How Ikizmet CEO Andres Moran grew to $1.2M revenue and 1K customers in 2018.

hello everybody my guest today is andres moran he is the ceo and founder of ikizmit which delivers business analytics and insights to boutique fitness studio owners with over 500 000 businesses in the fitness and wellness space the company is making valuable data analysis tools affordable for small business owners to help them make data driven decisions faster without the complexity while helping to grow their business anders has been in the fitness and wellness space for over 15 years and was a founding member of mindbody helping out a world-class sales and business development organization andres are you ready to take it to the top yeah absolutely i have to ask you first i mean mind body was a rocket ship why'd you leave um there was really no reason except um getting that um the entrepreneur bug um when i started on my body there was five of us and one of the things that really attracted me to my body was that entrepreneur spirit um and so after a decade of being at my body i saw an opportunity i wanted to serve the same space and the people that were in it um and i you know wanted to start that rocket ship again that's great so you let you left after a decade what year would that have been when did you leave 2014 2014 it was actually end of 14 going into 15. okay and did you launch this company right on the back of that right on the back of it i know break you know the six months off you know while i was uh putting it all together but overall it was from one thing to the other that's amazing okay tell us about about ikezmit so what's the company do and are you a pure place sas company yeah um so what we do is and right now um we are mindbody's technology partner um and so what we're doing is bringing over nightly we bring over all the raw data that is generated at the studio so at the front desk if you've ever been to a yoga studio um or you know orange theory fitness or one of those type of places every time you come in they check you in you have a membership they you know they um you go into a class so there's a lot of things that are happening at the front desk all that data that mountain of data is super valuable for customers um or our customers and owners to continue to be relevant we're in a very kind of trendy industry and so every night we pull that data down and based on the industry best practices that we've created we create these analytics and metrics and these very beautiful visualizations that make information and insight really really easy to consume just be clear the mind body doesn't pay you the small business owner does correct we're going directly to the small business owner interesting so what do they pay you on average per month would you say i'm sure you have a lot of cohorts but what was the average um on average we're charging about 99 a month um when you take into account um our spread and you've been doing this since 2014 did you self kind of self-capitalize or you raised capital yeah so at the beginning of 2015 we bootstrapped the the first mvp um and got our mvp to luckily enough to a franchise called bar three um that has about 120 locations across the country and from there i was able to raise a round uh between friends and family and um early mind body investors as well that i had made a relationship with over the um over my time at mount vernon definitely a very good body you should have made them a lot of money right yeah i definitely um i can't complain it's been a i've been blessed to say the least so sorry so how much have you raised a date uh today we've raised about 1.4 million okay so so not not a ton but enough to kind of get your mvp off the ground and now you're basically what breakeven are you still burning cash yeah we're burning a little bit of cash um we we um are chasing that break even just to um you know make ourselves attractive for the next rounds and and show that our operations cover um you know our are our nut as people like to call it yeah so i want to understand growth here so 2015 you launch you get your mvp out you're growing you're growing how many customers have you scaled to today so we are in almost a thousand locations um across the us um we have some australian clients we have some customers in in canada um that have come to us that have heard about us um so it's been organic and and you build per location right we do okay so i mean can i take the thousand right customers time is that 99 price point you're doing about 100 grand a month right now yeah you can take that okay and what's growth look like so if we go back a year where were you so we were about 600 um locations um last year okay um so it's about sixty thousand so so that's healthy 30 40 year over year growth rate absolutely how are you driving the growth i mean you saw the engine at mind body is are you able to replicate it so one of the one of the early mistakes we made was trying to replicate you know there's there's always a time and a place for when things work and so it's really easy as an entrepreneur to get caught you know in that in that trap we did try the same kind of outbound hit the phone kind of sales approach and so now we've learned that you know small business owners are bombarded uh by um calls right so we're focusing on content we're focusing on education we're focusing on trying to build kind of a platform that shows these small business owners how to put our metrics and analytics into play because if you think about it a lot of them are serial entrepreneurs they they the best time that they have in their business is when they're in class teaching class working with people right so managing the business and the analytics and the metrics that go with it not necessarily in their in their wheelhouse so typically they offload off they offload that to a manager um or their bookkeeper or someone like that um and we're trying to make these analytics super simple um so that they can consume them and then it makes sense to them so a lot of the lexicon that we use within our software is very much related to them so um we're we're vertical specific um but give me i'm just sorry i don't mean to cut you off but uh on time so give me like a specific example i mean how do you get a specific channel you use to land a bit you know customer with you know 30 locations um well so originally we use trade shows uh or partnering with mindbody on doing education events and trade shows where um these customers are coming and so we're able to have face-to-face with them um build a rep um you know be able to sell them it doesn't hurt that i know a lot of these customers as well right so um it's easy for me to kind of reach out to them when they're ready to implement this discipline into their business um so those those are the two channels and now we're going out building our brand in our name interesting what's the uh what's the team size today how many people so we have uh nine people on our team okay and everyone remote uh no uh we have some remote um but a big portion of it is in the office in san luis obispo okay so california and remote churn's critical with any smb right especially kind of studios what's your turn today and how do you keep it low yeah i mean churn has been something that we've been dealing with um specifically because people are like okay you're giving me all this great data like how do i implement this into into my small business so that's where that education um comes into play um and so that's what we feel is we've we've created some features that'll be coming out in 2019 that addresses a lot of those those needs but i think overall people just want to understand how do i use this information and how do i use this data um and so you know that's that's what we're pursuing that's what we're pursuing in two thousand so what so last 12 months what was churn um we we typically are um you know losing about 10 customers um a month okay so so what is that about one percent a month or about 12 percent annually yeah yeah yeah that's not horrible actually for the smb space do you have do you have meaningful upsells and expansion revenue that makes up from that 12 percent churn are you net revenue retention above 100 yeah so we do have um features that um have been coming out slowly but we have a big launch for 2019. 2019 which is really creating a personal assistant for your business that is driven by goal setting so because we've been able to see all these metrics and what successful businesses are doing we're able to create goals around them that are delivered through the mobile app that basically every day is monitoring how well you're turning against that goal so that's kind of a big feature that we're going to be pushing on in 2019. interesting okay so too early to talk about expansion and stuff like that yet yeah what about i mean so when you now do look at fully weighted cac right to get a new location a new 99 location i mean how much how much are you comfortable spending to get that new location you know that's a good question um i think it's changed in so we have three different three different personas we have the single location right we have the multi-location um chain and then we have the franchisee so how much am i going to spend on the franchisee you know on a 80 000 a year um contract i'm willing to spend um a good amount to get those customers don't don't let's not talk in absolutes because again it's very different if they pay a ton of money can we talk in percentages so payback period are are you okay if you cover in a year or you want to go up to two years or less than a year no we'd like to we'd like to be in our payback period we like to be within four to five months a four to five months okay good so whether it's a hundred thousand dollar contract or a one dollar a month contract you like to be paid back in four to five months exactly okay interesting so on a 99 a month plan you'll spend 500 bucks about yeah yeah and where will you so where will you spend that where are you doing any direct paid stuff or is that just like your sales people right now so um sometimes it'll be forum events that we go to um well we'll partner up with either mind body or somebody else that's doing some sort of industry trade show those will have higher cost of acquisition and then um it's just our sales guy through ads or hitting the phone um creating um those sales and so the cost of acquisition is a lot lower um so when we talk about the you know three to four hundred dollar cost of acquisition that typically involves sponsoring a show travel and accommodations and everything that goes um with that yeah um as you look at growing the company and potentially using kind of some more capital to that have you considered venture debt like non-diluted venture debt or no yeah we have um not you know not necessarily venture debt um but we have um it's funny i just had a conversation with um light speed capital yesterday light speed or lighter lighter speed capital i'm sorry you mean lighter capital am i getting it wrong well i don't know there's one really well known venture debt firm called biter capital i don't know if there's a lighter speed capital yeah it is lighter capital okay you're right how'd that and so how about cargo i mean what do you like great conversation great um you know learning about their business and how they can help small businesses like um us um to grow um with capital so we've um you know for the most part we've been uh self-funded um but for 2019 to really get our products out there to get our brand and what we're doing we really want to just reinvigorate like what we're saying the content the education and getting getting people to know more about it in our space let's wrap up here with the famous five quick answers if you can number one what's your favorite business book ah fame uh crossing the chasm number two is there a ceo you're following or studying right now i i like to follow you know rick stollmeier from my body i think what he's done is amazing number three what's your favorite online tool for building your business i'm sorry on that you cut out your favorite online tool for building your business um i would say quickbooks online it gives me what i need number four how many hours i sleep to get every night that i'm really good at i try and get about six to seven that's good and what's your situation married single kids married with four kids holy mackerel you're busy how old are you what's that andres how old are you you cut out there 42. 42. last question what do you wish your 20 year old self knew ah that's a really um what what um to take a moment to appreciate um how fortunate you are in those situations you know when you're 20 you're driving fast and you're driving hard um and a lot of times you don't just take a moment to appreciate it because it does go by quick appreciate the good moments andres again part of mindbody early 2014 branch on his own launched by kismet in 2015 full time now a thousand locations using them 99 bucks a month doing about 100 grand per month in revenue up from 60 grand a month just 12 months ago they are burning a little bit of capital as they look towards working towards profitability they raised 1.4 million bucks nine people between california and remote locations turning about 12 percent of their logos per year again spending up to four or five months of lifetime value on customer acquisition so 500 bucks on a 99 a month plan as they look to scale again helping these studios visualize their data andres thanks for taking us to the top all right thank you have a great day