SaaS Interviews with CEOs, Startups, Founders
EP 93: I offered him $2m for his business on the podcast
25 Oct 2015
Chapter 1: What is the main focus of The Top podcast?
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. 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 talk. 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. Coming up tomorrow, you guys are going to hear from Rob Burke. He's a 24-year-old who invented a new way to listen to music through your teeth. Okay, good morning, Top Tribe. As Halloween approaches all you U.S. listeners, I hope you've got your costumes picked out. You are going to love this interview today. It's with AJ Prasad.
Now, AJ is a serial entrepreneur, successful business strategist, and an adept marketing expert. He's the founder of GMR Web Team, a digital marketing agency dedicated to helping businesses maximize revenue from the internet. AJ also owns GMR Transcription, a seven-figure web-based business and award-winning transcription and translation company, which serves over 9,000 clients.
AJ, are you ready to take us to the top? Sure. All right, so let's have some fun. First things first, where are you guys based? We are based in Orange County, California. Very good, very good. And so what's your main business? Is it the GMR Transcription line? Is that accurate?
Actually, our main business is GMR Web Team, which is the digital marketing agency. And GMR Transcription was something that I had created seven, eight years back to have a guinea pig so that I can test all my marketing processes. The digital marketing at that time was not really proven. I love that. Before charging someone to do digital marketing, I wanted to make sure that it's effective.
So I created that GMR transcription for that purpose. And I think it worked. So it very rapidly became a seven figures business. For a while, GMR Transcription was generating more revenue than even my original business.
So guys, I think that's such an important lesson. You know, AJ set up the marketing business, AJ, if that's correct, as a guinea pig to really test new ideas. And when you saw something that hit, which was the transcription stuff, you built a business around it. Is that accurate? Yeah. Yes, yes. Okay, so let's break it down. You know, the top tribe listeners, there are so many of them.
We're going to have over a million by Thanksgiving.
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Chapter 2: Who is AJ Prasad and what businesses does he run?
It's just taking off. AJ, a lot of times what our listeners want to know, they want to understand how much revenue you did last month in the business that you care most about. So I assume that's the transcription business, right?
No, actually, again, the transcription business is now a business that That is a standalone business. I have a team of three people run it. So my work is actually still, my focus is still the digital marketing agency. That's what I enjoy doing.
So let's go to the agency in a second. But first, you've got a three-person team on GMR Transcription. I'm curious because you're serving like thousands of clients all over the place. How much revenue is GMR Transcription? How much did it do in August? In August, we did about $135,000. Okay, and just real quick, the pricing model on that. People send you an audio file to transcribe it.
What do you charge per minute?
It totally depends actually on what... So we have a very transparent pricing model where it totally depends on the kind of audio, how soon they need it, and how many people are there. So it starts anywhere from $1.35 per minute of recording, and the highest, I think, is $3 per minute of recording. So that's the range. Like I said, it depends on the urgency.
Per minute of recording, right?
Yeah.
Yeah. Okay. Very good. Okay. So that's that business. Let's flashback to the other side. Talk to me about the marketing business. So what does it do? Is it all strategy?
Well, actually, the strategy is just the beginning. And what we learned, we started with all strategy because that is my background, actually, in the corporate world. But I just learned that the small businesses, strategy is not good enough. You really have to help them execute their strategies because most of them are not don't understand even what the strategy is.
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Chapter 3: How did GMR Transcription start and what is its revenue model?
Exactly, because, you see, the agency, I mean, the biggest reason is I enjoy that. You know, that is something that I find challenging. Every client has a unique challenge. And we have to come up with unique solutions. So that is really stimulating for me. And the second thing is that there's a difference in both business models in the sense that transcription is like a retail model.
People come in and they upload the file. And if they don't come in, we don't have any revenue. Versus the digital marketing agency, it is different. you get a recurring revenue. So I really am not dependent on new sales in any month to hit that target that I was talking about, the volume. So we have consistent volume and we just keep on adding it. So it is a more stable business.
You can predict better and you can plan better.
The transcription business is more predictable.
No, no, no. The digital marketing agency. Transcription business is retail business. It's like you have a store and it just so happened that our store is on the internet and the customer come and buy.
So you don't have people like me. I mean, you don't have like podcast hosts that consistently give you business every month. It's more like one-off things.
Actually, we do have it, but it's a very small part of the business. And you'll be surprised that we have podcasters like Jim Jantz. We have Jamie. I'm just trying to figure out. Jamie Tardy. Yeah, Jamie Tardy. So, you know, we have actually several really well-known podcasters who use us on a regular basis. Like every podcast, we transcribe for them. But it is a very tiny percent of that
revenue that I'm talking about. It's not even 1% right now.
And who does GM the transcription side? Who do you really compete with? What are your biggest two competitors?
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Chapter 4: What revenue did GMR Transcription generate last month?
No, the top line revenue. But if you look at the EBITDA, 5 million will be closer to like 10, 11 times the EBITDA. But the reason I am saying that that is the right number, at least in my mind, is because this business is so scalable, the way this business is set up, that I can literally double my volume without... Adding anything to the fixed cost.
So what it means that every new dollar that comes in in sales over what we are right now, it's almost- Has higher margin. Yeah, 60, 65% goes straight to the bottom line. And that's how I set up. So the whole infrastructure that I have created for this business has a huge value in its own. So someone who comes in very aggressive and wants to take it to the next level,
you know, this will be a very right business for that person. Now, I'm not telling you that we are not growing. We are growing and, you know, but I'm treating GMR Transcription as just another of my client. Sure, sure.
I'm not putting, I spend maybe, I would say, five hours a month on strategizing, looking at the results, trying to see what we'll be doing in the next month and the next quarter and the next year.
And when was it founded again? When did you create GMR Transcription? In 2005. 2005. And how much, if you just do all revenue, or maybe all revenue in the last fiscal year, what was total revenue? Somewhere around, what, $2 million, $3 million? Yeah. It was around, I would say, last year was about 1.7. Okay, so 2015, you did 1.7 million. So yeah, okay, that's interesting.
It's good to kind of get inside your head and think about and understand how you're thinking about sale price. So at 1.7 million top line, it's really only 2 to 3x top line revenue, which for, say, your business might be aggressive, but for a SaaS business, that's really, really low.
But then when you look at EBITDA, it sounds like there's plenty of room to scale because you don't have any additional fixed costs. So right now it might be 10 to 11 X EBITDA, but if someone buys it and really runs it efficiently, they could get that and really make some money there. 100%. That's my logic. So if I offered you 2 million right now on the podcast, would you take it? No. Okay.
Back to your marketing side of your business. Walk us through how that works. How do you get new clients?
Oh, so on the marketing side, actually, the way now, I'll tell you how we are getting now, how we got was a different story. So now what we have done is we have identified who is our ideal customer. So we have a profile that we have created. And we reach them directly through direct mail, through even, you know, I have a couple of people who call them. And then also they find us on the Internet.
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Chapter 5: How does GMR Web Team differ from GMR Transcription?
So I have offices in India. And then in addition, we work with, I would say, two, three hundred writers because there's a lot of content creation that is needed in the U.S.
These must not all be full-time then, correct? Are all 90 in the India office full-time? Oh yeah, in India office 100% full-time and over here the people are also full-time. So what's the average salary of the folks that you pay in India? Is it 60k a year? 60K? Are you kidding me? Higher or lower? No, no, no. It's much lower. It is more like, I would say, 10K.
Well, I was going to pin you in a hole because I did the math and I'm going, if he's got 100 employees averaging a 60K salary, that's $5 million a year just in expenses on headcount on a business doing $2 million top line. Correct. No, no.
Luckily, it is much lower. Even 10K is... is stretching it. When I'm saying 10K, that includes everything, including overhead and the rent and everything. Got it. You know, in India, you have the skilled people are expensive. Typically, skilled people's salary is, I would say, one-third of the salary here, very highly skilled.
But then there are a lot of people that is needed for road work, which is not that, you know, where you don't need the kind of skill. And there the cost becomes amazing because those are the people that you are paying $200, $300 a month, which is a good salary, by the way, which is a market salary in India. Now, of course, you know that for even minimum wage here is 300 is not there.
And then the similar level of people, if I want here, which is someone has to be, you know, educated, coming from college and all that, I wouldn't be paying less than $15 an hour. Yeah, you'd be broke. That's where I have the biggest savings is the, you know, the people of lower scale.
Got it. Got it. Well, I'm going to, I'm moving to India. That's my next, I'm going to start a business in India. Just kidding. Okay, so AJ, last question. What do you think the marketing side of the business will do here in 2015, top line?
You know, 2015, we forecasted very modest. I have a 20% growth plan. So we forecasted that over last year. And that will be around, I would say, $2.4 million or $2.3 million. And we are definitely on target to do that.
Well, that's great. That's really great. And so the last thing I want to tell folks is if you're listening in, wondering about these numbers, links to AJ's information and all that stuff, you can find it in the show notes at Nathan Latka dot com forward slash the top nine three again forward slash the top nine. OK, top three. I want to give you more brain juice this month. Totally free.
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