Why This SaaS Founder Chose Detroit To Build $1.25 Million Revenue Company, 13 Jobs Created

Nathan Labenz

In Episode #335, Nathan interviews Nathan Labenz, the founder and CEO of Social Proof, a Detroit-based business that’s bringing online strategy to small businesses in an affordable way. They’ve secured $4 million in investment and brought in $1.25 million in their first year. Listen in to hear how Nathan’s creating targeted ad campaigns with only 1 minute of a client’s time; why a second-string city is a fantastic home for start-ups, and why entrepreneurs shouldn’t be so afraid of corporate America.



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Famous Five:

  • Favorite Book? – The Third Wave
  • What CEO do you follow? — Mark Zuckerberg
  • Favorite online tool? — HipChat
  • Do you get 8 hours of sleep?— Yes
  • If you could let your 20 year old self know one thing, what would it be? —A little bit of patience is not a bad thing. Understand how large organizations work.

Time Stamped Show Notes:

  • 01:15 – Nathan’s introduction
  • 01:49 – Nathan is based in Detroit, where he’s originally from
  • 02:40 – “I don’t think that you can build a tech company in isolation…in Detroit there’s so much dynamism”
  • 03:45 – Nathan is hiring talent from around Detroit, and has connected with the Venture For America program to bring in national talent
  • 05:15 – There is software talent everywhere – “It isn’t an industry any more – it’s a layer”
  • 06:38 – Social Proof helps small-business owners to make the most of online promotion
  • 07:40 – Clients provide a phone number – Social Proof automatically pulls together available online information and testimonials, and creates a targeted ad campaign
  • 08:30 – They make money from a monthly flat fee
  • 08:40 – Their average price point in $50 per month
  • 09:03 – Working with 2400 customers
  • 09:25 – Annual revenue in 2015 was $1.25 million
  • 10:10 – There’s no inside sales team – Social Proof will not contact customers
  • 11:00 – Goal for early 2016 is $120k per month
  • 11:17 – Willing to pay a customer acquisition cost of $100
  • 12:05 – Currently scaling up marketing – and they’re targeting mobile phones heavily
  • 13:20 – Gross churn is about 5% per month
  • 14:30 – Lifetime value for each customer is about $1000 – so why the 1:10 CAC/LTV?
  • 15:08 – Marketing costs are paid from the customer’s total spend – so that $1000 isn’t all profit
  • 16:20 – They’ve raised a little over $4 million
  • 17:12 – The story behind securing investment from a pitch competition
  • 18:34 – Team of 30 people in Detroit – their monthly head-count costs are about $100k
  • 20:00 – Connect with Nathan through email or on Facebook
  • 22:10 – The Famous Five

3 Key Points:

  1. A little patience can be a good thing. Successful startups eventually become a reinvented part of corporate America.
  2. You won’t build a successful startup in isolation. Connect with entrepreneurs around you and become part of your community.
  3. Social marketing is incredibly powerful – if you aren’t using it, find someone who can

Resources Mentioned:

  • Host Gator – The site Nathan uses to buy his domain names and hosting for cheapest price possible.
  • Freshbooks – The site Nathan uses to manage his invoices and accounts.
  • Leadpages  – The drag and drop tool Nathan uses to quickly create his webinar landing pages which convert at 35%+
  • Audible – Nathan uses Audible when he’s driving from Austin to San Antonio (1.5 hour drive) to listen to audio books.