How Nutrisense CEO Dan Zavorotny grew to $60.2M revenue and 15K customers in 2024.

asnutronsense.com they're doing 3.3 million a month today in Revenue up from call just under a million a year ago so really Healthy Growth past 12 months they got going back in 2019 marketing pre-marketing inside of Facebook groups like the ketogenic group and aurorin group once they pre-sold and had traction they did a 250k seat around they raised about 32 million bucks today to scale this company now a team of 170 people again you want to measure your glucose levels you put a little white thing on the back of your arm you get the app you pay about 2200 bucks per year if you want a 12 month plan they've got nice Arbitrage as they spend about 200 bucks to get a new customer now looking to scale hey folks my guest today is Dan zavarotti he's the co-founder and CEO of nutrisense a metabolic Health company that helps anyone discover and reach their health potential under his leadership the company's become one of the fastest growing startups in America he's led the company through Rapid growth building a team of 170 employees in just over three years and raising 32 million dollars January tickets to the top let's do it so just to be clear is this sort of a d2c company or is this Pure Play software B2B sure we're purely GDC right now uh it doesn't mean we're not going to go B2B our belief system is that specifically around the healthcare industry it's very hard and long takes to go to B2B so the trends then go direct to Consumer uh show folks what is possible and then push the industry in the B2B Direction so they can start asking for it and making progress so I mean how do you do a churn right I mean is it a subscription fee and how to keep folks engaged yeah so people sign up for subscription uh we have different options anywhere from one three six or twelve months and people commit to a certain time frame and turn you know for direct consumers always an issue but the way we look at churn is as long as there is at least three to one contribution margin uh lifetime value to our CAC we're always happy with that so as long as we keep maintaining it we're always pleased you know in theory if you're ever as long as you're above one to one ratio you're always uh successful right because then you just have to cover your fixed cost but three to one is really what we aim for all the time and so what do you spend on cap typically uh sarc X range you're for instance from like absolute dollar amount sure uh our tax range based on channels but it goes anywhere firm free to all the way up to like 300 right it really depends on the channel we use mix from Instagram Twitter quora Pinterest I mean really every single YouTube influencers every single Channel you can imagine but if you look at all of your paid spend last month divided by the new customers driven from those paid channels what were the weighted average CAC B something like 150 200 bucks yeah around 200 I'm around 200. interesting and what what are they paying so so what's the average customer paying per month per six month per year sure so it's a we so we look at the LGB ratio in two different ways one is the gross booking one is the actual uh realized LTV and the reason I say is because so some of us might sign up for let's say six month plan and that might be a 1200 plan uh they're paying however they may actually like the program so much they may stay for an extra three four months so what we realized our customers is our product is direct consumers we can continuously iterating on it so the retention actually improves so we see this when we first started give you context we first started people would stay for like three weeks right uh and now we've related to the point people who are staying seven to eight months on average and a lot of times it's just we basically once we get someone in the funnel we now have the ability to keep consistently trying to convince and stay longer and so every it's now the same time where it's like you have a you know two-year contract you're done it's more of we try to understand actually going to call their customer basically monthly to understand like what is it you like and if we're close to solving your problem great what's the next problem you want to solve right I think if you take a look at specifically around the healthcare system and the health itself that's one of the few things that will never go away right if you think about you know a car you bought a car you have a car now you're good with health unfortunately people say we started dying at the moment we were born and so how do we make sure we prolong your health uh as long as possible and solve in some ways right so Dan just because I know you have multiple different price points but the the average if we you know if a six-month plan divide by six right to get a month and the monthly rpu is about what 100 bucks 200 bucks uh around 225 225 okay and the cheapest that they can get that effective per monthly cost would be if they sign up for like a year-long plan maybe it goes down to like 188 a month or something like that yeah exactly exactly yeah yeah you're right now okay okay well it's like I think it's like 189 or something like that okay so that would mean the annual plan is uh what is that something closer to two to twenty two hundred bucks yep oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different evaluations inside of your founder path dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to 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 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 not built off random data again you guys hear these interviews on YouTube all these datas are built from real-time valuation data points Founders share with us on the show so traction 1.2 million seed around 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been 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really quick here let me just take a step back for a second right so you have you know it's all about health but I think there is a physical monitor people are putting them back in their arms appetized to and you're mainly focused on glucose give us more detail on the product sure so basically there's three three pieces you get you sign up and we write a digital medical prescription in your state for you through our health partner or a device called continuous glucose monitor uh then we add analytics on top of that why is that important why is that important the first thing you just said sounded very official why is that required or why is that needed yeah so when these devices came out they were specifically focused on type 1 diabetics and it was meant for insulin injection uh as the Medicare and Medicaid system expanded they realize this is effective for type 2 diabetics so uh who are initial injections but that was for that was the focus of the device when it first came out as the device became more and more effective and the life was of the device was lasting longer they started expanding the codes for what they could use it for and so these devices basically track your glucose in real time 24 7 on stop and when they first came out they were tracking for like four hours at a time they became eight hours at a time then a day now they're tracking 14 hours at a time and so that's the piece that makes this device and part of our package so expensive is because the hardware is still pretty innovative and so until the life of the devices gets longer you have to keep replacing it all the time and so really we're still at The Cutting Edge of Technology what's physically available for the buy wearables uh you might have heard for example Apple talking about how they may release some sensors that are looking at uh looking at your glucose through light spectrum these devices currently penetrate the skin just a couple of millimeters and they sit below the blood skin level and they actually track your actual blood and that's what they send to your phone so the hardware is expensive how expensive what does it cost you to make one of these little white devices so we actually don't manufacture them we take it from a third rare uh third party uh there's a couple companies out there there's Medtronic uh there's ever since there's um Avid there's Dexcom so we partner these companies they manufacture it uh what we do really is we focus on the software analytics on top of it what do you pay for though you have to Source them somehow right yep yeah yeah that part we you know we have negotiate contracts that part we have to unfortunate to keep to ourselves but what's a range I mean are we talking like a like a dollar a thing or like a hundred dollars oh no no no it's expensive expensive right so uh it ranges anywhere from like 100 240 per month so these things are eating up a good amount of margin for us all right break that down on actual per like unit basis right because I don't know what per month means I don't know how many devices you go through in one month so one device is gonna cost what two bucks uh any no no no no so that's what the manufacturers make all the money right uh for us it ranges anywhere from uh from 40 to 60 per device the last 14 days so so the consumer is paying 40 bucks for one device that lasts 14 days or you're paying your supplier 40 bucks for enough devices to last 40 days we're paying our supplier that's the last 14 days of 14 days and how many white guys split an average human go through in 14 days if they're using nutrisense something so you need one device for 14 days once you put it on it stays when you're on for 14 days oh okay and basically uh that will use of 14 days if you sign up for a month you get two devices per month I thought you said earlier that these last for 14 hours did you mean did I miss hear you 14 days sorry when they started uh so the hardware has been improving over the last decade I just want to start these last four hours then 10 hours and 14 and I became longer longer than a day it's been two days and now it's 14 days oh I see okay so just to put that all on a shelf you guys go to nutrisense.oh you're paying for a plan you're paying nutritions 225 bucks a month or a six month or 12 month plan you're getting one white device that you stick on the back of your arm it costs nutrisense 40 bucks to source that from the supplier they make that up in the monthly fees they charge you but that stays on there for 14 full days in showers out of showers in the pool out of the pool whatever and so you go through two per month and you you see 12 or something if it's a six month plan do you got it yeah you gotta double that up because if you only if you decide for a month plan let's say uh you need to get two of these devices yep now we're past the hardware now let's get into you I cut you off when you start talking about the app let's talk about the app yeah so remember there's another part uh we need to also pay a medical third party provided to write the medical prescription for these devices just other parts so there's online consult um and so we have to pay for that no matter what the doctor decides whether they want our prescription or not and so we pay for that we send them information to the doctor they decided if they want a prescription then that gets routed to a pharmacy partner then that fulfills the product the hardware itself oh my gosh this is complicated so I'll put it up all on the stage we actually take all the risk uh with very little benefit right so it's all about trying to get the consumer to get the opportunity to track their glucose in real time so what is I mean Dan if somebody pays you like I'm used to interviewing use pure SAS Founders margins are always yeah yeah yeah five percent gross market right I'm getting this sense very quickly if someone pays you 2200 for a yearly plan your margin is not 85 no it's not nothing this is why this makes a fun right um because I think it's hard you know there's the medical side of it there's the hardware there's the software there's also human portion here too and I think that's what we this is why we went into this because it's a problem that nobody wanted to attack because it's a hard problem to solve but you're margin I mean I mean this could be down as like I mean your margin would be like five ten percent something like that right on the gross margin perspective yeah yeah we get I mean we get better now because we start scaling uh there's to give you some context we also have dietitians whilst there's a human perspective as well on this that keeps coaching you through your data uh but we get down to like 40 50 well that now as we're scaling uh when we started it was really really poor but the nice thing is with unit economics getting better as you scale the business uh you get some improvements there yeah let's let's get more history here when did you launch the business what year so we launched September 2019 2019 and how many white devices have you shipped total today so we've had somewhere around 50 000 people used a platform uh in regards to the number of devices yeah yeah 50 000 people paid to us uh for at least one month or longer yeah uh big range of people again five zero not one five right fifty thousand no five zero fifty thousand yes okay well then that means you've shipped at least a hundred thousand devices at least significantly more than that yeah interesting um okay and then you talked obviously about churn seven to eight months average how many are still actively sort of paying today and engage with the platform yeah uh we're anywhere with someone like around 15 to 16 000 people a month oh wow okay I mean that's pretty good so so um do you see any behavioral patterns where somebody maybe a year ago would use you for six months they stopped for six months and they start again and if so do you count that as churn then a reactivation or how do you from a unit economics perspective map sure so we actually subgroup people into different categories of uh are they here just to like do a one-time use are they on a continuous use or are they more of a health check-in right and based on that we look at the LTV separately so for example a lot of people they don't need us all the time and they look at this almost like an annual physical they're going to come back year after year for one month but they're going to come back three or straight at the same time like you know if you go to the doctor you don't need to see your doctor every single day but you do want to go CV annually and sometimes semi-annually and so we actually split up those people into different buckets and based on that uh we determine how we want to track their LTV interesting very interesting okay so you get going in 2019 um you get your first customers in the door I guess walking through funding capital structure you mentioned you have raised Capital One was the first round sure so we got revenue before we ever got before we build a product actually and before we raise a single dollar or money um we just started trying to conceive anyone wanted this uh because let's get slow and see if there's anyone wants this product because people thought we were crazy I don't even want to stab themselves in our arm and then track and let someone else read their data and give them feedback all the time right and so we started to try and see if you didn't want it and we just put a landing page and said Pay Here and just went to Facebook groups and just started telling people in Facebook groups what was the first thing you know your early customers yeah uh there's two that stuck out it was uh the ketogenic groups people have all the ketogenic diet uh and then also people that have O-rings so those two groups seem to be really into this right away and we said we want to build this if you believe in this uh sign up and we'll no one's built what was the English Landing Page uh it was 500 and what did you tell them like wait give us six months and we'll deliver it to you otherwise we'll refund you uh we said you pay us and then we'll let you know when we're ready we didn't even tell them when uh you know when we're gonna launch us or not right it was uh it took my co-founder like three weeks lunch so so to so if people pay you 500 but like let's say you're launching today I pay you 500 right after you actually got things out to me that who prepaid in three weeks so we need to build a software right because we had to build our own software analytics and my co-founder who was in the general background he said hey let's see people actually like show me that there's a demand for this so as I went and got people to prepay he's like whoa this is real demand people will prepare for someone doesn't exist yet uh so then he just and then he drank a lot of coffee for her and just sat there and pumped out the first version of the software and released in three weeks the problem is that when we released it was coincided with uh iOS 13 release I think it was the newest iOS back then it was 13 14 I'm trying to recall but we didn't anticipate the night mode which basically makes your phone go our app went black screen from like 10 pm till 6 in the morning so people are paying you know 500 and they can use the app for half the third of the day so that was a really fun thing to challenge a fun challenge to solve um so that's you know launch went well and a lot of uh me acting as customer support after that and we said okay people want this now it's actually you know try to plan out the next couple months and see how we're gonna keep going and try to go raise money and things like that we'll take it we're running out of time here take us to the funding though quickly so when was the first gun so the first round is was actually Tech Stars and one Angel and uh we got a total of 250 000 that was 2019. this was 2020 uh about three weeks before the pandemic and then you know Tech Stars I think was doing 125k for seven percent back then or something like that so what you sold like did was another company back then exactly yep and then we were gonna you know go raise millions of dollars after that but uh unfortunately hit the cover head and we're like all right I guess we have to survive on Revenue instead it's awesome then was this when was the second round what year uh so the second round happened about a year later uh we've raised another 1.2 million dollars after that and that was in 20 late 2021 uh yeah exactly seed would you consider that your seed yeah I guess in college it was all unsafe now yep yeah Fair okay and then most folks and see you know they're selling 15 to 20 of the company were you serve in that same range uh uh yeah exactly that's you're very good at this I feel like you're getting the numbers better than I am awesome well I just go with averages I've interviewed so many Founders so okay cool and then close to the funding story here before we wrap up um I guess there was another round that happened yeah so then we did another round for about five million uh a year later and then we did another 25 million a year later 25 million would have been what like earlier this year uh 25 million was actually in August of 2022. okay and if so the five million so you did a 5 million and a 25 million round in 2022 um yep yeah okay and the dates are different yeah yeah I know that's great um Okay cool so that's your funding you know your race called 31 32 33 million I think the dates on the five might have been earlier I think it might have been 2021 again and then 2022 before the 25 oh I see I see okay cool um series a standard there 10 10 15. yeah okay cool and then I guess you know do you talk about Facebook groups as your first users you're now at 15 000 customers you told us earlier our posts average revenue producer per month is something like 220 bucks I mean that would put you at something like 3.3 million a month in Revenue right around there is that about right yeah during the ballpark okay we're getting that that's where you are today where were you a year ago so we calculate growth rate uh a year ago we were about three and a half plus stats so somewhere around a little under a million a month well in mrr yeah Mr yeah wow okay so holy crap so you've seen it most of your growth has come over the past 12 months then what happened that's incredible growth you like 3xed well I mean the year before that we did about 7X oh okay smaller numbers though but still going from a million to 3.5 million a month is incredible months how'd you do it was it a new channel you turned on Facebook ads what was it um it was everything I mean it went from the first two years I did all the marketing by myself and the next year and a half was Bill entire marketing team you know now we have a 18 person marketing team and it's everything from SEO Facebook ads Google ads Twitter quora Pinterest every single you can imagine um influencers but it really went from just Omni channel to multi-channel with like 13 different channels I'll pump in the same time wow how many are the team full time today everybody I'm sorry how many are the teams today full-time everybody uh on the marketing team specifically the whole team everyone oh the whole team 170 people 170 interesting how many are engineers uh Engineers currently are about 25 that's including data science team as well interesting yeah very interesting Okay cool so so um Hardware software recurring Revenue um you sometimes recover CAC instantly if they pay for six months up front you only spent 200 bucks on the core ad right so we used to do this up front but we realized that's you know we want to try to slowly work toward making us affordable more people so we got rid of the prepayments uh at first we have prepaid because it actually help funnel the company uh that's how we had we have to raise as much money because we were able to just kick cash and run that business that way uh but we could remove that now it's monthly payments okay that's fair um interesting so you lose your Arbitrage on Payback period there a little bit but you still have a healthy LTD cache ratio right you get paid back like two three months exactly yeah interesting okay what's nice so so I guess as we wrap up if people want to learn more about this where can they where can they find you online sure uh economy on LinkedIn always happy to help in other entrepreneurs uh Danza Rodney uh you could sign up for our newsletter on newsense.com we actually finally got news.com we couldn't afford newsense.com before uh now we have made a little bit of money now we can we finally went into one what'd you pay would you pay for the.com well let's say for the I I know we pay Seven dollars.com and uh mid tens of thousands that's actually not too bad for vivid.com that's pretty good all right and and then five here rapid fire number one favorite book uh lead startup big fan number two they're a CEO you're following or studying yeah it's actually it's interesting uh my co-founder my CEO because as you my my job as a chief operating officer I have to basically be the opposite of him so whatever he gets good at I have to go do something else right so I'm constantly just looking at what he's improving now what he's getting you know what he's not focus on so I can compliment him in that direction awesome number three what's your favorite online tool for building Nutri sense uh airtable uh we use their table for everything for the first three years number four how many hours of sleep do you get every night uh much more now than before uh before I was like five six now I'm getting nine that's amazing so sleep critical sleep is just incredibly critical more important than even German nutrition 100 what's your situation married single kids uh single display in time okay any kids are now no kids no kids yet no kids and Dan how old are you I'm 34. 34 last question something you wish you knew when you were 20. I I think it's having a mindset of failures as part of the process I mean it's great not to fail but it worse comes worse you learn a bunch and there's no risk early right what source happens you get a job and I think that was a fear that I've always had and I never took that chance but it finally took the chances adult guys nutrasense.com they're doing 3.3 million a month today in Revenue up from call just under a million a year ago so really Healthy Growth past 12 months they got going back in 2019 marketing pre-marketing inside of Facebook groups like the ketogenic group and auroring group once they pre-sold and had traction they did a 250k seat around they raised about 32 million bucks today to scale this company now a team of 170 people again you want to measure your glucose levels you put a little white thing on the back of your arm you get the app you pay about 2200 bucks per year if you want a 12-month plan they've got nice Arbitrage as they spend about 200 bucks to get a new customer now looking to scale Dan thanks for taking us to the top thanks for having me appreciate it one more thing before you go we have a brand new show every Thursday at 1pm Central it's called Shark Tank for SAS 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 our poo CAC LTV you name it they share it and the buyers try and make a deal live it is fun to watch every Thursday 1 p.m Central additionally remember these recorded founder interviews go 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 SAS World whether it's an acquisition a big fundraise a big sale a big profitability statement 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 SAS 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 nathanlacka.com forward slash slack in the meantime I'm hanging out with you here on YouTube I'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive I am on these shows but I do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that I appreciate your guys's support all right I'll be in the comments see ya