Mar 16, 2018 · 21m · top-founders
965 Why This $14m ARR Company "Went Public" To Win Marketing Automation Space
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 episode of The Top Entrepreneurs, host Nathan Latka interviews SharpSpring founder and CEO Rick Carlson about scaling an agency-focused marketing automation platform to $14 million in ARR and navigating public markets following an unconventional merger and divestiture.
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 32.8% of the talking time here. How this is scored →
Nathan as informed peer 5.5 Guest teaching 3.0 Guest disagreement 1.8 Nathan pushing back 3.8
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 16:45 Rick rejects the upselling premise
Rick pushes back on Nathan's phrasing, emphasizing that they do not upsell software tiers but instead expand as agency partners add end-clients.
Hardest push from Nathan ▶ 4:53 Nathan challenges missing historical ARRNathan refuses to let Rick bypass the historical revenue metric, insisting that every CEO tracking growth should know their revenue from 12 months prior.
Biggest teaching moment ▶ 7:41 Rick explains the reverse acquisition path to public marketsRick corrects Nathan's assumption of a traditional early IPO by explaining how SharpSpring was acquired by SMTP, grew rapidly, and subsequently spun off the original acquirer.
Nathan holds their own ▶ 9:18 Nathan quotes exact SEC institutional holdingsNathan demonstrates thorough preparation by citing exact share counts and percentages showing Morgan Stanley held more shares than Rick himself.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Rick Carlson on SharpSpring's Core Model and ARR | 6 | 2 | 1 | 2 | Nathan quickly calculates SharpSpring's monthly ARPU per agency on the fly at $830 per month. Rick is cooperative and impressed by Nathan's mental arithmetic. | |
| Bootstrapping, the SMTP Merger, and Non-Dilutive Capital | 6 | 4 | 2 | 5 | Nathan presses Rick when Rick claims not to remember his exact revenue from a year ago. Rick then explains the unique reverse acquisition via SMTP that funded their growth non-dilutively. | |
| Navigating Public Markets and Investor Dynamics | 7 | 3 | 3 | 6 | Nathan references specific public filings showing institutional ownership percentages and questions their vulnerability to private equity takeovers. Rick counters by outlining why hostile takeovers of small-cap SaaS companies are impractical. | |
| Sponsor Message: SignEasy Document Signing App | 4 | 3 | 1 | 3 | Following the sponsor read, Nathan explores the compliance overhead of being public. Rick details how non-SaaS public market investors frequently misunderstand SaaS payback periods and unit economics. | |
| SharpSpring Unit Economics: CAC, LTV, and Payback | 7 | 5 | 3 | 5 | Nathan interrupts the silence to explain gross versus net churn concepts to the audience while Rick calculates his figures. Rick reframes Nathan's terminology by clarifying that agency expansion is client growth rather than feature upselling. | |
| Team Headcount and Gainesville Headquarters | 3 | 1 | 1 | 2 | Rick shares team headcount and location details before transitioning into the Famous Five rapid-fire questions, concluding on a collaborative note. |
Statements from this episode (14)
Carlson: Agencies generate about 90% of SharpSpring's revenue
“We've really built our whole business around agencies. It's about 90% of our revenue.”
Carlson: SharpSpring is at $13M-$14M ARR, growing over 50%
“This year we're somewhere around you know, 13, fourteen million dollars. We don't really, and we've been growing about 50%, little, little north of 50% on our core, core business, and have been doing that since we started.”
Carlson: SharpSpring is the number two marketing platform for agencies
“Today, we're the number two company amongst digital marketing agencies.”
Carlson: SharpSpring serves 1,400 agencies and 6,500 businesses
“We've got about 1400 agencies around the world and about 6500 businesses on the platform.”
Carlson: SharpSpring sold its SMTP division for $15M
“I think it's public. So I think I can tell you it was fifteen million dollars.”
Carlson: SharpSpring became public through SMTP acquisition rather than traditional IPO
“Actually the company that acquired us was a very small public company called SMTP. I was not part of that company. They were public. And so we became part of that company ended up selling that company. And so suddenly Sharp Spring is a small publicly traded co…”
Carlson: Hostile PE takeovers of microcap SaaS are impractical without management buy-in
“When you're dealing with companies our size, it's very difficult for you to purchase that many shares and have it not move the needle. And so it becomes potentially prohibitively expensive. But what I'd really like to believe is that any company you know, a co…”
Carlson: Non-SaaS public investors often misunderstand CAC and payback periods
“Oftentimes investors don't understand when we get to the point where we're talking about our CAC and LTV ratios and things that I share with you. You know, there's strong arguments for investing, but then you've got longer payback periods than maybe an investo…”
Carlson: SharpSpring spends $6,100 in CAC per customer
“So we're paying about 6000 and our last quarterly update, we paid 6100 dollars to acquire a customer.”
Carlson: SharpSpring agency customer LTV exceeds $50,000
“And just to get to kind of the next question, the lifetime value of our customers is north of 50,000 dollars when we talk about our agency partners. So pretty fantastic, you know, eight times CAC to LTV ratios.”
Carlson: SharpSpring monthly logo churn is well below 3%
“On a logo basis, we're doing we're well south of three percent churn on a monthly a logo basis.”
Carlson: SharpSpring gets hundreds of percent expansion over customer lifetimes
“We have hundreds of percentage points of expansion revenue over the lifetime of our customers.”
Carlson: SharpSpring loses about $15,000 per month in gross churn
“In terms of gross revenue, revenue, gross revenue attrition, I would say we're losing you know, with, if we're losing 25 customers or 30 customers a month at 500 dollars, 15,000 dollars a month in terms of just revenue attrition from the lost customers.”