How Sendlane CEO Jimmy Kim grew 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 let's heart hard turn here let's go to product assembly what have you released over the past three years oh man uh a lot uh we released our v3 platform which was all hyper focused on e-commerce then we started going really deep into e-commerce so instead of going wide where a lot of our competitors are you know trying to add a lot of little communication platforms and new things we were really deep into email just my love of email and just being an email marketing expert myself i could see so many use cases to really drive revenue at the deepest level so you know everything we do is very behavioral data driven and uh allowing uh allowing the merchant to be able to make these decisions and kind of drive everyone down to a true personalized experience so uh you know we take like for example you integrate to shopify right now and you get 100 points of data on the customer instantly you can live segment it right on our platform and really drive a true behavior based around the information that they've given you location to revenue to what they purchased what category down to you know if it was shipped or not i mean we we cover all sorts of different points interesting and how many customers are using the tool now uh we have about 1650 customers roughly 16.50 okay so that's very different from 2017. you said you had about 6500 customers in so it sounds like you let a bunch churn but the ones that are paying today pay more yes absolutely so they're paying about 255 bucks roughly uh a customer now uh we were probably i think on the last uh one was what twenty five or thirty dollars 24 25 around there yeah yeah yeah so you've got 10x change you've 10x the average ac the average acv yeah interesting and okay so we understand where the capital stack we understand you've driven customers you you last one in 2017 but when did you launch the company uh so we launched the company in 2015 january 2015 technically but for real when i jumped into the company fully hands-on when i exited my other two companies where it's august 2017. okay august 2017 and how many people do you now have on the team uh we have 38 people now 38 okay and what how many engineers uh nine nine engineers okay and any quota carrying sales reps uh well we just started ramping right now but we had two as of last month and now we're at seven as of this month with the vp of sales as well too so break that down the first sales higher and especially scaling those early sdrs early aes there is not easy you have to you know put a quota in place and you're kind of guessing early on how did you make that first quote a guess let me let me i'll back up and tell you a story real quick my first sales team completely failed all right and when i talk about that is i did launch a sales team i hired people i thought like i could bring in the big logo guy and the vp guy and like really scale his team and he'd go off and he or she would go off and hire their team and we'd get it going and then you know my quota was based around because that first before i hired that first sales person it was all me right i was selling everything so i assumed if i could do this then 50 is what i would assume a quota should be for a sales person as they're coming to the company well a lot of the processes a lot of the things were broken up through that and we ended up having a big layoff of the entire sales team in 2019 and we realized and i realized that hey look we didn't have a good repeatable foundation process in place and i realized that that was the problem to begin with so i actually buckled down from september of last year and essentially became the salesperson with one other guy and we repeated the process and nailed down everything from cadences to uh how the process works to how do we find people how do we outreach to people and we really laid it down over the last like 10 11 months and then when we got to a good process we hired another salesperson i think in uh march march april of last this past year this year and we basically repeated that process made sure that he could carry it get to his numbers and then we were starting to grow our sales team right away so then i went out and found a great vp of sales with tons of experience under his belt five exits and all that good stuff and brought someone into the team and now we're now we're at a point of scaling and you know it's been just a different journey for uh per se and i i kicked myself because i wish i would have figured that out before a year ago and i would have saved probably half a million dollars of burn that i spent uh you know trying to grow that sales team and losing it after you let that first sales team go and you buckle down with one other person on your team you said you want to make sure he could run a repeatable process unquote hit his numbers what was the target how much new mr do you want him adding per month sure uh his mrr was uh right roughly four thousand dollars that's what he needed to hit okay interesting and sort of get me in your brain there why four thousand four thousand came out to 567 000 ar this in a year right and we we kind of backed out all the data and realized that based around our metrics where a company was where our average revenue what our attack was we knew that that is where they needed to be in order to kind of maintain profitability over uh about an eight month period to start seeing the payback fully reoccur in the company as well too so we started to kind of understand the metrics and data so i got into velocity i got into a little bit of everything in order to make sure so i got really deep into the sales playbook in the world so 4k quota per month for one sales rep if they do that back to back for 12 months they've essentially added 50 000 a new monthly recurring revenue to the business or 600 000 in new ar do you follow a traditional commission structure you pay out about 30 percent uh we pay out a little bit more on the on the commission structure we pay about 40 actually so we go a little bit more aggressive on it just because the the volume it's a velocity gain a little bit more for us so when you have velocity you know you want to keep them entertained especially if they're bringing in deals that are you know 500 i feel like giving them that little bit extra bump makes them feel a little bit stronger about you know their success as well too so and i want everyone to crush my quota too by the way so these quotas are like i mean my reps are crushing my quota which is a good thing right how many of your seven quota carrying reps will be quota in september of 2020 here uh probably two considering i've only have uh the five of them are brand new as of oh okay age or less so only two will probably hit it but those two are the guys that have had and they will crush the quota and how long will it take the five to ramp up to where they're beating how many well we saw about three four months okay not bad and when you say 40 commission if i am your one of your new sales reps and i close 4k new mrr you were saying that i'll get 1800 about 40 that month how long will i get that 40 commission on those new accounts i brought in it's just well it depends so it's monthly or annual right if they get monthly deals that we pay out full there and then annual they get a percentage of the chunk they get a little bit less they get five percent chunk of the annual payment so if they come in monthly they get forty percent of the first month's payment and then they bring them annually they get five percent of the entire annual chunk oh i see so they really you sort of every sales rep starts from clean every month they're not sort of building a commission stream over time correct i mean sales cycles and everything else going but it's a very black and white commission stream right now yeah i mean the nice thing about is that it's simple i imagine you must get a little pushback though from sales reps going i'd love to get commissions longer than just the first month yeah well the the point is to push into an annual deal and get five percent correct yeah interesting um interesting okay and and so let's go through your funnel for a second so i'm on the site i click request a demo you ask for first name last time phone number etc about how many people are filling out this demo request you know whatever over a day or a week or a month whatever time period you're doing we're bringing in currently inbound about uh about 300 qualified uh leads from our website uh or uh from our website through corporate and internal onboarding demos so either through there or if they sign up for a trial and they go ahead and fill out all the right markers it gets over their sales team and our sales team reaches out and over what period of time uh 24 hours i mean oh daily so daily 300. yeah oh no no not daily monthly 300 roughly got it got it okay per month got it and so how many you have nine you now have seven sales sort of quote occurring reps how many demos are they doing per month uh our goal is to get to one demo per month for each of them again because a lot of them are new right now they haven't gotten there obviously right now so we haven't gotten there but the goal is not per month one demo per day per business day so 20 demos a month is their goal okay got it so 20 demos per day and then your help you're hoping that they close how many of those uh we've been on pace right now we're closing 60 of our demos so when we get on a demo uh we'll close at 60 okay got it so if they're going to close 12 accounts at an average acv of salt call it like 200 bucks a month right they need to either do more than 12 accounts or sell at a higher price point than 200 to hit that 4 000 quota the sales team right now is running about 8600 acb right now on their closed deals on average on average correct interest and how many are they usually up front uh no uh 20 are up front right now and the other 80 are monthly still so okay something's still not shifting that's still healthy i mean 8 600 average acv on these closed accounts is what is that 700 bucks a month on average i mean that's that's that can grow quickly um interesting very cool what else should we know about the business that i haven't already asked about uh nothing really i think uh some of the things that we've really just been focusing on in the company i think last year's kind of pain exposed a lot of things and we we've got our turn control we've got you know which term uh churn so two sectors i like to be uh you know overall look i'll do two two ways uh overall churn entire company running about four percent on the revenue turn about eight percent on the logo side on overall company but if we hone down on the revenue where the sales team is operating which is what we call our pro or enterprise level uh we're turning about 17 annually on that and we're doing net positive retention so we're doing about 105 percent net positive retention on there so our revenue turn is not there it's just all logo insurance on that side interesting so on that cohort that you do you do have touch on there is a demo you have you clearly have expansion revenue to get a 100 net revenue retention what are you typically upselling oh we're not upselling it's natural growth so it's all subscriber or contact count so based around content growing any good business that we bring in that grows will naturally be able to expand over time yeah you've got a really nice um sort of contact calculator on your pricing page where if they go from you know 25 000 contacts to 50 000 contacts they can sort of move the thing and see what the change in price point is yep exactly do you like this model in terms of pricing or would you make any changes you know it's simple i a lot of our a lot of our competitors will have that model plus a cpm model plus this model and they'll start adding a lot and i understand the business side but we find that customers just get irritated by most of them half the times the customers do come to us like when we take we started recently taking a lot more on the higher end so like the oracle brontos the uh you know the dot digitals list track type users that's literally their pain point that they get frustrated about because they paid this huge chunk of money and they have these cpms and these caps and they end up feeling really limited on that side and for us we own our own infrastructure so we don't care it doesn't actually cost us more money to send more emails outside of simple server usage so we kind of sat back and said you know what we're going to be the unlimited guys and just stay on the unlimited side and we'll obviously don't want to be abusive but want to also allow customers not to feel that pain point so we've kept the pricing simple i think we're going to continue to keep it simple but it's something that we're still continuing to be talking about the last couple questions here back in august of 2019 according to ahrefs you ran a pretty aggressive paid campaign you are ranking for you know 41 to 50 sort of keywords you then abruptly sort of turn that off what happened with that test uh it was just a matter of august did you say august 2019 yeah august of 2019 and ahrefs is sometimes wrong by the way so that you maybe weren't running any ads but it's showing that you ran a bunch of ads in august of 2019 so about a year ago i think i kicked off a bunch of ads maybe that's what it is i think i kicked off and started running him at that point so uh that's when like we in august september is when we started making a lot of shifts in the company so we'll probably pull down a ton of ads relaunched a bunch of stuff we also relaunched it with a new site uh so that's probably what it is is like our last site came up right around august of 2019 roughly so if that's when we put up the newsletter it's probably when we added new google sem servers new facebook ads and did a lot of new advertising just refresh style touch on seo for a second because you've got a great domain rank of 71. how have you grown your your domain authority yeah uh complete content marketing focus uh really high quality content uh really focusing on just getting uh great content in the world and then kind of have our little content engine where we're you know uh advertising out with all our content getting more people into it and kind of putting them through our flow and funnel as well too so one of our biggest strategies that we really changed was instead of going out and trying to advertise the product or advertise the demo we started advertising content really high value good content actionable and basically we were able to drive our cost for acquisition down by almost 3x so we're able to reduce that by really focusing on the content side and letting the content speak for itself so you name one of those pieces of content that sort of does really well for you that you run ads to yeah uh the newest one that we uh one of the newer ones i mean the big book of funnels for example is one of the ones that we have or the the you know the definitive guide to abandoned car uh the segmentation book that we just released so we're releasing a lot of these very core focused actionable uh books that we're putting out there and then essentially what it's doing is we're driving leads about two three dollars a lead that's what we're pulling up leads at and then from there we're getting about one and ten as a sales qualified lead and then uh naturally we're bringing one in ten of those people uh ten percent of those people are actually signing up for a trial to over over the 30-day period and then we're naturally converting about eight and a half percent of those people super interesting yeah i'm on the send lane resources page big book of funnels it's basically a nice cover it makes you really curious and then ask for first name last name email current size and are you in the market to buy a new email marketing tool and you're saying you pay two to three bucks to get a new opt-in here and then if you get 10 of those so you pay 20 bucks to get 10 one of them will convert into a qualified lead and that helps fuel your sales reps demos correct fascinating jimmy you're doing all that you're running all kinds of tests man this is great well you know i've always been the data guy so i've been just like drilling into data and trying to figure out how to make better decisions for the company always with it so where what where would you put your sort of overall weighted calc right now to get a new 250 a month account you're gonna pay what yeah so you know the numbers don't make sense because our team has been lean and we don't spend a lot of money so like last month or two months ago was the last time i really our attack was 254 on a 250. so they don't make sense right now so uh at this point because we didn't have a sales team we didn't have a marketing team as of july we had one person in marketing and me so now we have three people we're obviously out there hiring a vp of marketing now so we're getting to a point where we're gonna start growing that and i know our cac is to go up a lot so yeah what are you comfortable though in terms of payback period you'll go up to what 12 months eight months eight months eight months is my goal is my mindset of goal like max i want to go to eight month payback all right jimmy let's wrap up here with the famous five number one favorite business book ooh that's that's changed a lot lately um crossing the chasm has been my favorite book lately because that's what i just did in 2019 until now yeah it's a good one so you sort of considered going from sort of two million to five million that was really your crossing the chasm moment well it was switching complete verticals launching a new platform saying goodbye to old customers and also saying hello to new customers so yeah a little bit more even than that so number two jimmy is there a founder that you're really following or studying right now uh i can't say that i'm following anybody like very very closely right now um i would say that i look at my mentor as my like my coach mentor i work with this guy named brett fox uh i don't know if you've ever heard of him but uh he's a big quora contributor but he's been coaching me and helping me all year so i would look at him as someone i'm looking up to currently right now number three besides what's your favorite online tool for building the company uh right now it's omni graffle right now i don't know what omni graffle grapple i haven't heard of them it's a mind map tool basically allows you to build out your mind maps around flows and everything that you need to do number four jimmy how many hours of sleep are you getting every night six okay and situation when you have two kids married yep married two kids and how old are you i am 39 now 39 last question what's something you wish you knew when you were 20 uh focus focus on one thing and stop trying to do 900 other things i think that's been my biggest learning lesson right now is just if you focus on one thing now i'm not talking about just focusing on business but even taking the business and focusing on one vertical or one niche and really being focused on it would have been a lifesaver difference in the businesses that i've grown guys senlane.com has just passed five million dollars in annual revenue you heard it here first up 3x from november of 2017 in terms of run rate the big change they went focused they hyper focused now on e-commerce sites and the email market needs of e-commerce brands average customers paying 255 dollars per month serving over 1 650 customers they raised some capital to do it 38 people on the team so far just now scaling up their sales team to see if they can get some repeatable process there to drive additional mrr growth jimmy thanks for taking us to the top thank you for having me one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big 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