SaaS Interviews with CEOs, Startups, Founders
1077 We Bootstrapped Our Way to $2m in ARR, Now $10m ARR
06 Jul 2018
Chapter 1: What is the main topic discussed in this episode?
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 Colin Holmes.
He's the founder and CEO of a company called Chatmeter, founded in 2009. Before Chatmeter, he was VP of product management and marketing at V-Enable, which is now XAD. His extensive experience in the local search industry, both online and mobile, provides a solid foundation for the direction of the current company. Colin, are you ready to take us to the top? Yeah, let's do it. All right.
Tell me about Chatmeter. What do you do and what's your business model? How do you make money?
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Chapter 2: How did Chatmeter achieve $2 million in ARR?
Sure. So Tabular is an online reputation and local SEO company. So we help large chains of multiple locations improve their presence, visibility, and reputation on sites like Google Maps, Yelp, all those reviews that people are reading and searching for every day when they're trying to find those local products and experiences. We help get those businesses in front of consumers.
Okay. And is this a, I mean, is it a pure play SaaS model or pay as you go or professional services? Yeah, pure SaaS, very little services. Okay. And are you doing kind of enterprise deals or high volume, you know, low ARPU kind of deals?
Yeah, so we are enterprise. When I started the company, we were originally a direct-to-SMB model. Banged my head against that wall for a few years and then moved to the enterprise space. So now it's typically changed. We don't talk to clients unless they have about 20 locations. business or our average client has about 250 locations.
So it really is that regional chain, but we've also acquired some of the largest brands in the country, uh, like Kohl's and auto trader and, uh, pay less and large retailers as well.
And so just to round that out before we get more of your backstory that you mean general, you know, general contract value on these things over a year, are we talking like a hundred grand, 10 million, a million? Uh, the average is about 50 to 70 grand a year. Okay. Got it.
And are the, the, the metrics or the levers you pull to drive expansion revenue, is it based off number of locations or what, or number of seats or what is it?
You got it. Yeah. It's based on the location size. The bigger your chain, the more you're going to pass.
Interesting. Okay. Tied to location, not like foot traffic or anything else.
And what they're actually paying for, just to give you a sense of the platform, it's a dashboard that aggregates and reports on all of this information and enables them with tools to be able to do things. So a couple of those things would be great examples are responding to reviews. We're aggregating all of that content, allowing them to see, let's say I'm a regional manager.
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Chapter 3: What business model does Chatmeter utilize?
It was like 100,000 that year. That allowed me to find my current CTO as well as my head of sales. And total team size today is what?
I'm sorry? What do you got now today, total team size?
So team size now is up to, we're just approaching 60 people.
Okay, all in San Diego?
Yep.
Okay. All right. So we found out. To get back to the funding side. Yeah, round up the funding stuff.
Yeah. So we rebuilt the platform. We kind of found our product to market fit. Enterprise was the way to go. We had to build enterprise functionality and redesign the dashboard for that because it was a very simple SMB dashboard before and just crushed it in 2015. You have to quantify that somehow.
What do you mean crushed it? Like tripled the business? 5X'd it? What?
Yeah, it was more like 5X. And so we had massive growth in 2016. So we went out and said, okay, it's time to go raise some funding. So we went out to raise a million. We ended up raising about closer to 2 million. We grew from about 15 employees to roughly 40 within three months. So pretty rapid growth.
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Chapter 4: How did the company's focus shift from SMB to enterprise clients?
You're north of 10 million at this point, right?
Yeah.
We're in the ballpark of that range. Okay, got it. Fair enough. And you've only raised, you've raised 2 million total now, right? Yep. Okay, good stuff. What about economics in this space? So obviously churn is critical in a SaaS business. What are you guys at in terms of churn?
Very good retention numbers. We're about 90% annual retention.
In terms of logo or revenue?
Uh, actually the numbers are pretty similar on both.
They're okay. They're about equal. Okay, cool. Now, so you haven't, you haven't, you haven't hit net negative revenue churn yet when you added back in your expansion.
Nope. We have a lot of upsells as we have additional products and services that we offer. Uh, so we're even garners, we're in a positive element. Um, We've added, we offer other services like listing management in our plan, you know, as a service. You have a clarity on what that is.
It's helping clients make sure that all their stores, name, address, phone number that has photos, basically highly optimized business listing profiles on all the local search sites.
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Chapter 5: What were the funding strategies used by Chatmeter?
Brian Halligan. He makes a lot of great posts. Yep, number three. Number three, what's your favorite online tool for growing the business?
We are, it's funny I just mentioned HubSpot because we're switching from HubSpot to Marketo.
That's funny, why?
A little dig. It is not, you know, it's probably not good enough from a scale perspective. Better for kind of a smaller business. Business is smaller SaaS, but we're getting to much bigger needs from a campaign perspective.
Yeah. All right. Number four, how many hours of sleep are you getting every night?
A lot more than I used to. So when I started the business, I was outsourcing to India as well. So working about 80, 90 hours a week. Right now, I'm getting a good seven and a half hours. Life's a lot better than it used to be.
That's good. And what's your situation? Married, single, do you have kids?
Single, no kids, live-in girlfriend. That's good.
And how old are you?
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