SaaS Interviews with CEOs, Startups, Founders
Inkit Breaks 100 Customers, $1m in Revenue Helping Companies With Direct Mail Campaigns
09 Jul 2020
Chapter 1: What is the main topic discussed in this episode?
if you were to balance them all, I mean, somewhere between, let's just say 20 to 40, 20 to 50. Okay. I mean, I don't, I don't have the numbers off the top of my head, but that's just a guesstimate. Well, let me, let me ask you a different question. I mean, when do you think you break a right, a million dollar run rate? We're already, yeah, well past that.
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Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests, no questions asked. Hello everyone, my guest today is Michael McCarthy.
He is building a company called Inkit, which is a direct mail solution which tracks and automates personalized letters, marketing collateral, statements, policies, and many other items. Michael, you ready to take us to the top? do it. All right. So just to be clear, you are not directly competing with call it a HubSpot or Salesforce in terms of the technology of the CRM.
You're just tying in via web hooks or something to do direct mail. Correct. We already bolt on to those types of platforms or products. Okay. Which of those platforms, I imagine you're, you're obviously integrated with all of them. Which one of them drives you the most customers? We, we wouldn't say one or any others drive us more than the other. So there's, you're not going to pick a baby. Yeah.
anybody listening to our ecosystem drives us, drives us customers. So we're, we're very friendly to, you know, lots of different solutions. And, and in fact, Nathan, there's actually solutions out there that are, that are point solutions where they might be used by really, really large insurers or really, really large banks.
Take for, take for instance, like an FIS where they might drive one or two customers a year, but those one or two customers are massive whales compared to, to other products in the market. Now explain to me how you price. Is it a SAS model? We price as a SaaS model. Pricing is very transparent. So we have a software as a service amount, and that gets you a certain amount of mailings every year.
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Chapter 2: What is Inkit and how does it automate direct mail campaigns?
The two of us grew up together. He was one of Aaron Schwartz's best friends. Aaron was one of the founders at Reddit, co-founders at Reddit. So Abram and Aaron helped build some of the very first open-sourced Python frameworks that actually ended up being used to build Reddit.
And then right out of high school, my CTO Abram was hired onto Leadpages to be their chief information security officer when he was 18. Myself, I went off to college, played soccer, I had a degree in econ minor in computer science and my, my first actually job out of school was sitting next to a direct mail team.
I wasn't doing direct mail, but I was sitting next to a team of 70 people doing this and just saw how archaic and really how the process was all dependent upon flat files and CSV exports and everything was just like very, very manual and actual like human intensive. Right. Meaning that if a bank like U.S.
Bank wanted to turn around a direct mailer, it would take them sometimes up to 12 to 16 weeks to actually get this out in the mail. Yep. So you two started this thing in 2017. Now, how much time and money did you spend coding before your first dollar of revenue?
Chapter 3: How does Inkit integrate with existing CRM systems?
Do you remember? We spent a good six months coding. It's tough to put a dollar value on it other than our time, but we had a team of myself and three other guys that we were all just working on this whole time to get things going. Did you have to pay those other three people anything to work or it was all equity? We had a lot of those guys just on hybrid types of equity agreements.
It was a pretty different, atraditional setup process from the beginning. No, no, it's not. I mean, it's not different. I mean, founders have to get creative in their early days to figure out how to get stuff done for free, right? So you use equity, you use other incentives, you do consulting work on the side, whatever you have to do. Exactly. Yeah.
So we did a little bit of consulting work on the side, paid people a little bit differently than out of the gate. And then, yeah, we really, really launched our product in... you know, I'd say really Jan, February of 2018. So we've really only been around for, you know, even a little less than two years. And how many people are on the team today? We have a team of 15 plus.
Mostly, most of them are based in Minneapolis. Okay. How many engineers? We have, I'd say over, still over 70% of our businesses is engineering based. So 10 plus. Okay, got it. Very engineering side. Do you have... Are you at a stage... I imagine with your contract values, you must have some folks that are carrying a quota. Are you the only sales rep right now? No, I'm not the only sales rep.
And we do have other sales reps carrying quotas. So we have a few other sales guys. How many total? We... Oh man, it's three right now. And are you still figuring that out? Or do you feel like you've perfected? In other words, you know what the quota target is, you know what the ramp time is, you know what the kind of OTE to quota target is in terms of payback period, all that jazz.
I don't think anybody's figured out their OTE or their sales formula. So we're, even big companies are constantly tweaking that and changing that. So we we have a really good idea of what kinds of customers we want to sell to. We have a really good idea of what those cycles look like. We have a really good idea of who the buying centers are.
Now, from a OTE and just earning side, I mean, let's face it, some of these large enterprises, let's say you go out and talk to the Exxon Mobils or the Walmarts or the United Healthcare Groups of the world, a lot of those companies take you know, years to do things. So that's where, that's where there's sort of a, it's more of an art to how you craft these, these sales projects. Yeah.
I mean, just to be fair, the companies, once you're north of 20, 30 million bucks in ARR, this is a, this is a system. It is a well-oiled machine. There's very little tweaking that happens. So, I mean, so I guess what I'm asking you is you're, you're at a valuable point where most of my listeners are probably very similar to you.
They've hired maybe their first one or two sales reps, but they're still tweaking. They're still figuring out.
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Chapter 4: What is the pricing model for Inkit's services?
I'm just trying to understand what different inputs you're using for that model to try and get a better guess of what that will look like at scale. Yeah. So this is a two big, two big inputs we have is one, we have a baseline compensation and a baseline comp is we actually pay very similar to like what a, what a sales rep would make in SoCon Valley or New York city.
So there's just, there's a base amount. And then what we do is we have a, we have a commission structure based on the SAS component of our product. So depending upon, you know, different functions to obviously a sales rep is incentive, incentivized to sign a,
a two year deal over a one year deal or a five year deal over a one year deal, or to include things like auto renews or other types of favorable provisions. There's a, there's a baseline cut that we provide just on getting the contract signed. And then for each additional, like, added benefit that's pro-ink it, such as like an auto-renew, then that mechanism slides up.
What new annual revenue do you want to see kind of reps closing in their first 12 months? Is it like $300,000 worth of ARR or a million or something else? We'd like to see, you know, close to 400 at least in the first, you know, couple months. couple of months, but we do know too, that a lot of these take time, right? Where what do you mean first couple of months?
So let's say I just joined you today. I'm your fourth sales rep kind of higher. You're going to say, Nathan, our expectation is over the next 12 months, you're going to close $400,000 in new annual business. Correct. Right now we have a lot of, we have a lot of those types of clients just coming in inbound. So it's, it's pretty, it's
it'd be pretty tough not to hit, you know, those types of types of quotas that we've laid out already. Well, it's not about are the leads coming in? I mean, there's plenty of people have plenty of leads coming in, but someone has to get on the phone with them if they're paying you $100,000 a year and actually get the deal done. You know what I mean? Totally. Yeah. Okay. Interesting. Okay.
So three folks with quota, 10 engineers, 15 people kind of full-time. Now, here's a question. So you guys started a desk. You're sitting next to these people doing direct mail. You're going, this is a massive pain point. Did that customer become your first customer or how'd you get your first couple of customers? I wish. No, we're actually talking to them right now.
So truth be told, our first couple of customers were When we first got going, we didn't know who we were selling to, Nathan. We, frankly, were just trying to figure out the market. So we spent the first three months literally walking around this college town area, knocking on restaurant doors, wondering if a restaurant or a dry cleaner or a local business would actually buy our tool.
And what we very quickly learned was that a lot of these small mom and pop businesses just one didn't have the budget or two didn't even have the marketing automation tools to make this, you know, medium automated. So we, we started calling into companies that, you know, you and I have heard of like, like to Kovas or like, do you remember the first logo? Let's tell that actual story.
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