How Ramble Chat grew to $600K revenue and 50 customers in 2019.

hey everyone my guest today is justin mcdonald he spent 16 years in sas he's an entrepreneur atlanta based focused on martech chat and grc technologies he was the ceo of ramble chat was acquired last year by terminus as the gm of chat email and sales experience oh sorry now he is the gm of chat email and sales experience at terminus also a car enthusiast justin uranus the top yes look forward to it well something's in the water down there in atlanta you've got tope crushing it you've got atlanta tech village david cummings just has like a magic touch i guess huh he does man it's uh he's what three or four really great outcomes lately with rigor and of course he has sales off and terminus uh in the balance so yeah he's he's got the magic touch yep okay so you were acquired by terminus in what month and year april 6 2020 so smackdown during the pandemic interesting times so we'll now go back before that build up to that point so when was when was ramble chat launched and what did the product do yeah so great question so i came on as an original um board member and uh advisor and there was a sister company that had really been in this great technology called chat from anywhere which the whole evolution is hey you go to you go to a website you go to a landing page you launch a snippet you have chat right but what about the expansion of the digital spectrum the experience where what if you could chat with someone with one click from anywhere online so the whole underpinnings of the architecture was how do you extend chat beyond the website and so in 2018 i came on board as kind of a co-founder pre-revenue and we started it from there okay so that wasn't the plan to start right so what happened why couldn't the founding team get revenue like when they get going great question so i think that they were great technologists they were great architects but they didn't really understand the go to market motion and how to launch something um that that was where i came in that was my expertise on taking things to market and so it was just a really great skill set on they needed some fresh eyes they needed some someone to come on board to take this really great idea this fantastic uh technology uh and bring it to life okay and you're saying that that sister company you were then rebranded as bramblechat it was so it had been rebranded the entity was was you know it was doing dba a number of legal components i won't get into but it was pre revenue it was essentially launching a brand new product that had just been developed uh that was kind of the underpinnings from a sister company called teledini okay interesting so i guess what did the cap table look like the day you joined i mean were you majority shareholder as the sole founder so i was not the sole founder so i had two i two two other co-founders who were original founders of the sister company and they had raised some money right they'd raised a couple million uh that played into the development of the at that time existing rainbow technology and so um however i would say it was it's such a it's a weird paradigm in that they had raised money uh some of it used in a sister company some of it used to build the rainbow technology but it became really a bootstrap approach right they were out of money at that point that i joined and i agreed they spent all how much did they raise three million you said around two and a half or so they spent all of it it was bank was at zero correct yeah yeah okay bootstrap job straight from 2018 on and so i always wonder in situations like this i understand you want to keep your current investors get them a return like not shut the thing down or restart but there was no cash left i mean why not just shut down and restart and buy the tech and the ip from the old company and give the investors a little return uh that's a great question i mean i think that kind of speaks to the outcome that we had so quickly right less than two years for me coming on board we gotta acquire and i think that played into it i wanted to do right by the existing base i'd gotten to know the investors some of them sat on the board um yes of course there could have been an i.p play but i think my partners um loyal really great business folks cared about the investors wanted to take care of them versus do the greedy kind of you know flip it over by the ip and kind of you know get the win did you guys raise additional capital after you joined or you stayed bootstrapped so we uh we raised very little so i say bootstrap we we raised an additional 250k uh in 2000 early 2019. okay yeah okay got it so 250k then and again we're in 2019 now and we haven't talked a little about this yet but what is ramble chat what were people paying you for sure sure is a software as a service product and it's it sat smack dab in the conversational marketing chat space right you probably saw zoom info acquired incent.ai two days ago which is uh another small conversational marketing player so a lot of um you know drift leading the way there's a lot of momentum in the conversational marketing space but essentially it's how do you rebrand the old legacy bottom of the funnel customer support chat and repurposes so that sales and marketing folks can start to convert conversations personalize and really get away from forms right the whole premise is we live in this on-demand society people don't want forms and the old marketing automation conversion how can you utilize the chat technology to create more of a conversation and collecting information and converting and what were people paying on average for this back in 2019 it varied you know the average deal size it was spread around probably 15k arr okay god it's called a grand two grand a month something like that yeah okay so again that's not smb but not quite enterprise sort of mid market play um and what do you mean flush out the rest of the business at that point 2019 how many team members so we had less than 10 uh 10 10 10 uh team members at that point how many in 2020 at acquisition time right around 10. right around 10 we stayed fairly steady yeah that's great small business mighty business uh capital efficient at that point when i when i took over um you know not a huge rate in 2019 i'm sorry profitable in 2019 it was not profitable okay pretty close to making it in we were not profitable pretty close to break even yeah okay got it and and how many customers in 2019 i can't disclose that um can't share a customer account i can't share customers i would say it's less than 100 more than 50. how's that okay that's fine what terminus said we're going to acquire you but the one thing you cannot disclose is how many customers you had a year ago before acquisition uh it's it's complicated but um yeah i'm trying to be fair to to my ndas and and the non-disclosure of terms so understood okay so you move forward when did determinants reach out happen was it atlanta tech village over coffee or who you know yeah that's a great question so terminus um so i had several uh in entry points in the terminus right eric spett the old ceo you know obviously david cummings was an investor but terminus was a customer of ramble chat so they knew the technology uh they loved it it was working well they were seeing roi so we had the benefit that they had used the technology they did some stress stress testing and uh they love the ip player right this was a big ip play they didn't buy us for our ar they bought it they bought us for the team they bought us for the technology did all 10 are all 10 still with terminus they are not and some of those 10 were contractors and um [Music] yeah all 10 or not with and and it's a core team the good majority of the team still is by the way yeah now this is middle of covid the last thing most companies are thinking about is how do i spend a bunch of cash on an acquisition preserve cash for extra runway what do you want for you guys i'm sorry what did terminus pay for you guys i can't disclose that but uh i can say the multiple was over 10x the 10x revenue multiple yep and what gave you that sort of leverage i mean you had raised a little bit of capital already how were you able to get above tenants you know i think the the technology so we had a patent pending on our chat for manual technology that allowed companies to engage customers beyond the website so i think the ip around that patent-pending technology was valuable i think the momentum in the growth in the market around conversational marketing and chat was tremendous with drift and intercom now qualified and salesforce back company coming into play so i think it's highly prophetic by tim kopp and some folks at terminus to see the big channel push and how that can merge into an account based model an account-based marketing technology and so i think it was the ip it was a talent behind it and the recognition that yes data reigned supreme in account based marketing but having the right channels in first party data captures is super important as well when you guys sold the business did did mo was most of this deal price stock now in terminus or did common holders early employees incentivizes equity did they get some cash payout on the exit um i can't disclose that but let's just say both parties our existing investor base the founders customers is a great transaction for all both for terminus as well as a ramble chap investor base got it i have to go read the terminus announcement and see if they said it was all stock or all kinds of things yeah you read that we just obviously did a recent series c as well for terminus at 90 million so uh it was a great transaction for all yeah okay so excuse me you sell in 2020 um why how are they gonna convince a guy like you to stick around that's a great question um so uh that we did a recent reorg so i know my bio is a little bit out of date that you just read so i'm the gm of all channel applications at terminus so i picked up digital ads as well as the ones that you read off uh quite honestly i think terminus is in this goldilocks zone right yes i'm an entrepreneur yes i'm no longer you know the ceo but i'm working for a fantastic company a leader who's probably the most humble competent leader that i've experienced in tim comp um and it's it's you know abn's a hot market you see some of the recent investments evaluations or unicorns are popping up unicorns are popping up left and right in the space so it's a great company it's great culture hot market right so it's hard to turn that down yeah of course obviously taking care of us to stick around uh it was reported that that 90 million dollar raise was around a 400 million dollar valuation i mean 20 25 of the company in this range i mean you could argue is actually a little higher than what you see on market um what what what enabled you guys or what got you guys excited about bringing on these investors and getting great hill a larger cut than most serious c transactions well one of the things i'd point out as well is i think that valuation is quite conservative look with six sensitives rates right i think their their valuation was what two billion plus for similar run rate so i would argue that the 400 million is is quite conservative when it comes to the valuation okay got it fair enough um that was reported i'm reading here live here but not not necessarily confirmed by your folks but that was based off sources so we'll see what happens but point being where do you think great hill can add value to the business you know people always go you want to read investors add value yeah yeah great question um experienced private equity guys uh folks that understand data right so you look at some of the folks from gray hills some of the partners that sit on our board came from zoom info uh abm is so critical at least the data elements on how you personalize how you collect obviously in a privacy-centric fashion but uh i think their data expertise their strategic connections are highly valuable to our base what's your estimation and then we'll wrap up with sort of product ideas but what's your estimation on what size sense is doing right now in terms of revenue sixth sense uh sci were you were you referencing earlier yes six cents got it what's your estimation there i'd say they're uh they're over 50 i hate to use this fake term but i think they're around 60 million plus between 60 and 100 million yeah when we had um yeah yeah that that that matches the data we have when we interviewed uh interviewed the folks there so very cool what about product uh sorry what was your question who did we interview i was just curious who you interviewed at sixth sense um nick hill uh i'm gonna kill his last name vora okay i don't know i think he's a founder usually interviewing the founders of companies yeah yeah i knew vital orbit call one of the other co-founders okay nice well it wasn't it wasn't it wasn't him but um look you've mentioned a couple competitive drift zoom info within cents right you know they're going to buy and send and try and drive it across their current base and increase our expansion right across the thousands of customers how are you thinking about chat and conversational marketing at terminus great by the way i just told you that information so you must have did some speed reading on this podcast here man [Music] uh how am i thinking about conversational marketing i think it's the future martech i think the post covent in itself has really driven the need for real-time conversations for taking playbooks and what we know about audiences and segments and personalizing and the best way to do that on the domain on the website is through conversational marketing and chat so i think you'll see a greater emphasis as a channel on the conversational marketing um and then he who takes the data he who personalizes and adapts the experience based upon who is on the website is going to win out yup niagara obviously you know smart move yeah i mean silent or sly lent or if you pronounce it just raised at 20 million at 100 million free today so i mean it's a hot hot space um let's wrap up here with with the famous five number one favorite business book favorite business book man hope is not a strategy i love it old school number two is there a ceo you're following you're studying besides determinants you know i like nick made at gainsight of course benny opps always an interesting guy to follow yeah hopefully cliche ones but um did nick sell too early to vista i don't know i don't know 1.5 billion to me you see gone going out doing 7.2 billion and outreach going out raising 4.2 billion two weeks ago yeah things that people don't realize with gain side it's just you know like most startups it's not an overnight success he's been in it for a while right it's a grind so uh hindsight's 20 20. i think you could you could make a case that he sold too early but i'm sure he's happy with the outcome number three what's your favorite online tool for building a business favorite online tool for building a business oh man what do you use the most that's hard to say we're in the mix of some um some big post cookie world ads product components so i think uh from a product perspective figma has been brilliant i think there's the whimsicals of the world and then you just have your standard you know kind of crm uh behind the scenes that provides all the intelligence so number four how many hours of sleep are you getting every night no so we have about two girls uh one and a half two and a half so more than you think but um i try to average between six or seven hours okay so married two girls and how old are you i'll be 40 next month 40. very cool all right last question what's something you wish to do when you were 20. something i wish i knew when i was 20. patience guys patience critical ramble chat playing in the conversational marketing space launch in 2018 or actually before that raised about two and a half million bucks burned through all of that then we had justin join as part of the co-founding team in 2018 they turned the business around grew to between 50 and 100 customers paying between caught a thousand and two thousand dollars per month they sold for a 10x valuation multiple back in 2020 and justin's now leading uh sales product conversational product all that stuff now at terminus as they looked at scale just announcing 90 million around justin thanks for taking us to the top appreciate it one more thing before you go we have a brand new show every thursday at 1 pm 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 arpu 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 pm central additionally remember these recorded founder 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