Structuredweb Revenue & Funding (2024)

hello everyone my guest today is Daniel Nissan he's a channel sales and marketing expert entrepreneur and president and CEO at structured web Daniel are you ready to take us to the top absolutely all right tell us you bet tell us about structured web what do you guys do and how do you make money so structure web is the market leader in channel marketing automation software and we help large global enterprises and to equip their local resellers with ready-made marketing content and marketing tools to execute marketing at the local level most of our customers at the moment are large tech companies that have resellers dealers agents in variety of countries and they're the primary users of our system and is it a pure place ass model to pure-play sauce model and the channel partners get into the service at no cost fully subsidized by their brands that providing the service interestings okay so what's the average customer pay per month just to avoid going down every different cohort and the prices are very based on the number of a channel partners they have on on the platform and it can varied from anywhere from $5,000 a month to over $100,000 a month give me an average that would you say I would say $20,000 okay and give me more the back story here when did you launch the company in and why start a company at all that's a good question so I started company in 1999 99 my gosh Daniel you have the patience of a grasshopper it's all overnight success yeah right that's what they all say yes the idea was when when the internet was now booming at that time I saw a lot of small businesses trying to set their online presence and everybody trying to reinvent the wheel so I said why won't I create a company where we create a template eyes website with four different industries with different functionality and we'll keep that functionality evolving as the internet continued to evolve we didn't know what's kind of going to be available later on but well we knew that this technology is moving very quick so we we focus on small businesses in the same group and we try different industries we tried chiropractors too in that was in 2000 we try to sell themselves what is internet and I don't have a connection even DC are offering so we move through move to travel agents and there we had a great product with distribution we had a lot of travel vendors subsidizing the offer and we launched it on September 9th 2001 as Nene have you bootstrapped the company have you raised we raised money then and since then we bootstrapped the company so after they the travel was not successful we try to other resellers with awesome I don't think you know how much have you raised total we raised at 5.7 million dollars in in equity and we have about the few million doors in there as well okay the 5/7 and equity that you raised back in the early 2000s are those folks on the captive or have you bought them out Oh still in the cup table very supportive very friendly investors how are they patient for over 17 years how have you held them back it just a full dedication to the business full transparency and they do understand that sometimes things go immediately sometimes they go Buster then sometimes just takes more time late bloomer that's great that's that's yeah you're lucky you're a lucky guy maybe actually maybe I'll say you're a smart guy because you picked the right people right yeah all right what have you struck is also very important what is I said luck is also important yeah what have you scaled to today in terms of total customers using you we have a few thousand customers and global users of over 100,000 businesses using structure web so each one of our customers gave it to hundreds and thousands and sometimes tens of thousands of their channel partners globally so when you say a couple dozen I mean can we say like 36 something like that don't be weird about okay can I multiply that times the $20,000 a CV and assume you guys are what I'm doing 700 grand a month something like that installation yeah I was advocating no I don't know how publicly these focus is so we don't want to disclose too much information on the public pool what does that mean have you listened an episode before no come on Daniel that's your own phone pin the podcast is downloaded by by like five million people every month so it goes out all over I interviewed b2b SAS CEOs every day so but but just to be clear I mean I want to make sure I mean those are just numbers that you gave me that I'm multiplying 36 times 20 grand are you generally in that 700 700 : you got that's fair and then what are you growing at year-over-year a Bureau ver year last year and our plan for 2018 is about 30 30 % growth year over year that's pretty I mean that's pretty healthy so you're doing what about 600 grand a month 12 months ago something like that would be 20% growth yeah that's great and what's driving most the growth how are you finding new customers where are you getting them we do a lot of fair marketing activities both online and offline trade shows industry events and we have our own online marketing Google advertising and we have a lot of referrals so it's a relatively closed the small industry the tech industry we're talking about no few thousand companies or people in the industry share information and to go to industry analysts and ask for the short list of companies to talk to and we're typically will be on that short list of companies they consider what kickback do you pay to your partners we don't you don't it's totally free interesting do you do any paid marketing a paid marketing yes we do as I said we do google advertising we do trade shows we do events we do direct mail sometimes for that we pay but for any referral partners no we don't pay for that which conference is been most successful for you in terms of lead generation any one of these channels focus so because we deal with the channel industry so we go where you can find channel Chiefs those are the typical leader in the channel channel marketing channel sales so we try to be very industry specific and then to go to broad conferences about like marketing automation so on is this application channel visionary is one of them and visionary visionary and channel focus is another one so those are a small industry event so typically will have few hundred and channel executives meet mid-level executive to high level executive and that's where you really can create meaningful engagement in conversation with potential buyers and you're paying what 20 30 grand to sponsor each of these Okubo we broke them oh you're interesting all together we end up all your paid spend what percent are you spending on that relative to your revenue each month about we don't look at it that way we look at the amount of money we spend against new revenue that we generate and and typically it's about one to one so for every dollar we invest we would they generate one door in the same year that we invested that that's a pretty healthy kind of flywheel there yeah we have very good return much much higher than the average that you find in the industry of door invested the first beer a CV growth yeah it's usually you know 1.2 1.5 something like that takes a little longer what do you look at payback period or no hey we do and I said we typically see the return in the first year also sometimes the reason I have a new revenue wise no profit wise he's gonna say those numbers are not always the same so some people will look at payback period and they'll multiply gross margin on the end of it versus the number you gave me typically people don't consider gross margin it's a dollar and how long does it take to get a new dollar of air are ya interesting okay tell me more about the team what's the team size today we have total 50 people zero five zero yes we're mostly in New York City that's where our headquarter is and we have also people spread around the world there's some of them are in support services some of them are in development some of them in content management and so we do a leveraged now a global presence also because we have global customer base that need the global support with languages and time zones interesting they ask you a question holding that one to one ratio you just gave me earlier I mean that's great if you can get you know one new customer there but in order a scale you have to get more aggressive I mean how much money can you spend and still hold that ratio in your current acquisition channels good question I don't know the number right of my head I mean this is the tough part right I mean you can find a pocket of money with super healthy economics but how long does it scale on to diminishing returns kick in I think we can scale it pretty nicely at this rate and because the revenue that we generate really required more cash flow to subsidize or to pay for and kind of the credit that we give for our customers risk of course our customers very large well-established enterprises and we can continue to find working capital to subsidize the gap that is between the time that we expense to the income that we receive from our customers yep and I mean look if you have more cash flow management and other kind of a profit and losses you got it I mean look if you have a twenty thousand dollar monthly kind of average or two hundred forty grand a year and you have that one to one ratio I mean yours but you can spend up to 240 grand you acquire these guys that's how big they are yeah yeah how many of the of the 50 on your team are inside sales folks we're the total sales team that we have is three people okay and what are their roles Director of Sales two and one is if they are still developing grip so you don't mean okay and I mean they're dated activities do you rely heavily on inbound stuff or inside sales or no it's a different model they follow and it's combination but we do most of the they lead that we get a quality one or inbound that are result of our different marketing activities churn is always tough in a SAS company how do you manage churn you have a large sample size to analyze consider you've been around for a couple years and dramatically fanatically whatever you want amend title in focus on on customer success so we spend a lot of time a lot of attention there are some years that we kind of a grower decide to grow slower and bring less best customer to make sure that the existing customer is happy and that's the holy grail of any size business the retention and very proud to say that we fish 2017 and we lost a single customer so we were almost in 99 percent retention rate how much revenue that represent though very small it was a small customer and actually because they didn't adopt and didn't grow they turned from the customer base that's really good how significant they're like five percent of revenue ten percent less and less very variable yeah it was and customers never adopted so they never scale beyond what we call the pilot period and because we're our licenses are based on the number of partners using the system if you don't scale beyond beyond the initial 50 then the revenue is not significant so it wasn't there a big revenue loss but we invest a lot and bringing those customer in so every loss is the loss and we try to learn from that and improve our adoption rate and and my onboarding process so and we end up very successfully with customers the continuum beyond three months six months or your first year pilots each annual you lose fight last year you you lose less than five percent of your revenue but you obviously drive expansion revenue where you at net negative revenue churn enough so by how much no we're in positive well positive revenue positive revenue Turner would not be a good thing net neg your expansion was greater than what you lost you'd be net negative revenue churn right okay yeah I misunderstood your question that's a bunch it's a bunch of like backwards forward stuff I have troubles all the time because I'm Dyslexic with it but I guess the easier would ask the question is how much expansion revenue did you drive do you drive from the current base I don't have a number right in my head you don't know okay interesting do you know though over the past 12 months you gained more revenue by upselling current customers than that 5% of revenue that you lost from the one churned one yeah absolutely okay interesting very good now so how does I mean how does it you've been doing this for 20 years right how does a guy like you create wealth from his company you created it before this is this is my fifth a startup and we had successful exits before and I think part of building a startup is to understand it's not always it's an overnight success and you can build wealth and it can build a successful company over time and and not every company is meant to be sold no two or three years later and and moved forward and I believe in this company I believe in the vision and I also recognized that I started too early I was the founder and CEO of net grocer the first online nationwide supermarket back in 1996 and prior to that I was part of the team that invented the Internet telephony voice over IP in 1993 so sometimes you'll be there early to the market I recognized it with structured web after a while and we build a strategy and focus and and a very lower burn rate to be able to manage and grow and we think that when we see it with the revenue growth and customer growth and the profile of our customers that now is the right timing so sometimes you have everything perfect you have the right team the right funding the right vision and but the timing is wrong and and company's failed we managed to say okay we understand the timing is not right yeah let's wait let's find a way to stay in business today yeah I think we raised the last time raise money world years ago see you're not burning capital no we're generating cuz that's that's great are you in talks to you sell the company right now no we think it's too early and the company still has a growth potential and it may be in fears all right Daniel let's wrap up here with the famous five number one what's the last business book you read uh business poker rib yep don't remember okay that's a no number two is eros what's the who's in the last CEO you had dinner with in your town great pound and Jeff Leventhal he's a very successful serial entrepreneur with which companies is latest he's later for rail work railworks good number three what's your favorite online tool besides your own trailer number four how many hours of sleep to get every night that's good and what's your situation married single you have kiddos married two kids in college no great and how old are you 60 all right Daniel last question what he was your 20 year old self new nothing I think it's the life is very interesting and you go through it and what player like what you learned through life and what the exposure life that's life there you guys have it from Daniel he's got the patience of a grasshopper I don't know if I could last 20 years or one company I'm too you know squirrel all over the place 1999 founded structured web they now the team of fifty again helping channel partners really scale they're serving 36 organizations that pay on average 20 grand per month so somewhere in the 700 thousand dollars per month range right now up from about 600 grand just 12 months ago per month that's about 20 percent year-over-year growth super healthy economics less than 5% gross revenue turn annually net revenue churn is negative which is obviously healthy payback period less than 12 months so again economics look good based up there in New York City holding out the time is right right now Daniel thank you for taking us to the top thank you very much have a good day and thank you very much inviting me Nathan