How Kvsocial CEO Neil Napier grew to $420K revenue and 500 customers in 2018.

hello everyone my guest today is Neil Napier he's a charismatic leader of people currently and leading a company called kV social which will dive into today empowers people to spread their wings and develop all of their superpowers he cares about his customers like nobody else and is available for them more than his wife would prefer he loves the teaching goes the extra mile to enable success Neil are you ready to take us to the top I have indeed and I think my wife is listening as well so go ahead that's good all right so tell us about the company what does KB social do and and what's your revenue model how do you make money sure so we started about five years ago and we started by creating software products for social media hence the name social and we focused for quite some time on creating software for Facebook as well as YouTube and initially our revenue built our business was creating new products every few months and bringing them out to market and it worked quite well for some time but I found that we exhausted ourselves really quickly so about a year and a half or so ago we decided to strategically move more towards recurring business model and we've been focused on that since we are working to grow our latest product for Cavia and that's been the one thing that we've been developing now for more than a year so it's definitely something that's different to what we were doing before so what does that product do so it allows people to help people to build funnels as well as launch membership sites if they won't do email marketing and recruitment manager affiliates all in one platform essentially that's a lot there are huge multi-million dollar companies competing in just one of those sectors why are you trying to do it all at once so yeah I mean we're definitely in what you would call it red ocean and I think this is more of an accidental discovery for us because we have a lot of different tools along with the previous partners that did some of these things and we found that the best way to offer value to people is to bring them all under one roof but not just bring them all together actually make them talk to each other because yeah there are companies out there doing it but they are not their tools by themselves all right but together not smart enough so we're focused on making these tools talk to each other better so that we can automate a lot of things that people without any technical skills would otherwise find difficult to do so instead of you know a clickfunnels plus convertkit for email marketing and just using zapier to connect the two via an api call you're betting on your solution which is all just one product is going to outperform that exactly and I mean let's add kajabi and you know any for any solution like first promoter to the mixer our goal is to kind of provide everything in one place but with better communication instead of using third-party tools and so what's the average customer paying you per month so the average customer at the moment and I was looking at my numbers today before getting on the coal per month it's about seventy dollars okay seven zero yeah okay and you said earlier you launched this product or you were start working a full time about a year ago but when did you launch the company so the company KB so she launched in 2013 late thirteen but the product itself had a soft opening in April last year so it had been in development for longer but it had a soft opening in April last year okay and and walk me through kind of what the company did between 2013 and 2017 I mean you were doing a bunch of different products was at one time sales or recurring or an agency what was it mostly one time sales so the way we work is we would create a product that would be one problem one solution so we've been doing that for a while we had a formula down and we would create a product that would for example help you find viral content on Facebook or help you find tags on YouTube videos and so on from your competitors and again I mean that the whole process worked well between two thousand thirteen to seventeen and it was very profitable it was good for cash flow but it wasn't an exit table business which is why were to move away from that model so what did you grow that joint in the best year what did that model do in revenue to million human okay got it and how many people were you sure at peak when that model was still active we had about 18 or so people okay and now update you go for the transformation you are now only focused on occurring higher margin products what do you had today in terms of team so in terms of team size we actually up to 21 now and have you bootstrap this or raise capital it's absolutely bootstrapped I'm not I love it doesn't it feel good to be bootstraps I really doesn't mean own to tell you what to do when to do yeah did you did you come from a start-up prior to this how to raise capital like do you know what the other side looks like I have no stories but that's that's the best I know got it all right Anne what have you scaled to today in terms of how many customers are using this new product so when we open the back in April we had a lot of lifetime customers joining as well because you wanted to make sure we give people an early deal and we recently also had an absolutely launch so we're sitting at close to 6,000 overall customers at the moment and we have about 500 recurring customers or so right now oh you know some are paying more so bigness got it so so basically five if I take the 500 times that $70 price point gave me earlier they're all paying that but then you've got another 5500 that are kind of lifetime people yeah exactly got it so 500 times 70 is about 35 grand a month is that basically where you are right now it changes month-to-month bed I mean I think for the last because we're in a red ocean market and recently another competitive tool came out so we do see a chairman something like that happens at the chin which is higher than usual but as long as we keep on growing consistently I think we all right what is your turn so Chen at the moment is rather high I mean it's up to 12 percent every month and so I mean that is basically what you were doing earlier which is a one-time sale it's just they're paying you for that one-time sale over eight months instead of paying it all up front why not just do a one-time payment if you know they only have 50 for eight months why not just do a one-time payment upfront which is equal to 70 bucks times eight months I mean we have considered that in our onboarding process we try to get people onto the illy price instead but we just feel on principle we don't want to get committed to lifetime especially if you want to exit out the business because we think that at that point anyone would have an objection to people who have their commitments here for the rest of chronics lives you ever knew you didn't appSumo launch their only reason EPSA mode does well is because they get monthly recurring business models to do a lifetime deal right so you have 5500 people that have bought lifetime so you're already stuck we are but I mean we're working on upselling these customers to monthly yearly as well as much as we can and we also turn them into brand brand evangelists so we just ran a campaign to get them to promote guy view as well I mean if they like enough of course and many did so that's the goal is over Schumer was never really about the money it was about branding because we also in November changed our name from instance we took a beer so we wanted to make sure that our brand name gets out there as well yeah but but you you mean you know JCPenney is famous for putting out deals right and they're known as a deal brand so no one ever buys anything at full price that is wait for the next deal I mean you essentially created the worst deal possible by selling a one time lifetime products and you're now stuck into basically doing I mean have you had meaningful success upselling those folks and the monthly plans we have yes absolutely I mean that as well as as I mentioned turning them into affiliates and brand evangelists so using them working with them to generate case that he's making sure our customers have the best experience so that's something we're working on as well what percentage of people that a sign of the appSumo have you converted or up sold to a monthly plan I don't have this tab but we recently ran a campaign where we had about I think 40 more customers that signed up from that list but again that's just one campaign that we've run so it's not a big number official okay and then going back to product I mean look 12% churn tells me you don't have product market fit I mean have you considered getting more focused only only attacking one of these things versus doing everything yeah I mean so this is kind of the problem that we fell into when we as I mentioned got into the trouble because our goal was to do this in the society but because when the erosion we feel that people tend to move from one throw to the other really quickly and many people Beckham in they feel that they don't want the whole thing they want just one thing so something that we are working towards now is modularization within our platform so that each one application can exist without the other and can still be sellable without the other so that's absolutely been the goal and I mean in also in terms of the actual market there we go two words we're talking to people to see who is using the application in what way and then we are focusing our our marketing both organic and paid traffic to targeting those kind of users with those specific use cases yeah but why not I mean even if you split and module eyes into five separate things right you've got 21 people on your team so that's four person per product right the kajabi team alone which is maybe what your membership site would compete with it has way more than that many people working on it full-time and it's all they care about I mean you're still gonna get your turn still gonna be high across the entire Prada base unless you go all in on one thing do you agree I do you agree but I do think that's what these you could have a bit tough to do that now especially because we're committed to providing support across all these four things so again there's the problem with startups that bootstrap and you know go all in and give people lifetime licenses we do have a sense of commitment to them and I think unless we find that one module really stands head and shoulders above the others we wouldn't feel compelled to strip the others out so you're just gonna keep hustling and killing yourself and turn it being happy with 12% churn every month because you've sold 5500 people in lifetime and you're gonna serve them the rest of your life even if it sucks from a business perspective I think it'd be hard to commit to doing one specific module at this stage we will have two more to arise and see which fits their greatest market demand and then go with the flow they're interesting all right very good what about it talk to me about CAC so obviously you mentioned appSumo but the customers you're getting that are not via appSumo what are you paying to acquire them on average so right now our key focus system on developing we're not spending enough on marketing at this stage about 20% of our monthly cost is going to its marketing efforts or I would say design efforts as well because that's opposed to marketing so we've got about approximately I would say four or five thousand dollars a month or so going towards that say not you know considering my time that gives us about 100 150 new trials a month and in a bad month and a couple of hundred and a good month so yeah trials how many of the trials convert to paid customer though so we have it by 35% at the moment can writing to paid customer for the first time okay got it so call it on her new trials you'll get you wasted 3.5 or 35 35 cakes so a hundred trials you get 35 new customers and it cost you five grand to get those so I mean you can kind of back into a calculation from that right yeah yeah 340 bucks yeah yep and then you and obviously if you're if they're paying 70 bucks per month it takes you two months to get that back so so healthy healthy character I mean the biggest thing is a tournament why are people churning I think what we found and again we are quite you know we just started doing the trials early on from January and what we found is most of the time it's the cards getting declined because of doing an honor and I don't know maybe because a base at the Hong Kong and the customers in the US or Latin America it's probably that we don't get funnily enough we don't get a lot of people telling us that they want to Chen they want to cancel it usually just happens because the credit cards get declined or something and we try and follow up but I guess our ongoing isn't strong enough that people are committed enough to continue using a platform so we don't get that response from people if they do accidentally turn out as well yeah I mean average churn in a space like this at this price point should be somewhere like a round call it between like 2 and 5 percent per month and usually 60 to 70 percent of that churn is credit card failure at this kind of price point I mean do you know what you have to users to do in the first week when they join your platform to make sure they get sticky used to sure at the moment we have automation emails going out but we also trying to have automation placed inside of the tool itself so we'll do like a mini survey asking them exactly how they intend to use a tool and get them to the result really quickly how so our goal is what we working on now is asking them first of all what it is they do and then based on that you know Austin have another question that is what is it you know why did they get kind of in the first place where they get to inter intend to get out of it which would be one of four options and then based on those four options showing them how can they get to the results fastest but my point is though like do you know for example Facebook knew when they launched they had to get people to add seven friends in the first seven days and there are chances of sticking after they do that is really high what your tummy is you're not quite sure what it is they want so you ask them a question which is what they want and then based off all the potential question variants you then I guess manually email them and try and make them sticky I mean do you know that you've got to get them to install the membership plugin in their site and upload their first you know lesson video and in your kajabi competitor for them to be sticky so I think as you quite rightly pointed out because we have multiple things people might use guy.you for different things and no we don't have we don't know one critical success factor that they need one win that they need to continue using the tool and that's still something we're figuring out I mean in the recurring will be still relatively new and it's still quite a new product compared to others out there all right very good last question here what are you going on you every year I'm sorry what are you growing at year over year so you're doing 35 grand a month today what were you doing twelve months ago so twelve months ago I mean that is when we actually just opened up so it's hard to really compete because we didn't have a monthly black plan then but back when we opened that opened up we did about 400,000 in sales over what time period it was in seven days okay but bad what was at the optimal deal no it was a marketplace that we're in so I mean we had a lot of affiliates who promote the product we reached out to them we set up a public launch and as an opening and that one did about 400,000 okay and but were they selling these monthly plans no some came in on monthly but mostly as I mentioned but on lifetime so I was at 400 about you know 300 thousand words I think lifetime and we've had some more recurring yearly coming in just in April mouth and you're and you're paying affiliates what 50 percent forty percent forty percent okay so call it call it you know hunter and 70ish of that 400 taking off the top right away sure yeah okay good but then after I won you really started scaling the the monthly recurring stuff so between now and then over the past twelve months you've grown at about 35 grand for a month yeah all right very good Neil let's wrap up here with the famous 5a first question here what is your favorite business book I actually like the one called power of negotiations I mean I like to negotiate so I think for me that one really stands out number two is their CEO you're following or studying right now I really like Elon Musk but I think in terms of what he's doing what I'm doing the quite far apart but it's still good to see his journey number three is there a favorite online tool that you use to build the business besides your own sauna okay number four how many hours of sleep do you every night I get six and a half hours so that's pretty healthy all right good and what's your situation married single you have kids expecting a kid in October ah very good all right it's a married a little kid on the way in hell Daria um page 32 all right last question Neil what do was your 20 year old self Neil I wish I could push him into entrepreneurship you know looking for himself sooner work for yourself sooner there you guys have it he launched Kay be social back in 2013 built basically an agency model up to about two million bucks in revenue then got sick of those margins and sick of that kind of work and said we've got to go recurring did a launch about 13 months ago did four hundred grand and launch selling lifetime plans he's now focused on building a true monthly recurring models got about five on our customers paying seventy bucks a month or doing about thirty five grand per month they're the promised churn at 12% logo term per month it's too high he's working on module izing his platform which does five things five very different things and he's trying to figure out which obviously will perform the best in terms of charm CAFTA LTV is also healthy spending about a hundred forty bucks to acquire these $70 per month customers with the scheme of twenty one Neal thank you for taking us to the top appreciate that Nathan thanks