How Inkit CEO Michael Mccarthy grew Inkit to $2.5M revenue and 100 customers in 2022.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is michael mccarthy he is building a company called inkit which is a direct mail solution track which tracks and automates personalized letters of marketing collateral statements policies and many other items michael you ready to take us to the top let's do it all right so just be clear you are not directly competing with call it a hubspot or salesforce in terms of the technology of the crm you're just tying in via web hooks or something to do direct mail correct we already bolt on to those types of platforms or products okay which of those platforms i imagine you're you're obviously integrated with all of them which one of them drives you the most customers we we wouldn't say one or any others drivers more than the other so there's you're not gonna pick a baby anybody listed at our ecosystem drives us drives those customers so we're very friendly to you know lots of different solutions and and in fact nathan there's actually solutions out there that are that are point solutions where they might be used by really really large insurers or really large banks tank for take for instance like an fis where they might drive one or two customers a year but those one or two customers are massive whales compared to to other products in the market yeah now explain to me how you price is it a sas model we price as a sas model pricing is very transparent so we have a software as a service amount and that gets you a certain amount of mailings every year so it's it's very very very very basic vanilla so break that i mean give me give me a sweet spot on the sas side what's the kind of the average customer paying you per year to use the tech so average customer is you know north we're we're typically seeing a lot of six-figure size contracts on average uh okay so you're not an smb player not as much as smb play smb is really really tricky when you go into direct mail meaning a lot of you know your local coffee shop probably doesn't have the budget for for direct mail even begin with so it's typically more of a mid to enterprise type of customer play okay and then i cut you off but you were going to say you also have kind of a per mail delivered fee what did i imagine that's in a sense how many cents yeah so that can that can really vary it can be as low as 30 cents it can be as high as you know let's say you want to send out a 100 page document that could be 10 bucks just depending on how many pages there are so we have a we have a sas amount then we have a per piece amount per piece is fixed interesting so okay let me let me ask let me ask you a question when you add up all your revenue over the past 12 months what percent came from pure sass versus the metered portion that's something that we don't publicly disclose but it's it's it's definitely we have we have a lot of sas it's a very healthy mix so it's it's it's it's similar to like if not more than like food comps out there publicly trading well i don't i don't know what those are i'm just trying to get a sense of are you more a metered business that's pay as you go or more a sas play because they're very different questions i'll ask based off what you're the majority are like it's more than 80 of the business sas would you say i'd i'd say less than 80 but definitely more than 50. so it's it's a hybrid of the two it's it's definitely sas is definitely a big component of it and you know of course as companies ramp up their usage then you start to see more metered the metered side yeah yeah that's that's fair enough now obviously your margins are gonna be better on the sas side correct yeah correct yeah sas sas is pretty pretty good margins from from what i've heard put this uh put all this michael on a timeline for me when'd you launch the company so company was started in 2017 it was started by myself my my best friend abram isla who's the other co-founder cto our our quick backgrounds are abram has been coding since he was four years old the two of us grew up together he was one of aaron schwartz's best friends aaron was one of the founders at reddit co-founders at reddit so abram and aaron helped build some of the very first open sourced python frameworks that actually ended up being used to build reddit and then right out of high school my my cto abram was hired onto leadpages to be their chief information security officer when he was 18. myself i went off to college played soccer i had a degree in econ minor in computer science and my my first actual job out of school was sitting next to a direct mail team i wasn't doing direct mail but i was sitting next to a team of 70 people doing this and just saw how archaic and really how the process was all dependent upon flat files and csv exports and everything was just like very very manual and actual like human intensive right meaning that if if if a bank like u.s bank wanted to turn around a direct mailer it would take them sometimes up to 12 to 16 weeks to actually get this out in the mail yep so you started this thing in 2017. now how much time and money did you spend coding before your first dollar of revenue do you remember we spent a good six months coding um you know tough to put a dollar value on it other than our time but we had a team of myself and three other guys that we were we were all just working on this whole time to get things going well did you have to pay did you have to pay those other three people anything uh to work for all equity we had a lot of those guys just on on hybrid types of just equity agreements so it was a pretty pretty i guess different a traditional setup process from the beginning no no it's not i mean it's not different i mean founders have to get creative in the early days to figure out how to get stuff done for free right so you use equity you use other incentives you do consulting work on the side whatever you have to do exactly yeah so we did a little bit of consulting work on the side you know paid people a little bit differently than out of the gate and then yeah we really really launched our product in you know i'd say early jan february of 2018 so we've we've really only been around for you know even a little less than two years and how many people are on the team today we have a team of 15 plus um mostly most of them are based in minneapolis okay how many engineers we have i'd say over still over 70 of our businesses is engineering based so 10 plus okay very very engineering side do you have are you at a stage i imagine with your contract values you must have some folks that are carrying a quota are you the only sales rep right now no i'm not the only sales rep and we do have other sales reps carrying quotas so we have we have a few other sales guys how many total we oh man we have three right now and are you still figuring that out or do you think you've perfected it in other words you know what the quota target is you know what the ram time is you know what the kind of ot to you know quote a target is in terms of you know payback period all that jazz i don't think anybody's figured out their ote or their their sales formula so if we're even even big companies are constantly tweaking that and changing that so we we have a we have a really good idea of what kinds of customers we want to sell to we have a really good idea of what those cycles look like we have a really good idea of who the buying centers are now from a ote and just earnings side i mean let's let's face it some of these large enterprises let's say you go out and talk to the the exxon mobils or the walmarts or the the united healthcare groups of the world a lot of those companies take you know years to do things so that's where that's where it there's sort of it's more of an art to how you craft these these sales yeah yeah i mean just to be fair the companies once you're north of 20 30 million bucks in ar that this is a this is a system it is a well-oiled machine there's very little tweaking that happens so i mean so i guess what i'm asking you is you're you're at a valuable point where most of my listeners are probably very similar to you they've hired maybe their first one or two sales reps but they're still tweaking they're still figuring out i'm just trying to understand what different inputs you're using for that model to try and get a better guess of what that would look like at scale yeah so this is the two big two big inputs we have is one we have a baseline compensation and baseline comp is we actually pay very similar to like what uh what a...