SaaS Interviews with CEOs, Startups, Founders
1260 Whitelabel SMB Tools Platform Raising $1m on $4m Pre with $1.5m in ARR
05 Jan 2019
Chapter 1: What is KeyBot and how does it help SMBs?
KeyBot launched in 2015, currently raising a million bucks at ideally a $4 million valuation, helping over 2000 agencies service SMB clients ranging from email marketing tools to e-commerce tools to social media marketing tools, along with four or five others as they scale all through kind of this white label model, which is working well. They're doing about $62 in ARPU per user per month.
So it's 2000 times 62, about 120 grand per month in revenue. That's up significantly over a year ago in June, 2017, where they did about
four grand in that month so again healthy growth now we're multiplying small numbers but still healthy growth right less than one percent gross logo churn per month 35 cac two month payback period team of nine based between san francisco and phoenix 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 of 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 Matthew White. He's the founder and CEO of KeyBot, helping businesses across the globe access and utilize software in a more productive way.
Before KeyBot, Matthew established a presence in mobile advertising and SMB marketing. His time with a very predominant marketing agency led Matthew to found the company. Matthew, are you ready to take us to the top? I sure am. All right. Tell us about KeyBot. What's the company do and how do you make money? Yeah, great. Thanks.
So what we do is we work with a number of different business applications. We integrate the functionality of those tools into a single platform. So we have things like a website builder, social media platform, e-commerce, a number of different things. You can check our website at KeyBot.com to see a list of all the products that are in there.
What we do is we work with these companies that have really great applications. We take their technology, integrate it into one platform so that our customers have just a much easier way to access these tools and discover new tools. We build automation between the tools.
So when the client comes in, they can automatically connect their website to their social media, to their email and all that good stuff. And it just makes technology, it makes SaaS tools a lot easier to work. And how we make money is we partner with these different companies and we do a rev share model with what they're selling, what we partner with and how we resell for them.
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Chapter 2: What revenue model does KeyBot use to generate income?
Maybe there's a way we can actually create a different platform for this. Another reason we kind of built something like this is because from my time in marketing as an agency, we realized a lot of these companies are spending just a ton of money on tools that were really not so built out, not so well done.
And I figured we could do it a lot better and a lot more at scale with technology, utilizing the technology that's out there and kind of bringing it all together. Well, look, and look, the numbers will tell the story too. So up to me on that, right? So how many customers have you put through your platform since you founded the company?
Yeah, so right now we're sending about 2,000 all in all, and it's growing fast. We're also signing a lot of reseller partnerships. We actually white label our platform out to other resellers, and we're signing a whole bunch of marketing agencies, consultancies, media companies, technology companies right now that are now starting to utilize our platform as their back end as well.
So just to make sure I understand that 2000 number, there are 2000 people today paying you on a monthly basis for one of your eight product suites that you've got listed on the website of which you take about 64% margin, whether it's the advertising tool, the CRM, the e-commerce, email marketing, social media, or website builder. Yeah, exactly. So it's 2000 separate businesses. Oh, got it. Okay.
Got it. Some of those might be like, so we have an agency that has, you know, 500 clients and that we, we consider that because we have 500 different actual accounts from them as 500 different businesses. Got it. Yeah. And then give me a general sense though, of what each of these customers are paying you per month and, and are they activating one tool or, you know, all eight or what?
Yeah, that's kind of the great thing about the platform is a lot of our clients will start with one, two, maybe three tools and, And they realize the simplicity of it. They realize the ease of, you know, automation between these tools. And typically they're upselling themselves up to four or five, six tools within, you know, three to four months time. So it grows pretty quickly for us.
We can scale it up and they're asking us for new tools. So that's kind of the great thing about this is we really built our system. based on what our clients are actually asking us, what they want in the platform, which has been great for kind of how we grow our business.
So just to avoid going down every customer cohort, if you did give me an average, what would you say the average customer is putting through you per month? Yeah, so I think right now we're spending about $62 per month in spend. Some are obviously spending a lot more, some are spending a lot less. That's excluding advertising spend, though, too.
So we have some clients that are spending, you know, it could be between $300 and $2,500 in advertising. Yeah, but you're not making 64% margins on that. You've got to put it through back to the platforms. Yeah, so that one is the one we make the least margin on, but we actually make a decent revenue on it. Got it. Got it.
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Chapter 3: How does KeyBot ensure predictable revenue growth?
Yeah. What's the number? Probably 200 grand. OK. So not a ton, but I mean, for me, it's still like that's a ton for a lot of people. Yeah. And what are you trying to raise now? So right now we're trying to raise our first round. We're considering this basically our seed round of a million.
And I think that's what we're going to do with that is help really start to build a lot of the automation between the tools in a much more robust way. And a lot of that's going to most that's going to go to growth. The nice thing about how we operate is getting new tools in our platform. Our engineering is almost like a
a revenue driver because each new tool they integrate in, we start to make new revenue on pretty quickly. And growth is a big one for us right now. We want to get those numbers up and continue to scale. So let's say you have a million bucks. Obviously, I assume some of that you'll spend on marketing and sales. What is your CAC today?
It depends on kind of how we look at it because if we go for direct clients, Right now we're spending, I would say right about $35 per client for a direct client. But for like an agency, actually agencies, they love our platform and they just, they go crazy over it when they see it. So our cost for that is actually lower, usually about $25, but those have a huge multiplier effect to them.
So we're focusing a lot more of our time and effort kind of in that direction. Yep. So on the $35 CAC and a $62 ARPU, your payback period right now is what, less than three months? Yeah. Yep. On most cases, yeah. Yeah, I mean, really, it's kind of about a month, month and a half. Yeah. Makes a lot of sense. What about churn? What's your churn today? Yeah, it's very low.
So I think over the last three months, we've seen it. It was like 0.05 or 6%. A very, very low churn for us because when somebody comes to us, they buy a number of tools on our platform. Michael, sorry, what does that mean? Or sorry, Matthew, what does that mean? 0.06 gross logo, revenue, monthly, annual? Churn, that's clients. So how many clients have actually churned off of our platform?
From a revenue standpoint, I'd have to look exactly at the numbers to see what the actual churn is. I don't have it on top of my head because we've been growing so fast that it just hasn't been something I've been focusing too heavily. And just to be clear though, so that's 0.06% logo churn per month. And is that gross or net? That would be net.
Okay, so you're adding back new customers that month. Oh, absolutely. Got it, got it, got it. Yeah, so yeah, that obviously, what is the gross number? Do you know? I'd have to look it up. So I'd say in the last month, we've probably lost maybe one client. So it's just been incredibly low. Um, so are you priced too cheap? Uh, I don't think so.
Um, I think there might be opportunities in the future for us to increase, but we want to also keep it in line with market, right? So most of the tools on our platform, uh, Oregon city and right at, or maybe just under the actual cost of, of our, our actual partner or their direct competitors. So we want to make sure we keep it at that level.
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Chapter 4: What challenges does KeyBot face in customer support?
Um, be... be more positive about what's going on. I think I was hard on myself for a while. So, you know, things will go right if you put yourself in a positive mental state. Guys, be more positive. KeyBot launched in 2015, currently raising a million bucks at ideally a $4 million valuation, helping over 2,000 agencies service SMB clients, ranging from email marketing tools to e-commerce tools,
to social media marketing tools, along with four or five others as they scale all through kind of this white label model, which is working well. They're doing about $62 in ARPU per user per month. So it's 2000 times 62, about 120 grand per month in revenue. That's up significantly over a year ago in June, 2017, where they did about
four grand in that month so again healthy growth now we're multiplying small numbers but still healthy growth right less than one percent gross logo churn per month 35 cac two month payback period team of nine based between san francisco and phoenix matthew thank you for taking us to the top all right thanks so much appreciate it