MonetizeMore Bounces Back After 10% Revenue Churn at Start of COVID, Grows Customer Base by 15% in One Month

Nathan Latka:

Hello everyone. My guest today is Kean Graham. He’s the founder and creator of a company called a monetizemore.com, which empowers ad monetized publishers. All right Kean, you ready to take us to the top?

Kean Graham:

Absolutely.

Nathan Latka:

Okay. So walk us through this. This is obviously in the ad tech space. Is it a SaaS platform or is it a different monetization strategy?

Kean Graham:

It’s a SaaS plus a service. So, it’s kind of like a combination.

Nathan Latka:

Okay. So, help us really understand that over the past 12 months, if you add up all your revenue, what percent was SaaS versus service?

Kean Graham:

It’s a combined for most publishers; so, it kind of breaks down. We have a starter publishers, which resells a demand source that is like the premium version of AdSense called Ad Exchange. We have pro where we sell at auction technology. And then, we have premium, which is a white glove service. And, this is all intertwined with our reporting platform, PubGuru, that gives them the deep stats to help them dig in and come up with a new ad optimization for their ad inventory.

Nathan Latka:

So again, if you look at all your revenue over the past 12 months, what percent of that revenue would you say was SaaS?

Kean Graham:

With a SaaS combined, that would be about over 95 percent.

Nathan Latka:

Oh, got it. So 95 percent SaaS, with a little bit of service.

Kean Graham:

Yep.

Nathan Latka:

I see. Okay. Describe one of the customers that pays you. Can you name one?

Kean Graham:

Yeah. Like one of them boredpanda.com, Lifehack. We’re a big and growing in the Latam region. So, we have a lot of big Brazilian pubs, for example. And, we typically focus on the premium, versus our competitors; we go for the larger, more sophisticated publishers.

Nathan Latka:

So, boredpanda.com, again, big publisher, art, photography, animals, funny featured, all this stuff, are they a Latam focused company?

Kean Graham:

No, they have traffic from all over the world. They’re big in Europe.

Nathan Latka:

So, walk us through, they sign up with you guys, how do you help them?

Kean Graham:

So, before they were running Google AdSense to monetize their ad inventory, and then we started working with them. We replaced their technology with our auction technology. And, rather than Google just competing for their ad inventory, we created this auction where Google competes against Facebook, Amazon, Index Exchange, all these different bidders. Our technology chooses the highest bidder, and places the advertiser in the ad placement. And, we do that for, a hundred million, sometimes billions of ad impressions; and that creates a large revenue increases, and we take a revenue share of that.

Nathan Latka:

I see. And, is the rev share the five percent to your business that you call service, or the rev share is the SaaS part of the business?

Kean Graham:

It’s the SaaS part of the business.

Nathan Latka:

I see. Okay. Interesting. So just to be clear, MonetizeMore helps publishers like Bored Panda, pit Google against Facebook, against other sort of platforms, in terms of helping them get the best CPC or CPM.

Kean Graham:

Yeah.

Nathan Latka:

Interesting. Okay. And so I guess, give us some context here. What year did you launch the company in?

Kean Graham:

Sorry.

Nathan Latka:

When did you launch the company? What year?

Kean Graham:

2010.

Nathan Latka:

2010. Okay. And then, did you bootstrap or decide to raise?

Kean Graham:

Bootstrap from the beginning.

Nathan Latka:

Bootstrap.

Nathan Latka:

Love that man. Very cool. And, what’s the team size today? How many folks?

Kean Graham:

Over 160.

Nathan Latka:

Okay. 160 people, spread out through the world or what do they look like?

Kean Graham:

Yeah. All over the world. A hundred percent remote.

Nathan Latka:

A hundred percent remote. Interesting. So, I mean, what is that like? Were you remote before COVID, or you just went remote?

Kean Graham:

We were always remote. The division from the beginning, was to go remote. It was me for the first three years. And, the reason I started the business was to live a location and schedule free lifestyle.

Nathan Latka:

That’s a good way to live it. How many engineers are on the team?

Kean Graham:

About 25.

Nathan Latka:

25. So, what do the rest of the folks do? What do the other 120 do?

Kean Graham:

A lot of the others are in ad optimization, kind of like customer success, working directly with them. Account reps, doing ad optimization for them. Helping them with their in-house ad operations teams, to make sure that they get the most out of our technology and ultimately hit their ad revenue goals.

Nathan Latka:

And Kean, do you have any quota carrying sales reps or no,

Kean Graham:

We have sales reps, however it’s based on commissions. There’s no OTE’s.

Nathan Latka:

Got it. So, there is no full-time salary. It’s all based on commission.

Kean Graham:

There’s full-time salary, plus commission.

Nathan Latka:

[inaudible 00:04:46] Okay. So, how many sales reps do you have, where there are commission components?

Kean Graham:

We have five.

Nathan Latka:

Five. Okay. Walk us through that process for a second. How do you make sure that you fill their calendars with hot leads?

Kean Graham:

One of our biggest competitive advantages is our content marketing, and we get over 95 percent of our leads from inbound. So, we have a very active blog. We have a lot of evergreen pillar posts, and the traffic coming in, we’re very active on social media. We’re answering questions on forums. We have an active YouTube channel, and we’re getting constant leads, and we’re hitting new records; actually, recently these.

Speaker 3:

months, in terms of the sellable leads that are coming.

Nathan Latka:

How many?

Kean Graham:

The last month, we were 160; and that’s out of a total amount of leads, of over 500. So, we’re rejecting most of them, because we’re on the premium end. And, we reject for traffic reasons, for policy, traffic quality, all that, we’re very picky.

Nathan Latka:

Ignore the other components, except just traffic volume. How much volume does a blog have to have? Well, first of all, sorry, are you selling to the… Yeah, the blog is who’s paying you, the blog is paying you a percent of the revenue increase that you drive. Is that right?

Kean Graham:

Exactly.

Nathan Latka:

Okay. Not total ad spend, only a percent of what you increase over the baseline.

Kean Graham:

For some, yes. For others, it’s their programmatic revenues, which is their unsold ad inventory, what they don’t sell directly.

Nathan Latka:

I see. Okay. So, of the 500 leads that come in, you only picked 160 to work with. What’s the traffic cut-off, what’s the minimum traffic a site has to have to work with you?

Kean Graham:

So for starter, it’s half a million pageviews per month. For professional, that’s 10 million pageviews per month. And for premium, is 20 million pageviews per month.

Nathan Latka:

Okay. And, I imagine each of those plans, you take a lower and lower percentage of the programmatic revenue.

Kean Graham:

Typically, the baseline is between 15 and 20 percent. In ad tech, things are negotiable; so the larger track of volume makes it more negotiable.

Nathan Latka:

Yeah. So, we had Bill Wise on with Mediaocean. And, one of the things he told me is, “He feels like he’s got a massive advantage, because of the amount of volume he works with.” He can really charge a low, low, low percentage, because of volume. And, there’s a lot of people that are bringing these sorts of teams in-house to do ads, because of the ad tax, where there’s platforms like you, that sit in the middle. Now to be fair, I’ve heard of other founders, where they’re charging way more than 15 to 20 percent, sitting in the middle; so, I would say that you’re pretty competitive there. But, how do you think about that?

Kean Graham:

Yeah, for sure. Some really push on the revenue share side. Negotiation is really important in our industry. However, we compete with quality. I’ve spoken about our auction technology, our reporting platform. We have other tools that are not offered by our competitors. And, that’s really what we bring to the table; is that quality, we’re a product led business. And, we want to compete on quality rather than price.

Nathan Latka:

I think that makes good sense. And so, how many of these publishers… How many of these customers are you working with now, today?

Kean Graham:

Over 300.

Nathan Latka:

300. Wow, okay. Got it. So, just to fill earlier, when you said you had 500 sellable leads come in, and 160 qualified, was that in June or what was the time, they just came in?

Kean Graham:

That was last month? Yeah.

Nathan Latka:

In June. Okay. And so, of the 160 using your sales reps, about how many will you close, convert into new customers?

Kean Graham:

Of those, we had a sell through of 26 percent. So, that would give, yeah, about 40.

Nathan Latka:

Yeah, 40 new customers. That’s great. Okay. Wow. So, you really grew your customer base a ton in June. I mean, you went from 260 to 300 customers.

Kean Graham:

Yeah. Things are really popping. It might be pandemic; and the pie definitely shrunk during the pandemic, however we’ve really hit our stride. We had a big growth mark in Q4, which continued into 2020.

Nathan Latka:

Why did growth shrink? For example, Target have to spend more money to drive clicks to their e-commerce brands, since they can’t rely on foot traffic anymore.

Kean Graham:

There’s aspects of that; but overall, like in programmatic, a lot of them are big brand advertisers that really slash their display advertising funds. And overall, when the ad spend pie shrinks; that means, there’s less money overall, for publishers to earn. So the RPMs, which you call CPM; so the revenue per thousand ad impression, those decreased overall, starting in the middle of March.

Nathan Latka:

I see, okay. And, give me a sense of volume you’re processing. So in June, how much ad spend went through your platform?

Kean Graham:

Overall in June, there was about three million.

Nathan Latka:

About, three million. Okay, great. I mean, how do you get like three million? How do you turn that into 10 million and 30 million? Let’s just say you can’t add any new customers, you can only expand accounts. How do you get a larger portion of the inventory, from these publishers? And, how do you win that inventory over from them using, in selling direct via Google?

Kean Graham:

Yeah. Well typically, what would have happened, especially with the large publisher, is they only want to start a little bit. They want to do a split test, to see if you can outperform what they’re currently running. So, they’ll start you at 10 percent. And then, once you prove that you can make them more money, then they’ll expand you more, and more. So, it’s about winning the split test. Sometimes we’re doing split tests against competitors, so it’s about winning these split tests. It’s about having very efficient technology, so we’re not slowing down the page. It has to be SEO friendly. It’s about having these other upsell to like… For example, another tool that we recently launched, is called Traffic Cop, and it detects and blocks invalid traffic. So, it prevents these publishers from getting banned by, say Google AdSense, and losing all their unpaid ad revenues overnight.

Nathan Latka:

Don’t some of these publishers though, intentionally, use some of these bots themselves to drive more clicks to their sites, specifically so they can monetize more?

Kean Graham:

Yes. Some of it is [inaudible 00:11:16] induced. And, we have to be investigators to make sure we separate the ones who are genuine, versus the ones who are not. And our Traffic Cop tool is part of that. We’ve also come up with other types of violations, that publishers can do on purpose. We call it, ad set up policy violation, and it’s things like hiding ads off the page, refreshing ads very aggressively, things like that. So, we have technology that can now detect it, and provide that information to the publishers. And then, there’s certain things that we see, that we know it’s pub induced. And, we deal with it accordingly because, it can get pretty nasty, and we don’t want to hurt our partnerships with Google, and all of the other ad networks.

Nathan Latka:

So I land in inc.; And they auto play a video in the footer, which I’m never going to scroll down and see it. Does that count as an impression or not?

Kean Graham:

That is an ad impression. We do tend to stay away from the video sticky ads. They’re very intrusive. And, there were kind of more, short-term thinking we’re more of a long-term bootstrap company, that wants to go with less intrusive ads that you have, you continue to grow your traffic, and get return traffic. So, we stick with the less intrusive ads.

Nathan Latka:

3 million through your platform in June 2020. So, last month across 300 publishers that are using you, if you take again between 15 and 20 percent; 20% of 3 million would be about $600,000 in revenue to the company, in June. Is that accurate?

Kean Graham:

So when I say 3 million, because we accept the revenues on behalf of the publisher, and some we don’t, especially the big ones. So, the three million is an estimation of the ones we don’t, as well. In June, we were close to 400,000. [crosstalk 00:13:06] about 400,000.

Nathan Latka:

So, got it. So on three million going through your platform, whether you recognize it or not, you still made about 400,000 bucks, so that you could reinvest in your engineering, grow your team, support everybody; and keep building new tools, like this Traffic Tool.

Kean Graham:

Yeah. Exactly. We’re pouring in a lot of resources into our engineering team to have the best product in the ad tech industry.

Nathan Latka:

That’s great. Okay. So, as you think about growing the company over the next 12 months, is it going to be more of a strategy of winning more business from current customers, winning more of these A/B tests, right? Or, is it going to be go… You just mentioned record month in June, 40 new customers, is it going to be adding new customers altogether?

Kean Graham:

Yeah. So, that keeps on flowing in. We’re still going to be winning from that, but the big strategy is enterprise. We want to go for the big boy. We’re talking top 1000 ad monetized publishers. Our BHAG, is to have 25 percent market share of the top thousand, ad monetized publishers. And, we’re building solutions that are a better fit for these enterprise publishers, that are very sophisticated, and need to be approached in a different way.

Nathan Latka:

So people are going, “Okay, I wonder if Kean can execute that.” They’re going to think, “Okay, well what is he growing out historically?” So, if you’re doing 300, 400 grand a month today, what were you doing a year ago? Do you remember?

Kean Graham:

A year ago? We were at… For June, it was around 225.

Nathan Latka:

So, you still even have growth even though COVID has just shocked the world.

Kean Graham:

Oh, absolutely. Yeah. We’ve grown, despite COVID. In Q1, we were close to around double, revenue growth. It’s slowed down a bit for the pandemic, but we’re still rolling along, and still have that momentum, from the growth back in Q4.

Nathan Latka:

Besides your SEO strategy, you mentioned your YouTube channel. Are there any other channels you’re using to drive growth? Again, you had 500 leads come, in June, alone.

Kean Graham:

We also have a free Chrome extension called PubGuru Ad Inspector. And, what it allows publishers to do is, they’ll run it on their actual site, that is ad monetize, and it’ll crawl the whole page, find any errors, any warning, any revenue opportunities; and, it’ll make very specific recommendations for their site, to realize those opportunities or fix those errors. There’s actionables of how to fix each one of those. And, some of those are natural upsells to our products. We detect, they’re not running any IVT detection. Then we will upsell Traffic Cop. If they’re not running any auction monetization, which you call a header bidding, then we’ll recommend PubGuru, header bidding. There’s a lot of natural upsells within there, that we’ve also been getting a lot of leads from. And, the audience that’s running PubGuru Ad Inspector, has been growing consistently week-to-week.

Nathan Latka:

So, when you add up all of these sorts of strategies to bring customers in, these great mousetraps. What would you say that your CAC is to acquire a new customer, where you’re making a grand, a month from them?

Kean Graham:

Yeah. So, because we’re mostly inbound; when we calculate CAC, we include all our fixed costs, of the whole marketing department; and, that comes to $150.

Nathan Latka:

That’s great. Yeah, so many CEOs don’t do that, because they want the CAC to look the best. But, what I say is, listen, do like fully weighted CAC, take all your expenses last month and divide by all your new customers; that’s your worst case CAC. And then, you can do a version that’s only your marketing team; and then, you can also do a version that’s only your paid spend, for example. But, you choose to use just all marketing, salaries, expenses, support of a Chrome extension, all marketing.

Kean Graham:

Yeah. We even cut up Slack, all that. It’s definitely worst case.

Nathan Latka:

Well, 150 bucks to get a new customer, and you’re making on average, across 300 customers about, what is that, 1,350, 1400 bucks per month, on average per customer, the math works.

Kean Graham:

Yeah. We’re quite profitable. And, we have a conservative growth, we’re doing the long play. But, we’re turning it up, as we more aggressively go for, especially these large publishers.

Nathan Latka:

So, how do you think about, this is a personal… Do you own the majority of company? Are you a hundred percent owner?

Kean Graham:

A hundred percent base equity.

Nathan Latka:

What does that mean?

Kean Graham:

We have stock options for our executives.

Nathan Latka:

Oh, got it. Fair enough. Okay, so you have a hundred percent base, yeah, that’s what I meant. So, you could really choose to do whatever you want to do with company. So, you could launch a plan where profits are distributed out as dividends. You can just let profits pile up in the bank account. You could pay profits out to the executive. I mean, how do you choose to handle profits as a bootstrap founder, with full control?

Kean Graham:

Yeah. So right now, we’re keeping it within the company. There’s a lot of reinvestment. One of the ways that we re reinvest our profits is, we buy content websites that are ad monetized, apply our technology; and then we increase the ad revenues immediately, and we get the full increase rather than a percentage of the increase. And, we have a growth hacking team that also increases the traffic; so that’s been a really nice return. In terms of dividends, I’ve never taken dividends for myself. I live pretty frugally and happily, as a kind of nomad entrepreneur, that travels around the world.

Nathan Latka:

That’s why you see the Christmas lights hung above your window, behind you with sort of homemade curtains, right?

Kean Graham:

Yeah, exactly. Yeah, I’m from a small town; so I’m happy with the simple life

Nathan Latka:

I love that. And on 400,000 bucks, and the top line revenue each month; I mean, how much were you taking to the bottom line, would you say, before you go spend money on acquisitions?

Kean Graham:

So yeah, we’re not going to disclose the bottom line stuff. But yeah, we’ve been profitable every year; every one of our 10 years. And, I can say that this year, we’re on track to be the most profitable we’ve ever been.

Nathan Latka:

Congrats. That’s great. Last question. Before we wrap up, what’s churn look like? And, I imagine you probably measure churn by, if someone decreases the amount of spend through you, it’s obviously revenue churn. If they leave you completely, it’s full churn. So, how would you measure churn?

Kean Graham:

Yeah, so we have revenue churn and customer churn. Revenue churn, we measure that as, the publisher goes down to zero for 60 days, and that is 2.25 percent, per month; so far this year. But keep in mind, we had a big one in March. We had 10 percent churn in March. So, that one hurt, that increased it. Usually it’s close to the one percent. Our customer churn is 1.2% per month, so far this year.

Nathan Latka:

Got it. Yeah. So you’ve got about 20 percent churn, basically on a logo and revenue basis, annually.

Kean Graham:

Yeah.

Nathan Latka:

Something like that. Yeah. Interesting. That’s great. Very cool. Let’s wrap up here, Kean with the famous five. Number one, favorite business book.

Kean Graham:

Never Split the Difference.

Nathan Latka:

Number two, is there a CEO you’re following or studying?

Kean Graham:

Russell Brunson, another bootstrapper.

Nathan Latka:

I love that guy, and you’re great too. I love… There’s this flock of entrepreneurs, like no one really knows about. I’m doing my best to try and get you guys out in the public more, so people can realize there’s another way to do it. You don’t have to be like VC. You don’t have to chase a billion dollar valuation. All right. Number three, what’s your favorite online tool for building your company?

Kean Graham:

Google Drive. We heavily use it, all the different tools, and they apply a lot of automation.

Nathan Latka:

Number four. How many hours of sleep are you getting every night?

Kean Graham:

Around eight hours.

Nathan Latka:

And situation, married, single kids?

Kean Graham:

Newly single.

Nathan Latka:

There you go, guys. Listen up, newly single. And Kean, any kids running around or no?

Kean Graham:

Nope.

Nathan Latka:

And, how old are you?

Kean Graham:

I’m 34.

Nathan Latka:

34. Last question. What do you wish you knew when you were 20?

Kean Graham:

To hire my CTO, about two years earlier than I did.

Nathan Latka:

Guys, there you have it, MonetizeMore serving 300 publishers right now, as their customers; as publishers put 3000,000 in terms of ad spend earned through their platform; of which Kean made $400,000 in top line revenue, just in June from that. So, the company is doing north of quarter, 4, $5 million run rate, in terms of revenues. All bootstrap, which you love and highly profitable. He uses profits to go buy their content websites, and run them internally, with his growth hacking team. They’ve got a total team of about 160, 25 engineers that they look to continue to scale a healthy economics, 150 bucks to get a new customer; payback obviously less than a month there. Kean, congrats on the growth. Thanks for taking us to the top.

Kean Graham:

Thank you so much.

Nathan Latka:

One more thing before you go, we have a brand new show, every Thursday at 1:00 PM Central. It’s called SharkTank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers. They try and do a deal live. And, the founder shares backend dashboards, their expenses, their revenue, ARPU, CAC, LTV; you name it, they share it. And, the buyers try and make a deal live. It is fun to watch every Thursday, 1:00 PM Central. Additionally, remember these recorded founder interviews go live. We release them here, on YouTube, every day at 2:00 PM Central. To make sure you don’t miss any of that, make sure you click the subscribe button below, here on YouTube. The big red button and then click the little bell notification, to make sure you get notifications, when we do go live. I wouldn’t want you to miss breaking news in the SaaS world; whether it’s an acquisition, a big fundraise, a big sale, a big profitability statement or something else. I don’t want you to miss it.

Nathan Latka:

Additionally, if you want to take this conversation deeper and further, we have by far, the largest private Slack community, for B2B SaaS founders. You want to get in there. We’ve probably talked about your tool, if you’re running a company; or your firm, if you’re investing. You can go in there, and quickly search, and see what people are saying. Sign up for that at nathanlatka.com/Slack. In the meantime, I’m hanging out with you, here on YouTube. I’ll be in the comments for the next 30 minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad, at how aggressive I am on these shows; but I do it, so that we can all learn. We have to counter those people, we got to push them away. Click the thumbs up below, to counter them; and know that I appreciate your guy’s support. All right, I’ll be in the comments. See you.