How Revtrax CEO Jonathan Treiber grew to $10.2M revenue and 100 customers in 2019.

hello everybody my guest today is jonathan schreiber he has championed greater measurement accountability for online and offline marketing as ceo of revtrex guiding his company from initial product development to capital investment and continuous innovation he leads a team of veterans and rising rockstars who today probably work with more than 350 brands in numerous industries jonathan you ready to take us to the top sure sounds good all right man tell us what rev tracks does and how do you guys make money so we uh we're an 11 year old startup and our vision uh uh over a decade ago was to solve a problem among big consumer brands retailers consumer package goods companies that we uh believed were overly discounting and uh and overly promotional and the the problem that we solve in the market is that a lot of these brands uh believe they're too promotional and they want to discount less but don't quite know how in order to leverage technology and a framework and systems to do that and so we built a software platform that ultimately helps our clients figure out the optimal discounts to give to each consumer through their digital marketing efforts um in an attempt to honestly not give a dollar more than they have to uh to a consumer uh to generate the sale and so that's the problem ultimately to enhance margin uh or reduce margin pressure that a lot of retailers and brands feel when they're just when they're discounting so universally so jonathan if jcpenney had your software maybe they wouldn't be bankrupt today then right it's possible yes you can own it you can you can say yes i mean it's possible yeah it's very possible how do you so how do you price for something like this so our pricing model for now 10 years has been um a volume-based sas so what that means is our clients typically commit to a 12-month contract where they're committing to a certain level of usage of our platform meaning a certain volume of offers that they want to create in a pool and optimize a certain number of offers distributed or offers actually cashed in offers distributed okay so the goal being a client might say hey revtrex i want to do over the course of my 12-month marketing calendar 50 unique offers uh x percent offs x dollar offs buy one get one all these different offers they want to set up in our system and um and leverage our system to help uh basically figure out which offer to give to which person and over the course of the year they might say hey i think i'm going to do a million offers distributed or 10 million offers distributed and what we'll do is we'll price the client in a tier where they'll commit to that level of usage and if they go over we'll bump them to the next tier and you know prorated and if they use less um they're sort of uh they're they're stuck with them jonathan you're a tough guy no refunds if you don't use your your what you fully paid for huh use it or lose it use it or lose it like a good offer use it or lose it all right so um give me i'm sure you have tons of different customer cohorts here but give me an average you're on average what's it what's a brand going to pay you per year for this so a brand on average will pay us about 100k a year okay and generally speaking if i pay you 100 today what am i committing to in terms of offer sent over the next 12 months probably somewhere in the neighborhood of 20 to 30 offers that we're gonna manage in our platform for you over the course of the year and probably a million offers distributed okay fair enough okay and then you said this was a you launched in 2007 did i get that right january 2008. oh 2000. by the way hell of a time to launch a company what were you thinking um i wasn't you know the uh the thought actually was uh it wasn't based on macroeconomics i come came out of my first job at a citigroup doing mergers and acquisitions um before the whole wall street industry sort of melted down so i felt like i got out at the right time uh and then really wanted to start a business focused on um you know a problem i i perceived in the market with my co-founders which uh you know has become more pervasive over the last decade with uh pricing and promotions being rampant so i think we just picked the problem worth solving that um actually was more acute in a recession than it was uh then it was not and so believe it or not i feel like the business we started and the problem we solved was actually more relevant in 2008 and 2009 uh you know versus in the boom years that uh you know preceded it yeah that's great so okay so you have you've had 10 years to essentially 11 years to grow the business what have you guys scaled to now in terms of total customers using you so we work with uh we work direct with brands so so not through agencies and that means that we today have a hundred corporate clients at a corporate entity as customers but underneath typical large company umbrellas um many of our clients like kimberly clark and unilever have you know dozens and dozens of brands and um and so when you look at it that way we work with a hundred corporate clients that ultimately have about 600 brands active using our platform and how did you i mean how did you get take me back to 08 right because the first 10 customers are always the trickiest right what what kind of mousetrap did you use to close the first 10 customers so uh yeah i would say that the first two customers were the trickiest you know selling even the first customer before we had a product um yeah the best uh the best story i could give you briefly is when we started the business in 08 myself and my tech co-founder made a gentleman's bet as to who could finish first could i finish selling our first client before he was done building the product or would he be done before i was done selling uh our first client and as the story goes we both finished pretty much in june of 2008 where uh where we were able to convince uh the all-new comp usa that had emerged from bankruptcy with a much smaller footprint you know much more nimble team um to buy uh our offer management platform who'd you sell into there we sold into their marketing and merchandising team and really from from you know their their big need was they had a much smaller digital footprint and um or digital footprint they had a lot smaller physical footprint fewer store locations after they emerged from bankruptcy you know they were a national chain went bankrupt had a much smaller footprint and they wanted to use digital marketing that they had going on to drive in-store sales with um targeted and um trackable offers and that was where we came in so we were a good fit for what they wanted to do to drive awareness among customers many of whom thought they were out of business um and what we found is in our first 10 customers what all sort of seemed to be a common theme was that they were small enough to be able to make a decision and be you know nimble enough to quantify that for me less than how many employees or revenue or what do you mean small enough so so the best exam the best way to quantify it is they had you know a 10 person or fewer marketing team and they had everybody kind of do everything it was all in um very scrappy nimble now on a revenue scale basis those companies still did anywhere from 200 to 500 million in sales a year so they are not small but what we found is that we could get in front of the right stakeholders who can make a decision versus of course over the years we've sold into bigger companies that tend to have much more silos and and you know very uh different decision makers that can make the sales process a lot harder now have you chosen to bootstrap this company or chosen to raise capital we bootstrapped the company um so we we initially did uh raised 1.6 million of angel capital from a bunch of industry angels who um you know bought into this vision and uh and then ultimately we took that capital invested it very prudently um and was able to scale the business so total total raise today then is just that 1.6 yep of equity capital and uh you know scaled the business to about 10 million of arr with um you know people and that's great i mean are you talking like like seriously positive or basically break even break even okay our focus has been to aggressively reinvest in the business for growth and a lot of our contracts you were joking about the use it or losing concept of our contract but one better than that is like most sas companies and i think you know this from your experiences um all almost all of our clients prepay their annual contracts up front yeah yeah you gotta i mean you told me earlier kind of average acv is 100 grand so it's 8 500 bucks a month across 100 customers puts you at what about 850 grand a month right now on revenue or about a 10 million run rate yep yeah that's great now where help us understand growth so if you're doing 850 a month today where were you about a year ago so we were about the same okay so we hit flat yeah we're flat we hit some uh some growing pains and hit the hit the ceiling um probably actually about closer to three years ago and have been dealing with some macro things um in our customer base that have you know created disruption for a whole set of vendors but you know we've been working through some transitioning in our customer base and working out some fine concentration issues but um but overall the business has you know continued to get stronger fundamentally but as far as you know getting our sales and marketing engine back on track took um you know some experimentation are you jonathan and any kind of are you kind of in any m a talks right now to sell the company no it's interesting so i'm curious like why you have the patience a 10 11 years in now you're flat and you're basically bootstrapped you could probably sell and get a nice chunk of change for you and everyone else at the company uh why have you now or have you considered selling and why have you not so our pov is um we have considered it but that there's a lot of intrinsic value and track value in the company that i don't think is um is going to get sort of fairly valued with um with with you know selling the business today versus turning it around focusing executing getting the business back to growth and then exiting over the next couple years yeah let me try and quantify that so i mean if you had an offer today in front of you all cash upfront for call 34x arr so call it 30 40 million bucks would that be an offer that you'd consider strongly or no you'd reject it immediately i would consider it strong okay so there's like some threshold of value you think is not unlocked yet you think maybe 1x or 2x isn't fair but once you start getting this kind of 3x4x it becomes interesting yep yeah um okay interesting talking about churn it's critical in a sas company what's your turn look like danieleen how do you make sure you keep it down so um sure and ironically was a much bigger problem for us in our earlier years while we were scaling and kind of taking new customers of all different types and sizes only to learn that many of them were not our ideal client over the last several years where we found churn to shake out is a um on account basis and a revenue basis account basis our churn is um is a little north of 20 but what that really translates into when i give you the revenue retention is is we we have a um a decent size of what we consider mid market accounts that are between 20k and 100k acv um our enterprise accounts which are about 30 of them are all north of 100k ecb and um and they tend to churn almost not at all and so on a revenue retention standpoint um our our net revenue retention is about 95 now peel that back for me net revenue retention is made up of two components your gross revenue return annually adding back your expansion revenue on top of that so can you give me those two metrics so for for probably worse than it is better um the two are the same because we haven't executed as well on expansion strategies and upsell opportunities and so when we look at gross and net they're more or less within a couple percentage points of each other um okay so so so hold on you said net revenue retention was is about 95 percent yeah and and gross revenue retention is about 95. okay got it got it so you're basically what that means is you're not driving expansion on historical cohorts correct yeah yeah which has been an area of focus for us to turn that around this year yeah that's interesting and that comes with like new product lines to upsell against things like that new product lines um you know a uh a new sales force yeah that um you know has the experience that we need in order to penetrate what multinational what's the current team like look like today how many people so the the company is made up of 35 people okay and we've got um six people in sales and um six people in client services and the the rest are distributed through you know product engineering and um and how aggressive are you being with like landing a new hundred thousand dollar your customer are you comfortable spending kind of first year acv on getting the customer in the door yeah okay so you're feeling an intermittent correct and you know and even a little bit less i think it varies it costs us obviously a lot less to win a more mid-market account that's paying us 50k a year in acv and then for some of the bigger ones it could be more but you're right and our payback here is about 12 to 14 months so you know the metrics seem to to pay out the issue that we've had as a bootstrap company is um is lacking you know the resources to be able to invest aggressively ahead of the curve so you know we've had to balance that over the last several years if someone hears this even though you're flat see they're going to see you as non-fundable because you're flat right which whatever but if you get a smart investor listening to this they might see the upside i certainly obviously see it if someone came to you and offered you you know four or five million bucks to put in the company and ask for caught i don't know whatever 10 20 of the company for that cash would you take a deal like that or no absolutely yeah because you'd fund that on like a new sales org things like that yep yeah interesting all right let's wrap up with the famous five number one what's your favorite business book i would say good to great number two is there a ceo you're following or studying [Music] uh hiroshi mikitani of rakitan uh at rocket internet wait rocket what rakuten oh yeah yeah we're good yep all right number three how many hours of sleep are getting every night six and uh what's your favorite online tool for building your company um for building my company i would have to say predictive in-depth yep that's a good one a number and then what's your situation married single kiddos married to young girls oh that's so adorable okay and how old are you i'm 36. last question jonathan what do you wish your 20 year old self knew [Music] um how long it takes to build a business of lasting value guys they're basically bootstrapped founded 11 years ago 1.6 million dollars raised today just passed 10 million dollars in ar but they've been flat over the past couple years as they look to kind of pivot and shift the nice thing is they're doing this profitably uh they're doing it up in new york have about 100 enterprise customers jc you know big kind of retail brands that basically use them to do smarter offers and smarter discounts so they're not giving up so much margin um again growth they're looking to refactor as they bring on a new sales team team of 35 today as they look to scale 95 net revenue retention annually and 100 000 tax on 100 000 acv so 12 month payback period there jonathan thanks for taking us to the top my pleasure thank you