SaaS Interviews with CEOs, Startups, Founders
1091 Founded in 1999, How He's Managed a 20+ Year "Overnight Success"
20 Jul 2018
Chapter 1: What is the background of Daniel Nisan and Structured Web?
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 Daniel Nisan.
He's a channel sales and marketing expert, entrepreneur, and president and CEO at Structured Web. Daniel, are you ready to take us to the top? Absolutely. All right. Thank you, Nathan. You bet. Tell us about Structured Web. What do you guys do and how do you make money?
So StructureWeb is the market leader in channel marketing automation software. We help large global enterprises to equip their local resellers with ready-made marketing content and marketing tools to execute marketing at the local level.
Most of our customers at the moment are large tech companies that have resellers, dealers, agents in a variety of countries, and they are the primary users of our system.
And is it a pure play SaaS model?
the pure play SAS model and a channel partners get it as a service at no cost, fully subsidized by their brands that provide them the service.
Interesting. So, okay. So what's the average customer pay per month just to avoid going down every different cohort?
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Chapter 2: How did Structured Web evolve since its founding in 1999?
So after the travel was not successful, we tried other resellers.
So how much, real quick, Daniel, how much have you raised total?
We raised $5.7 million in equity and And we have about a few million dollars in debt as well.
Okay, the 5-7 in equity that you raised back in the early 2000s, are those folks still on the cap table or have you bought them out?
Nope, still on the cap table. Very supportive, very friendly investors.
How are they patient for over 17 years? How have you held them back?
It just a full dedication to the business, full transparency. And they do understand that sometimes things go immediately. Sometimes they go busted and sometimes it just takes more time. Lead bloomer.
That's great. That's, that's, you're a lucky guy. Maybe actually, maybe I'll say you're a smart guy because you picked the right people, right?
Yep.
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Chapter 3: What is the business model and pricing structure of Structured Web?
Do you do any paid marketing?
Paid marketing, yes. We do, as I said, we do Google advertising. We do trade shows. We do events. We do direct mail sometimes. For that, we pay. But for any referral partners, no, we don't pay for that.
Which conference has been most successful for you in terms of lead generation?
Anyone that is channel focused. So because we deal with the channel industry, so we go where you can find channel chiefs. Those are the typical leader in the channel, channel marketing, channel sales. So we try to be very industry specific. And then to go to broad conferences about like marketing automation or business application. Channel visionary is one of them.
Channel visionary.
Visionary, yeah. And channel focus is another one. Those are small industry events that typically will have a few hundred channel executives, mid-level executive to high-level executive. And that's where you really can create meaningful engagement and conversation with potential buyers.
And you're paying, what, $20,000, $30,000 to sponsor each of these? That's about the right amount, yeah. Interesting. Altogether, when you add up all your paid spend, what percent are you spending on that relative to your revenue each month about?
We don't look at it that way. We look at the amount of money we spend against new revenue that we generate.
and and typically it's about one to one so for every dollar we invest we would generate one door in the same year that we invested that that's a pretty healthy kind of flywheel there yeah we have very good return much much higher than the average that you find in the industry of door invested the first year acv growth yeah it's usually you know 1.2 1.5 something like that takes a little longer um what do you look at payback period or no
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Chapter 4: How has Daniel managed to bootstrap the company after initial funding?
I then went live on Facebook. I drove two sales and 97 bucks each. And I was like, okay, wow, this works. I want to strike a deal with a CEO. So that's what I did. Any of you guys can use Thinkific today for one month, totally free on the business plan. Everyone else, if they go to the regular website, they pay $99 for that.
But to start and launch your own course, totally free for that first month, go to nathanlaca.com forward slash thinkific. You'll also get, oh, over about $1,000 in other goodies that they make other people pay for. So go to nathanlaca.com forward slash thinkific. All you have to do is put in your email, click agree, and then take the next steps to rock and roll. I'll see you there.
And before you know it, you'll have your online course launched and making sales. That's NathanLatka.com forward slash Thinkific. Holding that one-to-one ratio you just gave me earlier. I mean, that's great if you can get, you know, one new customer there, but in order to scale, you have to get more aggressive.
I mean, how much money can you spend and still hold that ratio in your current acquisition channels?
It's a good question. I don't know the number right off my head.
I mean, this is the tough part, right? I mean, you can find a pocket of money with super healthy economics, but how long does it scale on to diminishing returns kick in?
I think we can scale it pretty nicely at this rate because the revenue that we generate really required more cash flow to subsidize or to pay for the
kind of the credit that we give for our customers, because our customers are very large, well-established enterprises, we can continue to find working capital to subsidize the gap between the time that we expense to the income that we receive from our customers. There's more cash flow management than other kind of profit and loss issues.
Got it. I mean, look, if you have a $20,000 monthly kind of average or 240 grand a year and you have that one-to-one ratio, I mean, you can spend up to 240 grand to acquire these guys. That's how big they are. Yeah. Yeah. How many of the 50 on your team are inside sales folks?
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Chapter 5: What strategies does Structured Web use for customer acquisition?
So every loss is a loss. And we try to learn from that and improve our adoption rate and onboarding process. So we end up very successfully with customers that continue beyond three months, six months, or your first year pilot.
So Daniel, you lose five, last year, you lose less than 5% of your revenue, but you obviously drove expansion revenue. Were you at net negative revenue churn? And if so, by how much? No, we were in positive. Well, positive revenue churn would not be a good thing. If your expansion was greater than what you lost, you'd be net negative revenue churn, right?
Oh, okay. Yeah, yeah. I misunderstood your question.
That's okay.
So I don't know the answer to that.
It's a bunch of like backwards, forward stuff. I have troubles all the time because I'm dyslexic with it. But I guess the easier way to ask the question is how much expansion revenue did you drive? Do you drive from the current base? I don't have the number right in my head. You don't know. Okay. Interesting.
Do you know though, if over the past 12 months you gained more revenue by upselling current customers than that 5% of revenue that you lost from the one churned one? Yeah, absolutely. Okay. Interesting. Very good. Now, so how does, I mean, how does, you've been doing this for 20 years, right? How does a guy like you create wealth from his company?
You created it before. Okay, got it. So this is my fifth startup. And we had successful exits before. And I think part of building a startup is to understand that not always it's an overnight success. And you can build wealth and you can build a successful company over time. And not every company is meant to be sold two, three years later and move forward. I believe in this company.
I believe in the vision. I also recognize that I started too early. I was the founder and CEO of NetGrosser, the first online nationwide supermarket back in 1996. And prior to that, I was part of the team that invented the internet telephony voice over IP in 1993. So sometimes you're a bit early to the market. I recognize it with structured web after a while.
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Chapter 6: How does Structured Web maintain a high customer retention rate?
The company still has a growth potential, maybe in a few years.
All right, Daniel, let's wrap up here with the famous five. Number one, what's the last business book you read? Business book I read? Yep. Don't remember. Okay, that's a no. Number two, who's the last CEO you had dinner with in your town?
In my town? Jeff Leventhal. He's a very successful serial entrepreneur.
With which company is his latest? His latest, Railworks. Railworks, good. Number three, what's your favorite online tool besides your own? Trello. Number four, how many hours of sleep do you get every night? Six to seven. That's good. And what's your situation? Married, single, you have kiddos? Married, two kids in college. Oh, great. And how old are you? 50. All right, Daniel, last question.
What do you wish your 20-year-old self knew?
Nothing. I think the life is very interesting and you go through it and what you learn through life and what you explore through life, that's life.
There you guys have it from Daniel. He's got the patience of a grasshopper. I don't know if I could last 20 years at one company. I'm too, you know, squirrel all over the place. 1999 founded Structured Web. They now have a team of 50. Again, helping channel partners really scale. They're serving 36 organizations that pay on average 20 grand per month.
So somewhere in the $700,000 per month range right now, up from about $600,000. Grand just 12 months ago per month. That's about 20% year over year growth. Super healthy economics, less than 5% gross revenue churn annually. Net revenue churn is negative, which is obviously healthy. Payback period less than 12 months. So again, economics look good based up there in New York City. Holding out.
The time is right right now. Daniel, thank you for taking us to the top.
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