SaaS Interviews with CEOs, Startups, Founders
1689 Why he Left MINDBODY To Build This Data Visualization Tech for SMB's
09 Mar 2020
Chapter 1: What is the main topic discussed in this episode?
early 2014 branch on his own launched like kismet in 2015 full-time now a thousand locations using them 99 bucks a month doing about 100 grand per month in revenue up from 60 grand a month just 12 months ago they are burning a little bit of capital as they look towards working towards profitability they raised 1.4 million bucks nine people between california and remote locations turning about 12 of their logos per year again spending up to four or five months of lifetime value on customer acquisition so 500 bucks on a 99 a month plan as they look to scale again helping these studios visualize their data
Thank you. Hello, everybody. My guest today is Andres Moran. He's the CEO and founder of iKismet, which delivers business analytics and insights to boutique fitness studio owners.
With over 500,000 businesses in the fitness and wellness space, the company is making valuable data analysis tools affordable for small business owners to help them make data-driven decisions faster without the complexity while helping to grow their business.
Andres has been in the fitness and wellness space for over 15 years and was a founding member of MindBody, helping go to world-class sales and business development organization. Andres, are you ready to take us to the top? Yeah, absolutely. I have to ask you first. I mean, MindBody was a rocket ship. Why'd you leave? There was really no reason except getting that the entrepreneur bug.
When I started on MindBody, there was five of us. And one of the things that really attracted me to MindBody was that entrepreneur spirit. And so after a decade of being at MindBody, I saw an opportunity. I wanted to serve the same space and the people that were in it. And I, you know, wanted to start that rocket ship again. That's great. So you left after a decade.
What year would that have been? When'd you leave? 2014. 2014. It was actually end of 14 going into 15. Okay. And did you launch this company right on the back of that? Right on the back of it. I mean, I took, you know, the six months off, you know, while I was putting it all together, but overall it was from one thing to the other. That's amazing. Okay. Tell us about, about iKismet.
So what's the company do? And are you a pure play SaaS company? Yeah, so what we do is, and right now we are MindBody's technology partner. And so what we're doing is bringing over, nightly we bring over all the raw data that is generated at the studio.
So at the front desk, if you've ever been to a yoga studio or, you know, Orange Theory Fitness or one of those type of places, every time you come in, they check you in, you have a membership, they, you know, they... You go into a class. So there's a lot of things that are happening at the front desk.
All that data, that mountain of data is super valuable for customers or our customers and owners to continue to be relevant. We're in a very kind of trendy industry.
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Chapter 2: Why did Andres leave MINDBODY to start iKizmet?
And now you're basically, what, breakeven? Are you still burning cash? Yeah, we're burning a little bit of cash. We are chasing that break even just to, you know, make ourselves attractive for the next round and show that our operations cover, you know, our nut, as people like to call it. Yeah. So I want to understand growth here.
So 2015, you launch, get your MVP out, you're growing, you're growing. How many customers have you scaled to today? So we are in almost a thousand locations across the US. We have some Australian clients. We have some customers in Canada that have come to us, that have heard about us. So it's been organic. And you build per location, right? We do, yes.
Okay, so I mean, can I take the thousand, right, customers times that $99 price point? You're doing about a hundred grand a month right now? Yeah, you can take that. Okay, and what's growth look like? So if we go back a year, where were you? So we were about 600, locations last year. Okay. So about 60,000. So that's healthy. 30, 40% year over year growth rate. Absolutely.
How are you driving the growth? I mean, you saw the engine at MindBody. Are you able to replicate it? So one of the early mistakes we made was trying to replicate. There's always a time and a place for when things work. And so it's really easy as an entrepreneur to get caught in that trap. we did try the same kind of outbound, hit the phone kind of sales approach.
And so now we've learned that small business owners are bombarded by calls, right? So we're focusing on content, we're focusing on education, We're focusing on trying to build kind of a platform that shows these small business owners how to put our metrics and analytics into play. Because if you think about it, a lot of them are serial entrepreneurs.
The best time that they have in their businesses This is when they're in class, teaching class, working with people, right? So managing the business and the analytics and the metrics that go with it, not necessarily in their wheelhouse. So typically they offload that to a manager, or their bookkeeper or someone like that.
And we're trying to make these analytics super simple so that they can consume them and that it makes sense to them. So a lot of the lexicon that we use within our software is very much related to them. So we're vertical specific. But give me, I'm just sorry, I don't mean to cut you off, but we're short on time. So give me like a specific example.
I mean, how'd you get a specific channel you use to land a customer with 30 locations? Um, well, so originally we use trade shows, uh, or partnering with MindBody on doing education events and trade shows where, um, these customers are coming. And so we're able to have face-to-face with them, um, build a, um, you know, be able to sell them.
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Chapter 3: What services does iKizmet offer to small business owners?
It doesn't hurt that I know a lot of these customers as well. Right. So, um, it's easy for me to kind of reach out to them when they're ready to, um, implement this discipline into their business. Um, so those, those are the two channels and now we're going out building our brand and our name. Interesting. What's the team size today? How many people? So we have nine people on our team. Okay.
And everyone remote? No, we have some remote, but a big portion of it is in the office in San Luis Obispo. Okay. So California and remote. Churn's critical with any SMB, right? Especially kind of studios. What's your churn today and how do you keep it low? Yeah. I mean, churn has been something that we've been dealing with specifically because
people are like, okay, you're giving me all this great data. How do I implement this into my small business? So that's where that education comes into play. And so that's where we feel is we've created some features that will be coming out in 2019 that addresses a lot of those needs. But I think overall, people just want to understand how do I use this information and how do I use this data?
And so You know, that's what we're pursuing. That's what we're pursuing in 2019. So last 12 months, what was churn? We typically are, you know, losing about 10 customers a month. Okay. So what is that? About 1% a month or about 12% annually? Yeah. That's not horrible, actually, for the SMB space. Do you have meaningful upsells and expansion revenue that makes up from that 12% churn?
Are you net revenue retention above 100%? Yeah, so we do have features that have been coming out slowly, but we have a big launch for 2019, which is really creating a personal assistant for your business that is driven by goal setting.
So because we've been able to see all these metrics and what successful businesses are doing, we're able to create goals around them that are delivered through the mobile app that basically every day is monitoring how well you're turning against that goal. So that's kind of a big feature that we're going to be pushing on in 2019. Interesting.
Okay, so too early to talk about expansion and stuff like that yet. Yeah. What about, I mean, so when you now do look at fully weighted CAC, right, to get a new $99 location, I mean, how much are you comfortable spending to get that new location? You know, that's a good question. I think it's changed in, so we have three different personas. We have the single location, right?
We have the multi-location chain, and then we have the franchisee. So how much am I going to spend on the franchisee?
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Chapter 4: How does iKizmet help businesses visualize their data?
You know, on a $80,000 a year contract, I'm willing to spend a good amount to get those cuts. Well, don't don't let's not talk in absolutes, because again, it's very different if they pay a ton of money. Can we talk in percentages? So payback period? Are you okay if you cover in a year or you want to go up to two years or less than a year? No, we'd like to we'd like to be in our payback period.
We'd like to be within four to five months. Oh, four to five months. Okay, good. So whether it's a $100,000 contract or a $1 a month contract, you like to be paid back in four to five months. Exactly. Okay, interesting. So on a $99 a month plan, you'll spend 500 bucks. About, yeah. Yeah. And where will you... So where will you spend that?
Are you doing any direct paid stuff or is that just like your salespeople right now? So... Sometimes it'll be forum events that we go to where we'll partner up with either MindBody or somebody else that's doing some sort of industry trade show. Those will have higher cost of acquisition. And then it's just our sales guy through ads or hitting the phone creating those sales.
And so the cost of acquisition is a lot lower. So when we talk about the, you know, three to four hundred dollar cost of acquisition, that typically involves sponsoring a show, travel and accommodations and everything that goes with that.
Chapter 5: What is the pricing model for iKizmet's services?
Yeah. As you look at growing the company and potentially using kind of some more capital to that, have you considered venture debt, like non-diluted venture debt or no?
yeah we have um not you know not necessarily venture debt um but we have um it's funny i just had a conversation with um light speed capital yesterday light speed or lighter lighter speed capital i'm sorry you mean lighter capital am i getting it wrong well i don't know there's one really well-known venture debt firm called lighter capital i don't know if there's a lighter speed capital yeah it is lighter capital okay you're right how'd that and so how'd that call go i mean what do you like great conversation great um you know
learning about their business and how they can help small businesses like us to grow with capital. So we've, you know, for the most part, we've been self-funded. But for 2019, to really get our products out there, to get our brand and what we're doing, we really want to just reinvigorate, like what we're saying, the content, the education. getting people to know more about iKismet in our space.
Let's wrap up here with the famous five quick answers if you can. Number one, what's your favorite business book? Ah, crossing the chasm. Number two, is there a CEO you're following or studying right now? I like to follow, you know, Rick Stolmeyer for my body.
Chapter 6: How much capital has iKizmet raised and how was it utilized?
I think what he's done is amazing. Number three, what's your favorite online tool for building your business? I'm sorry on that. Your favorite online tool for building your business? Um, I would say QuickBooks Online. It gives me what I need. Number four, how many hours of sleep do you get every night? That I'm really good at. I try and get about 67. That's good. And what's your situation?
Married, single kids? Married with four kids. Holy mackerel, you're busy. How old are you? What's that? Andres, how old are you? You cut out there. 42. 42. Last question. What do you wish your 20-year-old self knew? Ah... That's a really... What... To take a moment to appreciate how fortunate you are in those situations. You know, when you're 20, you're driving fast and you're driving hard.
And a lot of times you don't just take a moment to appreciate it because it does go by quick. Appreciate the good moments. Andres, again, part of MindBody. Early 2014, branched on his own, launched like Kismet in 2015. Full-time now 1,000 locations, using them 99 bucks a month, doing about 100 grand per month in revenue. Up from 60 grand a month just 12 months ago. There are burnings.
a little bit of capital as they look towards working towards profitability. They raised 1.4 million bucks, nine people between California and remote locations, turning about 12% of their logos per year. Again, spending up to four or five months of lifetime value on customer acquisition. So 500 bucks on a $99 a month plan as they look to scale. Again, helping these studios visualize their data.
Andres, thanks for taking us to the top. All right. Thank you. Have a great day.
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