How Truelytics CEO Jeremi Karnell grew Truelytics to $1.3M revenue and 40 customers in 2022.

hello everyone my guest today is jeremy carnell he's a serial entrepreneur has founded four companies including one which he scaled to more than 100 million bucks in gross revenue he's got significant experience in operating and scaling digital platforms and has helped a significant he's helped run significant operations in the us the united kingdom and singapore currently he is the president and ceo of a company called true lytics all right jeremy you're ready to take us to the top absolutely all right edition the covet edition that's right so so what we're both hunkered down here in in texas um for folks that uh that haven't heard of true linux tell us what it does what's the product do sure so true linux is a sas platform right now focused in the wealth management space uh all industries but them in particular are faced with what we're calling the great transition which is just the the tsunami of retirements that are about to happen because of the baby boomers and wealth management has done a very poor job in in filling its ranks with a younger generation and i think serelian associates predicts that the industry needs to recruit and or bring in 250 000 new financial advisors just to meet current demands and so uh true lytics is a sas platform that's an advisor transition management platform and it uh helps wealth management enterprises with sort of an end-to-end solution helps them with recruiting financial advisors helps them with practice management and optimizing their business uh protects that asset through an emergency continuity module and then gives that asset a path for either strategic growth and or an exit through our matchmaking solution so it's it's that and it's the first one of its kind up until this point the industry's really been dominated by professional services and give me this before we jump into the product give me a sense of size today what revenue are you doing so we are right now i think around 1.1 million in annual recurring revenue we launched the enterprise solution in the middle of uh in june of 2018. okay and was that your first revenue coming in in 2018 or you got revenue before that no so we purchased the core of this application was ip we acquired from an investment bank in the middle of 2016 and the way that intellectual property was designed was really focused on selling direct to financial advisory firms and so when we launched in 2017 that was what we did we were trying to sell 1075 licenses direct to financial advisors that's not that's a that's a recipe for well a very difficult business so we why they just didn't have budget or well it's well there's several different dynamics one is a lot of them are older and not necessarily um that savvy with technology two is that a lot of these are lifestyle businesses and uh you know paying a thousand seventy five dollars for a uh for a tool that would require them to do self practice management was also sort of a tall order um when we pivoted to wealth management enterprises that's really when things took off for us so by the way what is that i think my i don't know what that you mean when you say well an enterprise wealth management enterprise yeah well yeah okay the wealth management industry is a relatively convoluted value chain so it's made up of a nor several different layers you've got independent broker dealers you have custodians you have asset managers we we view that set as a wealth management enterprise and then if you expand beyond that you have rias uh you have then uh connected within things like independent broker dealers osgs office of supervisory jurisdictions they're their own sort of mini enterprise and then beyond that are the independent financial advisory firms so it's it's a alphabet soup of layers so can you name can you put some faces to those descriptions can you name a couple customers that we might know that use you yeah so we have uh as far as our top enterprise customers are concerned we work with cetera lpl uh capital group hd vest brinker uh carson group uh advisor group um fidelity the like the likes of that okay so people definitely have heard of fidelity so that that's helpful okay so so about 1.1 and ar i know how many customers have you scaled to today so we have six well so we in our database is 500 independent financial advisory firms now the bulk of that 90 of that came from the wealth management enterprises of which we have 16 of those enterprise relationships got it so these are these are people these are paying like very high amounts what's the average one paying per year so the average uh annual contract value is seventy thousand dollars and they pay uh that uh they sign up for three-year contracts and back us into that so so seventy thousand dollars per year and they pay 210 up front yeah so no so our pricing is is really tiered on the number of affiliated financial advisory firms for the with those enterprises so it it starts at anything less than 50 and then it goes up to um if you if you have 7 000 or more financial advisory firms lpl is a huge independent broker dealer a cetera is another one they have like 8 000 well cetera has i think over 8 000 independent financial advisory firms as part as their broker dealer they are as our pricing fee is concerned that would put them at 120 000 annual fee paid uh annually for three years okay got it so 120 000 a year divided by 8 000. it's about 15 a seat per year yeah and we sell and we sell directly to financial advisory firms uh through our website all of that self-service and that is a thousand that's 99 bucks a month so about 1075 a year and so it's a huge it's a really big value or at least savings for an enterprise to come in and purchase this for their entire network versus having their network come to us directly yeah experience so again and to put all this on a timeline you launched the company in in 2016 with that uh acquisition yeah okay and what did you guys spend on that or did you were able to get that for free or a trade or something no no so so we we've raised since our inception um we've had two different rounds of fundraising early on when we to acquire the iep was like we raised about a million dollars generally from friends and family and some industry insiders and then at the beginning of 2018 i think we did another two and a half million or so i think in all it's a little over three million dollars that we've uh we've generated and again all primarily from industry insiders no professional money okay and again scale today to about what is that a hundred and 110-ish thousand dollars per month something like that yeah that's exactly right and where were you a year ago do you remember yes so here i'll let's see here uh so last let's see enterprise annual recurring revenue um well let's look at monthly reoccurring revenue so we ended uh 2020 with 122 000 i mean 2019 about 2019 i'm sorry thank you we ended 2019 with 122 000 an mrr that was 109 increase over 2018 which was at 53 915. that's got it yeah it's good that's good growth so what uh and what do you think you'll grow at in 2020 considering the virus is that what has changed exactly so we we actually had uh we had pretty reasonable goals going into the year where we were just looking to add a net new 1 million and had we done that uh we would have generated a 400 000 profit at the end of the year um and uh and what was your profit last year i'm sorry what was your problem last year so our ebitda last year we we weren't profitable last year again we had about six months in the green but we ended with negative 540 000 um and uh a negative sort of 48 percent ebitda um but you know going into our basically our our second full year uh we had a path to actually get to break even cash flow positive uh by the end of 2020. we've reset that um i'm um i'm a big fan of the book uh infinite game by simon sinek i don't know if you read it but that whole the theory of that whole book is to stay in the game as long as possible and given the sort of left curve the black swan event of cobin 19 and the pandemic what we've seen early on is a lot we've got five million dollars in our pipeline we had an expectation again of closing a million of that we've seen in q1 uh basically a lot of decisions being pushed into the basically in the middle of the year if not the back half of the year so that's really had us revise down our expectations um and and we need more data points uh such as whether or not enterprises are going to be willing to spend in this time um so far we've seen small like not enough for me to be convinced and so we're really preparing to again just make sure we're in this game for the long run so we've really uh reduced uh where we could in the op x um we still have some really good client opportunities in front of us but instead of reaching for that million as a as a net new reach target it's now 600 000 at the high end but if we finish the if we close 250 000 of net new we still end the year with a half million in the bank so i'd be happy with that so jeremy long lasting in in today's day and age in sas world means cash and profitability walk me through where you're at today so if you do 120 000 this month how much will you burn or you break even no we're not break even so we have um a monthly bur monthly well a monthly burn of 134 000 but given all of the current enterprise contracts we had so that's gross our net burn um...