SaaS Interviews with CEOs, Startups, Founders
1210 How this Niche CRM player passed $7m in ARR after CEO Stroke
16 Nov 2018
Chapter 1: What inspired Jeff Gordy to start a CRM for nonprofits?
nonprofit for crms uh building up again building up neoncrm.com launched in 2005 totally bootstrapped now serving over 3 000 non-profits paying on average 200 bucks a month so doing north of 7 million in ar today they've got one percent net revenue churn annually gross is about six percent so healthy economics there cac is 1100 bucks mainly through gartner as a channel which is interesting
Payback period there, obviously, under six months as their team of 100 people based between Chicago and China work to give more power back to these nonprofits via the CRM product. 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.
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Chapter 2: How did Jeff's early experiences shape his business journey?
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 Jeff Gordy. He's the CEO and co-founder of Z2 Systems, otherwise known as Neon CRM. He's got a background in sales, marketing, customer service, and management. He's a UIC graduate with a BS in business management.
And after making a few mistakes growing up and turning his life around, decided to focus on helping nonprofits. That's where the company is focused on. Jeff, are you ready to take us to the top?
Chapter 3: What is the business model of Neon CRM?
Yes, I am. All right. CRMs are tough. Nonprofit CRMs are even tougher. What on earth compelled you to get into this business?
No other choice in the very beginning and a passion for nonprofits.
All right. Fair enough. So is that the business? It's a pure play SaaS company?
Chapter 4: How has Neon CRM achieved over $7 million in ARR?
It's a CRM for nonprofits? Yes, completely.
Basically, I was a troublemaker growing up. I got kicked out of high school. I got kicked out of the home. I didn't even get my GED and go back to college for the third time until I was about 28. Did you ever serve jail time? I might have spent a few nights for some behaviors that I did back in the day. All right. So you were a bad boy.
Chapter 5: What challenges does Neon CRM face in selling to nonprofits?
Yeah, I was. I was a troublemaker. But at the same time, I had to make a living. So I was on my own around 15, 16 and worked in restaurants and managed restaurants, sold some of the first cell phones, sold copiers, walked the streets selling fax machines, even sold voicemail when voicemail was something you would cold call on and sell as a service.
Um, so, you know, and then I ended up running the world's largest Haagen-Dazs of all things down here at Navy Pier. Um, I had a staff of 100 kids. Which state are you in?
Uh, Chicago. Chicago. Okay.
Chapter 6: What strategies does Neon CRM use for customer acquisition?
Yeah. So I had a hundred kids selling popcorn, lemonade, and ice cream, um, in a popcorn shipping business that I was managing and I was getting paid about 40 K a year, 60 hours a week, six days a week. And I had an epileptic seizure one day. An actual one or a fake? An actual one. Never had epilepsy before, but out of the blue, it just hit me.
And I woke up and was looking around and all my employees were looking at me down on the ground. And I said, you know, I haven't completed college. I don't have a degree. I need to do something to change my life and to really make things happen.
Chapter 7: How does Neon CRM handle customer churn and retention?
So at that point, I decided I'm going to go back to school. And I'd always read a lot. And I wasn't. How old were you, Jeff, at this point? About 28. OK. And I said, well, if I'm going to go back to college, what better place to do it? And I went down to Miami Beach for a year. Oh, gosh. So I was at Miami Dade College.
Chapter 8: What lessons does Jeff share about growth and success?
And just would spend some afternoons on the beach, waiting tables at the evening and school in the morning. And after a year of that, I was able to get some student loans and come back up here to Chicago to UIC and really finish school. And that's where I got my business management degree in a BS. Okay, so here's a big question. Looking back, was it worth it? Oh, completely. Oh, my goodness.
Yeah. You know, everything taught me about karma. And that's why I am where I am today. If you do bad things, bad things come back.
If you do good things, good things come back. So Neon CRM, to kind of dive more into the business, what's the average customer or nonprofit paying you per month to access this and what do they get?
Yeah, sure. So the average customer is paying us about a little under $200. We do have some customers that are paying us as little as $50 a month and some that are paying us over $1,000 a month, really based on the size of the nonprofit and what they need.
But all of this started when I was going back to school and working at the Kidney Cancer Association and my partner came in with a beta test platform and said, hey, will you guys test this out at the Kidney Cancer Association? Because I was working there just part-time and entering gifts and was absolutely amazed that you could help people and make money.
But I had a background in using sales software and marketing software, and I was falling in love with nonprofits. So my partner was a developer. So what we did is we just kept adding more and more and more features. We started off with no capital, absolutely nothing. I think we paid ourselves 5K the first year, 15 the second. You're talking about Neon.
This was the first year of Neon, right? Correct. What year was that? 2005. Okay, 2005. Good. So now are you still bootstrapped today or have you raised capital? Still bootstrapped today. I love that. Very good. So bootstrapped. And what have you scaled to in terms of total nonprofits paying you?
We are what we should. Last year, we closed up around six million. This year, we should close up around eight million.
So what does that mean in terms of customers, though? About 3,000 nonprofits. Oh, wow. Okay. I mean, that's very healthy. And by the way, this is impressive because people that have tried to sell to nonprofits before who are listening, you appreciate how difficult it is to sell to a nonprofit. I mean, this is not an easy thing. So, I mean, what are you finding your sales cycles?
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