SaaS Interviews with CEOs, Startups, Founders
1070 Navy Vet Makes Loads Via Lifetime Fitness, Now Digital Asset Management
29 Jun 2018
Chapter 1: What inspired Mike Brown to start the FISION platform?
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.
Chapter 2: How did Mike's Navy experience influence his business success?
Hello, everyone. My guest today is Mike Brown. He's the founder and chief enthusiasm officer and inventor of the patented Fission Digital Asset Management platform. It's also a sales enablement platform. He attributes his experience to serving as a U.S. Navy submariner and U.S. Navy diver as the foundation to his success as a corporate executive and entrepreneur.
Mike, are you ready to take us to the top? I am. All right. You bet. Thanks for joining me. I appreciate you coming on. Thanks for your service. And so tell us about fission. Why do you attribute success in the Marines to your success here at fission? Well, um, slap your mouth, calling me a Marine. I'm a Navy guy, right? Oh, I made the Cardinal sin. Yeah.
Former, uh, in a, in a past life, I've had about 30 some years of business since I was in the service. But, um, Just the whole dedication to a purpose, to a central purpose, the dedication to something bigger than yourself. The leadership attributes, I gained all of that when I was in the U.S. Navy. Very proud of it, and I'm very thankful for those that continue to serve.
Let's dive into the company. What's the company doing? How do you make money? What's the revenue model? Well, my background in business was in the health club business for many, many years, a product that many people across the country now and actually in Canada as well know, Lifetime Fitness. And that was a monthly dues annuity business model that was very, very successful.
The business that we're in is very simple, right? We're a cloud-based, patented cloud-based technology. But what we do for large enterprise companies is we simplify how they distribute their brand materials. And we simplify how they enable their frontline employees and their sales teams to use that material. And in that, they pay us a one-time setup.
a monthly license fee and it's a you know 82 gross margin business so it's a good business it's a good business there's no there's no uh workout equipment you have to buy to get launched there right no what's interesting you know we in uh in the fitness game you'd have to continue to go out and develop additional uh locations at 25 30 35 million a pop
With fission, we've got about 8 million total invested to date, which is far below our competitors in the industry. We've gotten a great deal of traction, but we can have unlimited memberships in the cloud from these various different global companies that we serve. That's right. And ignoring the setup fee originally, on average, what's the customer paying you?
I mean, are we talking a grand a month, a 10 grand a month, 100 grand a month? Well, I have two stratums of customers. We look at it as kind of the SMB market. My SMB market is probably $3,500 a month on average, right? My enterprise level ranges in the $15,000 to $20,000 a month. We've got some that are as high as $30,000, $35,000 a month, right? So it's a fairly big range.
But all blended, we have tripled our monthly annuity on an average client basis in the last year. We've doubled the total annuity value just in the last 12 months. While still driving revenue growth? Yes. Because, you know, if you have one if you have if you have one million dollar a month customer, it's easy to just fire the rest of them and lose revenue. But increase your ARPU.
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Chapter 3: What is the revenue model for FISION's digital asset management?
is harder to accomplish than selling into the large corporate global enterprise channel. Because they don't have a tech muscle to understand digital asset management? They've got a bigger pain point, right? So it's a multiple problem at the global enterprise. So if I'm a small business with 50 or 100 employees versus an enterprise that has 20,000 frontline sales reps,
Uh, the, the dynamic of problem created amongst 20,000 sales reps if they're off brand message is a huge pain point. So we have learned, uh, through trial and tribulation, right? Uh, that calling on global enterprises are our sweet spot. And what have you scaled to today in terms of total customers using the platform?
Um, I'd like to keep that, you know, we're, we're, uh, dozens, we're not hundreds yet, but we're dozens. Uh, and we have eclipsed now, uh, on the annuity run rate of over a million here on the annuity basis. So it's kind of a critical point and we should see, uh, we should see a three X that this year. That's really great. Now, where were you?
Can you give me a sense, since you shared kind of a, you just passed a million, can give me a sense of growth. Where were you at about a year ago? Half that. Okay, so you had about 100% year-over-year growth. Yeah, we've got 100% January to January in our annuity, which is awesome. And we should see 3x that by the time we end this year. So it's really starting to take off for us.
And we haven't... Go ahead. This cycle on enterprise... it's really something that you have to be mindful of. Enterprise is probably easily in the tech space 15 months on average from the time that you engage until you have a profitable generating client, right? That's right. That's right.
And we haven't talked about your extra revenue kicker here, which is you kind of smooth out cash flows a bit with an upfront, it sounds like, setup fee of some kind, right? Correct. It's minimal. And And strategically, it's designed to stay underneath an organization's capital expenditure guideline, right?
Because once it goes above the CapEx guidelines for a company, then it typically needs a higher level sign-off. We try and stay at the operational level with the companies that we serve. Yep. You mentioned you've invested about $8 million so far. Was that all money that you've raised, you fundraised, or is that from cash flows? Half of it is mine out of HIP National Bank, both branches, right?
And the other half is from...
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Chapter 4: How does FISION differentiate itself from competitors?
friends, family, small business folks that know my track record and so forth. And we're just now going to be going out and doing a larger race sometime this year. Oh, that's great. If just to the next level, right? How do you think about, well, let's get more, let's put some timestamps on this so we understand more of the story. When was year one? We've been at this now six years. Six years.
Okay. So 2011 was launch. And we kind of puddled around with it a little bit. I was retired at the time. I had cashed out my chips from the Lifetime Fitness Casino at Public, and I left that company about four years after we went public. So it took us a couple of years to develop the first product. The market wasn't quite ready for it yet.
We've only seen in the last 24 months where digital asset management and localized digital asset management has really become the norm. Prior to that, Everybody was focused on getting their CRM in place, Salesforce, or getting their Marketo or Eloqua lead generation machine in line. And now they're all scrambling to say, hey, how do we control our digital material?
And that's when we really started to see the lift. Yep. And obviously with a SaaS company, churn is critical. You have an upfront fee, which probably helps create a little bit more stickiness, you know, because you know there's serious customers signing up. What is your churn today and how do you look at that number? The industry will suggest 15% annual attrition. Logo or revenue churn?
Total contract. So they'll not renew or they'll cancel. We haven't seen that yet. We're probably less than, we're probably about a third of that. So we've been really, really blessed. And I attribute that to the exceptional service industry. that we provide post integration and setup of our tech, right? Tech is one thing and it solves a problem, but people still do business with people.
I don't care what industry, I don't care what business you're in, you're talking to another person and you're helping them solve a business problem, a pain point.
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Chapter 5: What challenges did Mike face in the early stages of his business?
And so you have to be focused and keep it real. CRMs might be the tool that I fight with the most. I just haven't found one that I really liked. I don't know if you guys are the same way, but they're just so tricky. And a while ago, I had a guy named John Lee on my show. He's the CEO of ProsperWorks. And he told me they just passed 40,000 customers and 24 million in annual revenue.
So they're doing about $286,000 annually. in revenue per employee. And I said, wow, why is this working? And I said, you know what? I'm going to try it. So I went to prosperworks.com forward slash love your CRM signed up and it immediately became clear why it worked. Those of you that love growth hacking, you should go to that link just to see how they do the onboarding.
That's prosperworks.com forward slash love your CRM. In short, it's like magic. You know, I'm not the guy that, you know, finishes the sales call and then takes the time to actually put data into the CRM. They have this magical way of just doing it. And it's a beautiful thing.
So every morning when I wake up, I just go, okay, what leads are prosper works telling me to reach out to because they're most likely to close and it works so well. And you guys know, I love money and I love only focusing on the leads that are going to close. So I encourage you to try prosper works or sponsoring the show. Check them out at prosperworks.com forward slash love your CRM folks.
That's again, prosperworks.com forward slash love your CRM. You also fit, I mean, people watching the YouTube version of this, if I had digital assets I wanted managed, you fit the profile. I mean, just talking to you, like with the background in the Navy, how articulate and you talk very precisely. I'm like, if I want to trust someone with all my digital assets, you fit the model perfectly.
So it makes perfect sense. And I'm Irish. And you're Irish. I mean, how can you go wrong, right? That's funny. All right. Very good. And talk to me more about the economics here. What are you willing to spend to acquire these customers and how quickly do you like to get your money back? You know, it's we're really not at that level of specificity yet. I mean, we've got a ballpark on it.
You know, it probably costs us several thousand dollars to acquire to acquire the client. Sure. Our setup, we typically make on the setup barely enough to break even on the actual setup itself. Very labor intensive in the front end. But long term, this is an 82% gross margin business model. So think about that for a second. That's amazing.
So at the EBITDA level, which is earnings before interest, taxes, depreciation, whatnot, right? It's 45% to 50%. That's one of the healthiest business models out there. That's why the SaaS space is growing so fast. In our particular area, it's expected to be $22 billion. within the next 12 to 24 months, growing at about 16% per year. So it's exploding right now.
So just to be clear, it sounds like you're making back your money with the setup fee and the first month of the annuity payment. I mean, you're making your money back in less than a month. Yeah. Well, we should we should get it back within about 90 days typically. OK, got it. Right. And then talking. So interesting question here.
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Chapter 6: What is the customer acquisition cost and payback period for FISION?
All right. And how old are you, Mike? Well, I'm going to be 60 in next month. That's great. I would have never guessed. That's great. My second half of my life, I'm going to go out and build something new. I love it. All right. Last question. Take us home. What do you wish your 20-year-old self knew?
You know, I think the thing that I didn't do as well was take the time to appreciate the path and the journey as much. Um, whether you want to climb Kilimanjaro or if you want to swim out of submarines, like I've done in the past, jump out of airplanes. Enjoy the path.
Enjoy every day and the people that you come across because it ends up being the memories that you have when you get to my stage of life, right? There you guys have it from Mike. Enjoy the process and the adventure with Fijian. Digital asset management had a big success with Lifetime before that. Served, obviously, the country before that as well.
Credits a lot of the success he's having in business to that service. But the company's doing very well. They put about $8 million in the company, $4 million of his own, launched in 2021.
2011 team of 15 20 maybe based up there in Minneapolis Minneapolis serving currently the low dozens in terms of customers they're doing about 88 grand per month right now or a million dollar run rate that's up 100% year over year so about 44 grand a month in December 2016 or about half a million in AR then super healthy churn less than 5% annually CAC about three grand payback you know 90 days so super healthy economics looking to raise capital maybe this year Mike thank you for taking us to the top
Hey, and remember this weekend, go Vikes. Go, there you have it. Thanks, Mike. All right, have a good day.
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