$3m+ in Revenue, How to make a SaaS and Professional Service Model Work Together


In Episode #835, Nathan interviews Scott East. He founded his company MSIGHTS in 2004 to help marketers make better decisions with better data and reporting. His experience includes global ads and digital agencies of Fortune 20 telecom and AOL prior to founding MSIGHTS. He understands how to engage marketers as he has 20+ years in this area. His new book, The Cuttlefish Marketer: The Five Essential Traits of a Modern Marketer, focuses on helping marketers transform themselves into modern marketing leaders.

Famous Five:

  • Favorite Book? – E-Myth
  • What CEO do you follow? – Jason Fried
  • Favorite online tool? — LinkedIn Sales Navigator
  • How many hours of sleep do you get?— 7
  • If you could let your 20-year old self, know one thing, what would it be? – Scott wished he had focus more on “pull goals”, not “push goals”

Time Stamped Show Notes:

  • 01:54 – Nathan introduces Scott to the show
  • 02:38 – Scott wrote a book because it was on his bucket list
    • 03:00 – Scott’s publisher is Advantage Media
    • 03:46 – The book is now available on Amazon and Apple
    • 04:06 – It has sold around a couple of hundreds of copies
    • 04:20 – Scott worked on his book for 10 solid months
  • 05:05 – MSIGHTS provides data management and performance reporting services for large marketing departments
  • 05:21 – MSIGHTS’ primary model is a SaaS model and they charge based on the data they integrate
  • 05:38 – “We giveaway licenses for free in our platform”
  • 05:58 – Scott wants as many enterprise companies as possible to use their reporting for decision making
  • 06:18 – MSIGHTS charges based on the volume that they’re integrating onto the system (in bulk)
  • 07:00 – MSIGHTS’ professional service is a recurring service
  • 07:40 – Scott shares why the SaaS model is different from a professional service, even if both services are recurring
  • 08:24 – ACV is $250K per client
  • 08:47 – MSIGHTS has 35 people
  • 09:20 – Scott shares how the data they receive needs to be analyzed
    • 10:15 – MSIGHTS integrated the data and added the translation key, but it took the founders more than an hour to decide if they would take it
  • 11:03 – Scott self-funded the company
  • 11:33 – MSIGHTS was officially launched in 2003
  • 12:00 – First year revenue is around $150K
  • 12:10 – 2013 revenue
  • 12:31 – 2016 revenue was $3.21M
  • 13:04 – Churn is less than 5% annually
  • 13:30 – Some of their clients have been with MSIGHTS for five years plus
  • 13:50 – MSIGHTS is still bootstrapped
  • 14:15 – Blended gross margins is a low 85%, platform side is 80% plus and 70% on professional service
  • 15:05 – Last month total revenue is around $264K
  • 15:30 – CAC
  • 15:54 – Payback period is around a month
  • 17:53 – The Famous Five

3 Key Points:

  1. If you want something and it’s within your reach, GO for it!
  2. Having a great product could mean you’re bootstrapped for years, even a decade.
  3. Professional services can be a recurring service.

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