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Sep 19, 2016 · 17m · top-founders

KitCRM, $38K MRR, 2000 Customers

Michael Perry · 11m spoken Nathan Latka · 3m 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 with Nathan Latka, Kit founder and CEO Michael Perry discusses how his SMS-based virtual marketing assistant scaled to 2,000 paying e-commerce customers and over $30,000 in monthly recurring revenue. He shares insights on product pivots, unit economics, capital efficiency, and his mission to help small businesses survive and grow.

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 24.5% of the talking time here. How this is scored →

Nathan as informed peer 6.0 Guest teaching 3.0 Guest disagreement 1.0 Nathan pushing back 2.0
05100:0010:001:00–4:23 · Nathan as informed peer 5/10 Kit's Virtual Marketing Assistant Product and Pricing Nathan asks straightforward questions regarding product functionality and pricing tiers, chiming in on SMB failure rates. Michael openly walks through early product churn and the pivot to an SMS-based digital assistant.4:23–9:06 · Nathan as informed peer 7/10 Capital Raised, Customer Base, and ARPU Growth Nathan demonstrates solid SaaS finance knowledge by instantly computing Kit's implied lifetime value of roughly $475 from ARPU, CAC, and monthly churn numbers. Michael shares granular unit economics transparently and admits he had not calculated LTV directly.9:06–14:15 · Nathan as informed peer 6/10 Managed Ad Spend and Flat-Fee Pricing Ethics Nathan interrupts to drill down into exact ad spend figures and validates Michael's flat-fee model against percentage cut psychological barriers. Nathan also performs mental runway calculations based on net burn and cash raised.1:00–4:23 · Guest teaching 4/10 Kit's Virtual Marketing Assistant Product and Pricing Nathan asks straightforward questions regarding product functionality and pricing tiers, chiming in on SMB failure rates. Michael openly walks through early product churn and the pivot to an SMS-based digital assistant.4:23–9:06 · Guest teaching 3/10 Capital Raised, Customer Base, and ARPU Growth Nathan demonstrates solid SaaS finance knowledge by instantly computing Kit's implied lifetime value of roughly $475 from ARPU, CAC, and monthly churn numbers. Michael shares granular unit economics transparently and admits he had not calculated LTV directly.9:06–14:15 · Guest teaching 2/10 Managed Ad Spend and Flat-Fee Pricing Ethics Nathan interrupts to drill down into exact ad spend figures and validates Michael's flat-fee model against percentage cut psychological barriers. Nathan also performs mental runway calculations based on net burn and cash raised.1:00–4:23 · Guest disagreement 1/10 Kit's Virtual Marketing Assistant Product and Pricing Nathan asks straightforward questions regarding product functionality and pricing tiers, chiming in on SMB failure rates. Michael openly walks through early product churn and the pivot to an SMS-based digital assistant.4:23–9:06 · Guest disagreement 1/10 Capital Raised, Customer Base, and ARPU Growth Nathan demonstrates solid SaaS finance knowledge by instantly computing Kit's implied lifetime value of roughly $475 from ARPU, CAC, and monthly churn numbers. Michael shares granular unit economics transparently and admits he had not calculated LTV directly.9:06–14:15 · Guest disagreement 1/10 Managed Ad Spend and Flat-Fee Pricing Ethics Nathan interrupts to drill down into exact ad spend figures and validates Michael's flat-fee model against percentage cut psychological barriers. Nathan also performs mental runway calculations based on net burn and cash raised.1:00–4:23 · Nathan pushing back 1/10 Kit's Virtual Marketing Assistant Product and Pricing Nathan asks straightforward questions regarding product functionality and pricing tiers, chiming in on SMB failure rates. Michael openly walks through early product churn and the pivot to an SMS-based digital assistant.4:23–9:06 · Nathan pushing back 2/10 Capital Raised, Customer Base, and ARPU Growth Nathan demonstrates solid SaaS finance knowledge by instantly computing Kit's implied lifetime value of roughly $475 from ARPU, CAC, and monthly churn numbers. Michael shares granular unit economics transparently and admits he had not calculated LTV directly.9:06–14:15 · Nathan pushing back 3/10 Managed Ad Spend and Flat-Fee Pricing Ethics Nathan interrupts to drill down into exact ad spend figures and validates Michael's flat-fee model against percentage cut psychological barriers. Nathan also performs mental runway calculations based on net burn and cash raised.

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

0:00 · Nathan 27% · guest 73%0:00 · Nathan 27% · guest 73%3:00 · Nathan 14.9% · guest 85.1%3:00 · Nathan 14.9% · guest 85.1%6:00 · Nathan 20.9% · guest 79.1%6:00 · Nathan 20.9% · guest 79.1%9:00 · Nathan 29.5% · guest 70.5%9:00 · Nathan 29.5% · guest 70.5%12:00 · Nathan 21.4% · guest 78.6%12:00 · Nathan 21.4% · guest 78.6%15:00 · Nathan 36.9% · guest 63.1%15:00 · Nathan 36.9% · guest 63.1%
Sharpest disagreement ▶ 9:55 Rejecting agency pricing models

Michael forcefully rejects the agency model of taking a percentage cut of ad spend, emphasizing that nickel-and-diming small businesses violates their company ethics.

 Hardest push from Nathan ▶ 9:06 Pressing for exact managed ad spend figures

Nathan interrupts Michael's general answer about user budgets to demand the exact aggregate dollar volume managed during peak holiday months.

 Biggest teaching moment ▶ 6:32 Debunking the online foot traffic myth

Michael educates on the realities of low-barrier entrepreneurship, explaining how new e-commerce owners mistakenly expect online foot traffic to be effortless and free.

 Nathan holds their own ▶ 8:18 Real-time LTV calculation

Nathan demonstrates his domain expertise by instantly synthesizing a 4% churn rate, $20 ARPU, and $21 CAC into an estimated lifetime value of around $475 before the founder can.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Kit's Virtual Marketing Assistant Product and Pricing 5411 Nathan asks straightforward questions regarding product functionality and pricing tiers, chiming in on SMB failure rates. Michael openly walks through early product churn and the pivot to an SMS-based digital assistant.
Capital Raised, Customer Base, and ARPU Growth 7312 Nathan demonstrates solid SaaS finance knowledge by instantly computing Kit's implied lifetime value of roughly $475 from ARPU, CAC, and monthly churn numbers. Michael shares granular unit economics transparently and admits he had not calculated LTV directly.
Managed Ad Spend and Flat-Fee Pricing Ethics 6213 Nathan interrupts to drill down into exact ad spend figures and validates Michael's flat-fee model against percentage cut psychological barriers. Nathan also performs mental runway calculations based on net burn and cash raised.

Statements from this episode (14)

Assertion Contradicted
Kit won Facebook's Innovative Partner of the Year award in 2015
“So we're a Facebook marketing partner. We just got innovative partner of the year in 2015.”
Michael Perry Sep 19, 2016 ▶ 1:37
Disclosure
Kit Basic costs $10 to $100 monthly; Pro costs $25 to $150
“So the monthly fee for kit basic starts at 10 dollars a month and can go up to a hundred and kit pro starts at 25 dollars a month and can go up to a 150 dollars per month.”
Michael Perry Sep 19, 2016 ▶ 2:21
Opinion
Investors avoid small business technology because it is difficult to crack
“I think a common thing, an issue that people who build within the small business sector face is no one wants to invest in technology for SMB because it's such a tough nut to crack.”
Michael Perry Sep 19, 2016 ▶ 3:14
Assertion Not checkable as stated
Kit's SMS product launched in 2015 and became 100% of its business
“And we launched that in January of 2015, the SMS component, which is now basically a hundred percent of our business.”
Michael Perry Sep 19, 2016 ▶ 4:16
Disclosure
Kit has raised slightly over $1 million via convertible notes
“We've raised a little over a million dollars.”
Michael Perry Sep 19, 2016 ▶ 4:26
Assertion Not checkable as stated
Kit has approximately 2,000 paying customers
“We have about 2000 paying customers.”
Michael Perry Sep 19, 2016 ▶ 5:03
Assertion Not checkable as stated
Kit's monthly average revenue per user is approaching $19
“We're just kind of approaching 19 dollars.”
Michael Perry Sep 19, 2016 ▶ 5:14
Assertion Not checkable as stated
Kit averages 4% monthly customer churn across its marketplace partners
“Well, I think that, you know, right now what we see is that we average pretty consistently a four percent churn within our marketplace partners.”
Michael Perry Sep 19, 2016 ▶ 6:13
Assertion Not checkable as stated
Kit acquires new customers for approximately $21
“Our cost per acquisition is about 21 dollars.”
Michael Perry Sep 19, 2016 ▶ 7:40
Disclosure
Kit allocates its entire customer acquisition budget to Facebook ads
“We're spending all of our money on Facebook.”
Michael Perry Sep 19, 2016 ▶ 7:48
Disclosure
Kit abandoned taking a 10% ad-spend cut because it cheapened the brand
“We just do the flat fee. We had a 10% little bit for a second, but we just learned that that really kind of cheapened our brand and it really wasn't kind of hitting on the morals of what we wanted to be as a business.”
Michael Perry Sep 19, 2016 ▶ 9:37
Assertion Not checkable as stated
Kit surpassed $30,000 in monthly recurring revenue in January 2016
“January, we just cleared over 30 KMR.”
Michael Perry Sep 19, 2016 ▶ 11:23
Assertion Not checkable as stated
Kit's net monthly cash burn ranges from $30,000 to $40,000
“Well, our net cash per monthly right now on any given month can be anywhere from 30 to 40 K.”
Michael Perry Sep 19, 2016 ▶ 12:28
Opinion
Mark Zuckerberg is by far the best CEO in Silicon Valley
“I mean, Zucks is by far right now the best CEO in the Valley in my personal opinion.”
Michael Perry Sep 19, 2016 ▶ 14:51
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