How Utm CEO Dan Mcgaw grew Utm to $1M revenue and 100 customers in 2024.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is dan mcgraw he's building a company called utm.io utm.io's internet's most loved utm link builder it's widely used by the best companies and enables teams of all sizes to get better campaign tracking data dan you're ready to take us to the top absolutely many people go utm that's such a simple way of tracking there's much better tools like you know all these other things that you pay 29.99 a month for why is this thing in the simplicity of it working yeah because utms are the most proliferous tracking means on the internet right they work with every single analytics tool they work with every mobile tracking tool they work with everything so they're by far the most commonly used tracking out there okay so walk us through just kind of quickly how it works and describe the kind of customer that's paying for this sort of thing right now yeah exactly so i mean i think a big focus of us is making sure that content marketers social media marketers can build tracking links really easily but the hardship is that when you're working on a large team it makes it really hard to stay consistent across all of these different geos all these different departments even these different locations so our typical buyer is going to be the vp of marketing or somebody of that nature or a data analyst they're going to want to buy us ultimately roll it out downstream to all of their marketers so we are best fit for companies that are doing 20 marketers 50 marketers we have companies like shopify that have over 85 people on their account so the tool is really designed to keep your utm campaign metrics uh consistent across all of these different types of users and even across departments or locations and help me understand you have a lot of different price points on your site the average customer pays you kind of what per month to use the tech would you say yeah great question so we definitely have a lot of pricing testing that's going on right now to understand the market i would have to say our most popular customers are spending more than 59 a month and a lot of our new customers are much more focused on the enterprise level which are paying more than fifteen hundred dollars a year and they have all custom plans that's really our big target right now okay but when you look at your current customer base right would you say a fair average is 59 or it's much higher um i would have to say it's a really really good question i mean honestly i would have to say our largest user base is our seven dollar a month users uh and those are that's something we deprecated probably about eight months ago so how many how many people are on that one probably about 80 people on that plan right now okay that's deprecated now how many and what percent of your total customers would that make up how many customers today it's a good question i don't have that on top my head i would probably have to say it makes up probably about 60 to 75 percent of our total customer base because we're much more focused not on quantity but actually bigger deal sizes got it so you've got somewhere between kind of around 20ish basically customers paying you much more than seven some of them even enterprise at 1 500 you know per year kind of thing absolutely yeah i think that's about right i would have to say our total customer base is probably about 100 customers total on the paid plans yeah that's good okay put this on a timeline for me when you launch the company yeah so this has actually been kind of interesting we launched it originally as an internal tool of our consulting company so originally it was the f and amazing utm builder it sat on the market for probably about two years and kind of organically grew and then we decided hey let's charge five dollars a month and see how this works so uh that was about four years ago and it then sat there for about a year doing that and then about i would say 18 months ago we decided to rebrand we acquired the utm.o domain and we now rebranded the entire company to be separate so i would have to say 18 months is when we've really been focused on it as its own business um what'd you pay for utm.io i can't share those details that's part of my co-founder agreement a co-founder with who yeah so one of our employees here at f amazing hussein he actually worked with us for about two and a half years as a contractor and as an employee he owned utm.io and as part of our agreement when we actually acquired that we decided to keep those details between ourselves because we did acquire that and as well as make him a partner in the company um but the company is based off the slicing pie model for equity and interest and things like that have you ever heard of the slicing pie model no so basically it's sort of like you would have as a fund but it tracks the amount of hours as well as the amount of costs that we all contribute and then the equity amount ultimately is changing depending on who's putting the most effort or money into the company yeah but you just measured effort by time that's a ridiculous measure of effort one hour of every person's time is definitely not equal absolutely all of us have hourly rates that are stated inside of our contracts those cost rates of course will get changed during time as an example i received a very large increase in compensation in the past 12 months so that was obviously changing the way that model works but we do look at a cost basis uh and since we all track ourselves hourly due to our agencies at the same time it makes it really easy to track is it fair to say when you did this whole utm deal there was not something like 50 000 in cash going out of your pocket it was more like let's do equity here and upside here kind of thing yeah absolutely so i would have to say that at the moment in time you're roughly about 75 000 into the project at the time that we decided to do this deal and that of course built out our percentage interest whenever we combine the two amounts to it there was a certain amount of funds that my co-founder of course considered as his previous work in this and we took that into consideration with that but i would have to say total investment from our company when we started this at that time was about 75 grand i don't know the numbers off my head of what we've invested since then um i would have to assume probably in the range of about 50 to 100 000 but it's not something i actively track because it's such a small part of the pie right now what you're saying is you put in 75 grand when you have the discussion with hussein for utm and he's basically saying well i think it's worth x and you're saying okay well x plus 75 this is the pi you get x percent of the pi absolutely and then that pi changes based upon who's ever putting the most effort or energy into it at the time yeah okay interesting all right so a great model now is is f and amazing still going yeah fm amazing's kicking butt we're doing really good we're actually growing really fast um and so my time is split between the two companies and we actually are hiring our first growth marketing manager for utm video which will start next month and their job is to basically help run that brand so on effing amazing how many people are now inside the agency yeah we're roughly 15 to 20 people at any given time okay and so last year did you break a million in revenue profit amazing for sure for utm now okay can you give me i mean was it like two or three million or just barely 11 million no so we did 1.2 million in 2018. that's great okay so you're basically that's where you're getting the 75 grand to start the thing you're basically pulling it out of the agency sticking into the software product now how many people are purely dedicated to utm uh there's three people on that team right now two full-time developers a full-time product manager i would say my co-founder and i are both focused of course on this as a part-time investment and then of course like the company kind of runs itself and that's the reason why we're making this new hire so before effective october 7. okay so how much is the business burning right now the utm side of the business yeah great question so we're probably investing around nine thousand dollars a month our current mrr is 3400. okay got it yeah so call it five six thousand dollars and burn um 3 400 or cost 100 customers so on average they're paying you about 34 bucks a month i would say so and that's dragged down dramatically because of those seven dollar a month users which we of course are trying to do everything in our power to get away from and then our initial funding um of course was fueled by affine amazing and as well as my co-founders company marcolytics however that being said we also did an app sumo uh say three months after we kind of or six months after we kind of launched one that helped drive a lot of our customer feedback and then as well as give us i think we made about 45 grand off that deal yeah but how many of them are now paying you more than 2 000 a year i have no idea we actually decided that we don't want to pay attention to those users unfortunately we felt that that was the wrong product market fit they weren't the right type of user so we kind of don't really pay attention to what's going on with those users yeah that was that was going to be my point but you made it for me uh back to yours 80 people at 70 bucks a pop is 560 bucks of the 340 3 400 in total revenue right so you have about 2 800 the majority of your revenue coming from you know 10 20 customers that are more enterprise level for sure uh and you're way better at math off the cuff than i am so good job no no no that's fine um take me to your turn's critical in any sas company right when you look at now don't let's not ignore logo trend because you have such a wide range of rpoos when you look at your revenue turn over the past 12 months do you know what that is i don't know over the past 12 months it was extremely high until we made the pricing change we basically ate x-star pricing i would say three months ago when we made that switch our current uh revenue turn off of that is about 10 per month you still have a huge turn problem our problem right now is uh if you're familiar with the analytic space at all is if you don't get set up correctly you turn out quickly i learned this in my days at kissmetrics so what we need to do is have a better onboarding program we're actually looking at making it so you can't even sign up until you sit down with one of our reps and we're actually looking at potentially increasing the cost per plan again once again by about 10x so even the entry price would be potentially 300 a month yeah i mean you can just copy super human right they put touch on every 30 month sale they sit down with a 30 minute demo to get you using their inbox before they close you have very similar economics besides they've raised 18 million from andreessen yeah and we have no interest in going to vc route so we're all about debt financing keeping equity ourselves slow and grow and then that way we can obviously capture all the uh proceeds at the end how much jet have you raised so we haven't raised anything for this product right now so f and amazing does have some debt financing i'm not interested in disclosing those metrics but utm.eo will continue to focus on its mrr growth fm will keep funding it out of our current customer pool and then at a certain point when we spin at utm completely off of the company we might raise some debt for that one as well what's that you don't have to come into numbers but what's the financial instrument you use to raise debt inside of an agency you know in the sas world you have things like rbfs revenue-based financing term loans et cetera but i those are all valued based on ar streams which agencies don't have so what's the vehicle you use to raise debt in the agency yeah so typically the debt starts with a personal loan from myself so i'm obviously able to take out debt across myself i then will apply that loan back to the company so the company will then borrow the money from me so this way i'm able to control all of the levers and as well as make sure that it all makes sense for both people involved but it is at an arm's length so as you can understand like it's not me just putting money in putting money out it's literally a contract between me and f amazing and f amazing of course pays that debt back to me and if i want to take out more debt or use my own personal savings i'll make that decision at the time got it okay and then business-wise so utm doing 3 400 a month today what was it doing a year ago do you remember a year ago i would probably say a year ago probably like 500 um something in that range we've had on average i mean we've been growing between 15 and 20 month over month um so and that is not taking into consideration our enterprise annual deals it's only looking at our mrr that's coming from chart mobile i think a problem that we have is uh obviously i'm distracted by the bigger business um so what we need to do is add more rigor around the financial metrics and the way that we look at all that stuff yep now when you look at your cac to get a new customer what's your i mean do you have that kind of fleshed out yet no clue no no idea okay all right good stuff man let's wrap up here with the famous five number one what's your favorite business book right now i'm reading good strategy bad strategy and it's really really helping me figure out a lot of different things number two is there a ceo you're following are studying right now um i would say no i don't have anybody specific that i'm following right now now number three what's your favorite online tool for building your business besides your own hmm trello probably i love trello and butler you have to use butler with trello and then it is a godsend number four how many hours of sleep to get every night probably around eight to ten i love to sleep that's good and situation married single kids i'm married i have three kids i got 14 8 and 5. and we're all over the place we're having a great time how old are you dan i'm 35. last question what do you wish your 20 year old self knew oh um be more patient guys be more patient his agency f and amazing did 1.2 million dollars last year he used that to start subsidizing this internal software totally built called utm.io to make utm tracking easier now over 100 customers paying for that i caught 34 on average per month for 3 400 a month in revenue up from 560 a month just a year ago so now they're dedicating resources to it three people on the team focused on scaling this tool while he manages to continue to drive the agency revenue which allows him again to generate cash flow to reinvest in the software got a churn problem but he's going to work on solving that damn thanks for taking us to the top thanks so much these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it more so if you want to get more of this stuff make sure you subscribe up here and then additionally go check out one of my other ceo interviews right now