SaaS Interviews with CEOs, Startups, Founders
993 The Argument For Buildling a Product For Yourself First, $6.5m in Funding Later...
13 Apr 2018
Chapter 1: What is the main topic discussed in this episode?
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. Good morning, everybody. My guest this morning is Luke Beatty.
He serves as the chairman and CEO of Brandfolder, a digital asset management platform located in Denver. Prior to that, he served as the president of media brands at Verizon slash AOL. He co-founded, or sorry, founded Associate Content in 2004 and served as it, as its president and CEO and sold that company to Yahoo in 2010. Before that, he served on the executive management team at Wand Inc.
His expertise is in contextual advertising models, online media collection, and distribution strategies. In his free time, Luke is a youth lacrosse coach and fly fishes around the world. Luke, are you ready to take us to the top? Yeah, let's do it. All right. So tell us what Brandfolder does and what's your revenue model? How do you make money?
Yeah, so it's a very traditional SaaS model, and it's a platform that allows brands to manage their digital assets and track the behavior and analyze the use of their digital assets across the web.
And what kind of space are you playing in? Enterprise, small business, mid-market?
Uh, enterprise and we do some mid market, but most of our customers, we have about 4,000 customers and I would say more than half of them are, are brands that, you know, on a daily basis.
And can you give us a general sense of size? I mean, are these people paying a hundred bucks a month, 10 grand a month, a million a month? Yeah.
Yeah. The average, uh, our, our, our range for the down market product for the sort of medium sized enterprise, uh, you're looking at, at brands that pay five, $5,000 a year. And then we have a lot of brands that pay up to $150,000 a year for a very tricked out enterprise level product.
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Chapter 2: What does Brandfolder do and how does it generate revenue?
And so I didn't start working as the CEO and joining Steve and the brand folder team until about… seven months ago. And until before that, I had been really just the board chair and really sitting on the board and participating from an investor and board perspective.
So I think the indication of Velocity was more around just, you know, I'd never seen a company that had built such a clean and clear and concise product that fit a very perfect niche with such an incredible customer base.
I think, um, you know, it was also a company that was, you know, after tooling around for three and four years and really trying to find its product market fit had gotten to cashflow positive and really was a great thing. And I felt like, Hey, you know, I can, I can come in, raise a quick round of financing and we can, we can grow this thing into how much total has been raised.
Uh, our, our early stage kind of tech stars, um, uh, angel stuff, I think amounted to about, uh, 1.5. And then I just raised, uh, uh, around a little bit North of $5 million.
Okay. So call 6.5 and all together.
And now I think we're probably close to seven.
Okay. Did you participate in that first five, the $1.5 million round back in the day?
I put the first money into the company. Yeah. Yeah. Me and other people. Yeah. Not by myself.
Yeah. Good. And you kind of, you used it as a customer, which is a great place to start.
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Chapter 3: What is the customer profile for Brandfolder?
And you kind of stayed attuned over the years as you're, you know, getting, collecting more information from all these different brands you're at. Now you say you go all in full time.
Yeah. And I spent my, you know, I spent my weekends and stuff working with these guys on it. And, you know, it's been a real, a real pet project for me. I think, you know, it's funny.
My, my background has been almost exclusively in, in, in media and in ads and, and content on the big side running, you know, brands like tech crunch to Yahoo brands, like Yahoo autos and, you know, big consumer facing media brands. And so, the, the, we know, which is, which is, which is a very, very difficult business.
So the prospect of working on a SAS business that I felt like had predictable revenue, predictable revenue, or just what I like to call revenue or revenue at all. Yeah. So that's, uh, that's been how that's, how that's worked. So it's been good. What's your team size today? We have 25 people, mostly, mostly in Colorado, except for like outside sales folks in, in region.
Okay. And where, what do you spend? I mean, 4,000 customers, you know, that's nothing to shake a stick at there. How are you acquiring these guys? What are you paying, you know, all in to acquire a customer?
You know, it really depends on the product. I think, you know, for a big, big enterprise customer like JetBlue or a, you know, one of the sort of bigger underarm or kind of some of our bigger, huge accounts that we have, you know, we will pay, you know. like most SaaS companies, we try to have a 12-month payback. So we're willing to invest 12 months.
Are you at that now across all your cohorts, about a 12-month payback? Try to be, yeah.
It kind of really depends on the product. We also have a lighter product that isn't necessarily for smaller businesses. In fact, a lot of our biggest businesses like um, you know, like a Slack or something, they, they don't have our biggest, our biggest offering. Um, so it's really not about that. It's more about use case, uh, as opposed to company size. So those guys, um,
A lot of those guys come organically, and then their payback is very, very short. I think some of our directly sold enterprise stuff where we get guys into market, we do a lot of demos, we show them, we do some sales, we do a lot of training, and it's a heavy onboarding. Some of these brands are uploading digital asset libraries of tens of thousands of images, especially e-commerce people.
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Chapter 4: How did Luke Beatty start Brandfolder while at Yahoo?
So we have to really start engaging on moving people out to edge cases and into core use cases so that they can get the product better. We haven't spent a lot of time on that. Our business operates 100% on inbound sales right now. So we need to get better at going out, especially to existing customers and moving them into new features and building.
Guys, I get asked all the time, Nathan, you host all these interviews, hundreds of them per month. How do you do them efficiently? And guys, the answer is simple. People always agree to my calendar, back-to-back meetings. I batch my interviews to stay very efficient. And the way that I do it is I use a tool called Acuity Scheduling at nathanlatka.com forward slash schedule.
And the reason I use them is very simple. They keep my no show rate very low because they send out reminders about when the interview or the meeting is coming up. And also they make it very easy to schedule time, right? I don't have to go back and forth via email 10,000 times with people I'm trying to meet with. Okay, at nathanlatka.com forward slash schedule. Helps me so much.
And by the way, look, I like have so many meetings. I'm the best at meetings. Okay, I do them back to back. Very, very efficient. You guys know me. many people say I'm the most efficient they've ever seen. Okay. So I use the tool. It's so efficient. And by the way, I got Gavin. I said, Gavin, he's the CEO. I said, I want a great deal for my people.
He said, Nathan, well, most people get a 14 day trial. Isn't that great? I said, no, he's given us a 45 day free trial at Nathan Latka.com forward slash schedule. That's not going to stay up forever. So go get it now. Nathan Latka.com forward slash schedule.
And then in terms of size-wise, before we close out here, you know, you mentioned 4,000 customers, 10 grand a year is basically, what is that, 830 bucks a month. So it's fair to say you guys are doing what, north of 3.1, 3.2 million per month in revenue?
Uh, no, cause all those are different sizes. A lot of those have, when we first started the company, um, you know, we have probably, you know, about 700 to 800 big time paying customers, enterprise customers. The balance of those in the 4,000 number are, are a lot of early stage customers. When brand folder first started, you could buy a brand folder with a credit card online for, for very cheap.
So you're doing, you're doing less than 3.1 a month.
Sure.
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Chapter 5: What challenges did Luke face in building Brandfolder?
Yeah. Although we haven't sold those brand folders for years. We're actually getting ready to launch a product that's going to be able to be bought with a credit card here soon. But for the last two years, you haven't been able to buy that product. Got it. We've retained those customers.
That's good. I mean, that's good. They're sticky. What are you doing above? Have you broke a million a month?
Um, I don't want to see right now.
Well, you hit it. You got 30, you got 30 days left in the year. Will you break it this year?
Well, we, we will do, we will double in revenue every, like we have every year since we started. That's the revenue number. I'll tell you.
That's good. That's good. All right. Fair enough. Let's, uh, let's, uh, wrap up here. Luke with a famous five. Number one, what's your favorite business book?
Um, my favorite business book, my favorite business book right now, uh, which I just read about a month and a half ago. Um, is, um, Zingerman's, which is a deli in, um, in, in Ann Arbor, Michigan, which is a very famous deli. And if you haven't been there, you should check it out. It's kind of got a cult following in a college town and they wrote a customer service book that is really amazing.
It's a very quick short read and it is, it details how a bricks and mortar business has a very unconventional, um, customer service model. And I'll say that the sort of the punchline for the book for me is that if you go into customer service with an expectation that it's like fair, you're, you're screwed, right? The way you have to work it is this is an unfair thing.
I'm going to be giving way more than I'm getting. People are going to be unreasonable. They're and you need to meet those. So, uh, the book is just called Zingerman's, which is the name of the deli. And it's, it's a really good book about customer experience.
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