SaaS Interviews with CEOs, Startups, Founders
1033 Couple Cashes Out 401k in 2010, Now Doing $15m/Year
23 May 2018
Chapter 1: How did Bryan and Shannon Miles start their business journey?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million.
I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Good morning, everyone. My guests today are Brian and Shannon Miles.
Brian is a CEO and co-founder of Belay, and along with his wife, they lead this US-based virtual solutions company that has over 550 folks on payroll, all working from home, totally virtually. Before starting the company, Brian worked for companies in the tech and construction industries.
He obtained his BA in business from Mount Vernon, and in Mount Vernon, obviously, Ohio, where he met his wife, Shannon, who also co-founded the company.
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Chapter 2: What motivated them to cash out their 401k in 2010?
Brian, Shannon, are you guys ready to take us to the top?
We are. All right.
So who on earth graduates school and says, I want to go manage 550 virtual assistants that I'm never going to see. And they're all over the place. Not us.
There was a big gap of time between graduating from college and making that crazy decision.
So walk me through that story. First off, when was year one for the company?
Year one was 2010. Okay. And we had started kind of our careers in 1999. So we'd had about 10, 11 years doing other things before we started Belay.
Okay. And where were you from an emotional perspective in that year?
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Chapter 3: What business model does BELAY use to generate revenue?
Were you guys broke and had to make something work so you did this or you had built up a cushion in corporate and so you could safely quit and de-risk the startup? Yeah.
Yeah.
We spent our 20s getting in a lot of debt and getting out of it and actually saving and having a 401k that we used in 2010 to fund our businesses. So Brian and I were both working for different corporations and for various reasons came to the point where those seasons were ending and we'd always wanted to have our own business.
and just felt like having this cushion of our 401ks to fund it, and then the idea to offer virtual assistant solutions in a very niche market, it was just the right time to make the leap. So we quit our jobs on the same day.
That's amazing. So for those that are not familiar with the space, what's the company doing? How do you make money? What's the revenue model?
Our predominant model or service is virtual assistants. So basically, we assign dedicated US-based virtual assistants. So say, you know, college educated stay at home moms that are assigned to work with a busy leader in some capacity, whether a pastor, a CEO, an attorney, doctor, you name it.
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Chapter 4: How do they ensure quality in their virtual assistant services?
Then we also have a couple other service lines. One is bookkeeping. So it's the same thing, but a little bit different virtual bookkeeping where a bookkeeper is assigned to work with an organization to basically create weapons grade bookkeeping for them.
In general, though, no matter the service you're providing, is it a basic game of go find the talent at X bucks per hour, go sell the talent at X plus $10 per hour?
That's right. We're matchmaking in a virtual capacity. That's exactly right.
But unlike other firms in our space, we stay with the client and the contractor throughout the relationship to make sure that as things with our clients' businesses change, we're able to adapt and adjust with them. And so we assign a relationship manager that oversees that relationship and really ensures the success of the engagement for the long term.
Yeah, a lot of our competitors don't do that. They just kind of match and hope for the best. And we don't believe in doing that.
Who are a few of these that you're referencing? Are you talking like purely no-touch systems like Fiverr? Or are you talking, no, there's touch plus no touch?
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Chapter 5: What challenges did they face in their first year of business?
Well, we don't really kind of put a... We might camp around the same industry like with the Fiverr, but it's just they're more of a marketplace where we're providing a specific dedicated service. I would say our closest competitor is Worldwide 101. They're based over in London, but they do operate here in the States.
And then I'd say, you know, ones that you may or may not be aware of are Zirtual is one that's out there that we get kind of lumped into that bucket as well with those guys.
Now going back to 2010 when you cashed out your 401ks, have you bootstrapped the whole thing since then or have you raised capital?
We have. We have not raised a dime in capital for our business. We bootstrapped it all. We got the profitability around 14 months in.
Okay, and here's the big question. Who owns more of the company? I do. Oh, Shannon. I like it. How'd that negotiation go down?
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Chapter 6: How did they achieve profitability so quickly?
Well, it's 51-49.
It's not that far off.
It's majority owned by a woman. That's awesome. Actually, I really like that personally because... The lion's share of the people that represent our brand, our company that work for us, are female. And I think it's just really cool. And I've seen how well Shannon worked to get to this place in our business in terms of the years leading up to when we started our organization.
And it just made complete sense.
Now, what year did you say you broke even? Well, we, we broke even 14 months into our business. Okay. So 20, yeah. Late 2011, early 2012. Right.
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Chapter 7: What strategies do they use to attract and retain talent?
And what was, do you remember what first year revenue was? How low was it in 2010?
Oh my goodness. I want to say it was maybe two, two 80, 300,000.
And that's, and that's not, I mean, you guys are a little unique. Usually I talk to software companies. You actually have a pretty significant cost of goods sold in the form of a payment to the person. Right. So what, what do you, what do you optimize gross margin to typically?
Well, we were targeting somewhere around 50%, you know, but that's also based on the service line. Sometimes you can get a little bit more, sometimes not based on the types of people you're going to attract. The challenge for us, frankly, is we're on the higher side of cost on purpose. We want great people and they're not cheap. So we have to go up in the market with their price.
And today we're kind of known as that premium player because of it.
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Chapter 8: What are their future plans for scaling the business?
So if I'm going to use you guys for bookkeeping, you might have a relationship with, you know, I'm making this name up, Joanne Nelson in Utah, who does this for a hundred bucks an hour. you put it in your marketplace or your matchmaking kind of inventory at 200 bucks an hour. And that's where you get that 50% in an ideal world margin.
Yeah. And the key, the operative word there is ideal. Yeah.
Do you have any other kind of above the line expenses that we wouldn't necessarily know about besides like processing fees, things like that?
Yeah, our account management layer is very expensive and very important to the success of our business. We put that in there, too, because it's definitely a cost of goods sold.
And this is what you actually sign a dedicated rep to really handhold and the margins on that are obviously low. That's right.
Yeah. And really, we found, especially in the bookkeeping and virtual assistant realms, that first 90 days is critical. Like to get off to a good start. And a lot of our clients have never worked with a virtual assistant before and never had an outside bookkeeper before. So there's a lot of education that goes into making that successful.
Yeah. Now, if you go back, we're obviously just closing out 2017, but I bet you guys are on your game because you are a bookkeeping service after all. What'd you guys do in 2017? We ended the year just shy of 15. Okay. And what was that up from in 2016? Uh, 11, 11. Okay, good. So, I mean, it's healthy growth, especially considering bootstrapped. How are you getting more talent on your system?
You went from my, what, 400 to 550 or something like that?
Yeah, we have about 500 contractors, um, with our team right now and about 61 employees here in the Atlanta Metro area, you know, when people do something that they love, they tell other people about it. So word of mouth continues to be our number one source of finding great talent. Now we only bring on, um, about 2% of the resumes that we get.
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