Sitewit Revenue & Funding (2024)

hello everyone my guest today is Ricardo Lassa he's the co-founder and CEO of a company called sight whit Ricardo and Don his co-founder co-founded sight wait to bring the power of digital marketing of small business owners Ricardo is a product owner of site for site witness deep understanding of website builder platforms ecommerce platforms predictive analytics digital marketing and SMB SAS solutions Ricardo are you ready to take us to the top I am alright so how do you end on split roles you're the are you the developer or the business lead would you say that's a great question so I we both actually co-developed the first engine so we're all fairly technical both of us okay but I am more the product owner strategy side of the business and Don helps more on the data science the predictive analytics engine side of neither of you guys do sales we do both actually yeah we do mostly partnerships with with other platforms so both of us work on that that's good okay tell us what site wit is and how do you make money what's your revenue model so when it is decide to it yourself it's all serve marketing platform for small businesses to market on Google AdWords Google Shopping also Bing ads and retargeting and it basically ties into all the major website builders so like Wix Weebly you're like with a shopping platform and then our customers basically use our platform to advertise their stores or their businesses on Google and how we make money with we charge a percentage management fee for the platform 20% of the retail price so for example of you spending $200 on Google we forty goes to where's our platform and the rest goes into Google ad spend and that's basically how it works okay so would you so you're not a pure place as company you would say so actually we are pure play on the on the marketing side so there's no human intervention whatsoever it's all machine based you know but we we target only the marketing side so Google AdWords Google Shopping but it's not like in other words it's not a flat $40 a month fee to use you it's it's a transaction percentage correct that's right yeah yeah so it's a 20% overall value of your marketing do you see that do you see that revenue stream be very predictable and consistent like a SAS company would be yes okay yeah I got it because in a sense our our packages are also you know specific packages so there are a hundred fifty dollars three hundred dollars so so it's actually a percentage of that okay so if someone pays you three hundred bucks per month is is that that's not tied to a spinner that is tied ad spend that is tied to ad spend so there will be three hundred dollars total that you will pay us and of the three hundred eighty percent goes to Google directly so two hundred and forty will go to Google AdWords directly for your media and then the sixty dollars go to our platform I see okay so let me ask you a question what is the I'm sure you have a lot of different cohorts but I want to save time what's the average customer pay you per month would you say so I think probably there's like two big clusters shopping Google Shopping and regular search like for service providers and there are a bit different on the on the Google Shopping side we see probably between three hundred or three to have five hundred dollars per month per customer and on the services side we see around two hundred okay so if we put it at like three hundred as an average just to be clear though that's your that's your top-line revenue but you have a big cost of goods sold because you take sixty or take eighty percent of that actually spend it yeah exactly yeah so so our customers end up paying us on average between I would say thirty to sixty dollars yeah yeah that's I was going to say 30 60 bucks net right that's right that's right okay interesting put all this on a timeline for me when did you and Dawn launched so we started really building the first engine in around 2010 we launched late in 2013-14 but we were more on the enterprise side so we're actually helping optimize very high-level campaigns and then we actually brought it down to the SMB market around 2015 so what were you doing between 2010 and 2013 just building we're building the engine yeah it's a fairly complex engine when you think about it I mean we automate completely paid search so we actually built a machine learning based engine to do a better job than even a human professional will do how did you find yourself did you raise capital early on we had a side job or what so we we raised some capital this is my fourth venture so I am one of the largest shareholders and capital sources but we raised a capital here in Tampa Bay and also from Silicon Valley I'm from Boston okay so how much total have you raised today so total today we've raised about seven million dollars seven million how much did you start with how much did you raise on day one probably we were raised in small chunks of like half a million nice uh nature yeah we never did like big big races well as being racing basically like between half a million to a million and a half and break down that structure for me was it a convertible note that you just let roll kind of over the years no we only did one convertible that round between the Series A and the Series B so it's been always like straight equity with you know obviously like different you know different series so different you know type of stock and preferences or things of that nature but it's pretty much always been equity outside of a convertible that round that we did between the seriously answer is B so Ricardo if you've raised 7 million bucks in each round was around half a million two million bucks am i reading right you were creating a new chief created a new term sheet essentially seven times actually not really what we did is we had multiple phases of the same round asking so you had one term sheet but you let it roll over time people could come on in those same terms over time later on yeah so there's been actually three three different therapies I original one seriously and then Series B got it okay that makes sense all right and what if he scaled two in terms of total customers so we're scaling very significantly at this point we've launched with you know Maria make your platforms like Wix Weebly you know get your like wind and so forth and many other big ones coming right now so we're adding tons of customers per month you know without going into all the big numbers were probably going to be the largest independent marketing platform in the world 2019 as measured by what like number of customers on the platform so properly let's the same that tens of thousands okay customers running campaigns for us so it's fair to say today you have more than 10,000 customers paying use that but less than thousand yes that's auditor okay very good now if I take ten thousand times that minimum our pool you gave me earlier I can kind of back into 300 grand per month in revenue is that generally accurate on the low end uh it can be let's listen you know what I say that you know we also have other products so we have a stats product where we have a 1.5 million customers on the products so the the average ARPU is not 30 bucks probably a little bit lower but let's say yeah it's within the let's say a three hundred thousand dollar range since a lot okay so you're less than you haven't hit three hundred grand yet but you're close that's right I see do you think you had at this year yeah yeah sure okay and so how do you so so with again ten thousand customers paying that well I'm curious why do you make a statement like you'll be the largest I mean I can think of other companies that have significantly more than ten thousand paying customers well you know I mean in our specific side of a space so in the automation of do-it-yourself soft serve you know putting people on Google shopping Google AdWords things of that nature there is very few platforms I had that many customers doing that I see walk me through a growth looks like so if you're flirting with 300 grand per month today where were you about a year ago so it's been more than double you know probably like every year something like that okay yeah so somewhere around 100 grand 150 grand in August of 2017 that was kind of a monthly recurring revenue then sharp yeah something like that nothing yeah what is driven most that growth is it onboarding new customers or getting current customers to spend more so it's been mostly onboarding new customers but the the real big growth is coming now though because the large platforms that we're launching and we've been launching through all these years we've been an integration phase this last year so so we actually are you know launching finally you know big partnerships are now mm-hmm and that won't really make a big difference on anakata at this price point on the SMB space churn is always really critical what is your turn today and how do you manage it so the churn is not the same for everybody so we see for example very different churn rates between customers that are on the free product for our customer our partners so for example if you're like a small business that not even buying a domain you're actually using a free website builder YAG no it's for ignore free I only want some people who are paying you yeah no no no paying us paying our customers everybody pays us approaches paid completely always paid but you know we have actually customers that they not even paying for their website I saw I'm saying they're going on a free website right so so what is your turn yeah so the turn on that is quite high you know over fifty percent for sure no churn per year yes okay but on the paid side of things the churn and again it depends on the platform different type of customer for example in e-commerce we see way less churn that we see in other platforms but you know we're seeing an average churn of let's say between thirty to forty five percent okay that's again that's logo churn per year Chuck okay so let me ask you a question let's assume the most the best case scenario which is like three percent logo churn per month which comes out again about thirty six percent per year even at me at this volume one second maybe maybe maybe it makes understood your question that is on a cohort base churn so like if you start today over a period of like a year now those 30s you're going to lose between thirty and forty percent yes yeah which means it's about 3 percent logo term per month sharp yeah if we're not look at or not reject it yeah sure yeah 3 percent times 12 months gives you 36 percent over the year yeah so so my question is Constant Contact had a big issue with this because they were about at the same price point they were public and they had you know hundreds of thousands and millions of paying customers but the churn was in this range and they could never make up that Delta which is why they ended up basically flash selling the EIG right so how do you get the churn rate down under you know 30 40 50 percent per year sure so that the answer to that is clearly closed-loop marketing companies that actually know exactly how much money they put in or how much money they put out tend to churn way less so Constant Contact had probably a much bigger issue in the sense that many times you know you're just sending a newsletter it's just difficult to know or the output of that but doesn't mean as far as like how much how many sales I get out of that what's the actual revenue coming out of that in the case of e-commerce for example and something we're actually working very heavily on right now you know exactly how much money you put in how much money you put out right so those customers tend to churn very very little yeah I mean when see in theory because of the tribution you just mentioned your turn should be lower than Constant Contact but it's actually about the same well in that's why I say it depends on what type of market so like in e-commerce is way less than 30 percent that's an average like when you look at 30 yeah I thought you just told me that on your free thing it was 50 percent logo turn per year and your best case scenario your other cohort was between 30 and 40 percent each year well I was thinking about the SEM site on the candle like the services side on actual the Google Shopping product is they weigh less than that I just want to talk about your SAS product so on the SAS product it's less than that well we have actually what that say that we have two different products one is like a Google Shopping side of it which is ecommerce only and then Google AdWords side of it which is you know more generalistic just Google Adwords marketing mm-hmm on the Google Shopping product our turn rate is way less than 30 percent okay this one let me ask a different question related to how you get these customers in the first place so what is kind of CAC are you playing these channel partners any kind of kickback so I cannot get a loading to that because almost all our business through partnerships but we have a revenue share model okay and they don't everybody so I won't ask obviously about specific relationships but in general if you're spending you know 60 bucks to get a customer and they're paying on average 30 bucks a month to you it's a two month payback period what payback period are you optimizing for right now so we actually look at it far more like not as a bounty as an ongoing revenue share relationship if that makes sense so we it's not like a one-time fee okay I don't god I got it got it so yeah it's 10 or 20% as long as that customer is active with you every month that's right you got it I see okay um very good what about team size how many are you 20 and everyone's in Tampa most we have a couple remotes okay okay very good last round of funding you said was about a year ago did I hear you right actually we're closing a small round right now I was about to say so are you raising capital right now and if so how much yeah so we're actually on the final stages of posting a series B it's gonna be a total of about five million dollars okay raising five million yeah but it's a committed all the way now to the last you know five hundred thousand so we're closing that this month that's great well congratulations and can I ask generally I mean did you get did you negotiate north of a 10x valuation on air our or or less yeah so yeah I would but so let me think about that so if you do a three hundred grand today right yeah like what is that a three point six million dollar run rate so if you got more than 10x your pre money would be about thirty six million so it's about that okay oh that's okay that's healthy now did you raise mainly in Tampa or did you go to the valley as well no so we actually raise from earlier with the same group that we've you know the same group of investors oh that's wonderful so that so no new investors it was all just people yeah RiRi investing that's great yeah yeah they like to you know that means recorder they like you well we try you know like a like I said before I mean we say that this is a long-term game it's been you know a scaling game and it didn't make sense to raise a lot of money until our partnerships when life which is you know what's happening right now so the group that you know we took us investors for a long term based and you know we all knew what we were getting ourselves into so so it's very easy to raise from them consistently and again just because we haven't seen a lot of dilution for all of us because we've been slowly funding the company between all of us to get to this point you know there we yeah we have a different funding probably approach to most people yeah very good all right let's wrap up here with the famous five number one what's your favorite business book oh that's a great question there's so many I would say probably outliers outliers number two is there a CEO you're following or studying right now no not really no okay number three what's your favorite online tool for building your business all in total in my business I would say on my side and a ton of you know it's a company called our table yeah we set up it you know kind of like PC databases online I use that all the time for strategic planning and how many hours of sleep to get every night eight that's good what's your situation married single kids married kids how many took it to kids in how old are you Ricardo B or the you you have meeting me I'm 47 47 alright last question what do you wish your 20 year old self knew I would say make sure that you keep the team small as you develop the business don't don't scale fast if you have a good vision like you know keep on plugging at it until it really organically takes off guys there you have it stays small don't over hire and keep those folks close as you build out that almost like SWAT team approach she founded the company back in 2010 with his partner Don they developed it for three years before then launching full steam now they're serving over ten thousand paying customers with mostly SMBs they pay about 30 bucks per month each so they're flirting with 300 grand per month right now in revenue that's up about a hundred percent year over year from August 2017 when they're doing about a hundred and fifty grand per month in revenue they've raised seven million bucks turn is depending on the cohort you know it varies but generally speaking about three percent logo churn per month again team of twenty people based in Tampa again really helping these SMBs both on Google shopping and Google AdWords in a fully automated way they raise seven million bucks about to close a five million dollar round at around a thirty six million dollar valuation Ricardo thank you so much for taking us to the top thank you