SaaS Interviews with CEOs, Startups, Founders
MyWifiNetworks Turned Down $5.4m All Cash Offer Last Month, Despite Loosing 30% Due to COVID
12 Nov 2020
Chapter 1: What challenges did MyWiFi Networks face during COVID-19?
We have about 300 resellers. We lost about 25% of our overall base. Naturally, because we're a month-to-month in a lot of our products, people can easily drop off and come back. The vast majority of everybody that's canceled has said, we love your platform. We're going to come back as soon as our clients can reopen their doors. Got it.
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My guest today is Kevin Zickerman. He helps digital agencies and MSPs innovate to increase profitability by reselling guest Wi-Fi marketing solutions. Kevin is the CEO of MyWiFi Networks, the leading white-label Wi-Fi platform with social data capture, visitor metrics, and marketing automation. Kevin, you ready to take us to the top? I am. How are you, Nathan? I am doing well.
So last time you were on the show, man, it's been too long. I think it was April of 2019. You told me you were sitting about 400 customers, had just cracked about a million in ARR, and I love the use case. A Wi-Fi at a coffee shop so that when I check in and sit down to work, they capture my email.
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Chapter 2: How did MyWiFi Networks adapt to a decrease in customers?
Take one of these devices, simply plug it in. We have it USB powered, plug it into the internet or even tether it with your phone. It'll take the data and broadcast a Wi-Fi, guest Wi-Fi network at that location. And every guest that comes into that location, you can capture their data. So we're telling a lot of digital agencies now,
If you've never heard about Wi-Fi marketing, you don't even know where it starts, join our Wi-Fi Marketing Academy. We'll teach you everything you need to know about how to sell Wi-Fi marketing, how it works.
We have these devices for $39, dropped, shipped to your door, free shipping, where you can take this and upsell it right away to a client, even give it away for free to your local business client to get them to trust you by generating that data. And what quickly happens is when they drop this in, they start generating big email lists, Facebook retargeting lists.
That's gold right now, especially with knowing your customer.
Kevin, how many total emails? How many devices, your own devices, do you have out in the wild right now?
We have about 15,000 of our own devices in the wild. And we layer on top of, I would say, our network of other devices is greater than that.
And over the past year, how many emails have been captured across all your customers online?
Uh, over 50 million, five, zero, five, zero.
So that's effectively email. It's, it's sorry to interrupt, but it's, it's Mac address of the device itself. It's gender birthday. Uh, you know, a lot of other demographic information, specifically Mac address, because that's trackable and, and, assigned to now a profile, a Facebook profile in some cases. So that's very valuable to, to other companies that would look at that.
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Chapter 3: What strategies did MyWiFi Networks implement to retain clients?
So we're about to launch an entirely new academy where it's really designed to all these digital marketing agencies that are unfortunately had to declare bankruptcy or not having clients. They're figuring out what to do right now. So Our product is that door. It's the foot in the door. It's the most important thing for them to do.
And the message is, you got to reach out to your local brick and mortar clients. First of all, check how they are. Check how their family and friends are doing. Make sure that that's number one in this world. People got to be healthy and happy. Beyond that, it's saying, hey, I have a way to help generate data. Once you open your doors, you got to treat this as a grand reopening.
This is not like just another Monday morning. This is you know, we're passive. You're in stage two. I'm not sure where it is and where you are now, but stage two, stage three, when the doors start reopening and businesses start welcoming customers again, the customers walking into those doors for the first time are the best customers.
I mean, I mean, everybody has their own opinion on the pandemic, but people who are going to a steakhouse to sit down and have a steak are, you know, in essence, risking their lives to eat that steak. And you got to know exactly who that guest is, what's their name, gender, birthday, email to reach out to them personally via SMS or email.
but also to take that to Facebook audiences and find similar people to John, let's say, who comes in to eat that steak. Because if businesses don't do that, they're going to die. And if they don't build that list right now, in case there's a shutdown or a wave two, they need to be able to communicate with the people that came to their business when they reopened. So that message right there.
But you're not selling that message. The design agencies that you sell to are selling that message. So what does your sales pitch sound like to the, to the agencies?
The agency is you got to pivot your business. You got to figure out, you got to rejuvenate and reinvigorate your agency. Chances are you lost a ton of your clients. This is a new foot in the door strategy to get you in, to generate new business, to show value to clients.
But how though, Kevin, that's where I'm a little confused, right? You're basically saying, hey, COVID has shut everything down. Hey, agency is taking a big hit. I have a new thing for you to make money. You install it in physical locations to track foot traffic, which is exactly opposite the effect code. All agencies are moving and doing more and more online, obviously, today.
I just don't get the sales pitch.
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Chapter 4: How has the company's revenue changed post-COVID?
So for example, we are working with like Great Us as a review management platform. They have a backend funnel. The issue with most review management platforms that operate in brick and mortar locations is that how do we get people into the funnel? The whole process could be awesome.
You could build a great loyalty program, but it's ultimately down to as many people that are in that loyalty program. So you have bars, restaurants. It's just a small piece of our clients. We have major amusement parks that went live in Europe. As soon as they went open, they're like, okay, we now need to understand who our guests are. We have Airbnbs running this.
When they have people staying at their locations, you've got to understand who your guests are, not only from a compliance standpoint and contact tracing, but also I want to build a list of tourists. I don't want you to limit the potential of our product with restaurants.
Keep going. What other customers? Those are valuable. What other sorts of customers are you working with?
So any auto shops, anywhere like car dealers right now, like if somebody walks into a car dealership, you kind of still have to do that to buy a car. And while you're there, you want to be able to generate data anywhere that there's a brick and mortar location. So I think I 100% agree with you. The last five months has been online only.
But now that things open up again and that people are out and visiting physical locations, that is now hyper important. And if that's not important for the business, then you just close down shop and go online only. But there's a lot of experiences that you need to be there to live the product.
Has the loss in revenue cut? Last time you told me you were profitable, you were printing, I think you said about $20,000, $30,000 a month in profits. Are you now around break-even or are you still profitable?
We're on the customer break even. We're spending a little bit more money now to invest in our development and infrastructure. We've had about four different takeout offers during COVID as well, I should mention. So not with the valuations I want to be because the multiple in revenue is not where I want it to be. What was the best multiple you got? I got seven and a half.
Okay. And why do you feel like that wasn't a good valuation?
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Chapter 5: What new partnerships did MyWiFi Networks explore during the pandemic?
We shrunk, so has everybody else, but our trajectory now is growing, you know, pending the 30%. We still have a very high trajectory.
I'm just surprised if that was a clean $5.4 million all cash upfront offer. I'm surprised you didn't take it.
I want more for this business. I worked pretty hard for it. And I think we're highly, like I said, we're highly under indexed. We don't do very much marketing. We don't do any sales. And I think that once we do that, I'll be back on your show and telling you that I got at least 20. Was it not a clean offer?
It was clean. I could walk in 60 days.
And it was all cash up front?
Yeah.
Sounds interesting. And so are you the sole decision maker? Do you have any co-founders? No. Got it. Got it.
So you own 100% of it. And yeah, I mean, like at the end of the day, I, you know, I might look back at this and be like, you know, whatever, but I, I, I, I believe in the product, I believe in the technology, and I believe in the market.
I think that when, like I said, I'll gladly come back on your show and tell you how we took this pivot and how we built the sales team and we scaled it to international regions like Brazil, Southeast Asia, East Africa. We have a lot of traction in those areas right now. And if there's anything COVID has done, it's like, hurry up and wait.
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Chapter 6: What is the significance of data capture for brick-and-mortar businesses?
What do you wish you knew when you were 20? Started business earlier. Same old thing. Yeah, work for yourself. Guys, there you have it. My Wi-Fi networks. They give local brick-and-mortar shops a way to capture data, a lot of data on their foot traffic, which you could argue, at least Kevin argues, is more valuable in today's day and age.
The company was doing about $96,000 a month in revenue pre-COVID. They dropped a little bit down to about $65,000, $66,000 a month post-COVID, but they've got a lot of big deals lined up. They are bootstrapped. He owns 100% of the company. He recently turned down a 5.4%.
or we'll call it a 7.5X multiple on current revenue in terms of selling the company because he sees a lot of promise with the deals he's got lined up when things start to reopen. We will see what happens. 15,000 of his sort of data capturing units, his little Wi-Fi hotspots out there in the wild. Kevin, thanks for taking us to the top.
Thanks, David. Appreciate it.