SaaS Interviews with CEOs, Startups, Founders
1042 "We're selling the company right now" for $10m+
01 Jun 2018
Chapter 1: What inspired Mike Lapchick to start Shotfarm?
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. Hello, everyone. My guest today is Mike Lapchick.
He's the founder of the Chicago Catalog Group, which happened back in 1996 and was acquired by Lake Capital or the Hagen Marketing Show, which is now Epsilon, I believe, in 2006.
He went through the daily expense of manually facilitating the exchange of product information between their retail and brand clients, and this is where he saw an opportunity to build an exchange platform that automated this process. He launched his current company, Shot Farm, back in 2010, which enables retail channel...
different rapid retail channel on product assortment expansion for more than 12,000 brands and retailers today. Mike, are you ready to take us to the top?
Yeah. You hope, right?
I've been ready for seven years. Yeah. You hope. Good. All right. So tell us about the company. What do you do and what's your revenue model? How do you make money?
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Chapter 2: How does Shotfarm's Product Content Network function?
No, $1,200 per month. $1,200 per month. Right. Got it. MR would be that multiplied by all your customers. That's how we'd actually get your revenue number. That's not what I was interested in. I'm just curious, on average, a customer is paying you $1,200 per month.
But I gave you one data point. Now, if you get the other one... then you know my revenue.
Correct. I could back into that. But what I'd like to do now is understand more of the backstory. So tell me when you launched the company, what year, and where was your head at that time?
So... Yeah, it was pretty much what you read in the bio is 2010. And this is a problem that we saw that we had only found a manual solution for the last company. And I just couldn't believe that there wasn't some sort of a centralized exchange for this in existence. And I couldn't understand how companies were actually getting stuff to market. So, you know, that's where the idea came from.
Yeah, Mike, specifically though, so entrepreneurs that listen to this show or exited SaaS CEOs, they're always wondering, you know, I'm very comfortable now. Maybe they just sold their company for 100 million. They're sitting in an earn out at a company and they're wondering, should they leave and start their own thing?
Where were you emotionally at the time when you decided to finally quit that job? Had you saved up enough savings where even if the new thing failed, you were fine for a year or was your back against the wall? You had to make it succeed on day one. Emotionally, where were you?
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Chapter 3: What is Shotfarm's revenue model and customer base?
Oh, yeah.
I was out to solve a problem. So the, the way, uh, no, so I had sold my last company. So I had money that, that, that wasn't the issue. I wanted to solve a problem and, and, you know, the, the finances of it would be, uh, a by-product of that. Right. So, um, Well, more specifically, if you really want to get into it, where my head was. Why would I not want to get into it?
That's what I want to get into.
Have you listened to the show before?
Yes, I tried to listen to it the other night and get a sense of where you are. So yes, I want it. Okay, good. All right. So the real deal is that I had a number of checks written out to various charities and personal interests, but they're all checks out to, they were giving, it was philanthropic. And I started this company so that I could sign those checks.
And I made enough money for me to retire, but I didn't make enough off the sale of the last company to retire and actually make a difference in the world. And so that's why I went back to the blackjack table and gave it another try.
Got it. So let me make sure I understood that correctly. You wrote checks, which were so much that you couldn't actually send to these charities. And you said, okay, I'm going to use this as motivation to launch this new company, which also solves a problem. And the goal is if it build it successful enough where I can write those checks. Have you wrote them? You're seven years in.
You're, you're, you're, you're about your, uh, this will be a very different conversation in about 30 days from now. So tell me why you interview me then.
Tell me why. Who are you selling to?
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Chapter 4: When is the right time for an entrepreneur to sell their company?
So we haven't converted many free to paying, not even close to what we had projected. And that opportunity still sits there today. And it will be, I think, harvested by this next group.
Yeah.
Yeah.
Okay, so what is payback period today? I don't want to say there is none. There is none or you don't know? It's not an important metric for you?
It's not an important metric because it's so low, right?
So it's definitely under six months. Can we say that? Well, you're talking about a conversion, right? From free to fee? No, I'm talking about payback period, right? So you would say conversion is important because you said the way you measure your CAC is by carrying costs of free.
And you're doing some math in your head, I think, about how many free you need for one paid, and then that's how you're getting your, I think, fully weighted CAC. That's one way to do it, yes. Is that how you're doing it, though? I mean, your business is unique.
Well... uh, I'm, I'm not doing it a particular way. I'm, I'm saying that there are several ways to do it. And that's one, one way that we look at, if we look at it, a marketing cost and you look at the return on that marketing cost, right. That's one very different thing than, than my carrying cost. Um, uh, as compared to conversion last.
So I was gonna say last few questions here before we wrap up. Um, when was last round? What date?
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Chapter 5: What challenges does Shotfarm face with competition?
We'll leave it at that. Let's wrap up here with the famous five mic number one. What's your favorite business book? Seven Habits. That's a good one. Number two, is there a CEO you're following or studying right now?
No, not a CEO, but I do follow David Skok quite regularly. closely so uh northbridge so these guys are um ironically investors in in my biggest competitor but the guy's freaking brilliant so i do follow him yeah number three is their favorite online tool you have just for running the business besides shop farm besides your own yeah uh
No. Okay. Number of?
Google.
Google Suite.
Yeah, I mean, they have a great suite. I don't mean Google, the search engine, but their suite of products, we use almost all of them in the company.
Number four, how many hours of sleep do you get every night? Eight. And what's your situation? Married, single, you have kiddos? Married with two. Two kids, how old? Are they young? No, not young.
Five.
14 and 16. Oh, that's, that's healthy. And how old are you, Mike? Uh, 53. Last question. Take us back 20 or take us back 33 years. What do you wish your 20 year old self knew? Hmm, man, you should have given me these in advance. Uh, I like on the spot reactions.
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