Apr 3, 2016 · 20m · top-founders
LTV, CAC, ARPU Numbers from SaaS CEO Michael Perry of Kitcrm.com EP 222
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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 Kit CRM founder Michael Perry to explore how his SMS-based virtual marketing assistant scaled to 2,000 paying e-commerce merchants. Perry breaks down his company's SaaS unit economics, capital discipline, and strategic product pivot from a web dashboard to conversational AI.
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 36.9% of the talking time here. How this is scored →
Nathan as informed peer 5.1 Guest teaching 2.4 Guest disagreement 0.4 Nathan pushing back 1.4
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 18:36 Michael rejects conventional playbooks and rules
Michael passionately states that 'nothing fucking matters' and explains his mindset shift from trying to figure out how to play by other people's rules to forcing the world to play his game.
Hardest push from Nathan ▶ 10:19 Nathan interrupts to demand exact managed ad spend figuresNathan cuts off Michael's explanation of individual campaign sizes to demand the exact aggregate dollar figure managed during peak seasonal months.
Biggest teaching moment ▶ 7:43 Michael deconstructs the misconception of free online commerceMichael breaks down why SMB churn is structurally high, educating Nathan on how low barriers to entry fool founders into thinking customer acquisition and online foot traffic are free.
Nathan holds their own ▶ 9:31 Nathan computes SaaS unit economics and LTV liveNathan instantly calculates Kit's LTV at approximately $475 based on a $20 ARPU and 4% monthly churn, catching Michael by surprise as Michael admits he had not yet calculated LTV.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Introducing Michael Perry, Founder of Kit CRM | 4 | 2 | 0 | 1 | Nathan introduces Michael Perry and immediately asks focused baseline questions about Kit's business model, platform integrations, and tiered subscription pricing. Michael explains Kit's automated SMS marketing assistant capabilities collaboratively. | |
| The Strategic Pivot from Web App to Conversational AI | 5 | 3 | 0 | 1 | Michael walks through the painful pivot from a poorly adopted web app to SMS conversational AI. Nathan interjects with an industry benchmark about SMB failure rates driving customer churn, which Michael validates. | |
| Deep Dive into User Metrics, ARPU Growth, and SMB Churn | 6 | 4 | 1 | 2 | Nathan interrogates user counts, ARPU expansion driven by Instagram features, and clarifies monthly versus annual churn rates. Michael educates Nathan on why ecommerce churn occurs, explaining that low barriers to entry create unrealistic expectations among new store owners. | |
| Customer Acquisition Economics and Managed Ad Volumes | 7 | 2 | 1 | 3 | Nathan performs rapid mental math to extrapolate lifetime value ($475) from ARPU and churn, noting Michael hasn't modeled LTV yet. Nathan also interrupts to pin down exact managed ad spend volumes across peak holiday months. | |
| 2016 MRR Targets, Team Size, and Monthly Burn Rate | 6 | 2 | 0 | 2 | Nathan probes Michael's aggressive target of growing from $30k MRR to $150k-$200k MRR by year-end, while clarifying full-time headcount and net versus gross burn rate. | |
| Capital Discipline, Startup Lessons, and Contact Channels | 5 | 2 | 0 | 1 | Nathan estimates Kit's remaining runway based on their monthly burn and initial raise, while Michael reflects on startup frugality and lessons learned from past failures. | |
| The Famous Five Rapid-Fire Questions with Michael Perry | 3 | 2 | 1 | 0 | Nathan runs through his Famous Five rapid-fire questions covering favorite business books, tools, and sleep habits. Michael answers candidly, expressing a defiant perspective on breaking rules and playing one's own game. |
Statements from this episode (19)
Kit Basic costs $10-$100 monthly; Kit Pro is $25-$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.”
VCs avoid funding SMB tech because it is a tough market
“And 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.”
Kit CRM's SMS component now makes up 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.”
Kit CRM has raised slightly over $1 million in total funding
“We've raised a little over a million dollars.”
Kit plans a 2016 priced round to fund headcount and burn
“Yeah. I mean we're, you know, we're fortunate enough to be, we're obviously revenue generating and we're, you know, gravitating towards a break even point. But you know, we're not in the business obviously just To reach break even, you know, we want to increas…”
Kit CRM reached approximately 2,000 paying customers by January 2016
“We have about 2000 paying customers.”
Kit CRM's average revenue per user approaches $19 per month
“We're just kind of approaching 19 dollars.”
Kit CRM consistently averages a 4% monthly customer churn rate
“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.”
Kit CRM's customer acquisition cost is approximately $21
“Our cost per acquisition is about 21 dollars.”
Kit CRM spends its entire customer acquisition budget on Facebook ads
“We're spending all of our money on Facebook.”
Kit CRM managed $80K in November ad spend, dropping to $40K
“It was about 80,000 dollars in ad spend. In November. And then we're basically in both December and January. So about 40,000. So it cut in half.”
Kit CRM dropped a 10% ad fee 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.”
Missing $150K to $200K MRR by year-end would mean failure
“It's like, can we get to that 150 K MRR, right? Like I think that one 50 to 200 K MRR, if we don't satisfy that, the years of failure, we very much look at I think when you look at great sports teams, right? It's like championship or bust, right? Like second p…”
Kit CRM cleared $30,000 in monthly recurring revenue in January 2016
“January, we just cleared over 30 KMR.”
Kit CRM's net cash burn is between $30K and $40K monthly
“Well, our net cash burn monthly right now on any given month can be anywhere from 30 to 40 K. Just depending on variable marketing costs and things.”
Kit CRM does not need to raise additional capital in 2016
“If we didn't raise money this year, it wouldn't make a difference. We're in a unique situation where we've been very patient with how we spend capital.”
Venture capital should fund pure growth acceleration, not startup experimentation
“Raising venture capital, obviously, as you know, is not for everybody. But you have to be in position to use that capital purely for acceleration. Like for us, it can't be just like experimental cash.”