Directiq Revenue & Valuation (2024)

hello everyone my guest today is barrish organ he was born and raised in turkey and started turkey's first digital agency in 1996. he started and sold two successful dot coms in turkey before moving to new york in 2006. he started direct iq there and still is managing it currently sitting in two other startup boards and taking active roles to help fellow entrepreneurs barris you ready to take us to the top hey how are you i am well all right tell us what direct iq does and how do you guys make money uh direct iq is an email marketing service provider an esp so we provide small to medium businesses uh a self-service solution for sending emails to their clients uh it's a web-based software it's a pure software as a service and our revenue is completely um subscription cost from the service mm-hmm so bearish i mean what what do people pay you on average per month to use the technology right now it's 150 per uh customer average okay and so how do you be i mean you're very much in like the mailchimp space right why do people use you over mailchimp oh first of all the first version of this software started before mailchimp when you started 2002. the only other solution in the market was constant contact but at that time we had so many other businesses and direct iq was never a core business for us so until 2011 it was always a site project one of our companies for us in 2011 i finally decided to focus on direct iq and enhance the product from a basic english software as a service tool to seven languages multi-language application that serves uh to 40 countries right now and with annual and monthly pricing science based and contact-based pricing so we cover much more space than five years ago and now and so how many customers are you serving now right now we have 250 customers paying monthly but we have around 10 000 premiums because we do offer a plan called forever free so if you're a small business with 500 customers you can use us for forever there's no so that's 500 contacts in your system yeah yeah okay so 250 customers paying 150 a month you're doing about 37 000 a month right now in revenue 35 37 right now yeah and where were you a year ago oh well we had a drop a year ago mainly because we weren't well prepared for this european data protection what was the number though how much revenue a year ago we dropped from 50 to 25 in a year half of the customers lost and then now since last year 25 to 37 so we are about to catch the loss okay so a year ago this month you're doing 50 000 a month now today you're doing about 37 500 something like that okay so what what why specifically did customers leave when kind of the gdpr stuff came out oh half of them were really european companies looking for gdpr compliant service provider but the other half were really don't care about gdpr but they were worried that they may get fined because of their email activities so they stopped sending emails and they come back after like six months of break so they were like worried about let's let the dust settle down and then we'll decide what to do so they did they came back interesting okay so you're launching now have you bootstrapped the company or did you raise capital i it's a good sub company i love that congratulations you very much i do i did start all my businesses bootstrap as well one business always feeds the other one so that's good kind of like funding my one project with the other one what's the team size today bears how many people well you won't believe this but we are running a global business with only five full-time employees okay five full-time on direct iq yeah and what are your other two businesses self-service and very self-explanatory so people can use it without any need and we do marketing online as well so we don't need sales people doing sales calls or meetings so two separate software developers and three customer support agents can easily manage the operation and so how much free cash flow per month does direct iq spit off well probably one third costs i'm keeping at that level so for thirty five thousand we're like fifteen twelve thousand right now so call it fifteen thousand is free cash flow to the bottom line expenses 12 000 right now okay so that would mean like 20 000 comes to the bottom line yeah what do you do with that money you just kind of pay yourself out of dividend and that's how you get rich or do you live in a company or what last year it was the lifestyle for me so i was traveling and just saving that money somewhere but this year i'm focusing on new uh ideas so direct iq will be a incubator for my new project interesting that's what i'm using the money for okay now are you so you're making money today uh we understand the team how are you getting customers today how are they finding in other words when a new small business searches the internet today to set up with a new email marketing tool why would they pick you over your competitors oh well i am stealing customers from the biggest player in the market mailchimp mainly because mailchimp is getting more and more features every month but we don't have both lot of features so that adding more features to the system makes the ui the interface user feeling very hard so a lot of people who needs to just send weekly emails and just not don't need anything else uh switch to us because our interface is much simpler and also we have seven language support so our interface can be in native spanish or german or french so a lot of people from latin america for example are choosing us over the bigger players mainly because it's in spanish it's in their own language interesting okay so that that's helpful and then where are they finding are you doing any paid kind of acquisition we did some uh paid acquisition in latin america and in the middle east we did it we tried we tried in us and we failed because the biggest players are in us and they are over bidding us in all the marketing channels but in middle east and in latin america it's working well but the biggest source is word of mouth because every email has an unsubscribe link at the bottom with a small link to our website as well so if you come to us and use our system yes you can remove that uh tagline but if you don't you kind of market us to our mailing list as well so that's our biggest source of uh new traffic okay so to get so to get a new 150 a month customer what are you paying fully weighted to get them today what do you mean like fully weighted marketing fully weighted spend fully weighted cost to get a customer oh well i don't spend more than one month of revenue of the customer so right now no more than 150. yeah interesting and what are you testing if you can't do the ad spend channels because other competitors are out bidding you we do have social uh integrations with other apps that's a real source of traffic for us for example we are in the shopify marketplace we are in the google apps marketplace now we're about to enter into the wordpress marketplace so once we do integrations with major softwares that people use they find us through the marketplace by searching it how many new leads do you get from the shopify marketplace each month right now fifty five zero one or two is converting to fifty fifty trials five zero yeah five zero very good and what about google app store uh google app store was really big in the past like we received probably 100 paying customers from google app store years ago but they changed their layout and now people are not discovering new apps in the marketplace even iai is a google apps user i don't use marketplace as well interesting um why do you think they made that change uh probably abused by app developers mostly from china they're building small apps the data security is one thing because once you install an app from marketplace you kind of open your database to them so maybe that's why very good all right let's wrap up here with the famous five number one is their business book you're reading right now that you're really enjoying oh over over lawyers or outliers old liars yes number two is there is is there a ceo you're following or studying well elon musk it's going to be a little bit cliche but it's okay number three what's your favorite online tool for building your company online tool probably trello [Music] number four how many hours i sleep to get every night oh i cannot do without eight hours of sleep how old are you uh 42 and uh situation married single kids i got married twice divorced twice okay no kiddos and last question what do you wish your 20 year old self knew uh i would probably do whatever i did in the last 10 years from 30 to 40 in 20 to 30. so i was late in everything so i wish i would i started everything earlier start earlier guys he's built a mailchimp competitor direct iq that he's winning business because he's simpler and multi-lingual the company's spitting off call it 20 000 a month in free cash flow it's bootstrap team of five so again great way to build a business make yourself rich off the cash flow they've got about 250 customers paying 150 a month right now so 37 000 a month in total revenue that's down from 50 000 a month just a year ago because of gdpr compliance they lost about 50 of their customer base now rebuilding that khaki spends up to one month of first year acv to get customers 150 bucks they look to continue to scale burst thank you for taking us to the top thank you for your time