How Shotfarm CEO Mike Lapchick grew Shotfarm to $1.4M revenue and 100 customers in 2018.

hello everyone my guest today is Mike lapchick he's the founder of the Chicago Catalog group which happened back in 1996 and was acquired by Lake capital or the Hagin marketing show which is now Epsilon I believe in 2006 he went to the daily expense of man a facilitating the exchange of product information between their retail and brand clients and this is where he saw an opportunity to build an exchange platform that automated this process he launched his current company shot farm back in 2010 which enables retail channel different rapid retail channel and product assortment expansion for more than 12,000 brands and retailers today Mike are you ready to take us to the top uh yeah you hope right I've been ready for seven years yeah you hope good alright so tell us about the company what do you do and what's your revenue model how do you make money so it's a straight up SAS based model so it's you know mor it's all about mr yeah what do you do what does the company do yeah so so that we understand the revenue model how do you tell me what you do for clients I don't know if you can mention the one we talk pretty show up down here in Dallas but tell us what you do yeah so well let's see yeah this is what I was I was alluding to I'll give you a just a cold start right as if is if I'm telling my mom so so essentially the the private information that you find on on an e-commerce site Amazon or in e-commerce site all that information about a product comes from the manufacturer okay that's that's how it gets there or where it comes from I should say how it gets there is a whole different story and there is no protocol for for the transfer that information or the information itself so every retailer has a different requirement both from a data standpoint and also from a transfer is different so so what we do is we sit in the middle and we centralize that whole that that whole process so that the manufacturers can upload their product information in in their own way and then we distribute it out to retailers in the format that they specify and help me understand more kind of size of companies you're working with what would you say the average companies paying you per month in terms of our poo yeah I'm not doing that dude I'm not like I can't I can't tell you what hurt what I really sorry like I'm not asking your revenue I said what is the average contract size on average I have no idea how many customers you have are we talking $1 a month a million a month 10 grand a month on average so yeah so our average mor is 1200 bucks okay average mr I'm talking just one specific client so you're saying a specific client on average might pay about 12 grand per month no 1200 per month 1200 per month right got it mr would be that multiplied by all your customers that's how actually your revenue number that's not what I was interested in I'm just curious on average a customer pending at 1200 per month but I gave you one day to point now if you get the other one then you know my revenues correct I could back into that but what I'd like to do now is understand more the back story so tell me when you launched the company what year and where was your head at that time so yeah it was pretty much what you read in the bio is 2010 and and this is a problem that we saw that we had only found a manual solution for the last company and I just couldn't believe that there wasn't some sort of a centralized exchange for this in existence and I couldn't understand how how companies were actually getting stuff to market so so you know that's where the idea yeah my specifically those so entre nets into this show or exited sassiest they're always wondering you know I'm very comfortable now maybe they're they just sold their company 400 million they're sitting in earn out I've got a company in there wondering should they leave and start their own thing where were you emotionally at the time you decide to finally quit that job had you saved up enough savings where even if the new thing failed you were fine for a year or was your back against the wall you had to make it succeed on day one emotionally where were you oh I was out to solve a problem so the way you know so I had sold my last company so I had money that wasn't the issue I wanted to solve a problem and you know and you know the the finances that that would be a byproduct of that right so well more specifically if you really want to get into it where my head was is like why would I not want to get into it that's what I want to get into how do you listed it have you listened to the show before I tried to listen to it the other night and get a sense of okay so yes I wanted I okay good all right so the real deal is that I had a number of checks written out to various charities and and personal interests but they're all they're all checks out to they were giving it was philanthropic at in and I started this company so that I could sign those checks and I made enough money for me to retire but I didn't make enough of the sale of last company to retire it actually make a difference in in the world and so that's why I went back to the blackjack table and gave it another try got it so let me make sure nurse do that correctly you wrote your ear oh you wrote checks which were so much that you couldn't actually send to these charities and you said okay I'll be using the motivation to launch this new company which also solves a problem and the goal is if it build it successful enough where I can write those checks is that have you wrote them you're seven years in your about your this will be a very different conversation in about thirty days from now so tell me why you interviewed me then tell me why who are you selling to I can't tell you I'm selling to ya so why are you selling because of times right tell me why how does an entrepreneur stand when the time's right well what you look for is is a you look at your growth trajectory right - you look for that hockey stick or anything that approximately is a hockey stick and as soon as you can start predicting when the plateau is going to occur we you want to sell on on the upside right you want to sell before the plateau and that's where we are today why was one of the painters are you looking at where you're going I see a plateau coming in this case now so smart time to do it that's where I was going so so there's um there's a lot more competition so we we really we were the first in this field and now we have a ton of competition so much of it is well funded you know and we've got first move first mover disadvantage classic first mover dissident so so what is that you mean you spent all the money to figure out the problems and then others just ripped it off for free exactly so yeah and the other ones are yeah they're ripping it off and they're coming in with much more funding than we had going out because obviously when you have a new idea something that's it's disruptive it's it's hard to get funding because it's bigger risk there's no proof point right so other companies are using us as a proof point how much had you raised Jen you raised ten total and was that what through maybe what series a yeah yeah a and we did a small B yeah on top of that so and then so we raised ten we got competitors and now at fifty seven million in funding who is a company called salsify and in there a number of others that are you know somewhere between I just can't I can't is your competitive nature who every sedan go oh man it was gonna be fun to beat them in the beginning but now it's fun to beat him even more because I've got 57 million in funding that that kind of thing that you're mine doesn't work like that like what do you mean you know the idea the idea of beating a bigger giant with more money yes the David Goliath thing always gets me out of bed but in in this case it's we've got to the point where it's hard to fund our company it's hard to find additional funding even though I could bring up all these proof points you know it's it's just it's hard the story's too long it just took too long you know it's we were a little bit early and in we were we were the first ones out there so so it's it's hard to bring that that that in funding unless we reinvented ourselves entirely and honestly I'm a little bit tired for that yeah yeah so so we did a great thing we changed the nature of the industry certainly there are a lot of options now which actually fractures exactly what we're trying to solve right because we're trying to create one centralized exchange now there are a whole bunch of centralized exchanges which kind of screws up everything but but at least the customers some choices network before they had none so I feel good about that but but all that said the company that that if all this goes through that we'll be working with is is very well-funded and and we will bring a whole lot of new life into this and we have a we have a pretty crazy plan on how to how to do what you just said is beat the guys with the 57 million in funding it's good well look we are recording this here on January 10th 2018 it won't actually go live until...