Mywifi Networks Revenue & Valuation (2024)

hello everyone my guest today is kevin zickerman he helps digital agencies and msps innovate to increase profitability by reselling guest wi-fi marketing solutions kevin is the ceo of my wi-fi network's the leading white label wi-fi platform with social data capture visitor metrics and marketing automation kevin you ready to take you to the top i am how are you davin i am doing well so last time you were on the show man it's been too long i think it was uh april of 2019 you told me you were sitting about 400 customers had just cracked about a million in arr and i love the use case a wi-fi at a coffee shop so that when i check in and sit down to work they capture my email absolutely and uh things were great as you know and then all of a sudden uh come march everything imploded and uh i can actually dive into that so things were rocking we were doing really well uh we were actually slated to be on track for 1.4 this year into january uh things were rocking you know new year's eve party party great you know let's look forward to the new decade and then march 16th you know literally just it's on like right there you're good sorry about that kevin we'll edit that out keep going yeah cool i'll just wait until i'm here by the way just give you context i'm here in la for tech executives and we rented this place and so we're sharing cars and stuff so i had my car keys on this on his table yeah yeah so uh you know everything was great new year's eve hit you know 20 20 20 new decade big big high hopes and everything and we were on track to do about 1.4 and then you know kobe we started hearing some you know whispers about some pandemic happening and we didn't think too much of it to be honest until march 16th and uh i should have actually shared a chart here but it was literally like it you know you you'd think uh you know a bomb went off or something god forbid right like it literally like all the traffic went down 86 percent just like that and this is not just north america this is global we have installations in over 52 countries and we saw just a massive drop in in overall wi-fi usage you know naturally our wi-fi installations are in public spaces where guests gather and dwell and that was almost illegal in most cases uh most countries so um yeah we got hit pretty hard and um you know that has a ripple effect in our business because we don't sell directly to that end user we don't sell to that you know coffee shop or restaurant we sell to the msp or the digital agency that services that restaurant so naturally the domino effect happens where hey they don't get paid they come to us hey do we have to pay our bills and you know we were we were nice and we extended you know three months for a lot of clients extended 50 off for six months in many cases our churn shot up to about 20 like we lost about 30 percent of our revenue alongside our everything else i think it's kind of standard in the industry we were lucky to maintain a lot of that uh we actually pivoted indirectly to do a lot of work with the cleveland clinic a lot of different uh you know medical offices that remained open that had traffic unfortunately uh but we were able to not only offer uh great data but also presence analytics contact tracing so a lot of new applications for wi-fi marketing that's not so much you know the old world is not no longer the current world so we also had to change our product a little bit and how we apply it so give us an update on the numbers and let's dive more into that backstory cleveland clinic etc so so how many customers do you still have today on the platform actively paying so we have about 300 resellers so we lost about 25 or you know 25 of our overall base uh naturally because we're a month to month a lot of our products people can easily drop off and come back the vast majority of everybody that's canceled has said we love your platform we're going to come back as soon as our you know clients can reopen their doors so we're seeing that to happen slowly so it's 300 customers there and are you still charging the 240 a month on average uh that's dropped a bit to about 220 uh but in fact hidden in those numbers are two major deals that we've managed to to work on during covet you know everybody thinks kovid's you know terrible and obviously it is but you know a lot of small businesses had to close their doors couldn't operate but the bigger companies were still operating and you had marketing departments scrambling figuring out hey how are we going to generate data how are we going to like survive and we've actually found let's dive hold on let's let's dive into that in a second i want to like capture the full just covered impact first before talking about sort of how you pivoted so pre-covered you had grown about 400 customers and at one point what 1.2 ish million run rate something like that yeah exactly yeah okay post covet and you had 400 customers postcode or during company you lose about a quarter though so you have 300 customers and and just in case you missed your first episode define a customer for us so a customer is a digital agency or a managed service provider that typically has anywhere between 10 to 50 locations that they manage so they resell our software it's white label so they've slapped their own brand on it and then service their clients with a wi-fi marketing solution is there a hardware you're selling them as well or no there is sometimes hardware that we that we offer it's a low-cost hardware to get our foot in the door and then obviously have those with the monthly fees we service that we offer it actually have one just over here so you know it looks like this it's a really small device and we get agencies that don't know how wi-fi marketing works but the vast majority of our applications are on existing networks like cisco or aruba networks or morag you know cisco meraki is a big partner of ours and we layer on top of that existing hardware so again depending on the install but we do have our own hardware as well can you just hold that up real quick so what does this piece of art what does that cost you to make so our cost of this is 20 landed okay and we sell it for 39 so we don't really make a big margin on this but what this allows us to do is give this to an agency a traditional social media marketing agency that is obviously having a really hard time capturing clients and capturing revenue now nowadays so we tell this agency you need a pivot you need to get your foot in the door take one of these devices simply plug it in you know we have it's usb powered plug it into the internet or even tether it with your phone it'll take the data and broadcast a wi-fi guest wi-fi network at that location and every guest that comes into that location you can capture their data so we're telling a lot of digital agencies now if you've never heard about wi-fi marketing you don't even know where it starts join our wi-fi marketing academy we'll teach you everything you need to know about how to sell wi-fi marketing how it works we have these devices for 39 drops you know shipped to your door free shipping where you can take this and sell it upsell it right away to a client even give it away for free to your local business client to get them to trust you by generating that data and what quickly happens is when they drop this in they start generating big email lists facebook retargeting lists uh you know that's gold right now especially with knowing how many total emails like how many how many devices your own devices do have out in the wild right now we have about 15 000 of our own devices in the wild and we layer on top of i would say that our network of other devices is greater than that and over the past year how many emails have been captured across all your customers uh over 50 million five zero five zero so that's it that's not only email it's it's sorry to interrupt its mac address of the device itself it's gender birthday uh you know a lot of other demographic information specifically mac address because that's trackable and assigned to now a profile a facebook profile in some cases so that's very valuable to to other companies that would look at that and to be honest we're not monetizing that data at all right now uh why yeah i mean obvious players are selling like cookie data to people and you're getting you know retargeting and pixeled and etcetera you're not doing any of that right now why not no we're building a the library for it our focus is 100 on selling to the resellers and having them market there and you know for us it's all about focus we're a small team we're lean bootstrapped uh we have about 11 now so we downsized a bit but we're actually we were replacing a lot of our customer support to be honest like our the lift on net new clients has not been there so we've actually strengthened our development team and we brought on two more developers to help companies how many engineers uh eight now oh you have eight engine okay well so there's only three people and then four people on the team basically that are not engineers correct yeah you see they're at 11 or 12. uh now we're 11. eleven yeah so eight engineers three that are not engineers interesting um okay so so this makes sense 15 000 in the wild 50 million emails sort of captured so last question here before i talk about how you pivot the business and the new customers you're selling to post covet why sell the device at any markup i mean if you want to get most market share why not sell it at your cost of goods sold why build in nineteen dollars there of spread absolutely because we offered for free like it's free shipping it's all in it's literally 39 as you go uh we're not in this to make money to be honest we don't really sell these the majority of our clients do they buy one of these and they're like okay i get how it works and they go out and they use datto or aruba or cisco meraki or a more powerful device this device is great for 15 simultaneous users it's pocket size it's great to take it to your meeting tethered to your phone and show a client how it works it's not necessarily the device you want to plug into your restaurant yeah but you've sold 15 i mean there's 15 000 of these in the wild that's 50 per the 300 customers you have this isn't like a one-time thing i mean people are using a ton of these yes they are uh but they're the power of it is really limited in application so you're using this for a kiosk for a mobile application so even somebody who's installing air conditioning unit and they're parking their car in the driveway you can actually just broadcast a network so we have a lot of different applications where people are using this uh we actually are provisioning a new device so it's much more powerful it's designed to be that pure plug and play and we are to be honest through kovid our our mantra has always been through the reseller channel partner specific exclusive we're about to launch a program at a product called social guest and this is going directly to that restaurant uh not with this device with with a much more powerful device uh doesn't that turn off all your channel your 300 channel partners right now if you start going direct to their customers i think it's going to be more of an inbound play it's not necessarily their customers we work with partners that have their own customer bases all over the world this is more of like an inbound and round play on that i mean it's a good point but to be honest at the end of the day we also have to generate money where where it makes sense and and if a lot of partners and resellers are out there uh you know selling this directly and there's no reason why we can't as well in a different way i think the way that we would sell it is very much turnkey really simple generate emails send a couple emails be very very straightforward our platform the reason it integrates the reason it's so powerful and it integrates with a lot of third-party tools like hubspot fusionsoft uh it's really an open platform so the agencies that can really make the most amount of money are the ones that go in there they tinker they set up you know the zapier extended integrations uh that's not what our product would do our product would be the simple turnkey it would very much compete with zen reach the yelp wi-fi uh whereas our partners are winning business because they're differentiating themselves with a more uh strategic custom approach versus a turnkey wi-fi marketing play got it so 300 customers each paying 220 per month right now these are mainly agencies design agencies etc uh that's pure software revenue correct 220 a month each yeah so you're doing it you're about sixty five sixty six thousand dollars a month right now in revenue yeah it's dropped a lot but we're getting back there i've seen worse i've seen worse so it dropped from about ninety six thousand you lost about thirty thousand dollars a month in mrr because of cobit yeah okay so talk me through the pivot how are you trying to recover that cash so at the end of the day like our our product hasn't changed it's it's still we're still going forward but the messaging has changed i think the whole sales process everything the whole world has changed right so at the end of the day we're very much selling this to the same markets that we used to sell it to but with more urgency so we're about to launch an entirely new academy where it's really designed to all these digital marketing agencies that are unfortunately have to declare bankruptcy are not having clients they they're figuring out what to do right now so our product is that door it's the foot in the door it's the most important thing for them to do and the message is you got to reach out to your local brick-and-mortar clients first of all check how they are check how their family and friends are doing like make sure that you know that's number one in this world it's people got to be healthy and happy beyond that it's saying hey i have a way to help generate data once you open your doors you got to treat this as a grand reopening this is not like a just another monday morning this is you know we're past if you're in stage two i'm not sure where it is where you are now but stage two stage three when the doors start reopening and businesses start welcoming customers again the customers walking into those doors for the first time are the best customers i mean i mean everybody has their own opinion on the pandemic but people who are going to a steakhouse and sit down and have a steak are you know in essence risking their lives to eat that steak and you got to know exactly who that guest is what's their name gender birthday email to reach out to them personally we'd be sms or email but also to take that to facebook audiences and find similar people to john let's say who comes in to eat that steak because if businesses don't do that they're gonna die and if they don't build that list right now in case there's a shutdown or a wave two they need to be able to communicate with the people that came to their business when they reopened so that message right there but you're not selling that message the design agencies that you sell to are selling that message so what does your sales pitch sound like to the to the agencies the agency is you gotta pivot your business you gotta figure out you gotta rejuvenate and reinvigorate your agency chances are you've lost a ton of your clients this is a new foot in the door strategy to get you in to generate new business to show value to clients but kevin that's where i'm a little confused right you're basically saying hey coda shut everything down hey agency has taking a big hit i have a new thing for you to make money you install in physical locations to track foot traffic which is exactly opposite the effect code all agencies are moving and doing more and more online obviously today i just i don't get the sales pitch yeah absolutely well think about the brick-and-mortar business they're paying rent right so it's either they're going to keep paying rent for a reason or they're going to go online only so we're outfit or out of business or out of business correct but the ones that want to stay in business and that do have a brick and mortar location need to understand that that foot traffic is hyper valuable it's what differentiates them between the online retailer the experience of walking into a store and touching maybe not touching but looking at a product building an affinity towards a product is something that an online store will try to mimic with irar uh it's not gonna happen uh it's not yeah but you're gonna have to be convinced you have to convince the design agency that when they have an hour with with the restaurant owner that they should build in your pitch the restaurant owner i'm just saying about all the things they could pitch to restaurant owner my why like this wi-fi solution would be in my opinion the last thing that they would try and sell them consider it's the hardest sale right now considering all the other digital things they could sell them i i i would highly disagree because if you're a restaurant looking to generate like in-person traffic it's either you're going to give up or you're going to try to make make it uh you make a play right i think if if you go to a restaurant it's not the only thing i think at the end of the day this is sold as a package it's not wi-fi marketing standalone it never is wi-fi marketing is really that foot in the door to help you generate the data the data helps you build the loyalty so for example we are working with like great us as a review management platform they have a back-end funnel you know the issue with most review management platforms that operate on brick and mortar locations is that how do we get people into the funnel the whole process could be awesome you could build a great loyalty program but it's ultimately down to as many people are that are in that loyalty program so you have you know bars restaurants uh it's just a small piece of our clients uh we have like major uh amusement parks that went live in europe as soon as they went open they're like okay we now need to understand who our guests are we have airbnbs running this when they have people staying at their locations you got to understand who your guests are not only from a compliance standpoint and in contact tracing but also i want to build a list of of tourists right so it's just i don't want you to limit the the um yeah keep going what are their customers those are valuable what other sorts of customers are you working with so any like you know auto shops uh anywhere like you know car dealers right now like somebody walks into a car dealership you kind of still have to do that to buy a car and while you're there you want to be able to generate data anywhere that there's a brick and mortar location so i i think i 100 agree with you the last five months has been online only but now that things open up again and that people are out you go out and and visiting physical locations that is now hyper important and if if that's not important for the business this is just close down shop and go online only but there's a lot of experiences that you need to be there to to to live the product has the loss and revenue cut last time you told me you were profitable you're printing i think you said about twenty thirty thousand dollars a month in profits are you not around breakeven are you still profitable we're we're on the customer break even we're spending a little bit more money now to invest in our development and infrastructure we've had about four different uh takeout offers during covet as well i should mention so um not the valuations i want to be because the multiple in revenue is not where i wanted to be what was the best multiple you got uh i got seven and a half okay and why do you feel like that wasn't a good valuation i think it was a good evaluation but my revenue was not where i wanted to be and we're doing all that revenue we're doing about 700 now on the hit with no sales team so i want to build a sales team i want to grow that revenue and then i'll take the 7.5 on that yes i mean point five multiply where i say i mean that's a five point four million dollar offer on a company that is that has shrunk thirty percent over the past three months you and you said no yeah we're highly under indexed i think the potential of this product is it's amazing and every every ceo is going to think that their product's amazing but i know our position i know when we find our clients how it works everything's been inbound we've done it with no sales team uh i very much you know delayed on that sales team because i it's for me the mentality of the products never ready has been a thing but now that i know the product's ready it's prime time uh we're about to launch um can't really talk about the deal but a major hardware deal that's slated to have us in about 300 000 businesses next year tier one isp style so um we're growing fast we have a lot of potential i think no you're not but you're not growing fast kevin you're not growing fast you've shrunk 30 over the past six months well i think so correct myself we shrunk so as everybody else but our trajectory now is growing you know pending the 30 percent we still have a very high trajectory i'm just surprised if that was a clean 5.4 million dollar all-cash upfront offer i'm surprised you didn't take it uh i i want more for this business uh i worked pretty hard for it and i think uh we're highly like i said we're highly under indexed we don't do very much marketing we don't do any sales and i think that once we do that i will um i'll be back on your show and telling you that i got at least 20. was it was it not a clean offer uh it was clean i could walk in 60 days and it was all cash up front yeah um sounds interesting so are you the absolute decision maker do you have any co-founders no got it got it so you know i own 100 of it and yeah i mean like at the end of the day you know i might look back at this and be like you know whatever but i i i i believe in the product i believe in the technology and i believe in the market i think that when you know like i said i i'll gladly come back on your show and tell you how we took this pivot and how we built the sales team and we scaled it to international regions like brazil southeast asia uh south east africa uh we're you know we have a lot of traction in those areas right now and if there's anything coveted has done it's like hurry up and wait i've done countless sales calls in last three to four months where these are big msps you know they got thousands of locations that they service and everyone's like we're sold we're just waiting for everything to be back to normal and you know everyone's still waiting so that that's also why i say that you know we got people lined up at the starting point line and we're just waiting for the gun to go off very good we'll see what happens uh let's wrap up here with the famous five number one favorite business book very business book um i would have to say it's tough um four hour work week still because i have to implement more what what uh the outsourcing in that number two is there a ceo you're following or studying steely all musk man he's done some pretty amazing things i'm looking forward to uh the brain hookup later this week number three is there an online tool that you're using aggressively to build a company slack i i hate email i'm all about slack in tournament number four how many hours i sleep breaking every night aiming for seven i almost get it okay good and situation married single kids married with two kids two kiddos how old are you i am turning 40 this year fourth congratulations it'll be exciting big four oh last question what do you wish you knew when you were 20 start a business earlier same old thing yeah work for yourself guys there you have it my wi-fi networks they give local brick-and-mortar shops a way to capture data a lot of data on their foot traffic which you could argue at least kevin argues is more valuable in today's day and age the company was doing about ninety six thousand dollars a month in revenue pre-code but they dropped a little bit down to about sixty five thousand sixty six thousand dollars a month post code but they've got a lot of big deals lined up they are bootstrapped he owns a hundred percent company recently turned down a 5.4 or we'll call it a 7.5 x uh multiple on current revenue in terms of selling the company because he sees a lot of promise with the deals he's got lined up when things start to reopen we will see what happens fifteen thousand of us sort of data capturing units little wi-fi hotspots out there in the wild kevin thanks for taking us to the top thanks appreciate it one more thing before you go we have a brand new 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