SaaS Interviews with CEOs, Startups, Founders
1347 "Our minimum is $500m" Says Ecommerce Tool CEO
02 Apr 2019
Chapter 1: What is the main topic discussed in this episode?
My new book, How to Be a Capitalist Without Any Capital, is out. You can get it at capitalistbook.com. Here's what Nicholas said on March 6th on Amazon. Incredibly incisive, useful, and sensible. The author is not greedy and is in fact extremely generous and does not hold back on the knowledge he imparts.
I've barely made it halfway to the book, and I'm already gushing over the book because it's an absolute gem. Nathan gets to the point quick, shows proof, and best of all, shows you not just what to do, but how to do it in explicit detail. To say the book is actionable is an understatement.
Now, you guys that listen to the podcast know I'm detail-oriented, so that review might not surprise you, but I hope you grab the book. It's now a Wall Street Journal Instant National Bestseller. Grab it at capitalistbook.com. Audible version is available too. He goes from vacuums to Wall Street to coffee filters to e-commerce, started Scubon in 2015.
His team now is 27 people based up there in New York City and Jersey, helping well over 1,000 customers. E-commerce brands scale, get more efficient, understand purchase history, inventory, things like that. 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 two point seven million. I had no money when I started the company.
It was one hundred and sixty million dollars, which is the size of many IPOs.
We're a bit strapped. We have like twenty two thousand 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 Chad Rubin. He builds e-commerce businesses.
Fresh out of college in Wall Street, he took his family vacuum business online and built his own direct-to-consumer e-commerce business called Crucial Vacuum. He grew it from zero to a $20 million valuation in just seven years. He happens to be a top 250 Amazon seller, and he co-founded Scubana with his friend and built one of e-commerce's hottest operational softwares.
Chad, are you ready to take us to the top? Let's do it. First off, how do you get excited about vacuums?
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Chapter 2: What inspired Chad Rubin to enter the e-commerce industry?
before we get into kind of updates on those numbers tell me for people that are just now tuning into this episode and missed the last one what do you do and is it a pure play sass model
So Subana is a pure play SaaS model where one-year commitments build monthly for our clients, really focusing on advanced sellers, and we're an operational platform. So the point when someone checks out on Shopify or Amazon, all the way to the point of delivery, we do everything in between to make that happen.
So orders, inventory, algorithmic purchase orders, and analytics all in one platform instead of using fragmented softwares. What's an algorithmic purchase order? So imagine in the old days, or even today, right now, people go through all these reports. How many do they need to order? When do they need to order it? With what vendor? At what cost? What's the minimum based on the lead time?
Using technology to automate that process. So now you're just approving purchase orders. So we have a system that takes all the velocity from all the different channels you sell on and will literally automatically place a purchase order for you, awaiting your approval with a bow on top. So it's replacing human labor and doing it much quicker than what a human can do.
That's really the benefit of technology.
Okay, and so most of your customers then are what, e-commerce brands? Yeah, retailers and direct-to-consumer brands. And what do you have today in terms of total customers?
We're approaching quadruple digits. Since we last spoke, our company has grown probably 4x on our employees. I mean, 3x maybe. We have 27 employees right now. So we've experienced a tremendous amount of growth and we just can't even hire quick enough.
Yeah, I mean, that's a good thing. So yeah, you're at 13 employees. Last time we spoke, you're up at 27. Now, where's most of the hiring come from our salespeople, engineers, marketers, it's account managers to support our customers along with engineering. Okay. And have you done anything like introduce additional products to increase the average price each customer is paying you?
Are you still people are still paying you what I think you told me about 1000 bucks a month is the average.
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Chapter 3: How did Chad Rubin grow his e-commerce business to a $20 million valuation?
I think that's actually a mix of both, but it takes us about a year to ramp up an account manager, to get them to run efficiently. into the manager clients because we have a very, very large platform.
So we have to think about, okay, what's the ramp-up time, the new clients that we're bringing on board, but also, since we're nearly bootstrapped, we need to think about, we have to be very financially disciplined with our capital. So we can't just spend frivolously on all types of things like other SaaS companies do today.
So 27 people, how many of them are account managers?
I think we're at 14 now, roughly.
Okay, so a fairly significant amount. And then how many engineers? 10. Okay. So that's the majority of your team.
That's 24 right there. We just hired a project manager. We're looking for another developer and another account manager. And where are you guys all based? So that's the other big change. So we used to be only devs and only engineering team in New York City. And then the rest of the team was in Jersey in our other office.
And now we've actually started building our team in New York City just because it's been very, very difficult to find talent in Jersey.
Interesting. But I imagine it's way more expensive in New York. It is way more expensive.
But there's also veterans and talent that we can tap into versus trying to train from the bottom up and learn from paper cuts.
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Chapter 4: What is the SaaS model of Skubana and how does it work?
Got it. And then, and then you have these like large, you have certain clients on our platform that, uh, sort of maybe should have never been on the platform. Like maybe they need something that's very, very, very, very special and that we did it in the early days, but we probably wouldn't do it again today.
Yeah.
So just to bring them on the platform. So addressable churn three to 5%. That's, I think that's normal. And I think that's, uh, that's right where we are, but obviously we're working our butts off day in and day out to make sure that we can, uh, even lower that even more.
And just to be clear, is that annual logo churn or annual revenue churn? Logo churn. Okay. Logo churn. Now I imagine, I mean, have you guys reached net negative revenue churn when you add back expansion revenue?
When you add back expansion revenue, have we reached negative churn? Uh, That's a good question. I have to dig into the numbers a little more. Okay.
Yeah. Well, I only care about numbers that you look at. So if that's not something you look at, we'll skip over that. But so what you care about in terms of churn, you're just looking at gross annual logo churn.
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Chapter 5: How does Skubana handle inventory and order management?
Right now it's 3% to 5%. Okay. Got it. Interesting. You mentioned you're scaling this thing with you're essentially the marketing guy. I mean, how are people finding you? I would ask you CAC number, but it sounds like you're not doing any direct paid spend.
No direct paid spend. Outside of, we do have an inbound salesperson that manages all the inbound leads that come our way. And then we also have one outbound that we just activated in September of last year. So you could technically count that as your CAC. Do you look at CAC or no? You don't care about it right now? Right now, I have so many things to care about.
I'm focusing on keeping current clients and how do we find new ones in a rapid way to scale this thing and get to where we need to be.
Ignoring your legacy, folks, and only focusing on the kinds of new customers you want to be adding, kind of where you're focusing the product at. What do you assume those clients, when they join your platform, based off your historical data on that same cohort, how long do you expect them to stay with you? What do you assume minimum lifetime value is?
Oh, it's... at a minimum of a year, right? Because we have a year contracts, but we're a very sticky platform. Think about it. You're using our platform to run and automate your entire business. On top of that, we have an open API where they connect all these other integrations into our platform, which enhances the stickiness.
Yep.
So for us, I mean, I think that we're doing a great job. And I think that if you look at it, we have about, I would say LTV is probably 18 months.
Yep.
And that's just being very conservative. But like once clients use our platform, they don't quickly leave. Like we're a necessity. We're not a luxury platform. We're a necessity.
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Chapter 6: What strategies did Chad use to scale his customer base?
Jason Freed. Jason Freed. Yeah. Number three, what's your favorite online tool for building Skubana?
Online tool for building Skubana. Uh, In terms of what? Building what?
Like what you use on a daily basis to just build and grow the company. Are there tools you use?
Tools that we use, we use HubSpot, we use Jira, we use Slack, we use Trello for a lot of our blogging and content calendar. So I'm in that frequently. But yeah, we're using the traditional tools I think most companies are using. We're using Intercom, which actually we're looking to deploy even further after talking to Matt Saster.
That's great. Number four, how many hours of sleep are you getting every night?
I'm actually a good sleeper. Seven, seven, eight hours. That's good. That's good.
And what's your situation, man? You married, single, you have kids.
Married. I've known my wife since college. We were college sweethearts and we have a cat named Collie and, uh, kids are, that's, that's probably part of the future plan.
Yes. That's on the, that's on the product roadmap, right?
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