public it's called the top inbox.com no questions asked here's why sales people hate using tools like yesware and tout app and Salesforce because they don't have to log in and update their you know pipelines just for their bosses so I was using this company called the top in box or something very similar that allows you to track emails set open reminders set autof follow sequences to people to make sure you get replies and to frankly close more deals in fact I use this concept to sell my whole business hoo.com I saw when investors opened When Buyers opened when they replied I followed up and I sold it so I bought the whole business I will take it public you should get on right now before I start decide to start charging for this thing it's totally free the top inbox.com okay top tribe I have to tell you many people go Nathan you came out of nowhere your website's growing so fast how' you do it the answer is simple so I use host Gator I don't know if you guys know that but I use HostGator and the reason I do they have like about 4500 free templates I can use cuz I don't code they've got a great e-commerce plugin and guys I bug the heck out of their support they've got 247 support which I love so what I've done is I've worked with them you guys know I make great deals if you go to hostgator.com Nathan you can sign up get your own domain for 30% off and a 45 day a money back guarantee okay again I make great deals for you guys go to hostgator.com Nathan to grab that now all right top tribe will link to that in the show notes at Nathan la.com thetop 522 again/ thetop 522 all right Neil let's wrap this up with a famous five these are onew answers number one what is your favorite Business book uh my favorite Business book which I just read uh great CEOs are lazy by Jim schleeter and it's it's a brilliant book uh it talks about doing more with less time so any lazy excuse me any busy CEOs uh should read the book I highly recommend it number two is there a CEO you're following or studying right now uh well you know you got to admire Facebook and and Mr Zuckerberg and I never miss a chance to read a press release or a story about Mark number three is there favorite online tool you have like top tow uh my favorite online tool which I live in is either Twitter or LinkedIn because I'm always looking to uh build my network number four yes or no do you get eight hours of sleep every night at least nice and what's your situation married single you have kids uh married uh two kids and uh you know love and life uh both personally and professionally that's good and Neil how old are you 67 all right very cool so last last question take us back a beautiful 47 years what do you wish your 20-year-old self knew uh you know I'm going to flip that around and tell you that I wish I knew as much now as I did back when I was 20 years old what's one lesson save us 47 years of of learning in hardship what's one little tidbit you'd tell us uh so I'm I'm going to use two terms here uh patience and determination uh will win the game there you go top trbe patience and determination will win the game coming from a founder that launched his email marketing company back in 1999 talk about patience he's now grown it they did 4.2 million bucks in 2015 they have 500 paying customers paying an average of 833 bucks a month or 10 grand a year they're currently as of December 2016 doing 416 Grand in monthly recurring Revenue with 1.5% gross monthly customer churn their team is focused on helping these guys email Market more effectively and grow their list with their team of 48 People based up there in Indianapolis Neil thank you for taking us to the top thanks Nate enjoy talking with you if you enjoyed meal today go back and listen to Chuck yesterday he runs his own brick-and water business The Burger Joint he did 5.5 million in 2015 revenue and is now getting into the subscription Burger Market with this new idea burger box top tribe I love giving away free money I feel like o we're giving away cars and I have something special for you today how many of you have heard our super sharp guests talk about success they've had with Facebook and Google ads well all of you listening right now yes if you're listening you get $100 in free AdWords here's how you get it okay again thanks for listening get the free $100 from Google right when you sign up with my website host provider HostGator go sign up now to get your free money hostgator.com Nathan again that's hostgator.com Nathan okay top tribe I'll see you bright and early tomorrow morning and don't forget before you listen to any other episodes subscribe on iTunes right now for your chance to win a 100 bucks every Monday