Marketmakerleads Revenue (2020)

hello everyone my guest today is mike odo he uh is building a company called market maker leads he started selling real estate when he was 17 became number one in his market by 26 and has had multiple offices and mortgage companies got kicked in the teeth during the recession going from number one to number 47 and needed a better mousetrap to compete he built software used it to get back to number one took that beta software to market hit 20 000 bucks in recurring revenue in the first month sold that business and now has been been in software for agents ever since inc 5000 for the past two years mike you're ready to take us to the top yeah let's rock all right so market maker leads just to be clear you still have this company or you sold it i do i sold my real estate company is it what what what that said there very good okay so market maker leads you founded when you got kicked in the teeth to help you get back to the number one spot after the recession so what year was that when you launched um that was about let's see uh 2012 is when i officially launched so it was a little bit after the recession okay and help us understand what the products doing what do you what are you selling to real estate agents now so it's a it's a lead generation platform and uh crm tied to content marketing for real estate agents okay and what are they paying on average for this sort of thing uh our average customer uh pays a thousand thirty one uh per month you you did your research man you're looking after four cents yeah all right about a thousand bucks a month and why would someone pay you know a thousand versus two thousand per month in other words what are your packages going to look like yeah so so our our initial package started out at 14.97 a month we created a 997 package and what we found is that the average agent actually doesn't make a great deal of money so we've been backfilling with lower packages um you know this year actually okay and how many customers have you scaled to today um well i only have the core ones i don't have the smaller packages but we're sitting at about 200 of those core customers okay well i mean 200 core customers at a grand to pop per month i mean that puts you over 200 grand a month in revenue is that right right yeah okay and then just because that is pure play sas revenue no professional services no custom work right okay and uh that was that's up from about how much a year ago so what were you doing monthly about a year ago uh 19 was our was our uh 2018 growth okay so so 19 year over year growth there and then do you remember what you finished out 2018 with so about six months ago what we finished out with yeah well end of the year uh it was just shy of three million i wanna say two eight two nine in terms of your run rate in terms of total revenue generated okay sorry in december of 2018 that month do you know what you did i apologize um the deal's gotten out on me yeah mike it's fine in december of 2018 so about six months ago do you know what you did just in that month oh um i do not know off the top of my head i would say it's probably pretty close to where we're at right now probably around 200 okay so so so you're about flat i mean why is that why aren't you growing faster um well we kind of took a decided step back we were actually uh selling the product on the road and we were scaling very quickly um but the the type of customer we were attracting wasn't our ideal client profile and so we decided to put the brakes on it um and look to either build products that were more suited for the people we were selling we were selling real estate agents with a dollar in a dream that couldn't really afford our product we got really good at sales and marketing so we wanted to stop that put lower priced products to meet them where they were at and that's that's the endeavor that we're on now and it's really it was a churn play is why we did that what so what was churn and what have you gotten it down to um gosh back then it was you know uh as high as probably eighteen twenty percent oh wow yeah and so and so right now uh let's see what do we got we got uh logo turn at three percent revenue turn down to two point nine three that's great so that's about 36 percent revenue churn annually per year now what what enabled you to go from 18 down to you know three percent basically per month was it just changing the customer profile um no it was it was it was understanding the customer profile a little bit more and i think creating the proper expectations up front um you know a lot of times agents and and that's why i sell to his real estate agents they have a a kind of shiny hubcap syndrome so um they'll buy anything and then it needs to work now immediately they got to get a return on it this month because they slammed it on a credit card they couldn't afford so so getting the agent to understand how long it takes for our product to get up and running for them um it's a little bit of a sales prevention model but it gets us a better customer and in the end it's more profitable and we'll build a better foundation you know taking two steps back right okay good so 200 folks now more your ideal customer churn is down at 36 percent do you have any expansion revenue annually or no um define that that's like if you have a if you have a 100 of these customers paying and making this up 10 grand a month a year ago you'll lose 36 percent of that 10 grand so you're down at you know set 10 grand minus 3 600. do you do that same cohort the ones that stay do you get them paying more um we're working on that through the lower tier products uh to have a you know strong ascension model really to grow as they grow because that's kind of but not yet you can't point any expect okay got it so net revenue retention annually is about 64 100 minus the 36 percent churn i i would say that's uh accurate math yes okay and then walk me through kind of funding so how have you capitalized this thing are you bootstrapped or have you raised capital no just bootstrapped um never raised capital never uh really endeavored to or looked into it uh when we hit that inc 5000 list the first time a lot of phone calls um ignored most of them um you know it's probably a smart thing to do but just really not it's not my wheelhouse yeah well it's not smart if you don't know how to use i mean it's not smart if you you know don't know how to use money to grow because you're giving up to lucia i mean you're getting diluted right um what's it what's the team size today how many people fifteen one five and where's everyone based uh springfield missouri and dallas texas ah very cool okay dallas and i assume because you're bootstrapped that you guys are profitable or are you funding losses with your own capital no we've been profitable from day one very very profitable like how like you're talking 20 to the bottom line or 40 how much um generally at least 40 yeah okay that means you're taking about 80 grand per month to the bottom line on 200 grand top line revenue yeah yeah that's right yeah that's accurate um last year we invested more of that um into you know some of the things that i mentioned so not as profitable last year um once we hit kind of the sweet spot of what we want to accomplish this year uh we'll start cranking down more on uh profitability getting it raised back up okay but what is it at it's like last month you had a total of a kind of 200-ish grand in total income total expenses were about what um our profit last month was about 30 grand okay still i mean look by the way it's still not bad um no i love that i love i love profitable bootstrap sas company that's a beautiful place to be um how are you walking with a mousetrap how are you getting new customers um well content marketing is a big part of it we put out a lot of content through facebook live uh we recently launched a free tool which is a free crm which we're putting out and what's it called the pre-crm oh the free crm.com no no i'm sorry uh i thought i thought you yeah what is the free crm what's the website marketmakercrm.com okay market maker crm and how are real estate agents finding us uh pay-per-click on facebook interesting okay marketmakercrm.com wait this is interesting mike break down this for me so so what what what does it cost you facebook ad kind of ppc to get one new uh free user on the free crm um six bucks and some change okay and how many free users do you have to get to get one new paying customer to ground a month you know i don't have that exact metric but i do know that um what i look at is the amount that we spend in the return on investment and that in that that marketing campaign is profitable month over month so it's really not costing us any money and then we get the the the you know recurring reward so break that down right last month how much did you spend on facebook ads or ppc probably about 10 grand okay 10k and so so what how many customers do you land from that um because of the smaller products i don't have the exact number um because we're still you know testing um but we at least made 10 grand we probably made 11 or 12 back but is most of that on people paying a grand per month for your software or other stuff ebooks consulting um no it's smaller lower tier products um you know 197 a month product a 297 a month product what we found we'll gci pop them which means that we'll get their annual income on the sign up of the crm um 80 of them really shouldn't pay more than about 200 bucks a month for any kind of a marketing product because you're taking a percentage of their of their disposable income and so if they were to reinvest into software or or lead generation that's really the max they can afford and that was the mistake we made when we were going full steam on the roadshow because we could sell them they just couldn't afford it yeah so if you spent ten thousand dollars right and it's six bucks to get a new lead you're getting about 1500 new leads a month from that free crm is that right yeah i think that's that's probably pretty correct on average i i want to say in my mind it's about a thousand so maybe we spend a little less maybe our budget is ten thousand in the in the uh model maybe we only got to about eight you know i see i see okay but the point is you're using that to sell lower to your products 97 197 based off what the household income is for that particular agent and then some portion of those maybe one or two of them you're converting to one of your new thousand dollar a month customers correct okay how does it how do they go from a 197 kind of small to your purchase to a thousand dollar a month purchase you know actually what we're doing in that uh gci pop when they go to sign up for the crm is we're showing them the right offer based on their income so we haven't nailed the ascension so far yet how do you what software are you using to collect the lead where when i say i make i'm making this up 180 grand per year that allows you technically to on the next step of that form say you should buy this thing um well we're using our own we had to custom build it and then we're driving it based on that and i think there's some wordpress involved uh to an evergreen webinar that plays one of the three different uh price point webinars automatically for oh interesting what um whatever what webinar platform are you using geek i don't know at the top of my head that's okay i can go ask jess real quick no no no i'm just curious there's a lot of them out there so i'm just curious if you had a favorite name one and a web webinar jam uh our uh uh go-to webinar webinar ninja i think it's webinar jam yeah okay got it cool um all right let me go in here okay so growth looks good you talked about team size you're still bootstrapped so you mentioned you got a bunch of calls from from vcs and folks that want to invest and is it really just did none of them give you the valuation you wanted or really you just didn't know if they gave you a million bucks where you'd spend it you know i think everybody has like a certain level of intelligence in different categories and mine is not particularly there um i did have one company that was an equity capital company that we were we were actively working with and looking to uh put a deal together they had uh some adverse situation within their organization and kind of put the brakes on it and that was the end of of us looking at it what would mike i don't care so i'm really fascinated with how to get software companies like yours cheaper capital where you don't where you don't necessarily have to get deluded how do you i mean if you had to go out right now and i'm going to make this up get 400 000 what would what do you think you what's the cheapest cost of capital you could get where you're not by the way you're not selling equity just like an interest rate what do you think the cheapest is no personal guarantees warrants or covenants just cash cash advance personally uh the the profit margin of our product that's the way i've always looked at it so you would go and who do you think you would raise that who i mean who would you go to to raise that from you think i i would i would sell something i would sell something and make a spread on it you know if i had to make 400 grand quick i i that's that's how i would my brain would think to do it um the only alternative would be you know maybe some private capital raise um with some larger agents and customers that are fans of ours um you know but they want equity right yeah they would definitely want equity for sure that's what i'm trying to figure out right like if you saw that you could spend 20 grand a month on these facebook ads and go from 1 000 new leads to 2 000 new leads and you're getting your cash back immediately so payback period is really healthy you would go out and try and run an experiment with somebody else's money to see if you can actually scale the business that way and i'm just trying to figure out from your perspective how you think about if you had to go get 500 grand where you'd get it from now your answer is a good one which is customers are our best investor let me just go sell more but if you were if you were going to go try and get that money from somewhere else i'm trying to figure out if you've done the calculation to figure out what your cheapest cost of capital is i haven't like i said i don't have a high level of sophistication in that area yeah maybe you could tell me what what are you no dude mike i don't know man this is why i do the podcast i'm always want to stay abreast of kind of what software ceos are thinking about so i mean i will tell you there there is very expensive capital out there right now in terms of venture debt where you could go raise 3x your current monthly recurring revenue so it'd be like 600 grand for you right but you'd have to pay that back let's say over three years and you'd pay back a 1.3 x so 600 times 1.3 you're looking at 900 grand you're paying back over three years so the only reason you would take a deal like that is if you felt like you could use 600 grand today to make more than 900 grand over three years right that's that's the only reason you would take that kind of deal which means you have to have an engine that gives that kind of return what i'm trying to figure out is is there a way to get software ceos like yourself capital cheaper like if i said hey i'll give you 500 grand today but it's a cash advance no covenants no warrants no equity no nothing i'm literally loaning you the money uh and you're uh and the fee for you to get that today actually think about it like real estate almost like hard money right you would you'd pay like i'm making this up you'd pay whatever 25 grand right for the right to get 500 grand today and then i'd have to trust that you pay it back like i'm i'm thinking i'm actually trying to think about models that allow me or my partners to get capital to folks like you cheaper without having to give up equity gotcha well if i was in your seat i would say you know how's my how is my investment secure right and uh um you know how soon can i get it back and well that's the thing here i have so much data i've done 3000 interviews i can actually pretty accurately price the risk of a sas company's ability to pay back i could look at your cohorts of customer signups and get a pretty good idea if you could pay back that 500 grand um assuming you could though the question becomes how cheaply could i get you capital and that's i'm just i threw that question out you to see uh just to have a real-time brainstorm here yeah i love that i you know i i would have to really assess i'm i'm a big fan of finance and especially as it pertains to real estate you know i look at if i can get 10 grand a day and it cost me 50 a month and carry cost how many years does it cost me to save up 10 000 and so that's how i would look at that equation as a software entrepreneur you know how long would it take me to scale that to be able to use it today how much can i get back right now from from having that capital in my pocket and then quantify that you know over the amount of the time of the day um um versus the amount that the capital actually cost me that's exactly right you're taking 30 grand a month right now the bottom line if i was gonna write you check today for 600 grand and you said no your opportunity cost would be you have to wait 20 months to get 30 grand to the bottom line every month and then you kind of do a discounted cash flow analysis on it yeah yeah you know i think you're on to something i think that um done correctly um i i i would definitely be it you know yeah well listen we'll chat more offline but it's something i'm actively thinking about so i want to run that by you um what are you so do you know today your fully weighted cost to get a new thousand dollar a month customer yeah our uh cic is 426 dollars and 15 cents you've done your research did you you must have listened to episodes before this or something you did your research huh you know uh jake who is our head of sales and marketing is is is a big fan and he reached out to me last night and he's like mike do you have your questions ready and i was like no i didn't get any questions he's like well here they are and so then i called pat who's our our operations manager i said pat here's the questions he's like what i said come on pat you can do this he's like all right so yeah he knocked it down for you i love it well listen here's the question are you having fun i am having a lot of fun good no this is great this is great for me i love kind of niche specific things like what you're doing versus like me talking to another like you know marketing you know sierra you know a pure crm player or something like that so this is great um okay let's uh let's wrap up here uh mike with the famous five number one what's your favorite business book favorite business book um how to win friends and influence people number that's a good one number two is there a ceo you're following or studying right now uh russell brunson yeah number uh three what is your favorite online tool for building your company favorite online facebook good good ads are working for you number four how many hours of sleep you get every night usually i try to get seven but i have small kids so how many uh uh two two okay six and uh 13 months yeah okay so married with two kiddos and how old are you mike 38 last question what do you wish your 20 year old self knew more more marketing guys marketing is powerful market maker leads selling to real estate agents used to have a really high churn at 18 per month now down at just three percent doing about 200 grand per month in revenue that's up from 173 grand just 12 months ago they are bootstrapped so slow growth is the answer here and it's working nicely for mike uh launched this software to help him move his status as a real estate agent back to the number one spot after the recession so it worked for him now team of 15 they're profitable taking 30 grand a month to the bottom line so about 15 there as they look to scale and grow and drive expansion revenue mike thanks for taking us to the top thank you