How Rocketreach CEO Amit Shanbhag grew to $221M revenue and 75K customers in 2024.

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 to 5 and6 million he is hent on global domination we just broke our 100,000 unit soul Mark and I'm your host Nathan Latka 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 this is episode 635 and coming up tomorrow morning you'll learn from Amar PRI cowcat his Bangalore startup just hit $40,000 a monthly occurring Revenue helping 18 customers get consumer data using social intelligence with his company thr good morning everybody Nathan ladka here my guest this morning is am shanag he bootstrapped rocket reach from zero to over 300,000 registered users in its first year rocket reach and the rocket reach API are trusted by some of the largest companies on the planet like apple Google Chase Morgan Stanley just to name a few he has more than a dozen patents and started his professional life writing code for geostationary satellites he's also a judge for the MIT 100,000k competition and hopes to invest more time and money back into the startup ecosystem Amit are you ready to take us to the top sounds good I'm here all right so last time we had you on it was actually a very good episode many many people really enjoyed it that was episode 465 in November of last year and at that point You' passed 120,000 paying customers uh your goal for uh or you pass $200,000 in month your curring Revenue your goal for 2017 AR is to hit uh you said $10 million are all those on track you're beating those goals yeah so yeah I don't know I don't remember exactly how many users we had back then but we have almost 300,000 users now um our growth has continued to accelerate so all the all the signs definitely look positive and uh we're also investing in a couple of features in the uh product that uh we hope we really accelerate the revenue when you say be specific with 300,000 users people don't know what that means are those paying customers or free users no those are so we have three tiers of users there are there are Anonymous users who just use a site a little bit and go away there's signed up users so there are 300,000 signed up users and there are paid users who are less than 300,000 obviously okay and last time you told me you had about 120,000 paid customers are you still at about that same area or have you gone up to 130 140,000 yeah they're not exactly exposing that number but it's somewhere you know it's definitely lower than 300,000 okay well but am me you you already told me that number on the last episode that it was 120,000 I mean all I'm asking is have you grown above that over the last four or five months we've continued to grow we've uh you know ever since March of 2015 we've had you know double- digit growth um High double digit growth and that's continued to continue to occur okay great and you so you mentioned one of your focuses here in q1 is to get more teams signing up so so how do you do that pragmatically how are you approaching that yeah so a little bit of a journey right so what what what have we been up to so we've um we we tried to do a few things to figure out how to accelerate a revenue growth one of the um approaches that we tried is we tried to go more into the lead generation space which is um rather than just providing contact information and just doing contact Discovery let's give customers a list of leads based on uh users who signed up for their service every day or something we call it lookalike uh lead generation the key learnings from trying to do a lead generation product were one that uh the end customers Hold Us responsible for much higher um you know a much higher value of you know a much higher quality of data and for things that are out of our control if we provide a list of leads to our customers then they have to actually you know reach out to them and follow up on those leads um and how well they do that will affect how they gauge our data which which is sort of unfair so this is like the same spaces like Inspire beats or Leo or lead genius prospec toy Pro leads these kind of come toer these kind of companies right absolutely twer probably does uh contact Discovery but lead genius is a good is a good example of somebody that does lead generation okay so if you think about lead lead genius right um they charge you much more per row of data because they are giving you what they would consider a qualified lead yeah they've got about 200 customers and their monthly RP is about 3.3 Grand 3 3,300 bucks exactly um so uh you know so so the problem with that the problem with that space is one um the the uh the bar is very high like the quality of the data has to be very very good otherwise people will um people will churn out very quickly so how I mean could you not get to the quality of data that like a lead genius has what was the challenge there so we did not so Le genius uses a combination of people and software okay uh we wanted to do it completely with uh completely with software not rely on human intervention so one of the things that we noticed is that we started hitting an upper bar of how good our quality was which was what if if you give me 100 emails how many of them are going to bounce um it's not the bounce it's let's say we give you a 100 uh emails the question is how many of those are good leads for you and that's a subjective evaluation um we found that we were topping out out at about 40 to 50% good leads were good leads the rest of them programmatically generated were not great leads okay the other part of the problem is you've given this data set to your customer they have to now follow up on them right so they could do direct emails they could do Facebook ads Twitter ads um they they have to call those people up if they have phone numbers right they have to follow up on that now the the way that they do that their sales pipeline if that's not good they will eventually pass the blame on to us and then say you know this did not work because the leads were not good enough how does lead genius solve that problem to be honest I don't know I I don't know whether they are able to solve that problem this is you know as long as you're providing leads and you're not in control of pipeline you are you know you're inadvertently going to be held responsible for things that are out of your control well there yeah I mean I look that was episode 265 for anyone that wants to go listen to it but I mean they've got less than 2.8% gross customer turn per month and their Mr is above $700,000 per month so I mean look their ARP is way higher than you maybe they're putting humans on every account they only have 200 accounts right um you know if they're if they're able to do it with very low churn that's awesome but what we found when we were doing it ESP especially because we were not you know we were not doing the human intervention part of it um is that first of all the cost of getting each customer was very high because we had a you know the sales cycle was long lot of handholding How High what was the cost um I mean we're talking about like almost $1,000 to acquire a customer okay and what's your arpo that you have on average so we never really we never really release this product to a point where you know we have good metrics on these things we have 120,000 customers though you must you must know what an average is that's a huge sample size right for lead generation though the lead generation product is not wasn't that we basically piloted it we never really took got it got it so the the amount of money that we were getting per um per delivery of data set was somewhere between $3,000 to $7,000 right and and the thing is that they wouldn't last for more than two to three months because eventually they they would um eventually they would find that the the quality of the lead but that math Works doesn't it if you spend a grand to get a user that pays you three grand per month that's a grand for every nine grand I mean why that math seems to work to me it does work but the margins are not as high as a selfs serve uh model okay I think this the scaling of that is much much more difficult okay and were you powering I mean a lot of your data you want to do it with software were you kind of using a combination of what clear bit and full contact I mean what other data sources were you using um um we're using a bunch of open apis right so we're using a bunch of search apis we're using can you name a few though yeah I mean we're using angelist crunch Bas um those those two things for sure um but then the other ones are a lot of them are spiders um so they're basically just looking at open HTML pages and are those spiders things that you've built your internally or you're paying access for other people's spiders It's a combination so we've got our own search cluster as well as apis interesting who Who besides you guys who you think does that really well the spider approach um um I honestly don't know because um and there are companies that do it I'm not sure if axium uses this but we uh yeah to be honest I don't know the answer to that question we definitely use spiders we definitely use entity recognition there have been companies in the past that have used it like connectifier um but to some extent I think connectifier also used their browser to collect a lot of the data and from you know the plugin to collect a lot of the data from the users browsers which we actually do not do at all um so and then going going back to your other sources like angels and crunch base I mean do you pay crunch base is it what do they have a model where you can pay for Access yeah a lot of the a lot of the apis are paid so that's that's one of the reasons why our um you know is high yeah interesting that's why it's not as high margin um the the contact lookup model is relatively high margin um especially because we have no like no marketing costs no sales costs what is relatively high margin like 85 85% gross margin something like that um so start of this so we we we would say yes about 8% yes okay got it uh got it cool okay so what did you do you looked at the product you put it in a beta you didn't like it what' you do so we decided that you know the direction that we want to go with the company is not a legion Generation Um you know not lead not a lead generation play but a more of a productivity play so we want to think we want our customers to think of Rocket reach as a productivity tool that is always installed you know on their browser always something that they access and they don't think a lot about like it's it's almost like you know a Salesforce anybody who's in sales uses Salesforce anybody who's in a sales team uses rocket reach right uh we want that wanted to become more of a def facto um productivity tool for sales teams and so the features that we're focusing on um you know they are catered towards teams being more productive with rocket reach so uh directly being able to send emails through our website through our plugin being able to track their effectiveness uh being able to add and remove users we've made our plug-in a lot more uh powerful so that uh it can pick up Le you know it can pick up basically profiles from all sorts of other websites um so essentially making it easier for people to use and where are those pricing plans because on your website I only I see 049 99299 but the only thing differentiated those really are number of lookups per month absolutely yeah we want to keep things as simple as possible Right but where are the team features like if I want to try those where would I go um so right now we don't have a self-served team feature if you want to you know if you want teams to sign up for Rocket reach the best way to do that is to contact support at rocket. go and we set you guys up got it but it will be I think in the next two or 3 weeks you'll see a um Self Serve team signup feature and it'll be in your account settings you'll be able to go to your account settings and invite the members to your PID plan got it and what are you guys uh I think last time we spoke uh you you had told me that well how much are you raised you're with boot you're bootstrapped right we're absolutely bootstrapped yes and still about you said last time team size was about five people has that grown or is it still about five uh we're probably about to add two more people okay so call seven people you're bootstrapped you have one of the EST because you're bootstrapped U uh uh Revenue per employees in this industry when you compare across Leo Lee genius everybody else I mean are you thinking about raising capital or do you think you can just fuel growth off Revenue um you know I think that it makes so if you had gone with the lead generation model I think that we it would have made sense for us to uh raise money scale the sales team and then grow Revenue grow Revenue that way that was actually the original plan but what you're trying to do is trying to scale without hiring a sales team MH um um and it remains to be seen whether that can be done I mean there's there's a healthy amount of skepticism about it I mean we spoken to a lot of people who say you know you really need a sales team to uh grow quicker and that might is might quite possibly be the case U but we want to find out if we can do it with software alone yep well and and just to make sure I'm going back on some of these numbers so last time we spoke which was O October 18th 2016 you had said you you had pass 120,000 customers and our po was about 70 which is in between all your self- served pricing plans right now I mean that puts you at a healthy I mean your Mr is above two 2 million per month right no I mean I really don't want to get get into Revenue numbers at all just because it's very very wa I mean I mean but you said I mean this I'm literally this is taken straight out of your mouth from the last step so I can't take 120,000 times 70 because that's what you told me your customer number was and your Ru was last time right so the per user Revenue um per user monthly revenue is about $70 so that's actually accurate um the um the number of paid users is is kind of complicated right the reason it's complicated is because there are teams um and that's why I just don't feel I'm sorry yeah but I mean sorry but this is I mean you're like a super smart guy you're picking winners for MIT competitions this is not a complicated question so you have like number of logos and then you have number of seats across all the logos and you either have a credit card or you don't so what I mean what's the number is it is the 120,000 number the number of seats across all your logos so but to be honest I think there was a bit of maybe a bit of uh misunderstanding so when I said 120,000 users I think this is probably like maybe six four five months ago I don't remember you said customers though because you said he had 300,000 users and I said how many customers you said 120,000 I uh I mean I have the I have the recording I I reviewed it before this one so so let's clarify we can fix it now okay um you know I think those were when I gave you the 100 something thousand number those were registered users they're not all paid users right um 300,000 right now is the number of registered users they're not all paid users um so our revenue is not like $70 million or something that it's not crazy like that um it's in the millions and it's in the millions well I'm not trying to necessarily get to your Revenue numbers but I just want to get a sense of of scale on terms of your customer base so I mean do you have more or less than 10,000 paying customers paying you 70 bucks per month yeah I will not sure that I'm sorry okay why not because the numbers you again it sounds like we're way off from the last time you came on the show like it's it sounds like it's a completely different number right yeah I why don't you want to reveal it what are you scared of I just I don't think there's a need to reveal it it's I mean you know if somebody somebody wants to buy us we'll be happy to talk to them reveal our numbers and stuff like that but um it's just not something that I so I mean one of the reasons I ask a lot of these questions on the show is because when people are listening they want to take value and advice from people that are maybe about their same size or where they're trying to go that's why I ask the question so the problem with this is somebody that has maybe 100,000 paying customers at a lower arpo is going to is going to is going to see this and go oh I should listen to a meet that's going to be valuable but you're saying you your model is actually much different your model is not high volume number of customers at a low RPO maybe you have way less customers I mean can you give us a big range stay as vague as you want in terms of number of customers um it's in yeah let's say it's in the um it's in yeah it's give me a big range and I'll stop give me a good range and I'll stop pushing you on it sure it's somewhere between a th000 to 50,000 okay good that's helpful all right let's move forward so what what are the plans moving forward into Q2 kind of where do you put your focus um yeah so so as I said right like people so so we're very sticky people don't actually churn a lot at all right we talked about churn last time I mean it was actually sort of around the 9% Mark and what we've noticed is that gross customer churn per month was seven yeah you told me 7% yeah something like that yeah and that has gone down significantly um so over the last few months I think that uh you know we've made a bunch of quality improvements to our site and the churn has gone down quite a bit um a lot of a lot of it was two of the main reasons that people used to ch was basically quality of data and then we had some stability issues and we fixed both of those um so people are just more satisfied with the product got it the other there's a third reason that people CH that we still haven't fixed which is you know what you once you have a large contact list what do you do with it and getting the data out of Rocket reach and using it for something is still a little bit hard so that's what we fixing and um hopefully with that um you know both uh both are both our um you know turn should reduce and revenue should increase the other thing that I you know want to mention about our Revenue um which is interesting is that one of the things that makes it hard from a revenue perspective to kind of clearly gauge what revenue is is we also have an API um and the API it just runs at a very very different scale yeah I get you're talking about when I'm trying to do Mr calculations or something like that there's two you have two different revenue streams is what you're saying yeah I think I mean but I imagine you probably see very much 8020 rule here 80% of your Revenue comes from the recurring subscriptions 20% probably comes from the API it's not that it's not that l-sided actually okay um it's probably yeah we've see so some some metrics right I think it's like 40% API 60% um consumers and then Internationals somewhat similar actually 60% us 40% International okay top tribe as many of you know I sold heo and every one is always ask me what my expenses were when I was building hoo well a big expense was that I spent over 3 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 lanka.com freshh books and enter the top in the how did You Hear About Us section I meet that's helpful man let's wrap up here with the famous five number one what's your favorite Business book I have a good one all right good that's good number two is there a CEO excuse me is there a CEO you're following or studying right now um I think Sund P you know especially since he's been in the news I've been reading about him a lot what was the name Sund P the CEO of Google oh yeah good uh number three is there a favorite online tool you have besides your own uh Google what specifically Google search Okay number four how many hours of sleep do you get each night uh more now it's probably about four to five okay and um what's your situation married single do you have kids I'm married I have a fouryear old oh very good and how old are you I am 37 all right take us back 17 years what advice would you give your 20-year-old self yeah I think I said this last time uh you know when I was in my early 20s I think I worried about life a lot and uh you know at a time when I should really have been enjoying life I think I was worrying about it too much um and I think for everybody who's young out there I think take risks uh you know give everything that you're doing a good shot but worrying is not something that actually is productive and I would advise against it guys there you have it take risks but don't worry it's not productive from a meet shanag again founder of Rocket reach they've got a team of five people adding two more out there in San Francisco again helping you get better data better lead data specifically they've got between 1 and 50,000 uh paying customers uh doing a turn now is less than 7 7% gross monthly CAC anywhere between 10 and 30 bucks spending on the product line about a 40 60 split between API revenue and SAS Revenue me thank you for taking us to the top thank you D if you enjoyed a meet today go back and listen to David yesterday his lice killing brush just raised $2.2 million pre-sale so interesting that the pre-sales raising that much money it's going to retail for 20 bucks to kill lice with no chemicals 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 top dri I love giving away free money I feel like oh we're 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 adws 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 poost provider HostGator go sign up now to get your free money hostgator.com Nathan again that's hostgator.com 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 bathroom I was worried about germs and getting all the nutrition I need I mean finding a restaurant in Japan difficult because nothing's in 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 mixtures that make them sticky it was very clean and smooth took them once per day never got sick so 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 juu that's Nathan l.com slj