For those of you unaware of what Optify was, it was a ‘Marketing Automation Platform’ that tied together online promotion with search engine optimization, e-mail marketing, and social outreach with a straight-forward CMS to track leads and move them through a conversion pipeline. While Optify wasn’t the cutting edge of technology, it did have an effective team of digital marketers that managed to expose the market and garner a few hundred paying customers.
Unfortunately Optify went into the startup deadpool.
August 31st – Geekwire breaks the news that Optify is having rough times in an article titled “Optify hits the wall, lays off staff.”
September 3rd – Optify notifies the public that things are going wrong, but doesn’t tell its customers. It isn’t a normal notification, but a Merger & Acquisition notice that assets are being sold.
The Board of Directors of Optify, Inc., have made a strategic decision to maximize value of the assets and Intellectual Property of the company. The Board of Directors have retained Gerbsman Partners to solicit interest for the assets and intellectual property through Gerbsman Partners proprietary “Date Certain M&A Process”. Mersin escort
September 9th – The M&A Firm sets an official date for bids for October 4th. Financial records detail that Optify had over 350+ customers including 190+ digital agencies at an average monthly recurring revenue of $650 with a 25 day sales cycle.
October 17th – Official ‘Optify Sale Complete’ per the Optify.net Blog. In addition to selling the assets of the company, Optify gives all of the customers the short end of the stick:
As we have previously communicated, we have been seeking a buyer for Optify. We have recently finalized a sale. The buyer has chosen not to continue to operate Optify’s service in its current form.
WHAT DID INVESTORS VALUE IT AT?
According to Crunchbase records, Optify has a total of $10.8M in funding from an established group of investors:
[ezcol_1third id=”” class=”” style=””]$2.75M Series A, 10/2008
Madrona Venture Group
John Cunningham[/ezcol_1third] [ezcol_1third id=”” class=”” style=””]
$6.1M Series B, 10/2010
Triangle Peak Partners
Madrona Venture Group
[/ezcol_1third] [ezcol_1third_end id=”” class=”” style=””]$2M Partial Close, 7/2012 [/ezcol_1third_end]
What my team collected
Through digital analysis of search engine links, social comments, web tracking segments, social networks, and server clusters my team used a variety of tools and processes to identify over 2000 sites that had utilized Optify.
Without going into a prolonged research project we also discovered social accounts related to both existing Optify customers and some who merely tried it.
- 1096 Unique Twitter
- 1107 Unique Facebook
- 631 Unique Linkedin
WHAT IS IT WORTH?
That is the $100k question.
One of the big problems with any startup is generating traction and finding out where demand can be supplied by a solution (the startup.)
Optify spent $10.6M performing several ‘pivots’ in business process and pricing point since it came into the market in 2008.
By 2013 it had brought in a new executive team to establish revenue and had been touted by employees as having ‘the best quarter ever’ – but the burn-rate had consumed the raw cash necessary to keep the sales and client churn in-check.
In terms of what the client and prospect list is worth, we need to think about the raw formula of what it could/would be used for.
There are four core categories of total cost:
- Lead/Data cost (the raw info: mailing address, business name, e-mails, etc.)
- Outreach cost (the process of marketing touch points, branding, etc.)
- Nurture cost (the process of on-going outreach, multiple touch campaigns.)
- Sales cost (the fee paid to sales personnel for signing contracts.)
For purpose of the process of building a sales pipeline we are going to assume all for components are evenly split at $25 dollars each per lead (for a $100 total client acquisition cost.)
*As an industry standard in the SAAS category, client acquisition costs are usually FAR higher. A typical SAAS client acquisition typically absorbs %30 to %50 of first year revenue. In the cast of Optify clients this would mean a client creating $7,800 in annual revenue would have a total acquisition cost of $2,340 to $3,900
Lifetime Value (LTV)
According to Optify’s own numbers, clients had a monthly recurring revenue of $650 and a multi-million dollar revenue.
We need to assume that a typical client has a 6 to 36 month lifespan.
That equals a LTV of $3,900 to $23,400
If we apply a basic model of how many new clients convert off the total list of contacts if a proper sales and marketing campaign is implemented, the results in the chart below would be reasonable.
We know of the 2500+ sites engaging with Optify that only 350 to 530 were active paying clients.
The New Clients column takes into account that a much smaller percentage of sales would occur with non-paying customers or trial users of Optify. For a similar product or service vendor these are businesses that were very interested in the Optify product but chose not to sign-up for various reasons. The last four client columns assume a variable conversion rate on the ‘high value’ segment of the list that we actively using Optify.
Interested in talking?