How Plusthis CEO Dave Lee grew Plusthis to $5M revenue and 3K customers in 2024.

hello everyone my guest today is dave lee he founded a company called plus this back in 2012 which is a marketing automation and campaign toolkit dave you're ready to take us to the top i am thank you thanks for having me you bet man so give us a quick update on the company last time you came on i believe it was january of 2019 products still the same or have you made changes we've continued to make changes uh 2019 was a a stellar year for us we broke uh 2 million in revenue so we did 2.1 in revenue almost half of which was profit which we've been very intentional about growing a profitable sas company and we feel um a little out of place with the rest of our sas brothers and sisters out there but it's what we're doing we had a great year tons of new product improvements um so it was a really really good year for us and before we dive more into what the product does tease us a little bit what was mr last month mrr last month was 190 190 he knows it exactly so we're on the cusp of 200 we're like right there very good and of the 197 how much went to the bottom line that month profit uh about 48 48 okay got it so we're talking like 85 90 000 bucks something like that yeah yep okay what does the product do so the product is a it's a campaign toolkit so any any small business using marketing automation especially keep infusionsoft drip active campaign even hubspot they typically can't do everything they want out of the box and so we have a library or a toolkit of add-ons to help them do advanced marketing campaigns without having to build it custom yeah yeah very cool and how many customers you have today we've got almost 3 000 paying customers and we've got over 60 tools in the toolkit anything ranging from video triggers and tracking to sms marketing to a big one this year was a deep zoom webinar and zoom meeting integration um so webinar platforms things like that dave can people pay one time like each month and get access to all six zero do you have to buy each one individually uh that's a great question we built it from the ground up at the very beginning knowing that small businesses do not like to pay for every little thing so once you have access to the library you get access to everything um so it's it's one price however during 2019 we did change our model a little bit where it is a blend between um uh i guess you could call them levels but also usage we went to a more heavily usage based model and and that has really helped drive mrr as well usage based model yeah so we do on average we do about 50 million campaign transactions a month for our clients for our customers what does that mean um so if uh if you send an sms message that's one transaction if you um have a little watcher on a video and somebody watches that video and it triggers something else to happen in your campaign because they hit a certain milestone in watching that video that's another transaction so across our 3000 small businesses to process 50 million transactions a month is is a lot and so we knew we knew that to be successful we had to kind of create a hybrid of not just um core levels of of where you come in but also start to drive revenue based off of how who's using it successfully am i doing this about 50 million divided by 3 000 customers well that's like 16 000 per customer yeah per month like holy crap that's a ton yeah yeah these people are definitely active in the marking automation space they are heavy digital marketer users using lots of video sms like getting very creative with with their marketing automation platform so what do you mean then when you say you moved your pricing to a more usage-based pricing model um we auto-upgrade when they hit certain thresholds so if they use a certain number of tools or hit thresholds on the volume of transactions they do we bump them up interesting how many customers did you bump up last month because they hit a usage milestone do you know uh probably 25 out of the 3 000 okay interesting and people can also downgrade um but that is very rare i mean as as a ceo you always worry about introducing a new pricing model and i was scared to death that we would have an exodus of customers moving from a mid-tier plan or a high tier plan to a lower tier and and that was just not the case we had very very little downstream movement well because it's tied to usage right the question is tied to usage and also features that they didn't want to give up or grandfathered um thresholds so are you measuring expansion revenue monthly what is that typically uh honestly we don't do a good job measuring the expansion revenue we should we should do that but i'd say um of of the monthly mrr growth i would say 20 of it at least 20 percent is expansion revenue yeah yep so yeah yeah that makes sense if you grow by 10 grand in a month what you're saying is you know a couple grand expansion yeah do you measure churn we do measure churn um churn churn was brutal at end of march april and into may um our average just the world that we live in in small business our when we started the company churn used to be monthly churn used to be about 9.8 and we worked for years to get that down and we got it down to about four and a half percent monthly churn um and that went up to probably six seven percent during the initial parts of covet we had an exodus of customers who just knew jerk reaction but then things came roaring back out of nowhere i mean we we started hit zoom really hard which was a big need out there and uh our churn now is down to 2.9 percent which is we've never seen it that low so we've seen a 36 3 decrease in in churn yeah two point nine or three percent per month times twelve is about thirty six percent revenue trend on a run rate basis yeah you have some expansion in there but never retention it sounds like you're flirting with maybe a hundred percent something like 95 90 something like that yeah interesting very cool how about getting new customers where are you finding these folks uh so there there are a few different channels one is working from with consultants marketing automation consultants out there that are working with their clients and they become resellers either on a wholesale model or just a referral like affiliate referral model we also try to work directly with the platforms with hubspot and fusionsoft key bond report activecampaign and drip to get into their marketplaces educate their frontline employees and do anything that we can to get referrals directly from them and then we do a lot of pay-per-click and just content marketing so if you had to back into your fully weighted customer acquisition cost to get a new 70 a month customer what where would you peg that at about 260 bucks i'm sorry no no that's that's not right uh it's probably no that's about right it's about 250 250 251. 250. okay yeah yep okay so you're getting paid back there and you know three four months yeah about three months three and a half months yeah yeah not not too bad there at all um okay interesting and then you bootstrap the company correct yes any plans to raise no interesting so so why do you do it is are you sort of happy with the lifestyle it's making casual for yourself it feels really good and you love your customers yeah i've i've so of a few things the the the addressable market is not the general small business market our addressable market is actually a fraction of that because they have to be on one of those platforms that i mentioned so that shrinks the addressable size so we don't need a ton of capital to go attack that so it's kind of like a you know it's just a constant monthly you know go for it and um we don't need a ton of capital and and we've intentionally wanted to create a very profitable business i've been in both and on on this gig it's you know let's just keep growing it at a steady pace let's have a great pace for the employees and amazing culture and let's just drive profits um and it's worked it's worked really well for us now there are other ventures that that we're doing and in the process of launching um that that could be a capital raise scenario but plus this is not is not that what are one of those the other ones uh we will find out very soon are the other companies we're not ready to announce yet it'll be in the next couple months though what what are they these are other companies you're planning on launching yeah yeah other standalone companies uh that will still you know what we're in the business of developing tools for entrepreneurs and entrepreneurial businesses to help them be more productive make more money convert quicker and just make life easier so that that's the world that we live in my business partners and i live in so this tool that we will be launching and the business with it is is around helping primarily service-based businesses become more effective interesting what we'll be watching what's your team size today how many folks uh eight we're still at eight eight people that's good that's great so do you do profit sharing with those folks uh no we just make a really fun cool culture and pay out bonuses and things we've flirted with profit sharing but uh they just want stability yeah so what do you do as a smart guy i mean you've been through this before so you know the drill i put on take off your founder hat for a second and put on your capital allocator hat which many people say that's who makes...