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Mar 10, 2019 · 16m · top-founders

1324 How He Bootstrapped to $6m in ARR

David Nafziger · 8m spoken Nathan Latka · 5m spoken
0:00 / 0:00

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In this episode of The Top Entrepreneurs Podcast, host Nathan Latka interviews Brand Verity co-founder and CEO David Nafziger about how he identified an affiliate search arbitrage loophole and bootstrapped a trademark compliance SaaS platform to over $6 million 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 39.1% of the talking time here. How this is scored →

Nathan as informed peer 5.4 Guest teaching 3.4 Guest disagreement 0.8 Nathan pushing back 1.8
05100:0010:002:05–5:40 · Nathan as informed peer 5/10 Origin Story and the Discovery of Affiliate Arbitrage David educates Nathan on the mechanics of affiliate arbitrage and reverse geo-targeting, which led to founding BrandVerity. Nathan follows along attentively and interjects to show he understands the tactic by noting 'Exclude San Fran'.5:42–9:02 · Nathan as informed peer 5/10 Product Offerings, Pricing Tiers, and Customer Base Nathan directs the conversation toward pricing tiers and customer volume, specifically cutting off detailed customer breakdowns to get clean averages. David clearly lays out the product splits and direct customer numbers.9:04–11:13 · Nathan as informed peer 6/10 Bootstrapping Strategy and Revenue Growth to $6M ARR David reveals the company recently passed $6 million in ARR while bootstrapping. Nathan runs quick financial calculations and presses David on his rationale for avoiding venture capital after running venture-backed startups previously.11:14–14:11 · Nathan as informed peer 7/10 Unit Economics, Churn, CAC, and Team Operations Nathan drills into churn, net revenue retention, CAC, and LTV. David momentarily corrects Nathan on a 5-year vs 5-month slip, while Nathan actively back-of-the-napkin computes LTV and 12-month payback periods.14:11–15:39 · Nathan as informed peer 4/10 Famous Five Rapid-Fire Questions Nathan conducts his standard rapid-fire Famous Five questionnaire without tension. David provides reflective and straightforward answers about his routine and career advice.2:05–5:40 · Guest teaching 6/10 Origin Story and the Discovery of Affiliate Arbitrage David educates Nathan on the mechanics of affiliate arbitrage and reverse geo-targeting, which led to founding BrandVerity. Nathan follows along attentively and interjects to show he understands the tactic by noting 'Exclude San Fran'.5:42–9:02 · Guest teaching 3/10 Product Offerings, Pricing Tiers, and Customer Base Nathan directs the conversation toward pricing tiers and customer volume, specifically cutting off detailed customer breakdowns to get clean averages. David clearly lays out the product splits and direct customer numbers.9:04–11:13 · Guest teaching 3/10 Bootstrapping Strategy and Revenue Growth to $6M ARR David reveals the company recently passed $6 million in ARR while bootstrapping. Nathan runs quick financial calculations and presses David on his rationale for avoiding venture capital after running venture-backed startups previously.11:14–14:11 · Guest teaching 4/10 Unit Economics, Churn, CAC, and Team Operations Nathan drills into churn, net revenue retention, CAC, and LTV. David momentarily corrects Nathan on a 5-year vs 5-month slip, while Nathan actively back-of-the-napkin computes LTV and 12-month payback periods.14:11–15:39 · Guest teaching 1/10 Famous Five Rapid-Fire Questions Nathan conducts his standard rapid-fire Famous Five questionnaire without tension. David provides reflective and straightforward answers about his routine and career advice.2:05–5:40 · Guest disagreement 1/10 Origin Story and the Discovery of Affiliate Arbitrage David educates Nathan on the mechanics of affiliate arbitrage and reverse geo-targeting, which led to founding BrandVerity. Nathan follows along attentively and interjects to show he understands the tactic by noting 'Exclude San Fran'.5:42–9:02 · Guest disagreement 1/10 Product Offerings, Pricing Tiers, and Customer Base Nathan directs the conversation toward pricing tiers and customer volume, specifically cutting off detailed customer breakdowns to get clean averages. David clearly lays out the product splits and direct customer numbers.9:04–11:13 · Guest disagreement 1/10 Bootstrapping Strategy and Revenue Growth to $6M ARR David reveals the company recently passed $6 million in ARR while bootstrapping. Nathan runs quick financial calculations and presses David on his rationale for avoiding venture capital after running venture-backed startups previously.11:14–14:11 · Guest disagreement 1/10 Unit Economics, Churn, CAC, and Team Operations Nathan drills into churn, net revenue retention, CAC, and LTV. David momentarily corrects Nathan on a 5-year vs 5-month slip, while Nathan actively back-of-the-napkin computes LTV and 12-month payback periods.14:11–15:39 · Guest disagreement 0/10 Famous Five Rapid-Fire Questions Nathan conducts his standard rapid-fire Famous Five questionnaire without tension. David provides reflective and straightforward answers about his routine and career advice.2:05–5:40 · Nathan pushing back 1/10 Origin Story and the Discovery of Affiliate Arbitrage David educates Nathan on the mechanics of affiliate arbitrage and reverse geo-targeting, which led to founding BrandVerity. Nathan follows along attentively and interjects to show he understands the tactic by noting 'Exclude San Fran'.5:42–9:02 · Nathan pushing back 3/10 Product Offerings, Pricing Tiers, and Customer Base Nathan directs the conversation toward pricing tiers and customer volume, specifically cutting off detailed customer breakdowns to get clean averages. David clearly lays out the product splits and direct customer numbers.9:04–11:13 · Nathan pushing back 2/10 Bootstrapping Strategy and Revenue Growth to $6M ARR David reveals the company recently passed $6 million in ARR while bootstrapping. Nathan runs quick financial calculations and presses David on his rationale for avoiding venture capital after running venture-backed startups previously.11:14–14:11 · Nathan pushing back 3/10 Unit Economics, Churn, CAC, and Team Operations Nathan drills into churn, net revenue retention, CAC, and LTV. David momentarily corrects Nathan on a 5-year vs 5-month slip, while Nathan actively back-of-the-napkin computes LTV and 12-month payback periods.14:11–15:39 · Nathan pushing back 0/10 Famous Five Rapid-Fire Questions Nathan conducts his standard rapid-fire Famous Five questionnaire without tension. David provides reflective and straightforward answers about his routine and career advice.

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

0:00 · Nathan 69.2% · guest 30.8%0:00 · Nathan 69.2% · guest 30.8%3:00 · Nathan 5.8% · guest 94.2%3:00 · Nathan 5.8% · guest 94.2%6:00 · Nathan 53.5% · guest 46.5%6:00 · Nathan 53.5% · guest 46.5%9:00 · Nathan 24.5% · guest 75.5%9:00 · Nathan 24.5% · guest 75.5%12:00 · Nathan 28.7% · guest 71.3%12:00 · Nathan 28.7% · guest 71.3%15:00 · Nathan 63% · guest 37%15:00 · Nathan 63% · guest 37%
Sharpest disagreement ▶ 12:00 David reframes net retention metrics below 100%

David gently pushes back on Nathan's assumption of positive net retention over 100%, clarifying that as an older company with gross churn, net retention sits slightly below 100%.

 Hardest push from Nathan ▶ 6:30 Nathan redirects pricing discussion away from specifics

Nathan cuts in to steer David away from listing every customer cohort and demands a direct, concise monthly pricing average.

 Biggest teaching moment ▶ 4:25 David breaks down affiliate reverse geo-targeting

David gives an instructive walkthrough of how affiliates disguised rule-breaking search ads by geo-targeting everywhere except the brand's headquarters.

 Nathan holds their own ▶ 13:35 Nathan calculates CAC payback on the fly

Nathan immediately contextualizes David's $10k-$12k CAC figure by calculating first-year ACV and confirming a 12-month payback period.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Origin Story and the Discovery of Affiliate Arbitrage 5611 David educates Nathan on the mechanics of affiliate arbitrage and reverse geo-targeting, which led to founding BrandVerity. Nathan follows along attentively and interjects to show he understands the tactic by noting 'Exclude San Fran'.
Product Offerings, Pricing Tiers, and Customer Base 5313 Nathan directs the conversation toward pricing tiers and customer volume, specifically cutting off detailed customer breakdowns to get clean averages. David clearly lays out the product splits and direct customer numbers.
Bootstrapping Strategy and Revenue Growth to $6M ARR 6312 David reveals the company recently passed $6 million in ARR while bootstrapping. Nathan runs quick financial calculations and presses David on his rationale for avoiding venture capital after running venture-backed startups previously.
Unit Economics, Churn, CAC, and Team Operations 7413 Nathan drills into churn, net revenue retention, CAC, and LTV. David momentarily corrects Nathan on a 5-year vs 5-month slip, while Nathan actively back-of-the-napkin computes LTV and 12-month payback periods.
Famous Five Rapid-Fire Questions 4100 Nathan conducts his standard rapid-fire Famous Five questionnaire without tension. David provides reflective and straightforward answers about his routine and career advice.

Statements from this episode (9)

Disclosure
Nafziger: Brand Verity's Paid Search ASP Is Just Under $1,000 Monthly
“Our average selling prices are sort of just shy of a thousand a month. And our web compliance you know, sort of an order of magnitude higher.”
David Nafziger Mar 10, 2019 ▶ 6:48
Disclosure
Nafziger: Paid Search Drives 80% of Brand Verity's Revenue
“So our paid search product is by far our oldest. And so I'd say that's 80% of revenue today. But the younger product by compliance sort of has a faster growth rate.”
David Nafziger Mar 10, 2019 ▶ 7:03
Disclosure
Nafziger: Brand Verity Serves Over 400 Direct Customer Relationships
“That we're sort of probably Little over 400 direct relationships.”
David Nafziger Mar 10, 2019 ▶ 7:27
Assertion Not checkable as stated
Nafziger: Brand Verity crossed $6 million in ARR
“So our ARR, we just crossed six million. Six million. so we sort of celebrated that milestone a few months back.”
David Nafziger Mar 10, 2019 ▶ 9:11
Assertion Partly supported
Nafziger: Prior ventures Quova and Judy's Book raised $50M and $10M
“So Quova and Judy's book both companies raised a ton of money. I want to say Quova over its lifespan, sort of close to 50. and Judy's book, I think, you know, close to 10. Ish give or take.”
David Nafziger Mar 10, 2019 ▶ 9:36
Assertion Not checkable as stated
Nafziger: Brand Verity grows between 20% and 30% annually
“We grow sort of between 20 and 30% a year.”
David Nafziger Mar 10, 2019 ▶ 11:03
Disclosure
Nafziger: Brand Verity gross churn is slightly under 20%
“Gross churn is sort of a little under 20%.”
David Nafziger Mar 10, 2019 ▶ 11:47
Disclosure
Nafziger: Most Brand Verity revenue comes from referrals
“The vast majority of our new revenue comes via word of mouth and referral.”
David Nafziger Mar 10, 2019 ▶ 13:22
Disclosure
Nafziger: Brand Verity fully weighted CAC is $10k to $12k
“So fully weighted CAC is somewhere around 10 to 12 K.”
David Nafziger Mar 10, 2019 ▶ 13:40
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