StarZero All shows Try the podcast clipper →

Nov 6, 2017 · 20m · top-founders

835: $3m+ in Revenue, How to make a SaaS and Professional Service Model Work Together

Scott East · 11m spoken Nathan Latka · 7m 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 episode of The Top, host Nathan Latka interviews Scott East, founder and CEO of MSIGHTS, exploring how the company bootstrapped past $3 million in annual revenue using a hybrid SaaS and professional services model. East details the company's enterprise pricing mechanics, near-zero churn rates, global workforce distribution, and strategies for sustainable, self-funded B2B growth.

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 39.6% of the talking time here. How this is scored →

Nathan as informed peer 4.0 Guest teaching 2.3 Guest disagreement 0.9 Nathan pushing back 2.3
05100:0010:0020:001:53–4:46 · Nathan as informed peer 4/10 Authoring 'The Cuttlefish Marketer' and Modern Leadership Nathan inquires about the economics and rationale of writing a book versus running a company. He demonstrates industry knowledge regarding Advantage Media's Forbes distribution model, while Scott keeps the tone self-deprecating and lighthearted.4:46–8:41 · Nathan as informed peer 6/10 MSIGHTS Core Platform Architecture and Pricing Mechanism Nathan pushes Scott to explain how MSIGHTS prices data ingestion and challenges the hybrid SaaS and professional services revenue breakdown. Scott reframes professional services as recurring rather than one-off project work using his pit crew analogy.8:41–11:32 · Nathan as informed peer 4/10 Team Allocation, Global Footprint, and Customer Data Dilemma Nathan probes into team structure and asks about unusual customer acquisition stories. Scott shares an anecdote regarding adult content data transformation and the cash flow challenges of bootstrapping.11:32–13:57 · Nathan as informed peer 5/10 Historical Growth Trajectory, Churn, and Long-Term Client Retention Nathan investigates MSIGHTS' revenue trajectory and historical numbers. Scott walks through their revenue retention, low churn rate under 5%, and 14-year enterprise client accounts.13:57–16:37 · Nathan as informed peer 6/10 Operational Margins, Foreign Exchange Arbitrage, and CAC Dynamics Nathan checks gross margins across SaaS versus services lines, expecting low margins. Scott explains how maintaining global offices allows forex arbitrage to keep service margins at 70%, while Nathan assesses unit economics and CAC payback.16:37–19:38 · Nathan as informed peer 3/10 Promotional Sponsor: The Top Inbox Email Tool Nathan transitions through an ad read into the standard Famous Five rapid-fire questions, with Scott providing concise, cooperative answers about routines and favorite books.19:39–20:23 · Nathan as informed peer 0/10 Episode Summary and Final Takeaways Nathan delivers a closing solo recap summarizing MSIGHTS' revenue, churn, ACV, and CAC metrics before concluding the interview.1:53–4:46 · Guest teaching 2/10 Authoring 'The Cuttlefish Marketer' and Modern Leadership Nathan inquires about the economics and rationale of writing a book versus running a company. He demonstrates industry knowledge regarding Advantage Media's Forbes distribution model, while Scott keeps the tone self-deprecating and lighthearted.4:46–8:41 · Guest teaching 4/10 MSIGHTS Core Platform Architecture and Pricing Mechanism Nathan pushes Scott to explain how MSIGHTS prices data ingestion and challenges the hybrid SaaS and professional services revenue breakdown. Scott reframes professional services as recurring rather than one-off project work using his pit crew analogy.8:41–11:32 · Guest teaching 2/10 Team Allocation, Global Footprint, and Customer Data Dilemma Nathan probes into team structure and asks about unusual customer acquisition stories. Scott shares an anecdote regarding adult content data transformation and the cash flow challenges of bootstrapping.11:32–13:57 · Guest teaching 3/10 Historical Growth Trajectory, Churn, and Long-Term Client Retention Nathan investigates MSIGHTS' revenue trajectory and historical numbers. Scott walks through their revenue retention, low churn rate under 5%, and 14-year enterprise client accounts.13:57–16:37 · Guest teaching 4/10 Operational Margins, Foreign Exchange Arbitrage, and CAC Dynamics Nathan checks gross margins across SaaS versus services lines, expecting low margins. Scott explains how maintaining global offices allows forex arbitrage to keep service margins at 70%, while Nathan assesses unit economics and CAC payback.16:37–19:38 · Guest teaching 1/10 Promotional Sponsor: The Top Inbox Email Tool Nathan transitions through an ad read into the standard Famous Five rapid-fire questions, with Scott providing concise, cooperative answers about routines and favorite books.19:39–20:23 · Guest teaching 0/10 Episode Summary and Final Takeaways Nathan delivers a closing solo recap summarizing MSIGHTS' revenue, churn, ACV, and CAC metrics before concluding the interview.1:53–4:46 · Guest disagreement 1/10 Authoring 'The Cuttlefish Marketer' and Modern Leadership Nathan inquires about the economics and rationale of writing a book versus running a company. He demonstrates industry knowledge regarding Advantage Media's Forbes distribution model, while Scott keeps the tone self-deprecating and lighthearted.4:46–8:41 · Guest disagreement 2/10 MSIGHTS Core Platform Architecture and Pricing Mechanism Nathan pushes Scott to explain how MSIGHTS prices data ingestion and challenges the hybrid SaaS and professional services revenue breakdown. Scott reframes professional services as recurring rather than one-off project work using his pit crew analogy.8:41–11:32 · Guest disagreement 1/10 Team Allocation, Global Footprint, and Customer Data Dilemma Nathan probes into team structure and asks about unusual customer acquisition stories. Scott shares an anecdote regarding adult content data transformation and the cash flow challenges of bootstrapping.11:32–13:57 · Guest disagreement 1/10 Historical Growth Trajectory, Churn, and Long-Term Client Retention Nathan investigates MSIGHTS' revenue trajectory and historical numbers. Scott walks through their revenue retention, low churn rate under 5%, and 14-year enterprise client accounts.13:57–16:37 · Guest disagreement 1/10 Operational Margins, Foreign Exchange Arbitrage, and CAC Dynamics Nathan checks gross margins across SaaS versus services lines, expecting low margins. Scott explains how maintaining global offices allows forex arbitrage to keep service margins at 70%, while Nathan assesses unit economics and CAC payback.16:37–19:38 · Guest disagreement 0/10 Promotional Sponsor: The Top Inbox Email Tool Nathan transitions through an ad read into the standard Famous Five rapid-fire questions, with Scott providing concise, cooperative answers about routines and favorite books.19:39–20:23 · Guest disagreement 0/10 Episode Summary and Final Takeaways Nathan delivers a closing solo recap summarizing MSIGHTS' revenue, churn, ACV, and CAC metrics before concluding the interview.1:53–4:46 · Nathan pushing back 2/10 Authoring 'The Cuttlefish Marketer' and Modern Leadership Nathan inquires about the economics and rationale of writing a book versus running a company. He demonstrates industry knowledge regarding Advantage Media's Forbes distribution model, while Scott keeps the tone self-deprecating and lighthearted.4:46–8:41 · Nathan pushing back 4/10 MSIGHTS Core Platform Architecture and Pricing Mechanism Nathan pushes Scott to explain how MSIGHTS prices data ingestion and challenges the hybrid SaaS and professional services revenue breakdown. Scott reframes professional services as recurring rather than one-off project work using his pit crew analogy.8:41–11:32 · Nathan pushing back 3/10 Team Allocation, Global Footprint, and Customer Data Dilemma Nathan probes into team structure and asks about unusual customer acquisition stories. Scott shares an anecdote regarding adult content data transformation and the cash flow challenges of bootstrapping.11:32–13:57 · Nathan pushing back 3/10 Historical Growth Trajectory, Churn, and Long-Term Client Retention Nathan investigates MSIGHTS' revenue trajectory and historical numbers. Scott walks through their revenue retention, low churn rate under 5%, and 14-year enterprise client accounts.13:57–16:37 · Nathan pushing back 3/10 Operational Margins, Foreign Exchange Arbitrage, and CAC Dynamics Nathan checks gross margins across SaaS versus services lines, expecting low margins. Scott explains how maintaining global offices allows forex arbitrage to keep service margins at 70%, while Nathan assesses unit economics and CAC payback.16:37–19:38 · Nathan pushing back 1/10 Promotional Sponsor: The Top Inbox Email Tool Nathan transitions through an ad read into the standard Famous Five rapid-fire questions, with Scott providing concise, cooperative answers about routines and favorite books.19:39–20:23 · Nathan pushing back 0/10 Episode Summary and Final Takeaways Nathan delivers a closing solo recap summarizing MSIGHTS' revenue, churn, ACV, and CAC metrics before concluding the interview.

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

0:00 · Nathan 88% · guest 12%0:00 · Nathan 88% · guest 12%3:00 · Nathan 18.2% · guest 81.8%3:00 · Nathan 18.2% · guest 81.8%6:00 · Nathan 25.2% · guest 74.8%6:00 · Nathan 25.2% · guest 74.8%9:00 · Nathan 15.7% · guest 84.3%9:00 · Nathan 15.7% · guest 84.3%12:00 · Nathan 24.1% · guest 75.9%12:00 · Nathan 24.1% · guest 75.9%15:00 · Nathan 57.3% · guest 42.7%15:00 · Nathan 57.3% · guest 42.7%18:00 · Nathan 47.9% · guest 52.1%18:00 · Nathan 47.9% · guest 52.1%
Sharpest disagreement ▶ 7:00 Scott corrects Nathan's categorization of professional services

Scott explicitly rejects Nathan's assumption that professional services revenue is one-time cash, explaining that all their services are structured as recurring contracts.

 Hardest push from Nathan ▶ 6:10 Nathan demands exact pricing mechanisms per row of data

Nathan refuses to accept a vague explanation of volume-based pricing and presses Scott to state specific per-row metrics or bulk package terms.

 Biggest teaching moment ▶ 7:05 Scott explains the bundled race car and pit crew model

Scott educates Nathan on why large enterprises prefer bundling SaaS platforms with dedicated ongoing services rather than dealing with piecemeal statement-of-work billings.

 Nathan holds their own ▶ 15:06 Nathan calculates monthly figures and analyzes CAC payback speed

Nathan instantly converts Scott's annual run-rate figure into monthly revenue and contextualizes the $25k enterprise CAC against the $250k+ ACV to determine a rapid one-month payback period.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Authoring 'The Cuttlefish Marketer' and Modern Leadership 4212 Nathan inquires about the economics and rationale of writing a book versus running a company. He demonstrates industry knowledge regarding Advantage Media's Forbes distribution model, while Scott keeps the tone self-deprecating and lighthearted.
MSIGHTS Core Platform Architecture and Pricing Mechanism 6424 Nathan pushes Scott to explain how MSIGHTS prices data ingestion and challenges the hybrid SaaS and professional services revenue breakdown. Scott reframes professional services as recurring rather than one-off project work using his pit crew analogy.
Team Allocation, Global Footprint, and Customer Data Dilemma 4213 Nathan probes into team structure and asks about unusual customer acquisition stories. Scott shares an anecdote regarding adult content data transformation and the cash flow challenges of bootstrapping.
Historical Growth Trajectory, Churn, and Long-Term Client Retention 5313 Nathan investigates MSIGHTS' revenue trajectory and historical numbers. Scott walks through their revenue retention, low churn rate under 5%, and 14-year enterprise client accounts.
Operational Margins, Foreign Exchange Arbitrage, and CAC Dynamics 6413 Nathan checks gross margins across SaaS versus services lines, expecting low margins. Scott explains how maintaining global offices allows forex arbitrage to keep service margins at 70%, while Nathan assesses unit economics and CAC payback.
Promotional Sponsor: The Top Inbox Email Tool 3101 Nathan transitions through an ad read into the standard Famous Five rapid-fire questions, with Scott providing concise, cooperative answers about routines and favorite books.
Episode Summary and Final Takeaways 0000 Nathan delivers a closing solo recap summarizing MSIGHTS' revenue, churn, ACV, and CAC metrics before concluding the interview.

Statements from this episode (12)

Disclosure
East uses his book 'The Cuttlefish Marketer' purely for business development
“I think I've given away more copies than I've sold, but because I really use it more as a business development tool. I think the only person that really bought one so far may be my mom and my dad, and I forced them to buy it, but no, it's, I think we've sold a…”
Scott East Nov 6, 2017 ▶ 3:54
Insight
East: Per-seat licensing hurts the value of enterprise data platforms
“To me, the license model for that type of system just really doesn't make sense because it really hurts the value proposition. I want as many people as possible. Inside the enterprise using our reporting for decision making, because it really drives better val…”
Scott East Nov 6, 2017 ▶ 5:49
Assertion Not checkable as stated
East: MSIGHTS revenue splits 50-50 between SaaS licenses and professional services
“We have recurring platform license, which is about 50% of our overall revenue, and then we also have recurring PS revenue, which is the balance of the 50%.”
Scott East Nov 6, 2017 ▶ 7:24
Assertion Not checkable as stated
East: MSIGHTS averages $250k annual revenue per enterprise client
“Our average revenue is about 250,000 dollars per per client. And that actually, we have clients that are on the lower scale paying 30,000 a year, and we have clients that are paying us over, over a million a year.”
Scott East Nov 6, 2017 ▶ 8:22
Assertion Not checkable as stated
East: MSIGHTS serves fewer than 20 total enterprise clients
“I mean, it's less than 20 clients.”
Scott East Nov 6, 2017 ▶ 13:04
Assertion Not checkable as stated
East: MSIGHTS loses at most one client per year to churn
“But on churn, we maybe lose a client a year, if that much.”
Scott East Nov 6, 2017 ▶ 13:13
Disclosure
East: MSIGHTS is fully bootstrapped, having never raised outside capital
“No, I still haven't raised capital.”
Scott East Nov 6, 2017 ▶ 13:53
Assertion Not checkable as stated
East: MSIGHTS achieves 80% software margins and 70% services margins
“So generally speaking on the platform side, we have an 80 plus percent gross margin on platform. And then on professional services, we're 70”
Scott East Nov 6, 2017 ▶ 14:20
Assertion Not checkable as stated
Scott East: MSIGHTS reached $3.5M ARR in 2017
“Last month, I mean, we were running about three and a half million for ARR as of last month.”
Scott East Nov 6, 2017 ▶ 15:06
Assertion Not checkable as stated
East: MSIGHTS enterprise CAC reaches $25k for six-figure deals
“Our CAC, when we're looking at kind of lower price point clients, our CAC can be anywhere between a thousand to 5000 dollars for acquisition for a lower end client, but when you start getting up to enterprise, I mean, you can get 25,000 dollars on the CAC, and…”
Scott East Nov 6, 2017 ▶ 15:32
Opinion
East: Relying on word-of-mouth was MSIGHTS's biggest growth mistake
“If I had to kind of name a big mistake that I've made over the last three years was not being more aggressive on the sales and marketing side and investing too much on word of mouth.”
Scott East Nov 6, 2017 ▶ 16:14
Insight
East: Future-oriented 'pull goals' are more sustainable than 'push goals'
“I think a pull goal is one of those things where you look a lot more in the future and you pull yourself up rather than using push, which I think depends too much on how energetic you are and focused you are.”
Scott East Nov 6, 2017 ▶ 19:18
Made with StarZero

Turn any episode into a week of clips.

This entire site, over 2,600 episodes transcribed, diarized, checked and made playable, runs on the StarZero media pipeline. Drop in your own episode and the podcast clipper finds the moments worth sharing, cuts them, captions them, and reframes them for every feed.

Try the podcast clipper Learn more