How Doorboost CEO Johannes Herzer grew to $17M revenue and 6 customers in 2024.

hello everyone my guest today is Johanna her sir he is a serial entrepreneur with one acquisition and to disastrous failures prior to his current venture door boost he's also an online advertising expert with more than 8 years of experience in advertising for retail brands and their retail locations Johanna's are you ready to take us to the top sure yeah all right so start tell us real quick what does door boost do and how do you guys make money what's the revenue model so we're basically the classic software-as-a-service model but we do make a lot of money it's still with services that we add on top of our software what's the breakdown out of curiosity how much what percent of your last 12 months revenue was software versus professional service so the last 12 months were actually pretty much even though out so we have 50% software and service subscription and 50% service system we just add on top of that and which one's growing faster the subscription model is growing faster just because we've shifted a little bit we might get into the later in this interview yeah that's great okay so before we go down that rabbit hole yeah tell us about the business what do you do yeah so we find now we have become something that doesn't exist as of right now is a category it's basically a campaign distribution platform so what that means is we allow brands that work with retail locations to create campaigns from their headquarters and basically distribute them into thousands of retailer accounts and on the way basically making sure that their readers are running the right campaigns are taking care of the brand or representing the brand the weight should be represented and they're also able to subsidize campaigns and that's the really interesting thing that we've seen so give us an example over this and give us an example this is one of your customers so our biggest client is one of the largest kitchen manufacturers in the world like a typical brand it's a billion-dollar company they have a no-name one Johanna yeah like okay it's a premium kitchen manufacturer they have about a thousand dealerships worldwide and what they've seen is that their leadership czar really bad at online advertising but they're spending a lot of money the brand has no control over what happens after people come into their showrooms because they just don't see how much ROI those campaigns actually produce so what they decided to do is they decided to partner up with us and basically use our service to create centralized campaigns split them into all their dealerships accounts subsidized campaign budgets and therefore they get that whole picture they can measure everything all the campaigns that those thousands readerships are running they can measure that and they can make sure that it's going in the right direction and also I mean campaigns are therefore not competing anymore because they can just make sure to their individual dealerships they're not crossing over into each other's locations and I think bidding activating on the same keyword exactly yeah exactly okay and what are one of these brands pay for the software on average per month so the brand pays a management fee off between twenty five hundred and five thousand a month okay and then we take a 10% to 20% cut of the budget that all those dealerships spent in terms of budget got it so the model where you would consider professional services is that is the cut of spend which is 50% and then that flat twenty five hundred or five grand management fee per month is what you're calling your kind of your SATs revenue correct we call both of those Assassin revenue to service that we add on top of that is basically coming up with implementing that strategy with those tier ships so busy coming up with a centralized advertising strategy for the brand with those two ships that's something that we charge on an hourly basis that's the management fee that I see I but the more of this concept the more they get that concept the more brands understand that this is what they want the less management fee we actually have to charge because they just get that whole system of setting up a centralized campaign taking maybe a national campaign that they've already run and just slitting it locally becomes so ignoring the the the non software the non recurring fees is is that after the average brand is paying you twenty five hundred fifty five grand per month yeah correct okay I thought use that I love that you said that was the management fee which is what confused me all right sorry no so the that's the subscription fee for this offer so we really make the software available to a brand and depending on how many dealerships they have the fee is between twenty five hundred and five dollars a month for the brand and then the cut of the budget is basically the that's the major part of to revenue as I said sometimes 500 and more dealerships are participating in campaigns and a 10% cut of the budget is basically our biggest chunk of revenue okay give us more the backstory here what did you launch the company what year so we launched a company in 2014 when to build like a cross channel advertising platform there's so many out there right now like the mannequins and AD espressos basically and started selling that and we basically drowned in customers leaving us you had huge churn rates so we decided in in beginning of 2016 we decided to shift and at that time we were lucky because we were already working with one of those with that kitchen manufacturer that I've just been talking about our biggest case so we had them as a client for their brand and we were just thinking what can we do to help them support their dealerships because their case has been working really well and we see we've seen that working in 2017 and just shifted the entire model and what have you scaled to today in terms of total customers so in total we have six friends that work with us and about 3,000 dealerships that run campaigns and those are between four to six campaigns per year per leadership terms revenue were past the 1 1 million per year okay so I classing so like last that would that would be about 88 grand a month so last month what did you do around that or much higher or lower no much higher much higher we do have a little bit of a seasonal effect basically just because we have four to six campaigns that those two versions run per year so it tends to be it goes well above 100 a month and then it goes down to a little bit under 80 if you just look at your pure SAS revenue though last month what was that that was about 75 seven yeah okay and does that say stay fairly consistent or know that also you have a lot of churn it goes up and down it fluctuates yeah because the cut of the budget is basically a part of it and that I think is the main the main challenging thing about yeah marketing tech in general because as long as as long as your budget is tied to or your revenues tied to the budget you will always have brands cutting budget and your revenue dropping all of a sudden that's right so yeah that's right so what is the I mean 75 grand per month right now I think you cut out but I think you said you're you're raising capital or you've already raised capital so we've raised capital in at a very beginning and we've we've been profitable since so we burned through a lot of money by just being becoming like a cross-channel advertising platform and basically having serving all kinds of clients and ever since we shifted to that brand retail model we've been profitable but now in order to grow a little faster we're looking to raise money how much have you already raised so we've raised half a million okay and how much are you looking to raise in the series a and we're looking to raise about three and a half okay and how do you so when you go out and start having these conversations on you know hey we want to race turn 1/2 million in your ideal scenario obviously it's a negotiation but ideally what valuation you want to raise that I mean we are looking at something that should be around 12 to 15 billion and that's because the model itself is not something that a lot of venture capital firms are looking for marketing tech in general is very very difficult if you start a conversation with that so your valuation tends to be limited by a by that factor yeah that's still don't mean that's a if you're doing 75 grand a month right now or about a million a year I mean that's still a 12x multiple um when they say and tell you things like hey Johanna's this isn't really a SAS business it's going up and down all over the place we can't give you a 12x multiple how do you defend that yeah so what we're what we're defending it with is that we work in a huge market that is basically not being served right now at all so there is one company that actually does something pretty similar that we do which is promo box so he basically called themselves a digital asset management platform for campaigns and they had a seriously insane valuation for their last round of funding that was well beyond that great Kroft funded company how much how much revenue are they doing I'm not aware of the of the revenue number that they have but they're they're much bigger than more okay and what what multiples they raised that you said it was a much bigger valuation yeah yeah so I don't know the exact amount but it was a higher evaluation that we've had in in terms of the stage that they were in in terms of the multiple yeah yeah interesting and what's your guys's growth rates day so if you're doing about a million a year today go back a year July 2017 what was your run right then so we were about 300,000 that year so it's a pretty significant growth yeah we're growing with those cases that's the interesting thing so as soon as we sign up a new brand client they might start with ten dealerships twenty dealerships 30 year ships and then they throw in their entire deer should Network as soon as they see it working so the leverage that we have is it's pretty high because those cases can grow significantly mm-hmm so it's if you think ahead and if you think about how much budget those dealerships actually have so that grows as well so a leadership might start with a low budget of $1,000 per campaign for example which is really something that paid that they're spending realistically then in theory they might have a budget of 5,000 so not only does the amount of participating dealerships grow but also the amount of budget that each dealership spends so those cases can can go up really quickly yeah you're still very dependent on again six customer if you lose one it really throws a wrench in your plans but if you gain what it also drives great growth right so at 75 grand per month divided by six each one's paying about twelve thousand five hundred bucks per month that's all and professional services plus SAS correct yeah correct yeah interesting walk me through your team size today what do guys at so we were five full-time people two of them in Germany three of them in New York and yeah mostly I mean two of them are full-time sales so that's what we're focusing on just like you said super dependent on the amount of clients that we have right now and making sure there's also needed to talk to a new brand partnership trial case that we start that's the most important thing for us what are you and have you lost any customers in the past twelve months so we haven't lost any brand partnership programs so far just because I mean the be Ahmad is still pretty small that could happen and we definitely expect that to happen as well we just need to be prepared by having a few new one signed up to it's too early to talk we're like you don't know what it your turn rate is exactly I mean we had you churn rate when we were selling to individual clients that that was the main thing that stopped us from doing that what's huge like how big I mean we would lose every other client so about 50% of clients would just say because we working with monthly or monthly or annually no monthly okay because we had a month to month plan the plan was I mean it was pretty cheap so it's really really hard to figure it out especially when those are all small businesses and the first thing that they cut is their advertising spend yeah what do you have the chance they will yeah what do you paint on is to acquire a new customer what's your CAC so right now it takes us about three to six months and you can really say that therefore acquiring a new trial case costs us between 3,500 and 4,000 dollars because it's like full commitment from our salespeople mm-hmm and then how many trials convert to paid as of right now we're almost converting all of our trials supergate paid so 3500 4000 is it accurate not just of your tri acquisition cost but also as your customer acquisition cost yeah because I mean as of right now the costs for the brand and that's something that it might shift or that we might have to look at a little more the cost for the brand is really really low for a brand and what's your payback what's your payback period how quickly to get that money back all right Everage in between three and four months yeah that's because we do have yeah and also our contract periods are pretty long just because that traditional those are traditional industries that we work with so we don't sell the startups that are used to having a month month contract so what we do is we do have a trial campaign that we run with ten to twenty dealerships and then we liked we'd like to get them into a 12-month contract just so it's up for the entire year good stuff Shauna's let's uh let's wrap up here with the famous five number one what's your favorite business book zero two one number two is their CEO you're following or studying right now um you know Mark Zuckerberg for example yeah number three with your favorite online tool for building your business ah-ha-ah-ha died oh yeah no I have to look it up and number number four how many hours of sleep do every night I try to get seven at least and what situation married single you have kids Mary doesn't recently Oh congratulations that's great no kids yeah no kids yet all right and how and how old are you I'm 29 two hundred thirty years here it's 29 all right last question what are you sure twenty year old self knew that it's okay to crash a few companies and to fail sometimes and and not yourself too much guys it's okay to crash a few times you'll learn he lunch door boost back in 2014 was turning a lot of people shifted his model now focused really on enterprise clients enterprise plant brands with light is kind of their their key one it's a kitchen kind of brand basically helps them again centralized campaigns it also helps the parent brand subsidized maybe campaigns at each of their different locations or different brands around the world are spending so they're not competing with each other accidentally they've got six customers right now they raised five hundred grand doing about a million per year and revenue today that's up from 300 grand in a are just a year ago so healthy growth they're out raising about three call it four million on ideally at 12 to 13 million dollar pre-money valuation they got a team of five people between New York City and Germany again with a payback period of about four months spending about four thirty five hundred or four grand to acquire these new brand to customers Johanna's thank you for taking us to the top thank you thank you