How Rfactr CEO Richard Brasser grew to $10.8M revenue and 220 customers in 2017.

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 held bent on global domination we just broke our 100,000 unit sold Mark and I'm your host Nathan lka I just finished traveling south East Asia for 41 days and I usually always get sick when I travel and quite frankly eating is difficult for me it's hard to find a restaurant and I'm spoiled in Austin with my personal chef well I took these little packets with me this time 30 of them in my carryon suitcase they kept me totally healthy with 11 different secret ingredients you can see them at Nathan la.com juu I'll tell you more later on in the show that's Nathan la.com slj top tribe you know I don't have a lot of time to waste that's why I use fresh books to send out invoices and make sure I'm collecting my money to get your free month go to Nathan l.com fresh books and enter the top in the how did You Hear About Us section Nathan L to hear this episode 623 and coming up tomorrow morning you're going to hear from winmo CEO he's 37 years old two kids Dave Curry they've passed $1.1 million in monthly recurring Revenue helping 2,000 customers close more sales with their tool winmo good morning everybody Nathan lad here and our guest this morning is Richard brasser he is the foremost expert in helping companies increase the effectiveness and influence of their Salesforce through strategic use of social Communications he does this through his company called rfactor which we'll dump jump into having created the sales enablement program for some of the world's best Brands Richard is focused on the pursuit of enabling salespeople to leverage social communication and build more meaningful relationships Richard are you ready to take us to the top absolutely good morning how are you thanks for joining I appreciate you coming on all right tell us what our Factor does and what's your business model how do you make money so there was you know an awful lot of buzzwords in that uh kind of in the normal descriptions at the base of it you know the the truth is that companies need to to engage their potential buyers in a more meaningful way and we know that sales people that are that more efficiently build relationships and build trust and solve Solutions right sales people can't forget that that last part of adding value um but the that do that win right and you know we are very much focused on enhancing uh their ability to connect with more people find people to have a a conversation with through using and leveraging their social network and allowing companies to make it easy for them to engage find and and influence people with content so we have a platform uh it's called soci social Port it's really designed for uh organizations that have an indirect sales uh kind of or a world of resell agents advisors you know anywhere where you got a bunch of people selling your stuff and um and you're looking to make it easier for them to have a social presence have the right content and go out and very effectively hunt the right people then our platform is designed for that it's a it's per month per user model so this is a model yeah absolutely and there's this is not a Marketplace play like you don't have influencers paying on one side and companies's paying on the other no no it's entirely for the companies to leverage with their their salespeople it's an internal tool there's no uh kind of outside influence and it's directly plugged in typically to their CRM system so they can see the exact amount of dollars uh that are resulting from the activity in Social so we can we can actually give that Holy Grail of what in the world is this worth and and why am I paying for it we can actually run reports in CRM to see it and so uh I don't want to go into every like different customer cohort so let's just take an average what's the average customer paying you per month oh it it is across the board I'm only going to make one disclaimer is that we started with the top of the Enterprise so we cut this solution and developed it in conjunction with companies like Microsoft Oracle sap um you know and and and a lot of others and and now we're coming down market so uh when we do Channel activations those can be small accounts that are paying you know somewhere in the the couple hundred to few thousand dollars a month uh the large companies are paying you know uh massive massive amounts per month in the in the six and seven figures okay if you take an average though again I want to go going into every single one if you just take an average across your entire base would you say it's 3,000 a month 5,10 yeah our kind of our typical unless you're part of another organization our typical starting point is about five grand a month okay perfect that's helpful so let's go back and capture more of the kind of the story now some context what year did you launch the business in uh so this product was created in 2009 late 2009 great and what uh bootstrapped or have you raised Capital uh so the company was bootstrapped uh for the first uh say eight years we when we came around this product because the company's been around for 16 years total um we did a a seed round very strategic kind of um angel investor round and we'll we'll probably go out and do a series a um here sometime in the next I don't know six months to a year how much have you raised to date though uh I've raised about $9 million okay and and when you go into and that's all been on a seed round and internal funding Lord have mercy so when you say internal funding you mean like you and your co-founders putting money in correct yes okay where did you guys get a bunch of money from did you have some success before this that's a great it's a great question um I played golf on tour for about seven years wow and started off in technology and digital and marketing and um then had this stint playing golf and um and made some good amount of capital there and my uh and I start winning fees or something yeah yeah you can make make a few million bucks a year playing golf it's pretty good interesting not a bad life thanks Richard for making us all jealous I appreciate that it's all good but uh and then um about four years into the business um I really needed somebody on the operations and finance side you know I'm I'm more sales marketing strategy technology and um so I brought my partner Greg into the business and he was just exiting a uh selling company healthc care It software company that he had built and um and has successful exit so really made a great Synergy coming together real quick question for you this is off topic but back in episode 615 I had a guy named sheen on from Tokyo who runs a company called seven dreams raised 75 million bucks their main product is a carbon fiber golf shaft which they sell for a between uh the average selling point is 1,800 bucks but the highest line of that of that product it's $120,000 carbon fiber golf club have you seen that on the trail at all or no I I have not no I I doubt uh I'm sure there's a market for that because there's a market for anything right but um it was crazy all right interesting so 9 million raised so has the have you done an equity round yet or has this all been convertible note Deb uh no no no the the the first was a the seed round was really a a formal um you know preferred round it was uh it was an equity round okay so there was a valuation on the company yeah absolutely got it and when was the last round sorry and how much was it for uh the last round was in 200 uh 10 and we raised 3.25 okay got it um and then you want to raise a series a how much are are you targeting um yeah probably in the in the seven or 10 range interesting okay great um let's jump into so let's take us forward by the way you said this was launched in 2009 but then a minute later you said it's been around for 16 years which one's right the company's been around for 16 this product was was uh developed in 2009 okay so you I mean you really launched this thing back in 2000 and you've iterated and pivoted and added products that's correct we uh we started out as a sales as a strategy and consulting firm and then started to get heavier and heavier into Building Products one of those products was an online community solution private corporate Enterprise online community kind of like a Yammer um on steroids or you know private corporate Facebook and we grew that and we sold that um in I don't know 2008 is and um did you spin it off as its own entity or what we did yep interesting and and what did you sell it for I mean how's it valued uh it how what was the valuation or how was it valued well both I'm more I'm more interested in the Y versus some big number that's really impressive no that's right yeah we can't share we can't share the big number but um but it was you know we we saw that it needed to be combined with some other uh Technologies and a more more uh mature organization that wanted to be in that business um we wanted to be in the next business which was focused on helping sales teams generate more sales and the intern of collaboration and communication was really not uh the thing that we wanted to do you know for the for the Long Haul so we found a company that was very much in that space they needed some some higher gravity technology and we sold that off to him when you sold that asset was it for more or less than 5 million bucks uh it was for more okay got it and did you is that whatever you sold it for did that money did you plow back into the company or did you guys get a nice little mini cash exit there I would love to say that we went and and bought Ferraris and things like that but uh we poured it straight back into the company is that included in the 9 million number you said that you've raised or is that exclusive that's exclusive got it so 9 million plus an additional sale this is a model by the way I wish more people did build these little products fog Creek just did this with obviously Trello 425 million bucks um take us for now team size where do you at to date so very small um 18 folks servicing uh about 220 clients okay so 220 paying customers yep and then can can I do the math I mean I I know obviously I push you for an average but if I take 220 times about five grand RP it's fair to say you guys are doing somewhere around a million bucks per month um yeah it's it's a little bit more topl loaded than that so um topl loaded so we've got eight eight to 10 customers that are um you know ve very very large custom uh very large companies okay so um so you're above a million a month uh not actually not quite not quite but it's yeah I'm close we're close okay good we don't have to be specific but it's good to understand that actually you're going a very different route than most SAS companies I talk to most of them they they start off in the SMB and I hear them say things like I hate 10% sure and these small business people they take too much time and they go out of business we're going Enterprise you're going the opposite way why uh because we are naive in the beginning no um if we if if we knew how hard it was to actually start there uh we we may have done it differently but um but the truth is is that is that the real challenge that we saw and were on the front lines of were these companies that had you know very large distributed worlds they were selling in lots of different countries and different divisions and business units and different products and so to actually organize content and to organize their teams to help them was a huge challenge you know there was tons of tools that were serving the SMB Market the lighter weight stuff and kind of like you see advocacy today it's kind of starting in that super lightweight you know here's some content and do you want to post it well that takes like three weeks to develop a platform that totally um you know we were seeing the same thing in our world which was it was kind of like The Hoots of the world of yeah pay nothing or a few bucks and you can kind of aggregate your social accounts well what's your just because we're running short on time Richard what's your gross customer turn monthly um less than 10% okay that's okay that's oh actually that's high if that's monthly you mean annually or what uh annually sorry sorry yeah okay so less than 1% monthly and then what do you pay I mean these are Big accounts what are you paying customer acquisition cost wise uh it it it does truly depend you know we have much more of an a landing span kind of model so um you know we're in order to land a seven figure account we're not doing that all at once we'll land you know a $40,000 pilot prove it out show the numbers you know so our cost on that might be you know 40 50% but then the phase two you know those those numbers plummet and you know and obviously the economics work really nicely what let me ask this a different way last month let's just say December 276 what did you spend on paid Marketing in a month zero okay so you don't do any paid you don't do any paid acquisition we do not no okay got it you just have an inside sales team uh that's correct yes we have we have an inside sales team and an indirect outside sales team and where you got you said 18 where are you based uh Charlotte North Carolina and mainly operations and customer success is in is in Charlotte we've got folks in uh Denver or sorry in uh Boston in Vancouver you kind of sprinkled around some of those some of those yeah okay top tribe as many of you know I sold hoo and Everyone is always asking me what my expenses were when I was building hoo well a big expense was that I spent over three grand per month on financial services to keep me out of trouble in terms of taxes you know my mom would always haror me Nathan you got to keep all your receipts and put them in a freaking box or something to make sure you don't get an audit or things like this I'm like Mom I'm a millennial you think I'm going to keep all these receipts I now use fresh books I use their mobile app to take a picture of receipts and it makes taxes a cinch additionally I don't have to hire a $3,000 per month person to manage all my finances it's like saving so much money and my mom's happy additionally I don't waste a bunch of time creating invoices I use their templates and I can avoid using word templates or Excel files I just use fresh books to quickly send out invoices and it works like a charm to get your free first month go to Nathan l.com freshbooks and enter the top in the how did You Hear About Us section again go to Nathan l.com freshbooks and enter the top in how did You Hear About Us section hell Richard let's wrap up here with the famous five number one what's your favorite Business book oh my favorite Business book you know I got to go way back in the a long time ago and say crossing the chasm yeah Inside the Tornado yeah that's good stuff that beautiful orange red cover it's a good one number two is there a CEO Richard that you're following or studying um right now I am um I'm actually quite uh quite fascinated and it's going to seem totally uh out of out of left field but um but Tony Robbins and what he has done to transform his organization from you know a company doing 30 to 40 million and making no money to you know a company doing five billion and Incredibly efficient it's not in my world it's not my sector it's not you know necessarily technology play but um it's pretty amazing what he's done number three is there favorite online tool you have like a QD scheduling um is there a favorite online tool um I would you know I it goes without saying Social Port but uh what's my other one um God I'm blanking on this that's okay if you don't have I mean what do you use every day to build the business um I use our product I use Outlook and I use you know my my browsers really really rarely use anything else all right number four yes or no do you get eight hours of sleep every night very rarely and what's your situation married single you have kids married four kids four kids how old are you I am uh I just turned 50 like a week ago amazing okay take Congratulations by the way take us back 30 years what do you wish your 20-year-old self knew um uh financial management better the concept of compounding and compounding interest and the concept of uh of deferred or um you know asset allocation there you guys have it from Richard the founder of our Factor founded back 16 years ago in 2000 spun out one of their products for more than five million bucks back uh several years ago now have a team of about 18 people in Charlotte North Carolina serving 220 customers and clients helping them them to get a return online when it comes to Social and social marketing and social influencer marketing they raised $9 million total they're looking to maybe do 7 to 10 million here shortly economics wise again 220 customers about five $5,000 rpr that's obviously top heavy though they're moving Downstream doing somewhere between 900 to 1.2 million bucks per month in Revenue less than 1% gross customer turn per month really sitting on a rocket ship Richard thank you for taking us to the top awesome thanks Nathan Nathan lka here and if you enjoyed Richard today go back and listen to nectar yesterday he's a runs a fintech accelerator which has helped 60 companies he helps link the banks that works with with the startups via $177,000 investment and a lot of Consulting and coaching it would mean the world to me if you guys got any value from this episode if you would go leave a review on iTunes right now and then subscribe you know I hustle like heck to get these episodes out every freaking day for you guys and trust me I love it I would do it with no listeners but boy oh boy it makes my day and it makes my team's day when we see great reviews and get your feedback so thanks so much drive I love giving away free money I feel like o are giving away cars and I have something special for you today how many of you have heard our super sharp guests talk about success they've had with Facebook and Google ads well all of you listening right now yes if you're listening you get $100 in free AdWords here's how you get it okay again thanks for listening get the free $100 from Google right when you sign up with my website post provider HostGator go sign up now to get your free money hostgator.com naathan again that's hostgator.com [Music] Nathan so guys I'm so glad to be back in Austin I just got back from a major tour of Southeast Asia went to Sydney Bangkok Bali and Japan and you know I always get sick when I travel and this particular trip my gosh 15 different airports 20 different hotels I mean imagine flushing in airport bathrooms I was worried about germs and getting all the nutrition I need I mean finding a restaurant in Japan difficult because nothing's English so it's hard enough to figure out the train system but my point is I had a guy named Drew canoli on the show who said Nathan if you're concerned about that take these little green packets with you you just mix them once per day with water they'll keep you super healthy you get all your nutrients and they'll keep you from getting sick so I took them and guys they worked unbelievably well I got no sickness just mix them with water once per day they didn't make my water bottles all sticky that's like nice a lot of these mixers they make them sticky it was very clean and smooth took them once per day never got six they've got 11 superfoods and they're perfect if you're not traveling but you're just on the go from your office to work so you can check them out at Nathan la.com slj that's Nathan lanka.com slj [Music]