Huckabuy Revenue, Valuation & Funding (2024)

hello everybody my guest today is jeff atkinson uh he is now building a company called huckaby which we'll talk about huckaby which we'll talk about today it's performance seo software but before that he was senior vp of marketing for overstock.com very leveraged seo to increase growth by 300 million bucks in overstock he managed marketing analytics crm seo and much more in 2007 he was named advertising ages top 40 under 40. jeff are you ready to take us to the top honored to be here let's go i have to get your feedback on this because i was the kind of um i did a panel at um oh the start engine conference uh related to blockchain about a year ago and one of the folks there was someone that was leading the blockchain project at overstock so just quickly bullish or bearish on the project um bullish for sure okay patrick's on to something he's on to something legit fair enough we'll leave that at that okay let's talk about huckaby so what's the company doing how do you guys make money yeah for sure so huckaby is performance-based seo software um we basically translate websites um and deliver them faster to google giving basically google the perfect experience when they come and crawl and they can understand the site better the more google understands the more keywords that they rank for the more impressions the more clicks product really works well for b2b software companies and if you want i can tell you why but um yes we're fortunate to our product moves the needle the most for b2b software companies where the value of an organic search visitor and the value of an organic search lead is you know quite high okay so impres my audience i want you to impress the hell of them real quick what's the number one thing that like all these internal seo people at like grow.com for example think they know but when you take like the first day you look at the back end you go oh my gosh how did you miss this x thing yeah navigation so think of a retail company right you go into overstock and it's all well described men's watches uh patio furniture you go to any almost any other than some of our customers yeah you need to be software company it's like product solutions right people don't search for that stuff so you have to be more descriptive in your navigation around your product and uh the more descriptive you are um you know you can't just just uh hope that you're gonna rank for something you actually have to have a page if you're looking for crm software right you have to have a page dedicated to crm software yeah now we had rob on with grow.com back in november of 2016. he articulated they passed 1300 customers at that point and about 10.4 million bucks in arr were you working with them already at that point no we had been talking to them they were like my white whale here and or one of my yeah yeah we've been talking to them for over a year we actually just signed them uh this past month so we're great really big deal um you know it's on our new product seo cloud and uh you know they're just set up for success we really like we really like that company and uh we have done a lot of face-to-face time which is great they're on the right track yeah what um are you finding that someone like grow might i'm gonna make this up let's say they're spending i'm a 25 a click for the keyword um drag and drop business dashboard or something like that are you finding that they can essentially instead of competing in that hyper competitive on purpose google adsense market they can essentially shift that a little bit of that a fraction of that spend to you you can rank organically for that kind of word and still and get better results essentially yeah you know the value of an organic search click is typically two to three x what it is for a ppc click and with ppc at some point um you lose scale right it just gets too expensive um unless you just keep raising tons and tons of money and just lose you know just spend a ton with organic it's scalable right so you've got it's really a technology problem and if you get it right you know i've talked to really good cmos that you know that i really look up to it concur and new relic and places and they their engine is like build a really good seo channel and your sales team is psyched because they're going to get tons and tons of good leads okay um on average what are people paying you for the software either per month or per year yeah our pricing range is between two and four thousand a month so our average just comes out to be up at 2500. okay about 2500 bucks a month you said yep and and help me understand why someone might pay 2 grand a month versus 10 grand a month what pricing axes are you using to drive up sells yeah it really doesn't depend on the size of the company or or the size of the site it really is just we have two products our first product which is just structured data which is a machine to machine learning language that that allows a website to talk to google that's 2k a month we have a new product called seo cloud that i think is kind of a game changer it's like my perfect world of seo and that product's 4k a month and that's that's in beta right now that's the one that you know sap has bought that product grows brought that product domo's bought that product it's getting a lot of traction so we're really excited about that so just really i've only been selling it for about a month your expansion revenue is dependent on essentially you selling people on like basically it's the same fee on the products but just adding additional products you don't have anything like number of keywords you want to rank for or like or like no no no none of that stuff now at some point we'd love to get to pay for performance because just the roi for some of these companies is just so ridiculous you know if you grow their own granite search channel by 75 percent year over year i mean what's that do to their business right so at some point i'd love to get a little bit more predictable around you know what the growth for a potential customer would look like and then we can put more skin in the game around pricing yeah okay and then put this on timeline for us when you launch man so we started about five years ago but it was a b2c site it was a terrible business model this is what 2013. yeah right around there um it was a b2c model it was an affiliate site i think google shopping meets uh a coupon site right you don't have to go back and forth you just turns out google doesn't like affiliate sites anymore so just uh we were struggling but we built some of this cool seo automation software and people that kind of knew the company wanted to start licensing it and so we did it was the fastest way to revenue and i didn't even understand the value of i mean you're like the king of sass i didn't know any of these you know multiples or like the value of recurring revenue um you know it was a whole new world for me unfortunately got a really good uh sort of angel super angel investor that was uh svp at salesforce that's kind of held by hand and so how much how much raised to date uh under a million oh okay good okay yeah we're in a round right now um but we've raised under a million bucks angel investment money that's great and then how many customers have i scaled to today we have about 60 customers okay good okay so this this is kind of high touch enterprise playbook yeah we're figuring it out you know at first we started would sell to anyone um now we see our our almost our whole sales pipeline right now is enterprise software companies because they you know the return is just they have high domain authority the reason is is that if you think of an overstock it's really easy to understand right for those reasons there's categories the site's structured there's an api going back to google with all the product information they get to us you know google comes to salesforce and they're like they know salesforce is really important but they have there's all that structure goes away and so they really want to understand the intricacies of a sales force or an sap and our product allows them to do that so if you layer our software on top of a site like that high domain authority google really cares the results can get pretty 60 customers paying 2500 bucks a month is about 150 grand and monthly revenue is that about where you're at today uh we're at 123. okay yep okay and where were you exactly a year ago so call it january 2018. jeff man probably 50 oh wow okay okay good so healthy has mostly only been we've really only been selling to be honest with you nathan um this product for about a year and a half um you know before that it was just sort of uh jeff's friends and now we what's the team size today how many folks uh 14 14 and is everyone based in utah uh no uh offices here in park city and uh about half half are in utah and half our our dev team is is uh is remote so um about half remote okay and and talk to me about you said you're raising right now so you obviously want to go into the raise with as much leverage as possible so that you can minimize dilution for yourself and other you know early employees that you incentivized with equity um did you get to a point where you are now break even so you don't have to if you don't want to that's giving you the most leverage um you're right it's it's a quick lever for us to turn um you know you don't make the that sales higher that month or you do right kind of between break even and and you know making sure that we're profitable you know what's interest and from my side what's interesting is that we have a really clean cap table right now and so we're going into this round just you and the early angel uh few angels but it's all common stock which is pretty unusual and um and so we're kind of teetering between institutional money is very interested in us but we want to keep it um you know common stock angel investors so that's kind of been my struggle with this round is is trying to figure out that which way to go honestly and um why do you want to race from why do you want to why do you want to sell equity at all why not try something like venture debt where you don't have to give up equity at all [Music] we're exploring that as well yeah okay well so what what would make you go with venture debt over traditional vc you know um we're really focused on the angel route so we haven't explored it as extensively as as probably we should be but um you know it's it's a good idea well i mean who knows maybe it's a shitty idea um why maybe you know something i don't so so the angel path are these like really strategic angels that'll bring you 10 000 more customers or why why the angel route uh mainly it keeps it all common it's great for us is it's great for employees right everybody's on the same same stock um and uh that's just sort of the way that we've done it we've uh we've always done it through angels and we have a great you know our network is mainly here in park city to be honest with the one sort of super angels in boulder colorado but he comes here quite a bit and uh well and there's new it's as well if you look at if you look at qualtrics there are super angels being created every day in utah so you're in good company yeah um so so just let me go back on my profitability question so it sounds like you said it in kind of a coded way but you're basically like you know call it plus or minus 10 grand above kind of the black line right you'll maybe burn 10 grand a month or profit 10 grand but you're flirting with that while you go through a raise correct okay yep and then and then um in terms of actually a little bit some some months might be more or less than that right um really depends like ar and stuff like that and um but uh yeah we're you know if we if we pulled a dial back here there we're profitable yeah okay good and then um in terms of raising i mean how much do you want to raise and where do you like do you know where you'd spend or you're just kind of raising for a cushion right now no we want to raise for a for a sales push yeah for sure we finally kind of built a uh reliable this seo cloud products a lot easier to sell than structured data we're starting a really good pipeline um a lot of meetings you know it's just it's time to go yep yep okay very good so for and by the way so how much do you need to raise to build a sales team you're gonna try and raise like two three million uh we're raising 1.5 well okay good good so you're being conservative about it which is great um good 1.5 million and then walk me through some of the other economics turns critical in a sas company what's your turn today uh churn in 2018 was not great i'm not going to give you an exact number but we really were kind of flushing some bad customers right like a boutique furniture store and durango colorado can't benefit from our software as well as an sap so ignore that that's exactly why revenue based churn was invented was so that you can clear customers that are paying you less and not getting value so what was rev i mean do you look at revenue based churn last year um i don't have that number off the top of my head so revenue based certain like where do we where you can explain it to me i'm sorry i am relatively new at sas so no no it's fine it's fine i only wanted i'm only in this is about you so i'm only interested in what you're measuring not like trying to tell you you should or shouldn't measure other other stuff so just help me understand how you understand how sticky customers are yeah so the bigger the customer the more sticky they are bigger so your saps your grow.coms your sales forces we impact their pipeline in a way that we they just can't they can't get rid of us so bigger is defined by pipeline size is that what you're saying or team size or what are customer count um it's really defined by the value of an organic search lead to their team so if you think about how much you know overstock benefits from an or an incremental organic search visitor versus sales force it's a whole different game and so the if we even move the needle 10 for someone like salesforce it's a no-brainer so we really are focusing on enterprise software as a segment because that's they're the stickiest customers by far okay let me ask you a different question to get a new 2500 a month customer what are you spending right now on fully weighted cac to bring them in um you know with not much um we have an fcvp of growth that just started in the last 30 days um that's been a fantastic addition we have one ae um we haven't done any marketing we've flown under the radar this is a bit of uh out of our wheelhouse doing something like this but you know i have a marketing background obviously and i'm really so what is fully what's fully weighted cac today your your best guess i don't know um four or five thousand bucks okay so you got like a three if you call it three month payback something like that yeah yeah i mean by the way these are things like you want to know right before you hire a sales person like what quota do you want them to hit over and how many months does it take them to ramp up and yeah and honestly we're still figuring that out um you know we're working with you know and having an spp of growth that has a solid you know sas sales background all those numbers are starting to to come to fruition we're kind of figuring it out um you know young company that's that's that's part of the deal it's like we're growing up yeah what were you so between 2013 and a year ago when you started selling this to 2017 it was all you were basically supporting yourself just on affiliate commissions uh yeah occupy really wasn't anything of significance honestly i was more of a uh skier and dog walker than actually okay very good jeff let's uh let's wrap up here with the famous five number one what's your favorite business book uh right now it's the sales acceleration formula number number two is there a ceo you're following or studying i always follow the founder and ceo uh my mentor patrick byrne he's always up to something number three what's your uh what billing tool do you use what billing tool do we use right now well everything comes through salesforce and then i believe it goes i think it's bill.com that's it that we're using yeah number four how many hours i sleep to get every night you know i need a lot of sleep i always have so i usually get about eight hours of sleep at night that's great and it's a little bit good uh this is just about right for me that's good and what's your situation married single kiddos i have a wonderful wife and a big chocolate lab okay good and then how old are you i'm 37 37 last question jeff what do you wish your 20 year old self knew um you know it's actually something i had heard you asked this question before and uh it was actually something i learned probably around that age that that really made a difference for me and that was to um find a mentor and find someone that you know you can help and impact their success and as a result they'll grab you by the caller and drag you with them and uh it's a great way to to get experience and you know patrick's godfather was you know warren buffett and his dad was the ceo of geico i mean that kind of business experience for me at a young age meant everything yep guys find a mentor hug a buy launch back in 2013 really started selling in 2017 essentially seo software 60 customers paying call it two grand a month right now so doing about 120 grand uh per month in revenue up from just 50 grand a month about a year ago they are called burning maybe up to 10 grand in a bad month as they kind of look to stay nor by break even as they look to raise about 1.5 million here right now they've only raised so far to date about a million bucks so good growth considering what they raised 14 folks on the team based in utah and remote locations churners call it bad right now but they're looking on driving that down as they as they focus more on the right customers versus any customer five thousand dollar cac three month payback jeff thanks for taking us to the top you got it thanks nathan