Chapter 1: What inspired Mike Donnelly to start Seventh Sense?
start a business earlier although it sounds like he had a lot of success and as an enterprise sales rep building up a nice little nest egg he then said you know what i want my nest egg to become a little bit more risky i'm gonna throw some of that money in 2015 at again the new company seventh sense which is helping folks understand better times to send their emails to increase open click-through and conversion rates he scaled it to about 10 grand per month in december 2016 grew
well over 3x year over year now doing over 30 grand per month across about 150 36 customers paying 225 bucks a month too early to get too deep on unit economic stuff but his team of three in northern virginia growing the company 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.
Chapter 2: How does Seventh Sense optimize email timing and frequency?
I'm your host, Nathan Latka, and here's today's episode.
Chapter 3: What partnerships does Seventh Sense rely on for data?
Hello, everyone. My guest today is Mike Donnelly. He's the CEO and founder of Seventh Sense, which is a system that optimizes the timing and frequency of email for sales and marketing professionals. The idea was conceived during Mike's 13-year career as an individual contributor and sales leader for emerging enterprise technology companies. Mike, are you ready to take us to the top?
I am and appreciate you having me on, Nathan. You bet. So Seventh Sense, it's email, it's timing. What inputs are you feeding kind of this algorithm to make sure it's smart?
Chapter 4: What is the business model behind Seventh Sense?
Yeah, so we have strategic partnerships with both HubSpot and Marketo. And so we take data feeds from both of those, open data, click data, you know, is it happening on a mobile device, happening on the desktop? And then we also have an integration with Google so we can also listen in on corporate email systems. And those are kind of the inputs that feed our system.
Okay, and what do you have to pay someone like a HubSpot for access or Google for access to those data streams? Nothing. Okay, why do they do it? So customers... Uh, added value for them, HubSpot, Marketo, et cetera, are looking to build out their ecosystem. Um, so that's where our relationship comes in.
Chapter 5: How has Seventh Sense grown in terms of revenue and customers?
And then Google, all the user has to do is authorize access to their Google accounts. Well, what do they, but what do you give back to like a HubSpot that, that makes it, you know, HubSpot more valuable for their users? Cause it's sensitive, obviously to give you this kind of data. So it's actually the customer. So the customer gives us access to their data.
And so the customer comes to us, pays us, signs up for our service, and then we analyze their data and then provide value to them. We don't give anything to HubSpot or Marketo or Google. I thought you just said you have a data relationship with HubSpot and HubSpot feeds you data. So... We do.
Chapter 6: What challenges does Mike face in scaling to enterprise clients?
HubSpot doesn't feed us all of their data across all of their customers. If their customer decides to opt into our service, then that's the data feed that we get from HubSpot. Oh, I see. That customer's data. You're like an app in their app exchange or something. Exactly. Got it. Okay. And then how do you make money? Is it a pure play SaaS model?
Chapter 7: What are the metrics that demonstrate Seventh Sense's effectiveness?
It is a pure play SaaS model. That's correct. Okay. And on average, what are these folks paying you per month for the service? So our poos are around 220 bucks a month. We've got 136 customers today. So around 30 K and annual recurring or sorry, monthly recurring revenue. Yep. 225.
So are these, I mean, small, maybe it's small business, maybe it starts pushing mid market, but I mean, who are these?
Chapter 8: What advice does Mike have for aspiring entrepreneurs?
I mean, what are they usually small business or mid market? So I would say probably 60% of our customers are SMBs and then 40% of them are more larger scale. I wouldn't say total enterprise. We do have one very large enterprise company. This past year, they did about 4.4 billion in annual revenue. Do they make up more than 50% of your revenue? They do not. Okay, got it.
So you're able to, you don't have a huge risk. Yeah, they make up about 10% of our revenue. Okay, got it. And what's the company growing at? So you're at 30,000 per month, 136 customers paying 225 per month. Where were we at 13 months ago? So 13 months ago, we were around 10K in MR. So healthy, I mean, small numbers, but still healthy growth. Yeah, really healthy growth. And it's a small team.
I mean, we're a bootstrap company, self-funded. Totally bootstrap. No rich uncles writing a million dollar check? No. Uh, so we did do a small, I shouldn't say small, but we did a friends and family round, but I've invested a pretty significant chunk of change over the past few years. And where, well, what was the small round? Are we, I mean, are we talking sub 400 grand? Yes. Okay. Got it.
And then you've put in your own money. Um, what's the team size at today? Uh, so it's three full-time. Okay. Three full-time folks, everyone based in Arlington. Uh, we're spread. We've got one in California, one in, um, in Ashburn and then myself and all that stuff. But we do have a local office in Reston. Okay. Got it. So some Loudoun County action going on, which I like my hometown.
And when did you launch the company? What year? Uh, so we launched the company in 2013, but we were doing it as a nights and weekends project for the better part of almost two years. And that was really kind of a research and development phase. And then we once we landed our first customer, we decided, hey, this is the time it's adding value. What year was that? So that was 2015. OK.
And then so what have you done? I mean, there's there's I guess there's enough MRR to cover three full time salaries. But but where like where did you get money from in order to invest in this new thing? What gave you the confidence to take the risk? So where we got the money from was I was in. very successful enterprise sales rep.
I also was part of a few IPOs, a few exits, and so made money there. And that's really what I've been, you know, where the, where the funding came from. Where, I was willing to take the risk is, you know, just believing in the value that it's delivering to customers. And I still see there's just a huge market opportunity with where we want to go with the technology.
And then so you're at 136 customers now. Let's say a bunch sign up from the show. So you have 137. What actually happens right when I sign up and start paying you? So what happens is you sign up, sign up process takes about five minutes. You connect up to your marketing automation system, whether that be HubSpot or Marketo, which literally takes about a minute.
And then we start analyzing all of the historical data that you have within your marketing automation system or in your corporate email system. We then go through an analysis phase depending on, you know, total number of email addresses that you have anywhere from, I think our smallest customer probably has 2,000 email addresses. Our largest has around 10 million email addresses.
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