SaaS Interviews with CEOs, Startups, Founders
EP 341: 15 Year Old Sells Company, Creates and Sells 3 More for Almost $1M with Cody McLain of SupportNinja
30 Jun 2016
Chapter 1: What is the main topic discussed in this episode?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base.
Chapter 2: How did Cody McLain start his first business at just 15 years old?
You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. Five and six million. He is hell-bent on global domination. We just broke our 100,000-unit soul mark. And I'm your host, Nathan Latka. Every Monday, I give one of you, Top Tribe, 100 bucks to invest in your idea to get it to the top.
To enter for your chance to win, simply subscribe to the podcast on iTunes now, and then text the word Nathan to 33444. Top Tribe, this is episode 341. Coming up bright and early tomorrow morning, you'll hear from Steve Olsher, and he breaks down how to write a best-selling book. Top Tribe, good morning. Our guest today is Austin-based Cody McLean. He's the founder and CEO of Support Ninja.
After starting his first business at 15 years old, he created and sold four more companies in just under a decade. Over that time frame, he has been helped thousands of customers in more than 100 countries worldwide. He's been featured in Forbes, Mashable, Entrepreneur, and others for his achievements and diverse skillset. Cody, are you ready to take us to the top?
I certainly am.
Chapter 3: What challenges did Cody face after merging his hosting company?
15. Most people are like, you know, they're getting their first boyfriend or girlfriend then like playing on the park. You're launching businesses. What's up with that?
It was always something that I gravitated to. It wasn't even my idea when I first started it. But when I found this idea of starting this hosting company and I just kind of took off on it. I mean, there was just something about it that I got addicted to that instead of all the other things that I guess you're typically looking at at that age.
How'd you get into it? I mean, was it someone else's hosting company and you got your way in or you bought someone else or what?
Chapter 4: How did Cody transition from hosting to starting Support Ninja?
No, actually, it was just me and a friend and we were trying to figure out how to get money to buy this new Xbox that came out. And then he came up with this brilliant idea to start a hosting company. He looked at HostGator and he saw that you can sign up for a reseller account for like 25 bucks a month.
And I guess we both kind of had this idea that, oh, we can get like super rich and this is going to be like super easy to just run a hosting company. And after about a week, our partnership fell apart. But then there is some part of that that that process that I was just like, wow, I actually feel like I found something.
And so he kind of dropped out, but I continued to just work on it week after week. And it just did eventually turn into a business. And I don't even know when it turned into one, but to me, it felt like just kind of a hobby, like a, like a passion.
Chapter 5: What unique business model does Support Ninja offer?
So when did you move from reselling HostGator's product to actually building your own hosting company?
It was, it's something that occurred over several years, I was just continuing to build up that company. The biggest shift was sale, I think I had maybe 3040 clients at some point, and then I had a jump to a dedicated server. And that was a big change for me as he then had to go figuring out how to manage a server and everything.
And that business, he just continued to grow over two and two and a half, three years until I combined with another partner, and we branched out even further.
So this is when you were 15, 16, 17, 18 before you could bring on the partner, right?
Yeah, I believe I was 16 and a half or 17 when I decided to merge companies with another business partner. And then we we grew that one exponentially as well.
And how much in sales had you done since the start date to before you right before you merge just total sales?
I'd like to say maybe 100, 100, 150,000.
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Chapter 6: How did Cody manage to achieve $1 million in contracts within 14 months?
All right, so you're rolling pretty for early teens, right? Yeah. All right, good. So tell me why you decided to merge the business.
It was somebody that I was working with for a while and he had a lot of business experience and background and legal and taxes and all these things. And so then we decided to just emerge and I would handle the whole marketing and the business and the branding and it seemed like a perfect match. So then I moved up to Vancouver.
I was living in Cincinnati at the time and then we... He was up there or she was up there? Yeah, he was up in Vancouver.
Okay.
Chapter 7: What is the average contract value for clients at Support Ninja?
Okay, got it.
And yeah, we started that and it grew.
There's a transaction like though, what I mean, was it like, how do you have an equity conversation? Who gets what revenue? What was that like?
We just really split it 5050. There really wasn't a conversation about that. And I've certainly, I certainly wouldn't recommend doing 5050. But that was just what we what we had at the time. And we both trusted each other and it worked out to the extent that it did.
Chapter 8: How does Cody maintain a work-life balance as an entrepreneur?
Okay, so what extent did it work out to what happened?
Well, I actually have a book coming out as well later this year that details this whole process, because when I first started my business, really about my story is partly when I was starting that first business, I ended up in foster care as well. Both my parents died when I was young, so I really had no backup plan. And that was kind of this extra emphasis to make my business successful.
When I moved up to Vancouver and I partnered with this guy, we ended up
finding this guy who was running a penny stock company and he wanted to buy us and he would he said he was going to find us investors and everything long story short he ended up screwing us over and there was a lot of legal battles and everything else like that and that was over a period of a year and it was it was most incredibly painful because i was running this business not knowing every day if i'm going to wake up and whether it's going to be still still be mine or not and after that after about a year of litigation we and how old are you cody just so people can follow the story
19. And so after that, we just ended up to give him the company. He made me CEO after he had bought it. But during the whole litigation process, he went to great lengths, damaged the reputation of the company in order to kind of bend over backwards and just give it to him. And so by the time he took over the company, it was massively in debt. It was having- How much in debt?
It wasn't much, but the problem was the profit margin was nil. It was in the red. And after he bought it, he didn't realize that he would be having to actually end up using his own money to pay $30,000, $40,000 of server bills that the business could not afford to pay.
So real quick, what was driving net profit negative? Was it the debt coverage kind of expense or was it just server cost or you weren't charging enough to get top line or what?
was a loss of reputation that we had as a result of his litigation so he lost customers basically well no he didn't buy the customers but he ended up screwing the reputation uh like in one case he got a temporary injunction because we actually found out that a server administrator was colluding with him and so even all of our all all of our emails between our us and our lawyers was being sent to him so he was always a step ahead of us and uh he was going he made a
behind scenes deal to give him like equity and make him a CEO, which never actually happened. But then he got this temporary injunction when we figured that out, that our admin was colluding with him, that we shut him all of access to the servers. And so then he went to a court and said, hey, look, they're damaging the company because I don't have equal access.
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