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Aug 26, 2021 · 16m · top-founders

Keap Acquired CustomerHub For $1-2m in 2011, Founders Bought Back in 2018, Now $500k in ARR

Kyle Lovett · 10m spoken Nathan Latka · 4m spoken Frank Bien · 4s spoken Eric Yuan · 4s spoken Vivek Bhaskaran · 2s spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this interview with Nathan Latka, CustomerHub co-founder and CEO Kyle Lovett details how he sold his SaaS business to Keap in 2011, bought it back in 2018, rewrote the entire platform from scratch, and scaled it back to $500k in ARR.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 30.3% of the talking time here. How this is scored →

Nathan as informed peer 4.8 Guest teaching 2.8 Guest disagreement 1.6 Nathan pushing back 3.2
05100:0010:003:26–5:27 · Nathan as informed peer 4/10 CustomerHub's 2009 Origins and Recent Platform Rebuild Nathan inquires about CustomerHub's 2009 origins and the revenue plowed back from consulting into software. Kyle collaboratively walks through the accidental MVP development for Infusionsoft users.5:27–7:32 · Nathan as informed peer 5/10 Current Business Metrics and Financing the Buyback Nathan extracts core current metrics including 560 customers and $43k MRR. Kyle explains raising $750k from angels and friends/family to finance buying back the product from Keap.7:33–10:47 · Nathan as informed peer 6/10 Structuring the Keap Buyback and Calculating Rebuild Costs Nathan probes deeply into the buyback deal structure and challenges whether Keap made substantial profit. Kyle corrects Nathan's assumptions regarding the upfront cash ratio and points out Keap ran the tool at $1.5M ARR for years.10:48–13:47 · Nathan as informed peer 5/10 Team Structure, Upcoming Seed Round, CAC, and Ownership Nathan drills into team size, upcoming $1M seed round at a $10M valuation, and checks unit economics. Kyle clarifies the very low current ad spend and 70% co-founder cap table ownership.13:47–16:11 · Nathan as informed peer 4/10 The Famous Five Rapid-Fire Questions During the Famous Five rapid-fire, Nathan sneaks in a retrospective financial question about the 2011 exit price, which Kyle answers openly before concluding the interview.3:26–5:27 · Guest teaching 3/10 CustomerHub's 2009 Origins and Recent Platform Rebuild Nathan inquires about CustomerHub's 2009 origins and the revenue plowed back from consulting into software. Kyle collaboratively walks through the accidental MVP development for Infusionsoft users.5:27–7:32 · Guest teaching 2/10 Current Business Metrics and Financing the Buyback Nathan extracts core current metrics including 560 customers and $43k MRR. Kyle explains raising $750k from angels and friends/family to finance buying back the product from Keap.7:33–10:47 · Guest teaching 6/10 Structuring the Keap Buyback and Calculating Rebuild Costs Nathan probes deeply into the buyback deal structure and challenges whether Keap made substantial profit. Kyle corrects Nathan's assumptions regarding the upfront cash ratio and points out Keap ran the tool at $1.5M ARR for years.10:48–13:47 · Guest teaching 2/10 Team Structure, Upcoming Seed Round, CAC, and Ownership Nathan drills into team size, upcoming $1M seed round at a $10M valuation, and checks unit economics. Kyle clarifies the very low current ad spend and 70% co-founder cap table ownership.13:47–16:11 · Guest teaching 1/10 The Famous Five Rapid-Fire Questions During the Famous Five rapid-fire, Nathan sneaks in a retrospective financial question about the 2011 exit price, which Kyle answers openly before concluding the interview.3:26–5:27 · Guest disagreement 1/10 CustomerHub's 2009 Origins and Recent Platform Rebuild Nathan inquires about CustomerHub's 2009 origins and the revenue plowed back from consulting into software. Kyle collaboratively walks through the accidental MVP development for Infusionsoft users.5:27–7:32 · Guest disagreement 1/10 Current Business Metrics and Financing the Buyback Nathan extracts core current metrics including 560 customers and $43k MRR. Kyle explains raising $750k from angels and friends/family to finance buying back the product from Keap.7:33–10:47 · Guest disagreement 3/10 Structuring the Keap Buyback and Calculating Rebuild Costs Nathan probes deeply into the buyback deal structure and challenges whether Keap made substantial profit. Kyle corrects Nathan's assumptions regarding the upfront cash ratio and points out Keap ran the tool at $1.5M ARR for years.10:48–13:47 · Guest disagreement 2/10 Team Structure, Upcoming Seed Round, CAC, and Ownership Nathan drills into team size, upcoming $1M seed round at a $10M valuation, and checks unit economics. Kyle clarifies the very low current ad spend and 70% co-founder cap table ownership.13:47–16:11 · Guest disagreement 1/10 The Famous Five Rapid-Fire Questions During the Famous Five rapid-fire, Nathan sneaks in a retrospective financial question about the 2011 exit price, which Kyle answers openly before concluding the interview.3:26–5:27 · Nathan pushing back 2/10 CustomerHub's 2009 Origins and Recent Platform Rebuild Nathan inquires about CustomerHub's 2009 origins and the revenue plowed back from consulting into software. Kyle collaboratively walks through the accidental MVP development for Infusionsoft users.5:27–7:32 · Nathan pushing back 2/10 Current Business Metrics and Financing the Buyback Nathan extracts core current metrics including 560 customers and $43k MRR. Kyle explains raising $750k from angels and friends/family to finance buying back the product from Keap.7:33–10:47 · Nathan pushing back 6/10 Structuring the Keap Buyback and Calculating Rebuild Costs Nathan probes deeply into the buyback deal structure and challenges whether Keap made substantial profit. Kyle corrects Nathan's assumptions regarding the upfront cash ratio and points out Keap ran the tool at $1.5M ARR for years.10:48–13:47 · Nathan pushing back 4/10 Team Structure, Upcoming Seed Round, CAC, and Ownership Nathan drills into team size, upcoming $1M seed round at a $10M valuation, and checks unit economics. Kyle clarifies the very low current ad spend and 70% co-founder cap table ownership.13:47–16:11 · Nathan pushing back 2/10 The Famous Five Rapid-Fire Questions During the Famous Five rapid-fire, Nathan sneaks in a retrospective financial question about the 2011 exit price, which Kyle answers openly before concluding the interview.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 56.4% · guest 43.6%0:00 · Nathan 56.4% · guest 43.6%3:00 · Nathan 13.1% · guest 86.9%3:00 · Nathan 13.1% · guest 86.9%6:00 · Nathan 26.6% · guest 73.4%6:00 · Nathan 26.6% · guest 73.4%9:00 · Nathan 25.8% · guest 74.2%9:00 · Nathan 25.8% · guest 74.2%12:00 · Nathan 20.9% · guest 79.1%12:00 · Nathan 20.9% · guest 79.1%15:00 · Nathan 43.7% · guest 56.3%15:00 · Nathan 43.7% · guest 56.3%
Sharpest disagreement ▶ 8:20 Correcting the upfront cash percentage

Kyle firmly clarifies that Nathan had the payment terms reversed regarding the 70/30 cash versus installment ratio.

 Hardest push from Nathan ▶ 9:13 Nathan challenges Keap's profit scale

Nathan directly challenges Kyle's claim that Keap made substantial money, arguing that sub-40k MRR does not constitute massive recurring revenue.

 Biggest teaching moment ▶ 9:25 Explaining the multi-year $1.5M ARR era

Kyle educates Nathan on the timeline, explaining that Keap grew the tool to $1.5M in ARR and milked it for five years before putting it on the shelf.

 Nathan holds their own ▶ 8:27 Deducing deal structure ceiling

Nathan immediately calculates and narrows down the maximum upfront cash Keap could have received based on the total capital raised to date.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
CustomerHub's 2009 Origins and Recent Platform Rebuild 4312 Nathan inquires about CustomerHub's 2009 origins and the revenue plowed back from consulting into software. Kyle collaboratively walks through the accidental MVP development for Infusionsoft users.
Current Business Metrics and Financing the Buyback 5212 Nathan extracts core current metrics including 560 customers and $43k MRR. Kyle explains raising $750k from angels and friends/family to finance buying back the product from Keap.
Structuring the Keap Buyback and Calculating Rebuild Costs 6636 Nathan probes deeply into the buyback deal structure and challenges whether Keap made substantial profit. Kyle corrects Nathan's assumptions regarding the upfront cash ratio and points out Keap ran the tool at $1.5M ARR for years.
Team Structure, Upcoming Seed Round, CAC, and Ownership 5224 Nathan drills into team size, upcoming $1M seed round at a $10M valuation, and checks unit economics. Kyle clarifies the very low current ad spend and 70% co-founder cap table ownership.
The Famous Five Rapid-Fire Questions 4112 During the Famous Five rapid-fire, Nathan sneaks in a retrospective financial question about the 2011 exit price, which Kyle answers openly before concluding the interview.

Statements from this episode (14)

Disclosure
CustomerHub is expanding its target market beyond the Keap ecosystem
“We're sort of expanding our market reach to step outside of the key ecosystem, which is where we've predominantly been for the past 10 years.”
Kyle Lovett Aug 26, 2021 ▶ 3:59
Assertion Not checkable as stated
CustomerHub originally took six months to build as a Keap utility
“Oh it was six months. And so, and we actually didn't even know what we were building. To be honest with you, we built a little utility product for keep users to be able to have their customers log in and manage their billing information and make payments for o…”
Kyle Lovett Aug 26, 2021 ▶ 4:47
Assertion Not checkable as stated
CustomerHub currently serves about 560 active customers
“About 560 right now.”
Kyle Lovett Aug 26, 2021 ▶ 5:35
Assertion Not checkable as stated
CustomerHub generated $43,000 in monthly recurring revenue last month
“We were 43 K last month.”
Kyle Lovett Aug 26, 2021 ▶ 5:56
Disclosure
CustomerHub has raised approximately $750,000 in capital to date
“We've raised about 750 K to date.”
Kyle Lovett Aug 26, 2021 ▶ 7:18
Disclosure
Founders bought back CustomerHub with 30% cash upfront and 70% financed
“I think it was about 70, 30... 30% cash up front.”
Kyle Lovett Aug 26, 2021 ▶ 8:15
Assertion Not checkable as stated
Founders paid more to buy back CustomerHub than Keap originally paid
“They bought it for us for cheaper.”
Kyle Lovett Aug 26, 2021 ▶ 8:45
Assertion Not checkable as stated
CustomerHub maintained over $1M ARR for five years under Keap
“It got up to a million and a half in annual recurring revenue while, while Keep had it, so. You know, there was probably a five-year stretch of time where it was doing over a million in ARR under the Keep umbrella.”
Kyle Lovett Aug 26, 2021 ▶ 9:23
Disclosure
CustomerHub's platform rewrite represented up to $1M in sweat equity
“We did a majority of the work ourselves in rewriting software, but, you know, it took us over a year. So when you consider the going rate of software engineering, software design, product managers and such you know, we probably spent Between five hundred thous…”
Kyle Lovett Aug 26, 2021 ▶ 10:15
Disclosure
CustomerHub targets a $10M valuation for its upcoming seed round
“We're shooting for a ten million dollar valuation. So we think with the right growth numbers and stuff, we can get there.”
Kyle Lovett Aug 26, 2021 ▶ 11:14
Assertion Not checkable as stated
CustomerHub maintains a customer churn rate below 2.5%
“Our churn is sub two and a half right now.”
Kyle Lovett Aug 26, 2021 ▶ 11:46
Assertion Not checkable as stated
CustomerHub averages a $50 customer acquisition cost largely via referrals
“So right now we're averaging about 50 bucks a month to acquire a customer. So super cheap. A lot of our customers are referrals.”
Kyle Lovett Aug 26, 2021 ▶ 12:04
Disclosure
The Lovett brothers retain roughly 70% ownership of CustomerHub
“And together we still own about 70% of the company.”
Kyle Lovett Aug 26, 2021 ▶ 13:36
Disclosure
Infusionsoft paid between $1M and $2M for CustomerHub in 2011
“It was over a million bucks in between a 1,000,002 million bucks was what we sold it for.”
Kyle Lovett Aug 26, 2021 ▶ 14:41
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