SaaS Interviews with CEOs, Startups, Founders
1497 He Grew Hubspot Partner Program, Now $91k in MRR at DataBox
30 Aug 2019
Chapter 1: What is Databox and how does it help businesses?
Guru, the value-added reseller program at HubSpot, now joined DataBox, which helps you pull all your data to one place so you can track performance and get insights all in real time. Right now, doing about $91,000 a month in revenue. That's up from $23,400 per month in 2017, about a year ago. So healthy growth rate there.
They've raised about $5 million, really $1.1 million, though, on kind of the new product after the changes in the organization. serving 650 customers, paying $140 a month, 4% gross customer churn per month, 2.5% net revenue churn monthly with his team of 20 people based up there in Boston. Hello, everyone. My guest today is Peter Caputa.
Chapter 2: How much revenue is Databox generating currently?
He is the CEO and founder of a company called Databox. The company is a monitoring company. Basically, sorry, it's a tool to monitor company performance data all in one spot, really on any device.
Chapter 3: What factors contributed to Databox's growth from 2017 to now?
Peter, are you ready to take us to the top? I am. All right. So you emailed me this beautiful email before the show. I know you listen. So like, let's just jump right to it. What's, what's revenue today. And then let's go back and get more of the story. Uh, we're doing a little over 91,000 MRR. Okay. And what are people paying you for? Uh, do you mean how much or? Well, yeah.
So tell me more about the product and then tell me the ARPU. Got it. Um, so, uh, The product allows companies to pull all their performance data in from other tools. So we integrate out of the box with like 60 plus other tools. And then you can also integrate data in a variety of other ways. Once you get the data in there, they can visualize it however they choose.
We make it pretty easy to drag and drop or choose templates based on the data sources they connect. so you can get up and running quickly. And then you can set goals, you can set alerts, there's scorecards, so you can get data coming to you, the most important metrics. And then also you can put it on any device.
We have a very award-winning mobile device, a mobile app that's on both the stores that you can download and use to monitor. We also, you can put data up on TVs as well. And so what are people paying on average per month for this? 140 bucks a month. Okay, so how many customers are you at today? 650. 50. Okay. And give me a sense of growth rate.
Tending back a year, how much are you doing in a month? 23,000. I'm sorry. Yeah, around 23,000 MRR at the end of May last year. May 2017. Scaled nicely, so more than 3x that to date. Where's most of the growth come from? Organic. Just doing a lot of organic marketing, organic search, organic social, just a lot of content marketing.
And so tell me about the team and how many of the team members are focused on those organic channels. We have 20 people total. The majority of the team's in product. And then we have pretty much three people in each of sales, marketing, and service. A little heavier on the service side, a little lighter on the sales side. So three people in marketing, basically.
Okay, and what are some of these, you mentioned kind of SEO, some other things.
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Chapter 4: What is the pricing model and average revenue per user at Databox?
What's the number one organic tactic they're using to drive in new customers? We do a lot of content sourcing. We do a lot of roundup posts. We have a lot of agency partners who write guest posts for us. Since we integrate with so many tools, the topics that we can cover are pretty diverse. So one day we'll write about reducing your bounce rate in Google Analytics.
The next we'll talk about the new features in Facebook ads that you should be taking advantage of. How do you get the partner to take the time to write the guest blog post for your blog? That's where a lot of people get stuck in this whole process. They can't convince other people to take the time to write for them. Um, well in the beginning it was a lot of personal relationships.
I built the channel program, the agency partner program at HubSpot. Uh, and so I tapped a lot of, uh, agencies, uh, to do that. At this point, we have a pretty refined process, which would take me like 20 minutes to explain. We have people that are constantly reaching out on social. We have a list of past contributors that we ask to contribute to new posts.
We always give a link back to them when they contribute. And a lot of it is just very short stuff. So we're only asking them to take like five minutes to contribute to a post, which then becomes a post with 50 contributions. I see. I see. And have you, this is going to be very meta, have you written a post on your post process? No, but I just reported a podcast yesterday with...
for that I think will get published next month give a shout out for that which podcast the entrepreneurs HQ okay good we'll link we'll link to that in the show notes that'll be good all right because I mean that's if you figure out a way to scale that that's fantastic now quickly because you mentioned HubSpot when did you leave HubSpot 2017 so a little year and almost a half okay yeah I mean so you were there for the ride how early were you there
2007. I was 15th employee. Oh yeah. So you saw. Yeah. Yeah. So let me ask you a question. I mean, yeah, a lot of people would say when you go through a journey like that, obviously at equity, you built some, and I'm assuming a nice chunk of wealth for you set for yourself. It's hard for someone that just was made kind of wealthy, right. To then get motivated to jump in and start something new.
So talk to me emotionally in your brain in 2017, when you left, how did you deal with the extra money and keeping yourself balanced? Yeah. I always had a goal of making money, like enough money to be comfortable at least. Like I literally wrote in my high school yearbook that I wanted to make a million dollars by 30. I missed it by about 10 years.
And I didn't make enough from the IPO myself to retire. So I needed to do something. I also knew I wanted to do a startup again. I just love the part of the business where you're designing the strategy and figuring it out. And that can still be relatively one person. And I can stay involved in all that. Whereas with HubSpot, it's thousands of employees now. A lot of decisions are made and baked.
And I didn't have that ability to continue to influence that. So I knew I wanted that rush. Quickly, since I have you and you're the guy, what was the number one leverage point you were able to execute in terms of growing the value-added reseller program at HubSpot? That's what you owned, right? Yep.
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Chapter 5: What organic marketing strategies does Databox utilize?
Like, did you get a big stake in it? Or I don't understand. Are you like a hired CEO or. I, no, I got a stake. Okay. Okay. Good. I was about to say a guy like you, you can pretty much do anything after HubSpot. You know, you might as well go do something you own a big chunk of that. You also think could be a really big pie. Yeah. Yeah, I probably could.
Now that you say it, I probably could have negotiated for more, but. Well, you know, it doesn't matter, right? As long as you're happy, right? Because look, the difference between two or three percentage points long-term doesn't really matter, right? Okay, good. So 3.8 raised today, that's all? I raised $1.1 million on a convertible note when I joined.
A bunch of the HubSpot executives put in amounts. One of the existing investors put more in. And then I got two other funds to put some money in. Okay, so call it kind of $4.9 million, $5 million all in. Yeah, $4.8 million. Is David Cantle being too aggressive? Has he raised too much money? You guys must text message. You guys must text message about this. Sitting on it.
Yeah, I've gone the opposite way, right? Although, you know, he's got an amazing traction with that viral and freemium model. So I have no idea. I don't know. I don't know all his metrics, so I don't know. That's funny. You guys stay in touch? All the X HubSpotters stay in touch? A lot of, yeah, a lot of us do. Yeah. Yeah. A bunch of the X-Labs fighters invested in DataBox.
So I keep in touch and, you know, hang out with them once in a while. I see Cancel quite a bit. We, you know, we go over there once in a while. Are you in Boston? Yeah. Yeah. We're based in Cambridge. Yeah. Got it. Very cool. Let's talk about churn real quick. So walk me through your churn. What's it today and how do you manage it? Churn's too high from where I want it to be.
It's 4% to 5% this month. It's right below 4% on the customer churn number. Our revenue churn number hovers between 2% and 3%. Monthly? Monthly, yes. And that 2.5% revenue churn, is that net or gross? Walk me through what you mean by that. So do you include expansion revenue back on that? I do. I'm including the expansion. So that's net. Yeah. So that's, you lose, I'm going to make this up.
You lose 5%, but you gain, you know, 2.5% back. So yeah. Okay, good. Two for a net revenue turn. Good. And, and walk me through, I mean, is expansion revenue like a critical growth driver for you right now? Or is it really just get more subs in the door? No, it's still more of a get more subs in the door approach. I think that is where we're getting the majority of our revenue.
We have a pricing model that scales with usage, and we have a free version that's pretty generous. A lot of people start with the free version. They kind of continue testing and building out with their dashboards on the platform, and they might hit a limit and they'll upgrade to the basic version. And then maybe a few months later, they'll upgrade to our plus plan or something like that.
So and then we also with agencies, I have expansion where they're adding new clients to the platform. Got it. Walk me through. Okay, so that's helpful to understand. With that churn number in mind, what do you assume kind of lifetime value is? And how do you keep yourself honest about that number? Because it can get crazy quick.
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Chapter 6: How did Peter Caputa transition from HubSpot to Databox?
Less dilutive. Yeah. Now let me ask you a question. If you had opted to raise debt capital, let's say you want to raise 3 million bucks versus, you know, 3 million in equity. I mean, have you considered debt capital before? I haven't. I'm not the best on the financial side of stuff. I don't know what the benefit to that would be. Just non-dilutive basically, right?
It's dead, but no personal guarantees. Literally get a loan. We hadn't thought about it at this point. My ambition is to build a I built a very big business in the SMB market. I'm purposely keeping my CAC low for that reason, my price low for that reason. Who the hell wakes up and says, I want to build a huge business and the highest churn cohort of business as possible?
You're signing up for hell. No, I'm passionate about it. That's my roots. I got uncles that run small businesses. What do they do? What do they do? Plumbing, construction, automotive, a lot of consumer stuff. I got an uncle that sells medical equipment. I'm passionate about that. I love working with SMBs. There's no bullshit. There's no bureaucracy. It's dollars and cents.
I started my first business a few years out of college and worked with a lot of SMBs, helping them do their marketing. I'm just passionate about it. I like it. I hate, I hate the bureaucracy of big companies and you know, kissing ass. Is that, is that, is that what made you kind of pop out of HubSpot? It was too big at that point. Yeah. I think part, yeah. Part of it. Yeah. Yeah. All right.
Very good. Let's wrap up here with the, with the famous five Peter. Number one, what's your favorite business book? My favorite business book, probably Baseline Selling by Dave Carlin. Baseline Selling. Actually, real quick before I go to number two, people always ask me, Nathan, why do CEOs come on your show? And like, they're so cool sharing numbers and stuff. And I go, you know what?
Honestly, I don't know. Sometimes you're a guy, you listen to the show, right? Yeah. Yeah. Because you email me ahead of time. Tell me the psychology. Why does a guy like you come on the show and you're totally cool being so transparent? Why not? Like, I've learned a lot from other people being transparent. I'm proud of what the team has done so far. There's no reason to hide it.
I don't see any reason that keeping it secret. I've always found that the more I share, the more people care about what I'm doing. I didn't mean to make that rhyme, but it did. Peter, the answer I wanted to hear was that I'm very charming. I beat the hell out of people. They have to give it to me. But you gave me none of that. You gave me none of that. Well, I've listened to some of your things.
I can't believe people come on to this call expecting to avoid telling you their chair number. That's like what I do. Why would you join? I'm like, you're an idiot for not managing your time. Anytime you're going to commit 30 minutes to something, you should research what you're getting into, right? Yeah. Yeah. All right, Peter. Number two, who's the CEO you're following or studying right now?
I enjoy what Cancel is doing, since you mentioned him. I think... He's built an impressive product organization and he's slapped on a marketing organization that's getting the message out. So I like what he's doing there. I owe a debt of gratitude to Brian Halligan. Even though I gave him a lot of crap while I was there and he wasn't always easy on me, I learned a whole hell of a lot of things.
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