How LeadFuze CEO Justin Mcgill grew LeadFuze to $367.5K revenue and 175 customers in 2016.

this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per top 5 and6 million he is help on global domination we just broke our 100,000 unit sold Mark and I'm your host Nathan lka okay top dbe this winner of The 100 bucks is Daniel Alini he's based overseas he's an employee at a current company and can't wait to break free for your chance to win 100 bucks top tribe simply subscribe to the podcast now and then text the word Nathan to 33444 to prove that you did it again text the word Nathan to 33444 to prove that you did it I give away 100 bucks every Monday folks many of you reach out to me and you say Nathan so many guests on your show talk about the importance of batching but whenever I try and batch you tell me this you go Nathan they don't book back to back times so you or they don't show up after they book it's frustrating the answer is guys you have to use Smart Tools I use a tool called AE scheduling at Nathan lat.com schedu I'll tell you specifically how I use it later on in the episode Nathan L here hope you guys are off to a great New Year this is episode 537 I'm actively building and buying SAS companies the top inbox.com was the last one I bought if you have a deal send it my way and be sure to tune in tomorrow morning for episode 5:38 you're going to learn from next. Founders they've raised a million bucks in Pre in their pre- revenue they're aiming for a $6 million series a for a smart sales automation tool Nathan ladka here good morning everybody Our Guest today is Justin Mill and his Entre Journey started in 2008 when he started a digital agency after he scaled that out he launched lead fuse a B2B lead generation platform he's also the co-host of the zero tocale podcast which gives a behind the scenes look at growing a startup to 100K per month in mrr Justin are you ready to take us to the top let's do it all right tell us about lead fuse what do you do and how do you generate Revenue yeah so essentially we're a software platform we actually started off as a kind of a product IED service but we're we're now fully a software platform and basically we allow you to discover contact information and kind of automate that that Outreach to your ideal customers uh or at least your ideal perspective customers and then turn those into you know sales opportunities and how do you generate Revenue so basically it's a it's a sub you know a subscription so people pay to access the the platform so um you know essentially you get a certain number of of leads and and you can send a certain number of emails and and whatnot what is the so I see you have 150 bucks per user per month all the way up to 400 bucks per user per month what's the average customer paying you per month yeah it's it's roughly about $175 or so dollars a month is is kind of the average okay and is that is that what a a whole business would pay you or what what a seat on a business would pay you so it's a seat but right now we're we're primarily there's a lot of like early stage companies that use us and so uh it's it's predominantly like one seat um and so we're we're we'll gradually start to move up Market but right now it's it's primarily one seat we've got a couple that are you know two or three but it's it's primarily one seat and how many customers are paying you here in December 2016 uh roughly 175 or so 175 yeah right around there that makes the math easy can I just do 175 arpu times 175 customers to get anr of about 30 grand yeah that's exactly it awesome very cool talk to us about funding are you bootstrapping this or have you raised Capital yeah so started off completely bootstrapped we just recently raised some money like a small round 150,000 we we may end up adding another 100,000 or so but uh we we raised 150,000 we've got some awesome investors like like Rob Walling of drip who I know you've uh you've talked about their product they just recently sold the lead pages but he's an investor uh David Hower and Adam Gustafson are are three investors currently why does David how are ring about is that grasshopper grasshopper yeah yep very successful uh had had an exit there does uh chargify now and why' you decide to uh actually they just sold chargify that was a pretty good deal I think that's public um uh why did you decide to take Capital basically we we wanted to validate the the software and and kind of validate the business first and then kind of take on software to help us get to that next stage and start to you know invest more into marketing which you know marketing and sales and which and that's something we're we're just now starting really was that a convertible note or Equity round Equity oh wow okay this is so okay pretty pretty small Equity round most people do convertible n of that size why did you decide to do an equity round we we don't plan on doing uh another round you know like this is going to be just basically it's a One-Shot deal um you know we we kind of have the business structured where we're not going to need to raise more so we kind of wanted to keep that bootstrapped mindset I guess uh and bring them on as kind of more so as partners I mean I was very specific about who we brought on as investors um these were people that you know listened to like the Zer to scale podcast for example so they understood how we operated you know kind of the way I I approach business and so they came to us and um you know I look at them more as partners I guess than I do actual investors interesting interesting so were they actually we're very similar this way I'm I have actively have many VC and private Equity firms throwing ridiculous amounts of money at this rollup strategy I'm doing the mtek space um well marketing kind of BB SAS space but uh I just haven't really pulled the trigger yet uh one of the things I'm thinking about though is if you want to get someone's time like David's uh it makes a lot of sense or robs it makes a lot of sense to take a little bit of money right to get some of their mind share sure absolutely yeah I mean they've got you know just successes under their belt you know and and they've been kind of where I want to take lead FWS and so uh having them as kind of a a Guiding Light if you will certainly helps so tell us what you do what what's the company actually do what do I do or the the lead fuse what does lead yeah if someone's listening right now they're going I wonder if I should use these lead fuse guys what would you tell them yeah so I mean essentially you know if you're you know trying to grow your sales and and obviously you need lead generation to be a part of that uh you know lead fuse helps you uncover contact information on your ideal customer uh prospects I guess P prospective customers that should say and then you know basically automates the Outreach to them so I know you're working on something thing kind of in that space where you know it sends the emails and kind of automatically follows up and it's kind of the same thing it just ties it all into one platform essentially oh so okay so do you have a is yours web based or does it actually exist inside of Gmail no it's it's completely web based you can connect uh you know your your Google apps or or Office 365 accounts and is this I mean when I looked at your stuff I mean this looks to me more like we'll give you 500 leads you then go kind of figure out what to do with them but you have it sounds like you do I mean do you have CRM and some of that stuff built into the back end we actually integrate with CRM so we want to kind of be more top of funnel we do not want to be like the entire sales process right so uh we want to focus exclusively on the lead generation part and so you know kind of where we we you know are different in a sense is that not only are we just focused top of funnel but but also like we provide a little bit of a service so we're more of like a a swass if you will like a software with a service in the sense that we actually helped you that's the first Justin that was pretty slick so so essentially like we kind of help you construct your email copy as well because for you to have success with our platform from a customer success standpoint we know that you're going to need to send better cold emails than than what most people are putting together right so we actually kind of based on how we started as this done for you model where you didn't even have access to software I mean we wrote your email scripts we did the email sending and then we just forwarded you leads and that kind of helped us validate things but um you know through that process we we got pretty good at at sending cold emails and what that copy should be and so we've kind of translated that over into kind of a service level offering that's included in the software packages and so what is the you said you have 125 customers today um what's your gross customer turn monthly yeah so so user turn or like Revenue turn gross customer turn so we're at about 20 just under 20% uh which is way too high and I've got a whole story for that but uh and then Revenue turn is right about 20% again way too high so or annually monthly monthly yeah so so we're looking you know basically our customers stick around for about six months or so I've noticed like some people you know it's like they they don't want to say that but like you you had an interview earlier where someone said they were at like 7% but then their lifetime value was accounted by by calculating six months you know so yeah it just I mean this stuff just like depends right I mean like a lot of people sometimes will try and make their company a SAS company when really they'd make so much more money if they stopped thinking about it like a ass company like instead and instead like pay as you go right or something or a Marketplace or something like that so that would be my question to you at 20% monthly churn a customer sticks with you for about five months you charge 175 bucks per month why not just why not just charge UPF front you know 875 bucks uh so they don't so yeah so so what we so the last four months like our our churn skyrocketed and so basically what's what's happened was uh we we ended up losing our CTO and so we we were essentially a you know a product company with no engineering help so you know that you can imagine that the the stress is there but essentially uh we we had a product that that you know honestly just was not delivering on its promise you know we had broken components all over the place and so I'm trying to kind of replace our CTO with some part-time help and and different contractors and that wasn't really you know working out so well because we were you know basically no one's top priority at that point and so you know me I've been kind of while that was happening I've been still looking for that that guy to come in and just take over and so you uh yeah so we I bought him out essentially so he he's no longer you know he no longer has a stake is that why you raiseed the capital uh no not necessarily um you know his because the way it's structured too is like until you're like fully vested like we can buy you you know buy you out at at basically whatever rate essentially um but you know we we we were fair about it but you know that's not why we want why we raised money but it was it was not it didn't cost much he needed money I guess to you know to uh to start his next thing and so you know it was it was a pretty easy little negotiation why Justin nobody talks about this but it happens all the time I lost my two co-founders at heo they were both the whole Tech Team right I mean this happens all the time so I appreciate you talking about this kind of openly why did the CTO leave so a couple of reasons I think uh you know certainly family issues um were were a big part of that you know he was needing to be uh involved quite a bit on on the product obviously as a startup early stage you're you're hustling right and so when you have a wife and kids that that maybe don't understand that because you're your previous 10 years you weren't necessarily you know that involved in a like you had a Contracting job in his case um and so you know this was a little different it required a little more uh so I think that's one thing but then number two you know he had never gotten to a point with any of his little side projects that he had where there were demands you know like there were there were customers and it was growing and and this was kind of beyond what his experience level was at quite frankly and so you know I think those two things combined uh kind of added you know a lot of pressure and a lot of stress that was probably taking home as well so at least in this case that that's kind of what transpired and how what's the team size right now full-time so we have five full-time and then kind of a designer as well thats helps out part-time all in person or remote no so right now we're remote but ironically so you know with my agency we were actually fully in office and with this company we're actually fully remote but we're about to open an office here and so my partner is actually GNA be uh in Phoenix Arizona got it and so we're opening an office actually in Scottdale and my partner is moving here from from Florida at the beginning of the year and we're going to be opening an office in February uh Damen Thoms okay interesting so you had three you had three co-founders the CTO him and you yeah so so Damien was actually my sales coach for about nine months before I kind of approached him about maybe shutting that down and coming to help me out I wanted to kind of see how he operated first and foremost and and just make sure he was legit and so um he was somebody that you know I I respected and thought highly of and so I was like wow you know instead of teaching me this stuff you know how about you come on and and just get it done you know and so we kind of hammered out a deal literally within like 24 hours and he ended up shutting his coaching business down came on board and we've been like Gang Busters since so he came on about a month or so before our CTO left which was kind of interesting because when that happened like our our head of customer success left because she felt overwhelmed and because we had so many bugs at the time that you know she just felt like um you know by the time we get somebody in place uh and and we go through you know the learning curve there and kind of that transfer of knowledge like she was just going to be overwhelmed and so she left so yeah it was it was it's been an interesting few months I mean we're literally just coming out of it in the past like two weeks we've got our guy and and he's you know helped tremendously fix a lot of issues and and now we're actually starting to deliver on our promise again which is good but man it was it was it was a stressful few months for sure I get it and there'll be more I mean it always happens so take us through the rest of the economics real quick what are you paying right now to acquire customer so interesting we're not doing any paid advertising right so I guess to to calculate our our CAC here we're we're kind of looking at more our salaries to be honest so um between Daman and myself kind of on the sales and marketing side what like where we spend time like I'm obviously doing other things and managing the product and everything else but um you know the calculation comes out we at about like $300 at this point okay and how are you finding these customers so you know I I come from a digital marketing background right I mean I had the agency and so I've invested in content from the very beginning and that's driving signups uh right now um and now we're we're you know starting our own outbound campaign obviously using our our tool as well so uh we've got that and then we've got some other kind of marketing channels planned for for 2017 so what does that pitch sound like somebody reads your content then there's a link to a demo or or what's that onboarding funnel look like yeah so we offer 20 leads for free and so people can come in and try it out um and so you know right now from website like new website visitor to free Tru trial we're at about like 11% and then from free trial to paid it's about 82% on on that conversion and so uh we want to do a couple of things there we want to do more handholding during the trial process obviously does trial require credit card or no it does not no okay got it and so yeah so we want to kind of do some more handholding there obviously to help with churn uh which is finally starting to head in the right direction now that we're you know fixing some of these uh major bugs that we've had but um we want to do that obviously to also you know just improve the the lifetime value as well and Justin what did you guys do you said doing 30 grand a monthly curring Revenue today December 2016 what was total 2015 Revenue when you added all up so let's see so it's interesting right because 2015 was kind of our first year where we were doing a done for you service and we launched uh the software kind of in the second half of the year so we started with a done for you service just to start the business immediately uh validate the model and essentially self-fund it versus spending you know 8 10 months developing the product and you know hope it works but anyways we we kind of launched the software late in the year and we ended the year with software Revenue at about $6,500 a month in Mr what was total just added all up like on a cash basis just in 2015 how much cash did you generate yeah so cash was about 250,000 between the done for you and in the new software Professional Services Drive cash invest in automate stuff yep yep exactly so now that we've transitioned from that done for you into fully software we obviously we took a hit you know early this year because I decided to just shut down the done for you you side um so we could you know more so Focus exclusively on software which put us in the negative there for a little while obviously but um you know we'll end up this year at a little over 400,000 okay good stuff uh real quick because we're running out of time name some of the sources you're paying for your data I mean a lot of people pay like things like full contact HG data what kinds of tools are you getting your data from yeah so we've got a few um so obviously from our own crawling engine uh aside from that you know clear bit uh full contact Tower data you know those are those are a few of our data iders got it very cool anyone more reliable than the other uh no we kind of you know we're seeing a lot of similarities to be quite honest uh so what we do with them is is kind of rotate the the I guess the query limits there um just because you know the accuracy is is fairly the same across the board got it very good well Justin as you keep building this thing where's the best place for folks to connect with you online yeah you can uh hit me up on Twitter it's jus10 Mill Justin Mill guys I get asked all the time Nathan you host all these interviews hundreds of them per month how do you do them efficiently and guys the answer is simple people always agree to my calendar backtack meetings I batch my interviews to stay very efficient and the way that I do it is I use a tool called Acuity scheduling at Nathan lat.com slsu and the reason I use them is very simple they keep my noshow rate very low because they send out reminders about when the interview or the meeting is coming up and also they make it very easy to is schedule time right I don't have to go back and forth VI email 10,000 times with people I'm trying to meet with okay Nathan l.com SL schedu helps me so much and by the way look I like have so many meetings I'm the best at meetings okay I do them back toback very very efficient you guys know me many people say I'm the most efficient they've ever seen okay so I use the tool it's so efficient and by the way I got Gavin I said Gavin he's a CEO I said I want a great deal for my people he said Nathan well most people get a 14-day trial isn't that great I said no he's giving us a 45-day free trial at Nathan la.com schedu that's not going to stay up forever so go get it now Nathan lat.com schedu all right top tribe we'll link that in the show notes at Nathan lat.com thetop 537 againthe toop 537 Justin let's wrap up here with the famous five these are one word answers number one what is your favorite Business book The Ultimate Sales Machine by uh Chad Holmes yeah to too sad I mean it was unbelievable book uh number number two is there a CEO you're following or studying right now let's say Alon musk you know I mean the guy's literally changing the world so uh those entrepreneurs only come around so often number three is their favorite online tool you have like toptw yeah so I would say um I mean aside from leads of course you know I'll avoid the the Google apps type answer to and I'll give you can I give you two sure okay Zen payroll and bench . so to not have to worry about payroll taxes and and reconciling has just been a huge relief kind of back office type tools number four yes or no do you get eight hours of sleep every night no unfortunately what's your situation married single do you have kids married with two kids very good and how old are you I am 34 all right last question take us back 14 years Justin what do you wish your 20-year-old self knew you know I guess uh just in general you know that that entrepreneurship was was a path you could take you know I didn't have any role models that that were entrepreneurs themselves and so uh I think if if I knew at 20 that this was a possible way to to make your own way in life you know I would have gotten started earlier I I waited until I was 26 so I would just say uh you know take take that leap a little earlier there you guys have it from Justin Migel founder of lead fuse take the leap earlier they're serving 175 customers they've raised 150 Grand did 250 Grand in 2015 they're doing about a $175 RPO so Mr comes out to about3 Grand here in December 2016 gross turns too high but they're driving that down they're spending 300 bucks to acquire a customer that's worth about 875 people helping them get cold email addresses and then reach out and start to close those sales with our team of five based mainly remotely but soon to be uh an office in Arizona thanks so much Justin for taking us to the top thanks Nathan if you enjoyed Justin's day go back and listen to Mark Godly yesterday he's the CEO of HG data which has raised 24 million bucks and theyed 10 million in 2016 Revenue helping B2B companies get accurate data okay top tribe I'll see you bright and early tomorrow morning and don't forget before you listen to any other episodes subscribe on iTunes right now for your chance to win 100 bucks every Monday