SaaS Interviews with CEOs, Startups, Founders
Qebot Raising $1.5m With $1.2m in ARR Helping 1500 SMB's Be More Productive
30 Jul 2020
Chapter 1: What is the main topic discussed in this episode?
Altogether though, from the SMB model, what we're looking at, and this is gonna vary quite a bit, we're sitting right around the 1500 to 2000 mark. Okay, 1500 customers. Yeah. You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatka.com.
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My guest today is Matthew White. He's the CEO of Qbot, and he has a background in digital marketing and mobile advertising sectors. And his partner, Cornelius, built Qbot to make businesses, franchises, and marketing agencies more productive by centralizing SaaS applications into one single platform, making companies more productive. Matthew, you ready to take us to the top? Sure am.
And it's Qbot, by the way. It's Qbot? Qbot? I always thought it was Qbot. Why did you not? I always thought it was Qbot.
a lot of people do this is a wait so i mean you need to figure this is like a branding issue uh yeah but a lot of people see the name they remember it it's got kind of a nice like q e b o t and so people remember it people may say it wrong but they remember the the letters so it's key bot just to be clear you got it all right so uh how are you guys making money oh there yeah how are you guys making money
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Chapter 2: What is Qebot and how does it help businesses?
Wait, Matthew, why do you say that though? If you're in diligence, you're going to share these numbers anyway. So if the investors hear it. Yeah, but we're sharing them specifically with certain people that, you know, I just don't know
I don't know how, if this data really gets out there too well, how they're going to feel about some of this information being live at this point while they're kind of looking if they want to invest in this. They'll go, holy cow, how'd you get featured on Nathan's show? It does 10 million downloads. It's doing incredibly well. Thank God you got on.
So this is just kind of how we've got to be right now. I just don't want to put anything out there that's going to jeopardize where we're sitting with some of these opportunities. No, no, I think it's fine. I just think it's, I think that's not actually the reason. Because, right, there are people that have come on the show and they get more competition on term sheets.
The founders get better deals and higher valuations. Never has there been a case where there's been data shared and someone has lost a term sheet. Only if there's discrepancies. If there's discrepancies between what you're telling me right now from an audio format and what the investors actually see in diligence and you're like bluffing right now on my show, that's where people get in trouble.
Right. And we're not. I just it's something I'm not willing to kind of share at this moment. I don't know where we sit with some of these investors. And I just want to make sure that we have everything scheduled and sitting the way it's supposed to be. Yes. Something our advisors told us to do as well is just make sure we keep our numbers close to our chest right now. Yeah.
Well, you know, you know, who cares? Right. It's your company. You do what you want. Right. So fifteen hundred SMB, sixty five dollar price point somewhere in the hundred thousand dollar a month kind of range. You founded the company in what year? Uh, technically 2014, but we really kind of relaunched what we sell and what we do in about in 2018, mid 2018. Okay. So what happened there?
Why do a relaunch? Uh, it was more about kind of re re adjusting what our model and what our plan was going to be. We started the business in 2014, basically just like a website builder software and moved that and kind of sold that for a little bit and then started to build out the platform aspect of our business after having some of our clients sell us.
Hey, this is what we're really looking for from a platform. We want all these tools. We want integration. We want something that can facilitate these kind of, you know, communications back and forth between the tools. So we started building it out based on that. We kind of relaunched in I was like early 2018, actually, with an actual platform with all these different tools. Okay.
And how much have you raised to date total? Only $50,000. 5-0? 5-0, yep. 5-0-0-0.
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Chapter 3: How does Qebot generate revenue from its services?
Okay. And why raise? I mean, you mentioned your thing about raising right now. Why raise right now? Because we want to start scaling up. So we've started to launch a lot of larger scale marketing agencies, media companies that are reselling our platform, White Labeled, which has been great. Some franchises that we're starting to get into. And we're starting to build out pretty quickly.
And it's time for us to continue to ramp that up. We've got some some new ad campaigns that we want to run that we know are going to be successful based on some of the stuff that our, uh, our resellers have done. We've been able to kind of look at that information. And so it's time for us to take that next step and throw some, some gas on that fire.
Why would you go cannibalize what your current reps are doing? Your, your, your affiliates are essentially doing, uh, they're doing that for you for free. You're paying them a kickback and then now you're going to take money, get diluted and then go copy their strategies and undercut them.
Well, there's money that we can make that's going to be higher revenue if we go direct to clients than from some of our partners. We give some discount programs and everything there. But also, we want to get into more agencies. We want to get into more media companies as well. And there's some great advertising we want to do to be able to get into that market a little bit more.
Also, there's some conventions and conferences that we want to get into over this next year to really get us started. into that market a whole lot heavier. I mean, there's 120,000 marketing agencies in the US, right? And we need to be able to get in front of a whole lot more of them. Are you burning right now or cash flow positive? We're right at about breakeven. Okay. So what's that mean?
Like four or five grand a month in burn? No, we're actually right at about zero in burn. So you are operating right at breakeven. Okay. And what's the team today? How many people? Sorry, you broke it. What was that? How many people are on the team today? Yeah, we only have six right now.
So we're able to run very lean as an organization, which has been great because we have kind of the backing and support of all of our different partnerships and all of our different technologies into the platform. We can rely on their support teams. You can rely on their marketing collateral they give to us, all that kind of stuff. So we can run very lean.
which has allowed us to run a pretty low staff. Now we'll be ramping up that staff a little bit as we move into this next round of funding, but we feel we can continue to run pretty lean as we move along. So six folks on the team, how many engineers? We have two engineers and we're going to be hiring that.
That's going to be one of the places we're going to be hiring up pretty heavily once this round is in, because we want to add more tools. We want to add more functionality. We also we've got some automation systems. We want to continue to build into the system, build a third party marketplace where we can have third party developers build into us.
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Chapter 4: What is the pricing structure for Qebot's services?
Of the 1,500 SMBs that use you, how many of those are under a marketing agency? Like how many marketing agencies pay you right now? Yeah, so I'd say probably, I want to say like probably 1100 of those are from agencies. Across how many? You said four main? No. How many agencies? I think we have 16 signed up right now. Again, some are like 10 locations and some are a couple hundred.
Yeah, so you have a hundred SMBs across about 16 agencies, right? So if one of those agencies churns or downgrade, that's where you'd see your churn. Yeah, it would be, yeah. Okay. So we had an agency a while ago that was working with us, had a big franchise. They lost that franchise and that was a big hit for us.
That's one of the processes it takes when you're working with an agency, you're kind of at their behest, right? So when did that happen? That was about a year ago. I want to say like September, October of last year. And we had to claw back quite a bit to get back to where we are at this moment. Okay. Which is a lot. Okay.
So that churn happened right before like the last, you know, when you're measuring your last 12 months churn. So, you know, I mean, what, I mean, there has to be a percentage point. You have to be losing, even if it's not full churn, downgrade revenue from these marketing agencies. Is it truly you have lost not even a dollar of revenue over the past 12 months? Oh, no, no, no. Sorry.
I don't want to make it. From our direct clients, we really don't lose anything. No, just do total. Just do total churn. I'd have to look at the numbers. I don't have it right off the top of my head. It's I mean, I would say from the agency perspective, we're probably losing one or two accounts per month per agency.
So of the 16, probably between 20 to 30, I would say probably SMBs we lose per month. But each one of them, again, are bringing on typically more than we're losing per month. But ignore it from a logo basis, revenue churn, right? So if you lose 30 customers every month at 65 bucks a pop, that's $2,000 a month in churn or about 2% of revenue churn per month.
So there's a little bit difference there too, because some of the ones that churn more are using less tools on our platform. So we have agencies that are using one or two tools. We have agencies that are using six tools, right? That's exactly why I asked revenue churn. Yeah, I mean, I definitely look at the numbers to see exactly what it is.
I mean, isn't that one of those things that like, if you're in the middle of diligence right now, if an investor asks you, Matthew, what's your churn? You say, I don't know. They're going to look at you like you're silly. They're going to say, you're asking me for a million dollars and you don't know what your churn is. There's no way I'm giving you a check.
Yeah, I mean, the churn that we see, again, we can...
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Chapter 5: How has Qebot's customer base grown over the past year?
There's one in, let's see, the... What's it called? South by Southwest is going to be a big one for us because there's a lot of media companies and agencies that go there. But there is, let's see, there's a big media one in like February or March that we'll be at if we get the raise in. And there's a couple in the summer. I can't remember the names. How much are you targeting to raise?
Like a million or what? 1.5. And why is that the right number? Just by our calculations on what we think we can use that money for, the staff that we're going to be bringing on, as well as the advertising campaigns and the conventions and conferences and marketing structure we're going to build over this next year. That's kind of what it looks like we should need to take us for 22 months.
and grow our revenues to what we think could be an average of about 2 million MRR by the end of that time frame. Yeah, or 160 grand. Wait, an MRR or ARR? MRR, that's our goal. You think you can raise 1.5 million and use that to get a $2 million a month in revenue?
From what we're seeing with these new agencies that we've signed, we've signed three new agencies, just three of those five are 1,000 location agencies or 1,000 client agencies that are going live this month or next month. And they're paying $65 per account. What's that again? They're paying $65 per account. Probably average. Again, it's going to depend on what exactly they buy.
One of them is going to buy three tool packages. That should come in at $65 a month. I think the other one is actually going to do a four tool package. And I'm not sure what their structure is going to be set at yet.
I mean, so if you sign up, if you sign up, if you sign up a marketing agency, I mean, this is like, I mean, the reason I'm, I get so skeptical with this kind of stuff, because this just seems like pie in the sky, like projections. I mean, do you have any agencies, a single agency right now with a thousand accounts at 65 or the agency is paying you 65 grand a month?
No, I think the top one that we have right now has 250, I think, uh, clients on our platform right now at $65 per month on average. Yeah. Okay. So that makes up $16,000 a month in revenue right there. Yeah. Yeah. OK. So these three, if you land them all at a thousand accounts each at north of 65 bucks a pop, that's one hundred eighty grand a new MRR. But you've never done that before.
No, we haven't. So that's I mean, these are big accounts that we that if we can continue this kind of trajectory, we think we can we can grow very, very quickly. Interesting. OK. And what what is the growth in the past 12 months? So if you're doing one hundred grand a month today, what are you doing a year ago? A year ago. So after we lost that specific client, we were down to like $50,000.
It hit us pretty hard. Yeah. And we've had to claw back pretty heavily to get back to where we are. All right, man. Let's wrap up with the famous five. Number one, favorite business book? Favorite business book. Let's see. The one by Mark Benioff is pretty good. I enjoyed that one. Behind the Cloud? Yeah. Number two, is there a CEO you're following or studying? Ooh, right off the top of my head.
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