How Modigie Hit $1.7M Revenue with 6 Employees and Zero Paid Ads (Interview with Co-Founder and CEO Ken Hoppe)

Introduction and Company Overview

Nathan Latka

00:00Guys, Modigie launched really as an agency back in 2019. They did $300,000 in revenue in 2020. Then they started getting involved in the Salesforce app exchange, built SaaS, and now today, they're doing a $140,000 a month in revenue, up from, call it, you know, a 120 a year prior. So healthy growth, totally bootstrapped, three cofounders on the majority of the business. They used debt from Founderpath, $315,000 paid back on a twenty four month term to hire

00:24their another sales rep that's now helping them scale as well. And he and they only have six full time employees with a $1,700,000 run rate. Really high revenue per employee. Hey, folks. My guest today is Ken Hoppe. He's the cofounder and CEO of Modigie, built a real time software engine for sales and is accomplishing a series of industry first. The most essential tool in the sales stack and lynchpin to making everything else function properly has currently

00:46or usually has had zero visibility into its performance. Now Modigie changes that. They provide real time visibility into the performance of the tool, eliminating valuable wasted sales resources and at the same time, optimizing performance of the entire sales tech stack. Ken, you ready to take us to the top?

Ken Hoppe

01:00>> Let's do it.

What Modigie Does and How It Sits Inside Salesforce

Nathan Latka

01:01All right. Just to be clear, are you sitting on top of like a CRM to add more visibility or what did you mean by that?

Ken Hoppe

01:06>> Yeah. I like to start out by saying, you know, I'm old enough to say back in the early days, I can sell without Salesforce. I can sell without Gong. I can sell without Outreach or SalesLoft or even 6sense, right? So all I think you've had a lot of those founders on. Now I can do it with on spreadsheets, but really what we're saying is the most essential tool is overlooked, the if I don't have the right

01:31>> contact information to reach my likely buyer, none of the tech stack matters. And so what we do, to answer your question, yeah, we sit inside Salesforce, so give us coverage of 80% of the market we feel. We're a Salesforce managed package and what we do basically in the background is we're auto inspecting. This has never been done before, which is giving visibility into the accuracy and quality of contact data. So as a full production product, we

02:01>> actually run inside Salesforce and interact with all the different sales engagement tools that I've mentioned or sales tech stack tools. But what we're doing, Nathan, the front end of our customer engagements is we're actually running what we call a data diagnostic. And for the first time ever, we're giving companies visibility into the quality and coverage, like the inaccuracies. For example, how many of the people that they prospected to in the last thirty days had actually changed

02:27>> companies? Don't even work at the target company. How many phone numbers did they call that were inaccurate, that didn't work? And we had no idea, so we've sort of evolved as a company because we originally thought the idea was we're just gonna add mobile numbers to help companies and BDRs and SDRs reach their likely buyer, add the mobile channel. We thought that was the problem to solve or the job to be done. We had no idea

02:55>> how bad and inaccurate the contact database was that they were acting on. Then we're finding basically that's the bigger issue to solve. So if we can identify inaccuracies and correct them before they go into an outbound call step, then we've done that.

Pricing and Average Contract Value

Nathan Latka

03:10Makes tons of sense to me. What are customers paying on average per month to use the technology?

Ken Hoppe

03:15>> Yeah, it's funny. So when we I you know, when we reflect when we first met, I was excited about a $10,000 annual contract and our highest paying customers are close to $200,000 ACVs, bookings. Today. Today, yeah. So we're really sort of leapfrogged because of the value and really starting to see

03:39>> bigger publicly traded companies just giving us input to our product evolution. What I just described to you really came from a customer that said, hey, I don't trust my data that I have today. Can you can you use your software and inspect what we have?

Nathan Latka

03:55Ken, is that an average though? Or those are just your like, what's the average ACV, would you say, across your full base?

Ken Hoppe

04:00>> Yeah. So our a our ACV, we're we're modeling at, like, $80,000.

Nathan Latka

04:05Oh, wow. That's still an increase when we from when we talked in 2020 where it was about 10,000.

Ken Hoppe

04:10>> Yeah. I mean, I I I didn't think it would happen so quickly where where we're getting our first orders are over 100 k, which is Interesting. Hard.

Nathan Latka

04:20Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

04:43your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

05:08get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity And red is if you sold the whole thing outright. Now what's cool about this is this is

05:29not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're

05:55going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, we're gonna go back to the YouTube video here in a second, but

06:17if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into

Expansion Revenue and Consumption-Based Pricing Model

Nathan Latka

06:43the interview. What's allowing you to drive that expansion, those expansion? Is it more seats, more features, some utility based upsell?

Ken Hoppe

06:50>> It's a great question. You know, it's actually

06:55>> if I step back and I look and I I originally thought our our buyers were sales leaders, well, true buyer is RevOps. So revenue operations has that analytical brain where they're thinking, so they're reporting to the CRO and they're reporting to the CFO, so they think financial. So we built a revenue impact model based on, we really work hard on the front end of these engagements to show mathematically like the amount of time wasted that we

07:24>> could solve for, the amount of revenue impacted if you add our solution. And so we're coming up with these ridiculous ROIs of like a 2000%. And so we're able to get these large deals because we show for every dollar you give me, I can give you $10 back in revenue or optimization.

Nathan Latka

07:43But is it a feature based upsell? Is it a seat based upsell? Is it utility based upsell? Or is it we're adding a million bucks of new revenue, we keep 20% of it, a take rate model?

Ken Hoppe

07:52>> Yeah. So if you remember last time, so we charge a platform fee and then we charge a consumption. It's a consumption based model and it's really about

08:04>> What's growing is the ability to add functionality. So when you add automation modules, there's an additional fee for that. When you add the ability to do dynamic phone number validation, there's an additional fee for that. When you can do dynamic employment dispositioning, So we're adding, to answer your question, we're adding actually additional functionality, which adds value to the customer and adds more billable for Modigie.

Nathan Latka

08:30I'm trying to drill here, Ken, because I think you're pricing a very smart way that I want others to copy. You charge off the consumption model's number of API calls. And so what I just heard you say is that can unlock additional features, which enables them to call different kinds of APIs, which drives up the consumption model revenue. So it all feeds itself. Is that all accurate?

Ken Hoppe

08:48>> It is. So we have different like recipes, I call them, where if for one recipe what used to be called Get Modigie, which is just you would send us an API or a request to add a phone number and we would do our, we'd perform work, return a mobile phone number, validate it, return it, and at the same time, check for employment. What we do, that would be one fee. Now, if they say, I want you

09:13>> to check my existing mobile phone number, that's another fee. I want you to auto you identify that someone's changed You do API call. Yeah. API call.

Nathan Latka

09:24Yeah. Yeah. So someone paying you $200,000 a year, how many API calls are they probably doing in that year?

Ken Hoppe

09:29>> Oh, you're catching me right in like this, we're transitioning, we're trying to really figure We're in our second year of the product, and so we're really trying to refine our business pricing proposal and it'll continue to evolve. So it has been typically platform fee plus API calls, right? And what we do is we calculate how many net new prospects their BDRs are calling. And in the old business model, all we were doing is what percentage don't

10:00>> have a mobile number? And that was our addressable market, if you will, with that company. Now every prospect is our addressable market because now we can inspect every single record.

Nathan Latka

10:11And what that'll Last year though, for your old pricing model, someone that paid you $200k for the year, how many API calls would they likely do? I mean, we talking 20,000, a 20,000,000?

Ken Hoppe

10:21>> Well, to get us different, we used to charge based on a credit and the credit would be a one to one. So you would you would basically How many credits then? It could be so for a 100,000, it might be a 150,000 contacts.

Nathan Latka

10:34Oh, it's a one to one to one. So it's $1 equals one credit equals one API call?

Ken Hoppe

10:38>> No, I mean, we would basically charge based on the it would just be $2 a credit and then we would discount off of that. What we found is we were perceived more as a data company, but there's so much more value in the orchestration and the cleanup. So a cleanup of a record may take five API calls now to to inspect

Nathan Latka

10:59way for the audience to understand just what number of API calls if they're paying you 200 a year? Or is it too hard?

Ken Hoppe

11:06>> Yeah. The old model at that level, probably 225, 250,000 API calls.

Nathan Latka

11:15Wow. Interesting. Okay. Very interesting model. And then if I'm paying you 200,000 a year, what's what's the split between the platform fee for that versus number of API calls?

Ken Hoppe

11:24>> The platform fee is is will be roughly about 25% moving That's how we've modeled it. And again, to all the other founders, I mean, I think everybody's gone through the same thing where you're to find a scalable repeatable model that helps maximize our profit. So we're trying to get as close to 80% gross profit while showing true value to the client based the functionality. And

Nathan Latka

11:47Ken, you're a high touch, low volume kind of sales motion. How many customers are you working with now today?

Customer Count and Enterprise Focus

Ken Hoppe

11:53>> Yeah, under 30. And I think the last time we spoke, we were probably around 30. The trade off has been the smaller SMB companies that have churned, we're okay with. What we're really excited about is these larger companies that are continuing to re up. So our LTV, I mentioned to you, we have companies that are now By the end of this year, we will probably have three companies that have spent about 500,000 with Modigie, and that's

12:26>> really where we wanna go. So it's an enterprise enterprise sale.

Nathan Latka

12:29So '25 customers at 6,000 a month, you guys are doing about what? 150,000 a month in revenue if I multiply something like that?

Ken Hoppe

12:36>> Last year we came in at 1,700,000. So it's choppy. I'm hoping to smooth out that curve.

Nathan Latka

12:46So when you say 1,700,000, does that mean you did about 140,000 in MRR in December and the run rate is 1,700,000?

Ken Hoppe

12:54>> Our our pricing model is more bookings related. Right? We sell an annual contract, traditional annual contract that gets consumed over, the term of the contract, which is a twelve month term. Yep. And so we we record it as MRR from a GAAP perspective.

Nathan Latka

13:09Yep. So from m from a GAAP perspective, what was MRR in December? Was it about that $130k, $140k range then?

Ken Hoppe

13:15>> It is. And that's how you

Nathan Latka

13:17get the 1,700,000 run rate. You multiply times the 12. Right. Okay. That makes sense. Okay. Now what do you think you can grow here in 2023?

Ken Hoppe

13:25>> Well, we don't we we've we've been very measured and deliberate in trying to maintain a profitable model and control the company. So we haven't done traditional VC. So we have a very small staff, but we feel

Nathan Latka

13:39And what's small, how many people?

Team Size and Non-Dilutive Funding from Founderpath

Ken Hoppe

13:41>> So we have really six full time customer facing, whether it's sales or customer success. We're heavy on product development And and now we're just looking at, you know, we've taken non dilutive capital from Founderpath. Thank you so much. That's really helping Are

Nathan Latka

13:58you comfortable sharing how much you took?

Ken Hoppe

14:00>> We took, yeah, 315

Nathan Latka

14:05What and what did we I just don't remember. What did how many months are we letting you pay that back over? Do do you know off top of your head?

Ken Hoppe

14:12>> I think it's a twenty month payback. If I recall, twenty four, a two year.

14:18>> Yep. Yep, two year.

Nathan Latka

14:19But it gave us some runway.

Ken Hoppe

14:20>> What it did, it gave us some runway to hire our first sales leader. And then we brought a BDR in house. So again,

Revenue History from 2020 to 2022

Ken Hoppe

14:32>> we grew our first year as a services company, we were 300,000 in revenue. Which is what year? That was 'twenty. And then 'twenty one, we became a SaaS company in February when the Salesforce managed package was released. And then we just did a hair under 1,000,000. My goal was 1,000,000. I think we came in at $950k or $930k. And then we wanted to hit 2,000,000 this year and we, you know, we got close.

Nathan Latka

15:01Close. What did they say? Go for the stars, land on the moon, something like that?

Ken Hoppe

15:05>> Yeah. So, I mean, there's no reason we we can't I mean, my my stretch goal again is to double it is doubled. So with with

Nathan Latka

15:13some Ken, what I love about this though is you've managed so just repeat the number. How many full time employees today?

Ken Hoppe

15:18>> So there's six there's six that are actually in the Full time. Full time work for Modigie, and then we've outsourced the line of development. How many It's an accordion, but basically we have our lead tech so two sides of the house, we have our engine, which is in Google Cloud, and that basically we have a key technologist that runs that, and then we bring in expert Python developers when needed. And then we have a Salesforce development

15:48>> team that focuses on the managed package. And so combining those fluctuate between five and ten people, depending on the development that we need.

Bootstrapped Ownership and Avoiding VC

Nathan Latka

15:56I love the story. I mean, your revenue per employee with the six full timers is through the roof and you're bootstrapped outside of the 300,000 you took from Founderpath. Right? So, I mean, you own a 100% of the business, you plus employees?

Ken Hoppe

16:07>> Yeah. There's three three of us that own the majority.

Nathan Latka

16:10Ah, okay. So you have two co founders?

Ken Hoppe

16:12>> Two co founders, yeah.

Nathan Latka

16:13That's amazing. But but again, I mean, do you ever feel pressure to go raise VC? You read all this stuff in the press.

Ken Hoppe

16:21>> You know, it's interesting. You know, yesterday I had a conversation with a good friend of mine who runs Industry Ventures, Hans Swildens, and we talked over this and I ran some models by him and he said, there's no reason you need to take traditional venture capital. I mean, because we have a path to profitability. We're profitable at the moment and we just run really lean.

Nathan Latka

16:42Yep. Yep. I love that. Do you know off the 300,000 that you took from Founderpath, much new MRR are you able to generate with that or new ARR are you able to generate with it? I don't. I don't know You use them as sales rep though, right? Does a sales rep have a quota?

Sales Rep Quota and Pipeline for 2023

Ken Hoppe

16:56>> We do. Yeah. So sales rep says a $1,200,000 quota.

Nathan Latka

16:59Okay. Did the rep that you hired with the 300 k, did they meet did they meet quota last year?

Ken Hoppe

17:05>> No. Started in April. Okay. And so I'm a sales oriented CEO and my co founder is a sales oriented co founder as well. So we've been doing the bulk of the sales at the moment and then dragging Joe along. And then Joe has now he's got a healthy pipeline for 2023, which we're very excited about.

Nathan Latka

17:26I just wonder if this is repeatable. Right? So, like, for every new sales rep that I'm making this up. I don't know Joe's salary, but let's say you're paying new sales reps 80 k base, and then they can earn 80 k commission on top. So one sixty OTE if they hit, call it, a million dollar quota. Just I wonder if this is something you can repeat with Founderpath. Can you take a $160, go make to hire,

17:42then it pays for itself within twelve months and rents, wash, repeat? I mean, does that feel doable to you?

Ken Hoppe

17:46>> It does. We have a flywheel that so I mentioned on the front end of the call, we're doing this what's called a data diagnostic that gives the ability to provide empirical evidence of the problem that we're going to solve. So visibility and then understand and quantify the problem, see the problem, quantify the problem, and then we have a solution to solve the problem. We're getting really good traction on that. And so I feel my job is

Zero Paid Marketing and Word of Mouth Growth

Ken Hoppe

18:11>> to get awareness to because we've spent $0 on marketing, it's all been just brute force and word-of-mouth is where our leads come from.

Nathan Latka

18:22That's awesome. That's awesome. Well, when you decided to go with Founderpath, did you do any research into any other debt providers? And again, it doesn't hurt my feelings if you name them, but help us understand sort of why did you choose to go with Founderpath?

Ken Hoppe

18:32>> Well, we did. We did. We looked at we always try to look at three options. I won't name the other two. We just felt more comfortable. Well, first of all, there's a lot that you as a person and the relationship from just what you've built, your ecosystem was really a big factor. Your interest rates were more favorable as well. Your terms were more favorable.

Nathan Latka

19:01We love that. We try to give good rates. And And also the key is, founders always forget to ask for this. You want the longest payback period possible because it decreases your monthly repayments. Right?

Ken Hoppe

19:12>> Right. I could be wrong on the twenty four months. It could be it could be thirty six.

Nathan Latka

19:17Everything in Founderpath is totally confidential or SOC two compliant. So can I can't share your data unless you tell can I I know what it is? Do I have your permission to share how long your term is?

Ken Hoppe

19:27>> You do.

Nathan Latka

19:28Twenty four months. Yeah. So it was great. Right? You have plenty of time to sort of pay it back. It lets your sales rep get up to hitting his quota. And so it's obviously, hopefully ROI positive debt.

Ken Hoppe

19:36>> I think it's like a $17,000 a month, but what it does, it gives us that working capital to, you know, apply to an extra engineer or to, you know, like I said, to hire that sales and not and give give that extra runway to yeah. Where

Nathan Latka

19:50I love it. It's a great model. Our whole goal is to help as many founders as possible get to a $10,000,000 run rate and still own a 100%. So I wanna help you and your co founders get as close to that thing as possible.

Ken Hoppe

19:59>> Thank you so much.

Famous Five: Books, Tools, and Life

Nathan Latka

20:00Alright. Alright, Ken. Let's wrap up here with the famous five. Number one, what's your favorite book?

Ken Hoppe

20:04>> You know, it's interesting. It's it's relatively unknown, but it's called Jobs to Be Done by Tony Ulwick. Gave us some thought process into thinking about solving a problem instead of build just building technology. So jobs to be done.

Nathan Latka

20:17Number two, is there a CEO you're following or studying?

Ken Hoppe

20:22>> I don't know if I'm studying anyone. I think listen, we we're heavy in the partner ecosystem. So I mentioned so Jason's intact. I really one of our best use cases is with 6sense. We do some really good coupling with them. So I'm really following I would say Jason's someone I'm I'm tracking.

Nathan Latka

20:42He is great. Syntax is on fire too. Alright. Number three, what's your favorite online tool for building Modigie?

Ken Hoppe

20:48>> It's still the Google the Google Docs, Google Google Spreadsheets. We we use collaborative all that collaborative tools.

Nathan Latka

20:57And, Ken, how many hours of sleep are you getting every night?

Ken Hoppe

20:59>> It depends. If I get up for morning yoga, but it's you know, I'd say I I try for seven or eight hours, but close six to seven.

Nathan Latka

21:07That's great. And what's your situation? Married, single, kids?

Ken Hoppe

21:11>> So this is I'll be married twenty three years this year, and I have two daughters, 18 and 16.

Nathan Latka

21:19Wow. And how old are I think you had two birthdays since we last spoke. Are you 54 now?

Ken Hoppe

21:24>> Yes.

Nathan Latka

21:2554. Happy happy late birthday twice. Yes. Ken, last question. Something you wish you knew when you were 20.

Ken Hoppe

21:33>> You know, I'm a late entrepreneur, and I think I I wish I would have taken action sooner in my career when I identified early problems,

21:45>> and that that still sticks with me.

Closing Recap and Wrap-Up

Nathan Latka

21:47Guys, Modigie launched really as an agency back in 2019. They did $300,000 in revenue in 2020. Then they started getting involved in the Salesforce app exchange, built SaaS, and now today, they're doing a $140,000 a month in revenue, up from, call it, you know, 120 a year prior. So healthy growth, totally bootstrapped, three cofounders on the majority of the business. They used debt from Founderpath, $315,000 paid back on a twenty four month term to hire their

22:12another sales rep that's now helping them scale as well. And he and they only have six full time employees with a 1,700,000 run rate. Really high revenue per employee. We love this bootstrap mentality. We love Ken. Ken, thanks for taking us to the top.

Ken Hoppe

22:25>> Thanks, Nathan. One more thing before you go.

Nathan Latka

22:28Have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday, 1PM Central. Additionally, remember these recorded founder interviews

22:55go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big fundraise, a big sale, a big profitability

23:16statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up for that at nathanlatka.com/slack. In the

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