How Volie Reached $14.4M Revenue and 2,000 Rooftops Serving Automotive BDCs (Interview with President & Co-Founder Scott Davis)

Opening Revenue Teaser

Scott Davis

00:00Our monthly revenue is going to be $1,200,000 this month.

What BDC Means for Volie

Nathan Latka

00:03>> You said you're doing 1,200,000 a month, So you're doing about 14,000,000 a year. When I hear BDC, I think the publicly traded business development corporations. What does BDC mean for Volley?

Scott Davis

00:12In automotive speak, that means business development center. Our software, if you've ever submitted a lead for a vehicle and gotten a callback or you're due for service or you've got a recall and the dealership's called you, that's what we do. Our software

Nathan Latka

00:25>> does it. And Scott, how much do you and your other co founders still own of the business today?

Scott Davis

00:29My family plus one of our co founders owns about 85%.

Ownership and Hypothetical Acquisition Offer

Nathan Latka

00:33>> Someone offered you 70,000,000 all cash today for 60% of the business. Do you take the deal? Hey folks, my guest today is Scott Davis. He is the president and co founder of Volley, the leading communication platform for automotive BDCs. He's got over twenty years of experience in automotive retail operations and BDC strategy. Scott, you ready to take us to the top?

Guest Introduction and Product Overview

Scott Davis

00:52Yes, sir. How are doing, Nathan?

Nathan Latka

00:54>> I'm good. It's good to meet you. Now, is this like, you know, if people are going on the road and they see cars for sale on the side, it's a car dealership, are you installed in the dealerships as well or just the maintenance and repair shops?

Scott Davis

01:02We're franchise auto dealers is who we work with. So there are 18,000 in The US. We work with almost 2,000 and hopefully we'll keep growing.

Nathan Latka

01:13>> And Scott, that's 2,000 individual locations or 2,000 Yeah, logos,

01:18>> 2,000 individual rooftops, almost. Individual, okay. You said 2,000 individual rooftops again, that's just, that's the maintenance shop. That's the car dealership. That's the sales center, whatever it is. Yes, yeah. Okay, okay. Very cool. Okay, take us more sort of end of the story here. So we have your product featured here on our website. Walk me through, I mean, where can I find or tell us about your most popular product?

Customer Base and Rooftop Count

Scott Davis

01:40So most of our customers use us for their service BDC. We replace their desk phones or manual processes. Basically, built an automotive data matcher on top of a contact center solution. What is very common for dealers prior to Volley is to not have software for this. They use desk phones. They print it off lists. And

02:03we put a system in place that they could actually make money in their BDC.

Nathan Latka

02:07>> Okay. So can you point to me somewhere here on the screen? Is this a shot of that part of the software product?

Core Product Walkthrough

Scott Davis

02:13Yeah, that's the call screen that they're in. The agents go from record to record. There is no robo dialing in Volley. It is call email and SMS. But what we've done is we've helped the dealer build a plan and they go from action to action and the dealer has 100% visibility into what's happening.

Nathan Latka

02:34>> Are you selling them leads as well or is it just to manage their current leads that they generate?

Scott Davis

02:38Yeah, we're 100% SaaS software. We're not selling market fulfillment or leads or anything like that. So we do integrate with most of their data sources. We've loaded 5,000,000,000 human beings into Volley and de duked them down to about two forty four million customers. So we just make it easy for them to run their business.

Nathan Latka

03:01>> And help me get an understanding. If I want to use all these software products that you just gave us an overview on, what's the average dealership going to be paying you per month or per year?

Scott Davis

03:09It depends. So a single dealership is going to pay between $1,500 and $2,000 a month. Most of our customers are dealer groups. They use them at the enterprise level and we do it by the size of the store. So we have a 10 store group that pays $6,000 a month. We've got a tensor group that pays $13,000 a month.

Nathan Latka

03:28>> Okay. And when you say size of dealership, off what number of cars, number of leads, what?

Scott Davis

03:33Based on their consumables. So average number of repair orders a month, average number of car sales they sell, etc. Dealers don't like variable pricing. So we've got to kind of bucket them and take the good or the bad with what we sell.

Nathan Latka

03:47>> I guess I'm not following that. So 10 store group paying $6 a month for car sales average number of repairs versus this 10 store group paying 20 ks per month, that feels like variable pricing. They're paying more if they do more car sales and more repairs.

Pricing Structure by Rooftop and Store Group

Scott Davis

03:59Well, what I mean is the size of these dealerships is a lot different. You may have a little rural VW store that does 400 repair orders in a month. You may have one in the city that does 2,000. So when I say variable, we charge the dealer based on how big their dealership is. And we've used the size of these dealerships to estimate the consumables and what we need to charge to make it a good deal

04:28for them and for us to make the margins we need to make.

Nathan Latka

04:31>> Okay. And of the 2,000 roofs, right, that you're servicing to use your language, how many store groups is that?

Scott Davis

04:37We send about 300 invoices a month.

Nathan Latka

04:41>> Okay, okay. So then the average store group has about seven or eight roofs.

Scott Davis

04:45Yeah, yeah. That's a pretty good guess. A lot of our dealerships are enterprise customers. They want to combine this all in one view and they make it easy.

Nathan Latka

04:55>> And you just gave an example of a store group 10 paying 6 ks and another same size paying 20 ks. If I tried to pin you into an average, is it fair to say the average store group will pay something like $10 a month, $15 a month?

Scott Davis

05:06I think the average rooftop for us pays about $1,000 a month. Now that is for our core product. We

05:16have another product. Have you ever received on your phone a call those labeled potential spam? Yeah. So dealers are, it's epidemic for dealers. A lot of customers will flag their calls as potential spam. So we bundle that into Volley. We also sell it separate. About half of our customers just buy that from us. And it's a few $100 a month depending on between just say it's an average of 300 to $400 a month per average customer.

Nathan Latka

05:48>> Well, Scott, because you have car dealerships and then you have store groups and they're different. 2,000 roofs and 300 store groups. So the price points sort of are over, but I guess to just sort of make the math easy for my audience, you said the average rooftop is paying about a grand per month, right? Yep. Yes. Okay. Can I multiply that times the 2,000 car dealerships sort of back into your monthly revenue?

Scott Davis

06:10Yeah, our monthly revenue is about, well, it's going to be $1,200,000 this month.

Nathan Latka

06:17>> That's incredible. How's that feel?

Scott Davis

06:19We bootstrapped it. I love what we do. I wish I didn't feel like I had to learn every lesson the hard way, but we're pretty proud of it. We need to do a lot better, but it's going to be a great year. It's up to us to do a good job.

Nathan Latka

06:33>> When did you launch the business? What year?

Scott Davis

06:352017, we put on four customers and we ran with them, myself and a couple technical co founders. We ran with them all through 2018 and practiced on them. We started selling to vendors of automotive dealers first just to build out the product. And we started selling direct to dealer in late twenty twenty, of course, out of COVID. So put our first dealer on in March 2021 and it's been fast and furious from then.

Nathan Latka

07:09>> Do you remember your first million dollar year?

Monthly Revenue Confirmation

Scott Davis

07:11Yes. It

07:15was 2020. So sure felt a lot easier at that point, but I wouldn't trade it.

Nathan Latka

07:22>> You were still at four customers there, right? Or no?

Scott Davis

07:25By 2020, we had about 40 automotive vendors using it. Call centers that service dealers.

Nathan Latka

07:36>> Yeah. So you were sort of in a pilot phase with four customers from 2017 to 2019. You really hit the gas in 2020 and went from zero to a million dollars of revenue basically in eighteen ish months across 40 customers. How did you get those 40 customers? What was the strategy?

Scott Davis

07:49I had a just a nonsense part of the story here, but I own a bunch of pizza places and I hired a marketing person to run it for my stores and pretty soon I'm doing all this database work for this chain that we are a franchise in. And I started working with automotive dealers in 2002 and there was a company called Driving Loyalty. We sold it in 2015. I had a pretty good network. So we didn't

08:16actually add a sales manager until 2023.

Nathan Latka

08:19>> So how big was the team in 2020 when you hit a million revenue?

Scott Davis

08:222020 we had 10 full time employees. In June 2023, we had 19 total employees, 15 full time, and now we have 63 employees, 58 full time.

Nathan Latka

08:37>> Okay, wow. And if you're doing, you said you're doing 1,200,000 a month, right? So you're doing about 14,000,000 a year divided by that 63. I mean, that's really good. What is that? That's 230,000 of revenue per employee. That's pretty efficient.

Scott Davis

08:49With my own company, I always felt like I could never make good decisions because I was always adding the person for when I got big. And so I had very strict rules at the start. Since I wrote all the checks, I didn't have some of the pressures that other people have and it was painful. I'm getting buried somewhat in admin, but I'm very strict of how we've added workers. We need to move faster now. Honestly, it's

09:14harder to spend the cash we're sitting on than you think because you don't want, it's a precious commodity to have and you want to do it efficiently.

Nathan Latka

09:24>> Well, me about your champagne problems. How much cash are you sitting on?

Scott Davis

09:27I don't know if I want to publicize that, but we've been very strict with our margins, our retention. We need to step on the gas. We'll just say that.

Nathan Latka

09:39>> Fair enough. I won't push you on the cash number. Can you share though what's your profit margin on average the past couple months?

Scott Davis

09:45About 16%.

Nathan Latka

09:47>> Okay, that's pretty good. So yeah, so you as a capital allocator trying to think about growth, how do you decide what to do with that money? Because if you're doing 1.4 top line, Now what is that? That's $240,000 a month of basically free cash flow. You got to figure out how to reinvest.

Scott Davis

09:59Yeah, we're trying to hire. We're trying to build out some products and we've done it all. I mean, like I said, these hard lessons we seem to learn over and over and over. Where do we spend it? We are rounding out a few of the products. We're trying to aggressively. Our sales team now has 12 people in it as of Monday and we could add to that. It's a good question.

Company History and First Million

Nathan Latka

10:22>> Scott, tell me more about your sales team because this is a very niche sort of sales. Like are these folks, do they carry a quota? What's their base plus commission? How do So you structure

Scott Davis

10:31average salesperson, so seven of them are AEs. I've got a manager and then four SDRs and they have their quota each month for the AEs is $8,500

Nathan Latka

10:43>> new MRR or new ARR?

Scott Davis

10:45In monthly MRR.

Nathan Latka

10:47>> So they have to add 8,500 of new MRR each month or about 100,000 of new ARR every month.

Scott Davis

10:53That's our goal. No, that 8,500 times seven of the AEs, we've got a different plan for the SDRs. So 8,500 for the AEs, what is that, seven? That's about $60 in MRR. That's our goal for the month. We also have a couple of allied partners who we're hoping to get some revenue for as well. We're trying to step on it.

Nathan Latka

11:20>> Is that fair? I mean, is that a fair statement then? Are you adding about a 100,000 of new ARR per month the past couple months?

Scott Davis

11:26No,

11:29fair statement would, we added 66,000 in MRR in November.

Nathan Latka

11:35>> That's pushing like 800,000 of ARR though.

Scott Davis

11:40Yeah, we've got a good product. We've just kind of pushed it up to the starting line.

Nathan Latka

11:44>> Yeah, you're so humble. I feel like I have to pull, I have to make you brag about yourself a little bit here.

Scott Davis

11:49I love what we do. I don't take any of it for granted. Anyone out here listening, it's funny when we talk about this, entrepreneurs always daydream like the feature is going to save them and everyone's going to flock to buy it. We are at the part now where we need to go get the customers. This is a selling function. We have a product called Pulse, which we rolled out, which is AI call intelligence. Will rounded that

12:18out by NADA is the National Auto Dealers Convention in early February. We'll have a very, very, very strong offering there in the market. And it's time for us to not wait for something to happen. We got to go and get it now. I mean, you know it, you do thousands of these podcasts. Everyone thinks that they're cleverer than everyone else. We're at the stage where we need to get off our behinds and get this going.

Nathan Latka

12:46>> Yeah, what I find is that the most successful software companies, they all use the same 33 growth tactics. Everyone thinks they're doing something new and different, but generally speaking, they all grow using one of these 33 ways. And I don't wanna miss your unique genius because it's not every day I talk to someone that's making their AR and SDR relationships work. But you're doing account based marketing with your team of 13 or 14 folks. The seven

13:10>> AEs have 8,500 of new MRR per month quota, which means if that AE hits their quota for the year, they've helped add a 100 k of new MRR or 1,200,000 of ARR. Scott, if I am one of those AEs for you, what is my base salary? What commission am I making if I add a million of revenue in a year?

Scott Davis

13:29Yeah, mean, I think that we've got a percent of revenue that we pay out over the first four months and a bonus system.

Team Growth Over Time

Scott Davis

13:40You should be able to make about a buck 50 in commission. And then their base range is based on what their experience level is. So someone who promoted is a little lower and then

Nathan Latka

13:54>> What's the range there on base? Like 50,000 up to 100,000 maybe?

Scott Davis

13:5975 to 100.

14:0175 to 100.

Nathan Latka

14:02>> Okay, so just to repeat that back to you, those AEs depending on their seniority, they can make between 75 and 100 base per year. And if they hit their quota target, which is about a million of new ARR per year, they can add in another 150,000 of commission for on target earnings of about 250 k on a million of new ARR.

Scott Davis

14:16Yes.

Nathan Latka

14:17>> That's great. That's a four to one ratio. That's a profitable sales

14:20>> rep. Did you come from sales?

14:21You already knew that or you figured it out the hard way?

Scott Davis

14:23>> Trial and error.

14:24It's hard lessons. I mean, trying hard, working hard. Yeah. I mean, we've read all the same books and Scott, take a look at this chart

Nathan Latka

14:36>> any here. So I wanna make sure I'm not missing any other tactics you use that maybe you took for granted, but you're actually a genius at. You just told us about your ABM strategy. Are you doing anything like affiliates or selling through value added resellers or doing paid ads, anything else on here that you're using?

Scott Davis

14:51Yeah, so I had to put my reading glasses on for this. We do a lot of content. We do at least a customer video a week. We do a lot on LinkedIn. One of the interesting things about automotive, and I've had a hard time getting marketers who wanted to actually be more than just a keyboard cowboy. One of the hard things about automotive is a stock pond. There's 18,000 franchise dealers in The US and then whatever

15:23in Canada, and we just have a handful there. But we know who they are. So we're very aggressive in going and getting them directly. We have a couple, we have one reseller for that dealer identity product I mentioned. I've got one more relationship that I think will be quite a good channel this next year. So, I mean, that's our plan. Hopefully we can add 50 to 60 internally and we can add another 20 or 30 outside

15:55of that. And then it'll be a great year.

Nathan Latka

15:57>> And Scott, how much do you and your other co founders still own of the business today?

Scott Davis

16:01So this is an interesting deal.

16:06I've got a lot of family members working here with me and it's not always easier working for your kids, but so I've done some estate planning.

Nathan Latka

16:14>> Your kids work for you or you work for them?

Scott Davis

16:16They work for me, but they're pretty strong. A lot of them, my family plus one of our co founders owns about 85%. And then our other work is the pool, those type of things on the rest.

Nathan Latka

16:32>> Okay. But no outside investors?

Sales Team Structure and Quotas

Scott Davis

16:35Not yet. No.

16:36>> Interesting. And really at this point, I'm not opposed to it. I actually don't mind the thought. It's been a long time since I've had a boss, maybe thirty years. I'm not opposed to the pressure that it would take to have that, but it has to be accretive to the shareholders. It has to be a reason why we're going to move much faster at this point. All things I've So are a lot

Nathan Latka

17:00>> of growth equity folks that listen to the show. So they're gonna want me to ask this question thing back into your growth rate. You said you broke a million of revenue in 2020. You're at about 14,000,000 today. We missed the middle part of the journey though. What year did you break 5,000,000 of revenue? Do you remember?

Scott Davis

17:13Yeah, 2023 we did. So it was one to 2.4 to 4.8 to 6.7 to 9.6. Have I added the years right?

Nathan Latka

17:30You got it.

17:31>> Got it. A million in 2020, 2021 is 2.4, 2022 is 2.4, 2023 is 6.7, next year '24 is 9.6, this year 14,000,000. Healthy, healthy growth rate.

Scott Davis

17:43So about 50%, I think we're going to be 46% this year. So our margins are pretty good. I'd like them a couple of points higher, but.

Nathan Latka

17:57>> Scott, this kind of vertical specific SaaS, before AI would be trading at somewhere between maybe 10 and 20X top line, depending on the growth from you got Now the question is, well, wait, vertical niche SaaS is good, but we want to make sure they're not going to get replaced by AI. And if so, if you have an AI play, then you can still get that fifteen, twenty sort of multiple. Do you have an AI angle today?

Scott Davis

18:17Volley, we just kind of lucked into this and we do have to answer that question every single demo we're on. We do have our own internal strategy for a digital service assistant. Of course, Pulse is AI call intelligence, which we already have in our platform. One of the things that we kind of lucked into was we just learned that we're the perfect layer for the dealer in between the robots and the humans.

18:44It's compared to what they were using before with blindly doing things with desk phones and transfers or emails out of the blue, SMSs, etcetera. So it's a part of our strategy. Our vision of the company is to become the platform for dealer communication. And that's what we're focused on entirely. AI is part of it. We're also gonna plug in to everyone else.

Nathan Latka

19:06>> Well, if you get really aggressive and you wanna go buy other companies with your own cash flow, plus maybe a partner, I'm obviously running Founder Path, my fund. We fund these kinds of roll ups all the time, dollars $510,000,000 sort of debt checks where you keep all the equity. So my self serving pitch to you is if you, I've got about 10 companies you should go buy that also sell into the same space but don't directly

19:28>> compete with your product. Would you ever consider a rollup strategy like that?

Scott Davis

19:33I'm churning through a few of those thoughts right

Nathan Latka

19:35now. Interesting, interesting.

19:36>> Well, let's stay close. It's really incredible what you've built. Anything that you wanna touch on that we haven't already touched on related to your entrepreneurial journey here?

Scott Davis

19:44I don't think so. I'd like to not have you feel like I was humble or promotional. I think it's all right in front of us. I guess the thing I'd like to touch on is I know that this needs to be monetized at some point. I'm not the only shareholder. I've got to enrich the other people around me. I think it's perverse to build a company to sell it. You need to build a company to provide

20:11good value. And then, lo and behold, I've sold 16 restaurants. I've sold two other software companies. That's always been my focus. It'll continue to be, I'm going to try to run these like I'm going to own them forever. And I feel like that's the only way to do it. And I think if there's one model or message for everyone out there is that that's what's important is you don't matter till you matter. If you want to

20:36be valuable, then you've got to really provide value. And that's what kind of bothers me about this whole thing is I think people look at the opposite view is I've got the end in mind instead of really, really being valuable. And I'm going to continue to focus on that.

Nathan Latka

20:54>> Well, you've built great value. And if you do want to create liquidity for your shareholders, you want to think potentially about a growth equity round or something down the line. It's in your blood, you've sold pizza shops, it sounds like are in other things in the past. So let me ask this question. If someone offered you 70,000,000 all cash today for 60% of the business, do you take the deal?

Scott Davis

21:10It depends on the strategic partner. I'm not opposed to it. Obviously that would

21:17be good money for our shareholders. And I would have to thoughtfully consider that. It depends on who it is. I still wanna work and I'm always gonna work for sure.

Nathan Latka

21:29>> How old are you Scott? If you don't mind me asking.

Scott Davis

21:32I'm 57

21:33and I'm

Nathan Latka

21:34>> never equipped. Are

Scott Davis

21:37you married? Yeah, married.

Nathan Latka

21:39>> Wife would kill you, your spouse would kill you, right? If you retired and stayed home all day, she'd say, please go get a job.

Growth Tactics: ABM, Resellers, and Content

Scott Davis

21:44Yeah, I've been married thirty four years. She knows what she's stuck with. And yeah, I'm never gonna quit working now. When this journey is done, I'm gonna do something else. I'm excited for the next chapter, but this is three to five more years for sure for me.

Nathan Latka

22:02>> Scott, on What's that?

Scott Davis

22:04No, go ahead.

Nathan Latka

22:05>> As a minority owner?

Scott Davis

22:07As going for the second bite or, I don't know, I'm really wrestling with a lot of those things right now, mainly because I wanna make sure that I'm doing the best for Volley, the best for my customers. So this is an interesting timed podcast. Feel like I've a ton of talking.

Nathan Latka

22:28>> No, you've been great. You look, I think you have a lot of growth that equity firms reach out after this a lot. Listen to the show, they get great deals done from the show and you've built really something special here. So thank you for sharing your story with us. As we wrap up here, where can people find you online?

Scott Davis

22:40My email is scottvolley dot com. If you go to volley.com, there's all sorts of forms and we're not hard to catch.

Nathan Latka

22:50>> Guys, there you have it. Volley launched back in 2017 with four customers. They treated those customers really well through 2019 before breaking their first million of revenue in 2020. They broke 6,000,000 of revenue in 2023. Today, doing over 14,000,000 of revenue. They've sold their software product to 300 different store groups that spans over 2,000 rooftops. Think car dealerships, car repair shops, things like that. Really incredible revenue metrics. They've been bootstrapped. There's 12 on their sales team

23:19>> with healthy seven AEs on the team with a healthy ratio in terms of quota target to on target earnings. Still own majority of the business as they've scaled. He still wants to do more. 57 years old, it's a family business plus a bunch of other friends, 63 other friends as Scott continues to scale. Volley, check it out. Scott, thanks for taking us to the top.

Scott Davis

23:40Thanks, Nathan. Appreciate it.