SaaS Interviews with CEOs, Startups, Founders
1411 This Tool is Flat, Bootstrapped, Why Won't Founder Get The Hell out and Sell?
05 Jun 2019
Chapter 1: What is the main topic discussed in this episode?
By 2014, they topped down the high five figures per month in revenue. His co-founder left. He's now basically said, you know what? This is going to be a lifestyle business. We're bootstrapped. It's now flat. Call it, you know, do it somewhere. But, you know, less than obviously 80, 90 grand per month in revenue. They've gotten churn in check. So less than 3% logo churn per month.
Folks paying on average 50 bucks per month. They have between 10 and 1,000 customers, again, bootstrapped as he builds his team traveling the world for people fully remote. 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 Chris Mack. He's a former consultant to Microsoft, GE, GM, American Express, and many others. Now he's the founder of Spokal, which we'll jump into today.
Chris, are you ready to take us to the top? Yeah. All right. What is Spokal and how do you guys make money?
Spokal is a content marketing automation platform, which sounds like a lot of buzzwords. Basically, it's been designed to help small businesses be able to use content marketing to deliver new leads to their own businesses.
Okay, very good. And is it a pure play SaaS company? Yep, absolutely. Right between 50 and 200 bucks a month. Okay, fair enough. So very much in kind of the SMB space then. All right, and put this on a timeline for me. When did you launch the company? What year?
We started in 2012. Okay.
And what was the context? Did you just leave all your consulting gigs and wanted to strike out on your own or what was the deal?
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Chapter 2: What is Spokal and how does it generate revenue?
That doesn't make any sense.
We don't talk about how many customers we have because that doesn't really help our customers. There's like, that was part of the startup game. It's part of the thing that we realized moving into this is that like, there's two ways to approach a new business and one is to try to play the startup game and- What do you mean?
Sorry, I don't understand. What do you mean play the startup game?
play the startup game so when you enter for when we entered um when we started building this company there was a lot of drive and a lot of people pushing you know to take uh investment dollars for example or to uh you know really focus on all the metrics that you've been talking about churn mmr mr like there's really important baseline things but they're they're really important
if you've got a certain goal in mind.
Chris, just to be clear, there are the most successful bootstrapped companies know these numbers inside and out. This has nothing to do with raising capital. What I'm hearing you say is you made a strategic life choice. It's flat and it makes you self-conscious to share the numbers because they're flat. I would encourage you to go all in on this story because I think it's valuable.
So how many customers are you at today?
We're still not releasing those numbers.
Why would you not?
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Chapter 3: When did the founder decide to pivot the business model?
They still know how many customers they have. So all I'm asking for is a general sense. I mean, are we talking like 10 customers, a thousand customers, a million customers generally? Where are you?
Yeah, we're, we're between 10 and a thousand.
Okay, fair enough. Good. So less than 1,000 customers. So you're focused on retention. You've driven churn down. And you're bootstrapped, correct? Absolutely, yeah. Okay, so that's great. And talk to me about the team today. So are you the sole founder or are there co-founders?
No, there was two of us who founded it. So my former co-founder, she left probably about four years ago when we decided to make the switch. Did you buy her out or did she take equity with her? She still owns part of the company.
Okay.
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Chapter 4: How did the founder's travel experiences influence their business journey?
And how many people are on the team in all your remote places across the world?
We're four. We're a very small team.
Four people. Very good. And then walk me through what those four people do. So obviously there's you. What does everyone else do?
Well, we have a software dev, a customer support person, and basically like a... What do I call him? He's a software dev slash server admin, I suppose.
Okay. And... And so what do they, the software developer, I mean, walk me through like product strategy. Where are you trying to take the company?
Right. So, I mean, we're maintaining effectively. So the, the, the issue with this kind of space is it changes so fast that it's difficult to try to, uh, like you can't just build a product and then leave it running because all the other, like we integrate with probably about 20 different systems, which is kind of where a lot of the value add comes from like in Spokane.
So just maintaining a lot of the systems when, for example, you know, Facebook's updates their API or Twitter updates their API or any of our partners do requires quite a lot of work. So we've slowed down on new feature development.
and really kind of focused on maintaining current APIs and also... How can one developer do that, though? I mean, Hootsuite, these other companies that plug into all the different social APIs, they have dozens of developers specifically just to keep these things updated. You have one. How can you keep up?
But you know you could hire more if you wanted to stay bootstrapped and only grow based off your revenue. You could hire more developers to meet this vision if you focused on growing revenue. I understand. So why are you not doing that?
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Chapter 5: What challenges did Spokal face with customer churn?
It's like 7% per month. We can't keep up. And I ultimately sold the business. So like, I'm trying to push you here to be open about this. I think it's valuable, but you're being coy on the numbers. I would just, I just think you should be open with the numbers because other people should do what you're doing. And they don't because they think it's bad because they sense weakness coming from you.
When really, I think it's a strength.
I mean, people can sense whatever they'd like to. I mean, it's still not going to change how I decide to communicate about my company, right? So, I mean, I understand what you're saying. I don't think it really changes.
Well, it would because if you really doubled down on these questions I'm pushing you hard on and owned it, other people would say, you know what? There's nothing wrong with that. I should do it too. But because you're like holding stuff back, people assume there's something wrong with it.
Right.
I just think it's smart. I think it's a smart choice that you made.
And this is maybe something that you might be right about and something I have to reflect on. And I made the decision to be totally honest with the numbers at some point in the future.
So why not? So your best month four years ago, you're doing kind of 89 grand a month, whatever. Now it's down or it's flat, call it 30, 40, 50, somewhere below that, right? Why not just sell the company and move on?
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Chapter 6: How has the company's growth trajectory changed over the years?
Go travel more.
It's definitely been something that I've been thinking about.
Well, you know, no one's ever going to buy the company unless they know the numbers.
Absolutely.
A lot of buyers listen to my podcast. Okay.
Yeah, look, I mean, it's, I don't know what to tell you. It's kind of sitting in that space right now. where that, that is one option.
What would you, how would you think about selling it? Cause like the challenging thing is somebody like you, you say, well, we're a SaaS company and SaaS companies sell for, you know, six X, but, but the problem is you're declining. There's churn like dah, dah, dah, dah. I mean, you'd be lucky to probably get one and a half, two X, I think for a company.
And especially in this, I've seen a lot of companies actually in this space just totally roll up and fold because of all the changes and the, and the war against bots has really, they've cut off a lot of these applications. It's very tough. So what do you think you'd sell for on, on terms of a revenue multiple?
Honestly, like I haven't, you're pushing for answers to questions that I haven't even really gone that far down.
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Chapter 7: Why does the founder choose not to disclose customer numbers?
I've always admired Elon Musk, obviously.
Number three, what's your favorite online tool for building a business?
Honestly, it's really boring. I'd say zero, bookkeeping.
Nothing wrong with that. Number four, how many hours of sleep do you get every night? I aim for eight. I'm between six and nine. And what's your situation? Married, single, kiddos? Single. No kids? Sorry, no kids? And how old are you? I'm 41. 41. Last question, Chris, what do you wish your 20 year old self knew? Like so many things.
Um, I think I wish that, um, yeah, the difference between like getting advice from other people and the appropriate place that it belongs in your life. And, uh, taking their advice as, as gospel. I think a bit more inner strength and taking advice as advice as opposed to perhaps life guidance.
Guys, there you have it. Manage your advice wisely. Launched Spocal back in 2012, playing in a social media space. By 2014, they topped down the high five figures per month in revenue. His co-founder left. He's now basically said, you know what? This is going to be a lifestyle business. We're bootstrapped.
It's now flat, call it, do it somewhere, but less than obviously 80, 90 grand per month in revenue. They've gotten churn in checks, so less than 3% logo churn per month. Folks paying on average 50 bucks per month. They have between 10 and 1,000 customers, again, bootstrapped as he builds his team traveling the world for people fully remote. Chris, thank you so much for taking us to the top.
Thanks for having me.
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