I had the pleasure of being interviewed on The Top w/ Nathan Latka. Take a listen, or read the transcript below.
NL: Top Tribe, Good morning! Grab onto that coffee. We’re going to have some fun with Nick Gray. He is the CEO of Museum Hack, a million dollar company with 40 plus employees, that was created to eliminate museum apathy by giving unconventional tours of the best museums. He also does corporate and non-profit team training, teaching how to amplify the customer experience via story retailing and audience development. Nick, are you ready to take us to the top?
NG: Let’s rock this.
NL: Let’s do it man. We’re going to have some fun I know it. So first things first, museums are usually boring as heck, what on earth drove you into that space?
NG: Oh hell yes! I think museums are super boring and that’s why I started this company – to start renegade museum tours. We’re like the cirque du soleil of the museum tour.
NL: So you make a boring museum like shine with polish and it’s a lot of fun right?
NG: That’s exactly right.
NL: Okay, so tell us the revenue model. How do you make money off of this?
NG: Alright. We charge for our tours. They’re about $59.00 each. We also have a live museum
tour. This isn’t like an app. No, you’re going on a private tour with a guide, usually about 7 people per tour. We make money from selling those tickets.
NL: Okay so the tickets are $59.00 bucks a pop. What year did you launch in?
NG: Launched in 2013. They start at $59.00. They go all the way up to $200.00 sometimes.
NL: Okay. Since 2013 how many tickets have you sold?
NG: Last year, we did over 10,000 tours. I don’t know the total since 2013.
NL: Okay so well over 10,000 tours. In 2015, what was total revenue?
NG: 2015 was 1.3 million dollars.
NL: Unbelievable. So 1.3 million bucks. And you said you have tickets that range in price, what was the average ticket price in 2015, do you know?
NG: I’d guess the average was about $75.00.
NL: Okay, 75 bucks. Very cool. I imagine you have costs on this, how do you hire a museum to put at every museum and give the tour? I mean, how do you manage that?
NG: Yeah. We actually pay our tour guides really well. They each make $32 an hour. A tour lasts about 2 hours but we pay them for 2.75 hours of work. So right there, labor costs for each tour costs about $88 per person.
NL: Okay. I’m sure the museum is getting a cut here.
NG: The museum does get a cut. Say we sell a $59.00 museum tour ticket, at the metropolitan museum of art, $25 dollars of that goes to museum.
NL: Twenty five okay. So on average, what is your net margin per ticket? Like 30ish percent?
NG: It depends. We really excel and where we make money is on those high dollar tours, private tours, bachelorette tours, VIP night time tours. Our $59.00 tour, we basically do a break even to 1) provide a shift to the tour guides and 2) just to get the word out there about what we do.
NL: Okay so tell me how you get new customers. Are you spending money on paid ads? How do you do it?
NG: We’re spending money on all by word of mouth. So the first year I spent the whole year building the business.
NL: Which year?
NG: 2011, 2012, the beginning of 2013. I did it purely for fun, for my friends, for free, because I just wanted to do something fun.
NL: So you said, no beers tonight, instead meet me at the Smithsonian and I’m going to give you a tour of your lifetime.
NG: Dude that’s exactly right. I moved to a big city to go to great spaces. I could go to a dive bar, nothing against dive bars but I could go to this awesome museum. So I went to the museum.
NL: What city are you in?
NG: I live in New York City.
NL: Okay cool. Yeah. Many museums there. Okay so you start doing it, your rock and roll, it’s word of mouth first. Do you remember what your first year revenue was in 2011?
NG: 2013 is when we started to charge for the tours. And I think yeah 2013, our first year revenue was about 60,000 dollars.
NL: Yeah I always love that because it’s always embarrassing right. So what about re-purchase rate? Do people tend to buy more tickets over time or is it a one and done thing?
NG: Good question. The purpose of museum hack is to really attract people, to encourage them to come back to the museum. I would say the majority of our customers are visiting the museum for the first time and we’re so young as a business, the short answer is no. We don’t have like an amazing repeat rate. And that’s why we have to constantly hustle for word of mouth marketing. Trip Advisor is huge for us.
NL: So do you eventually run through the whole market? I mean I imagine there’s plenty of people to go to, but eventually don’t you reach everyone possible?
NG: No, there’s so many people. Six million people a year come to the metropolitan museum of art. And if we serve 10,000 of them. We’re barely scratching the service.
NL: You’re obviously scaling fast. Do you raise capital?
NG: No raise. Obviously boot strapped.
NL: Boot strapped. So how do you, as the CEO and entrepreneur. By the way, what’s your situation? Single, married, have kids?
NL: How is a guy like you single?! All this energy. These people afterwards, they don’t come up to you afterwards and go want to get a drink afterwards or something?
NG: I am lucky that when I did tours you get to meet so many great people. These days I spend most of time behind a business trying to run and grow the business.
NL: Ah, so speed dating huh. You just stick them in a museum for it. I like that. How do you personally generate wealth from this business? Do you pay yourself a salary or dividends? How does that work?
NG: I just paying myself a salary within the last few weeks. I’ve been working with an accountant aka my mother on the side. Thanks mom. Shout out interim CFO. She really pushed for me to start to take a salary but for me I think I’m building the business, I’m learning how to build equity, and I’m learning how to be the CEO. I’m not a good manager and I’m trying to be a better one.
NL: So people are going to be saying, wait a second, he just said he wasn’t paying himself from 2011 to just a few weeks ago, how in the heck was he supporting himself? What’s the answer?
NG: Okay. I had a full time job the first few years. I didn’t consider this a business 2012-2013. I sold electronic equipment for jets and military planes.
NL: Door to door didn’t you.
NG: Basically door to door.
NL: I can just tell. You’ve got all the energy.
NL: So then what? How did you support yourself after that? Did you have savings or what?
NG: Yep I built up some savings, working out the job, building up the money. When I left I quit the job and around July of 2013 I said you know what, I’m going to do this museum thing full time. Until then it had just been a passion and I turned it into a business.
NL: This is a critical step. Every entrepreneur, especially people that are waiting to become an entrepreneur, people in their late 20s or after they’ve had a full time job. The moment you decide you’ve saved enough to cover your downside risk and you decide to give that letter to your boss that you’re quitting is a big big big moment, so I love going there. If you mind sharing, what were you making at that job? What was your salary there?
NG: I will say that I had a very healthy safety net. I had a very good amount of money.
NL: Like above six figures?
NG: I would say in the low six figures.
NL: Okay so that’s the salary you gave up. You have no family so I would imagine you controlled your expenses pretty well. You were able to put a good chunk of that away for like 3 years and that was your savings
NG: I’ve always been a good saver, as long as I can remember. I’ve also been an entrepreneur so I’ve always been a healthy saver. Suffice to say I don’t have to live paycheck to paycheck but I’m very budget conscious.
NL: So with that hard data in mind, what advice would you give the person right now that is listening and driving to their corporate cubicle that they hate but can’t quit because they have kids or don’t have savings, or have some other savings. What advice would you give them?
NG: Alright here’s the exact formula I would give. I worked on this every week like it was my number one passion. I treated my passion like it was my job. I was obsessed with it. I did it for my friends for free as much as possible to create a product. I created a ton of demand for doing it for free for almost every single weekend. I became the best at it. And then once I had an amazing product, once I had a huge pent up demand, that’s when I left my job and turned this into a business.
NL: I have to ask you. I hate when people give the advice just do what you’re passionate about. And like the world will give you money. I just don’t think that’s true. I mean sometimes it’s true and it happens. But it usually just isn’t true. It sounds like you are a firm believer in that though.
NG: No, I think a lot of passions are totally worthless and you’re never going to make money in the market.
NL: Beautiful, wonderful, I love that. That’s great advice. So move forward, you’ve built this business, what does the team size look like now? How many people?
NG: Today, we have twelve full time employees. We have 20 part time employees. These are people that are W2 employees. We pay taxes on them but they’re only working weekends less than 30 hours a week. We also have an amazing team of remote staff. Some people call them virtual assistants. They’re basically part of our team. We’ve got about a dozen of those.
NL: Got it. So fairly healthy. What about salaries? What are you spending on them a month? What are you spending on headcount expenses?
NG: Estimate is 60-80 thousand dollars per month on payroll. I know that payroll continues to be our largest expense. Last year it was 70%. We spent over 7 or 8 hundred thousand dollars last year of that 1.3 million on labor.
NL: So I mean you take 60 thousand divided by 60 dollar ticket. You’ve got to sell at least a thousand tickets per month just to break even. Did that pressure ever worry you?
NG: I guess it could worry me. We know that we need to at least make a hundred grand a month right now to at least make costs and the stuff that we’re doing. Does it ever worry me? No because we’ve grown incrementally til there and I feel the business in my gut. I have an amazing managerial team.
NL: Plus your mom is on your team. I mean let’s give mom some credit right?
NG: It can be a good thing and a bad thing. Mom if you’re listening I love you, thank you.
NL: Thanksgiving dinners will never be the same. “Nick, make sure you save all your receipts, put them in a big binder because if you ever get audited…” My mom all day. I’m like mom I’m a millennial I don’t save receipts. I don’t do that. I have a credit card report and if I need it, I’ll use that right.
NG: Dude that’s exactly my mother. She talked to me last night about receipts. I’m like mom, picture this. I travel all the time. Where on God’s green earth am I going to put some cardboard boxes? I feel like I’m a loser when I’m at the checkout at Whole Foods and I have to even ask for the receipt.
NL: You have to save them for seven years because if the IRS comes.
NG: That’s exactly mom. My mom does, my grandma does it. I’m just like guys, what if I do that but my house burns down? There’s got to still be a way to do it right.
NL: So IRS if you’re listening right now, I pay you so much taxes, I probably overpay. You can come after me but you know, I’m good on taxes. So, okay let’s move forward. You got a big deal with Trip Advisor, how did you negotiate that?
NG: On Trip Advisor, we are ranked number 9 out of all the tours and activities in New York City. Right now we’re really proud of that. It does fluctuate but it’s a competitive market. We do it based on word of mouth. We do 100% satisfaction guarantee. We tell people if you do not think this was a 5 star experience, we are happy to give you all your money back. And we do. We give back thousands of dollars. You know people who say you know this wasn’t exactly what I expected and I’m happy to do that because that’s how we’re going to grow.
NL: Yep. But how did you get in that Trip Advisor market?
NG: I think it was just a fluke. You know. Somebody recommended you know I should write about you on Trip Advisor.
NL: Ohh. There’s not a process. Someone just leaves a review and tags you and boom you’re in.
NG: Yeah, that’s basically the jist of it.
NL: Well Nick this a great story. What will your revenue be in 2016. What’s your goal?
NG: 2.2 million.
NL: Well if people want to follow you as you go after that goal, where is the best place for them to do that online?
NG: Check us out at museumhack.com or my website nick.restartacademy.co. I’ve got a cool weekly newsletter.
Thanks Nathan for a great interview! Check out his website at nathanlatka.com
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