How Muck Rack Scaled to $50M ARR Before Raising a $180M Series A in 2022 (Interview with CEO Gregory Galant)

Teaser: Bootstrapping to $50M ARR

Gregory Galant

00:00And then, it was a real slug to get to a million. You're growing 50%, 70% year over year, and you're profitable like, you idiot. Why don't you raise money? So, my co founder and I are still the majority owner, is still in control of the company.

Nathan Latka

00:16>> Hey, folks. If we haven't met yet, my name is Nathan Latka. I launched and sold my first software company back in 2015 and went on to write a book about it, which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies. Thank you so much for that. After the book, I launched this show and one went on to create founderpath.com. I raised a large fund to do non dilutive deals with b to b software

00:41>> founders. So far, we've invested in over 400 software founders totaling a 150,000,000. Here in 2024, we're doing three to four new deals per week. So if you're looking for capital and don't wanna give up equity, go sign up at founderpath.com for free to get your offer. Alright. Let's jump into the interview.

Introduction and Overview of Muck Rack's Journey

Gregory Galant

01:01Well, thanks for having me. It's great to be here. I'm gonna tell you about how we scaled our way up to over 50,000,000 in ARR, which is about our size when we did our $180,000,000 round in 2022. But first, I'm gonna tell you about how we got started and the bootstrapping journey, which I I know many of you are doing here in the room.

Gregory's Early Podcasting Career (2005)

Gregory Galant

01:24Alright. So here is the overnight success story. Started in 2005, launched Muck Rack in o nine, and then we did that round in 2022. I'll come back to that slide in a moment. I actually got my start podcasting similar to to Andrew and Nathan where I was interviewing founders, but I actually started all the way back in 2005. So a lot of people don't know this. Podcasting is called podcasting because originally you could only listen on

01:54your iPod. This Photoshop here is kind of wrong because the iPods weren't in color back then. But got got this early start in podcasting. I interviewed Reid Hoffman back when LinkedIn had 50 employees, the founder of Yelp, Vanguard Group, Brooklyn Brewery. If only I had money back then, could have angel invested in those companies. I would have made really a lot on that. But I didn't, but I met all these great people. One of the people

02:21I interviewed back in 2005 was Evelyn Williams, who had this really hot start up called Odeo, which itself was a podcasting company. If you've never heard of it, it's because it didn't work, but Ebb's a smart guy. He pivoted. Can anyone guess what he pivoted to? Twitter. That's right. So this is the original Twitter logo back before they could afford the vowels. And ironically, they've lost all the vowels again now that Elon's renamed it x. But

02:55but I this was 02/2007 when Twitter was just getting going. It led me to sign up really early. I got my first name on there because no one else grabbed it. So I got got at gregory on Twitter and later on Instagram too. This is the First Name Club logo, which I made with Dolly last night. So I was getting to see all this social media really early on. And and one of the pain points that

The Shorty Awards Origin Story

Gregory Galant

03:22my cofounder, Lee Semmel, and I noticed in those early days was that there was no way to know, hey, if you're interested in news or sports or politics, like, who should you follow on social media? This was back in 2008. So we thought we'd launch an award website called the Shorty Awards, because tweets are short, and let people vote with a tweet. So we we built the first ever system. Now that's commonplace, you know, you wanna

03:49vote, share it on social media. No one had done that before. So when we launched it, within twenty four hours, it became the top trending term on Twitter. And then we had to drop everything, organize the first Shorty Awards. It's still a thriving business. We got over the years, DJ Khaled, Carly Kloss, Lizzo, lots of other amazing celebrities and social media influencers there, as well as brands and agencies. But what we noticed at the Shorty Awards

04:16is that there that we got a tremendous amount of press. And I I'm sure you all know when you launch something, it's really hard to get attention for it. I've launched things before in my podcasting days, really hard to get press. With the Shorty Awards, we instantly got written up in the New York Times, Wall Street Journal, BBC. So we realized like, hey, journalists are on social media trying to figure out what to write about, but

04:42there's no one place to figure out where you can find all these journalists. So we we thought, okay, let's build a site to do that, just to show all the journalists one place. We weren't thinking about SAS or anything like that at the time. And and to come with a name, we have have to go back now all the way to nineteen o six. This is Teddy Roosevelt where he dubbed these progressive investigative journalists muckrakers, because

05:08they're digging through the muck, the mud to find stories. Over it was a bit tongue in cheek, almost a little derogatory at first, but over the years, journal ists really adopted that and viewed it as a positive. They viewed, if you're a muckraker, you're really investigating and going beyond the press release. So, we knew journalists liked that idea of muckrakers. We we figured all the journalists are gonna be in one place, so it's gonna be like

05:35a newspaper rack or a magazine rack. And we embraced our bootstrapping constraint. We had an $8 branding budget, which is what it cost to buy a domain name on GoDaddy at the time. And it turned out muckrack.com was free. So we built the first version of muckrack in two weeks. It was kind of wafer thin, but it was way for journalists to show all their social profiles, show off their work. It took off virally with journalists,

06:02so we had over 10,000 journalists request to get added in that first year. At the time, I got to admit, were kind of unfocused. We were doing the Shorty Awards again. We launched like five other business ideas that didn't end up working. But but muck rack, we just let it run and it kept getting more and more journalists. And being in New York at the time, I kept turning into PR people. When I told them what

Launching Muck Rack in 2009

Gregory Galant

06:24I did, they say, oh, I use muck rack to figure out which journalist to pitch. I'm like, oh, that's interesting. We have this whole audience of people using our website to do their job. We have the data. We even have a little brand amongst these people. And like idiots, we're not charging for it. Also from running the Shorty Awards, as I'm sure Nathan or anyone who runs an event could attest, it was always profitable but we

06:49always had to start from zero. And I'd seen friends of mine launch SaaS businesses like Hootsuite and Mailchimp before us, and I saw how powerful that was to have predictable revenue. So we relaunched Muck Rack a year this is what it looks like now, but we relaunched Muck Rack a year later and in 2011 and added in the SaaS part. The rest is history, as I'll talk about in a moment. So let me tell you about

Pivoting to SaaS in 2011

Gregory Galant

07:16the bootstrapping journey now. Here's that timeline I showed again. So, again, it was 2009 here that we launched Mock Rack, 2011 that we pivoted to SaaS. And then it was a real slog to get to a million. It was, you know, pretty much three, four years of just hacking away at it. And we've raised, you know, pretty much next to no money. It was under 200 k of angel. It was the only primary capital we ever

The Bootstrapping Slog to $1M ARR

Gregory Galant

07:48took, and we used some of the profits from the shorties, which is still part of the same company at the time that we reinvested in muck rack. And so every day, it was just talking to customers, figuring out what would happen to get to a million. And it was really clarifying because we had to, like, find customer pain points that we could solve quickly and with the tech resources that we had. And because, you know, the

08:12on one hand, we couldn't invest money like we could had we raised a bunch. But on the other hand, we we weren't answering to investors. We weren't thinking about how to position for the next round. It was how do we get the next customer. I was personally doing the customer support for longer than I care to admit, and it it was really just kinda do or die to get to that million. And once we did that

08:37though, we we kinda knew we had something and we kept scaling. And here's our our ramp where it shows our our revenue, our ARR, or pretty much our ARR compared to our annualized expenses. And then this graph launched a secret, and that since 2022, before 2022, everyone was like, here, growing, you know, you're growing 50%, 70% year over year, and you're profitable. Like, you idiot, why don't you raise money and grow 300% year over year? Since

Revenue vs. Expenses: The Profitability Secret

Gregory Galant

09:122022, no one ever says that anymore. Everyone's like, well, what's the secret to being profitable? How do you profitably grow? And this is the answer. It's the secret. Spend less than you make.

09:25And it's what we always did. We always tried to reinvest as much as we could, because we knew we were growing, we believed in the future, we we knew that there was always more to invest in the company, but we just constrained ourselves by the ARR and also leaving a comfortable cash cushion in the bank. I always aim for for two or three months worth of whatever our total expenses were to have in the bank. Didn't

09:50always follow that, but but that was always the the goal early on. And it worked. So, yeah, I think it's, know, I'm not religious about know some people who do very well going out there raising a bunch of money to grow. And I think a lot of people have the misconception. I know a lot of people here might be at like the $510,000,000 ARR mark, and maybe you're thinking like, oh, if I wanna really go big,

10:15like I have to either decide I wanna be this tiny little lifestyle business forever, or I gotta go raise money if I wanna wanna go big. I don't think it's that dichotomy. May maybe it is the right move to raise money, but I think there is a path where you can keep reinvesting. And what I really learned was, like, at these different stages, like, getting to a million I guess, you have to index it for inflation

10:37too. Maybe now it's 2,000,000, but but it feels really good. But but it's still till like 5,000,000, 7,000,000, 8,000,000 for us. I found it was always this really kind of painful trade off where every time we get a couple 100 k more in revenue and we could invest, you know, reinvest it, it was always this impossible conversation. It's like, do we hire the salesperson? Do we hire the programmer? Do we increase the servers? Do we do

11:07we finally get a better coffee maker for the office back when we had one? So it was really tough, know, that that kind of five to 10. But then I find I found once we approach 10, it flipped where all of a sudden we had plenty of money. And the hard part the harder part became finding the right people to hire, figuring out what position to bring in next, really educating ourselves. So all because it's just

11:33facing all these decisions like, hey, gotta hire a CFO. What does the CFO do? You know, if you never hired one before and educating yourself about that. Or figuring out, okay, we need to add a layer of management in the sales team. How do we go about that? Do we bring people in outside, bring in new people? So so that the challenge has changed, I think you can just get to that 10,000,000 is a rough mark.

11:59That's when it starts to flip and you and you start feeling the pinch for cash, at least in in a lot of SaaS businesses.

12:08I also wanna show this is just a Google Trends results for Muck Rack. You can look it up yourself and from our our founding o nine till today. And I think it really shows the power of building a brand. One one thing we always thought about was that you have to do lots of things to get known in your industry. One's PR. That's a little self serving, because that's what our software does. But, PR, events, going

Google Trends and Long-Term Brand Building

Gregory Galant

12:35out there, meeting customers, creating content, all these things you have to do to get known in your industry. We did a lot of long term bets. We even launched this free academy to teach people how to do PR very early in their careers. It's a free certification. Anyone can can take it academy.muckrack.com. And we know like we're not gonna see ROI on that for three or four years because it's someone super junior with no buying power

13:03taking it. But our bet is, hey, in four or five years after they take it, maybe they're a director somewhere and they'll recommend it to their boss. In ten years, they'll be the VP and they'll be making that buying decision. So we we just always invested into the brand. And I I think this is hard because a lot of us, when we're bootstrapping, feel like we have to be so analytical. And you hear these stories where

13:25someone says, hey, we know with our our Google ad spend, our social ad spend, we invest a dollar, we get a dollar 20 out. With a lot of these long term brand bets, you're not gonna be able to see it immediately in a spreadsheet, unfortunately. But as I've seen our continual lift, especially for profitable growth, it really matters. And I think we all know it's just so much more capital efficient when you have inbound people coming

13:51to wanna buy from you. Even if you have a sales team like we do, having the person coming and wanting to buy is just so much easier than going out there and having to hunt for every single deal.

The Free PR Academy Strategy

Gregory Galant

14:06And finally, in 2022, we we'd always been approached by a lot of investors. I'm sure all your inboxes are if you're at a couple million in ARR even are are getting filled by investors, and I always told them to go away. But finally, we had one one that I got them to know for a while, Susquehanna Growth Equity approach us, a few others did too. So we finally said, let's talk to people. We wanted to get

14:31to a scale where we could do a round that'd be really meaningful and still stay in control. So my co founder and I are still the majority owner, is still in control of the company. Very very little has changed culturally. But by partnering with a growth investor, we were able to really kinda just give ourselves a lot more firepower should we ever wanna do an acquisition. Just have kinda more optionality. And it was also kind of

14:57our signal to the market, we're here to go long, to go big. And what one secret I learned is that I was like, well, what do we call this round? And I looked it up. Know, series a just means it's your first series. So I'm like, well, it's our first institutional capital, so it's a series a. And we will see if we ever do a series b, but that's how we branded it in the press. So

15:20never never too late to do your series a.

15:24And so finally, I want to talk about how we are thinking about scaling for the future and and hope some of this ends up being useful to all of you too. First, I I want to tell you about talent. We we always place a really big focus on this. Just in the past year or so, we added a new CRO, a new CMO, a new AI lead. I'm proud to say too, we have a lot of

15:46our old timers at the company still with us working with these new executives, you know, both learning from them with with the function and the new executives learning with our our long time team members about our market and the particulars of our customers.

16:05But but this is one thing that that I think if you're bootstrapping, it's important to think about. I found before we raised the growth round, when I was recruiting more serious executives to join us, it was a lot, it was a little more work. Because there is this site, I think, unfortunate perception of bootstrappers that, hey, we're just lifestyle businesses, we're spending most of our time surfing or playing golf. And then executives wonder, hey, if I

Raising the $180M Series A with Susquehanna Growth Equity

Gregory Galant

16:35join this company, are they serious? Will this look good on my resume? Will there be equity compensation that will ever be worth something? We always did all that just as rigorously as any other any other company, especially any any venture backed or PE backed company. But I had to do a lot more work in the recruitment process to really convince these executives that we were serious, that we were operating professionally, that their equity comp would one

17:02day be worth something. I found once we did do the growth round, I just didn't get any of those questions anymore. People just assumed, okay, that's a good company to join, it'll be good for my career, the equity comp will be worth something. So, think that that is a benefit to raising money, the talent you can access. But I'm also here to tell you that you can still get great talent without raising money. You just have

17:26to work a bit harder to to do it and really go out of your way to show that you're operating as professionally as someone who's raised outside money. I also want to talk about how we evolved our workplace. When we started, we had an office in New York and and by the time pre pandemic in 2022, we had a beautiful office in Soho, rooftop access. This was like the the young Greg dream of like what success

17:53is like for a start up. Still, only half the team was in New York. We were very remote friendly. We never forced the people in New York to actually come to the office. Most days, like less than half the team even in New York would come to the office unless we had free food, in which case just about everybody came. So when the pandemic hit, it was very easy for us just to tell everyone, hey, we

Talent Strategy and New Executive Hires

Gregory Galant

18:14already have Zoom, we already have Slack, just don't come in tomorrow. We grew a lot during the pandemic. So by the time our lease was up a year later, only a third of the company was in New York, since the new people we brought in were disproportionately out of New York. And we surveyed the New Yorkers if they want to come back after the once it was safe to. And everybody's like, maybe I'd come in once

18:37or twice a week to see my friends, but I don't know if I actually would. So we ditched the office, went fully remote, And since then, we've pretty much quadrupled in size. So it's really, really worked for us. And again, now when we do a talent search, it seems kind of insane to me to limit the search to one or two geographies, even if it's a great geography, like here in Austin or San Francisco or or

19:05New York, because there's so much great talent out there. You can get anywhere. Our CRO is in the Bay Area, our CMO is in Boston, our CFO is in New Hampshire. We just got a great team, but they're not in one place. And instead, we do quarterly exec off sites. We pick a new city every time. And then we do an annual all company off which we just did last December. We brought over 250 people to

19:31Cancun, Mexico and had a great time. And I no one came up to me and said, hey, I would rather go to an office five days a week than than come here for this off-site. So it's been a great mode to switch to. And of course, here's our obligatory AI slide, but it's something where I found on the SAS journey being on it now since 2000, since 2011.

19:56There's just always something new and you always gotta quickly adapt to it. So just a couple weeks after ChatGPT came out, we launched PressPal AI, a press release

20:07generative AI agent that also suggests journalists to pitch to. And then over time, as a lot of concerns have grown around AI, we've really gotten that ahead of presenting AI standards for the whole public relations industry out there.

20:23So that that's pretty much our our our journey here. Just going from bootstrapping in the early days to scaling up to 50,000,000 plus in ARR and still scaling past that to raising funding. I'm happy to to take any questions. As I mentioned, I'm just gregory on Instagram and Twitter or Instagram and X now. You can look me up on LinkedIn. Find me around today. I've got ten more seconds. I kind of want to wait for the

20:53opera music to come out so I can thank everybody, including my agent, and get dragged off stage. But I know they're running a little behind. So I'll get oh, there it is. Alright. Great. Well, I'd like to thank everybody for listening. Have a great day. Have

Nathan Latka

21:10>> a good one. Have a good one.