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Jan 4, 2018 · 18m · top-founders

894 SaaS: How Broadly Got SMB Churn Sub 2%, 5m+ ARR

Josh Mellick · 10m spoken Nathan Latka · 5m spoken
0:00 / 0:00

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

Nathan Latka interviews Broadly co-founder and CEO Josh Mellick, exploring how the company scaled to over $5 million in ARR across 2,500 SMB accounts, maintained sub-2% monthly churn, and optimized its SaaS unit economics.

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 35.5% of the talking time here. How this is scored →

Nathan as informed peer 5.3 Guest teaching 2.2 Guest disagreement 1.5 Nathan pushing back 2.7
05100:0010:000:49–2:54 · Nathan as informed peer 4/10 Josh Mellick's Demandforce Background and Meeting Bill Campbell Nathan introduces Josh and asks about his departure post-Demandforce acquisition. Josh gently corrects Nathan's mix-up of Bill Campbell with Brad Campbell before sharing a colorful anecdote.2:55–5:18 · Nathan as informed peer 5/10 Broadly's Business Model and Modern Word of Mouth Nathan digs into Broadly's pricing tiers and ARPU, prompting Josh to clarify retail price versus discounted blended average. Josh elaborates on modernizing word-of-mouth reviews for local trades.5:19–8:04 · Nathan as informed peer 6/10 Early Bootstrapping, Revenue Milestones, and Venture Funding Rounds Nathan tracks early ARR and MRR milestones and maps them to capital raises. He directly corners Josh into answering whether Broadly is raising another round or entertaining acquisition talks.8:04–11:54 · Nathan as informed peer 5/10 Scaling Customer Base and Managing Small Business Churn Nathan calculates total MRR from unit metrics and examines Broadly's low churn rate and net expansion limitations in SMB SaaS, followed by casual NFL banter.11:55–15:22 · Nathan as informed peer 7/10 Sales Strategy, CAC, and Long-Term Customer Value Nathan challenges the cost efficiency of an inside sales team on low-ARPU accounts. Josh reveals a rapid two-day sales cycle and clarifies payback periods adjusted for gross margin.15:23–18:01 · Nathan as informed peer 5/10 The Famous Five Questions and Final Financial Summary Nathan goes through the Famous Five rapid-fire questions and concludes with a concise numerical breakdown of Broadly's core metrics.0:49–2:54 · Guest teaching 3/10 Josh Mellick's Demandforce Background and Meeting Bill Campbell Nathan introduces Josh and asks about his departure post-Demandforce acquisition. Josh gently corrects Nathan's mix-up of Bill Campbell with Brad Campbell before sharing a colorful anecdote.2:55–5:18 · Guest teaching 2/10 Broadly's Business Model and Modern Word of Mouth Nathan digs into Broadly's pricing tiers and ARPU, prompting Josh to clarify retail price versus discounted blended average. Josh elaborates on modernizing word-of-mouth reviews for local trades.5:19–8:04 · Guest teaching 2/10 Early Bootstrapping, Revenue Milestones, and Venture Funding Rounds Nathan tracks early ARR and MRR milestones and maps them to capital raises. He directly corners Josh into answering whether Broadly is raising another round or entertaining acquisition talks.8:04–11:54 · Guest teaching 2/10 Scaling Customer Base and Managing Small Business Churn Nathan calculates total MRR from unit metrics and examines Broadly's low churn rate and net expansion limitations in SMB SaaS, followed by casual NFL banter.11:55–15:22 · Guest teaching 3/10 Sales Strategy, CAC, and Long-Term Customer Value Nathan challenges the cost efficiency of an inside sales team on low-ARPU accounts. Josh reveals a rapid two-day sales cycle and clarifies payback periods adjusted for gross margin.15:23–18:01 · Guest teaching 1/10 The Famous Five Questions and Final Financial Summary Nathan goes through the Famous Five rapid-fire questions and concludes with a concise numerical breakdown of Broadly's core metrics.0:49–2:54 · Guest disagreement 1/10 Josh Mellick's Demandforce Background and Meeting Bill Campbell Nathan introduces Josh and asks about his departure post-Demandforce acquisition. Josh gently corrects Nathan's mix-up of Bill Campbell with Brad Campbell before sharing a colorful anecdote.2:55–5:18 · Guest disagreement 1/10 Broadly's Business Model and Modern Word of Mouth Nathan digs into Broadly's pricing tiers and ARPU, prompting Josh to clarify retail price versus discounted blended average. Josh elaborates on modernizing word-of-mouth reviews for local trades.5:19–8:04 · Guest disagreement 3/10 Early Bootstrapping, Revenue Milestones, and Venture Funding Rounds Nathan tracks early ARR and MRR milestones and maps them to capital raises. He directly corners Josh into answering whether Broadly is raising another round or entertaining acquisition talks.8:04–11:54 · Guest disagreement 1/10 Scaling Customer Base and Managing Small Business Churn Nathan calculates total MRR from unit metrics and examines Broadly's low churn rate and net expansion limitations in SMB SaaS, followed by casual NFL banter.11:55–15:22 · Guest disagreement 2/10 Sales Strategy, CAC, and Long-Term Customer Value Nathan challenges the cost efficiency of an inside sales team on low-ARPU accounts. Josh reveals a rapid two-day sales cycle and clarifies payback periods adjusted for gross margin.15:23–18:01 · Guest disagreement 1/10 The Famous Five Questions and Final Financial Summary Nathan goes through the Famous Five rapid-fire questions and concludes with a concise numerical breakdown of Broadly's core metrics.0:49–2:54 · Nathan pushing back 2/10 Josh Mellick's Demandforce Background and Meeting Bill Campbell Nathan introduces Josh and asks about his departure post-Demandforce acquisition. Josh gently corrects Nathan's mix-up of Bill Campbell with Brad Campbell before sharing a colorful anecdote.2:55–5:18 · Nathan pushing back 2/10 Broadly's Business Model and Modern Word of Mouth Nathan digs into Broadly's pricing tiers and ARPU, prompting Josh to clarify retail price versus discounted blended average. Josh elaborates on modernizing word-of-mouth reviews for local trades.5:19–8:04 · Nathan pushing back 5/10 Early Bootstrapping, Revenue Milestones, and Venture Funding Rounds Nathan tracks early ARR and MRR milestones and maps them to capital raises. He directly corners Josh into answering whether Broadly is raising another round or entertaining acquisition talks.8:04–11:54 · Nathan pushing back 2/10 Scaling Customer Base and Managing Small Business Churn Nathan calculates total MRR from unit metrics and examines Broadly's low churn rate and net expansion limitations in SMB SaaS, followed by casual NFL banter.11:55–15:22 · Nathan pushing back 4/10 Sales Strategy, CAC, and Long-Term Customer Value Nathan challenges the cost efficiency of an inside sales team on low-ARPU accounts. Josh reveals a rapid two-day sales cycle and clarifies payback periods adjusted for gross margin.15:23–18:01 · Nathan pushing back 1/10 The Famous Five Questions and Final Financial Summary Nathan goes through the Famous Five rapid-fire questions and concludes with a concise numerical breakdown of Broadly's core metrics.

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

0:00 · Nathan 47% · guest 53%0:00 · Nathan 47% · guest 53%3:00 · Nathan 19.3% · guest 80.7%3:00 · Nathan 19.3% · guest 80.7%6:00 · Nathan 29.7% · guest 70.3%6:00 · Nathan 29.7% · guest 70.3%9:00 · Nathan 50.3% · guest 49.7%9:00 · Nathan 50.3% · guest 49.7%12:00 · Nathan 28.9% · guest 71.1%12:00 · Nathan 28.9% · guest 71.1%15:00 · Nathan 38% · guest 62%15:00 · Nathan 38% · guest 62%18:00 · Nathan 20.9% · guest 79.1%18:00 · Nathan 20.9% · guest 79.1%
Sharpest disagreement ▶ 7:45 Deflecting acquisition speculation

Josh resists Nathan's binary forcing question about whether Broadly is closing funding or actively talking to acquirers, declaring they are only in the second inning.

 Hardest push from Nathan ▶ 7:37 Cornering guest on funding and M&A

Nathan refuses generic responses and directly pushes Josh to reveal whether he is preparing a fundraise or negotiating an acquisition.

 Biggest teaching moment ▶ 2:12 Correcting the legend's name

Josh immediately steps in to correct Nathan when he confuses legendary Silicon Valley mentor Bill Campbell with 'Brad Campbell'.

 Nathan holds their own ▶ 13:36 Instant payback period deduction

Nathan demonstrates financial mastery by converting Josh's blended CAC and monthly ARPU into an estimated payback period on the fly.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Josh Mellick's Demandforce Background and Meeting Bill Campbell 4312 Nathan introduces Josh and asks about his departure post-Demandforce acquisition. Josh gently corrects Nathan's mix-up of Bill Campbell with Brad Campbell before sharing a colorful anecdote.
Broadly's Business Model and Modern Word of Mouth 5212 Nathan digs into Broadly's pricing tiers and ARPU, prompting Josh to clarify retail price versus discounted blended average. Josh elaborates on modernizing word-of-mouth reviews for local trades.
Early Bootstrapping, Revenue Milestones, and Venture Funding Rounds 6235 Nathan tracks early ARR and MRR milestones and maps them to capital raises. He directly corners Josh into answering whether Broadly is raising another round or entertaining acquisition talks.
Scaling Customer Base and Managing Small Business Churn 5212 Nathan calculates total MRR from unit metrics and examines Broadly's low churn rate and net expansion limitations in SMB SaaS, followed by casual NFL banter.
Sales Strategy, CAC, and Long-Term Customer Value 7324 Nathan challenges the cost efficiency of an inside sales team on low-ARPU accounts. Josh reveals a rapid two-day sales cycle and clarifies payback periods adjusted for gross margin.
The Famous Five Questions and Final Financial Summary 5111 Nathan goes through the Famous Five rapid-fire questions and concludes with a concise numerical breakdown of Broadly's core metrics.

Statements from this episode (10)

Disclosure
Broadly Retails For $250 Monthly But Averages $200 Across Channels
“So our retail price is two 50 a month. You know, all in across all the customers of multiple channels is around 200.”
Josh Mellick Jan 4, 2018 ▶ 3:37
Disclosure
Broadly Raised A $400K Angel, $3.5M Seed, And $6.7M Series A
“Yeah, so let me, so, so we actually did take a small angel round of about 500 K Not quite, 400 something in in mid-twenty 14. And then we did a three and a half million dollar seed mid-twenty 15, and then we did a 6.7 million dollar A in, in mid-twenty 16.”
Josh Mellick Jan 4, 2018 ▶ 7:11
Assertion Not checkable as stated
Broadly Reached 2,500 SMB Customers Paying An Average Of $200 Monthly
“Probably about 2500 or so small businesses, individual small businesses a few more individual locations than that, but yeah, average of a couple hundred bucks a month.”
Josh Mellick Jan 4, 2018 ▶ 8:07
Assertion Not checkable as stated
Broadly Keeps Monthly Dollar Churn Below 2% For SMB Customers
“We try to keep it in the low two percent month over month, which is really good for this type of market. And then we can keep the dollar churn below, below even two percent.”
Josh Mellick Jan 4, 2018 ▶ 8:56
Insight
Seat Expansion Is Unrealistic For Achieving Net Negative Churn With SMBs
“The traditional kind of net negative turn comes about more seats. You know, it's hard to talk to, you know, Bob the plumber about more seats.”
Josh Mellick Jan 4, 2018 ▶ 10:10
Disclosure
Broadly's Headcount Skews Heavily Toward Sales And Support Over Engineering
“The sales team's not quite half. So probably 30, 35 support team is 20, 25 engineers, another, you know, 15. So I don't know what that adds up to, but that's damn close.”
Josh Mellick Jan 4, 2018 ▶ 11:41
Assertion Not checkable as stated
Broadly Averages A Two-Day Sales Cycle For Outbound SMB Leads
“Our average sales cycle is two days long.”
Josh Mellick Jan 4, 2018 ▶ 12:17
Assertion Not checkable as stated
Broadly Spends $1,300 To $1,400 To Acquire Cold Outbound Leads
“Almost the vast majority of our sales are straight, cold, Outbound inside sales, and that CAC is about 13, 1400 bucks.”
Josh Mellick Jan 4, 2018 ▶ 13:27
Assertion Not checkable as stated
Broadly Runs At 85% Gross Margin With An Eight-Month Payback Period
“We have an 85% gross margin, so if you include that, which you're supposed to, it's like, it's more like eight, eight to 10, something like that, depending on From the channel.”
Josh Mellick Jan 4, 2018 ▶ 13:49
Assertion Not checkable as stated
Broadly Estimates An Average SMB Lifespan Of Four Years And $10K LTV
“And based upon the churn numbers, we do think the lifetime is in the, in that kind of four year average lifespan, something like that. You know, we think with a lifetime value gets in the kind of 10,000 dollar range”
Josh Mellick Jan 4, 2018 ▶ 14:26
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