Ovationup Revenue & Funding (2024)

hello everyone my guest today is zack oates he's an author husband father entrepreneur and hot tub aficionado but not in that order all the time he's voted top 100 entrepreneur rang the nasdaq bell when the world's biggest business competition started three companies received his mba from byu and did cx consulting for fortune 100 company zach you ready to take us to the top yeah man let's do it all right you're now building ovation the url is ovationup.com what's the company doing how you guys making money so we do customer experience and engagement for restaurants and retailers and we do monthly subscriptions sas we have a product that we put in and then we just charge businesses on a monthly basis to use our service and what i mean give me a general sense what are they paying per month on average to use it anywhere between 99 to 300 depending on on the package they got and what do you upsell against is the number of locations or how do you do pricing yeah everything is based on locations and then we give them uh discounted rates for more locations but primarily it's uh rack rates what's nice is that we don't do any contracts for rack rates so keep things really simple and uh keep our customers happy because we we feel like we got to earn their business every month and if we can't then we don't deserve it okay and so what does this mean relationship engagement for physical businesses like name a brand that uses you and how they how they actually use you yeah so there's a restaurant called tucanos they use us they have an ipad at the exit with smiley faces on it and then on the table they have like a text uh text to win or a qr code so all they do is they hold up their camera rank uh rate their experience if they loved it we're gonna push them leave positive online reviews and get them to come back if they didn't love it we allow them to chat with management and then our software stays in compliance with all the policies of you know facebook and and uh google review solicitations people actually do this stuff like over the past 30 days how many people actually submitted a review so we've actually had over uh this year so far we've had a couple hundred thousand people use the system and basically here's what it comes down to is right before ovation they're relying on things like receipt surveys or online reviews the problem is receipt surveys are really annoying for customers to do but they have great business insight online reviews are easy for customers to do but they hurt the business so what we do is we have a system that engages customers 16 times better than receipt surveys and gets people chatting 18 times higher than online reviews so it works so i mean how many customers are using the platform now today right now we have over 300 okay and uh we started off the year with about a hundred so it took us a year and a half to get to 100 and then in six months we've tripled so 300 head count 300 at about 100 a month you're doing about 30 grand a month right now in revenue yep and where were you a year ago uh a year ago we were at about six seven okay good and happy bootstrap the company are raised yeah so we bootstrapped it up until we got into 500 startups and uh and then after that we were able to raise just shy of a million dollars we're just wrapping up our seed round right now okay so a million dollars in the company and what's the team size today right now we've got about 14 we're just on boarding two more today and i imagine you're burning to drive growth how aggressive are you burning actually not that bad we're only doing about 14 15 oh uh a month last month yeah okay that's not bad at all i mean will you ramp that now that you closed the fund or close the round yeah yeah we're gonna get up to probably about 50 60. um but we you know having a background in in uh big consulting financial modeling is like one of uh something i'm really passionate about and making sure that because you know we have a fundamental belief that startups fail because they run out of money or they run out of excitement right and so you know we we have a pretty deep well of excitement so we just want to make sure we don't run out of money yeah and that's good now when did you launch the company what year uh november of 2016 is when we started it we did a year of beta testing and then i went full time about a year and a half ago how much total did you guys spend getting the mvp built before your first dollar revenue uh about five thousand dollars okay so not a not a ton there um yeah and tell us how you got the first couple customers i i mean just dial and smile baby that's what i mean specifically you got online what do you type it yep so we we came up with uh lists of a hub by five different verticals a hundred people from each vertical and we just cold called all those lists and we did that for about a month and we saw who had the most traction and uh where where did we get like the biggest value from it and we found the restaurant retail group was they were just loving what we were doing so like the name a restaurant retailer that was one of those first customers uh so there's a you know mainly mom and pop shops that are local to us so that's we we focus in our local community so we worked with a place called san diablo churros that he does churros and caterina we did a one one-stop brazilian location and where are you by the way location-wise we're in provo utah uh okay so san diego church was interesting okay so you then what were the other four verticals that ultimately didn't make the cut yeah we looked at dentists we look at uh or orthodontists pediatricians uh and we looked at finally and then restaurants and retailers so we focused on restaurants and then eventually we got into retail we had a few huge customers who loved us and just wanted to to jump in so even though we weren't like doing some outbound we had a lot of great inbound and today how are you getting customers especially when you look at like your fully weighted cac what are you spending to get a new 100 month customer mainly trade shows so that's where we're getting a lot of our leads from we just launched a partnership program um but you know either trade shows or we'll actually go and dial people on you know google or facebook and look for their numbers and dial them and chat with them is so fully fully weighted what's it cost to get a 100 customer uh about 250. okay so you i mean you got a two month payback three month payback that's pretty healthy yeah yeah so it's going pretty good right now um churns critical rights in any sas business what was your turn over the past 12 months so we had in total we have a 95 customer retention and uh so that's that's customers who have been with us you know yeah basically uh our monthly churn as far as mrr goes actually net negative so we have more customers upgrading the downgrading give me the gross first give me the gross yeah so we had uh you know like last last 12 months had like 20 customers uh cancel and then we had but of those we had more people upgrade than uh that made up for that revenue exactly sorry yeah what's the re what's the gross revenue churn over the maybe last month over the past year uh so last so last month for example we had like three hundred dollars in uh gross revenue returning okay yeah so sorry on a percentage basis yeah it's about one okay so about 12 annually and then what you're saying is you upsell those same accounts right in that cohort that signed up that month by more than 12 percent yep exactly what do you upsell against typically is it just new locations either new locations or we'll have people who will come in and to to do the customer experience and engagement and then they'll find that now that we we've got a few thousand of their customers in our database now they'll want to text market to them so we'll actually you know we have a texting platform so they can get customers to come back in so they'll upgrade to that and then once they're getting a lot more reviews they'll want to upgrade so that we can actually respond to reviews for them because now they're getting 10 times as many reviews as they used to get they don't have the time to respond to each one individually anymore okay make sense man let's uh let's wrap up here with the famous five number one what's your favorite business book uh favorite business book is actually how will you measure my life clayton christensen number two is there a ceo you're following or studying uh yes is um stephen covey jr he wrote the speed of trust amazing book amazing guy and also richie norton he's a incredible ceo you know someone i follow all the time in linkedin number three is there a favorite online tool you've got for building the company uh yes we love hubspot we have uh yeah that's good number four how many hours of sleep every night uh five and uh how old are you 33 33 and situation married single kids uh married with two kids okay and last question what do you wish your 20 year old self knew uh to go for it man like don't worry about conforming don't worry about conventionality just go for it why not guys ovation up helping restaurants get better reviews from their happiest customers 300 customers right now 100 a month 30 grand a month in revenue up from six grand a month just a year ago burning about 15 000 a month a million dollars raised team of 14 people net revenue churn of about our net revenue retention of about a hundred percent spending call it two months or three months of first year acv to get these customers as zach looks to scale zack thanks for taking us to the top hey thank you