SaaS Interviews with CEOs, Startups, Founders
Keap Acquired CustomerHub For $1-2m in 2011, Founders Bought Back in 2018, Now $500k in ARR
26 Aug 2021
Chapter 1: What was the journey of CustomerHub before and after acquisition?
We were very early on, so we were, I know we were sub, we were sub 20K a month. We continued to run the business after the acquisition under the Keep umbrella for a couple of years. And we ended up growing it to around a million and a half in ARR.
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There, you'll find a private RSS feed that you can add to your favorite podcast listening tool, along with other subscriber-only content. 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. Hey folks, my guest today is Kyle Lovett.
He's a membership site pioneer and CEO and co-founder of Customer Hub, a simple knowledge commerce platform that dramatically reduces the cost and complexity of launching and operating a knowledge business. He's helped thousands of entrepreneurs increase their profits by selling their expertise online over the past 12 years. Kyle, you ready to take us to the top? Absolutely. Thanks for having me.
All right. You have to remind me, I thought, wasn't Customer Hub acquired by Infusionsoft or Keep or are you an independent company?
Yeah, we are independent now, but it's been quite the journey. We Me and my brother, who's my business partner, we built Customer Hub after leaving Infusionsoft back in the early days of Infusionsoft. We grew the business for a few years and Infusionsoft, now known as Keap, they acquired our business in 2011. And so we were both back at the company for five or six years.
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Chapter 2: How did the founders manage the acquisition process in 2018?
Yep. And it sounds like if you raise 750 to date, it sounds like the total price was somewhere under 750K, right? Yeah. Yeah.
Well, the total cash up front.
Yeah. Yep. Did they make money? In other words, did they buy it from you for cheaper than what you ended up buying it for seven or eight years later?
They bought it for us for cheaper. And then obviously the product was a cash cow. It still is a cash cow, but it was especially a cash cow back in the day when we sold it to them. And so, you know,
the majority of the money that they made wasn't in the increase between what they bought it for and what we bought it for, but in all of the recurring revenues that they were generating through the product.
It wasn't a ton though, right? I mean, it's 20 grand a month in total MRR and they sold it to you and it was doing less than back to, and it's doing less than 40K in MRR. So it's not like it was doing a million a month in revenue, right?
Well, it wasn't doing, it was, it got up to a million and a half in annual recurring revenue for, While Keep had it. Oh, okay. There was probably a five-year stretch of time where it was doing over a million in ARR under the Keep umbrella. Then they put the product on the shelf and a bunch of the users started jumping ship. And so it fizzled out over time before we ended up buying it back.
So that was where they made their biggest impact. It was a good deal for them to have purchased the product just strictly from a revenue and cash flow standpoint.
So its best year would have been something like maybe 2016, 2017, doing 80, 85 grand a month in revenue, right?
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Chapter 3: How did CustomerHub evolve its product over the years?
Right now it's Outwitting the Devil. I'm a big Napoleon Hill fan. I just recently read that one. Outwitting the Devil. It's a leadership principles book, basically. Number two, is there a CEO or founder you're following or studying? I mean, I'm a big Elon Musk fan just because I think he does cool stuff and I like his sort of brashness and his innovation.
He always says what he thinks and he doesn't really apologize about that. So I appreciate some of the things he's doing. Smaller scale, just friends, a bunch of friends that are CEOs that I'm buddies with.
I meant to ask you this earlier. When you sold the company to Infusion Shops in 2011, what was the deal price on that?
Um, it was, it was over, um, it was over a million bucks in between a million and 2 million bucks was that was what we sold it for. We had some consulting revenue, so we had a service business as well. And, um, we were able to, uh, you know, we were able to get some valuation from that part of the business as well.
That's nice. Number four, how many hours of sleep do you get every night?
Well, I've got some little kids. I got two little boys right now and two teenage girls. The little boys are keeping us up. So I'm averaging about six right now. But to be hitting on all cylinders, I need about seven to eight to really be on my game. So I'm working to get out of the hole right now.
Married, four kids. How old are you, Kyle?
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Chapter 4: What strategies did CustomerHub implement to grow its revenue?
Yeah, I'm 43. 43. Take us home. Last question. Something you wish you knew when you were 20.
Conflict resolution. How to resolve conflicts effectively. I think if you can learn how to communicate effectively, really business, life, it's all about relationships. And in the nature of marriage, in the nature of business, in the nature of life, the only thing that you can count on is that conflict will occur.
And so having a skill set around how to lead through the conflict and how to resolve conflicts in an effective way was something that I was... you know, pretty oblivious to in my, when I was 20. And that's, that's a skill that I've acquired that served me well. So.
Guys, customerhub.com founded in 2009, grew to $20,000 a month in revenue, sold to Infusionsoft for between one and 2 million in 2011. And Infusionsoft grew it to over a million dollar run rate in 2015, before they put it on the shelf and started to decline. Then the original founders, Kyle and Nate bought it back in 2018 after raising about $750,000 to get that deal done.
They bought it back, rewrote the software. Now it's doing about $43,000 a month in revenue, about a half million dollar run rate. They still own about 70% of the business serving 560 customers. We'll go out and try and do a million raise on a $10 million valuation. Once they break that $600,000 ARR mark, again, still own about 70% of the business. We will see what happens.
Kyle, thanks for taking us this up.
Awesome.
Thank you, man.
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