Verticaliq Revenue (2016)

this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per top 5 and6 million he is help on global domination we just broke our 100,000 unit sold Mark and I'm your host Nathan lka okay top drive this week's winner of 100 bucks is Rick segman Rick segman he is stuck brick and mortar business that is his Focus so congratulations Rick if you guys want to win 100 bucks every Monday on the show in order to enter simply subscribe to the show on iTunes now and then text the word Nathan to 33444 again text the word Nathan to 33444 folks many of you reach out to me and you say Nathan so many guests on your show talk about the importance of batching but whenever I try and batch you tell me this you go Nathan they don't book backto back times so you or they don't show up after they book it's frustrating the answer is guys you have to use Smart Tools I use a tool called AC scheduling at Nathan lat.com schedu I'll tell you specifically how I use it later on in the episode Nathan L here this is episode 541 coming up tomorrow morning you'll learn from Connor Lee of hip lead they've hit 120 Grand in monthly recurring Revenue by helping 30 customers get more leads and I'll tell you what I'm going to buy a company in the B2B lead space very soon it might be Connor you don't want to miss that episode tomorrow Nathan ladka here good morning folks Our Guest today is Bobby Martin who believes that too many startup Founders pivot way too early quit too earlier early and expect rapid takeoff through his experience of starting and selling first research which was a leader in sales intelligence for 26 million to a Fortune 500 firm done in Brad street he's learned firsthand the challenges and solutions at each stage of entrepreneurial growth he's the author of the hockey stick principles the four key stages to entrepreneurial success which was named an 800 CEO read best seller his current Adventure is his chairman and co-founder of vertical IQ a leading provider of sales research insight for banks he's an angel investor and serves as an active board member with with several Innovative startups including local eyesight boardroom insiders my life site Sage works and etail insights while he's a national speaker is still a HomeTown guy and focuses most of his investments in North Carolina where he's lived and worked Bobby are you ready to take us to the top I'm ready all right let's do this man so you got the book you got the early exit for 26 million you have your current Investments it's all very exciting I want to spend most time on vertical IQ if possible tell me first though uh first research you so up for 26 million to 4500 firm what year did you launch that company in 1999 wow so you were one of the early ones huh yeah it was you know before I even really knew what a startup was man I just had an idea and decided to pursue it and how old were you at that point 29 wow okay so the the that exit did you get a were you kind of pre- or post bubble did you get a a great valuation because you beat the bubble or was that a suppressed valuation because you came after the bubble it was uh it was before the bubble so I would say we got a good valuation uh so it was March 2007 when we closed so nothing had really hit the fan yet and what was briefly tell us what first research was what was the business uh we provide industry profiles to sales and marketing professionals to help them prepare for meetings with all types of businesses so it's industry intelligence for sales and marketing professionals and was that business model assass or pay as you go or agency kind of fee Consulting what was it it was a it's a SAS model of course it's information as a service as opposed to software as a service but that that's how do we get paid Upfront for subscriptions okay and then it TI us forward after that so you built that how many years did you build that and then why did you decide then to write a book at the end well we built the business it spent about seven or eight years building first research it was an incredible journey and in fact the sale to done in Brad street sort of snuck up on me it was not something I was planning to do but after the sale I hung around for about a year working to you know transition the company into Hoovers and done in Brad street was that by choice or you had you to get an earnout uh both okay both and so after that I uh you know I started actually thinking about all these ideas that i' had from first research and quite frankly I wrote the book because I love the process and I I just really got into interviewing Founders and just found them to be incredibly interesting people and so I just love the journey okay so you write the book most people say don't write a book you lose money and it takes a lot of time and it's super tough you decided to do it just cuz it was interesting and you had just gone through it absolutely you know it wasn't it was like not because of those things that I did I did those things those things were fine with me I just absolutely love the journey and so it's been a blast to tell you the truth and let's quickly touch on this because I do know we have some folks listening Founders CEOs who are thinking should I write a book to get more distribution or to grow the business uh did you self-publish this or did you uh kind of go the publisher route I went the publisher route so I partnered with flat iron in which is an imprint of McMillan publishing and had an agent and everything and quite frankly they've been fantastic I mean you hear all this news oh you should self-publish don't you know go with Publishers but they're really good at what they do their editors are outstanding and their marketing is outstanding so it's been a good partnership did you negotiate in ADV this wasn't probably important for you but it would be for maybe some of our other listeners uh did you negotiate hard for an advance or did you just try and maximize profit per book or revor share uh my agent uh with writer's house Lisa deona she negotiated the deal with the publisher and most of most of it was upfront if it does really well right now we're off a fantastic start but uh then of course there could be additional Revenue down the road but it was mostly Advan an Advan up front what was your Advance you know I think I'm under confidentiality on that it's a how many how many years ago was it published uh it was actually published in May oh okay so that's new okay God I was under the impression this was like you know early 2000s okay so you just recently published this thing exactly the hockey stick principles that's right and you said it's doing great quantify that for me how many copies have you sold yeah you know I get my six-month report soon but I'm thinking at least 10,000 um and it's doing really well on Amazon I've been really pleased with that in the retail stores it's all over the bookshelves uh thanks to McMillan and their their wonderful distribution and uh and I'm doing a bunch of speaking engagement so I mean I would love to sell several hundred thousand copies quite frankly 2017 and 18 are going to be the years where I really just get out there and uh beat the drums like crazy and of course the whole process is a blast the speeches and everything and learning and talking uh I've just enjoyed it so you know shooting for hundreds of thousands of books we'll see anything since you've been through it anything you can uncover for us that drove like the most sales for the book that you just did not expect ah great question uh I thought that a lot of our sales would come from online like from people just seeing me in the media and that kind of thing which we've gotten a fair amount of that but quite frankly that's been a little bit disappointing um you know the traditional blogging all that's been pretty dis disappointing quite frankly I think my publisher has driven a huge percentage of our sales and that surprised me uh they've been outstanding just through kind of distribution in Brick and mor locations or any specific tactic yeah definitely bit brick and Mortal locations and also their connections throughout the industry and uh media and that type of thing and you know quite frankly they're pretty Savvy at it so a lot of those traditional channels like the bookstores libraries quite frankly have been wonderful uh in terms of sales and they've generated a lot of that now I'm building up my own platform of of people and that's growing rapidly but up till now they've been the the spearhead for so you mentioned you're going to be kind of hustling to sell more of this book in 2017 2018 how are you balancing that now as chairman and co-founder vertical IQ yeah that's a great question well I hired a president in vertical IQ who's been doing a lot of the David uh the day-to-day operations his name is Kevin mcnamer outstanding high energy guy and is sort of active chairman I'm probably working 10 to 20 hours a week with vertical IQ and then on top of that um I'm an angel investor so I'm involved with eight other businesses in fact one of the guests you had on Darren Pier some detail insights I'm really involved with that company for example and and several others but I'm still a 4050 hour work we got um I just kind of Juggle a lot of things and love that sort of career of Adventure if you will yep well guys listen real quick I'll plug Darren if you want to hear his episode again Bobby is an investor in Darren's company etail insights Darren came out in episode 539 which was two days ago they just passed 1.4 million bucks in ARR uh really specializing in a lot of e-commerce data so go check that out um Bobby tell us real quick what does vertical IQ do and what's the revenue model yeah so vertical IQ provides industry profiles to Bankers uh what we did is sort of did a first first research too if you will but this particular company you know we've customized the information for Bankers so what would a banker and by the way they're probably half a million Bankers in the country or something before they go visit with a business what would they like to know about that type of business in terms of how they actually operate their financials all that type of thing and so we provide that you know just an easy to use form so they do call preparation with vertical IQ and they run out the door and then the business owner says wow how do you know so much about my business and so the the revenue model is that we it's like SAS except there subscriptions with banks directly with banks and we get paid you know Upfront for those subscriptions it's a great business model man because you get paid up front and so it reduces correct okay so tell us today it's December 2016 how many current customers are you servicing we have uh almost 150 Banks 140 some odd Banks we have 30,000 plus users of vertical IQ within those Banks okay got it and do you sell based I mean is it seat based or po increases are driven by seat increases it's actually we're pretty unique in that way and I think your listeners will love that we don't charge per seat we charge according to the number of Bankers for example in particular divisions who will benefit from our service using it as a preall preparation the number of calling officers but then we let the bank have unlimited seats okay so we don't police seats we instead we encourage more and more seats so we we charge according to the division so you pre-sell and say hey you have potential to have 50 users we're going to charge you for 50 seats annually up front and then you can control how fast they're added or subtracted correct and what we do is let's say they have let's say they have 50 quote unquote users or active what we would consider active users we encourage them to ultimately have 100 or 150 because the people who support those calling officers can use it as well it's a really unique way to sell you know a SAS type product but quite frankly it's worked extremely well for us because we're easy to do business with you don't have to we don't have to police users right and what is the if you you just kind of average the annual contract value of kind of your average customer what is or the average Bank what does that come out to oh yeah the average contracts between 15 and 20,000 a year but there's are quite quite a range you know it starts at 5,000 a year and it goes all the way up to qu million a year but on average it's around that area so is it fair to say if I take the 140 Banks times C on the slow side on the lowside 15 grand ACV you're doing about 2.1 million in in in ARR currently that's correct yeah that's that's exactly what we're doing right in that range and what is the talk to me about gross Bank kind of monthly churn do you have churn and if so what is it well actually that's a great question we don't lose many uh customers it's a really sticky product and so I'm pretty proud of our 98% renewal rate andn or monthly annually okay and so if you take you know we only lose a customer or two a year and it's a lot of times it's due to a merger but then we end up picking it up after the merger you know Bank merge a lot but we have very few dissatisfied customers but it is kind of it's difficult to unwind the product and um so it is a very sticky product and we're fortunate and we provide a high degree of service you know behind it what do you pay it sounds like this is pretty sticky but it sounds like also Banks might have a long sales cycle so maybe inside sales you know expense are maybe High per per contract landed give us some insight into that what's your average customer acquisition cost well that's a good question actually so we have most of our cost within you know do acquire new customers is within sales so we're sort of a sales-driven company that's partly because of my background and partly because of the high price point but you know it costs us a lot of money to acquire a new customer because the sales cycle is very long sometimes it could be three years and sometimes it's you know six months but it's never quick uh we have very little marketing I mean we have very little marketing spend so uh but it is a you know we do like to operate at a profit you know sure we don't have enormous profit margins but we have really solid profit margins so what do you for 10% 20% 50 yeah 10 to 20% operating margins is what we aim for and we normally reach that you know some years we just started in 2011 and when we add cost for the future which we do occasionally if we really want to go for something big it'll shrink those some but then sometimes we shoot up higher and uh but I hope that helps and it's kind loaded it's a loaded question if you will well so uh if if you try and give me like the the fully weighted CA though so that you know if one inside salesperson is landing one new customer every kind of two months you can kind of do the math but I mean it sounds like your your turn is so low I mean it's hard you don't want to obviously extrapolate that in an Excel sheet because then you'll get ridiculous lifetime value numbers because that's so high but I mean you can assume I assume you're probably projecting these customers are staying with you for more than four years after you sell them which puts their LTV somewhere over 60 Grand right yeah exactly great point so it's worth a long sale cycle yeah so what are you spending though because you can have a cash Gap if you start doing this I guess too much but what are you willing to spend on a customer that's worth over 60 Grand to you well a lot of what we spend quite frankly is time and you know it's like how much time will a salesperson actually take to sell that particular business and a lot of it's their own Savvy you know our salespeople earn a 15% commission okay you know on their sales and they also get a small piece for for the renewals and so it's worth it to if it's worth it to them the way we structured it it's worth it to the company as a whole and worth it to the customer so I kind of all kind of works it itself out but have I gone in and actually calculated how much one of our salespersons for example uh spins and dollars wise to acquire new customer you know I really haven't maybe I Kevin yeah what's your team size how many inside sales reps do you have uh we just have three salespeople but um and so they're they very accomplished mentioned inside heck man 20 or 30% of the time they're outside you they're meeting with banks face to face uh a few of them with a smaller relationships would be more um would be done more over the phone but we do travel quite a bit so we only have three salespeople we have 15 employes 15 total based there in Durham uh actually yes 80% of them here in Raleigh Durham area but then some of them are in other places because you can just work out of your house but a lot of them are researchers you know I mentioned we provide all this research so we have to big part of our cost structure is going in and updating the industry profiles let's get just go back to a macro level real quick before we wrap up with the famous 5 take us back to that first year you guys were in business do you remember what your first year Revenue was 2011 yeah I think God 30,000 or something that's awesome I mean it took us fast forward yeah that's that's why I want to ask these questions fast forward to 2015 what was total revenue of 2015 1 uh 15 was 1.4 million yes 1.4 million annual break it sounds like 2.1 this year yeah so you can see growth rate pretty good that's awesome that's great and uh self-funded or have you raised Capital uh self-funded but we have um uh we have uh the you can still hear me right yep okay yeah so it's self-funded but the the the founders put in fair amount of money to build the research how much um we put in hundreds of thousands of dollars I'll say that but under a million yeah guys I get asked all the time Nathan you poost all these interviews hundreds of them per month how do you do them efficiently and guys the answer is simple people always agree to my calendar backtack meetings I batch my interviews to stay very efficient and the way that I do it is I use a tool called Acuity scheduling at Nathan lat.com schedule and the reason I use them is very simple they keep my noshow rate very low because they send out reminders about when the interviewer would a meeting is coming up and also they make it very easy to schedule time right I don't have to go back and forth via email 10,000 times with people I'm trying to meet with okay at Nathan lon.com schedu helps me so much and by the way look I like have so many meetings I'm the best at meetings okay I do them back toback very very efficient you guys know me many people say I'm the most efficient they've ever seen okay so I use the tool it's so efficient and by the way I got Gavin I said Gavin he's the CEO I said I want a great deal for my people he said Nathan well most people get a 14-day trial isn't that great I said no he's giving us a 45-day free trial at Nathan la.com slsu that's not going to stay up forever so go get it now Nathan lat.com schedu okay very good well Bobby let's let me fire these last five questions at you just so the audience gets more context they're the famous five these are one Word answers you ready yeah number one what's your favorite Business book besides your own uh rework rework okay number two is there a CEO you're following or studying right now Brian Hamilton from Sage Works he'd be a great guest on your show that'd be great I love an intro um number three is there a CEO you're following or studying right now uh no number four yes or no do you get uh eight hours of uh of sleep every night no seven seven okay good and then is there favorite online tool you have like top tow um let me think online tool salesforce.com okay and uh last kind of give us some context real quick are you married single do you have kids married okay any kids two kids all right and and how old are you 47 all right last question take us back Bobby a beautiful 27 years what do wish your 20-year-old self new uh I think ignorance is bliss you I love the Toby Keith I wish I didn't know then what I don't know now or whatever but I would say I would say look for be be patient for a long journey I love enjoy long Journeys there you guys have it from vobi vertical IQ founder hockey stick principal author be patient the long journey is worth it again building vertical IQ they started it with less than a million bucks now serving over 140 Banks and 30,000 users across those Banks they did 1.4 million in 2015 Revenue after doing 30 Grand in their first year in 2011 average revenue per user per year is somewhere around between 15K and 20K so if you back into Mr it's somewhere around 175 Grand they'll finish this year around 2.1 million in sales with over a 98% annual retention rate they're to totally willing to spend money on again lifetime value which is well over 60 Grand well over four years uh of Lifetime there building again easily identifiable data for banks to use with their team of 15 based there in Raleigh North Carolina Bobby thank you for taking us to the top yeah man Nathan this is a great show man had a lot of fun you thank you thank you if you enjoyed Bobby today go back and listen to Spencer yesterday his company client just hit 80 8K in monthly occurring revenue and is aiming for a $5 million valuation at their next round of funding okay top tribe I'll see you bright and early tomorrow morning and don't forget before you listen to any other episodes subscribe on iTunes right now for your chance to win 100 bucks every Monday [Music]