How Rantandrave CEO Nigel Shanahan grew Rantandrave to $28.5M revenue and 285 customers in 2017.

hello everyone my guest today is Nigel Shanahan he set up rant and rave after a poor experience at a motorway service station he believes consumer emotions drive their behavior and accompanies our revenue he's on a mission to change the world of customer feedback from dull surveys to a conversation that customers want to have Nigel are you ready to take it to the top I'm ready alright rant and rave dot-com is the company name what do you do and how do you make money well Ram to rave sort of does what it says on the tin Nathan customers are either normally ranting or they're raving and when they're ranting they're probably deciding in their own hearts whether they want to stay with the business if they're raving they actually love the company and they end up trying to tell lots of other people about it but most businesses most brands aren't getting it right and in my opinion surveys the antithesis of really what a consumer wants they just want to get it off their chest in their own words in their own feelings yeah and what your business model is it's a sir it's a SAS business Nathan yeah okay very good and give me a sense of kind of the size custody of customers you're working with are these small companies what do they pay you on average per month typically we our average order value annual is about a hundred thousand UK and the sort of businesses we deal with are Barclays Bank Manchester United Harrods Marks and Spencers you know DPD the biggest home delivery company in the UK premi��re in you know one of the biggest hotel chains how many are you working with total how many customers about 285 well okay so I mean you've built a pretty healthy customer base especially that about about at that level I mean if I do 280 five times at Evarts contract value I mean you guys are doing well north of what two point three million a month oh yeah or what is that what second about two annually about 28 five annually more than that yeah more than that we don't tend to disclose but I understand you're an expert to find out what don't give me too much credit we're just starting you might not like me very much by the end all right but that's fair looking I do I like getting numbers because it makes any other advice you give that much more credible right because they know you walk the walk so tell me about the backstory when did you launch oh well we actually don't launch the company in 2000 but there was a management buyout in 2006 and that's when rant and rave came to me I mean I'd actually sat at a service station and our business was all about sending messages out on behalf of brands to customers and I sat there at the service station thinking we send all these messages out on behalf of brands to their consumers we don't know what they're thinking and feeling when they're receiving the experience of not just receiving our messages our voicemails and text messages and the emails and all the things we did but the whole thing about having they really feel about the brand and the experience they're getting and what they gonna do in the future and it just came to me that actually walks in the marketplace today is a brand interrupting the flow of a customer's thoughts and asking them hey you know would you like to take a survey and then as soon as the customer says yes they say fantastic these are the questions we want to ask you which is you know to my mind is the wrong way around so that's when we started I didn't catch the first part you said something about a 2,000 minute or 2006 management buyout tell me that yeah yeah so we had VC funding up from 2000 to 2006 okay for what company the same one it's the same company and we've actually rebranded it around some raid but it was actually called rapid communication back in the day but as the feedback part of what we do became more prominent that's when we rebranded okay so Nigel let me see if I can decode this accurately mm a company launched it grew and raised capital how much by the way it was just over two million UK okay they raised 2 million UK between 2000 2006 the VCS were going oh this thing's not growing like we thought we should probably figure out a you know way to wind this down and get there maybe they already wrote it off but you and maybe some other people on that first team saw an opportunity in this one piece of the product they built you bought the VCS out probably at a discount spun it out and now you have a clean cap table in the new businesses that accurate you've got it yeah wow that's a pretty damn good guess for not no carpets now you got you got it smack on I mean essentially what happened though was that we were doing well I mean we were growing we weren't growing at the rate of she wanted us to grow up and rant and rave the concept of the feedback part I hadn't actually gone through it with the VC so it was growing in my own mind but I knew they were growing restless and their restlessness was really about a relationship that we had we bowed a phone we were going out to the marketplace via Vodafone to Vodafone's enterprise customers so the likes of Barclays Bank of Vodafone's enterprise customers and we had a an offering that was branded co-branded so his Vodafone Rapide back in the day so all of us stuff we were doing was broadcast communications mainly text messaging all around sort of a journey the lifetime journey of a customer and it just came to me the rant and rave concept but I knew that the VCS weren't very comfortable at that stage and I wanted to find out where their lack of comfort lay and their lack of comfort lay in the fact that the Vodafone relationship wasn't gonna go global and that's what they invested in the business for they wanted it to go beyond the UK Nigel how are you involved though in the business before 2006 did you just know the creators are you or you were actually playing I left IBM to find the business we got business angel funding and then beyond there I got VC funding and then 2006 initiated a management buyout and bought it back out now how did you is so first off this is a great story I hope you will talk about this because there are so many people that raise too much capital and then two three years after their last round they realized this isn't gonna turn into what the VCS want to turn into and everyone feels stuck and they don't know how to get out a management buyout is a beautiful way to get out so can you tell us details how did you negotiate this well it was interesting because I was actually gonna I was actually gonna walk away from the business I'd been diluted to such an extent that I actually thought I would restart how little do I leave I was down to 5% he I was down to 5% in terms of dialouge in it was all ratcheted based on not just financial performance but certain objectives they'd laid in and to be honest with you I was incredibly naive back in the day so I got down to 5% me and my partner because we actually set the business up together you each end five percenter together no we both had 5% yeah in total we had 10% and what happened was prior to the 2006 I actually removed him from the business as well which was really difficult sort of thing to take so suddenly I was out on my own and I went to Warwick business school I'm an alumni I've got an MBA from Warwick worried business school I went to somebody who'd become my mentor and he said to me don't set up another company you know don't let them force you well actually turn back and say you want to you want to talk to them about you know getting some cash out for them and I I just didn't know where how to do that but he ran me through the entire strip so the negotiation he had me on remote control it was absolutely fantastic so what did you end up paying to get that that basically buy up the two million that they bought earlier just over a million okay great so you basically crammed gonna make this up but you basic created eight hundred nine hundred grand and kind of value just with smart negotiation and it was clean you cleaned up the gap table now you're on the new company you've got it the reason that the V guys just to be clear I want to underscore this the reason that Nigel have leverage here is because one his other partner was out he had very little left the the VCS knew that he had to run the company if Nigel if they're thinking oh my gosh Nigel's about to leave they're more likely to do deal with them and that's partly Nigel I think what gave you the leverage to come in and say I'll buy you out for you know a million bucks 100 percent where did you get the million well that was I mean I remortgage my house on several occasions I got faith friends family a bit from the bank I got it from all sorts of different places it was absolutely frightening and what was the revenue at the time he did the deal crikey the revenue was you know I can't actually remember but it was something like it was something like 1.4 million okay might I say that because were you able to use the historical P&L and balance sheet of the company to go to the bank to raise from them via the company you personally guaranteed it yeah that's right absolutely that's how it happened so smart okay very good and then did you was it just you in 2006 or did you bring on like another co-founder at that point no it's just me John May...