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Sep 3, 2020 · 19m · top-founders

Madwire Hits 20k Customers, $120m Revenue, and Profitable Serving SMB's. IPO next?

JB Kellogg · 10m spoken Nathan Latka · 5m spoken Eric Yuan · 4s spoken
0:00 / 0:00

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

Madwire co-founder and CEO JB Kellogg discusses scaling the all-in-one SMB software platform Marketing 360 to a $120 million run rate with 20,000 customers. He breaks down their hybrid SaaS-plus-services model, embedded fintech monetization, cohort retention dynamics, and upcoming IPO plans.

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 36.4% of the talking time here. How this is scored →

Nathan as informed peer 6.2 Guest teaching 3.6 Guest disagreement 2.4 Nathan pushing back 5.0
05100:0010:001:27–4:56 · Nathan as informed peer 5/10 Madwire Background, COVID-19 Impact, and Marketing 360 Latka immediately frames the conversation around COVID impact and draws comparisons between Marketing 360 and HubSpot. Kellogg explains how Madwire differentiates by serving smaller SMBs and integrating managed marketing talent directly into the platform.4:56–8:53 · Nathan as informed peer 7/10 Madwire Team Breakdown, Revenue Metrics, and Profitability Goals Latka performs fast mental calculations comparing Madwire's current $120M run rate and 20k customers against their 2018 interview metrics. Kellogg outlines team headcount and their path to achieving the Rule of 40 through software automation.8:53–11:26 · Nathan as informed peer 7/10 Monetizing Fintech, Payments Processing, and Platform Stickiness Latka scrutinizes Madwire's payment processing economics, challenging how margin is extracted on top of standard interchange fees. Kellogg explains their Stripe partnership and gross vs net revenue recognition model following Shopify's blueprint.11:27–15:42 · Nathan as informed peer 8/10 SMB Churn Dynamics, Payback, and Net Revenue Retention Latka intensely drills Kellogg on SMB churn metrics, refusing to conflate net revenue retention with gross churn. Kellogg explains that first-year cohort expansion offsets high initial logo dropoff, but Latka continues to push until Kellogg acknowledges he lacks aggregate gross churn offhand.15:43–19:12 · Nathan as informed peer 4/10 Capital Efficiency, Valuation Multiples, and IPO Ambitions Latka explores Madwire's capital efficiency and prospective IPO timeline before moving into rapid-fire questions. He pushes Kellogg when the founder offers evasive or generic answers regarding favorite tools and lessons learned.1:27–4:56 · Guest teaching 4/10 Madwire Background, COVID-19 Impact, and Marketing 360 Latka immediately frames the conversation around COVID impact and draws comparisons between Marketing 360 and HubSpot. Kellogg explains how Madwire differentiates by serving smaller SMBs and integrating managed marketing talent directly into the platform.4:56–8:53 · Guest teaching 3/10 Madwire Team Breakdown, Revenue Metrics, and Profitability Goals Latka performs fast mental calculations comparing Madwire's current $120M run rate and 20k customers against their 2018 interview metrics. Kellogg outlines team headcount and their path to achieving the Rule of 40 through software automation.8:53–11:26 · Guest teaching 5/10 Monetizing Fintech, Payments Processing, and Platform Stickiness Latka scrutinizes Madwire's payment processing economics, challenging how margin is extracted on top of standard interchange fees. Kellogg explains their Stripe partnership and gross vs net revenue recognition model following Shopify's blueprint.11:27–15:42 · Guest teaching 4/10 SMB Churn Dynamics, Payback, and Net Revenue Retention Latka intensely drills Kellogg on SMB churn metrics, refusing to conflate net revenue retention with gross churn. Kellogg explains that first-year cohort expansion offsets high initial logo dropoff, but Latka continues to push until Kellogg acknowledges he lacks aggregate gross churn offhand.15:43–19:12 · Guest teaching 2/10 Capital Efficiency, Valuation Multiples, and IPO Ambitions Latka explores Madwire's capital efficiency and prospective IPO timeline before moving into rapid-fire questions. He pushes Kellogg when the founder offers evasive or generic answers regarding favorite tools and lessons learned.1:27–4:56 · Guest disagreement 2/10 Madwire Background, COVID-19 Impact, and Marketing 360 Latka immediately frames the conversation around COVID impact and draws comparisons between Marketing 360 and HubSpot. Kellogg explains how Madwire differentiates by serving smaller SMBs and integrating managed marketing talent directly into the platform.4:56–8:53 · Guest disagreement 1/10 Madwire Team Breakdown, Revenue Metrics, and Profitability Goals Latka performs fast mental calculations comparing Madwire's current $120M run rate and 20k customers against their 2018 interview metrics. Kellogg outlines team headcount and their path to achieving the Rule of 40 through software automation.8:53–11:26 · Guest disagreement 3/10 Monetizing Fintech, Payments Processing, and Platform Stickiness Latka scrutinizes Madwire's payment processing economics, challenging how margin is extracted on top of standard interchange fees. Kellogg explains their Stripe partnership and gross vs net revenue recognition model following Shopify's blueprint.11:27–15:42 · Guest disagreement 4/10 SMB Churn Dynamics, Payback, and Net Revenue Retention Latka intensely drills Kellogg on SMB churn metrics, refusing to conflate net revenue retention with gross churn. Kellogg explains that first-year cohort expansion offsets high initial logo dropoff, but Latka continues to push until Kellogg acknowledges he lacks aggregate gross churn offhand.15:43–19:12 · Guest disagreement 2/10 Capital Efficiency, Valuation Multiples, and IPO Ambitions Latka explores Madwire's capital efficiency and prospective IPO timeline before moving into rapid-fire questions. He pushes Kellogg when the founder offers evasive or generic answers regarding favorite tools and lessons learned.1:27–4:56 · Nathan pushing back 3/10 Madwire Background, COVID-19 Impact, and Marketing 360 Latka immediately frames the conversation around COVID impact and draws comparisons between Marketing 360 and HubSpot. Kellogg explains how Madwire differentiates by serving smaller SMBs and integrating managed marketing talent directly into the platform.4:56–8:53 · Nathan pushing back 4/10 Madwire Team Breakdown, Revenue Metrics, and Profitability Goals Latka performs fast mental calculations comparing Madwire's current $120M run rate and 20k customers against their 2018 interview metrics. Kellogg outlines team headcount and their path to achieving the Rule of 40 through software automation.8:53–11:26 · Nathan pushing back 6/10 Monetizing Fintech, Payments Processing, and Platform Stickiness Latka scrutinizes Madwire's payment processing economics, challenging how margin is extracted on top of standard interchange fees. Kellogg explains their Stripe partnership and gross vs net revenue recognition model following Shopify's blueprint.11:27–15:42 · Nathan pushing back 8/10 SMB Churn Dynamics, Payback, and Net Revenue Retention Latka intensely drills Kellogg on SMB churn metrics, refusing to conflate net revenue retention with gross churn. Kellogg explains that first-year cohort expansion offsets high initial logo dropoff, but Latka continues to push until Kellogg acknowledges he lacks aggregate gross churn offhand.15:43–19:12 · Nathan pushing back 4/10 Capital Efficiency, Valuation Multiples, and IPO Ambitions Latka explores Madwire's capital efficiency and prospective IPO timeline before moving into rapid-fire questions. He pushes Kellogg when the founder offers evasive or generic answers regarding favorite tools and lessons learned.

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

0:00 · Nathan 63.2% · guest 36.8%0:00 · Nathan 63.2% · guest 36.8%3:00 · Nathan 24.8% · guest 75.2%3:00 · Nathan 24.8% · guest 75.2%6:00 · Nathan 16.7% · guest 83.3%6:00 · Nathan 16.7% · guest 83.3%9:00 · Nathan 38.5% · guest 61.5%9:00 · Nathan 38.5% · guest 61.5%12:00 · Nathan 30.4% · guest 69.6%12:00 · Nathan 30.4% · guest 69.6%15:00 · Nathan 37.6% · guest 62.4%15:00 · Nathan 37.6% · guest 62.4%18:00 · Nathan 53.5% · guest 46.5%18:00 · Nathan 53.5% · guest 46.5%
Sharpest disagreement ▶ 12:11 Kellogg defends high initial SMB churn dynamics

Kellogg pushes back against the premise that high churn is catastrophic, arguing that outperforming general SMB survival rates while expanding remaining accounts makes the unit economics work.

 Hardest push from Nathan ▶ 14:51 Latka refuses positive churn framing

Latka refuses to accept Kellogg's blended net retention answer, explicitly telling him to peel back the onion and isolate gross revenue churn before factoring in expansion.

 Biggest teaching moment ▶ 10:06 Kellogg explains payments gross revenue accounting

Kellogg educates Latka on how SaaS platforms recognize gross payment processing volume and monetize narrow basis points at scale using Stripe, citing Shopify's precedent.

 Nathan holds their own ▶ 13:57 Latka breaks down cohort expansion mathematics

Latka demonstrates deep SaaS financial expertise by deconstructing annualizing monthly logo churn versus cohort expansion thresholds needed for net negative churn.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Madwire Background, COVID-19 Impact, and Marketing 360 5423 Latka immediately frames the conversation around COVID impact and draws comparisons between Marketing 360 and HubSpot. Kellogg explains how Madwire differentiates by serving smaller SMBs and integrating managed marketing talent directly into the platform.
Madwire Team Breakdown, Revenue Metrics, and Profitability Goals 7314 Latka performs fast mental calculations comparing Madwire's current $120M run rate and 20k customers against their 2018 interview metrics. Kellogg outlines team headcount and their path to achieving the Rule of 40 through software automation.
Monetizing Fintech, Payments Processing, and Platform Stickiness 7536 Latka scrutinizes Madwire's payment processing economics, challenging how margin is extracted on top of standard interchange fees. Kellogg explains their Stripe partnership and gross vs net revenue recognition model following Shopify's blueprint.
SMB Churn Dynamics, Payback, and Net Revenue Retention 8448 Latka intensely drills Kellogg on SMB churn metrics, refusing to conflate net revenue retention with gross churn. Kellogg explains that first-year cohort expansion offsets high initial logo dropoff, but Latka continues to push until Kellogg acknowledges he lacks aggregate gross churn offhand.
Capital Efficiency, Valuation Multiples, and IPO Ambitions 4224 Latka explores Madwire's capital efficiency and prospective IPO timeline before moving into rapid-fire questions. He pushes Kellogg when the founder offers evasive or generic answers regarding favorite tools and lessons learned.

Statements from this episode (15)

Assertion Not checkable as stated
Kellogg: About 35% of Madwire's customer accounts are in e-commerce
“About 35% of our accounts are e-commerce.”
JB Kellogg Sep 3, 2020 ▶ 2:37
Disclosure
Madwire provides in-house marketing services rather than using third-party partners
“And then one thing that makes us different than really any company in the SaaS industry is we also have the talent component. So if you want to build essentially an outsourced marketing team through the platform with us, you can actually do that too. We don't …”
JB Kellogg Sep 3, 2020 ▶ 4:06
Insight
Kellogg: Small businesses prefer buying services over pure software
“What we're selling to the SMB feels like services because an SMB wants to buy services. But on the back end, we're using technology to increase scale and profitability.”
JB Kellogg Sep 3, 2020 ▶ 4:31
Disclosure
Kellogg: Madwire has 20,000 customers averaging $500 monthly ARPU
“Well, we have 20,000 customers, and so when you look at it globally, it's about 500 dollars per month per customer, about 6000 per year.”
JB Kellogg Sep 3, 2020 ▶ 5:21
Prediction Not checkable as stated
Kellogg: Madwire targets $150M revenue run rate by September 2021
“We have targets about this time next year to be in that hundred and fifty million range or so we feel pretty good about so that's what we're kind of marching towards”
JB Kellogg Sep 3, 2020 ▶ 6:21
Prediction Not checkable as stated
Kellogg: Madwire aims for 15-20% EBITDA margins and 25%+ growth
“We're trying to get that into that 15 to 20% range here over the next year, which we think is very doable which would put us, you know, we're trying to align to that rule of 40, kind of, where our growth is going to be that 25% plus area and our EBITDA is righ…”
JB Kellogg Sep 3, 2020 ▶ 6:34
Disclosure
Kellogg breaks down Madwire's 500-person headcount across sales and tech
“Right now our 500 people is like 60 in, in tech. We have about 200 in sales. And then we have- All have quota. Yeah. Yeah. 200 in sales. We have a hundred, which is acquisition sales and a hundred, which is retention sales. So they're upselling, cross selling.…”
JB Kellogg Sep 3, 2020 ▶ 7:45
Assertion Not checkable as stated
Kellogg: Madwire's 50 accounts per employee beats HubSpot and Sprout Social
“Our account per person ratio now is about 50 accounts per person, which is better than HubSpot and Sprout Social.”
JB Kellogg Sep 3, 2020 ▶ 8:12
Assertion Not checkable as stated
Madwire processes close to $1B annually through legacy SilverEdge accounts
“We have his legacy payments accounts, which are more of like an ISO model, because we acquired a company called SilverEdge two years ago. So with them, it's close to a billion, but if you exclude them and just- Annually? Yeah. Annually.”
JB Kellogg Sep 3, 2020 ▶ 8:59
Assertion Not checkable as stated
Kellogg: 65% of new Marketing 360 customers activate embedded payments
“And so what we're seeing so far is 65% adoption rate. So users buying marketing three 60 right now, but 65% are activating payments.”
JB Kellogg Sep 3, 2020 ▶ 9:23
Assertion Not checkable as stated
Kellogg: Madwire core customer logo churn is roughly 2.8% monthly
“Today, we're our logo churn on core customers, which a core customer is a customer that's been with us 12 months or more is about 2.8% per month.”
JB Kellogg Sep 3, 2020 ▶ 12:11
Prediction Not checkable as stated
Kellogg: Madwire expects core churn to improve to 1.5% within 24 months
“And we expect that to improve to about 1.5% over the next 24 months with payments and some other business management tools that we've built into the platform.”
JB Kellogg Sep 3, 2020 ▶ 12:22
Assertion Not checkable as stated
Kellogg: Only 50% of new Madwire customers reach the 12-month mark
“It's more like 50%. We'll make it to that twelve-month mark.”
JB Kellogg Sep 3, 2020 ▶ 12:41
Assertion Not checkable as stated
Kellogg: Madwire pays $3,000 to $4,000 to acquire a new customer
“Yeah it's right. It's between three and 4000, depending on the month.”
JB Kellogg Sep 3, 2020 ▶ 15:38
Assertion Partly supported
Kellogg: Madwire has not raised additional capital beyond its initial $7.5M
“We've not.”
JB Kellogg Sep 3, 2020 ▶ 15:52
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