SaaS Interviews with CEOs, Startups, Founders
BetterAgency CRM for Insurance Hits $1m ARR, Raises $2m on $15m Valuation
03 Jul 2021
Chapter 1: What is the main topic discussed in this episode?
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hello, everyone. My guest today is Will Shaw.
He's the co-founder of Better Agency, the first sales-driven AMS and the industry's top CRM for independent insurance agencies. They're on a mission to help agents issue a billion in new business premiums by 2024. He's an ex-professional athlete, and his playing field is now the tech and software space. Will, you ready to take us to the top? Yeah, let's do it. What sport do you play?
I played football. So I played with the Steelers and Eagles.
Oh, very cool. Which one did you enjoy more? The Eagles because I lasted longer there. Good answer. Good answer. All right. So talk to me about Better Agency a bit here. So I obviously love niche-specific businesses. We've had you on before. I'd love to understand sort of growth from then. Are you still the same product or have you released something major over the past two years?
Yeah. So we've kind of grown a lot. Yes. I know we talked previously. You know, I got I fell into the insurance niche because I was customizing tools like Infusionsoft, HubSpot, Salesforce for the insurance space. And what we found was, hey, we were using six, seven, eight different platforms to do the same thing.
Wasn't working through antiquated systems and bad APIs because nobody's been really focused on the insurance industry. So right at the end of 2019, we decided to launch Better Agency, which was the first CRM specifically for independent insurance agents. And throughout that time, we've really grown doing that.
And then we recently just launched our newest feature, which is what we call the sales-driven AMS.
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Chapter 2: What is Better Agency and its mission?
So that's actually connecting directly with policy downloads from the carriers. That's been something we've been working on for almost a year now. And it's really allowing us to offer a one true system to insurance agents instead of them having to use multiple different platforms.
And you used to be, did you have a rebrand? You were called Marketing Connected, I think, previously, right?
Yeah. So that was a previous company that I was kind of using as a placeholder as I was transitioning out of doing custom implementations and into what we launched at Better Agency.
I see. I see. Got it. Okay, cool. But same story there in terms of that was the baby version. You've now since changed, matured, etc. ? Yep, exactly. Okay, very cool. So let's jump into this a bit.
On the CRM tool today, I think when you last came back on, I guess this would have been back again, 2019, you had just broken, I think, 100 customers and you were charging at that point, I think about 300 bucks a month, still the same price point?
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Chapter 3: How did the founder transition from sports to tech?
Yeah. So our price point has gone up. We're a little over $400 now on our average customer. We've been able to add some different upsell opportunities. So we try to get people in around the $200 to $250 mark. And now we're getting our average customer a little over $400 and we think we can get to $500 over the next 12 months.
And what's driving your ability to get higher price points? Are they buying more seats originally? Are you upselling more features on day one? What's the story there?
Both. More seats coming on. So as we're able to help solve more problems, we get more of the team on board to our platform. And the second thing is just adding more features. One of the things we've been passionate about is trying to achieve that kind of net negative revenue churn. And that's been kind of helped drive our growth. Where are you now on that?
So I think when we spoke in 2019, we actually just launched at the end of 2019, October, November timeframe.
Chapter 4: What growth milestones has Better Agency achieved since 2019?
So right now we're somewhere around 260 customers and we just broke the 1 million ARR mark. Oh, hey, congrats, man. That's exciting. Thanks. I appreciate it. Big deal. Bootstrapped or erased? So we bootstrapped to this point. We are tomorrow actually closing our first round. So we've got to this far bootstrapped. And so we just are closing on our first round tomorrow.
We love that. So you guys, you listen to the podcast, you get breaking news before it happens. Will, how much you guys end up raising?
So we're going to raise a total of $2.1 million. It's going to be at a $15 million post. And we're pretty excited about that. So yeah, we were able to bootstrap to this point. And so that made fundraising pretty easy and just made sense for where we were at.
15.2 posts. That's essentially 13 pre or about 13 next year ARR. Does that feel fair to you or do you feel like it could have driven it higher or lower? What do you think?
We could have totally have driven it higher. The market, you know better than I do, the market's pretty frothy right now and we could have driven it higher. My biggest problem with fundraising was telling people no. The reason being is we wanted to be as strategic as possible. We were in a position where we had bootstrapped this. We didn't necessarily have to raise money. The only money we're
know we're burning some of the original money we put in at this point or saved along the way and we're using that to drive some marketing so we really want to raise money to start bringing our our development talent our our product team in-house because that's been outsourced previously and to grow our sales and marketing team uh and what we're doing there so we we wanted to be as strategic as possible so that meant staying a little bit away from the vcs because we're not going the traditional fundraising route and going more towards angels which is a little bit different valuation so how many how many people are participating in the 2.1 race
So we probably could have got away with doing it with two, but we ended up getting a, we have about 50% from our lead investor and the other 50% is divided between insurance specific strategic investors.
And then the other half of that would be through strategic other vertical CRM founders or some people that we know that have gone through, whether it was Infusionsoft's fundraising or different fundraising events here locally in Arizona.
That's very cool. Is Clayton putting any money in? No, he's not. But I have had some conversations with him. Nice, nice. And then the lead that put in about 40-50%.
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Chapter 5: What new features have been added to Better Agency's CRM?
Did they set the terms? Or did you let the whole sort of like without traditional VC or just a wealthy individual?
So that was an angel here locally. So we let them set the terms. We thought it was more than fair for staying out of the VC realm and staying with more angels.
Priced round though, right? Not a credible note? Yep. It's a price round. Okay. And so you mentioned burn, right? So before this raise, like in June, how much capital will you burn? Uh, about 10 or 12 K. So not a ton. Okay. I mean, this isn't that bad. That's a, you know, 10 to negative 10 to 12% EBITDA margins. Not, not horrible in SAS and, and what's growth look like.
So, so, I mean, if you're at a million dollar run rate today, where were you exactly a year ago? Do you remember?
Oh man, I could look it up, but my guess is we were at this time last year, we were at probably somewhere between 25 to maybe 30K MRR.
So you were flat then, because that's what you told me you were at in 2019, or late 2019.
Yeah, so when we talked to 2019, that was more about where we were expecting to get. We didn't make our actual, we had some commitments that were helping us get there, but we didn't really bring in our first dollar until I think November of 2019.
Okay. I see. Got it. So you're pre-revenue up until that point. Yeah.
So when we launched, because we bootstrapped it, we pre-sold quite a bit working with people. And so that's kind of what we were expecting. We got to that number. It just took us about six months longer than we thought.
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Chapter 6: How has Better Agency's pricing strategy evolved?
So we spent a lot of time focused on the blog from the start. And we're starting to see dividends from that now. A lot of it is customer referrals. And then we have some still coming in from referrals. referral partners.
On the paid strategy, how much did you spend on paid ads in June this month?
So that would be almost all of our paid budget outside of SEO. So if we spent 12 grand on marketing in June, about probably close to 10K of that was specifically to paid. 9,000 to 10,000 probably specifically to paid through Facebook or Google.
Facebook. Well, interesting. And how many new customers or leads will you get on 10K of spend?
So on 10K in spend, we'll get about... 25 net new customers. So we'll get a bunch of trials and we convert about 70% of those trials. So that'll equate to about 25 new paying customers.
That's great. What do you have to get a trial to do to make sure they convert to paid?
Yeah, so there's a kind of key components that we look at. One is making sure that they engage with us. So kind of the first way we weed somebody out is if they don't engage with our onboarding team, we look at a trial as an opportunity for a paying customer. So we immediately start reaching out and trying to onboard.
They don't engage with us and they have no usage, we'll preemptively cancel their account and let them know to try to re-engage them.
um so that's the first thing we do but the the main key things we're looking at is getting them started on our onboarding process so we invest heavily on onboarding you charge for it is there a setup fee what's that no we don't charge a setup fee we actually i know everybody's trying to reduce our customer acquisition cost we're trying to increase it heavily through increased onboarding our our view is if we spend more on onboarding we can increase our ltv and we can spend more to acquire our customers so
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Chapter 7: What funding strategies did Better Agency use to reach $1 million ARR?
Oh, wow. In perpetuity. Interesting. Do you ever worry about in the future? I mean, basically, if a bunch of your revenues come from affiliates, your margin is never going to be higher than 70% because of the payment out to them.
Correct. Yeah. So what we do is it's on the base application that they bring in, and then we kind of take on charge of upgrading them. And so we don't pay out the upgrades to the affiliates.
I see. So as a percent of the total ACV of the account, the affiliate payout drops over time because you're upselling them. Right, because we're upselling. I see. Let's talk about upselling. When you last came on, I think you said churn was up 36%, expansion was 36%, so 100% net dollar retention. Where are those numbers today?
Yeah. So a little bit better. So we're hovering around 2% monthly churn, I believe, on an annual basis. Correct my math. What is that? About 84. Yeah. So that's our current. And then we're upselling at almost not... What is our upsell rate? I believe we're somewhere a little bit higher than 100%. I think we're between 105, 110% based off our upsell. But our goal is to get that to 120%.
Your net dollar retention? Yes. Got it. So if net dollar retention is 105 and you first have to make up a 24% churn hole, your expansion is about 30% year over year on a historical account. Yeah, that sounds about right based off the last numbers I looked at. What are you upselling? Is it mainly number of seats or is it more feature-based or utility-based upselling?
So it's a little bit of both. A lot of it originally was user base or user seats. And we just started doing that probably at the end of 2020.
And then with the release of our new features that have rolled out back in April and May, and what we have coming in this later, we're getting closer to a 50-50 split and we're seeing the larger increase in cost because as people start adding more features, we also see along with that, the seats that come along. So somebody that just upgrades seats, they just upgrade seats.
But somebody that's upgrading features generally is upgrading seats as well.
I understand the blog organic versus your affiliates versus your paid spend on Facebook and Google, they're all going to have different sort of CAC profiles because they're different channels. Let's just focus on the pure paid stuff for a second. What are you willing to spend to get a new $400 a month customer?
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Chapter 8: How does Better Agency acquire new customers?
I struggled figuring out transition from football into what I was going to do. And I really I was that prototypical athlete that did not have that backup plan. I wish I would have listened to everybody trying to tell me that.
Yeah, you see Brady building his own brand as he gets past 40 and 45 and 50. Interesting. Hey, actually, I have to ask and on this question, who has a better record this year, the Eagles, the Washington football team?
Oh, man. The loyalty in me wants to say the Eagles, but I'm a Ryan Fitzpatrick believer. We went to the same high school. I've known him for years, so I'll go with the Redskins.
And plus the beards. We've got the beards going on. Yeah, yeah, yeah. Epic beard over there. Do they take the East again or no? You think Cowboys or Giants sneak in?
Uh, you know, I, I, I'm kinda, I'm kinda high on the giants. Um, but I, you know, the Cowboys, you always think you're going to be good, but they never pull it off. So it's like, they're like the team that could bust, but they could actually, they could actually be good. They have on paper, they look great, but I would go with Washington just cause I don't, I don't, I can't trust that.
Can't trust the Cowboys.
Yep. Guys, there you have it, betteragency.com. Again, they are backing insurance providers, helping them with a great CRM tool. He's going to stay focused on that niche. They were doing $30,000 a month last year at this time, now doing over $85,000 a month, past a million-dollar run rate. They had bootstrapped to that point, serving 260 insurance agencies to date.
They're only burning about $12,000 per month as they scale and are announcing, they just now say basically, $2.1 million raise at a $15 million post-money valuation. The founder still owns 75 80% of the business, new investors own, call it 15, 20%, and employees have, call it 5 to 7% of the business. 16 folks on the team right now, they look to scale net dollar retention over 100%. All good.
Will, thanks for taking us to the top. Yeah, I appreciate your time.
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