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Jul 9, 2020 · 24m · top-founders

Inkit Breaks 100 Customers, $1m in Revenue Helping Companies With Direct Mail Campaigns

Michael McCarthy · 12m spoken Nathan Latka · 8m 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, host Nathan Latka speaks with Inkit CEO Michael McCarthy about scaling an enterprise direct mail automation platform past a $1 million ARR run rate. McCarthy details Inkit's hybrid SaaS pricing model, capital-efficient fundraising approach, and strategic pivot to high-retention enterprise clients.

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 39.8% of the talking time here. How this is scored →

Nathan as informed peer 5.7 Guest teaching 1.6 Guest disagreement 2.6 Nathan pushing back 4.7
05100:0010:0020:000:19–4:56 · Nathan as informed peer 5/10 GetLatka Subscription Announcement and Archival Founder Highlights After an opening promo feed, Nathan probes into Inkit's pricing model and pushes Michael to clarify whether the revenue is predominantly pure SaaS or usage-based metered billing.4:56–7:42 · Nathan as informed peer 3/10 Founding Story, Co-Founder Backgrounds, and Team Structure Michael recounts the founding story and early equity structures, while Nathan validates the scrappiness required in early-stage startups without contention.7:42–11:13 · Nathan as informed peer 6/10 Enterprise Sales Strategy, Commission Incentives, and Quotas When Michael claims no company has figured out sales OTE formulas, Nathan interjects that scaled SaaS companies operate as well-oiled machines, then drills into new rep quota targets.11:13–14:13 · Nathan as informed peer 4/10 Pivoting from SMB Sales to Enterprise Use Cases Michael explains the transition away from SMB door-to-door sales toward mid-market enterprise accounts and reaching the 100-customer milestone.14:14–16:54 · Nathan as informed peer 8/10 Historical Contract Values, Revenue Scale, and Growth Targets Nathan catches the mathematical discrepancy between 100 customers at a claimed $100k ACV and a $1M run rate, forcing Michael to walk back his numbers to an average of $20k to $50k.16:54–20:10 · Nathan as informed peer 7/10 Fundraising Strategy, Dilution, and Cash-Flow Neutrality Nathan confronts Michael for being evasive about seed funding, rejecting the idea that confidentiality is strategic, and then catches Michael hesitating over cash burn versus neutrality.20:11–24:21 · Nathan as informed peer 7/10 Retention Metrics, Negative Churn, and CAC-to-ACV Economics Nathan immediately corrects Michael's misuse of metrics when Michael claims negative gross churn, before closing out on CAC ratios and the Famous Five.0:19–4:56 · Guest teaching 1/10 GetLatka Subscription Announcement and Archival Founder Highlights After an opening promo feed, Nathan probes into Inkit's pricing model and pushes Michael to clarify whether the revenue is predominantly pure SaaS or usage-based metered billing.4:56–7:42 · Guest teaching 1/10 Founding Story, Co-Founder Backgrounds, and Team Structure Michael recounts the founding story and early equity structures, while Nathan validates the scrappiness required in early-stage startups without contention.7:42–11:13 · Guest teaching 2/10 Enterprise Sales Strategy, Commission Incentives, and Quotas When Michael claims no company has figured out sales OTE formulas, Nathan interjects that scaled SaaS companies operate as well-oiled machines, then drills into new rep quota targets.11:13–14:13 · Guest teaching 2/10 Pivoting from SMB Sales to Enterprise Use Cases Michael explains the transition away from SMB door-to-door sales toward mid-market enterprise accounts and reaching the 100-customer milestone.14:14–16:54 · Guest teaching 1/10 Historical Contract Values, Revenue Scale, and Growth Targets Nathan catches the mathematical discrepancy between 100 customers at a claimed $100k ACV and a $1M run rate, forcing Michael to walk back his numbers to an average of $20k to $50k.16:54–20:10 · Guest teaching 2/10 Fundraising Strategy, Dilution, and Cash-Flow Neutrality Nathan confronts Michael for being evasive about seed funding, rejecting the idea that confidentiality is strategic, and then catches Michael hesitating over cash burn versus neutrality.20:11–24:21 · Guest teaching 2/10 Retention Metrics, Negative Churn, and CAC-to-ACV Economics Nathan immediately corrects Michael's misuse of metrics when Michael claims negative gross churn, before closing out on CAC ratios and the Famous Five.0:19–4:56 · Guest disagreement 2/10 GetLatka Subscription Announcement and Archival Founder Highlights After an opening promo feed, Nathan probes into Inkit's pricing model and pushes Michael to clarify whether the revenue is predominantly pure SaaS or usage-based metered billing.4:56–7:42 · Guest disagreement 0/10 Founding Story, Co-Founder Backgrounds, and Team Structure Michael recounts the founding story and early equity structures, while Nathan validates the scrappiness required in early-stage startups without contention.7:42–11:13 · Guest disagreement 3/10 Enterprise Sales Strategy, Commission Incentives, and Quotas When Michael claims no company has figured out sales OTE formulas, Nathan interjects that scaled SaaS companies operate as well-oiled machines, then drills into new rep quota targets.11:13–14:13 · Guest disagreement 1/10 Pivoting from SMB Sales to Enterprise Use Cases Michael explains the transition away from SMB door-to-door sales toward mid-market enterprise accounts and reaching the 100-customer milestone.14:14–16:54 · Guest disagreement 4/10 Historical Contract Values, Revenue Scale, and Growth Targets Nathan catches the mathematical discrepancy between 100 customers at a claimed $100k ACV and a $1M run rate, forcing Michael to walk back his numbers to an average of $20k to $50k.16:54–20:10 · Guest disagreement 6/10 Fundraising Strategy, Dilution, and Cash-Flow Neutrality Nathan confronts Michael for being evasive about seed funding, rejecting the idea that confidentiality is strategic, and then catches Michael hesitating over cash burn versus neutrality.20:11–24:21 · Guest disagreement 2/10 Retention Metrics, Negative Churn, and CAC-to-ACV Economics Nathan immediately corrects Michael's misuse of metrics when Michael claims negative gross churn, before closing out on CAC ratios and the Famous Five.0:19–4:56 · Nathan pushing back 4/10 GetLatka Subscription Announcement and Archival Founder Highlights After an opening promo feed, Nathan probes into Inkit's pricing model and pushes Michael to clarify whether the revenue is predominantly pure SaaS or usage-based metered billing.4:56–7:42 · Nathan pushing back 1/10 Founding Story, Co-Founder Backgrounds, and Team Structure Michael recounts the founding story and early equity structures, while Nathan validates the scrappiness required in early-stage startups without contention.7:42–11:13 · Nathan pushing back 5/10 Enterprise Sales Strategy, Commission Incentives, and Quotas When Michael claims no company has figured out sales OTE formulas, Nathan interjects that scaled SaaS companies operate as well-oiled machines, then drills into new rep quota targets.11:13–14:13 · Nathan pushing back 2/10 Pivoting from SMB Sales to Enterprise Use Cases Michael explains the transition away from SMB door-to-door sales toward mid-market enterprise accounts and reaching the 100-customer milestone.14:14–16:54 · Nathan pushing back 8/10 Historical Contract Values, Revenue Scale, and Growth Targets Nathan catches the mathematical discrepancy between 100 customers at a claimed $100k ACV and a $1M run rate, forcing Michael to walk back his numbers to an average of $20k to $50k.16:54–20:10 · Nathan pushing back 8/10 Fundraising Strategy, Dilution, and Cash-Flow Neutrality Nathan confronts Michael for being evasive about seed funding, rejecting the idea that confidentiality is strategic, and then catches Michael hesitating over cash burn versus neutrality.20:11–24:21 · Nathan pushing back 5/10 Retention Metrics, Negative Churn, and CAC-to-ACV Economics Nathan immediately corrects Michael's misuse of metrics when Michael claims negative gross churn, before closing out on CAC ratios and the Famous Five.

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

0:00 · Nathan 61.3% · guest 38.7%0:00 · Nathan 61.3% · guest 38.7%3:00 · Nathan 24% · guest 76%3:00 · Nathan 24% · guest 76%6:00 · Nathan 25.7% · guest 74.3%6:00 · Nathan 25.7% · guest 74.3%9:00 · Nathan 38.1% · guest 61.9%9:00 · Nathan 38.1% · guest 61.9%12:00 · Nathan 22.8% · guest 77.2%12:00 · Nathan 22.8% · guest 77.2%15:00 · Nathan 47.5% · guest 52.5%15:00 · Nathan 47.5% · guest 52.5%18:00 · Nathan 51.4% · guest 48.6%18:00 · Nathan 51.4% · guest 48.6%21:00 · Nathan 41.5% · guest 58.5%21:00 · Nathan 41.5% · guest 58.5%24:00 · Nathan 95.8% · guest 4.2%24:00 · Nathan 95.8% · guest 4.2%
Sharpest disagreement ▶ 17:25 Michael defends secrecy around fundraising instruments

Michael firmly rejects Nathan's premise that funding amounts must be publicly visible via SEC filings, defending his strategic coyness.

 Hardest push from Nathan ▶ 14:45 Nathan refuses inflated contract value framing

Nathan directly halts Michael's claim of $100k ACV across 100 customers, pointing out the arithmetic impossibility given their actual run rate.

 Biggest teaching moment ▶ 9:30 Michael breaks down Inkit's commission levers

Michael educates Nathan on how Inkit specifically incentivizes reps with sliding-scale commissions based on multi-year commitments and auto-renew clauses.

 Nathan holds their own ▶ 20:15 Nathan calls out negative gross churn impossibility

Nathan immediately demonstrates SaaS metric expertise by correcting Michael's statement that gross churn can be negative.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
GetLatka Subscription Announcement and Archival Founder Highlights 5124 After an opening promo feed, Nathan probes into Inkit's pricing model and pushes Michael to clarify whether the revenue is predominantly pure SaaS or usage-based metered billing.
Founding Story, Co-Founder Backgrounds, and Team Structure 3101 Michael recounts the founding story and early equity structures, while Nathan validates the scrappiness required in early-stage startups without contention.
Enterprise Sales Strategy, Commission Incentives, and Quotas 6235 When Michael claims no company has figured out sales OTE formulas, Nathan interjects that scaled SaaS companies operate as well-oiled machines, then drills into new rep quota targets.
Pivoting from SMB Sales to Enterprise Use Cases 4212 Michael explains the transition away from SMB door-to-door sales toward mid-market enterprise accounts and reaching the 100-customer milestone.
Historical Contract Values, Revenue Scale, and Growth Targets 8148 Nathan catches the mathematical discrepancy between 100 customers at a claimed $100k ACV and a $1M run rate, forcing Michael to walk back his numbers to an average of $20k to $50k.
Fundraising Strategy, Dilution, and Cash-Flow Neutrality 7268 Nathan confronts Michael for being evasive about seed funding, rejecting the idea that confidentiality is strategic, and then catches Michael hesitating over cash burn versus neutrality.
Retention Metrics, Negative Churn, and CAC-to-ACV Economics 7225 Nathan immediately corrects Michael's misuse of metrics when Michael claims negative gross churn, before closing out on CAC ratios and the Famous Five.

Statements from this episode (15)

Assertion Not checkable as stated
Pure SaaS fees drive 50 to 80 percent of Inkit's total revenue
“I'd say less than 80, but definitely more than 50. So it's a hybrid of the two. It's definitely SAS is definitely a big component of it.”
Michael McCarthy Jul 9, 2020 ▶ 4:33
Assertion Contradicted
Inkit CTO Abram Isla helped build early Python frameworks for Reddit
“So Abram and Aaron helped build some of the very first open source Python frameworks that actually ended up being used to build Reddit.”
Michael McCarthy Jul 9, 2020 ▶ 5:23
Assertion Not checkable as stated
Legacy banks take up to 16 weeks to execute direct mail campaigns
“Meaning that if a bank like US bank wanted to turn around a direct mailer, it would take them sometimes up to 12 to 16 weeks to actually get this out in the mail.”
Michael McCarthy Jul 9, 2020 ▶ 6:07
Disclosure
Minneapolis-based Inkit pays sales reps Silicon Valley and NYC baseline compensation
“So this is a two big inputs we have is one, we have a baseline compensation and a baseline comp is we actually pay very similar to like what a sales rep would make in Silicon Valley or New York city.”
Michael McCarthy Jul 9, 2020 ▶ 9:27
Disclosure
Inkit expects sales reps to close $400,000 in first-year ARR
“Correct. Right now we have a lot of, we have a lot of those types of clients just coming in inbound. So it's pretty, it's, It, it'd be pretty tough not to hit, you know, those types of types of quotas that we've laid out already.”
Michael McCarthy Jul 9, 2020 ▶ 10:48
Assertion Not checkable as stated
Inkit serves over 100 paying customers and offers no free tier
“Yeah, we don't, we, we're really not, we don't do free from a business side. So we have, you know, a hundred plus customers, and customers come from a wide variety of industries.”
Michael McCarthy Jul 9, 2020 ▶ 13:26
Assertion Not checkable as stated
Inkit averages around $100,000 in annual contract value
“We're right around that like a hundred K clip range.”
Michael McCarthy Jul 9, 2020 ▶ 14:46
Assertion Not checkable as stated
Inkit has surpassed a $1 million annual recurring revenue run rate
“We're already, yeah, well past that.”
Michael McCarthy Jul 9, 2020 ▶ 15:40
Prediction Not checkable as stated
Inkit aims to hit a $5 million ARR run rate in 2021
“I mean, we think we can definitely do it next year. We've got a couple big ones in the pipeline right now that are certainly able to get us there quickly.”
Michael McCarthy Jul 9, 2020 ▶ 15:53
Assertion Not checkable as stated
Inkit is growing year-over-year revenue by more than 300 percent
“I mean, we're definitely more than tripling.”
Michael McCarthy Jul 9, 2020 ▶ 16:35
Disclosure
Inkit has raised less than $1 million in outside capital
“We've definitely raised less than a million.”
Michael McCarthy Jul 9, 2020 ▶ 18:25
Disclosure
Inkit operates as a cash-flow neutral business as of July 2020
“We're neutral. We're pretty much neutral as far as things from how we're sitting at the moment.”
Michael McCarthy Jul 9, 2020 ▶ 18:56
Assertion Not checkable as stated
Inkit experienced zero gross revenue churn over the past 12 months
“We've had no churn. So we're actually, our customers are buying more from us than they were.”
Michael McCarthy Jul 9, 2020 ▶ 20:23
Assertion Not checkable as stated
Inkit achieves over 50 percent year-over-year revenue expansion from existing customers
“Very, very high expansion. So we're north of 50% on expansion side.”
Michael McCarthy Jul 9, 2020 ▶ 20:46
Assertion Not checkable as stated
Inkit's annual contract value to customer acquisition cost ratio exceeds 3:1
“I mean, from what we've heard, typically like metrics are three to one is like good. We're way more than three to one.”
Michael McCarthy Jul 9, 2020 ▶ 21:42
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