How Modigie Hit $1.7M Revenue Profitably with 6 FTEs (Interview with CEO Ken Hoppe)

Ken Hoppe's Background: From Pre-Med to SaaS

Ken Hoppe

00:00So quick quick background on me. I I was a pre med. So when you look at my LinkedIn, and you see Bachelor of Science, it's not Bachelor of Science of Computer Science, it was actually Life Sciences. So I was intending on being a doctor. I worked in a teaching hospital at UCLA for about three years, and then pivoted, and found myself in software.

00:20Part of that journey is I'm always learning. And I always look forward to this event, Luke, you know, I learned from you, and Rajesh, I learned from you, and and I'll continue. And if you look at, you

00:35know, Anand yesterday, he probably would have said, I don't swear like Anand. I don't know who who watched Anand yesterday, but very inspiring CEO of in inside. And but profitable growth is is is hard, but it is possible. And I hopefully, I can share some nuggets with you of our story and how we got there.

The Case for Profitable Growth from Day One

Ken Hoppe

00:57Scaffolding is critical, and I'm gonna share with you, I think from the onset, you have to have this mindset of building from day one of thinking profitable. A shocking statistic, twenty eight percent of the publicly traded companies were not profitable in 2021. How is that possible? Crazy statistic.

01:17It's my own money, and it's my co founder's money, and for like many of you, you put your own hard work money in here, spend it wisely. Right? There's a lot of things you can spend money on, but you got to say no a lot. And if you do a and b, and I thank Nathan because I have control of the company. Right? He's been a big help to make sure that I stay controlled, that that

01:41we have ownership of the company. So that's one, is the foundation we're going talk about. Number two is, particularly in a down economy, figure out ways to remove buyer friction. We're a sales led growth company. Many of you here might be product led growth, but we actually have to do some hard work to convince customers of of value.

02:06Part of that, we do everything for the buyer, and I'll share with you what what I mean by that. And as a new vendor, as a company that's never spent a dollar on marketing that has no brand recognition, you have to derisk it for the customer to adopt you as a new vendor. And then what I call escape from velocity. I believe we're on the the front end of escape from velocity, I'll tell you how we

What Modigie Does: Fixing Contact Data Inside Salesforce

Ken Hoppe

02:29got there and what we plan to do that. And you really have to differentiate yourself by offering something unique and different.

02:39Offer something everyone needs. I feel we have something that every b to b sales organization needs, and I'll show you what that means. And get inside this trust circle. What we have going on is our buyers are bombarded. Email, in mail, phone calls, and they're blocking us. So if you get inside the the trust circle to get that first meeting, it's highly valuable, and I'll share with you how we're how we're able to achieve that.

03:08So modigie is basically a software as a service that boost sales rep productivity, and we drive revenue through efficiency. And so 40%, we're finding about 40% of contact data that reps use to prospect is inaccurate. It's a shocking statistic, but it's real. And so what modigie does is we fix this inside Salesforce before a sales rep makes a phone call. 40% inefficiency. In today's economy, you have to provide revenue outcomes or efficiency.

03:49So what we do is we sit inside Salesforce, we monitor leads and records that are gonna go into a cadence or sequence, SalesLoft, Outreach, I'm sure you've heard of them,

04:00and then that's when we act. So we inspect every record, make sure it's accurate. If it's not, we quarantine it, or we fix it. It makes reps extremely productive.

04:15So that's my little that's my little spot in in in the Salesforce ecosystem. So we have a tab, and that is functionally where we place our information and gets mapped to the to the dialers. It gets mapped to the sales engagement tool, and we look and feel just like Salesforce. And what it gives me is the ability to reach what I feel is about 70% of the b to b market, which gives us a little bit

04:41of leverage.

04:47I don't know how many of you can relate to this, but

The Three-Person Founding Band and Swiss Army Knife Roles

Ken Hoppe

04:51I can sell without a CRM. I can sell without intent data. I can sell without conversational intelligence. These are wonderful technologies. I can sell without a sales engagement tool. I just need a spreadsheet, and I have to have the contact information for my buyer. Otherwise, it's a non starter for anything else. So where we find ourselves, when we thought about where where we would place modigie in the in the ecosystem, there's lots of wonderful sales tech

05:17out there, is we're the last mile.

05:21We're cleaning everything up. Otherwise, all those tools to record conversations and train against conversations, the intent signals, who's my like, who's my high fit buyer, they're ready to buy. You can't reach them, it's a waste of money. And so that's part of our sales motion.

05:40So, as people that know me, know I love live music, and I just moved to Nashville from the Bay Area. It's a wonderful town. Anybody been to Nashville, live in that? Yeah. There's music everywhere. And so when I think about this,

05:56the way that we started our company, it's like a three man band. Rush, great band. BC Boys, since we're in New York, great band. The Police, that didn't go so well. Right? They broke up. But right now, we're through we founded this company based on the ability to produce wonderful music with with just three people initially. And there's a lot of crossover between what I do, and what my co founder CRO does, and what our COO

06:25does. Look at look at so I call it the Swiss Army Knife. But we all come together. We're all around innovation. All three of us, get together on innovation. Two of us focus on lead gen and sales, and then, we have a COO who really is incredibly talented that runs, not only operations, he runs product, he runs technology, he runs customer success, which I do as well, and and so that would cost a lot of money

06:55if you had specific people to fill those roles.

Expert Advisors Instead of VC Funding

Ken Hoppe

06:59Expert advisors, this came out of Anand's I'm keeping score on what Anand said yesterday. Don't believe you have to raise VC? Did not do raise VC. Don't be afraid to hire expert advisors. So we have advisors. I have a president of a telecom company because we're dealing with mobile phone information. I thought it was important to have that. We have Google on our advisory board, technologists, the lead technologists at Google. We have the cost of legal,

07:27oh my god, $850 an hour. So one of my advisors is an is an attorney, but he also worked at SAP on the deal desk. He worked at DocuSign. He built their go to market strategy

07:40and privacy compliance. But I also have people on my board from RingCentral and Lacework, which raised more money than any, cybersecurity company in a single round. So we're stacking the deck of things I can't do that I need expert advisors. So check on on Anon. Thank you. Don't believe your own hype. We haven't hyped anything. We've spent $0 on marketing. We've aggregated our customers through just hard work and grit, and now we might go out to

$0 Marketing and Selling Upstream to Billion-Dollar Companies

Ken Hoppe

08:11market and tell the world of you know, what we're doing.

08:19Don't sell only to startups. That was another thing Anon said yesterday. We actually started out upstream. So the majority of our revenue as a new company comes from companies that are worth over $1,000,000,000. I'm gonna share an example of a company that's worth $25,000,000,000 that that we're working with.

08:39Don't hire salespeople before you can sell.

$1.7M Revenue from Two Salespeople

Ken Hoppe

08:43And I'm gonna come back to this. That 1.7 that we did last year, it's a small number. I've been dealing with hundreds of millions of dollars of numbers when I've worked at in sales leadership. That's just two people selling. That's me and my co founder.

09:01So now that we know I'm trying to go back.

09:06Idiot. Is there no back button? Anyway, so the, the idea is that two of us, just two of us selling accomplished that. And what I feel good about is we have the feedback loop from every client engagement. So I was determined to be on every install of our software, which takes two hours to install and set up in in Salesforce, to be on, so I can get the feedback loop to improve our our technology. So, yeah,

09:31don't hire we haven't we just hired our first salesperson because now we've mastered what the sales cycle looks like.

09:39In 2022, we were at a you know, to to hire that individual and to hire my first customer success manager, came to Nathan to get a tranche of money to help us scale and grow for growth. And and here are the numbers. I'm not afraid to show it. And at the end, I'll show you my pro form a for the next twenty four months or next two years. But we made profit last year, and we made

10:02profit this year or the 2021, we made profit. In 2022, we made profit. We were a services company in 2020, and we didn't launch our product till q one of twenty twenty one.

Removing Buyer Friction: Value Reports and Data Diagnostics

Ken Hoppe

10:16So this is hopefully, I share some nuggets with you about so in in a down economy, you got to do a lot of extra go through a lot of extra hoops for for buyers. I have a couple fun stories. But one, I'm gonna show you what a value report looks like. So I heard, you know, Luke, you talked about data driven. Almost everything is data driven, particularly the type of deal sizes that we're working on. And

10:39you have to prove that you can solve a problem, so come up with a use case or two, prove it out empirically through data, and then increase you know, it has to be around increasing revenue, increasing productivity. A lot of companies are are are doing more with less, obviously. I mentioned earlier, de risk it as a new vendor. So through because we have a Salesforce managed package, we we took change off the table. One of the

11:03things that we run into in in in b to b sales is I don't have enough people. Not me, but the buyer. They're too busy. You look redundant. Right? Change management. I can't take my sales guy. I have fewer cycles to spend learning a new tool. And because you don't have to learn a new tool, I took that off the table.

11:27Get creative when it comes to deal, making deals. You know, we're a SaaS that has a twelve month subscription. That's our typical contract.

11:38But if our buyer says, listen,

11:41I need, you know, I I need assurances that that if you shit the bed, that we can get out. And so on occasion, we will build you a three month contract. We'll have specific metrics that we have to hit and be bold, and we can hit them. And so I can write that into a contract. It hasn't failed this yet.

12:01This is a fun one. So, a cybersecurity company we're working with, we had about a $150,000 deal on the table. And you if recall at end of last quarter, you

12:17know, POs that anything had like 50,000 or 100,000 had to go to a higher level of authority. And so our procurement basically said, listen guys, if you take a $99,000, 990 you know, $99,999 PO, we can we can cut you a PO, or you can wait for two weeks. Take the PO. Get off the table. And so we did. And then now our job is just to make sure that the deal goes well, so we get

12:41our our get our upsell. There's the PO.

12:48So I mentioned being data driven. Right? And data driven basically is giving our buyer became RevOps. RevOps became a really popular title recently, where they oversee the disciplines of marketing, sales, customer success, and their role is to extract as much revenue per head count as possible. So we had been building this revenue model or calculator to show the impact of our software solution, and it really stems back to, and I'm going to show you what a

13:16data diagnostic looks like, is what comes from the outset that we can build around. Is it a 30% improvement? Is it a 40% improvement? What's that improvement look like? So this is an example. It's a big number. It's a big number, and we have an insertion strategy because not all companies want to spend that kind of money, even though you can show a 2200% ROI. I never thought I'd be doing ROIs again, but some you know,

13:40right now, that's that's that's the kind of level of conversations we're having. And again, there's a revenue output. Job to be done. Rev ops needs more revenue with existing headcount. So we show them that. And then we show them, listen, if you do nothing, it cost you money too.

14:00So you have a choice. You can you can give me 300,000, and I'll produce a lot of revenue for you. I'll help your reps produce revenue, or you could do nothing, and you're you're it's it's a cost burden.

14:12So those are some of the techniques that we use. Now I talk about escape velocity. Escape velocity is really, to differentiate yourself.

14:21I feel I'm gonna show you something everyone needs.

The Free Data Diagnostic and Ambassador Program

Ken Hoppe

14:25We call it go to market data diagnostic. I mentioned to you that we're finding 40% of contact data is inaccurate. Think about the cost. 10 SDRs cost about a million dollars a year times 40%, that's $400,000 lost productivity. A non disruptive solution, more deal flow. So we've been fortunate enough to come up with something that is really frictionless, that, others will talk about on our behalf.

14:56Get the insertion. So I mentioned, we've already showed like a proof of value. Right? But those price points, there's a lot of consolidation in in in budgets, so I'm willing to take smaller deals that may be 25% of the size. $25,000 deals, $50,000 deals, just to get the just to get the insertion. Get a small order, and then earn earn the customers, you know, through through, through customer success at time to value. Right? And I would

15:23urge you all to do the same. So this is where it starts for us. I mentioned that I was pre med, so when I think about my upcoming doctor's appointment, new to Nashville, so I have to go to my new primary care physician.

15:38When you're my age, you do the PSA test, and there's a lot of things. You want to know what's going on. You do that through a blood test. This is my version of a blood test. So what we do is we take, the last fifteen or thirty days of contact data that companies paid their reps to use to prospect and effectuate engagement. Here's an example of a $25,000,000,000 cloud services company.

16:00They thought that mobile mobile phone coverage is what our big bet is. Right? That's what we're specialized on. That they had 28% mobile phone coverage, didn't understand. They thought it was higher. 68% of those phone numbers were wrong.

16:16They also had 9.8% of the prospects had changed jobs. That's another thing we do. We look at our people still at the target company. Our prospects still at target company. Have they changed? Is John Smith still at eBay or is he at Amazon? So they've effectively have in access of 91% of the market. They had no idea. They've never had visibility before this before this diagnostic. In over a 147 reps last year, 500 meetings, upside down.

16:46Less than 1% call to connect rate, it's all because of that bad data.

16:54So this one, what we've decided to do is take this data diagnostic, and we've built a network of ambassadors. K? And that's how, you know, I mentioned earlier, like getting the Circle of Trust, you have so much bombardment that there's only so much mindshare to get. And so what we've built is a program called ambassador program. So we have started, and actually this is old already. Mandy Mandy updated that this, we have 12 ambassadors 12 of

12 LinkedIn Influencers Promoting the Diagnostic

Ken Hoppe

17:27the top, 300 influencers on LinkedIn recommending and promoting modigie. Not modigie the company, but modigie the data diagnostic. It's a you know, it's a free it's a free diagnostic to see, the impact of of inaccurate information and our ability to fix it.

Pro Forma: $3M to $4M EBITDA Over Two Years

Ken Hoppe

17:45So as I mentioned, if I execute, there's no reason I doubt that I can. I'm sharing with you my pro form a. As a founder, I'm not giving up equity to VCs. That's 3,000,000. I can spit off 3 to 4,000,000 of EBITDA over the next two years, and I feel really good about that.

18:09So what I shared with you is if you're lucky enough to get a band together of people who complement each other, who have different skill sets, that's a great start. Spend your money wisely, outsource everything you can.

18:25I like to say, be a need to have versus a nice to have.

Key Lessons: Spend Wisely, Lower Barriers, Find Escape Velocity

Ken Hoppe

18:30Lower the barrier to entry. Do everything for your customer. Make it easy for them to buy and partner with you, And then they escape velocity. Find your version of offering something that didn't exist, that everybody needs.

18:47And that's it.

18:49Thank you.

18:52If the data diagnostic resonates with you, that's a website specific for this event. We'll prioritize you and your business,

19:02but you'd have to act pretty fast on that because we're getting really busy. Thank you.