How Paykickstart CEO Mark Thompson grew Paykickstart to $960K revenue and 505 customers in 2020.

hello everyone my guest today is Mark Thompson he has 10 plus years of internet marketing and entrepreneur experience and is currently the founder of digital kick-start dot-com a software company that helps online businesses with growth and automation all right mark are you ready to take us to the top I'm ready let's do it all right so you've got a bunch of stuff going on digital kickstart is this kind of like the holding company it's an agency then you have software stuff inside of it exactly so we have lots of different pieces of software and so digital kickstart is the main brand for all of those assets okay and at the agency is that an agency or is it just a holding company it's just a holding company so yeah we don't work with clients I mean we have a customer we sell b2c so okay so what's your largest SAS pure-play SAS company easyvsl so it helps you to create video sales letters okay so that that's our biggest revenue generator but it's actually not a SAS company it's actually an Adobe AIR app okay what's the largest again pure-play SAS company SAS is pay kick start so that's our shopping cart and affiliate management solution so tell us about that so how do people use it is it really affiliate management and-and-and payments yeah so it's really we specialize in anyone that has a digital product so maybe you're running a membership site or you have a piece of software of your own or you're a coach or consultant those that's really who we target we're not necessarily a Shopify like a traditional e-commerce store okay and so what do we all pay on average per month for pay kickstart the majority about about 75% of our vendors are on the $99 a month plan so we have 29 a month 99 and 149 a month okay so 99 is a fair average there and what are they getting for that ninety-nine a month they're getting they can add as many products as they want into the platform they can manage as many affiliates as they want to we don't take any per transaction fees so the only transaction fee that they would incur is from the payment gateway that they connect with into our shopping cart okay that's kind of on a timeline for me when did you launch the company we launched it about a little over a year and a half ago okay so call early 2017 and how long had and then the agency the holding on me how long had that been around that's been about five years now okay great so a lot of different a lot of different ideas 2017 this guy launched you turned on pricing and would it be scaled to today in terms of total customers so right now we're right around 50,000 a month in and monthly recurring okay so how many customers is that oh boy good question that's I don't know like there used to be average price points about a hundred bucks a month yep yeah so if we just take that 50,000 divided by 99 or 100 you get about 500 customers yep yep right around there okay and what's growth the plate so a year ago what we got in terms of monthly revenue I mean we were probably around 10 or 12 thousand so you know we were we kind of interests along for a little bit so the I mean when you're starting a shopping cart you want to make sure that everything works right especially when you're dealing with people's money so we were we were very slow to growth and then we did kind of an official launch just a few months ago even it was about 14 months into actually bringing our first beta customers when we did more of a formal product launch mm-hmm what was that product launch and when you say formal what do you mean yeah so we we did kind of that product launch sequence that you hear Jeff Walker always talked about where you have two or three pre-launch videos just to kind of educate people on why they need your product and and how it'll benefit them and then we open the cart for about seven days and we actually did a little bit of a different pricing model we did a thousand dollars and you get twelve months of pay kickstart premium for full year got it I see so you're basically pulling forward that you know get the year for two button two months free yeah and they paid all that upfront correct okay great so talk to me about funding have you raised capital or bootstraps it's all been bootstrapped that's great okay good so obviously at that launch if you pull a bunch of thousand dollar plans forward you have some cash in a bank to work with yeah and obviously with digital kickstart our holding company we've we've created so many different products and assets that we have a lot of revenue coming in from those different streams and then we've reinvested a lot of that into the pay kickstart platform and what's the team size today just on pay kick start on pickax start it's about 15 people and all together across the entire agency all your products like 20 20 okay so this is the majority or business then right now it is yeah we've really transitioned especially in the last year and a half we've transitioned a lot over to pick start okay talking about churn it's critical in this kind of business what's your turn churn is a rut well in pick kickstart it's about percent so it's a little high month here annually monthly okay monthly and that's when percent monthly revenue churn or logo churn revenue revenue turn okay so this okay so this isn't really a SAS comp I mean if you're turning your whole customer race in five months this isn't really a SAS company well what do you mean so I mean the reason SAS is called SAS is it software as a service is that it's it gets higher multiples but its predictive its predictive rep mean you can predict it right it's predictable it is and it is I mean well yours is predictors is predictable that it ends in five months right so like pretty in terms of stacking so you the reason the reason Chernus are critical and any SAS company is if you have a leaky bucket it doesn't stack and then you lose all the economics that you with the SAS company so right why is churn so high mean that seem that's like really really high why is it so high I mean so obviously the the one hurdle that we vote has had overcome is people that are using other shopping carts and then trying to get them to just to make that switch right because sometimes they're you know they have subscriptions and they're already in other platforms and it's not very easy just to transition those that recurring revenue over into our platform so there's certain things that we're doing to help with that so things like we're gonna have an import stripe subscriptions into our platform with PayPal is a little bit harder so there's a few obstacles there mm-hmm how are you what's interesting is I mean you're small enough where you can 20% is is not a lot of 50,000 in terms of you can drive more growth in that to cover it up but on 50,000 1:39 revenue if you're turning twenty percent per month that means next month you're gonna lose ten grand well you're gonna okay yeah so maybe so the churn rate is really just and not everyone is churning at you know at 20 percent I mean so I mean we're still our monthly recurring started at 10 around ten thousand last year and now it's at fifty thousand so I mean were still acquiring new customers yeah I get this so our so our companies that are there are tons of companies that are always acquiring customers but their churn is still through the roof that where it catches up is when you're not acquiring fast enough to make up for the churn but but I see a little bit I want to make sure we're talking about the same thing here the twenty percent monthly revenue turn would mean if you're doing 50 grand this month you're gonna lose 10 grand of that 20% next month but you're still growing because you're adding back more in new customer signups in the lost 10 grand is that what you meant to say is it accurate no we're I mean we're not losing 20 percent of revenue monthly revenue guess we just owe me 20 percent monthly revenue churn I'm sorry that's what you just told me you said you had 20 percent monthly revenue okay I apologize that we're not now we're not losing 20 percent of our revenue each month okay so what is your turn I I'm not a hundred percent sure to bounce with you okay yeah okay how do you so yeah like anyone listening right now is gonna go wait how does this guy not know what churn is if he's building a SAS company so so why do you not look at churn well it's so we're basically looking at a lot of our trials so I think it's the churn is based off of the trials that are coming in yeah I don't know what that means so yeah I'm sorry I don't know what churn is is if you have a hundred paying customers today and next month you'll lose ten of them you have ten percent monthly churn it's just churn is just a measure of the bucket you know buckets are leaky how leaky is your bucket so if you have fifty thousand bucks today per month in revenue how many how much of that will you ignore upsells or new customers you add how much of that will you lose next month just natural churn yeah no it's it's a good question I mean I'll all I really usually focus in on is our our monthly recurring and you know are we getting more trials and that kind of stuff so okay yeah but so most people when they put a performer together for a monthly recurring revenue what you do is you take beginning monthly m RR - lost plus what you added and that's how you get net mor growth are you just you're just ignoring lost em RR all together you just don't know what it is or ya know I unfortunately I don't have I don't have those numbers off and you know okay so how are you building a business if you don't know I mean I'm not trying to like be rude or hit you hard here but like churn is like a critical thing in a SAS company how do you I'm just it baffles me don't know Chernus yeah no I mean it's it's been just delivering great customer service and and innovating our product yeah but how do you know if you're delivering a great prod if you don't know what churn is you have no idea if people are staying or leaving yeah I mean it's a it's a great question I mean I don't know offhand I apologize okay so how do you I mean yeah I'm not I'm not quite sure where to go after this considering I mean usually churn in the early days on a company like this it can't can it can be higher camilo depend on how strong the onboarding is um yeah usually people have some sense of what's that you're not tracking it yeah like I have a business partner who handles a lot of the numbers stuff so he's more of our analytical guy so I mean yeah he would he'd be able to give you definite numbers on that all right mark so moving past churn it sounds give a business partner who focuses on some of that stuff you know you still have driven great growth in a very short amount of time getting up to 50 grand a month in revenue so how have you driven a lot of that growth where are you getting new customers from um it's been a combination of different things so we did a formal product launch where we had affiliates come on board and promote it and of which we gave them a certain commission percentage so some of its through that other channels we use our things like colds email outreach and then also Facebook Ads as well okay so in terms of the affiliate mod are you doing like kind of a typical 30 percent kickback kind of thing we are so during the launch when we had the thousand dollar price point we actually upped it to 50 percent just to kind of incentivize them to promote it and then 30 percent recurring for life okay so of $1,000 sale what launched you gave them five hundred bucks immediately so that immediately takes your margin down to 50% and then ongoing if they were new you're gonna pay him 300 per year every year that they were new correct okay and how do you those economics when you look at like your team any other expenses you don't mean you have confidence those will scale can you keep paying affiliates 50 percent at scale well I don't think we would do that at scale and that's why the launch was only one week so after that you know it's just 30 percent for our normal affiliate program okay what percentage of the fifty thousand bucks you have coming in per month right now would you say is from sales affiliates have driven um probably around ten or fifteen percent it's it's fairly low so mostly it's from Facebook ads or cold emails yes okay and from our own internal email list because like I was saying so over the past five years we've generated a fairly large buyer list and so a lot of it has been just from our own internal list tell me all about this buyer list how many people are on it and how did you build it um so there's a little over a hundred thousand people and so like I was saying with digital kick-start we've created lots of different products and so we've been launching products for for five or ten years now and you know each product launch that we do affiliates promote it and so our list is mainly generated from other people's buyers lists that end up buying our products and when you look at fully weighted customer acquisition cost on some of these channels what are you spending to acquire customers on average on which which channel you tell me whichever ones that low largest channel the largest would be probably our affiliate well our internal list is so essentially they're free from our internal list but for the affiliates that's probably our second-biggest and so obviously you know we're paying them only when they're a customer and somewhere it sounds like about fifty percent is that right thirty to fifty it depends okay so let's speak in server and say thirty percent so that's basically three hundred bucks right right for NR do you only have annual plans or if someone pays a hundred bucks per month you'll pay the affiliate thirty bucks a month we have monthly and annual plans okay but did I get the economics right though if someone does play monthly you'll pay out the affiliate monthly correct yeah on the recurring chart on the recurring the the ninety nine dollar a month plan its thirty percent from that initial thousand dollar investment it's 50 percent yep got it again so if someone's paying a hundred bucks per month from an affiliate that closed them you're paying that affiliate thirty bucks a month for that hundred dollar month sale corrects thirty thirty percent okay great so so call it a thirty dollar customer acquisition cost there which you get basically back immediately because it's actually tied it's a fixed cost tied to the sale so right what about you have any channels where you're investing upfront hoping for a return later Facebook Ads things like that we've we've just started to do it I mean so we're kind of slowly dipping into the paid side of things again because you know we want to make sure that we're trying to make sure the product is good enough where we can maximize our our lifetime value of each customer and minimize churn and so yeah I mean we're we're dipping into it but we've mainly built of where it's at today from either free sources of traffic or traffic that we pay after they're a buyer what do you assume lifetime value is right now of a customer if they I mean that's a good question I don't know off hands I would I'm gonna assume or because it's only been we've only been available to the public for about 16 months now yeah so it's hard to say I mean some people have stayed since day one and that number keeps changing for you know as we as we grow so show your back of the napkin yet which I get but what would you what would you guess six to eight months it's it's hard it's really hard to say I mean some people will try out the product for a month or two and they're like this just isn't for me or it was too hard to make the transition other people are absolutely thrilled with it and they love it and they never leave so so sure but understanding which one of those customers someone who you close gonna be in greatly impacts your ability of what you can spend on that person for Facebook ads you're gonna spend way more for someone that stays with a 3,000 hour LTV then some of that turns after two months so do you have any instrumentation in place to know that or no you're really just fine by this to your pants right now I don't right now no I'm sorry okay how much what's the test look like so how much are you spending per month on direct paid stuff so I handles that side of things so how do you handle that business what's that what do you hand on the business so I handle a lot of the sales and marketing side of things so I'm what I'm trying to do is start to build that that sales team like I'm working on some cold outreach outreach stuff and some social outreach stuff I handle a lot of the like videos and webinars and and that's a marketing stuff okay so how does that work if you're handling sales and marketing what the paid spend is in a different department how do you guys come in how does that work there's usually under the same thing well I mean we obviously collaborate and we talk about what our messaging is going to be and what our creatives are going to be we work out kind of we mindmap what our funnels are gonna be and then you know my partner will handle a lot of the the analytical side of things the conversion rates and how to you know and try to tweak those funnels that we do create so I handle a lot of the up front like videos voiceovers whatever we need to do for marketing materials okay and you said 15 people is everybody based in Raleigh know everybody is virtual so my partner is in Indiana we have a team in Russia we have a team in South Africa we have some support guys in the Philippines and India so they're kind of spread over very good all right mark let's wrap up here with the famous five number one what's your favorite business book Think and Grow Rich number two is there a CEO you're following or studying right now Elon Musk number four is their favorite online tool you have for building your business intercom and number four how many hours of sleep to get every night MA and what's your situation married single kids married 1-1 kids six years old oh nice and how are you I am 34 34 last question what he was your 20 year old self new uh new to find a mentor as quickly as possible I tried to do everything myself and and was cocky as most entrepreneurs are so find a mentor guys find a mentor faster he launched an agency that had a lot of success back in call it 2012 and 2017 they launched another product you know the agency had kind of done that spun out a lot of products but this one was called paid kick-start a pure place ask company he's about five hours paying about a hundred bucks per month right now so 50 grand per month in revenue launched about you know 16 months ago so healthy growth still putting in instrumentation to look at things like churn CAC payback periods things like that but generally speaking a good model for them has been you know direct spend their own internal buyer list from previous you know customers and previous launches and additionally affiliates driving them traffic and their most recent launch where they paid out you know minimum 30 percent per month and some up to 50 percent if they were selling thousand dollar annual plans during the launch mark thank you so much for taking us to the top thanks for having me