Leadgnome Revenue & Valuation (2018)

hello everyone my guest today is Matt Bonacci he's the CEO and co-founder of a lead gnome the market leading reply email mining web service that generates account specific contacts and hands his existing leads and identifies sales trigger events Matt believes sales and marketing alignment transparency and communication optimize revenue generation and each champions his philosophy in his team's and writings Matt are you ready to take us to the top all right tell us more about Lee gnome people know email marketing I think you have a unique twist on it what are you doing how do you make money yeah so I don't know a couple companies ago long time ago now you know I I jumped into marketing coming out of product management product marketing and of course lead generation and supporting those sales efforts is what it's all about and what I recognized is that inside of autoresponders right out of office left the company all those kinds of things that come back at us after we sent an email there's a ton of great information in there and so I would send my team in after it but that anybody who's ever done it knows that's a real pain I mean you know sales and marketing teams know the data is there but it's really hard to get at I look for a solution there wasn't one so I built it and this is specifically I mean give me a give me a tell me a story right now but customer name the customer that's using and how they're using you yeah so Steve Richard most people probably from your you know from your show will know the name he's a inside sales sales guru he is a co-founder and CRO of exact vision yep and their team uses us and they're the reason that they're leveraging us is that their sales teams are leveraging the new cadence types tools right the yes wares and sales loss outreach those kinds of things Aaron Ross made a very impassioned plea for sales people to not just call but to leverage other tools of the trade email specifically social media and so these cadence systems allow sales people to do that and part of that email of course is reply email and they leveraged us to get in deeper and broader within those organizations there's sort of this magic number floating out there of seven the closing Enterprise deals so gaining and mapping out those new contacts within organizations is critical the other thing that Steve talks about a lot and he's coined this phrase old client new company Oh CNC and lead known plays very well into that so a Craig Elias and Steve Richard and I have worked on this concept Craig uses his method of shift selling where he looks for sales trigger events and leave Nome specifically looks for some of these very very early much earlier than the sales intelligence databases out there that but it's all on replies it's all auto-replies so when you gotta left the company you know somebody's moved on you need to reach out to that person immediately interesting so I can say something like when I send out my next email blasts to my to my list of so you know leads and I always will get you know 20 or 30 that are either an out-of-office in another you know call it 20 or 30 that are hey I moved on this isn't my email anymore I can may say before I even send an email say if I get an out-of-office email reply with this kind of thing name tag here right got it interesting so it's almost like it's almost like reactive based email marketing versus like the initial outreach that's right so so we we provide all this intelligence including things like new titles right maybe somebody's moved in a role one of our best use cases for post sales right the account teams is renewals so if you know your primary contact has changed titles maybe they were your end user now you're they're your buyer mm-hmm primary contact left you've got to get that replacement person which we provide to you and now you engage with them to make the renewal goes smoothly yep now Matt is this a pure place SAS company do you replace that okay what's that was the customer paying on average would you say so sales folks will pay on average ten dollars a month okay god I mean 1999 so you're very much in that you've got to build you thousands hundreds of thousands dozens of thousands customers really to make the Revenue scale or do you have a few enterprise folks that are in the higher ranges yeah so we started our primary target were marketing ops and demand generation folks those companies are five figure deals for us those organizations the value there etc sales were just about to launch it we have a lot of sales people using us but we're about to launch in q1 probably in February a sales dedicated solution the onboarding is all been streamlined there's some new features in there for salespeople so we think it's gonna be a big hit and the price point is killer good at now you know you guys are hearing this likely when in July so you can actually go to the site now and see that new product since obviously you're listening to this now but recording in January so that's good stuff Matt when did you launch the company we launched well I I launched it in 2014 but we didn't have the product ready I went through alpha and beta until late in 2015 hello it's only been a couple of years since we've been stone and bootstrapped hundred percent bootstrap still bootstrap I love that I love that I know what it yeah it's good now what have you and maybe I'll ask more about your history in terms of your past companies and what you learn from those whether they were funded or not but focusing on leading them still for a second what are you announcing in terms of team size so so dedicated employees it's still just two of us my co-founder and myself everything else is outsourced to folks that we have used many times over the years yeah so I have in total about a dozen folks working for the organization today but you've it sounds like the way you articulated that you have figured out a way to keep them off of your fixed expense kind of line item you're not worrying about healthcare you're not working about desk space that's right we're all in fact for 100% virtual yeah another great thing right my commute to work is awesome especially on a day like today when Boston just got eight inches of snow right my friends are out there fighting traffic it's a great way to work right with all of the tools the virtual tools our systems are up in the cloud and AWS you know it's it's a it's a much nicer way especially in a bootstrap model to make the economics work now what are yet today in terms of how many customers you've scaled to so we have multiple dozens okay and our revenue is in hundreds of thousands a are that's great so if I mean if you have multiple well okay so wait break that down for me so multiple dozens I'll say between twelve and one hundred customers is that fair it's big enough range okay yeah so multiple dozens but you said you're in the hundreds of a are are your are prove that you told me earlier must be too small then right cuz if I take ten bucks times a hundred that's the only grand a month but our marketing departments were which is where we started our five bigger deals each got it but and just to be clear those five figure deals those are not set up fee professional service that is a those are recurring annual things no sir we're not a services company in fact one of the ways we gain Reach is to partner with consultancy organizations specifically Platinum and Gold HubSpot consultancies and Marketo Marketo consultancies driven by Marketo champions got it okay good now you mentioned you're in the hundreds of thousands today give me a sense of growth where were you at December 2016 13 months ago yeah so we have we did a two and a half x year oh great and and of course the start-up year we did a we did a killer euros 5x but yeah that's small numbers yeah yeah is there yeah that's I mean that's good that's a really good growth so in terms of hundreds of thousands I mean you keep Victor we can say somewhere between like two hundred and five hundred is a fair enough range okay so going back thirteen months you work us out call it somewhere in there like 80 to 160 km unthe that's exactly where we were in north of a hundred that's good okay so call it call it a hundred back then and you've two more than two exits so past the quarter million AR mark that's right that's good stuff what he gonna scale to this year so I I would love for us to kill it this year and I think we will because of the new product and I have an interesting business model behind but I think we'll be at 3/4 of milk 3 quarters interesting and whereas most that growth going to come from expanding what current customers are paying you are going and finding and more rapidly onboarding new folks it's gonna be a combination so the strategy here is to leverage sales folks because you know and the way to expand and get awareness we've done a lot with content we've done a lot with outreach through partners that I describe mm-hmm but salespeople will also drive tremendous awareness and the support that their marketing teams can provide them if they also take on lead known is incredible so one of the classic problems for salespeople is that they've got target accounts right we hear about this an ABM it's one of those big email trends last year and this year is all about ABM how do we tally based marketing yeah sorry count based marketing how do we leverage that so that we're not just spraying and praying but we're doing targets right where we're doing the right things for building plays email is always part of that play and and so when you have that alignment and marketing is providing that if you will air cover but focused air cover the new contacts the new leads that marketing is able to garner from reply emails are relevant finally to sales they're in the target accounts here they are go-getter hmm it's an incredible aspect of what we do that's high-end we talk about them as being sales ready leads because they're not only in the account they're generally in the opportunity and obviously churn is Curt upon a SAS company what do you guys at our journey really low what slow it it's clearly less than 5% a year ok got it in terms of logo or revenue actually both both okay both less than 5% okay that that's actually pretty impressive considering considering your price point usually you see churn its kind of stuff really high absolutely companies in fact I was just on they take us with them so what's really interesting about this world is our adoption while we have across many segments right I have oil and gas companies using us I have health care companies using us security companies using us but high tech is is probably the biggest sloth as you might expect there early adopters the so the attrition the churn in that field as we know is pretty high but when my customers go when they leave the company they take us with them and they make sure that we're stable in their old time picture that makes sense you need people to be fired that's your growth strategy all right what do you what do you paying mat to acquire customers what's your CAC that it's really too early to tell we don't spend a lot frankly like less than five grand a month oh yeah you use them so it's mostly your time we're not even doing that right just my god yeah interesting so it's too early early for CAC it's too early to talk about lifetime value and payback and all that yeah I mean I'd love to tell you that when we get it happy to do that but right now just know it's fine there's the clear cohorts not there to even analyze I totally get it just too early interesting tell me about your past companies what was a like what was your biggest success would you say oh well biggest success was probably open market way back in the e-commerce days but my last organization was logged me and I headed up marketing there okay good and what was wonderful about log me in was it provided me with high transaction rate right we they were one of the pioneers in freemium so to understand that high transaction rate and the early adoption and bringing people through that now we don't personally do freemium model but we do a free trial of 30 days and that gives people more than enough time to see the results and get used to it and that's been a big big win is this your first time going out on your own it is my first time on my own I've done a couple startups I've done three startups before this the you know the earliest I was in it one of those startups was 19 or something like that but were you on the cap table did you get to do some equity course yeah yeah yeah and was that was that coming bootstrapped or raised no raise interesting what did you learn strapped I'm gonna say what did you learn from the raising round you're going I'm gonna bootstrap this time well you know I won't say have trouble with authority but with authority I wanted a chance to mess it up myself right and frankly given the cost associated with building the product and those kinds of things that you can do and and I recommend to folks go build it right go get that started do an MVP use sort of a lean method you can get a real feel for what's happened whether your customers and the marketplace are truly looking at you for that kind of service or not and then if you want to accelerate you have a lot of options it's like you have more options at that point than if you went directly to BC in my humble opinion if ascend bloom or someone else like a yes we're approached actually yes we're makes a lot of sense bellows is what probably few blocks from you right if they come and offer you like two or three X air or do you sell the company I'm having a blast I don't know we'd have to talk are you married I am would your wife kill you or your partner kill you if you go home and said I just turned down a 3x deal on ARR I would seriously talk I mean I would have the serious conversation don't get me right now but honestly you know you're running your own thing right it is so much fun yeah every day is so much fun it's funny I asked that question a lot and they'll say Nathan listen I talk to my husband or my wife about this and they're saying Nathan if you sell the company that means are gonna be home bugging me all day no no I don't care what the multiple is keep your damn job so that you're not bugging me all day right that's funny all right Matt let's wrap up here with the famous five number one what is your favorite business book getting to yes that's a good one number two is there a CEO you're falling or studying right now yeah I would say David cancel out of drift he's awesome yes guy and you're using it on your site it's good stuff number two number two is there a CEO sorry is there a hold on did you give me a that first question what's your favorite is there a book favorite business book we're getting yes yeah do you know that one young Fisher yeah I do David cancel yours who you're falling up there number three besides your own what's your favorite online tool right now it's drift drift okay good number for something your David if you're listening it sounds like a sales pitch to me you know I'm just getting that alright number four how many hours of sleep are you getting okay and what's your situation married single you have kids I am married with two kids one in college oh great two kids in how old are you Matt I am forty nine last question take us back to your 20 year old self what do you wish she knew get out there early mmm get out good yeah start early I mean you know at the time I was risk adverse and the reality is youth is wasted on the young as they say you got to get out there you got to try things and latch on to some good mentors right they're always happy to help folks I mean I love to do it too there's a lot of us I want to pay it forward so reach out to people guys he's doing north around two hundred fifty grand a month or sorry a year today that's up from a run rate thirteen months ago just a hundred grand a year so two point five x ago foots trapped again matt founder of reply email mining company lee nome he says okay I'm gonna go strike it on my own launch the company or make it big on his own right either ways but start his own company back in 2014 two full-time team members himself and his founder he's outsource the rest of it which is great there I was obviously really helps with your P&L in terms of keeping fixed costs off off those month after month he's less than five percent churn annually so super healthy over 100 or around but a dozens of customers but less than 100 paying you know different amounts per month some of them in the five figures some as little as ten bucks per month Matt thank you for taking us to the top I have fun thanks Nathan