SaaS Interviews with CEOs, Startups, Founders
1575 Why This $1.4M ARR CEO Wants to Double CAC Even Though You Think Thats Bad
16 Nov 2019
Chapter 1: What motivated the CEO to focus on doubling CAC?
Company founded back in 2012. Channel grabber again, helping e-commerce brands. Currently serving 800, paying 145, 135 bucks a month. Doing about 110 grand per month in revenue right now. That's up from 85 grand per month just a year ago. They're bootstrapped. They have about 400,000 bucks in debt that they've raised. Looking to be cashflow positive in early 2019. 2.5% logo turn per month.
About 3% revenue turn per month. Spending 300 bucks fully. Waited to acquire a $145 a month customer. So two or three month payback. Team of 20 based in the UK. Founded in 2012. Hello, everybody. My guest today is Mike Morgan. He's an ex-RIF pilot who entered the IT sector 25 years ago.
He worked through the ranks to serve in senior executive roles at Compaq, HP, and Sony across EMEA before founding his own SaaS company, expanding to the US and exiting in 2016.
He's served on the boards of many startups since 2005 and currently runs two e-commerce SaaS companies, a consultancy practice for startups and a Harley-Davidson dealership while holding the chairmanship of a mobile ticketing software startup. Mike, you're a busy guy. Are you ready to take us to the top?
I am. I was born ready. Let's go.
All right. Board seats or a weekend, you know, cruising on your Harley-Davidson. What should you prefer?
Oh, come on. I love riding my Harley-Davidson.
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Chapter 2: How did the CEO transition from an RAF pilot to a SaaS entrepreneur?
There's nothing that beats that.
Do you ever ride and you have your AirPods in and you're on a board meeting at the same time?
It's been known, yeah. But I'm usually trying to do that on a train, which in this country, believe me, does not give a satisfactory outcome. But I love riding my bike and I fit the rest in everywhere I can.
Mike, which country are you in? Are you in Manchester?
I'm based in Manchester in the UK, yeah. Yeah, very good.
All right, tell us about the company. So first off, you do a bunch of stuff. Is Channel Grabber kind of your largest business?
Yeah, that's the company that takes most of my time.
Okay, great. So tell us about, let's focus on that company. What's the company do and what's the revenue model?
So it's a SaaS business. So it's monthly recurring revenue based. It's a multi-channel e-commerce solution, which we supply to online retailers. Enables a retailer to connect all of their online destinations. So eBay, Amazon, Etsy, Walmart, you name it. And access all of the back office functions through a single user interface through our web application.
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Chapter 3: What is Channel Grabber and how does it benefit e-commerce brands?
And what's the team size today? How many people?
So we have 20 employees right now.
Okay, everyone in UK?
So far, yeah. We started selling into the US this summer, and that's going really well. But we've decided to do that at a low cost, low touch model. So we... product to sell in the US, but we're doing sales and marketing from the UK into the US market.
Yeah, that makes sense.
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Chapter 4: What is the revenue model for Channel Grabber?
And what have you, you know, you took over a year ago, what have you been able to scale to in terms of total customers using the platform?
So we've just exceeded 800 customers.
Okay. And how is that? Where's that growth come from? I mean, how are you getting these customers?
Well, we've invested time and effort in demand generation, which is something that was not a great focus of the team previously, obviously. But we've also invested a hell of a lot in the product in the last 12 months. So the product was feature deficient. And in record time, we've plunged a lot of investment into development resources.
And we've now at a point where we have a product which we believe is market leading in terms of functionality.
And Mike, when you say plow a ton of money in, I mean, did you raise capital to do this or you just use your cash flow or what?
We used limited cash and I mean limited, but we've also brought in a little debt. So being very transparent, we've probably about $400,000 of debt in the last 12 months.
Which firm did you decide to work with on that? Venture debt is becoming more and more popular.
Well, we actually worked with two providers. One was Creative England. You may not be familiar with them, but they're a great and very supportive lender here to small businesses in the UK. And we also work with Funding Circle.
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