How Sendlane CEO Jimmy Kim grew Sendlane to $11.3M revenue and 6.5K customers in 2024.

hello everyone my guest today is jimmy kim he's a digital marketer turned tech founder built a platform in 2013 to solve his own problems which eventually turned into a business in 2015. that business folks is called send lane.com he's limited up in sunny san diego california jimmy kim you're ready to take to the top yeah absolutely thanks for having me back thanks for coming back on it's been um gosh 18 or so months what for those that missed the first episode quickly what's sembling do uh we're email marketing for e-commerce yeah okay that's different than last time so you are now hyper-specialized in e-commerce tell me about that decision to go sort of niche correct correct oh in 2019 we kind of looked back at all our data we surveyed our customers looked at all the data around like you know ltv rpoo and just kind of really figuring out what our customers are really like and what look like the good longevity for the future and uh we made a big decision in 2019 to rebuild a platform which we'll call v3 now that's now live uh last in 2019 it went live and hyper focused and hyper specialized on e-commerce on really deep data and like how we can take someone to the next level beyond name and email what did you feel was broken where you felt like you had to make that choice you know you did an analysis and you said we have to specialize in a niche let's go e-commerce but but what was broken that made you do the analysis in the first place i think i think the top level is very easy to find a customers let's just start at the customer level what we were serving before like a lot more of the content creator space it was just a more difficult market to find and we found that the the size of these customers tended to be much smaller so you would have to get more velocity under your belt in order to do it and they turned a lot faster because a lot of them were just starting businesses they were a little bit more uh immature as a business as well too a lot of times and you know there was mature businesses as well too but a lot more on the lower end side of things as well too so that's kind of how it all started for us kind of starting to figure out that our customer side of things weren't uh weren't exactly a fit for what we wanted to do for our future i see we're recording this down here on september 15th give us an update revenue-wise what'd you do in august in total revenue uh we crossed a little bit over uh four hundred and twenty thousand dollars and that's pure sass uh pure sass correct intro wow okay so that's great growth because when you came back on in november of 2017 you were just flirting with 150 000 a month so you've almost 3xed over call it 29ish months nice growth there have you bootstrapped or did you raise uh we did raise in uh december of 2018. we actually raised some money uh then as well so we raised three million dollars okay and that was equity or debt uh equity okay it was equity have you used any debt to drive the business growth as well or no yeah actually we actually use that to uh you know we've uh been with lighter capital a couple times now with a couple different tranches actually uh just as recent recently as the company kind of exploded this year a lot of our growth happened in 2020 this year and uh as the company exploded we took on a little bit more debt just continue to capitalize and keep lots of money in the bank a lot of sis founders don't understand what it means to take debt as a sas founder can you sort of educate them at a high level sort of why you did it yeah absolutely i mean it's very simple there's two things that come into place one the time frame right like going to raise money takes forever doing debt can takes five seven days right that's the number one and number two is i feel like people take uh give away equity too easy and too fast uh it's worth a lot more money than the little bit of money that they're giving you today for the future of the company growth so for me i i'd like to hold back only on big milestones and when we really need to and i think that's where we think about debt a little bit more and i i look at it as if i have a plan that i can take that money and make more money than i'm paying on interest rate then it's worthwhile that way and it's much smarter in that way because secondarily you don't have anyone extra telling you what to do with that money or you don't have people also looking at that money and trying to figure out exactly how you're spending that and it lets you kind of keep control as well too how do your equity holders your equity investors i believe they were zing capital how do they feel about debt uh they're okay with it they understand the need and use for it and they understand that as long as we're taking it and using smartly uh and you know using it for a reason then they're okay with that as well too i mean they offered a follow-on but we actually held off on that for the reason that we rather hold equity and if we go to another round in the future then we'd rather be able to kind of come in that clean yeah so i mean if you go do another run in the future how do you as a ceo and with your leadership team decide do we go and do a debt round or do we do go raise equity i think it's all goal oriented right where was their goals how's their profitability numbers where are we kind of flirting with what what do we want to get into and how do we want to spend that money right so you know if i wanted to go buy a bunch of companies and start acquiring for companies then i'd probably go take a raise out right because that makes sense but if i'm looking to grow the company and start adding head count i think it's much easier to take in 500 500 000 or something like that and be able to kind of float the growth and get you there and i actually like the pressure too of not having too much money in the bag i definitely learned a little bit of a lesson with uh my last raise where you know when you're taking a lot of money as being a bootstrap founder and taking in some money it definitely tried that pressure of trying to grow get starts putting pushed on you when you have the money it makes it easier to do that but ultimately if you don't hit the right levers then you ought to you become you go back to square one really quite quickly yeah now this is debt i mean you have to pay it back right so so to your point you have to be smart about where you're investing the dollars because you've got to get a return help founders understand if they're thinking about taking debt i mean what how are they going to pay it back over what period of time what's the cost of the capital typically yeah absolutely um you know for us uh with uh with lighter than we worked with them it's a three year term right it's revenue based so it's based on your revenue and it's tiered buckets based around your revenue and depending on how much you're making they're taking a percentage up to about nine percent or eight and a half percent of that revenue per month and then coming down from that obviously as you hit milestones but uh essentially you just gotta plan better and make sure that you're bringing the cash flow in on top of it and knowing that you have to kind of look at like how much does that money go as far as paying back the debt and when the money needs to be coming back in so you got to be looking at the long scope of the picture of your customers so if you spend 500 grand here you've got to make sure that you've recovered your 500 grand and start making money with it down the line as well too so you know we got you guys have to think long term but you also have to have a plan for it and there's a lot of revenue based financing options in the space lighter capital is obviously one of the larger ones uh help people understand how much like how many months you said three years eight point five percent to nine percent etc but there's also usually a repayment cap so if you take 500k you got to pay back some multiple of that can you explain how that works yeah absolutely it's obviously it's kind of i mean it's it's a uh i think for us it's like a 1.3 per 1.3 x roughly so essentially over a three year term we're going to pay 1.3 times more than we took in as money uh and it's essentially just spread out over that revenue so the good thing about revenue-based financing that i like is if you do have a rough month because maybe you're heavy on the front end of the month front end of the year or the back end of the year with your revenue allows you to kind of float that money a bit obviously there's a catch-up period if it becomes a problem but they're basing it off of your current revenues which makes it obviously if you're growing you should be able to achieve and grow past that really quickly as well too got it so just to make that really clear if you raise 500k from one of these rbi firms today and you have a 1.3 x repayment uh cap basically that means you're gonna be paying like 650 000 over whatever the term is three years based off 89 of your monthly recurring revenue correct okay jimmy...