How Idealspot CEO Marc Smookler grew to $804K revenue and 100 customers in 2018.

hello everyone my guest today is Mark smoke lore he's founded six companies two of which have been acquired and three of which are market leaders in their respective spaces the leading brick-and-mortar retail analytics company ideal spot comm a leading online retailer sake social calm and a cutting-edge marketing services platform written dot-com Mark's companies have generated over three hundred million dollars in lifetime revenues and sold over 150,000 products worldwide mark are you ready to take it to the top yep all right so you you're doing so much the challenges I have to figure out one of these things to focus on so let's do it this way which one's making the most money top line ideal spots sake social or written well its sake social so we all go loud yeah cheffy thought the online store the largest online retailer of Japanese sake but no I mean ideal spot is the one that's rocking and rolling right now and that's where I spend most of my time okay let's focus on that but I'm curious now that I know it's sake how much do you sell annually in Japanese sake online well a lot I mean on a daily basis so we use Shopify in the front-end I'm a big fan of Shopify and essentially every day we sell thousands of dollars worth of sake all across the United States now there's some states that are obviously dry that we can't ship to but but again I mean we ship to most states and it's all outsourced I have no employees we have a third-party warehouse in Napa Valley that pick pick packs and shifts all of our brews and again Shopify in the front end and it's just yeah just a fully automated business okay we fun business that's great so a couple thousand a month so minimum two hundred sixty five grand a year have you guys I mean do you do a more than a million a year there we do not do a million but we got a million dollars you guys so between 365 and a million but no touch no - I mean yeah I mean it's it's just a you know it was a hobby business that became something more and interesting and again it's not that I'm a you know big drinker of sake it's you know an opportunity that I saw and that's a sort of a long-winded story in and of itself but again I mean if I just had you know five of those ID I'd be happy right the automated businesses that sort of print money on their own yep okay let's talk about ideal spot what's it do and when do you launch it yeah so we launched for the platform that's live today we launched roughly geez September of 16 so what is that 15 16 months ago and we essentially helped everybody within commercial real estate including retail restaurants etcetera better understand their local retail markets and we do that through the use of what we call better data okay so you know if you call it retail as it was was focused very much on the identity right what people look like sort of age ethnicity etc we focus more on intent right so people signaling that hey you know I want a cup of coffee right and so when and where is that happening and helping sort of be the coffee shop the brokers developers everybody's sort of within this retail ecosystem better understand where that demand is for that cup of coffee now your yeah your algorithm those only as good as the inputs that you put into it so you spend a lot of time trying to probably fine-tune inputs what inputs are you using to make these recommendations sure so we have all the the standard stuff that you would think of right we have all the census data right so the demographics again what people look like right we also have spending by retail category psychographics all of the basics we also have really good traffic data so the movement of a local park is actually physical traffic from a DMV about cars passing this intersection per day yeah we actually partnered up with a company called INRIX that maps and models all of the traffic across you know the United States they're well-known for it I would call them market leaders and we buy that data album spell thy name in Rix I and RI XCOM on it and so they're attracting hundreds of millions of vehicles from their navigation systems to partnerships with BMW and Ford and all of those so they buy all that data and then we buy from the sort of democratize it to our clients and the same thing with our with our demographic data we partnered up with a few companies to get that data and so again I mean we don't add value there right that's just sort of we're aggregating that data that's already been aggregated for us where we cut our teeth is basically so the demand side data that purchase intent data's ours we've been building up that model for over two years now and pulling that from search and social networks and we're marrying that to identity so we're taking the what people are and we're marrying it to sort of the who people are right so I'm a 41 year old white guy from Austin Texas right and so retailers make tons of assumptions based on what I am but they wouldn't they don't know who I am for instance they don't know that I'm gonna be again that I suck at all right I'm not a fan of yoga etc that's who I am but you wouldn't get that from my identity and so we're trying to do is we're trying to peel back a layer and try to help people better on to get those other data points well actually search and social search is more active intent that's somebody raised in their hand saying I want a cup of coffee who near me where I'm at right now and that could be from then typing into google map so how do you know that though that's my question like how do you have a partnership with Google where you know what they're searching location wise on their phone and you tie that back to the demo data that dude oh I'm sorry end of itself and that's some of our secret sauce but most anybody right now can go on to Google Trends and they can type in coffee in a specific area over a specific time and Google will tell you the average amount of searches that happen for that keyword now it's not just you know coffee but it's 800 related cousins where it's you know roasted and you know you know bulletproof coffee all of those things add your data up so we aggregate all those up and then we and then Google will tell you of course from a city-wide live level same with Facebook they'll tell you from a citywide level what the reach estimate is for a category but of course we take that down from the city level to the street level right so we top that all the way down any because if you think about it sorry if you think about it from retailers perspective you know if you were to tell you know an online you know company hey Austin has a hundred thousand searches for golf and golf related term that's fine for them right because it's just an online advertising campaign but when you're talking about a location that matters right is that pet you know aggregation north-south-east-west where are those people where is that density and we help them sort of locate that so they make a better decision and who and who is they I mean is it Starbucks they're trying to open a store in Austin they want to know where we they want your recommendation on which intersection to open to that yeah so we don't work with Starbucks today but an example yeah that's an example and so if you think about it you know again you know we can now help augment whatever Starbucks was doing we can tell them hey we definitively know there were whatever a hundred thousand people that were searching for coffee within a five minute drive some of this ads on it oh and by the way there's no coffee shops within that five minute drive time so we call that a market opportunity yeah that's unmet demand and we can definitively tell that what's your revenue model SAS or is it something else so it's fast today and but again people can come on and I mean it's SAS with no commitment right so you can come on and you can cancel at any time but we you know people subscribe and they give them the ability to pull reports math whatever it is that they need and what do they paint on average per month are we talking a hundred bucks a thousand a million ten thousand no I wish two million yeah so we started $100 today for just a basic report and we scale up from there what I would say is our average take right now per clients is anywhere from five hundred to a thousand dollars per month yeah and it really depends on what they want right and so if they want all-you-can-eat today that you know you know $2,500 for them to basically pull all-you-can-eat reports maps models full access to our days and are you Selvi utility metric you're selling around is what based off like line of data or like what are those is it you know I'm saying like is it data records what's the number I mean are you I'm sorry what are you asking well I'm asking it happen yeah no no not the deliverable when someone starts at a hundred our plan what utility based pricing metrics are enabling you and your sales team to upsell them to a five hundred or two grand per month plan is it additional feature sets additional lines of data records additional contacts what is it yeah so today we're a seed stage company and so right now at this point it's all about getting people sort of using the service trying it getting to appreciate it and find the value in the service I don't think he'd stage companies can really get that discerning when it comes to their features I think it's just right now with prove it point or trying to find product market fit so that's basically the stage that we're at we're just pushing all of our chips on the table and we're trying to get as much feedback as we can and getting people to say what they like what they don't like and what we're missing and so we're just basically tossing everything right now and it's just really about how many reports they want right now a Mac do they want but we're giving them everything right now we're not starting to chop that up and sort of a Chinese than you I'm asking this because like a coming like clear bit as they matured they move from a model like what you you have currently you know one ideal spot report for a hundred bucks month five for a thousand clear but move to basically it is like a buffet and you pay per scoop you pay per API call essentially and it's now it's obviously cents on the dollar but I'm curious if you eventually plan to move to that kind of model you know look you know I'm a huge fan of sort of letting the the market gyda on a lot of these things and it's really what my customers were bear do they expect to purchase you know at a report based and we're finding that people are they fit our client base is a little bit more they're sort of they're more old-school if you want to call it right so they're thinking of you know a report I want a report I want something tangible right and I want my report to share it to either get an SBA loan or I want to give it to my broker even if it's the broker trying to you know leave the space or the developer trying to get financing whatever it might be they need that report so you know chopping things up is sort of not something that I think will work today in our marketplace but you know yeah look it only works I mean clear bit works because they're not selling to the person that needs the report they're selling to the technical team that builds integration that is constantly pinging the API I mean your thing you know when I think about the use cases you just gave I'd say man that's hard about SAS business around now because these reports are one-time events I mean or do you have people that have to come back over and over and over and over week after week month after month well yeah I mean so this is this is an interesting thing right so to find a good location or it's the right tenant you have to pull multiple reports and look at multiple locations and look at multiple types of retail categories and so mark once you find that tenant know isn't it done no I mean because I mean things change and so even from the demand point let's say that there's a huge spike in demand and we've had this conversation with a number of grocery chains etc and so if we track over time to man let's say there's a spike in demand for whatever tires right that's an opportunity for them to go into market and run a promotion and try to bring in that demand into that store and so things are always changing in the retail market and giving them the ability to be more reactive to what's happening is what we are hoping to do more and more of right so call it Google Alerts for your retail location and so again you sort of have to look past that you know just you know about site selection or getting a retailer in the spa okay how do you get them to evolve how do you get them to be more open or available to the changing retail market that they live in that make them does what do you I know you obviously just launched right so you're still learning here but what are you at today in terms of total customers so we have over 10,000 registered users on their platform and they have plotted over 500,000 locations already on our platform and we're adding about another thousand plus per month and so we're and that's inbound and so we're having to basically turn off that funnel about a little bit after lunch just because we don't want the wheels to fall off but as you can imagine the real estate space and data they're both combining to make a pretty large fertile environment mark what's the customer number though I know 10 dozen sounds better users but what's the customer number how many people are paying for a month correct we're closer than in at about a hundred okay that's I mean that's pretty healthy on that amount of folks and it's I mean it's not a cheap price point either so I mean are you putting touch on these sales with your team size today we're depend people tend to have our sales for right now two of them are still not including micro okay everyone based in Austin yeah oh that's great good I mean and then in terms of size I mean I can basically take a hundred customers times a minimum 500 ARPU you guys are doing north of 50 grand a month yeah we're doing higher than that yeah but we're on our way for the 1 million arrow well that's good do you think you but do you think you'll break that my q1 this year that's 88 grand a month I don't know if that's the end of your 2018 goal or end of q1 2018 go I'm serious let you know conservatively they will get there the next that's pretty good now can you give me a sense of growth so if you go back now this would have been early days right so if you go back to the end of 2016 what were you doing 10 20 grand a month no I mean we were just right did you know see like I want to say that we were doing 5 yeah I think we were doing 5 K December was a big lips just because people were trying to blow through their budgets but January I mean it was more normal around 5 to 10 K and so we started hitting her stride more as we start to understand a little bit more of how to sell price points etcetera that's good I look that's good 5x in year-over-year is pretty good if you give another year you're sitting on a rocket ship so what's your churn and how are you managing that you know so again turn I mean we're not requiring people to stay on the subscription I'm not a fan of that you should you know the value should be there to keep people long without locking people in the contract you know the churn in terms of people subscribing versus doing one-off no no just it's another pointer if you have a hundred customers in month one how many leave in months - yeah I'm not I don't have a good estimate to that right now have you lost any customers yeah I mean people come on and off all the time right you know a customer let's say they have five location they just need you know a month of reports or two months and then they're off and we're perfectly fine with that are we talking like 50 people leave in months - like 50 percent monthly churn or ten percenter I would say probably around twenty percent twenty percent okay so pretty high for a SAS business like so what's your goal do you want to go into the like one-time report site or if not how do you drive down turn no no again I want I want to be clear I mean you know from the SAS perspective as you define it you know we are a subscription service but we also have the ability to go to a pricing page today you can buy one-off reports right and so we're trying to sort of big bridge this gap grab a gap of you know how do you want to interact with us and who we are you as a customer it's the same product it's just a question of how much do you need and so you know as we say like the SAS product in terms of people subscribing I mean again these are the types of people that have a lot of locations or they're a brokerage firm and they need a lot of access to data and again the people that are doing the one-offs are subscribing for one or two months it's just really hard to look at churn a bad sort of view of the business or is it just that's the type of customers and that's how they want to take the product and again I'm not trying to I mean it's all revenue to me right and so yeah no I mean you're still experiment I mean look one of these I confuse me when my team is doing research for this interview is your first plan is it basically comes out to a hundred bucks report well your next plan which is five a grand a month it's comes out to 200 or report via two additional checkboxes for that are basically professional services a dedicated Account Manager and a team training session which tells me like you're trying to figure out how to onboard people at a higher price point which you have to charge because you have to pay someone to do the onboarding in the training yeah and again we're experimenting through all that pricing right and so we're running that pricing that $100 price point right now I mean it used to be $300 and so again it these are the things that you go through and a seed stage company right I mean it's from our perspective I mean we have you know we have a lot of top-line inbound demand where people are signing up and they're hungry for data it's just us trying to figure out the best way to interact with them and sell them products and it goes one of two ways I don't know how deep you went into it but when somebody signs up they either want to touch points or they schedule a demo they call us they reach out on chat etc and so they go through our sales team and then the other side of the funnel is self-service right and so you know we're exceptional at obviously the sales touch point side but on the self-service side I mean that's that's a much more difficult you know not to crack especially for a b2b for somebody that be able to understand enough need the value enough and commit money for a service that you know they're just learning yes how are you acquiring these customers what's your tak today so it's mostly PPC we're now starting to do a little bit of Twitter we tried Facebook we were not successful on Facebook for myriad of reason but you know we're just now trying yeah see in PPC how much are you spending to acquire our customer we are spending about 15 grand total a month all-in and that's spread between right now remarketing Google Bing and a little bit of Twitter so I mean what I would say is not that much I mean if you look back at my days of finality I mean we were spending 100 grand a month but mark it all comes back down the cat so a fourth at 15 grand how many new customers will that drive so again if we're you know bringing in at about a thousand so yeah we're but anywhere between fifteen to eighteen dollars customer acquisition cost from sign up in terms of sale I don't have exactly well how many how many sign ups do you well you said you had 10,000 and then a hundred of them have converted to a paying customer so you need about you need about a hundred sign ups to get one new customer so take fifteen to eighteen bucks times a thousand you can basically back into it yeah yeah interesting well I mean look it works because your price point your price button well I don't know this is you're figuring it all out that's the beautiful part where you guys are right I was a business how do you bootstrap Dennis or have you raised know we've raised that we've raised to date two and a half million in seed capital you race chromatic curiosity yeah it's a mix of people so we did HDX seed was a big chunk here in Austin Texas we also got some capital from Steve case over there revolution capital factory in town here put in some capital we have some individuals that were previously customers so you know some retail shops the money from individuals at CBRE new marker of knife frank etcetera so we had a pretty good list of investors that are also potential channel clients that's great makes a lot of sense mark let's wrap up here with the famous five number one what business book or or any book are you reading right now I actually read give my mind a break business yeah I mean again I don't you fear the water what's your favorite business book kind of a long time I don't know [Music] I mean if you don't realize this books it's fine no I mean I you know don't sweat the small stuff is a pretty interesting book for me number number two is their CEO you're falling or studying right now I'm not number three what's your favorite online tool online tool [Music] I don't know I use a lot of Google Analytics so looking at a lot of the data I use intercom a lot we use that for our chat program and so we use a lot of their tagging there's some good analytics in there as well number four how many hours of sleep to get every night three to five three to five hours of sleep you can survive on five hours of sleep yeah we have a lot of coffee geez Louise what's your situation married single you have kids married who kid Wow and how are you mark how old am i everyone man that's impressive okay last question take us back twenty-one years what he was your 20 year old self new oh Jesus um I don't know just not have so much of a fear of failure I mean we have all this thing where you know everything needs to be you know great and we need to just you know be awesome at everything but just doesn't work like that and I know I'm not trying to be sort of cheesy and I know a lot of people said this but I'm in most cases I mean I've learned more from my failures than I have from my win and I've had my fair share of both and and again I mean it just made me who I am today and now yeah so Gary very guys haven't from mark one day many years ago he was drinking too much sake from one of his companies and he said hell I'm gonna make this thing called ideal spot and so I was selling this data launched the company back in 2015 as really allows you to go in there a bio report especially brick-and-mortar brands grocery chains things like this every business has an ideal location they help you find that he's raised to nine million bucks to help grow the company his team of ten is based here all in Austin back a year ago they were doing about 10 grand a month in revenue at a maximum and they're now up well north of 50 grand trying to pass that beautiful 1 million dollar AR mark in the first six months here of 28 teen healthy economics trying to figure out to bring down churn and experimenting with pricing mark thank you so much for taking us to the top appreciate it have a good day