How Notablist CEO Michael Johnston grew to $150K revenue and 20 customers in 2018.

hello everybody my guest today is Michael Johnson he's the founder of a notable Escom a competitive intelligence platform for email marketers Michael are you ready to take us to the top yes I am David thanks for having me all right yeah so you go from you know that the ditches in in Wall Street to to email marketing intelligence how is that work oh I think it's it stems from boredom if you're if you're if you're a startup mentality type of person working in a very rigid corporate environment just isn't going to work for you just you get on edge and eventually you become bored and leave and that's what I did I left for the startup world interesting tell us about the company what's the revenue model and what's the company offer in terms of value notably we're competitive intelligence platform for email marketers and sales teams it's essentially it's a massive database of information on the email marketing practices of brands worldwide right now we cover about 500,000 brands around the world it's really smart by the way because what I do right now is I just have a little folder in my inbox marked by it with spam slash research and all these things go there you it looks like I've done a really nice job ranking these by Alexa rank or things like that yeah yeah we keep enhancing the ability to filter these things in a variety of different ways for instance you can just filter out brands that are sending campaigns and say Spanish or Italian or or whatnot you can filter them by technology which is one of our most popular features actually what email technology like mandrills and grade MailChimp yeah yeah I mean if you're if you're an email marketer you're probably using you're using a text back to send your email campaigns using probably MailChimp you may be using some dynamic content providers you may be using an ad network you're you could be sending your campaigns from a CRM sales teams in particular love that information because it's it's tailor-made for prospects and interesting so we have for instance some of our customers or ESPs and they come in and they want to do a search to see who's using ESP X that's when they're building their prospecting lists and that's what yeah yeah and how do you make money is it a saucepot form it's a SAS platform and your recurring contract what what's the at would be average customers pay for a year would you say 7,500 annually okay guys said that very quickly so it sounds like maybe you only have one price point at present yeah well it's obviously multiple users we work out discounts but that's the single-seat license price 7,500 bucks a year it's paid annually right yes okay and give us more the back story when did you launch the company oh we launched it in 2004 it was an outgrowth of a conversation that I had with my co-founder one one summer afternoon when he was actually he was getting ready to move out of New York and I you know I had a friend of mine that actually had been I've been doing some email marketing work for him because he was all thumbs when it came to tech what why came time to do his campaign just I wanted to take a look around and see what some of his some of his competitors were telling and I found that there was really no there was no place to go and just do casual searches for this stuff Google just was no help I did a little bit of market research and saw that there were limited options out there for that sort of thing and started toying around with with the prototype and I built two versions of the system myself before I brought my co-founder on and then of course you know once he once he came aboard it things really things really started a role you had diverse the business at that point cuz you already built the product have what percent equity did you give him when you brought him on less than 40 percent yes okay so you're still majority shareholder nice but it's yeah it's a nice chunk but I really rather have you bootstrap derby race capital we have bootstraps that's great that's great and what is the team size today right now we are three myself my co-founder and a part-time sales person who lives out in the west coast it's great and are they all okay I was gonna say so you are you both based that you and your co-founder and up there in New York or no no we're completely distributed I'm in New York City he's out in Tulsa and our other guys out in out in the West Coast out in Portland so it's we we're always on the go actually my co-founder and I I've known each known each other now for about seven years and we've worked on a number of different projects together we have never actually worked together in the same physical space he's always somewhere else and I'm always always here that maybe that's why it works you never see never have to see each other well you know we've had our differences it's better that you're not in the same room yes that's right that's what I think ulti that's right now what have you scaled to in terms of total customers using the platform at present where it's we're 20 customers most of those are annual customers a few of them are consulting customers because we in addition to our platform we do custom consulting for people who are you looking to use our data in interesting ways that maybe we haven't envisioned interesting so so you have a professional services component as well yes got it just the SAS model 20 people paying 7500 bucks a year that puts you just there what at about 150 grand a year is that accurate that's a cure ok and what portion of your business would you say is larger the professional services stuff the high touch low margin or the no touch SAS model those fast definitely it's way bigger yeah interesting interesting how how do you incentivize your sales person that's it's strictly commission or Frankel but frankly most of our sales have not come through the sales salesperson himself unless you count me most of the sales have come through through network marketing through you know I previously I led a team that developed a media marketing solution that critical mention a number of years ago so this market is it's very similar to that it's effectively the same solution just applied to a different marketplace email marketing versus media monitoring and a lot of my contacts a lot of people in my network are the sort of people that are interested in the solution in give me a sense of growth you said here about 150 grand today go back to 13 months what was your run right then you had Mancha December 16 young Wow it took us a while to two to zero we know and precisely what it was what the what the compelling feature was that that customers wanted I mean we'd shown it to a lot of people and they'd all looked at and said well it's a great idea but the difference between someone saying that's a great idea and there's someone whipping out their credit card is often subtle and we found that that was the case once we added certain features we've suddenly started getting a lot more yeses than those but you said he founded the company in 2004 so if you just started making money 12 months ago what were you doing for 13 years how are you supporting herself oh no I didn't found in 2004 2014 Oh 2014 say that's pretty incredible you must have had some money saved up or something ten years of burn yeah yeah now we had a few years of burn but we were we were really you know resource strapped I was you know we funded it from you know basically my bank account and basically giving up all the consulting income that I was me they can just class into the business great yeah so you would use the agency professional services stuff to fund the SAS company because it's obviously better to scale that side and that's where you are today right yeah so we're at the point now where the product is starting to mature and we're getting word-of-mouth referrals customers are calling us up you know people who know some of our customers and they're really getting good recommendations it's great which turn today it's very low actually our first our first renewals have started coming in and so far we've had a perfect renewal rate so I'm not I'm excited about that are you also I think some of what we provide is this data that you simply can't get anywhere else do you do any paid acquisition or no not so far okay so it's too early to look at like caki metrics or things like that customer acquisition costs mm-hmm yeah you don't run any of those money in the modeling around Cockrell TV or payback period simply wouldn't be enough data right now to uh to go there yep engine so how do you see I mean how do you scale faster you have some answer you need get people paying for it how do you go from 20 customers to mm uh basically it's plowing whatever money we bring in is is plowing it back into the business and you know right now we're focusing on inbound marketing mostly you know using our own platform to promote itself I mean so one of the best ways of from best forms of promotion is to take what you're what you've built and show people how they can use it and one of the reasoning that yeah well I'll give you I'll give you for instance you may recall last year MailChimp decided that they were going to force everyone who was using a platform called mandrel to become paid MailChimp customers and m'angil was just simply massive for the transactional email and then that forced a lot of people out onto the market including us we had literally just implemented mandrill on our platforms for sending transactional emails so a few months after the fact we decided to go back and look at our own data to see what it was where all those customers landed because it was a massive exodus from I don't know how many customers they said they had but they all we're exodus from mandrel from mandrel was mandrel a MailChimp product it is it is it was standalone product for a while but MailChimp for whatever reason they decided that it wasn't profitable enough for them or they just wanted to subsume the business into their their main brand so he was using man and Alone's it didn't want its MailChimp was forced to choose another provider anyone when everybody know we were a little irritated well we took a look at it we saw that they'd uh they'd gone to combination of spark posts and grid mail gun and to a lesser extent Amazon s3 or SES and for the most part it looks like spark post one that they edged out SendGrid by just a little bit so that's the kind of report you'll do you'll put content out there analyzing scenarios like that right right we're all working on several of those right now because we've only gotten to the point over the past six or nine months where the data has accumulated to the point where we can really make meaningful inferences from from what's in there and we've only just scratched the surface with that someone came to you and offer to you four hundred thousand bucks to buy the whole company would you sell no I think I put more than that into it frankly between you know cash and giving up giving up hours how would you guys like not number but the process you go through the process to value yeah like don't don't say oh I evaluate at 20 million say you know I think about it this times this or that or how do you get to evaluation you can't look at it in terms of revenue obviously because we don't have a lot of revenue but that's not something that's not situation that's going to remain the way this forever I tend to look at it I think you'd have to tend to look at it as more of a raw startup but not now you know not at raw start up at the napkin stage but but it start up it's actually built their their first Revit the product and they're actually they're in a go to market situation so whatever the current valuations are and that's fear is probably something we'd be looking towards yeah I mean look most most buyers you know our revenue buyers unless it's a highly strategic product and the multiples can get crazy if it's you know if they really want you it's an aqua hire etc so interesting so it's like if I make gonna make this up the Bezos came to you and they really wanted you for as it from talent perspective and said hey here's 2 million bucks or or a million bucks I mean do you sell the company and join Amazon Oh possibly are you married really we're I am would your wife kill you if you told over dinner tonight you turn down a million dollar check from Bezos I I hope to never have to tell her that I hope to tell her that we got a 10 million dollar check but no seriously I built the business for the long haul it doesn't mean that we wouldn't obviously we wouldn't sell the business but our interest is it's not purely financial I mean we literally love what we did this is a very exciting business and we're solving some problems that that really haven't been solved before so it's from from an engineering perspective it's very compare and I think from a business perspective too it's compelling sales teams in fact are just gaga over over the information that we can provide them because what they typically get is not not information that's specific to the email to email marketing so for instance if you're a sales team let's say you want to know who is running spark post and they're in their email tech stack well if you go to most of the the business intelligence providers that are out there the ones that will tell you what someone's tech specs if to really build with yeah they're looking exactly they're looking at web pages to see you know so if you want to know what someone's using in their email obviously you want to look at the emails not their web pages and that's that that's that's the key difference between what we do and say what a built with us or data nice and so on and so forth yep interesting all right let's wrap up you're Michael with the famous five number one what's your favorite business book you have a lot of choices it looks like uh well most of my business books actually I try to try not to mix oh right now actually I'm reading priceless by William Poundstone okay number two is there a CEO you're following or studying right now uh none specifically though I I have to have an interest in Tim Cook at Apple he's you know Steve Giles is a really tough tough act to follow and Tim has to to follow that act plus he's got to manage was one of the biggest companies in the history of the world and I don't think that's an easy job for for anyone so ever knocks he's taking about maybe apples not innovating or whatnot I think it's not looking at the big picture number three what's your favorite online tool for growing the business I think calendly constantly booking demos and what none it just saves me the back-and-forth of having to to schedule meetings how many hours is every night oh six okay that's pretty good and you said married guarantee kiddos or no she's grown okay okay but you still have you still have children I do at my feet so those those are actually more effort these days my daughter is up growing so one daughter and four dogs that's funny and he'll to the car how old are you Michael I'm 53 alright last question take us back thirty-three years what he was your 20 year old self new [Applause] don't trust anyone don't trust anyone at all spoken like a true Wall Street trenches guy there you have it from Michael don't trust anybody back in 2014 he went out on his own launched notable list with one of his friends four of seven years after having is really scratching his own itch they've since scaled the company is a pure place ass company the SAS revenue is the dominant revenue stream have about 20 customers paying seventy five hundred bucks a year that comes out to about 12.5 grand a month or about 150 grand per year scaling nicely they just really turned on revenue about 13 months or so ago too early to talk about unit economics one sell for for 300 400 grand he's loving what he's doing in totally bootstrap which I love with his team of two up there in New York and a sales guy out on the west coast Michael thank you for taking us to the top Nathan thank you very much for having me