Devhub Revenue & Valuation (2017)

hello everybody my guest today is Mark Michael he is uh well and what kind of building to his bio he nor a second but they've got expertise and dedication really defines him and Daniel rust they're the team behind a company called dev hub Daniel is a gifted Software Architect and Marc is a board entrepreneur that and they both met in high school they've been working together ever since dev hub recognized a gap in the CMS market between website builder enterprise scale and enterprise scale and pounced on the opportunity launching the company they received funding from the best VC and angel investors in Seattle LA in New York City and the valley from their downtown Seattle headquarters they helped big name global and national clients manage hundreds of thousands of digital products and millions of campaign performance dollars at scale mark are you ready to take it to the top yeah uh really good boys Newton really good boys thanks man I appreciate that I work hard on this voice it's a lot of trying hit not one or anything I got more for you buckle up here we go tell us about dev uh what do you do what's your business motto hey make money cool so basically it's a platform you can think about it brands and agencies use it to build like a lot of websites you're not using us to build one you're using us to build on let's say a hundred ten thousand twenty and so like that one of the use cases we always talked about is like if you're let's say a national brand let's say like a Wells Fargo you need to build out let's say 10,000 financial advisor websites you're not gonna build out each one one by one especially you have to regionalize them and whatnot so use a platform like dev hub to execute kind of what we call web experience at scale interesting so they might create a template and say put in the city name in the header now launch 50,000 them across 50,000 cities right and then then further dial those in once at least that initial part is live interesting well people also use you to do things like launch 50,000 landing pages catered towards this the word they're bidding on in Google Adwords so that when someone cooks 100 percent yeah that is that your main use case that is the simplest way people engage with us and then from there it kind of scales up right so it's like okay now that we have let's say those landing pages we want to regionalize them or we want to make them with more unique on or like whatever and then they break out they blow out into like kind of mini sites and they blow out into look you know kind of bigger web sites you know this like if I'm on a road trip or something and I Google I'm driving through Austin Texas and I Google you know Wendy's in Austin Texas Wendy's might have used dev hub to launch the site that says welcome to Austin Wendy's here are our store hours did it it uh exactly interesting okay what's your what your how do they pay you is it a SAS model yeah it's definitely it's a SAS model so typically I mean this is it we always say we can't just drop off tech even though there's not like a strategy behind scale there's like nothing we can do with those people so typically it's about a it's a 2k a month license and then there's a typically per unit cost that applies toward that 2000 so 2000 almost like a minimum okay just so many know that we're all engaging at the same kind of level in terms of getting to scale and then after that it's a per unit cost what would you see the average kind of customers paying you per month including the per unit stuff I mean I want to scare anyone just just say two thousand a month who I imagine you probably play more in the enterprise space I saw I would imagine we only have a bunch of customers that are in the can like 50 to a hundred thousand range a month yep you know but I would still say I would see like if you're looking at like for like a good average number so the average whether it's a brand agency or media company is typically doing a I'm waiting for this I'm looking at our dashboard is it a saying I want to see whatever you're looking at yeah yeah let me Sam this is your dashboard in your office or something that's it's in kind of like the main area where it begins where's that right there oh yeah yeah oh cool wait can you walk up to our can you get closer or no what is it rotate through like customer service stuff support times yeah customer client clients that are adding stuff so you know don't forget we're private labeled so like a lot of people don't know that it's us powering a lot of these kind of brands and agencies I mean even done the source code most people don't know we exist so I always say like what the best kept see in the agency world yeah but yeah so the number I was looking forward to telling the average kinda number that I was looking for really an easier one it just like how many customers are you at today so again I would say 61 today that's very specific that was it change frequently I'm looking at the board so it's like they're real time writing there's a bunch of deals right now I'm kind of pending and again don't forget we're talking on 61 I think I wanted I'm gonna show you something Nathan really quick some of our customers Wiki blurred out just that you have a reference yeah yeah we can blur it out yeah yeah that's a promise yeah we can blur whatever you want out we just split us a mess with the video or get blur this part out so this is these are some of our customers today got it but you - we you can't share it are those publicly you can't read any of those no ok ok well that's helpful for me my audience is gonna kill me though for not is there a client you can talk about I mean no it's been like the biggest that's been the hardest thing for growing right cuz it's like I want to brag yeah like okay from this oftens we're doing all this those huge bread six countries sorry seven countries six languages a lot of brands you would recognize right a lot of people on the other connives but again it's like so strict yeah I get it what would it be I mean so I want to get back into your your back story here in a second after I get a few more metrics here so I mean have you guys would yet now in terms of like monthly recurring revenue have you broken 500 grand uh no but probably next year that we'll definitely have them what are you at right now indefinitely in the six figures yeah okay so k what you want to say I mean if I take 61 people paying a minimum of 2 grand that puts you at 121 a month yeah it's a little bit higher than that some that are paying us a lot more yeah yeah but okay but generally in that range is fair yeah okay and have you bootstrapped this thing or view raised so I mean we raised in 2009 but not for what we're doing today my money was gone that money was gone in six months damn what how much did you raise just over two million bucks and you just paid it all to yourself right it disappeared yeah no we did I mean we did all the stupid stuff or Levi expanded the office we have like three people to 35 people what was your the most expensive point your history what were you paying for rent I think like 20,000 a month oh my gosh and what your Jew wants the company 2007 okay and what did you learn from that like you raise money you expand too quickly like we're looking back what do you learn you learn basically because those people by the way I've shown your cap table right those investors they all diluted you right oh yeah it's not a captive but we're still again we're still you know tight with everybody I mean obviously learned what not to do I mean I always kind of say the same thing I think is like if we didn't know what we were you know what we were trying to build and what we have today are just like not related you know so at the time we were spending the money we thought that that was the best way to spend that money besides like the office expansion and people and stuff like that so we were like wasting for this goal the economy was out of bottom you know our Bester's kept saying stop you know you guys should be cool about it you know like you're lucky you raise money in like that economy but yeah and and what do you got now today in terms of team size mark what do you I know I mean if I uh we at right now I mean if I was meeting you out in public I would say 93 if if you took a tour of the office there's probably seven here why do you why does everyone always assume a big team is good I don't know it kills me thank you I mean I can show you an email today I mean huge brand first thing the last question they asked today was let me just read it to you okay we get this all the time and I can't read you my response because again you saw the list of people who were doing stuff for we're not talking like you know a little bit of scale we're talking about like some of those festivals have 70,000 plus landing pages on the platform so all we do exactly what they said today and and put some table stakes on this what's the contract size if you close it I think I mean if you probably about a million year lastly do to blink brands requirements for updating pages based on promotions I'm a big concern that your company only has 17 members on the core team and I want to be comforting that you can meet blank brands requirement to turn around their requests please let me know your thoughts around this I would say I would write back nobody in the history of the world does as much revenue per employee as we do we love a small team and we're printing money yeah see like again I'm not that eloquent you know I was like I was like the short answer is absolutely we already power insignificant brands agencies media come to our tech team and are able to scale resources from a rich pool of talent here in Seattle we will not blink rayon of the park for year we have done this 127 times and Counting see the attempts connect that slide I just showed you that's what we sent to them to say we're really doing this for you know like that your brand your thinking as big as not as big as we've already done before yeah yeah I would say I write back if you want to pay for a big team we might not be the right fit for you that'd be way more expensive yeah I mean you need to start your own company because that's what people want to hear you know I mean yeah it's the same reason when I was starting my company in Blacksburg Virginia I opened a p.o box in New York City so I could say my address was New York right like like that matters unfortunately I don't know why okay so 70 members today you're on your you're kind of marching towards two million in air are your well past 1 million in ARR what about churn do people churn or no it's about 12% logos are revenue annually like in other words if a big customer that makes up 50 percent of your revenue churns that's 50 percent revenue churn but it might only be ten only like once a clients on our platform with scale what happens is like the churn is really like false starts right like again don't forget so besides some what deal is what we're working directly with a brand lot of times been working with the agency that's so like that say that that person who emailed us now all we have this huge deal you know whatever and then all of a sudden we get going and then they never are able to get to like whatever skills they thought they would get they just shut it off so within the first three months that's when people are really dropping off got it they're not dropping off once they get any kind of permanence kind of on the platform call it twenty plus yeah my last few questions here before we wrap up with the famous five what are you paying to acquire customers that's again that's a good question I mean the product our biggest I guess our biggest I don't you call a follower channel for acquiring new customers besides referrals has really been kind of outbound it's been we use outreach Deo and I mean we do those email blasts that a lot of people hate I think we're better at it than anybody else and and those really do work for us I mean we know who we're targeting right like so before we used to target like the CEO or like something crazy no because that's what maybe that's what we should be talking to but really we found out last year that it was really the project manager digital marketing manager a brand manager now once we targeted them got them in with like let's say landing pages and they felt comfortable doing that everything else they were able to do with our platform after landing pages got us into the bigger organization as a whole and what is your when it goes into growth rate so December last year the same time what were you doing monthly in revenue I mean candidly under a hundred thousand and well under well under like 60 grand uh yeah you can say that I guess then look at the numbers I mean like if you double year we're almost double ended a math of my head very quickly so I'm most double so you were out like 75 grand or something where's everyone from wheeler from 48 ish customers to about 61 yeah makes good sense mark let's uh let's wrap up here with the famous five quick answers here number one what's your favorite business book everything store number two is there a CEO that you're following or studying right now no should I have somebody no no not necessarily number three what is your favorite online tool force let's say just like just for fun or for what for growing a business its outreach day Oh number four how many hours of sleep to get every night I mean a lot better now accessor focusing on my health so like how many hours this you would say I guess you would say seven okay and what's your situation married single you have kids married in a cat but she's personally independent merchants emerge or not an acquisition yeah married no kids and how old are you 35 but bill 31 alright and last question take us back to 15 years when he was your 20 year old self new if you know you're right and you're good-looking just go for it guys there you have it if you know it you're right and good-looking just go for what if you only know one of those well I mean that's they go ahead and hand all day very guys from mark founded dev hub many years ago before 2000 and 2007 even raised a bunch of capital blew it learn lessons the hard way now dev hub growing quickly launching landing pages at scale for big enterprise brands have over 61 customers paying about 2 grand per month on average they almost doubled year-over-year between December 2016 and December 2017 now doing 120 grand in monthly recurring revenue retention annually over 90 percent growing quickly with a team of seven up there in New York mark thank you for taking us to the top yeah well OC out your seattle-based good I'm glad I'm glad I said that based in Seattle very good yeah all right mark thanks for taking us to the top