SaaS Interviews with CEOs, Startups, Founders
1543 They'll Help You Manufacture Your Product for 1/4th the Cost as Other Brokers, $100k in MRR, 20 Customers
15 Oct 2019
Chapter 1: What inspired Rich to create Inventaprint?
founded the company back in 2017, Inventaprint. Again, helping folks like me, right, or anyone that has an idea they want to get manufactured, helps them save money. They charge a fee, call it five grand per month to 20 of these producers right now.
They then pair them up with one of their 100 manufacturing partners they've worked with and take about 10% of the total kind of fees that go through that platform. They've scaled about 100 grand per month in revenue fairly quickly on just 120 grand in funding from
tech stars too early to talk about churn and cac and things like that but they got a team of four people up in the northeast as they look to scale Hello everyone, my guest today is Rich McCool. His passion for inventing and tinkering was ignited at an early age when he attached some wires to a battery in a light bulb and lit up his childhood bedroom for the first time.
Chapter 2: How does Inventaprint help manufacturers save costs?
It also happened to be around the time he saw the movie Flubber, so it's safe to say his fate was totally sealed. He has a patent related to the military space and was experienced and has experienced how difficult it is to get the products he'd spent years developing and prototyping actually made. This led to the creation of Inventaprint with his twin brother, Roland.
That's what they're working on today. Rich, are you ready to take us to the top? Yes, let's do it. All right. So what is Invent-A-Print and what is your revenue model? How do you make money? Yeah. So Invent-A-Print, simply put, is we apply intelligence to the hardware development process.
So we basically take hardware companies' component specifications, where they are in the product lifecycle, and give them a list of better manufacturers that can bring those products to life. Our model is we're a SaaS plus company. So we have... an annual license fee that hardware companies pay us. And the plus side of things is we get paid on any transaction from the manufacturers.
Okay, so let's just focus on SaaS for a second. What's the average customer pay per year, would you say? Yeah, so the average customer is about like $5,000 per month. Okay, per month or per year? Per month. Per month, okay. $5,000 per month. Okay, so let's say that I have a patent on something. I wanna go get it created.
I'm paying you five grand for the year and you're gonna help me find manufacturers to build my product. Correct. So basically, we have two tiers of customers within our SaaS business model. So within the enterprise level customers, we work with innovation teams, right? So they would pay for access to the platform.
And basically, by using the platform, they get connected to better network manufacturers to help build their products. Okay. So I sign up with you today. It takes me six months to pick a supplier from your network. I then eight months in finally have like the first product done. And then maybe 10 months and I'm starting to drive sales.
And let's say my little widget is now doing 10 grand a month in sales via that supplier. You're taking a cut of those sales. That is correct. Okay. And how do you, I mean, what percent are we talking? So it's roughly around 10%, but it's volume based. Okay. So if I'm doing a million bucks in sales, you'll take less than 10%. Correct. Okay. And I mean, how do you track that?
I imagine once I work with a supplier, you then have to basically track that my widget is being sold in Target and Kmart and Walmart. And I mean, how do you actually know how many sales I'm doing? So for us, it's not necessarily focusing on
focusing on the friction side of things, right, adding value and reducing that friction of how do you actually build a product better and how do you go to market quicker with less money from a working capital perspective. So that's what we really focus on. The added benefit is, you know, people tend to have more cost-competitive products.
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Chapter 3: What is the revenue model for Inventaprint?
Right, the transaction of the hardware company with the manufacturers. So think about it in this way, right? So you have a hardware company. Let's say you're the hardware company. You are trying to build a new innovative product that goes to space. Nathan's widget, Nathan's space widget. Nathan's correct space widgets.
So you you have our SAS model where you pay us for the access to the platform. And with each transaction, we get a percent commission, similar to how you pay. Oh, I see. This is like this is like Upwork or Fiverr. So if I pay a manufacturer 100 grand, you're going to take 10% of that cut. Right. And just just just to ground you on the way it works right now without a platform.
So similar to the real estate industry, how you have brokers, real estate brokers, you have manufacturing brokers in the hardware space. And those people take anywhere between 15 to upwards of 25 percent. Right. So what we do is by using a 10 percent, we're actually undercutting the broker, the broker market and giving a more cost competitive solution there. Yeah.
As long as your SAS fee is so they have to be doing enough volume where the SAS fee is marginal.
correct so we're mainly b2b yeah okay so like let me ask you your average customer how many dollars in a given year are they giving to manufacturers that you've connected them with are we i'm assuming it's in the millions yeah so our our dollar profile is you know for a mid-market company we really determine it by a million dollars worth of spend a year and then for the enterprises over that um so that's where we kind of target the mid-market enterprise range i see so if so if
Nathan Space Widgets is doing so well. I beat Elon Musk to the moon and I'm putting more than a million bucks per month or per year through the manufacturer that you connected me with. You know, I'm still paying the same flat five grand per month fee, regardless of my volume. But again, you're taking some cut of sales that's dependent on the volume. That is correct.
I just missed the last piece of it. That's okay. I'm just trying to understand whether someone's putting a dollar to the manufacturer or a hundred million to the manufacturer, they're still paying five grand a month. Right. And the key for us is making sure that we add value outside of that transaction, right? So the reason why we're more of a SaaS company is because we give companies tools
to better efficiently interact with their internal team to where when they're transacting, that's all fine and great, but they already see value without transacting. So there are customers that we have that even pay us regardless of transacting because we provide so much value without those transactions. I see. And how many customers have you scaled to today?
So right now we have over 100 manufacturers. We're mainly B2B. We have around a little less than 20 paying customers, but more than me, a larger B2B. 20 kind of large B2B customers. And you're helping get connected to a network of about 100 potential manufacturers. You know, if I take 20 times that $5,000 price point, you guys are doing north of 100 grand per month at this point. Is that right?
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Chapter 4: What types of customers does Inventaprint serve?
What were you doing a year ago? Yeah. So, so for a year ago, so I don't know if you know the background, um, but basically, uh, a year ago, we're actually part-time. Um, so my twin brother and I were part-time, uh, just started inventor print. There are part-time jobs. We actually just went full-time about three months ago, both of us. So how little were you a year ago? So we're pretty little.
We're probably maybe three customers. And most of them were getting the transactions, like the funding off of just transactions alone. OK, so like are you talking like less than 10 grand a month back then? Correct. OK, very good. And so and just to be clear, so today you're over 100 grand per month. So right now we have a pipeline of over a hundred grand. Okay.
What are you, what are you actually doing though per month? Cause it's, so it's less than five grand a month. Then if you have 20 customers and you said 20 customers, five grand, we're actually, yeah, we're actually doing over five grand a month. Like our, our revenues for projected. Okay. Yeah. I'm trying to, I don't want to talk about projected.
I want to talk about like what you've actually accomplished. Like actually like today, the monthly recurring revenue you're doing is about how much? So it's roughly five grand right now. Okay. You're only, okay. So you're doing five grand per month across the entire company. No, no, no, for the transactions, for each customer. Yeah, that's what I'm asking.
So total revenue per month right now is about what? So if you were to multiply, again, like five grand per month by 20. That's what I did. It's a hundred grand per month. And you said, no, it's around there. So I'm trying to ask you, what is the- Oh yeah, so the no was about, we also get off the transactions as well. I know, I'm sorry. So just the SaaS model you're doing, that's accurate.
You're doing a hundred grand per month. Right, right. Got it. And then you're adding on top of that transaction fees. So true or false, you're doing more than 100 grand per month right now in revenue. Okay, got it. Just want to make sure. Cool.
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Chapter 5: How does Inventaprint's SaaS model work?
And okay, so I want to put this back on a timeline so you can tell more of your story here. You guys were part-time a year ago. So you really launched this. You started tinkering in 2017 and you just started full-time this year? Yeah. That's great. Have you bootstrapped this or raised capital? We bootstrapped completely. I love that. That's great. Are you thinking about raising capital or no?
Uh, we are considering raising capital. Okay. And why would you say yes versus no? Um, it's a very interesting question. So for us is about how fast we want to grow. Right. Um, the beauty of us is we, because we're a SaaS plus business model, we tend to monetize really quickly. Right. Um, so in terms of, you know, do we want to raise money, uh, is about how quickly do you want to grow?
And just to be clear, sorry, you said you're bootstrapped, but you've gone through tech stars. So which means you raise capital. Right, so that 120 grand. Okay, got it. So you've raised 120 grand, but nothing else? Correct. Okay, got it. So 120 grand in the company, that's what's funded the growth up to this point. Zero to 100 grand per month in revenue, by the way, is not easy.
So congratulations on doing that that fast. Talk to me about churn. What's your churn look like today? No churn, actually. Probably that might change in the future, but right now, because we're very selective in who we work with, we make sure that we can provide value to people that we're onboarding. Mm-hmm. That's great.
So with no kind of revenue churn, that must mean your net revenue retention kind of month over month is above 100% because you're probably driving expansion revenue or the transaction fees. Is that accurate? Right, right. How far above 100%? Above just the SaaS. How far above 100 percent? So I'm not willing or comfortable with giving more numbers than that. Like we retired.
We try to keep private things private. OK, that's fine. I'm not going to push you on things you don't want to disclose, but you disclose 20 customers and $5,000 ARPU. So I'm just I'm only using information you gave me. Yeah, no, absolutely. Absolutely. And just to be clear, you just said you have no churn, which means net revenue retention has to be higher than 100 percent. Okay, cool. Yeah.
Again, I'm just... In terms of... I'm just saying like in terms of specifics, I'm not comfortable with going into specifics around numbers, but I'm glad to talk about generalities. Sure. I don't have a general podcast. I like to be very specific, right? Because a lot of people can throw out general stuff. And by the way, I think you have a compelling story.
So I want to make sure I feature that story, how it should be featured. So net revenue retention, north of 100% at this point, you haven't churned any customers. Does that mean you're too cheap? I think right now, that's a really great question. I think for us, the things we're struggling with internally in terms of pricing is, are we leaving money on the table in terms of value?
Are we capturing all the value that there is to capture? Right now, the customers that use us, the reason why there's no churn, because we actually represent, our case studies show, roughly averaging 75% in cost reductions. So clients are saving a ton of money using us. Because they're used to paying brokers 20%, 25%? Right. Not even just on the broker's fees.
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