How Linktrust CEO Bret Grow grew to $3.5M revenue and 110 customers in 2018.

you can very easily put that Amazon offer in link trust build up your own affiliate base have your affiliates start advertising it and then you start making a commission off of every single sale got it and this is interesting so I mean do you ever look at all the sales you're driving for people and go gosh darn we should have taken a cut model not a SAS model yes I have and many times I was like looking at closet customers saying man they make way more money than I do I should just so be an agency you know but but it is fun I love to support companies in their dreams so that that part is really fun and okay so give me more the back story here now that we know what what kind of what you do in the average price point when did you launch this thing so we launched it back in about 2002 and the real the reason that we launched it was there was only really one platform in the space at the time that was direct track they're no longer around we really wanted to provide some competition because we feel we felt like we had not only a great product but we really cared about people and so we launched link trust after we used it ourselves for our own advertising purposes and it was just me and a partner back then in 50/50 split 50-50 split and and just working out of our houses and that's how we got started and until we had so many business opportunities coming up that you said you know what one of us should probably quit our full-time job and just do this so that's I took the first leap in about two months later he took a leap how did he smart man to get you to take the leap first how about work well you know we sat down in my house and we literally put credit cards down on the table and said okay I have 2000 available in this credit card and 5,000 on this one so if it doesn't work out that gives me you know maybe a month or two and I'll jump back into a full-time job that's a good story now fast forward today Brett how many customers are on the platform we have about a hundred and ten customers on the platform right now got it and are most of these you know with that amount of customers you obviously know most of them personally right I know a lot of them many of them have been clients for for years and years but now can I do the math can I take an average 300 ollar ARPU times the 110 to assume you're doing around 33 grand a month right now or is that off no that's that's not exactly true most of our clients you would fall into that range of cost but we have some enterprise clients that would definitely screwed skew that so I uh so it's a lot more than that but generally when you're talking about your regular small business or regular you know 10 to 25 employee ad agency they're spending roughly about 300 to 500 bucks month okay and then I mean can you give me a general sense of growth this is gonna be an embarrassing question but do you remember what first year revenue was back in 2002 how low was it first year growth was probably like $50,000 a year right I mean that's that that covered me yeah essentially but you know we have a unique story you know it's not always you know just celebrations and growth we actually went through some really hard times as a company and we learned a lot of hard knocks lessons as entrepreneurs and what to do and definitely what not to do likewise oh okay like what well so you know we got up to about four and a half minutes relatively quickly competing with our competitor when you cut out there you said you got up to four and a half million relatively quickly yeah within the first few years but you know the problem was we didn't really have a business mind we were entrepreneurs and we liked what we were doing but we weren't really being careful with what we were building and so in the in the early years we built a company that we thought we would like to be a part of as employees and we we created a lot of entitlement within the organization a lot of the title and employees and and that just creates all sorts of problems so you know we've been through the wringer as far as like restructuring the company what year was that where that really hit a pivotal moment oh boy that was probably 2011 or 12 okay and you know we you know a lot of people think well you're not entrepreneur wow you're just like living on the beach and you're and you know you just tell people what to do and then you go relax and really that's not at all what it is at all so it's a lot of blood sweat and tears and even if you're successful you can be making a lot less 'full in the monetary side you can be making a lot of company and personnel mistakes so I mean what did you just solve that how did you restructure I mean letting goes never easy if you had to do that no and a lot of people entrepreneurs and and CEOs told us you know if you're ever gonna restructure because of the culture and you need to change your culture oftentimes it's just easier to throw out the whole thing and start a new company and you know what in retrospect it probably would have been easier just to cancel everything and start over but we really believed in the vision of what we could provide because our you know our purpose as a company is to provide good in the world and we want to accomplish that by bringing marketing to the masses so we took a company of about 17 and got it down to about a company of five and then had to build back up from there with our core strategic employees and that was that took the process of about two years to complete the entire restructuring of the company and at one point you know even though we were profitable we were burning so much cash like thirty thousand dollars a month in cash just from employees and overhead that we were 2.4 million dollars and buddies at one point and we said we gotta call it like we got to start running this thing like a business and not like you know an old boys club Brett you said 2.4 million in liabilities huh yeah yes and what do you at now today in terms of total team size we're about 14 to 16 14 to 16 we fluctuate a little bit and have you managed to kind of grow the business at breakeven or are you burning cash again no so when we structure restructured the company part of that goal was we needed to be in the black every single month so we restructured we've been in the black every single month and it took us three years but we paid off every single penny of the liabilities and pay off our last debt payment January of last year so we've been a cash-only company ever since then and decided that we will never go into debt we will never get more credit card we will no never go to the bank and ask for money if we can't support it ourselves which in a sense really goes back to bootstrapping which is what we've done for this 15 years yeah so you're totally bootstrapped even today that's right actually today we just got acquired January 1st of this year so I am advising the company I'm still on doing some projects with the company but that's the happy ending right every entrepreneur wants to be acquired and even better than that every entrepreneur wants to be acquired so that their dream can become a legacy so that it can continue forward with good people that can follow up and take their place so we're really excited about yeah well Brett I want to dive more into kind of where your mind was emotionally in that decision-making moment in a second but first so kind of completing up the restructuring I want to make sure I got this right you grew it's about 4.5 million in annual recurring revenue that's about 305 grand a month but you are burning too much you had debt payments out the wazoo over 2 million in liabilities your team was 17 people you cut it down to 5 that took about two years so we're at about 2014-2015 ish now you're now today at 14 people debt-free since early 2016 have you broken but we're talking pre-acquisition did you break the six million a hour mark or were you did you stay pretty flat during the restructuring during the restructuring we made a conscious decision to focus not so much on revenue because we knew that we could take cuts in order to keep the company afloat so the company actually was in a slow with the restructuring yeah it was it was a slight decline slight decline through the restructuring because we're really putting most of our focus on debt relief culture and accountability of employees and and really trying to keep the company growing at the same time so really there's a lot of costs that come into a SAS that you just can't forfeit you can't give up those costs and we we took a little bit of a hiatus with with our marketing spends so that we could pay off our debts and then we knew that once we would come out of that we would put the money right back in the marketing but we would do it our cash not credit yeah so when you look we just finished 2017 when you look at full year me to do guys break four five six million where were you generally speaking you know we ended I can't tell you where we were for 2017 but we ended cashflow positive in the black every single month and and to some degree you know we adjusted our scope a little bit we decided that you know all the stress and all the struggle we wanted to improve our lives a little bit so we we wouldn't make it a life business but we really wanted to focus on lifestyle as doing all of this we're not doing all this so that we could get to 20 million we wanted to do this so that we could provide and so that we could make a mission happen so we came out at the acquisition we were not at 4.5 million at the X that was my teeth question is did you recover back to four five so you were less than four five at the acquisition buy a better lifestyle we haven't recovered but we started to make that bend we started to make that turn and that's where we we made the acquisition right at that boy that's that's when you become pretty yeah last last question before I wrap up here with the famous five and how did you think about the acquisition off or how's a company like this valued that's interesting well we're a relatively small company so we're really valued based upon the the amount of money that basically can be saved by me not being there and I forget what that term is but basically you know you take what what my costs are and all the other costs have come into it from there it's not really just based on ebody we would have to be a little bit larger for that to occur and so they take that that amount that the new owner would come into and then they multiply that so actually our acquisition was not by a venture capital that's locally here to Provo it was sorry was a private equity it was not a private equity firm who was it was not it was a private owner got it and into his owner yeah but bright I mean you weren't super I mean it started you weren't super small you were doing more than a million per year correct yeah absolutely yeah so between a million and four million I mean you weren't you weren't I mean you weren't super small so okay interesting so so basically he said well if I cut out your salary and a few other things the cash flow increases and I'm gonna pay you this amount cuz I gonna cover my cash flow in this many years and that's how you did it yes I mean we did a multiple bet yeah yep that makes good sense last few questions here about kind of mid days especially doing restructuring customer growth what did churn look like that's critical in a SAS company what did your turn look like that's really important our churn is roughly around 4% logo churn monthly yes yes four percent and we really want to get that down to about 3% 3% is really where you need to be for a SAS so yeah and then what were you willing to pay to acquire these customers assuming that you kind of had an idea of what lifetime value was yeah so what we were willing to pay was upwards of about $75 at least that's where we decided we could go up to 150 we could actually double that and still do pretty well it just depends on the longevity but as our SAS we're a month-to-month platform we do have customers that do do a longer annual agreements but when you're doing a month month you take a real big risk when you're paying a lot to get that customer in the door so John averaged about 75 bucks per customers what we'd pay to get in and what even how many months do you tip it is typically take you to recover that cash to recover that really would take only a couple months to get that back yeah I mean because I mean I'm just doing a little bit of math here I mean if you were doing again between one and four let's just say 3.5 maybe that's a little aggressive but 3.5 right divided by a hundred and ten customers I think that comes out to about 2.5 grand a month if you're only spending 70 bucks to acquire that customer you get it back instantly well that would be true although in the industry the costs you know affiliate tracking and marketing platforms have really become a little bit more of a commodity and so prices have dropped over the last seven years or so with that affiliate racket we used to be able to charge six thousand dollars as a setup fee and five thousand dollars a month to a customer and really they do that anymore the competition is much higher the technology is is I should say it's much more prevalent in the industry now so really our prices we got our prices down to getting people in the door at 99 bucks a month and so with that 99 bucks a month we need to recoup that as quick as possible and then we built into the platform specific upgrades so that they can add features as they go rather than just get the whole platform for six thousand make sense Bret let's wrap up here with the famous five one-word answers here number one what's your favorite business book today my favorite business book is a leadership and self-deception by the arbiter group leadership and self-deception and self-deception fantastic book it's required reading for all of our people number two is their CEO you're falling or studying right now besides the one you just sold to you know I don't follow CEOs I guess Jesus is my see so that's that's my guy Barry this have it prices Jesus is a CEO coming from a guy named a Philly Ward I thought I would never hear the day just getting ready all right now number three besides zero and what's your favorite online tool my favorite online tool other than link trust is zapier and have really helped us to automate a lot of sales and back-end processes say PR in calendar number four how many hours will sleep to get every night I get at least eight okay and what's your situation married single you have kids married for kids for kids in how old are you and forty-four last question take us back to your 20 year old self what do you wish that guy knew oh my gosh what I wish he knew was that helping people to stay accountable for what they do is a service to them and that it shouldn't be shied away you're doing them a big favor by helping other people grow by holding them accountable there you guys have from Brett accountability is actually a service to people don't do it don't skimp on it he learned it the hard way launched his company back in 2002 grew it's about 4.5 million bucks an annual or revenue they'd had to go through a restructuring they were burning too much cash 30 grand a month had over two million bucks and liabilities restructured coming down to five people has now since grown it back up to 14 people between one and four million bucks an AR are never recovered to the 4.5 million post there were structure however much healthier business debts paid off much happier getting eight hours of sleep and then recently here at the end of the year January first sold the company to a to a local mentor and now obviously advising as he looks for his next thing healthy economics four percent sure and lifetime value they're about twenty five months seventy dollars in terms of paid spend to acquire those customers bright thank you so much for taking us to the top thank you very much