How Prospectify CEO Matt Ekstrom grew to $300K revenue and 100 customers in 2016.

this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per talk 5 and6 million he help on global domination we just broke our 100,000 unit sold Mark and I'm your host Nathan lka okay top tribe this week's winner of 100 bucks is Dustin Goodwin he's in the HR industry specifically in the software as of service space looking to increase his Revenue so congratulations Dustin for your guys' chance to win 100 bucks every Monday on the show to build your idea simply subscribe to the podcast on iTunes now and then text the word Nathan to 33444 again text the word Nathan to 33444 guys if you want an easy tool to use to book your meeting back to back to batch your calls to make sure people actually show up when they schedule you want to use aity scheduling it's what I use for all my podcast interviews at Nathan lat.com schedu I'll tell you more about how I use it later on in the episode Nathan lka here this is episode 553 coming up tomorrow morning you'll learn from Eric Burman of branded ties he's Jack Canfield's internet engine and they did 4 million in 2015 revenue on Pace to do 5.2 in 2016 good morning folks Nathan Latka here our guest today is Matt extrom he is the one of the founders of prospec toy. and formerly he co-founded hiring solved he's in charge of all things revenue for prospec toy a promising funded sales intelligence platform Matt are you ready to take us to the top sure all right man give it to us so what does prospect toy do and how do you guys generate Revenue um to prospective a B2B uh SAS product for sales people people particularly at the top of the funnel that helps people Prospect um based on their ICP in a quicker way um just helps them save time um and really our goal is you know longterm is to be able to to um scale personalization from a sales standpoint and revenue model how do you generate Revenue uh would generate Revenue by uh so far just using our product but yeah we're a month month-to-month subscription um credit based if you're doing the prospecting along with uh our upcoming company search okay and what is the uh in our research on our team was doing this when we went to your pricing page we kept getting a 404 error I don't know if that was intentional or not but what what does your ka's pricing look like oh really um this the first I heard of that that's you guys you have you have like a beautiful homepage and then I click on pricing and I click on the plans thing across the top I'm like what the hell's going on it's 404 so I don't know what's going on oh that's where um I'll have to check that out but if your revenue's dropped in the past two days that's why so it's a $40 a month for 100 credits credits are verified um email addresses meaning we have a very very high confidence level that it will not bounce uh and we go all the way up to custom pricing and all that but uh the ones you can buy on the site are $40 then $190 then $490 and then $975 per month and if we average that out Matt what's kind of the average customer paying you per month 352 okay okay good so you know that you're tracking these numbers huh absolutely we've been raising money so that's why you've got your you've got your funding deck right in front of you right uh no but I have those details memorized for sure what is the give us some of the history what year did you launch the business in uh so we we launched it this year uh in February of 2016 we did us we did a short beta in January um but my co-founder and I really uh started working on it aggressively about November of last year uh as far as building it and what is the you give us a sense of kind of traction now how many customers are you working with uh we're you know we're we're up there we have over a 100 people using it daily um I haven't looked at the customer numbers in the last week um but to give you an idea we have you know about 100 people that we can count on being in in the app on a daily basis are those customers though or those free users oh no definitely I'm only counting customers okay got it so you have about a 100 customers and is it easy I mean can I just do $352 RP times 100 customers to get an MR of about 35 Grand that would be users not necessarily customers so some of them have um you know uh multiple team members but we're we're over you know we're pretty well over 20k mrr okay but below 35 yes okay good so so you're between 20K and 35k you're raising Capital where are you based geography wise uh Phoenix oh Phoenix interesting what's the f I mean are you trying to race from local Angels or you going to the valley or New York or what uh for this round we actually just closed um our first round um it's not been made public yet but uh it's local Angels uh it's a Million Dollar Round um post there you go there you go baby breaking news a million raised sounds like you were going to say four million pre five million post right yeah and that was an equity round Matt yes it is why did you decide to do an equity round instead of a convertible note up front um I I think I think it was just timing and uh what what the local Angel scene was was more interested in especially at that at that size what walk us through cuz people always curious kind of negotiations around the valuation cuz it sounds like you're doing you know call it 25 Grand in Mr right now so AR what is that 300K so if you've got a 4 million preone valuation I mean that's a great great well you know 10 11x I'm sorry can you hear sorry let me correct you yeah yeah I can hear you I'm sorry uh let me correct you I I meant to say four million post so post okay so 3 million free y got it yes sorry about that it's still pretty healthy I mean you did a good job negotiating valuation if your goal is to maximize valuation what did you use besides Revenue to of argue for a higher valuation uh you know several things uh just the the trajectory of it um just the amount of growth month over month that we did really we got to 20K Mr when it was just me and me and Noah my co-founder that was it and we were overwhelmed uh at that point with customers and users on a daily basis trying to do support trying to do everything that a business needs to do um including continuing to scale growth so I think they saw that the fact that we hadn't put a dime into marketing other than using our own Tool uh eating our own dog food so to speak so I think a lot of that played into it so what would you do in prospec toy to get prospec toyed customers would you I mean I imagine you had to put some inputs like B2B SAS companies that just raised money with Team sizes of x amount and then to get the leads what were some of those inputs you used uh really that that's a very interesting question because uh we're we're just about to Launch our company search which will include about 10 to 12 million companies uh starting in the US uh where you can do that sort of hyper targeting on the typo company um which you know and then be able to prospect people on top of that um but no we we we had to you know go without those sort of specifics I guess so to speak um yeah it was more more uh using Google to really hyper Target um you know certain individuals and like give me an example of an individual you targeted um I think we saw our most success you know from a from an outbound standpoint um uh just looking for terms like sales hacker uh things like that um but our overall our customer base is pretty diverse so we're really trying to still figure out you know who uh who our uh ideal customer profile really is MHM got it what is the and I think it's and I think it's changing I'm sorry with the company search that we're going to release we're going to appeal to probably larger teams than we have in the past have anyone who started paying you over the past 12 months stops paying you have you lost anybody of course yeah I think every company does uh it's less than 5% sure annually or monthly but uh alt together annually but you know most of them were you know we had a couple Wealth Advisors as an example that came in bought our biggest package prospected you know got 5,000 people or so um out of it and then realized oh I don't need to do this anymore so that you know not necessarily people we targeted but Word of Mouth got around hey there's this new tool that will help you um and I think they got more than they bargain for how do you man that's I I hear this come up all the time when I talk to email Hunter TW fur any of these comp data ni mattermark crunch Bas it's like people go in they download the ex they pay the one time you know month they download a crap ton of data they save in their Excel sheets and they cancel I haven't talked to anyone yet that's really figured out how to extend the lifetime values of these customers by doing things kind of over time that get them to keep paying how are you going to solve that problem so um in the not too distant future uh especially with company search available being able to keep people up toate so we talked to VPS sales at a a recruiting company um that uh you know it's really really big company I want to give away who it is but um but anyway they he was super interested in this it was the first time we really thought about it but being able to um use triggers and alerts for people that you've currently prospected or companies that you've prospected um will help beyond the top of the funnel to the account Executives and customer success people who are always looking for reasons to reach out and and uh call or email their their current customer so I think that those types of things uh being able to do that uh being able to build that um bilateral Integrations with uh different crms uh we do have four Integrations already but but being able to get deeper into it and you know put those alerts and those triggers in the places that they're living every day yeah well I think it's one way yeah I think it's one idea for sure what is the uh a lot of people I mean it's this business this kind of B2B data lead business is very ancestral like everyone buys everybody else's data are you guys on top of clear bit or full contact who's who are you on top of data source wise um so early on we we would use some third- party providers um like which on just um you know we I don't know if I I don't know if I want to uh well I mean they're out there right I mean there's tons of them what which ones did you use um well you know I'd be lying if if we we said we didn't use uh full contact for sure uh on the on the people's side but really that was at a time when we were um really trying to validate the concept and we've now built our own proprietary crawlers um that do the crawling for instance you know for our companies as an example um you know our plan is to eventually get to the point where we're uh crawling every single company's Pages you know 15 pages deep um or so to look for things that have changed on a daily basis so that we can alert people in a very timely manner I think we're at about 3 days right now what are your fixed costs per month to do that um spell the crawler well I mean we've got Amazon credits and Google credits Cloud credits and things like that so so um that aspect isn't so um I think is this database intensive I mean is it thousands is it tens of thousands per month to to to execute a web a daily web crawler on every page online no no no not at all um it's really just a matter of you know the hosting but but we've got like I said credits with them uh various uh hosting companies but you have to buy those credits right no no no we were you know uh Amazon and Google will give startups um you know in certain cases um $100,000 worth of credits where can where can my audience go to get access to that program uh usually it's uh either investment from a certain VC or being in a certain accelerator things like that how you get uh honestly we we went direct because uh um you know one of the teams at AWS for instance one uh and and Google for that matter we're both interested in um our product using it as a customer or investing uh oh customers sorry yeah got it so you said we'll give you a free plan but we want $100,000 in free credits it it kind of worked out that way that wasn't the intention of of the various calls but yeah it end working that way got it so before we wrap up last two questions on unit economics do you have any sense in terms of lifetime value of your customer yet um no and and I would be foolish to say I you know based on our numbers that I could predict because company search were we're going to completely remodel our pricing structure for that um so for instance we're going to have a set monthly per seat license to our company search and we'll extend um our plan is to ex extend unlimited credits on the prospecting side for anybody that has a seat with our company search got it and what's your current team size uh we just got to four nice good good good yep that's not bad so if you add up all the salaries what's your what are your fixed monthly headcount expenses now um so we just added some by some adding that yeah um think about probably averaging 29 or 30 okay yeah so guys that's a good Benchmark right if you're kind of in the same range doing between you know 25 30k on Mr maybe raised you know 100,000 up to a million bucks you know they're doing about 30k in fixed head count expensive per month Matt thanks for thanks for sharing that that helps all right guys I talked about this earlier but I schedule like so many meetings it would blow your mind I mean all my podcast interviews right hundreds of buers I talk to monthly I schedule and you know what I do it so efficiently I get them all to agree to my calendar so all the calls are back to back to back that means I'm not switching in between tasks all day long I get them to batch so I can be very efficient it's so critical and I use a tool called Acuity scheduling to do this at Nathan la.com schedu it eliminates back and forth between me and people I'm trying to meet with it makes it very simple and most importantly they help me keep my not show rate very low because they send out reminders helps you look very professional so go to naa.com schedu to sign up and you get a great deal you know you guys know this I hit people hard I make great deals and Gavin the CEO has given us a great deal if you sign up like normal people okay on their website you only get a 14-day free trial to use my link na.com schedu to get 45 days free okay it's the best it's free go to naa.com schedu right now to sign up and I'll see you there um let's let's wrap up with the famous five these are onew answers you ready uh yeah I'm ready these are going to be like easy compared to what I've thrown at you okay number number number one what's your favorite Business book uh I can't answer that in one one word but I would say uh sales acceleration formula number two is there a CEO you're following or studying right now uh probably Gary bers Shu I guess is who I'm mostly looking at at this point number two is there a CEO you're following or studying right now now uh Gary sorry sorry sorry sorry I just read the same thing that was my bad favorite online sorry sorry favorite online tool oh um gosh I would say besides perspec toy um I'd say it's Google honestly what what specifically though I mean give me a tool oh uh well I was say the Google search cuz it's so effective but um I could also say um HubSpot for their sales pro has been really really a puant surprise okay number four yes or no do you get eight hours of sleep every night no and what's your situation married single do you have kids married one kid nice and how old are you uh 34 all right so last question take us back 14 years what do you wish your 20-year-old self knew uh I I would have studied more about startups and being an entrepreneur what did you study instead well I I mean I went to school for business but I was you know uh I I went into the corporate world at first um yeah got it well top tribe there you have it from Matt extrom he would have studied startups and how they work earlier in life they're currently serving 100 customers at prospec toy. with a $352 RPO doing about 25 Grand per month and monthly recurring Revenue 5% annual return with her team of four based in Phoenix they just round they just completed their $1 million round of funding at of 3 million pre-money valuation $5 million post money Matt extrom thank you for taking us to the top thanks Nathan appreciate it if you enjoyed Matt today go back and listen to Greg seagull yesterday they've done 300 Grand in the last 12 months to help sales people find the perfect gifts okay top tribe I'll see you bright and early tomorrow morning and don't for Forget 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