How UTM.io Reached $3,400 MRR with About 100 Paid Customers in 2019 (Interview with CEO Dan McGaw)

Host Intro and Guest Welcome

Nathan Latka

00:00Just 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 thirty 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

00:18way 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. Alright. For thirty minutes. Enjoy the interview. Hello, everyone. My guest today is Dan McGaw. He's building a company called utm.io. Utm.io is 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 ready to take

What UTM.io Does and Why It Works

Nathan Latka

00:40us to the top?

Dan McGaw

00:40Absolutely.

Nathan Latka

00:40Many 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 and the simplicity of it working?

Dan McGaw

00:53Yeah. Because UTM's are the most proliferating 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.

How the Product Works and Who Buys It

Nathan Latka

01:04Mhmm. Okay. So walk us through just kinda quickly how it works and describe the kind of customer paying for this sort of thing right now.

Dan McGaw

01:10Yeah. Exactly. So I mean, 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 geos, all these different departments, even these different locations. So our typical buyer is gonna be the VP of marketing or somebody of that nature or data analyst. They're gonna

01:30wanna buy us to 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 consistent across all of these different types of users and even across departments or locations.

Pricing and Customer Breakdown

Nathan Latka

01:48And help me understand, have a lot of price points on your site. The average customer pays you kind of what per month to use the tech would you say?

Dan McGaw

01:54Yeah. 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 $1,500 a year, and they have all custom plans. That's really our big target right now.

Nathan Latka

02:11Okay. But when you look at your current customer base, right, would you say a fair average is 59 or it's much higher?

Dan McGaw

02:17I would have to say... It's a really, really good question. I would... Honestly, I would have to say our largest user base is our $7 a month users, and those are... That's something we deprecated probably about eight months ago. So I would have to get out of...

Nathan Latka

02:27How many people are on that one?

Dan McGaw

02:29Probably about 80 people on that plan right now.

Nathan Latka

02:31Okay. That's deprecated now. How many... And what percent of your total customers does that make up? How many customers today?

Dan McGaw

02:37It's a good question. I don't have that off the top my head. Would probably have to say it makes up probably about 60 to 75% of our total customer base because we're much more focused not on quantity, but actually bigger deal sizes.

Nathan Latka

02:48Got it. So you've got somewhere between kinda around 20 ish, basically customers paying you much more than 7. Some of them even enterprise at 1,500, you know, per year kind of thing.

Dan McGaw

02:58Absolutely. Yeah. I think that's about right. I would have to say our total customer base is probably about a 100 customers total

Nathan Latka

02:58Yeah.

Dan McGaw

02:58On the paid plans.

Nathan Latka

03:05Yeah. That's good. Okay. Put this on a timeline for me. When did you launch the company?

Company Origin and Rebrand Timeline

Dan McGaw

03:08Yeah. So this has actually been kind of interesting. We launched it originally as an internal tool of our consulting company. So originally, was the Effin 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 $5 a month and see how this works. So that was about four years ago, and it then sat there for about a year doing that. And then about,

03:28let's say, eighteen months ago, we decided to rebrand. We acquired the utm.io domain, and we now rebranded the entire company to be separate. So I would have to say eighteen months is when we've really been focused on it as its own business.

Nathan Latka

03:39What'd you pay for utm.io?

Dan McGaw

03:41I can't share those details. That's part of my cofounder agreement.

Nathan Latka

03:45A cofounder with who?

Dan McGaw

03:47Yeah. So one of our employees here at Effin 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. But the company is based off the Slicing Pie model for

04:06equity and interest and things like that. Have you ever heard of the Slicing Pie model?

Nathan Latka

04:06No.

Dan McGaw

04:06So basically, it's sort of like you would have as a fund, but it tracks the amount of hours and as well as the amount of cost 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.

Nathan Latka

04:21Yeah. 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.

Dan McGaw

04:28Absolutely. All of us have hourly rates that are stated inside of our contracts. Those cost rates will, of course, will get changed during during time. As an example, I received a very large increase in compensation in the past twelve months. So that was obviously changing the way that model works. But we do look at a cost basis. And since we all track ourselves hourly due to our agencies at the same time, it makes it really easy

04:47to track.

Nathan Latka

04:48Is 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 a let's do equity here and upside here kinda thing?

Dan McGaw

04:59Yeah. Absolutely. So I would have to say that at the moment in time, we'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 cofounder, of course, considered as his previous work in this, and we took that into consideration with that. But I would have to

05:17say total investment from our company when we started this at that time was about $75,000. I don't know the numbers off my head of what we've invested since then. 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.

Nathan Latka

05:33But Dan, what you're saying is you put in $75,000 when you had 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 pie. You get x percent of the pie.

Dan McGaw

05:44Absolutely. And then that pie changes based upon who's ever putting the most effort or energy into it at the time.

Nathan Latka

05:49Yeah. Okay. Interesting. Alright. So a great model now. Is is Effin Amazing still going?

Effin Amazing Agency and Team Split

Dan McGaw

05:54Yeah. Effin Amazing is kicking butt. We're doing really good. We're actually growing really fast. And so my time is split between the two companies, and we actually are hiring our first growth marketing manager for utm.io, which will start next month. And their job is to basically help run that brand.

Nathan Latka

06:07So on Effin Amazing, how many people are now inside the agency?

Dan McGaw

06:11Yeah. We're roughly 15 to 20 people at any given time.

Nathan Latka

06:13Okay. And so last year, did you break a million in revenue?

Dan McGaw

06:17F and M, for sure. For UTM, no.

Nathan Latka

06:19Okay. Can you give me... Mean, was it, like, two or three million or just barely above a million?

Dan McGaw

06:22No. So we did 1,200,000 in 2018

UTM.io Team Size and Monthly Burn

Nathan Latka

06:24That's great. Okay. So you're basically... That's where you're getting the $75,000 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?

Dan McGaw

06:34There's three people on that team right now, two full time developers, a full time product manager. I would say my cofounder and I are both focused, of course, on this as a part time investment. And then, of course, like the company kinda runs itself, and that's the reason why we're making this new hire. So before effective October 7.

Nathan Latka

06:49Okay. So how much is the business burning right now? The UTM side of the business?

Dan McGaw

06:54Yeah. Great question. So we're probably investing around $9,000 a month. Our current MRR is 3,400.

Nathan Latka

06:59Okay. Got it. Yeah. So call it, call it $5,600 in burn. 3,400 across a 100 customers. So on average, they're paying you about $34 a month?

Dan McGaw

07:07I would say so. And that's dragged down dramatically because of the $7 a month users

Nathan Latka

07:07Yeah.

Dan McGaw

07:07Which we, of course, are trying to do everything in our power to get away from. Then our initial funding, of course, was fueled by Effin Amazing and as well as my co founder's company, Markalytics. However, that being said, we also did an AppSumo, I'd say, three months after we kinda... Or six months after we kinda launched, one that

07:27helped drive a lot of our customer feedback, and then as well as that would give us, think we made about $45 off that deal.

Nathan Latka

07:32Yeah. But how many of them are now paying you more than $2,000 a year?

Dan McGaw

07:35I have no idea. We actually decided that we don't wanna pay attention to those users. Unfortunately, we felt that that was the wrong product market fit. Weren't They the right tech users. So we kinda don't really pay attention to what's going on with those users anymore.

Nathan Latka

07:46That was that was going to be my point, but you made it for me. Back to your 80 people at $7 a pop is $560 of the 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.

Dan McGaw

08:00For sure. And you're way better at math off the cuff than I am. Good job.

Churn Problem and Pricing Strategy

Nathan Latka

08:03No. No. No. That's fine. Take me to... You know, churn's critical in any SaaS company. Right? I'm... When you look at... Now don't... Let's not ignore logo churn because you have such a wide range of ARPUs. When you look at your revenue churn over the past twelve months, do you know what that is?

Dan McGaw

08:15I don't know over the past twelve months. It was extremely high until we made the pricing change. We basically 8x'd our pricing, I would say three months ago. When we made that switch, our current revenue churn off of that is about 10% per month. We still have a huge churn problem. Our problem right now is, if you're familiar with the analytics space at all, is if you don't get set up correctly, you churn out quickly.

08:33I 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 10 x. So even in the entry price would be potentially $300 a month.

Nathan Latka

08:50Yeah. I mean, you could just copy Superhuman. Right? They put touch on every $30 month sale. They sit down with a thirty minute demo to get you using their inbox before they close. You have very similar economics. Besides, like, they've raised 18,000,000 from Andreessen.

Bootstrapped Philosophy and Debt Financing

Dan McGaw

09:00Yeah. And we have no interest in going the 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 proceeds at the end.

Nathan Latka

09:11How much debt have you raised?

Dan McGaw

09:12So we haven't raised anything for this product right now. So Effin Amazing does have some debt financing. I'm not interested in disclosing those metrics. But UTM.io will continue to focus on its MRR growth. FN will keep funding it out of our current customer pool. And then at a certain point, when we spin UTM completely off of the company, we might raise some debt for that as well.

Nathan Latka

09:28What's that... You don't have to tell me the numbers, but what's the financial instrument you use to raise debt inside of an agency? You know, in the SaaS world, you have things like RBFs, revenue based financing, term loans, etcetera. But I... Those are all value based on ARR streams, which agencies don't have. So what's the vehicle you use to raise debt in the agency?

Dan McGaw

09:44Yeah. So typically, the debt starts with a personal loan from myself. So so I'm obviously able to take out debt across myself. I then will apply that loan back to the company. 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,

10:01like it's not me just putting the money in, putting money out. It's literally a contract between me and Effin Amazing. And Effin Amazing of course pays that debt back to me. And if I wanna take out more debt or use my own personal savings, I'll make that decision

Nathan Latka

10:01Got it.

10:12Okay. And then business wise, so UTM being $3,400 a month today. What was it doing a year ago? Do you remember?

MRR Growth Over the Past Year

Dan McGaw

10:18Year ago. I would probably say a year ago, probably like 500. Yeah. Something in that range. We've had on average, I mean, we've been growing between 15 and 20% month over month. So... And that is not taking into consideration our enterprise annual deals. It's only looking at our MRR that's coming from ChartMogul. I think a problem that we have is obviously I'm distracted by the bigger business. So what we need to do is add more rigor around

10:41the financial metrics and the way that we look at all that stuff.

Nathan Latka

10:43Yep. Now when you look at your CAC to get a new customer, what's your... I mean, do do you have that kind of fleshed out yet?

Dan McGaw

10:49No clue.

10:50No no idea.

Famous Five: Books, Tools and Personal Life

Nathan Latka

10:51Okay. Alright. Good stuff, man. Let's wrap up here with the famous five. Number one, what's your favorite business book?

Dan McGaw

10:56Right now, I'm reading Good Strategy Bad Strategy, and it's really, really helping me figure out a lot of different things.

Nathan Latka

11:01Number two, is there a CEO you're following or studying right now?

Dan McGaw

11:05I would say no. I don't have anybody specific that I'm following right now. No.

Nathan Latka

11:08Number three, what's your favorite online tool for building your business besides your own?

Dan McGaw

11:14Trello, probably. I love Trello and Butler. You have to use Butler with Trello, and then it is a godsend.

Nathan Latka

11:20Number four, how many hours of sleep to get every night?

Dan McGaw

11:23Probably around eight to ten. I love to sleep.

Nathan Latka

11:25That's good.

11:26And situation, married, single kids?

Dan McGaw

11:28I'm married. I have three kids. I got 14, eight, and five. And we're all over the place. We're having a great time.

Nathan Latka

11:34How old are you, Dan?

Dan McGaw

11:35I'm 35.

Nathan Latka

11:36Last question. What do wish your 20 year old self knew?

Dan McGaw

11:43Be more patient.

Nathan Latka

11:45Guys, be more patient. His agency, Effin Amazing, did $1,200,000 last year. He used that to start subsidizing this internal software tool he built called utm.io to make UTM tracking easier. Now over a 100 customers paying for that at call it $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

12:09manages to continue to drive the agency revenue which allows him again to generate cash flow to reinvest in the software. Got a churn problem, he's gonna work on solving that. Dan, thanks for taking us to the top.

Dan McGaw

12:18Thanks so much.

Nathan Latka

12:20These CEOs rarely give these kinds of interviews. I hit them hard. I get the data, and I wanna do it more. So if you wanna 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.