SaaS: How He Did $30m 2016 Revenue And Will Hit $40m This Year

Irv Shapiro

In Episode #797, Nathan interviews Irv Shapiro. He’s responsible for the overall business strategy and corporate leadership as the CEO of DialogTech. DialogTech provides the industry a leading, actionable, marketing analytics platform for businesses that value inbound sales calls. The company was named an Inc 500 company in servicing close to 5000 businesses worldwide—ranging from emerging companies to the world’s largest enterprises.

Famous Five:

  • Favorite Book? – Purple Cow
  • What CEO do you follow? – Jeff Bezos
  • Favorite online tool? —The Top Inbox
  • How many hours of sleep do you get?— 6.5
  • If you could let your 20-year old self, know one thing, what would it be? – “I should have stayed in architecture school”

Time Stamped Show Notes:

  • 02:04 – Nathan introduces Irv to the show
  • 02:51 – DialogTech is Irv’s third rodeo in the industry
  • 03:10 – Metamor Technologies is a system information business that built large office systems
    • 03:35 – It scaled to 500 people and was sold to Corestaff
    • 03:51 – It was sold in 1997 for $38M
  • 04:11 – After Metamor, Irv started Edventions which was in the early days of the internet when schools were concerned about internet safety and its environment
  • 04:40 – Edventions provided a safe internet environment
    • 04:51 – In 2000, everything crashed and it was sold to Edison Schools
  • 05:17 – DialogTech’s team size is 150
  • 05:20 – Current revenue is at $40M
  • 05:25 – 2016 revenue was $35M
  • 05:30 – DialogTech raised a total of $60M
  • 05:45 – DialogTech did their A round in July of 2007
  • 06:15 – DialogTech helps companies who receive inbound calls to become more effective, efficient and close more sales
  • 06:37 – DialogTech does four things technology-wise:
    • 06:59 – It tells the customer’s behavior on your website
    • 07:04 – The data then can be used by the marketing team
      • 07:33 – An example of this is a life insurance call
    • 08:18 – Tracking is by a unique phone number
    • 09:38 – When a website is visited, a unique phone number is shown
  • 10:14 – DialogTech is a SaaS model, but is in essence a cloud model
  • 10:32 – Charges vary if the calls are in a batch or if it is an unlimited plan
  • 10:37 – Customers pay between $150K a month to over $100K a month
  • 10:55 – DialogTech has almost 5K customers
  • 11:19 – Irv shares a growth tactic they tried that didn’t work
    • 12:36 – They sent burner phones to over 200 marketing executives that have videos on them that will play after opening the phone
    • 12:55 – They’ve spent over $20K for the campaign but they were not able to get a single sale
  • 13:20 – Annual logo churn is around 8-9%
  • 13:35 – Monthly revenue churn on the enterprise side is around .4%
  • 13:47 – DialogTech has around 98% revenue retention
  • 14:59 – 3K of their 5K customers are legacy customers who are at a lower price point
  • 15:09 – Irv believes that they will reach $40M in revenue by end of 2017
  • 15:30 – The volume of calls that DialogTech processes requires a technology that needs funds
  • 15:55 – Gross margin is around 65%
  • 16:38 – CAC depends on segment
  • 16:43 – Gross margin payback is 18-24 months
    • 16:59 – Irv explains how they compute it
  • 17:45 – LTV is 5-7 years for enterprise customers
  • 18:13 – DialogTech has around 40 engineers, 50 in sales overall, 12-15 customer support, and the rest in back end
  • 19:50 – The Famous Five

3 Key Points:

  1. Target goals can be reached with a consistent model and growth tactics in play.
  2. We learn from our mistakes, so don’t be afraid to make them.
  3. Weigh the pros and cons of raising capital; if there is a need, then go for it.

Resources Mentioned:

  • Simplero – The easiest way to launch your own membership course like the big influencers do but at 1/10th the cost.
  • The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
  • GetLatka – Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
  • Klipfolio – Track your business performance across all departments for FREE
  • Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
  • Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
  • Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
  • Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
  • Show Notes provided by Mallard Creatives