The guest of the day is Brian Minick.
Chief Operating Officer at ZeroBounce.
Brian brings over 10 years of Operations and System Administration experience to ZeroBounce. His portfolio consists of developing KPI’s, streamlining processes, and scaling systems to support business growth. Brian’s role at ZeroBounce is to develop the systems that help support IT, Customer Support, Sales, and Operations.
ZeroBounce — a Florida based email validation company developing a SaaS product that reduces and eliminates invalid, abuse, and inactive email addresses. ZeroBounce has been around for 5 years and has a team of 30 professionals servicing 75,000 clients.
What will you learn?
What is email deliverability;
Why it’s important to track the bounce rate of your marketing campaign;
- How the pandemic affects Brian’s business and what they do to support the local community.
Michael: So what is the bounce in terms of ZeroBounce® terminology?
Brian: So when we think about email deliverability, there's a lot of things that come into consideration. Bounce rate is one of them. Abuse rate is another part of that. So those are the people that are actually marketing your spam as well. And so when we think about deliverability, there's many aspects that are super important and probably the most important is getting into the inbox. So inbox versus spam is so important, and I stress that all the time to a lot of our customers. ZeroBounce® is a company, we help validate your email list. We will help you with data hygiene and the reason behind it and why it's so important is because you want to achieve inbox. So if I have a million records on my database, let's just say 20 or 30% of them are old and outdated, which is the standard on a per-year basis, you should expect about 20 to 30% of your email list to churn.
If a lot of those emails start bouncing and there's two types of bounces - there's a hard bounce and a soft bounce. A hard balance is the recipient does not exist. The email box that you're sending to does not exist and therefore the mail server rejected it. Now when that happens, there's a lot of feedback loops that start to happen and there's a lot of things that people don't see. There's mail servers, the providers of mail - Gmail, AOL, and there's many of these - but those providers use intelligence from their platform to service their other customers.
You also have spam filters in front of that, like Barracuda, Spam house, there's a lot of those other companies. Again, this is all seamless to users. They don't really even understand it's happening, but their job is to deliver messages of high quality to your inbox and put the ones that are spam into spam. That's their job.
So when you have a high bounce rate, and for us a high bounce rate, anything over 2% bounce rate is bad, and you really want to have your list looked at. And when you think about that, the bounce rate being so important and what you're also not seeing is that your providers suppressing behind the scenes. So when you bounce a lot of emails, your data provider or your mail provider, if you are using like a MailChimp or whoever it might be, they actually start to suppress those emails. This overall affects the quality of your campaign. The quality and how many people get into and receive your message is so important, and it's a percentage. Everything's percentages, and so what we help people do is really remove the bounce rate or lower the bounce rate and remove bad contacts.
So that's what we're able to help with, but the thing that I tell people a lot of times and it seems to resonate well, but it takes explanation and thought. If I have a million records and 20 to 30% of those bounce, the other 70% probably landed in spam, because they're looking at that from a global perspective. These guys are talking to each other. Gmail runs about 20 to 40% of email in the universe here right now, and so when a lot of stuff happens on a Gmail account, they'll actually move the message on the other recipients that haven't seen it yet because they're just trying to be intelligent. So it's really important to have the right quality list. And even if you think you've done it the right way, and many people do and I applaud them for that, you cannot ignore churn. So if you're dealing with businesses, there's churn and it's just natural. So those bounces are just important to take a look at and get them cleaned up.
Michael: I did a webinar on email durability like a month ago, and quality of the list and the bounce rate was one of the top five of the most important things that you need to consider while you're doing your email marketing. Doesn't matter if it's inbound or outbound, you always need to clean the list. You always need to take care of your durability from the standpoint that you can just use the tool. My team has been using ZeroBounce® for I think the last few years and I know that it takes a few clicks just to run the list and see what's your deliverability in terms of what's the bounce rate is. So from the bounce standpoint, so there are the hard bounce as you mentioned. So the hard bounce is when the email doesn't exist. Are there any other types of the hard bounce emails or that's the only one? So I received that kind of email back when I sent an email saying that, Hey, this is email or the recipient email doesn't exist. And that's kind of the only message that resonates with a hard bounce.
Brian: There's a couple other hard bounces, but that's the most common one. The other one could be one of two things, which is the content of your message. It was just flagged as spam. It's to the point where the mail server - it might have a virus. Not saying it to you, but just in general. They might have an attachment that this mail server didn't like, or it might have some key words that the mail server just doesn't want to have running through the system. That's one.
Michael: Is it still a hard bounce, or does it count as a soft bounce?
Brian: Some of it just depends on how bad that content might be. It might not ever make it. Soft bounces are kind of accepted. They hit the mail server, the mail server looks at them and will typically reject them. Those can be like an attachment is too large. Let's say you tried to send a movie file, and that movie files is 100 megabytes, but the mailbox only accepts 15 megabytes. That would come back as a soft bounce, saying your message was not delivered. Attachment size is too large. That's where it's at, or maybe the mailbox is full. It's out of storage and it's a free email provider. They don't just hand out storage. That will bounce as well as a soft bounce.
Michael: So these are the soft bounces. So basically, so just to sum up, so the hard bounce is where the email doesn't exist. So it's just the poor list, right? So if you have a lot of hard bounces, it means that you didn't clean the list or you just acquired the list from some sort of a provider and they didn't do the good job. So it doesn't exist yet. The soft bounce means that the list can be okay, but the way you send out emails, either the content is with spam wards or that it's too large or you have attachments or links, or somehow the spam filter on the recipient side doesn't want to let your message pass through. Correct?
Brian: Correct. Exactly.
Michael: Okay. So when you use ZeroBounce® or any other tools that verifies the email, what is the process? So you basically check each email address? How does it work? You don't need to be very technical about it. Can you give just a general idea of how the software works in terms of how it checks the emails and what does it say? Would it tell you that you have a good list, or would it tell you that these are the hard bounce emails. These are the soft bounce emails. What is it about?
Brian: Sure. So the process, we have two different ways. I'm going to go with just the quick and dirty way, which is upload your list to our platform. We'll take that list and start to process it. And what we do is we actually go out and attempt to do a mail connection to the recipient. We never send a mail just to be clear. We do not violate any policies. We're GDPR-compliant, all of that nature but we go out and try to check to see if the mailbox exists. It's very similar to if you've ever had to type in an address and it tries to auto complete, but it doesn't find it, maybe if you are filling out for shipping. It's very similar, but it's for email. And so we're actually verifying that mailbox exists. And then what we do is we return the results with statuses and sub-statuses. For the sake of not getting complicated, I'll just stick to status for this, which is going to be valid. These are the ones that we are with 98% confidence are real mailboxes. They exist. And by the way, if anyone tells you they're a hundred percent accurate here, be concerned. It's just impossible. The other status would be invalid. These are, we are 100% confident that this mailbox does not exist. If you send to it, you will bounce the message. And quite honestly, you're just better off deleting the recipient, or just marking it however you want in your database, but you don't want to market to it. It's actually going to work against you.
The other statuses that we have, which are very important, especially for people that are maybe not expecting your email address ... sorry, expecting your email campaign is a category that we call abuse. And these are messages that we're able to flag from recipients that are known in the email world to mark you as spam. What we do is we kind of call those a toxic email or an abusive email. They can be detrimental to your campaign, and the reason is because, like I said, these mail servers talk to each other and they're talking within their own ecosystem for sure. If enough people are marking you as spam, your message can get moved from inbox to spam, and that can be again detrimental to performance. So if we remove a few of those guys, to me, it's all about how many people get into inbox. That's what's going to drive success. And the last one that we would have is we all identify catchalls. The catchalls can be a little bit complicated. It's the mail server saying we accept email no matter who you send it to. So you might not get the message to the recipient that you're looking for, and we have another system to help with that, but it's common. There's nothing anyone can really do about it besides take a look at them with more detail and try to make determinations around them. But the output that we want to send to you from our service is the valid list. That's the one you're gonna have the most success with.
Michael: What about the catchall? I still can use them in my campaign, right?
Brian: Yeah. You can use them. They're a little bit more risky to send to because you just really don't know the outcome. We have an artificial intelligence scoring system that we built specifically for catchalls. We're the only provider out there doing something like that because we tried to solve this issue and we go out and look for activity on that email address and give you a confidence score of 0 to 10, 10 being we are really confident it's a real email address that exists, and 0 being we just couldn't find anything. So we don't have everything on everyone, but we go ahead and try to give you the best insights as possible and our 9 and 10, we guarantee another 98% deliverability on. So we try to help with that.
Michael: How many lists or requests do you guys service every day? Do you have the number in front of you, or maybe have a dashboard with all those numbers?
Brian: Oh yeah, for sure. To date, we've served over 4 billion emails. We've processed over 4 billion emails. We've been processing it for about three years now and on a monthly basis because obviously weekdays and weekends on a monthly basis, we do anywhere between 125 to 250 million emails.
Michael: 125 to 250 million. What industry do you guys service, if you look at your clients? By the way, how many accounts do you guys have right now?
Brian: We have about 75,000 accounts on our platform and the type of customer, actually this is what's so interesting. I can't narrow one. What I can tell you is a lot of the people that are using us are people that take email marketing very seriously. They take their infrastructure seriously as well. So we have a lot of enterprise, Fortune 500 companies on our platform that are very concerned about their IP addresses that they're using for their mail server, and we help protect that for them. So if your email's real bad, you can get blacklisted, and that would be another reason why you have bounces would be due to blacklisting. So using a MailChimp or somebody like that, they're trying to manage that behind the scenes, without you worrying about it. But if you actually own your mail server, you need to protect it because it's the lifeblood to your communication, especially right now.
Michael: So 75,000 customers. So you have Fortune 500, but the majority of those customers are small businesses or just individual entrepreneurs that are doing the cleaning, right? Or most of them are agencies like Belkins that just happened to aggregate a lot of data and clean like 100,000 of those requests on a monthly basis?
Brian: Agencies, people just collecting data that have a sign-up form on their website. You can integrate us there so you get the address clean in the first place. Restaurants, insurance companies, car manufacturers, we really have such a wide range of customer base. There's really no customer too large or too small for us, which is really wonderful and it's very affordable. If you're just a little guy, we have a free service that helps people get off the ground. And even if you're - to us when I say small, it's under 5 million records - you're small in our world, then we can help you, and it's not very expensive to do it.
Michael: What is the minimum monthly subscription?
Brian: It's $15 a month. We have a free subscription, which will validate about 100 emails per month. The first paid subscription would be 2000 validations per month and that would cost you $15.
Michael: And what is that average LTV or ARR per client across the board? You said $15 per month for up to 2000, but if it's an agency, you're going to be spending at least a few hundred dollars a month, right?
Brian: Yeah. A very common purchase amount for us would be like 100,000 records. That would go for about $390 per month.
Michael: So $400 per month. And then if it's x 12, so it's basically like about up to $5,000 per year, right? Average?
Brian: And it's not only subscription. If you have a one-time need, we can help you. If you have recurring needs, we can help you. We have a lot of options just because there's so many different variations of customers that need our help. So we cover it. We don't put you in a corner and pressure you to sign up long-term. If you need us once, that's okay. We'll help you. No problem.
Michael: So you are one of those SAS companies that do month-to-month, or like a purchase-based subscription. So you're not just doing an annual subscription. And that it, right?
Brian: Yeah, correct. Yeah.
Michael: That's actually great. I talked to several companies in the last week and I said, Hey, we want it to have this software to test it and discuss it, so we are very budget-friendly or budget cautious or something, and they said, sorry, mate. We just do per-year so we need to put $20,000 upfront for that. And I was like, no, sorry. It's not for me.
Brian: We just don't agree with that perspective. If you wanted to test us, you could test us without talking to anybody. And obviously we're all here. We have 24/7 support, account managers available, but you could test us for as little as 15, 16 bucks and really get a good idea of what's going on with your list. And for that type of analysis with no commitment whatsoever, you really can't lose. What you'll see are the benefits that we can offer.
Michael: So how many people do you guys have right now?
Brian: We have about 30 employees in total. I have four locations. One of them in South Florida. I have another one in Santa Barbara, California, a satellite office in Las Vegas, Nevada. and then I have an office in Bucharest, Romania, and they help service companies across the globe. So we operate international across the globe, 24 hours a day, seven days a week. We have live support and people available to either chat or talk to, if you need help.
Michael: Did you lay anyone off before COVID-19 or after?
Brian: No, we did not. Actually as a company, we're really big on our people. The people are why we are as successful and good as we are today. If you look at our reviews, you look at anything, you'll commonly hear how awesome our support team is and how awesome our team members are. These are obviously the people that interface with customers, and then we have the kind of non-interfacing, our dev people, accounting. The people that are just not day to day with customers, and we just worked so hard to do the right things for people and for the business. One of the nice things that we've been able to do is we've been trying to give back during some of this. We've not laid anyone off. We've not cut any hours. We have had no negative impact to the team. And what we've actually tried to do is help where we can. And so we have some promotions we're trying to help people with, and your team, your listeners are welcome to that as well, kind of happy to provide something for them. But we're also trying to help some of the government agencies that really are trying to get messaging out right now, donating services there, as well as we've actually, I'm really proud to say this, we've worked hard to figure out a program. We've actually employed some spouses on the team that have had impact to their jobs during COVID, just so we can help the family make sure that they're okay, and to us, that's just really important. And God forbid, something happens health wise. We've put a program in place that we can help them to the best of our abilities with medical, whatever it might be. We really care and it's scary. There's a lot of stuff going on and we want to be part of the solution. We don't want to be anything other than part of the solution.
Michael: I wanted to talk more extensively about COVID-19 and your role in the community and what you do to support it. But I wanted to step back and just to confirm something. Obviously, a lot of decisions that you're making right now are decisions that led you to this point in time because of decisions that have in your business. Remind me how many years you've been in the business so far.
Brian: The company was founded in 2015. The product went live in 2017.
Michael: So it's been three years that you've been selling actively and getting customers?
Brian: Yes. And we've really exploded to be honest and we're very thankful and happy for that. And we put a lot of hard work and got the right team together to accomplish it. But yeah, it was just the good old tech story. Two guys in a garage-type story and now we're at 30 with locations everywhere 24/7, and known as a leader in this space.
Michael: So obviously in SAS business, your margins are high, so you just need to acquire customers and then have great tech to support those customers and have a great product. So I think that 30 people, but this half of the team is probably developers or engineers or people that are building the product, correct?
Brian: Yes. Product and support.
Michael: And then they have probably been with you since the beginning, so probably you're just hiring more and more people, but those that already worked with you, they don't basically leave the company. They are still with you so that all of the folks that you have are the old timers, correct?
Brian: Yes. From the dev side, almost, almost everyone has been there since day one, other than the people we've brought on as we've grown, and they've been there as well. Our support team, super thankful. Our support team, most of them have been there since day one.
Michael: Did you raise any cash so far? Any external investment or you've been bootstrapping?
Brian: This has been bootstrapped. We are private entity and funded within.
Michael: Okay. I wanted to kind of analyze the decisions you made so far, because for example, a week ago, two weeks ago, I read somewhere that the company Bird, this startup out of New York, they were renting scooters or something. So they let like 400 people go by Zoom or something. Did you hear about this story?
Brian: I did not hear about that one specifically. I heard about...
Michael: Basically they've had this startup story when you have an idea and you start building a product and you just start raising the cash and just scale, scale scale, and you raise more money just to increase your valuation, and they probably ended up hiring hundreds of people everywhere or in their central location. But eventually when the crisis happened, they didn't have any cash to support them. They probably don't have any new sales just because basically it is what it is. A lot of folks haven't been selling a lot from the very beginning, specially when you're dealing with offline, and then they ended up losing a lot of people. And I think that your story is the best example of how you build the SAS business right now. If you are lean and agile and you have a few people and you just bootstrap and you just make money servicing your customers, and you just hire people as you go, but you always maintain a cash positive because then when something happens, you have cash in the account, you have your customers, you have a small team, you have, you can always toggle this, adjust your expenses and you can support the families of your team and you don't lay off people. And then you can contribute to the community more. So I think that's a great example of how you build a software business right now. I'm okay with folks raising capital, but I think that raising capital in the Silicon Valley dream is very overrated right now. Do you agree with me or disagree?
Brian: Yes, I totally agree. We're having conversations. How do we do the right things? And the conversations we're having are just so much different. There's so much. We're not having the conversation of who do we lay off. We're having the conversation of how do we help families within the team? How do we give back to our community? How do I help the local agencies or local cities here are trying to send email blasts out? I had never done this. They've never had to do something like this and to issue a stay at home. If you can imagine how old government data might be, they have the same problems. They don't just automatically get the message in the inbox and that's important, and so we're helping. It's just the conversations are so much better, especially during a crisis where businesses are being challenged and email marketing is ramped up so heavily actually. We've actually come out on top of this and that's again why we are not just taking it and putting it in pockets. We are putting it in to our people. We're actually building the product out more. We're actually doubling down right now.
Michael: Because more and more folks are focusing on email marketing, you guys have increased your clients, right?
Brian: And a lot of people just trying to figure it out for the first time. And so we can help you. We have free support. We are not going to charge people to talk to us and we'll just try to help you, and a lot of people literally have never done email marketing. A lot of restaurants have never done email marketing in their life and they need to figure something out. How do they get their specials out? They never worked on social. They have never built a big presence and so we're just trying to help. That's what we do.
Michael: That's great. How did you talk to the team when all this happens, when you go through this crisis with the team? Did you implement something specific for the crisis, like a crisis management solution, or you just had the same drill as you always do, and by the way, what is the process? Seeing that you said that you have multiple locations, are you guys used to working remotely? Did you have the office before this or you worked remotely the whole time?
Brian: We have an office. We would like people to come in the office. We think that 80% of our team would be in the Boca office in Florida or in Romania, so we just encourage collaboration and productivity based on that. But we actually have always had, I don't want to say always - about six months ago, we put in a work from home policy. And that was really just to give back to our team. We work relentlessly. Our team members, we don't really have a 9 to 5. We don't have a schedule like that. Our schedule is we have work to; do let's get it done. And so in order to also help support the team members, we implemented a work from home policy in the U S and that's helped put all the redundancy in place that we need on the system. So our phone system is virtual. All of our messaging systems, that can all be done through a single laptop. You can do it anywhere with zero impact.
And so actually, I specifically remember when this was happening here and it's starting to ramp up, everyone was like, are we going to close the office? And I'm like, I'm going to have the conversation today. Let's figure it out. And this was early, by the way. We were early making these decisions, not late. I spoke to the Executive Team agreed, like hey, let's do the right thing. Let's put peoples' safety first. We can work anywhere. It was about 5:00 PM here when we made that decision and it was implemented that morning. Following day, everyone was working from home. So people take their laptops home and we worked. We had no interruption of service whatsoever, no impact to service or support. It's been nice. I'm very thankful that we did all of this actually a while ago. We were prepared but not really mentally prepared. There's been challenges to working from home all day as well, bu that's more on of the mental side than it is operational.
Michael: What kind of products do you guys have in place to make remote based work to be effective? I mean, do you have a daily stand ups, weekly calls, weekly company meeting. Do you have any specifics for your company processes to leverage their remote work, or you just do the standard thing that other companies are doing?
Brian: I specifically oversee our sales and support team and we meet on a daily basis and talk about what's going on, talk about any issues that we might need to work through, or somebody needs something, needs help. So communication is really paramount for us. We're also always on messaging. And so we have kind of live messaging that's always happening. We use Skype in order to accomplish that. We are holding a company meeting right now once per month. We've always been big on trying to communicate with our employees and having the supervisors of those teams talking to them on a regular basis. The only difference has been it's now through a camera versus face to face.
Michael: Which platform do you guys use? Are you on Zoom, or you said Skype, so you can basically Skype to each other, or do you have another platform for video calls?
Brian: It's funny because there's so many platforms. We are a G-Suite customer, Google customer as far as business goes. We just love them so we use Hangouts specifically, usually for video calls or whatnot and some meetings, and Skype just because. I'm not actually sure. Now you're making me rethink why we use Skype, but it's a pretty good messaging tool. It works pretty good for groups. They are a little bit better, I think, than Hangouts, as far as Chat goes.
Michael: We also are in G suite, and why I asked you this because it's so funny. I mean, there are multiples of those video chat platforms out there, and I just cannot get around the idea of why Zoom increased their database of customers from 10 million to 200 million in like 60 days or 30 days or something, even though...and I have read this story of Facebook or somewhere that there was a guy that worked for Google that had a meeting with Zoom, an hi kid came in and said, Dad, why are you using Zoom if you have Hangouts or you're on Google or something. It's so hilarious. We also use Hangouts for some of the meetings. And I was like, why do we have Zoom if we have free Hangouts if we still pay for G suite? The answer is that because it's all people are using them and then you use zoom, even though we have Hangouts and then why if Google has Hangouts for long now, and they have Google meeting, Google meet, and now they just have Hangouts and then it's still not trending and it's free. It works fine.
I think that the bottom line is probably the quality of those software and the perks that you have. For example, here I'm talking to you, Brian and I have this restaurant behind me in the background, and I can't do that on Zoom or something. I think the quality of the sound and that you can do a bunch of stuff. For example, you can do webinars here. You can one to one calls. You can have private rooms and we could do from your mobile. I think that goes down all sorts of the technology, but also the marketing. So it's weird. How many companies and good video platforms are out there, and everyone is using Zoom just because it's a trend, even though they do have a nice technology. You have your Hangouts, which is free and you can use it.
Brian: That's a good point. Also, maybe something a lot of people don't know. We figured it out a couple days ago. You can actually record meetings on Hangouts. There's an option.
Brian: Yeah. There's a deep option in the security settings. I hate to say things about Google's products cause it just sounds weird, but if you Google it, you can find the path to turn on that setting and it just uploads it right into your drive box. That's actually super convenient.
Michael: You need to go to the admin setting panel and then just tackle the settings there?
Brian: Yes. And I think that's a big reason why a lot of people are using Zoom.
Michael: Yeah, the recording.
Brian: I think they started this not too long ago, but they don't make huge product announcements. You have to be on top of them because they do so much.
Michael: Exactly. Yeah. And I think that they're lacking this. Right now I think that they will understand this because folks like Zoom, they have really basically taken the business from their hands just because they do better in their promotion. I think that for Google, they need to better promote and market their products for specific users or customers if we're talking about Hangouts or Google Drive or something so that they can concentrate more on building the ecosystem, but thanks for the tip. I am definitely going to look at this after we finish this up.
We hope you've enjoyed this episode of Belkins Growth Podcast and found it useful. Be sure to subscribe and catch up coming up on iTunes and Stitcher.