How LighthousePE CEO Andrew Steele grew LighthousePE to $120K revenue and 10 customers in 2021.

hello everyone my guest today is andrew steele he's the ceo of lighthouse pe a location-based mobile behavioral engagement platform he previously co-founded led three startups in healthcare and enterprise sas and earlier led marketing sales and business development for high growth businesses acquired by comcast motorola and microsoft andrew ready takes the top all ready all right so talk to us about lighthouse what does it mean when you say location-based mobile behavioral marketing and what what does cova mean for that when no one's moving around yeah so two gate questions so lighthouse pe is is what we call a proximity engagement platform and essentially what we do is we help businesses better engage their customers to increase their customer lifetime value and increase their their customer retention we do that the proximity comes in in our use of things like location real time location data that could be from geo fencing it could be from beacons combined with other things we may know about users from our customers platforms like crm which we then uh analyze with our platform to to engage based on the the kinds of behavioral profiles that we can create from that data so you know relative to covid um you know it's it's actually made what we do even more valuable to businesses because one of the biggest things maybe the biggest thing that they're struggling with now is how do i get my customers to come back and how do i get my customers to come back more often and so by by communicating with them by engaging with them using lighthouse um you know we're able to you know give them the ability to reach out on a very personalized level on almost one one to one level at scale you know to to create that comfort level to remind their customers that they're still in andrew we talking mcdonald's here or like mom and pop coffee shop in scottsdale arizona it it could really either be both um you know our focus right now is on local and regional businesses a lot of what we do um you know big global brands like mcdonald's like burger king target best buy you know they're doing this kind of engagement today but they're doing it with a lot of technology spend and a lot of marketing spend and so what we've built with lighthouse pe is a platform that's very accessible and you know cost-effective for cost-effective what are these businesses paying on average per month to use you yeah so um entry points about 200 bucks a month um and it scales up from there we price based on a recurring tiered fee based on the size of their installed base of mobile apps so everything we do from an engagement perspective is through their mobile apps consumers never see lighthouse we're projecting the brand of our customers i don't understand what that means uh so a mom and pop shop will have their own mobile app um a lot of them do and if they don't um we offer app templates that they can you know basically brand and skin and use in conjunction with with lighthouse and so mcdonald's will have i imagine mcdonald's corporate has one mobile app and they funnel all the location data into that one thing so you're only pricing based off that one mobile app uh we're pricing based on the install base of that app so for example if if i'm a local beauty bar with three locations in town um i've got my mobile app maybe i have 10 000 you know users across those three locations or if i'm a you know 10 state regional franchise maybe i've got a couple hundred thousand installed users and so our pricing you know tiers based on that install base and when did you launch the business so the technology actually grew out of a marketing agency also here in phoenix called off madison ave really as an answer to their clients questions or or issues that they're trying to resolve relative to retention and so the technology was built as a part of the agency um but late last year we made the strategic decision to start the process of standing up lighthouse pe as its own company and that's a goal for us this year is to spin it out um out of the agency and really grow it like you know every other sas startup company yeah this is a very typical model agency to pure sas but people get stuck sometimes in the middle and the ways people get stuck is sometimes cap table questions who actually owns the spin out other times it's you know they don't want to give up the agency revenue sometimes the three four five million dollar agencies and they don't want to go in on the sas because then you lose agency uh where are you stuck right now and how do you plan to solve that stuckness well you know the good news for me personally i i just joined the the company back in last fall um and by that point the agency had really created clarity around the objective with lighthouse pe and and the spinout and so you know from where i sit you know we're not stuck relative to any of those things because we're spinning this out and it's you know it's effectively been bootstrapped the cap table is going to be very very clean uh you will be on it will you be on it yes yeah so the agency will the agency will the team will i will and then as we raise outside funding you know those investors will will be on the cap table from there how much are you looking to raise so our initial raise our our bogey is a million um and you know the goal with that is to get from you know where we are today which is about um 10 ish kmrr um to uh to 80 to a million you know basically that to get to that hurdle for the series a and so you know we're we're on our goal for the end of this quarter for one queue is is to get to 250 and and we can point to about a third of that so we're 215 are in error sorry yes yep yep that's great and so when do you think you'll do the million dollars are you doing it now we're not i i haven't started it now um you know current thinking is we'll start that in earnest uh towards the end of this quarter early next year let's see and what do you think let's say you get up to a quarter million dollar ar when you do start the fundraise what valuation story will you go try and sell i think you know with that valuation story you know raising here in the phoenix market um you know somewhere in the six to eight pre range you know if we're being really aggressive um you know as you know valuations are lower here than they are in in the bay area or in the northeast so that's sort of our our realistic i think goal and how many customers are you serving today today we've got about 10 10 brands on the platform we're working on a couple of partnerships that will give us much broader reach into specific market segments that we also hope to launch by the end of this quarter and that's really sort of our our two swim lane go to market where we're we're going to be selling direct to brands but also building partnerships loyalty platforms um you know vertical app platforms where we can get reach uh you know to a broader uh set of of customers and ultimately end users that way andrew what's the total install base across all your 10 customers that's a great question um i'm going to guess it's somewhere in the 80 to 100 000 range yup so they're each paying about a grand per month on average which is where you get 10 grand per month currently that's right interesting talk to me about funding you know to where you're at today right uh what's the team size so we're five um full-time today um that's three three developers we've got um an inside sales person and myself and you know because of of our uh heritage we get a lot of uh marketing support from the agency um but five full-time today and so is 10 grand a month enough to pay those five full-time salaries or are you bringing money in from the agency or something so the agency is still covering the gap today we're we're not cash flow positive at 10k a month yeah yeah how aggressive i mean obviously you know all about burn from your time in the valley what burn are you comfortable with right now per month so we are as we sit here today we're we're somewhere around the 20ish k a month burn net or gross net yeah okay that's not horrible so you got about 30 000 in total monthly expenses 10 grand in revenue 20 grand bank account going down every month and the agency's covering that gap that's about right yeah yeah very interesting okay cool so team of five makes a lot of sense you mentioned you already have a first your first sales hire which is rare for a company this early what quota target did you set for that first quarter carrying sales rep so basically what we've been able to do is is poach one of the um the inside sales people from the agency and so we've got him focused full-time everything we're doing from a lead gen perspective today is outbound so you know the the focus um from a sales perspective today is on getting demos um and then um you know right now we're shooting to scale to getting to between two to four demos per week and what do you expect the sales person to close each month in terms of new mrr or arr so the way we've got the process structured right now um the you know the goal the goal to get from where we are today to you know just a hair over 20 um which is our you know quarter one exit goal um is you know roughly three to four per month an incremental net new mrr yeah so you're trying like four grand a new mrr per month from the sales right yeah or about...