Feb 17, 2016 · 21m · top-founders
Why We Turned Down a $35 Milllion Acquisition Offer With Russell Brunson of ClickFunnels
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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 ClickFunnels co-founder Russell Brunson on bootstrapping a SaaS platform to over $1.2 million in monthly recurring revenue, detailing the funnel economics behind its growth and why the founders turned down a $35 million acquisition offer.
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 42.7% of the talking time here. How this is scored →
Nathan as informed peer 3.8 Guest teaching 2.5 Guest disagreement 1.2 Nathan pushing back 2.7
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:00 Rejecting the venture capital playbook
Russell dismisses the venture capital route, arguing that taking investor money forces founders to serve a board of directors rather than their own customers.
Hardest push from Nathan ▶ 12:52 Challenging equal founder equity splitsNathan rejects the premise that cofounders provide equal value, pressing Russell on whether he split equity equally just to avoid an uncomfortable confrontation.
Biggest teaching moment ▶ 5:54 Explaining free-plus-shipping funnel monetizationRussell corrects Nathan's assumption about profiting on shipping fees, explaining that while they lose $12 per book shipped, the back-end funnel generates $32 per giveaway.
Nathan holds their own ▶ 8:34 Host calculates SaaS MRR run rate liveNathan immediately calculates ClickFunnels' monthly revenue run rate over $1M based on the pricing tiers and active paying user numbers provided by Russell.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Weekly Contest Winner and Upcoming Guest Preview | 1 | 1 | 0 | 0 | Nathan introduces Russell Brunson and his background before asking about his early entrepreneurial efforts selling potato gun guides in college. The dynamic is welcoming and conversational. | |
| The Evolution of DotCom Secrets Coaching | 4 | 4 | 1 | 2 | Russell outlines the history of DotCom Secrets coaching and the launch of his book. When Nathan assumes Russell profited directly off shipping charges, Russell educates him on front-end loss-leader funnel economics. | |
| Bootstrapping Philosophy and Monthly SaaS Revenue | 5 | 3 | 2 | 2 | Nathan probes whether ClickFunnels models VC-backed competitors like Leadpages, but Russell strongly rejects the VC route in favor of bootstrapping. Nathan quickly calculates ClickFunnels' monthly revenue run rate from the tier breakdowns. | |
| Turning Down a $35 Million Acquisition Offer | 5 | 3 | 2 | 6 | Russell explains turning down a $35 million acquisition offer and breaks down their equity split. Nathan pushes back hard on equal founder splits, questioning if Russell did it just to avoid conflict, prompting Russell to defend his cofounders' immense value. | |
| Unit Economics, Affiliate Cars, and Churn Metrics | 6 | 3 | 2 | 5 | Nathan drills down into CAC and churn metrics, repeatedly pressing Russell on whether giving away cars and hosting conferences counts as acquisition costs. Russell breaks down the math behind affiliate lease contributions and retention curves. | |
| Sponsor Promotion and Audience Asset Overview | 2 | 1 | 0 | 1 | Following an ad read and an inquiry into Russell's 500k email list, Nathan leads Russell through the Famous Five rapid-fire segment. The interaction remains amicable and routine. |
Statements from this episode (19)
Russell Brunson Began His Career Selling Potato Gun Guides and Custom Software
“One of my first products was actually a guide teaching people how to build potato guns, which I was an expert. I was an expert at so that, and then I started building hiring people to build software for me. So between software and how to information products, …”
DotCom Secrets Offers High-Ticket Coaching Programs Priced Up to $100,000
“So we have a 12,025 thousand and a 100,000 dollar coaching program. So we still actively run those.”
DotCom Secrets Generated Between $6 Million and $7 Million in 2015
“It'll do between six and seven million dollars by the end of the year.”
DotCom Secrets Sold 26,000 Copies in Its First Month
“Month one, we sold 26,000 copies since then. We sell a lot of them. I'm not sure exact numbers are probably at 30 or probably 40, 40 something thousand copies now.”
Free Books Lost $12 on Shipping But Drove $32 in Backend Revenue
“No, well, the book was free. We lost money on the shipping, shipping, seven 95 anywhere in the world. So on average, we would, we lost about 12 dollars per book, but because of the sales funnel we averaged 32 dollars every free book I gave away.”
ClickFunnels Reached 10,000 Paying Members and 50,000 Trials in Year One
“We just passed our one year mark with click funnels. We had over 50,000 trial accounts that people have gone and actually put a credit card in. And we currently have over 10,000 active members who are actively being rebuilt.”
18% of ClickFunnels Customers Pay $300 Monthly, While 82% Pay $100
“And so somewhere, you know, between there, the average I'd say about a little, about 18% of our customers are paying the 300 dollar a month level and the rest are a hundred dollar a month level.”
Raising Venture Capital Forces Founders to Serve the Board Over Customers
“Cause as soon as you start doing that, your customer no longer is your customers, the board of directors, and you start making choices that don't really serve your customers as much.”
ClickFunnels Reached $1.2 Million in Monthly Recurring Revenue
“Last month was 1.2 million. Month before was like 1.18.”
ClickFunnels Turned Down a $35 Million Acquisition Offer in Early 2016
“We got an offer last month for thirty-five million. We turned it down.”
Brunson Self-Funded ClickFunnels With Over $1 Million From DotCom Secrets
“It was over a million dollars when all said and done.”
The Three ClickFunnels Co-Founders Each Retained Roughly 27% Equity
“I think it's like 27% each. And then Dotcom Secrets has the rest.”
Co-Founder Todd Dickerson Built the Initial ClickFunnels Software Solo in Six Weeks
“Todd came in and within a month and a half had built it by himself.”
Brunson Advises Founders Against Doing Equal Equity Splits
“I wouldn't normally ever, I would never advise anyone to do equal shares ever, because I don't think it's smart typically, but for this, it just works.”
ClickFunnels Gave Away Eight Cars to Top Affiliates in One Month
“In fact, we gave away eight cars last month to affiliates.”
80% of ClickFunnels Customer Acquisition Is Organic, Compared to 20% Affiliate
“And I would say about 20% of our customer acquisitions from affiliates, the other 80% is organic, either from my company or from just, I don't even know how some of these people show up to be honest.”
ClickFunnels Generated $1 Million in Profit Hosting Its Last Live Event
“Like our last event, we made a million bucks putting on events. So it didn't cost us anything. We made 10 XR from tickets.”
ClickFunnels Boosted 14-Day Trial Rebill Retention From 40% to 64%
“And as of like six months ago only 40% stick through the rebill. We did a whole bunch of optimization. Now we're up to like 63 or 64% to make through the first rebill.”
Working for Free Initially Creates Case Studies to Sell High-Ticket Coaching
“I wish I would understand the power of working for free for people. When we launched our coaching program I started by finding someone who I knew I could help and I worked for free, dramatically expanded and blew up their company and then use that case study a…”