Surefire Local is a premier online marketing software service provider for local businesses. They help get local SMBs as much as 85% more customers through online reviews, local search and google rankings.
Nathan Latka sat down with Surefire Local CEO Christ Marentis to get the inside scoop about the trajectory and success of the company. Key metrics include:
- Average MRR per customer of $1100
- Close to $30m run rate this year
- One dollar of equity raised for every three dollars of ARR
Nathan Latka (00:35):
Hey folks. My guest today is Chris Marentis. He’s a technology entrepreneur and business leader on a mission to help small businesses leverage the power of digital transformation. He’s the CEO of Surefire Local and has focused the company’s efforts to build powerful marketing solutions that give SMBs cost effective, easy to use tools, usually only available to the big guys. He’s having a lot of success doing it. Chris, ready to take us to the top?
Surefire Local CEO Chris Marentis (00:56):
Yes, let’s go.
Nathan Latka (00:57):
All right. Now, pre-show you were just telling me how capital efficient you are. I don’t know what you can share or not, but you’ve got to brag a little. I’m giving you permission to brag a little bit. Can you share a little bit about how capital efficient you’ve been?
Surefire Local CEO Chris Marentis (01:08):
Well, we’ve been doing this for 10 years and we also, our company had to make a transition for managed services now being a software company. But one of the things having been around the block in a little older entrepreneurship, shall I say, is making sure that you retain control of your company. And you talk about this Nathan all the time in your blogs, in your interviews, everything you do. But two things happen when you raise a lot of money early.
Surefire Local CEO Chris Marentis (01:41):
One is you lose real control, operational control of your business. But two, you really own a small fraction of that business. And in all likelihood, you’re going to continue to lose more of that business because the whole game in the VC world is, let’s get in and fund this company, get them to either fail fast, spend a lot of money, or if we see them spending money and getting some traction, we’ll put more money in. Well, what does that do? That continues to dilute you. So they are not on the same operational plane as an entrepreneur. And that’s not to say VC money isn’t good, or they’re not good people, or they’re not… I don’t want to cast a dispersion over them, but they’re not in the same objectives that you do to an entrepreneur. I started this to serve a market and by serving that market, to make money for my family and myself and my investors.
Nathan Latka (02:51):
And what year was that? When did you start, by the way?
Surefire Local CEO Chris Marentis (02:54):
Nathan Latka (02:56):
And so are you able to share how you structured your capital stack today? Are you able to share the equity raise versus the -.
Surefire Local CEO Chris Marentis (03:01):
Yeah. Yeah, we have about six million in cash that we raised. I acquired three companies along the way, so for all stocks, so a capital stack of around 10 million in preferred. But then when we felt like we got the product to a point that it was the best product in the space and we are right now, we’ve accelerated that, then I knew it was time to make the bet on the go to market. And that’s when I started, we’re an Austin based company now, started the Austin office with Mike Pierce and the crew down there and really took that debt to really accelerate the go-to market and get that go-to market motion right. And that’s when debt really works well. I mean, it’s okay to use friends and family money to get the product right and start to feel like you got that product market fit. That is a great, non-dilutive way to really accelerate growth and get to break even.
Nathan Latka (04:11):
So how much debt did you raise?
Surefire Local CEO Chris Marentis (04:15):
Total right now, about 10 million.
Nathan Latka (04:17):
So more than or almost equal if you include the dollars for the acquisitions, but about equal.
Surefire Local CEO Chris Marentis (04:22):
It’s almost equal. And like I was telling you earlier, we’ll exit this year about 30 million ARR growing ARR at about 70%. And we’ll be at break even. We’re actually just about there. Any day now we’ll get there again. We were at break even before that in the earlier days. That’s why we were very capital efficient. And then we started spending money to build the whole go to market and customer success organization and be able to scale that and use debt to do that. And now we’re getting back to that break even. We’ll be able to continue to grow above 50% without any other new capital. And I’m able to make, with the board, good decisions on where we want to go from here.
Nathan Latka (05:11):
Oh, what’s going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I’ve done manually. Saves you a lot of time. Well, we’ve done this. We’ve built into the beautiful interface inside of Founderpath. Check this out. I’ll show you how you can access this in a second. But you log in, you connect your Stripe account, you see your valuation real time, you can see what it changed over the past 88 days and even set goals for valuation this year. Now the secret to valuation is there’s many different ways to value a SaaS business. So the reason you’re going to see three or four different valuations inside of your founder Path dashboard, this is all free by the way, is because depending on who’s doing the buying of your SaaS company, you’re going to get a different valuation.A VC’s going to pay a different valuation. Private equity firm is different. If you’re going to do a minority sale, that’s different. And if you sell the whole business, that’s a different valuation. You can see all those when I hover over here. So the teal is what a VC would pay, yellow is what private equity, and red is if you sold the whole thing outright. Now, what’s cool about this is not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So Traction, 1.2 million Seed Round 3.7 raised, they sold 22% of their business. Go in here and filter by the event. Maybe you only want to see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple.
Nathan Latka (06:46):
Maybe you’re going out right now and you’re raising your Seed Round. Well go in here and look at all this recent Seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There’s never been a larger data set of SaaS valuations than what you can get now inside of Founderpath. And we’re thrilled to bring it to you. All right, we’re going to go back to the YouTube video here in a second. But if you want to check this tool out, if you want to jump in and sign up, you can check it out for free to get your valuation at this link, this link founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform, I hope to see you there. All right, let’s jump back into the interview.
Nathan Latka (07:36):
Chris, a couple things on the debt side, because you’ve done a really good job getting fantastic terms. And full disclosure guys, we missed Chris. We were too small when he was raising 10 million in debt, so we unfortunately did not get the privilege of doing his deal. Maybe in the future though, we’ll see, but Chris, for-
Surefire Local CEO Chris Marentis (07:51):
I would do 1-800-Nathan for debt at this point as soon as you can.
Nathan Latka (07:56):
Well look, it’s a big space. We’re happy and we want to chat about all the options. So I believe you’re working with Bridge Bank and Recurring Capital Partners and they’ve been great partners for you. Help other entrepreneurs understand what are some of the things that a founder should negotiate for when they’re raising debt from anyone, us, Recurring Capital Partners, Bridge Bank?
Surefire Local CEO Chris Marentis (08:18):
So when you’re super capital efficient and you don’t have a VC sponsor, it’s tricky because the traditional banks like Bridge Bank or Silicon Valley Bank or Signature, some of the other ones that a lot of folks have heard of there, their go to market plan is get a company just raise a bunch of money from a VC, give them a revolver, and they know that VC is going to back up that debt play and they’re not going to ask for personal guarantees. So we’re talking about debt without any personal guarantees, which is important for most entrepreneurs.
Nathan Latka (09:09):
You guys, you shouldn’t be signing any debt deals where you as the founder are signing personal grant. We obviously don’t ask for that at Founderpath, but if anyone asks for that, you should run. There’s too many other good options.
Surefire Local CEO Chris Marentis (09:17):
Exactly. Yeah, yeah, exactly. So the way you could do that is really simulate the VC by doing a deal with Founderpath with, you guys made their recurring revenue. There’s others in the space too, in the venture debt space. If you’ve got a good story and you’re showing traction in growth, you don’t have to be at even break even. But if you’re showing that you’ve got a product market fit and you could grow and you’ve got that, you’re somewhat dialed in, you could go to a venture debt provider and you could get some type of a multiple on your debt. And once you do that, if you start to really show that you’re using that debt wisely and you’re able to continue to expand, then all of a sudden you make the other banks like the Bridge Banks and others feel comfortable that you’re not that kind of a risk anymore.
Nathan Latka (10:24):
So you did recurring Capital Partners first and prove that it worked and then brought in Bridge.
Surefire Local CEO Chris Marentis (10:30):
Nathan Latka (10:31):
Surefire Local CEO Chris Marentis (10:33):
We happen to use TIMIA first and then we settled TIMIA and brought in recurring for various reasons, but we were able to get Bridge Bank in once we got the TIMIA in place for three million at that time.
Nathan Latka (10:49):
Yeah, there’s all kinds of flavors of terms associated with the TIMIA loan or Recurring Capital Partners and the thousands of other, not thousands, dozens of other players out there. Let me just fire a couple at you and see how you respond. Chris, I’m going to act like I’m Bridge Bank, I’m offering you $10 million. Do you want a 12 month payback period or a 48 month payback period? And how should founders think about payback periods?
Surefire Local CEO Chris Marentis (11:13):
I would move that payback period as far back as you can. Because it’s sort of like a balloon loan for a home. All of a sudden you’re just going to owe a bunch of money and really as an entrepreneur, you just want predictability for as long as you could get it. So yeah, hope that answers that question.
Nathan Latka (11:34):
Okay, give you another one. I have another hypothetical that I know my audience is thinking about. Hey Chris, I want to give you $2 million loan against your B2B SaaS revenues. I can either give you a flat 16% interest rate with a four year payback, or if you want to lower interest rate, I can give you a 10% interest rate, but with 2% warrants, which deal would you take?
Surefire Local CEO Chris Marentis (11:55):
For me personally, I would rather not give up the warrants. I mean, the whole purpose of debt is that you try to limit, but it depends on how big the warrants are and what kind of a partner. I wouldn’t say it’s off the table at all. And if it’s a reasonable warrant conversion and even you could game it where you could put incentives in place for you to, because usually this is a bridge to ideally a private equity round, not another venture round, but a private equity round. And you should be thinking about how your business is going to mature over the next couple years, what that ideal place is going to be. And you could game optimizing the cost of that loan to where you think that’s going to be.
Nathan Latka (12:59):
Yep. Let me give you another one. This one’s a little bit trickier, but I know you’ve seen all this, so you’re the guy to answer. Hey Chris, I’m going to give you a $2 million loan we can either give you a 15% sort of flat rate and no cash covenant, no 1% draw fee, no 20K legal bill off the start, or we can give you 12% capital, it’s a cheaper interest rate, but we require you keep a million of the two million in the bank at all times, you’re responsible for our legal fees at the start, and there’s other backfilled terms. How do you think about those two things?
Surefire Local CEO Chris Marentis (13:35):
Yeah, I’d rather like, look, when you’re doing venture debt, it’s going to be expensive. And if you’re talking about it, when you do that as an entrepreneur, you’ve got to be of the belief that the value creation you’re going to be able to do, because again, the thesis here is that you’re using that debt to really accelerate sale. You’re not using it for product development, all those, maybe a little bit whatever, but really it’s to accelerate sales. And I could tell you my personal experience is, when I did that debt deal two years ago, we were hanging around 10, 11 million ARR had a great product.
Surefire Local CEO Chris Marentis (14:34):
I can’t tell you how many people Nathan, were telling me, “You’re a crazy, I can’t believe you’re paying that much for debt.” Well, I quadrupled the valuation of my company for my investors in me. So is it expensive? That’s why the key decision is that with that money, you are going to be able to really drive value and you’re super competent of that. And whether you get two points here or two points there is not going to make or break. I’d rather have less cash going out the door so you’re able to create more value.
Nathan Latka (15:23):
My counter would’ve been, no, the debt might be 19% interest, but how much the equity would’ve been worth if I raise and then quadruple evaluation? It would’ve been way more expensive there.
Surefire Local CEO Chris Marentis (15:35):
Yeah, exactly. Exactly.
Nathan Latka (15:38):
Yeah. I guess the last question on this, a lot of founders, they don’t have the confidence to know what they would do with a million to drive the growth. How did you build your of hypothesis in your thesis around where you’re going to spend the money to have predictable growth?
Surefire Local CEO Chris Marentis (15:57):
I always had in my mind general phases that my company had to go through as we made this transition. The first six years was through managed services, use as much as you can customer dollars to build the product and test the product and get the product market fit. Then once you feel like you have the product, then the next phase is, I want to get enough new money in so then that’s why stairstep your debt ladder to get more debt as you prove it. As your ARR goes up, you could get more debt so you don’t have to do it all at once. So I said, let’s show that we could get super high growth. So that’s when I got the team in Austin and the leadership, Mike Pierce and others. And honestly, it was magical, up and to the right.
Nathan Latka (17:19):
How? Was it with ad spend dollars or partnership channels, was it referral fees? What was the channel?
Surefire Local CEO Chris Marentis (17:25):
Well, and this is probably a whole nother conversation that perhaps we could do at your conference, but it was really around changing go to market from an inbound. I was thinking and had a predictable revenue type model where it’s SDR, inbound, whatever. And when I met Mike, he was a CRO at Digital Pharmacist sold for 12 and a half times to K1. He was at a Main Street Hub, ran 200 person sales organization, Yodle, through all the rest of it. He really knew this. It’s a very transactional model and it’s outbound primarily, maybe 30% inbound. Once we made that change, actually, he said, “Chris, hire me and give me six people in Austin and I’m going to show you what I can do.” We quadrupled monthly bookings in four months.
Nathan Latka (18:31):
That’s amazing. So he transitioned to outbound?
Surefire Local CEO Chris Marentis (18:33):
So he transitioned to outbound transactional model and it’s super sophisticated and a ton of things to unpack because you got to do it to make it work. And there’s a lot to unpack on that. But-
Nathan Latka (18:47):
Chris, real quick on that note, before I forget, sorry. And then I’ll let you continue. I can’t wait for your keynote note at Founder500 September 1st in Austin, Texas. If your guy in Austin is available, I would love for him to teach a private VIP session on just outbound. It sounds like he’s got some interesting things there. Is he around?
Surefire Local CEO Chris Marentis (19:06):
Nathan Latka (19:07):
Surefire Local CEO Chris Marentis (19:07):
Yeah, happy to do it. Yeah, great guy. He’ll love you. Yeah, and so then once I got back going, there was this holy shit moment because like I said, we quadrupled monthly sales, but we didn’t change our onboarding motion or customer success motion at all. So then we brought in ahead of customer success who work with Mike at Main Street Hub, but was at GoDaddy running all VIP accounts. And then we changed all the motion around the onboarding to be consistent. Because really one of the big changes in sale, and you could see it in customer’s interaction on our platform, was we went from talking about the mysteries of marketing and lead gen in today’s world, to showing them a demo, just doing a demo, saying here’s how you’re going to use the platform without even changing the backend motion. All of a sudden, we saw interaction with all of our new cohorts in the platform going up by multiple degrees –
Nathan Latka (20:09):
Historical cohorts even, so expansion.
Surefire Local CEO Chris Marentis (20:12):
Exactly. So then we spent the last year basically, we invested like 300K in a whole bunch of sophisticated software. Right now I could say that we are elite in customer support and in knowing… Well, it is a whole nother thing to unpack around that, but super, super cool about where we’re at and that’s now enabling this next phase of focusing on upsell and net retention revenue. And-
Nathan Latka (20:47):
What is that today, by the way? Are you above 100%?
Surefire Local CEO Chris Marentis (20:52):
No, we’re not above 100%. We’re just below and that’s the gap we’re-.
Nathan Latka (20:55):
It’s hard in this space. At your ARPU, it’s hard.
Surefire Local CEO Chris Marentis (20:57):
It’s super hard.
Nathan Latka (20:59):
Yeah, what’s your average price point?
Surefire Local CEO Chris Marentis (21:02):
Well, we have a pretty big one, it’s 1100 a month.
Nathan Latka (21:07):
But I would say that’s still on the lower end of mid-market. I mean, you’re moving up market, but I would say it’s lower end mid-market still.
Surefire Local CEO Chris Marentis (21:14):
Yeah, yeah. But so now getting part of net retention is really having a super clear vision of who your customers are, where they are in their adoption cycle, and being able to serve the right new ideas at the right time, and now we’re finally there to do that. So I’m really excited about the back half of this year for our company.
Nathan Latka (21:41):
Yeah, no, I’m pumped for you guys. We didn’t chat a ton about the product, so let’s just give a call. We learned a ton though so far. Just quickly, what is the product doing, in case any SMBs are listening that can really use you guys?
Surefire Local CEO Chris Marentis (21:54):
What we do is we’re an all in one platform. All the different channels and tools that you use to communicate with your customers and get new customers are all in one place. So no more silos, data silos. And really what we’ve become is a big data lake. And that data becomes super powerful to giving them insights into how to be more efficient and how to be more effective. So all the SEO, all the paid marketing tools and things like chat and a gallery to house all your media and push it around easily and text messaging all in one place on your mobile phone if you’re on the go and on a desktop. And it just makes it super easy for you to be the most effective person marketing in your local area. And just to be clear, we’re focused on customers that then generate their new business within geographies, like zip codes. So professional services, head companies, white collar, blue collar.
Nathan Latka (23:00):
This is a painter in a small town in Georgia that can only sign up people within 50 miles.
Surefire Local CEO Chris Marentis (23:07):
Nathan Latka (23:08):
Yeah, I love that. All right, let’s wrap up with a famous five. Number one, favorite business book?
Surefire Local CEO Chris Marentis (23:14):
My favorite business book, I’m spacing on the name. It was about coaching the-
Nathan Latka (23:25):
Surefire Local CEO Chris Marentis (23:26):
Nathan Latka (23:26):
What was the color? Coaching. Oh, the book on Bill Campbell?
Surefire Local CEO Chris Marentis (23:32):
Yes, yes. That’s it.
Nathan Latka (23:32):
I know it.
Surefire Local CEO Chris Marentis (23:32):
Yeah, yeah, yeah. Bill Campbell.
Nathan Latka (23:37):
I know what you’re talking about. It’s like the Silicon Valley coach or something like that, I forget.
Surefire Local CEO Chris Marentis (23:42):
Yeah, yeah, yeah. It was really, really great. And it really helped me as I think about my leadership team and how to interact.
Nathan Latka (23:49):
Number two, is there a CEO you’re following or studying?
Surefire Local CEO Chris Marentis (23:55):
I love Elon Musk. I know very binary thing with him, but I think that he’s super transparent and I think he’s super visionary and he’s got really good people around him to help clean up the mess. And he knows enough about himself to do that.
Nathan Latka (24:17):
Yeah, which is big. Yeah. Number three, what’s your favorite online tool for building Surefire?
Surefire Local CEO Chris Marentis (24:24):
Wow, that evolves over time. Right now my key focus is on ChargeBee. We spent the last eight months wrestling that bear to the ground, but that combined with ServiceDesk and Involve.ai and a couple of other tools gives us super micro visibility to our customers. That is very powerful.
Nathan Latka (25:01):
Number four, how many hours of sleep are you getting every night?
Surefire Local CEO Chris Marentis (25:05):
I do pretty well with that, man. I got one of those Sleep Number beds where it gives you your number. When I still am in town anyway.
Nathan Latka (25:13):
Surefire Local CEO Chris Marentis (25:15):
And I’m at least six hours. I’m at least six hours.
Nathan Latka (25:17):
That’s awesome. And Chris’s situation, married, single, kids?
Surefire Local CEO Chris Marentis (25:22):
Married. My daughter now took a job selling for Wiz in New York, the hot Israeli. She was at Okta before that. She’s killing it doing sales in SaaS.
Nathan Latka (25:35):
So one kiddo?
Surefire Local CEO Chris Marentis (25:38):
Yeah, all it takes .
Nathan Latka (25:39):
Chris, how old are you?
Surefire Local CEO Chris Marentis (25:42):
Oh boy. I’ll just say take a guess.
Nathan Latka (25:47):
I’m going to say you’re 40 years young. All right, 40 years young. Last question.
Surefire Local CEO Chris Marentis (25:54):
Thank you I appreciate that.
Nathan Latka (25:54):
Something you wish you knew when you were 20?
Surefire Local CEO Chris Marentis (25:59):
You know something… Wait, something I wish?
Nathan Latka (26:02):
You knew when you were 20.
Surefire Local CEO Chris Marentis (26:07):
To take a long view of your life’s progression and don’t be too impatient, because that’ll prevent you from making short-term decisions that might not be your best interest.
Nathan Latka (26:23):
Surefire Local, hell of a story. He’s capitalized the business with six million of equity, raised another three or ish million to do three M and A deals along the way. Launched in 2010 as a managed services business, now servicing SMBs directly that pay on average $1100 a month. This is the painter at a Georgia small town that needs to sign up a hundred clients a month to do well. All in one solution at Surefire Local, they broke 20 million-ish last year. Now north of close to flirting with 30 million, very capital efficient. Chris used 10 million bucks in debt to drive growth. So only a dollar of equity raise for every three dollars of ARR. Incredibly efficient. Catch them live on stage at Founder500 September 1st. Chris, thanks for taking us to the top.
Surefire Local CEO Chris Marentis (27:03):