SaaS Interviews with CEOs, Startups, Founders
1448 He's Selling $1.4m ARR Company For How Much?
12 Jul 2019
Chapter 1: What book is being promoted and what are its key ideas?
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Founded this company back in 2015, really an ad kind of server model. They've now scaled this to 120 grand per month, looking at selling it so they can spin off and doing this unified platform approach where they already have five kind of beta testers on that, paying about two grand per month.
They've got a team of 23 in basically three remote locations, adding customers, spending about 24 grand to acquire them, six month payback period, 10% revenue churn per year. 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 Declan Carney.
He's a 25-year advertiser sales and online media veteran, starting in B2B in 1992 in New York City, and then in 1998 launched Lawyers.com for LexisNexis. He was recruited by InfoUSA to be president and with sales offices in New York and London. He was then promoted by the parent company to become the SVP of SaleOps for InfoUSA with 125 sales reps and close to a billion dollars in gross revenue.
He continued on and on today. He's focused on his current his current venture called PubVantage.com, which we'll jump into today. DeCon, are you ready to take us to the top? Absolutely. All right. What is PubVantage and what's the business model? How do you make money?
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Chapter 2: What is PubVantage and how does it operate?
Yeah, no, that makes sense. Look, if you're doing 120 grand a month, that's obviously about 1.4 million bucks per year. And on the low end at a 3x, that's, you know, 4 million. But obviously, you know, if you do it right and you get a bidding war or you have some unique technology and get much, you know, a little bit higher than that. So that's great.
Now, that money, when you sell that, will you kind of plow that into the new company? Are you guys... Exactly. Yeah, we're taking that money to to give us additional working capital to expand the sales and marketing team and also to add some additional technology. But really, most of it will go into sales and marketing. We have a pretty solid technology team right now.
We will add more people to it. We have some additional products that we want to add that we see potential to automate even more of the process and add net.
ad management right now and all right across the board from ad agencies to publishers to ad networkers is still a very manual process and a lot of even though you hear a lot about programmatic buying there's still people in there moving things around and We really see that as a waste of human capital.
We think we can really automate 90% of what folks are doing today, which is this rote work they do every day to maintain profitability. We think we can do it 24-7 with smart machine learning.
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Chapter 3: How does PubVantage help publishers monetize their ad space?
Yeah, no, I totally understand the product. We've had a lot of ad tech folks on like Bill Wise and Media Ocean. They all talk about the same problem. So totally see the value there. Talk to me about about growth again on the current product. Obviously, I haven't sold it yet, but you grew to about 30 folks. Well, how are you acquiring customers and fully weighted?
What were you paying to acquire them? Well, it's a lot of our is word of mouth putting out in context within the industry. And we have one company. Sales, our business development person who's out there beating the bushes for it. But generally, it's going to conferences, talking to our early networks.
We don't have a big marketing team around the product because it's a hard product to explain to people. You really need to come into contact with them, which is very different for unified reporting. Because most people, when they think of an ad server, they think of displacement sales. Nobody's giving up ad manager, formerly DFP. But we're not asking them to do that.
What we're doing is supplementing their DFP and turning a part of their business that's inefficient inside of DFP into a very efficient revenue generator. Yeah. No, again, I understand the product. I'm just curious. You know, you have a sales team, so that obviously goes into your fully weighted CAC. You have, I'm sure, other onboarding expenses.
What is your fully weighted CAC for a new $4,000 a month customer? Um, we probably takes us about a year to make a six months to make profit on them, uh, based on, you know, our expenditure on trade shows and our staff. And so I'd say six months to actually begin turning them into a profitable customer. That's great.
So six month payback period at a $4,000 a month price point means you're totally willing to spend about 24 grand to acquire one of those new customers. That's great. That's healthy. And you mentioned the team. You guys are, you guys are pretty, it sounds like in three remote, different remote locations. How'd you get the setup? I mean, why that setup? Why that structure?
Uh, well, a part of it was, was just inherited by the nature of where the business was founded. Greg has been in Canada. He's an Australian guy who's lived in Canada for eight years. We met in one of my previous companies. He's a, it's incredible technology, uh, is, and, uh, I just saw an opportunity to create a company with him.
I wasn't willing to move to Canada and he wasn't willing to move to here. Consequently, we started the business with him there and me here. He had had experience working with folks in Vietnam. The culture is really good there. And it's very entrepreneurial. So people think out of the box inside of the Vietnamese culture. So it's a good place to build it. He had a team that he knew there.
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Chapter 4: What is the business model of PubVantage?
We built our own office and rented the space and hired folks out there. Greg actually lived in Canada for eight years.
months so i lived in vietnam rather months very cool to build the team over there look we are we are out of time but i want to get one last question in here when people look at buying this you know company they're going to go is it truly a sas company or is it too dependent on volume right basically the cpm model you mentioned so talk to me about your your revenue churn what does your revenue turn look like today
So it is truly a SaaS model in that it's, it's purely, it's all our own proprietary IP, uh, revenue churn. Uh, you know, we were losing about 10% of clients who go back to DFP, uh, that we bring on. So, uh, you know, it's not for everybody, no product. Sorry to call on that's annually. Annually. So it's 10% revenue churn per year. Okay. That's, I mean, that's not too bad. Very good. All right.
Let's, uh, let's wrap up here with the famous five. Number one, what's your favorite business book? Um, off the top of my head, I can't think of one. I wish I know you were going to throw me with all those books behind you. You don't have one off the top of your head. No, I don't. All right. Number two, is there a CEO you're following or studying? Um, well, uh, uh, Yeah, I'm not.
You've caught me in a plank at the moment. I'm really not. Well, by the way, we want honest answers. That's why I don't send these out beforehand because then people pick what's hot or what's new or what they think people want to hear. So if you don't follow anyone, you don't follow anyone. Number three, what's your favorite online tool for building your business?
Well, I mean, for us, Skype has been unbelievable because of its ability to have video conferences. Our customers are from all over the world. And you cannot have a personal touch over the phone. Being able to do Skype video conferencing has been huge because it creates that ability for having a face-to-face with somebody who's in Israel or somebody who's in England.
Number four, how many hours of sleep do you get every night? I usually get six. Okay, that's good. And what's your situation? Married, single, kiddos? Married, three kids, and very happy. That's great. And Declan, how old are you? I'm 60. 60, very good. Last question. What do you wish your 20-year-old self knew? Not to sweat the small things.
Guys don't sweat the small stuff coming from the con again, founded this company back in 2015, uh, really an ad kind of server model. They've now scaled this to 120 grand per month, looking at selling it so they can spin off and doing this unified platform approach where they already have five kind of beta testers on that paying about two grand per month, uh,
They've got a team of 23 and basically three remote locations, adding customers, spending about 24 grand to acquire them, six-month payback period, 10% revenue churn per year. We'll see if we can get this old, kind of the old version of the company sold, scale it up into the new one and Declan, come on later and give us an update. Congrats and thanks for taking us to the top.
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