Latest / 1 to 100 / E14: How to Print Money with Paid Ads with Neils Klement

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E14: How to Print Money with Paid Ads with Neils Klement · 1 to 100

0:00
Jeremiah over here hates money, so I guess we get to talk about
0:03
that today. We can talk about that.
0:06
We should also. We should also talk about Noah
0:08
and social snowball a little bit, those guys.
0:11
Yeah, I'm, I'm going to, well, he's going to come on the
0:14
podcast next week. Perfect.
0:17
And I might be in person with him because we're celebrating an
0:21
Ibiza. So Oh dude.
0:24
Yeah, that would be fun. Actually.
0:26
I I'm actually mostly upset though, that he didn't ask to
0:29
break the news on our podcast, right?
0:31
I feel like he let us down a little.
0:34
Bit honestly, he's been, I've, I've, I've kind of known about
0:37
the deal for like a couple months now and he's been pretty
0:41
Mia all across the board. So I think the last yeah, the
0:45
last few months to get like the deal over the finish line, it's
0:48
been a lot. But yeah, now he's filthy rich.
0:51
So it's great. No, it's.
0:52
Good for him. He didn't quite get to your 50
0:54
though that you talk about. He's doing all right.
0:59
Yeah, I don't. I'm not worried for him.
1:01
So yeah, I think. It'll be fine.
1:03
Yeah, those are like crazy young too.
1:05
He's younger than like, he's like very young so.
1:11
She got to feel me invoice like what was it an acquisition that
1:15
went over the finish line or yeah, for a good friend of
1:17
yours? Sick.
1:18
Yeah, it's a company called Social Snowball Bootstrapped and
1:22
they just sold to a public company for like 3035 million,
1:26
so yeah. Good for them, sick.
1:30
Yeah, for a bootstrapped outcome, that's incredible.
1:33
Yeah, absolutely. And I, I saw, I think he, I saw
1:37
him comment that it was all cash, which is actually like
1:40
kind of unheard of. Yeah.
1:42
What the public company 100% cash deal like?
1:45
I would not have expected that. It was all cash at signature.
1:49
We'll let him divulge. We'll let him talk about it.
1:52
But I mean, I mean, I'll just, I'll just say, I'll just say for
1:54
him like that was an important, that was an important piece.
1:56
Like there was other deals that weren't that so, yeah.
2:01
Good for him, yeah. But yeah, Neil, do you want to
2:04
do like a a quick intro for the pod and then we can kind of get
2:07
into our topics? The sure thing, sure thing.
2:09
Here's to hear what your questions are, gentlemen.
2:11
But generally, first of all, very excited to be here.
2:14
SAS operators podcast think it's a perfect match just because
2:18
we're running a SAS company called Perspective.
2:20
Perspective.co, it's a funnel builder at the end of the day, a
2:23
marketing platform bootstrapped within four years to 10 million
2:27
in AR, primarily within German speaking market.
2:30
Now moving over as well into the international markets and
2:33
primarily have done so through paid advertising, which I think
2:36
we can maybe get into the nitty gritty of today.
2:39
My name is Neil CMO at that company primarily running that
2:42
paid ads function. So yeah, maybe there's one or
2:45
two things I can share about that, So.
2:47
I think the craziest thing, I think, I think we met maybe two
2:51
or three years ago, maybe it's some somewhere around that time.
2:54
And you guys, yeah, you guys were on the trajectory of like
2:57
to hit like the 10 million ARR. And then like the crazy footnote
3:01
to that is that most of it was like German market, It's like 10
3:05
million ARR bootstrapped only inside of Germany, which is like
3:10
incredible. Exactly.
3:12
Yeah. And it's like by now it's a
3:13
couple million also from from the international markets.
3:15
But yeah, dude, like that was also honestly our biggest
3:21
ambition in general. It's like when we can like win
3:24
so much market share within that niche market specifically, like
3:27
if we play it right and if we continue building a great
3:29
product, we can also do that internationally.
3:31
And so that's, that's the bigger challenge that we're focusing on
3:34
right now. But it's also been like super
3:35
interesting for us coming from the German market, right?
3:39
And also having the the team primarily in Germany, we had, we
3:43
had to learn so many new things about what's actually going on
3:46
in the, in the global leagues, you know, and also what the
3:49
expectations of what's the product is and, and marketing
3:52
and all that good stuff. So it's fun journey.
3:54
Fun journey, yeah. That's awesome.
3:56
Wild you got to 10 million in Germany.
4:01
In Germany, yes, Sir. And only started
4:03
internationalizing also also this year.
4:06
Like, like we, we have had that thought and we have had the idea
4:10
like, hey, like, damn, we need to somehow break out of this
4:12
market for a long, long time. Yeah.
4:14
It was like it was quite tough for us to burn the boats.
4:16
You know, it's like it was a pro and con.
4:18
Like it was cool that we grew so, so big within a specific
4:22
market. But of course, like it's also
4:25
difficult to let go of that, especially if you want to stay
4:27
small and if we don't, don't want to take on big funding or
4:29
anything like that also for the boot shop.
4:31
So we had to rearrange our resources quite aggressively
4:34
earlier this year, but it's paying been paying off quite
4:36
nicely so far. And you're pricing I.
4:39
Cannot believe. Yeah, that's what I was going to
4:41
say. That's me.
4:43
And Jeremiah did the same thing. I cannot believe that you're
4:47
charging people $1000 a year and you're only in Germany and
4:52
you're at a $10 million run rate.
4:53
None of this makes any sense to me.
4:55
Because of the average Germany, did you?
4:57
Just like create people in Germany.
4:59
Dude, like we so one thing that actually was pretty neat back in
5:03
the days that the recruiting market is quite huge here.
5:07
So in general, like our software, what do you use our
5:09
software for? You use the software for Legion,
5:11
right And within Leech and there are sub segments, one of which
5:14
is and was recruiting specifically in Germany, like
5:17
people just need need to hire many people here.
5:19
And that was there was this trends of recruiting agencies
5:25
going on. And we basically became the go
5:27
to tool for that and just wrote that wave.
5:30
And that was, that was definitely a huge swing for us
5:32
back then because it was pretty much like we were able to to
5:35
have to create a category of 1 basically because that like we
5:40
saw that trend emerging from within our smaller customer
5:42
base. And when we continue to double
5:44
down on that, I did lots of educational material on it as
5:46
well. Like that was literally what's
5:49
what helped us go as far. Yeah.
5:51
That you you talked about paid ads.
5:54
I'm actually really curious on is that kind of like was your
5:56
home paid out strategy built around that, like that sort of
5:59
funnel, the idea of, you know, getting the right educational
6:04
content in front of people that kind of stuff like that.
6:05
It'd be interesting to hear what that looks like because also
6:07
like driving like $10 million with paid ads in those smaller
6:10
market is also I look at. I'm curious how you think about
6:15
like market saturation and all that too.
6:17
Yeah, Yeah. So the reason for why we also
6:19
had to move out of that market is just because it's been
6:22
stagnating a little bit for us, right?
6:23
It's like like what is what is the next biggest piece to it?
6:26
It could be raising average revenue per user, adjusting
6:29
pricing like like these types of place that you could do to still
6:32
squeeze the market. But in terms of new customer
6:34
acquisition, actually growing the top of funnel, growing the
6:36
user base. It just made sense to focus on
6:39
on new Geo locations and of course, like through paid outs,
6:43
like you guys know, right, Like even if you have a primary
6:46
channel that, that that brings in users, there's lots and lots
6:50
of things that happen on the sites.
6:51
Like there's people recommending the product, there's
6:53
distribution from the product itself.
6:55
Like specifically, for example, in a solution like ours where
6:58
you know, it's, it's always customer facing in a sense with
7:01
a funnel, right? So there's of course a lot of
7:05
extra wind coming with that. But the primary function was
7:09
always paid outs. And especially like you, I think
7:12
it's actually quite unusual that paid outs is one of the biggest
7:15
growth channels specifically for, for bootstraps like in
7:18
general and SAS and then specifically for bootstrap
7:21
companies. Because like if, if you are
7:24
running A S MB, B to B SAS, the main constraint is always cash
7:29
flow, right? Because if you bring in a user
7:30
looking at a pricing, what's it going to be?
7:33
It's going to be a couple of hundreds a month maximum at
7:36
least at first for the, for the wider user base.
7:38
And so we had to figure out how can we how can we bypass that
7:43
cash flow restraints And we've done so by, for example,
7:46
building webinar funnels which are running to the state where
7:49
we're selling yearly plans upfront and basically are
7:52
profitable on the front end. So we don't even have a payback
7:55
period on these and basically acquire lots of, lots of
7:58
subscriptions for free for that because the entire subscription
8:02
revenue that comes from the sidelines essentially because
8:04
the funnel in itself is profitable, that's, that's
8:07
additional and that's, that's driving a lot of growth as well.
8:09
So. That's exactly what Monday did.
8:12
You know that. Right.
8:13
Is that the case? No, I didn't.
8:14
I didn't actually. So, so Monday, do you guys know
8:18
the monday.com story by any chance?
8:21
Not specifically, no. So you should study at Neil's.
8:24
I think it'll be like super interesting for you.
8:26
But basically they feel they funded their growth because
8:32
their, even though their customer acquisition was more
8:36
expensive than their whatever three month revenue or six month
8:39
revenue, it was less than their 12 month and they were getting
8:43
people to swipe the card for the whole year.
8:46
And so you're always running ahead of your like gap realized
8:52
revenue. But because your cash flow is
8:54
good, you can use your cash flow to fund your growth.
8:57
And so they were like doing this constantly basically.
9:01
And in like some cases they were running really hot.
9:03
So they were like over X. So they raised capital and then
9:06
they overextended on the capital raise because they were like so
9:09
confident and and so it's like one of the very few B2B SAS
9:13
companies that it's grown basically on entirely unpaid
9:16
ads. Interesting man.
9:18
And you, like, talk to their investors, like their Series A,
9:20
Series B investors. They were just like, yeah, like
9:24
we were like pulling our eyeballs out because of like how
9:27
scary it was to like, see how much reliance there was on, on
9:31
paid ads. Yeah, it it's you should study
9:34
it. Yeah.
9:35
And there's like a few, few podcasts with with the founders.
9:38
It's very interesting. The same thing is happening in
9:41
e-commerce all the time. I mean in, in recurring business
9:45
as well like HIMS, I think the they spent 57 or 67% of top line
9:51
revenue on marketing, right? And assuming that they're
9:54
marketing to new customers and there's a huge amount of that
9:57
revenue that's in returning customer revenue, they're just
10:00
dumping it all into new customer acquisition, right?
10:03
I was curious if you're able to talk about like the a little bit
10:06
more specifically about the economics of how all that work
10:08
too, because I think that'd be really interesting.
10:10
You know, what, what was that? What did it look like in terms
10:11
of cost to acquire a customer? Like what?
10:13
How much? How much are you discounting to
10:15
get somebody to say yes to an annual upfront, all those kinds
10:18
of things? Yeah, 100% I can.
10:20
I can definitely share a bunch of details, maybe not all of
10:23
them, but essentially specifically on the discount
10:26
question. So we we are also like come,
10:28
come looking at our competitors in general.
10:30
We are definitely positioned a little bit more on the premium
10:32
side of things in terms of our pricing.
10:34
And we also didn't do any heavy discounting essentially like the
10:38
the annual plans that we're selling on, on these webinars on
10:40
these funnels is, is 30% discounted from the monthly.
10:45
If you extrapolate the monthly by 12 essentially, and our
10:49
yearly plans are discounted by 20.
10:50
So you're basically shaving off an extra 10%.
10:53
But we do like that's also what our DNA is, right?
10:56
So perspective for, for those of you that don't know, we were
10:59
basically running an agency before we have built that, that
11:02
SAS company and we took the agency money to go and fund it
11:05
and actually allow us to go and build that product.
11:07
But what I wanted to say is that pay dots and in general, like
11:10
Internet marketing was, was definitely within our DNA.
11:12
And so we also figured out what are other ways to build an offer
11:16
that is actually that's actually interesting to people that have
11:19
never heard of us. So the only two touch points
11:21
have been McKay. They saw now they're registered
11:23
through our funnel. Now they're coming to that
11:24
webinar. How can we make sure that
11:25
they're actually able to give us 1 1/2 to 2 1/2 grand basically
11:29
on the spots. And we do things like bundling
11:32
offers, right? So there's maybe some media
11:33
products added to it. We do run a community, there's
11:36
courses added to it. I mean, Zach, we're, we're in a,
11:38
a similar market, right? But both focusing on on ad
11:41
agencies and there's like huge, huge businesses also with just
11:45
within info. And since SAS always has a
11:48
service component to some extent because you got to make your
11:51
users successful, right? We do bundle that for example,
11:54
into the offer where we make that inevitably more valuable
11:58
without necessarily shaving off more in terms of the actual cash
12:01
that we're getting back. So yeah, that that was
12:03
definitely one of the one of the levers for even making that
12:06
profitable and making that work. Just to make sure I understand
12:08
the cost, it is roughly this kind of math where the cost of
12:10
acquisition is less than that one year revenue basically,
12:16
right. And then you just like keep
12:18
running that month over month and then you and and I mean,
12:22
yeah. And then the cash flows were
12:23
basically. Yeah.
12:24
The beauty of it, and that is like traditionally like if
12:27
you're running any type of sales or marketing for a SAS company,
12:30
what metrics are you looking at? You're looking at cost per
12:33
acquisition as like the main metric for measuring how
12:35
effective your marketing is. And then you're measuring that
12:38
against your average revenue per user per month, right, which is
12:40
your payback period essentially. And so then you have and within
12:45
SMB to B SAS, you're looking at like or investors might say if
12:48
you're under six months payback period, that's sick, maybe under
12:51
12 months, that's sick. What we do is we run traffic to
12:55
this funnel. We basically within a week, we
12:57
recoup that money, but we have 100 to 200 trials acquired extra
13:02
that are essentially all free now.
13:04
So we made that money back and these 200 trials convert to
13:07
paying customers. So that is all profit just
13:08
looking like if you were just looking at that acquisition
13:12
motion, right, that is the idea of course, like reality is some
13:16
weeks are more profitable, some weeks are less profitable.
13:19
But in general, that's like over the long haul that pretty like
13:22
works, works pretty well. 11 interesting thing is that when
13:27
you told me the whole like German market thing, I was like
13:29
blown away. But then I remember I looked at
13:31
our distribution of customers and we have like a highly
13:36
concentrated customer base in Germany.
13:39
People love you over here dude. Yeah, so one quick, one question
13:42
I have is what the fuck is going on in Germany and why do they
13:47
like so and and like it's just weird, like population size, it
13:53
makes no sense. It makes absolutely no sense.
13:57
It's a strong market, man. That's what it is.
13:58
There's lots of agencies specifically within, within our
14:01
market, right? There's many, many agencies that
14:03
are super successful over here. And yeah, strong economy, I
14:08
would say. How big is the average company
14:10
in Germany? But dude, I I wouldn't know.
14:13
Honestly, I wouldn't know. But I would say decently sized.
14:16
Yeah, decently sized. Is there a lot of small
14:19
companies in Germany? Lots of small companies as well,
14:21
yes, yeah. I don't have exact numbers off
14:25
the top of my head, but I know that for us in the Shopify, like
14:28
our customers being in Shopify customers, we Shopify merchants,
14:33
Germany is one of our top markets as well.
14:35
So it's behind there. You go.
14:38
It's right around the same level as like Australia for us and a
14:44
little bit behind the UKI believe it's right in that it's
14:48
in that range. Like the US is the lion's share,
14:50
and then after that it's like Canada, UK, Germany and
14:56
Australia are all kind of in the same area I remember.
15:00
When I was drop shipping, I knew this one kid that was like, drop
15:03
shipping globally. And he was, like, doing OK.
15:06
And then he did. He'd noticed that he was just,
15:09
like, performing better in Germany.
15:10
And so he converted all of his stores to only selling in
15:13
Germany, and he, like, tripled his revenue.
15:15
It was like, it makes absolutely no sense.
15:18
He was selling like Lego, like a Lego competitor.
15:21
Yeah. Yeah.
15:22
So I I know a couple of friends within the ECOM space that are
15:26
within the health supplement niche and they're only focusing
15:29
on Germany and do more than 9 figures.
15:31
Dude, it's crazy. It's got to be the case.
15:34
None of this makes any sense to me.
15:37
Companies are, is it? Well, I, I the only way this can
15:41
make any sense at all is that it's a rich country with people
15:45
who want stuff and so they're willing to pay for software and
15:48
services because there aren't other people.
15:51
So like the inverse of this, for example, is India where people
15:54
don't want to pay for software and services because there's so
15:57
many people, right? And so like you can, you can
15:59
replace with labor that which you would otherwise buy with
16:02
software. And so the, the only way any of
16:05
this makes any sense is the population constrained.
16:08
But the demand for a high quality of life means that you
16:11
have this very high spend power population, which is why I was
16:15
asking the like size of business question because it would also
16:18
then lead to leaner businesses that where you have like a small
16:22
team that's able to do a lot like I have.
16:24
No, actually how many people is is your guys's team?
16:27
We're 40 people by now. Oh.
16:29
My God dude stop it, you're 40 people bootstrapped at 10
16:33
million ARR selling only in Germany.
16:35
Well, we we started now selling outside how much?
16:38
Do you spend on SAS? On SAS like our SAS
16:41
subscriptions. Yeah.
16:43
How much do you spend on SAS? Dude, I, I, I don't know
16:46
exactly. I don't know exactly.
16:48
But there must be a lot. Yeah, we do pay a good sum,
16:50
100%. Yeah, yeah, yeah, totally.
16:53
A lot of it's drumming. Honestly, I don't don't even
16:57
think so, but we do like specifically in marketing, like
17:00
we do have a bunch of bunch of German SAS providers that we
17:04
also use, but also because I honestly enjoy enjoy supporting
17:08
like smaller SAS companies within Germany as well.
17:11
It's like something, something to it to me, especially when
17:13
it's young founders. But we like a majority of our
17:15
team also is the product team, right.
17:17
So the marketing team, we're, we're six people by now, but
17:21
majority is products because like if there's one thing that
17:25
we really, really care about, it's building the best freaking
17:27
product. I think like every, every SAS
17:29
founder, every SAS company would say that.
17:30
But especially in the crowded market like ours, it's, it's the
17:33
number one priority. Maybe we shop, I think for you
17:37
would be a great market at some point as well.
17:39
I mean, I think I'm, I'm just more like I'm so much more
17:44
interested in the shape of the company than I am because like
17:48
40 people doing this amount of revenue, I would be very
17:52
curious. I don't know if you can find out
17:55
later and then send it for in the show notes, like how much
17:59
you guys spend on SAS. But I've got to imagine that
18:03
what's happening is you have built a very high leverage
18:05
organization because like 6 people running your marketing.
18:09
Do you guys use agencies on top of the six people running your?
18:11
We do have two agencies, yeah, but like goal would be also to
18:15
like in general. Most of the functions I want to
18:17
get in house in general, yeah, but yeah, to two agencies.
18:23
And as each of the people on your marketing team like
18:26
automating their job aggressively like every week,
18:29
every month. Not enough man, not enough.
18:31
Like honestly, I would like if we just look at the day-to-day
18:35
work, I would say like there's so much more opportunity looking
18:39
at AI and everything in terms of leveraging ourselves and
18:42
leveraging, leveraging the specific job that we're doing.
18:45
But yeah, of course, like the main leverage, right?
18:48
Specifically within the function that we're running, the main
18:50
leverage is also capital leverage and the cash flow that
18:52
we're generating, right? Like we wouldn't, wouldn't have
18:55
been able to grow as fast if we wouldn't have figured out how
18:57
to, how to spend money around effectively, right?
19:01
That is, that is the main, main thing in this case.
19:04
And so yeah, of course, different types of leverage, but
19:05
like in terms of tech leverage and AI leverage, lots of lots
19:09
more to be done, definitely. I just say I've, I've always
19:11
wanted to get our paid efficiency to like where Neil's
19:15
is because it's like that is like the ultimate leverage.
19:18
Like if all you have to do is type in a bigger number and get
19:22
more customers and obviously there's more that goes into
19:24
that, but like it's type in a bigger number at the end of the
19:28
day. And if the machine on the back
19:30
end is like allowing you to keep making that number larger, like
19:33
it's the best leverage you could ever have.
19:36
Totally, man. And that's also why why I'm
19:38
excited to, I can somehow help you figure out how to do that
19:41
because as I said, like like in general in Germany also your
19:45
product is big. I know you you do have many many
19:48
trials coming through either way, but I think paid would be a
19:53
super sick thing to leverage on on your ends 100%.
19:56
I think we're just going to start only advertising in
19:58
Germany. That's the growth act to the
20:01
growth Act, yeah. I'm dying to know Neil's.
20:04
Are you mising around like annuals?
20:08
In terms of in general paid advertising, yeah, we do.
20:13
We do. It really depends on the funnel
20:16
we have. So like what Zach's just said,
20:18
right. So the idea is you spin up a
20:21
campaign, you have a link, you say, get me people to that link.
20:25
You see, oh, there's money on the other end coming back, you
20:28
dial up the number. That's the that's the wish,
20:31
right? But of course, like at the end
20:32
of the day, like we do a lot, a lot of testing.
20:35
So there's many different funnels as well.
20:37
And not all of them are optimized towards annual because
20:40
not all of the market is ready to go and, and pay, pay us a
20:45
couple 1000 bucks to, to go and use the software, right?
20:47
There's a big chunk of the market as well that wants to
20:49
just try. That's why we have the free
20:50
trial. So there's by now there's also
20:52
big, big part of the spend going towards free trial.
20:55
But the only reason for why we're now able to do so is
20:59
because we have the entire funnel dialed in in the sense
21:01
that we know exactly what's a trial to pay conversion rates,
21:03
right? Like what channels convert best,
21:05
etcetera, etcetera. You need to, you need to collect
21:07
that data to have the confidence to even spend in distribution to
21:11
know that the money's coming back.
21:12
And before we didn't really know that.
21:14
So we only optimized for the annual plans because we needed
21:17
to make sure the cash flow is coming back.
21:19
Otherwise we would have been, we would have not survived, right.
21:21
So it was a very, very different place back then.
21:25
So by now it's mixed, but before it was all annual.
21:27
And there's not like an 8 and 20.
21:29
It's not more into annuals or more into free trials.
21:32
It actually depends on the season as well, like depends on
21:35
what is performing best at the moment.
21:37
It's a little bit like like you're, you're rearranging your
21:40
budget on the basis of where you have the best, best chance of
21:43
success currently, right? It's like on the micro scale you
21:46
turn on and off different creative depending on what
21:49
resonates right now. And on a macro scale, you budget
21:52
more on the channels and the funnels that are that are
21:54
performing the best and are bringing the most money back.
21:57
So. That's cool for changes.
21:59
And of course, you need to come up with new stuff over and over
22:01
again as well, right? It's like the the wishes AI
22:04
build a funnel. I spin it up, it works, gets me
22:07
$2.00 for every $1.00 I spend. Then we spend as much money as
22:10
possible. Of course, at some point it
22:12
breaks some point you realize, oh, this week is worse than the
22:14
week before for some reason. So there's, there's lots of
22:17
things to of course, still keep in mind.
22:18
But yeah. With your international
22:20
expansion, are you primarily focused on free trials then or
22:24
is it kind of a mix of both? We do both again, do both again,
22:29
but primarily also because we had to like we realize that's
22:32
first of all, like we had to learn so much about how the US
22:36
works, how how the UK works, right?
22:38
Because like the, the big disadvantage of being being
22:41
focused on a smaller local market as you also focus on the
22:45
way these people think. And we had to realize, oh,
22:48
interesting, like there's a very different competitive landscape
22:51
that people have in their minds. Like we knew globally what the
22:54
competitive landscape was, but just the consideration of
22:57
different competitors, for example, in the prospects minds
23:00
changes with geolocation like and significantly.
23:03
And that's something for example, we had to learn.
23:05
So the communication shifted a lot.
23:07
We had to find new funnels. But the core concepts as to how
23:10
we're doing that still apply. And yeah, we're doing both.
23:13
Do you think that the the value prop on recruiting is like the
23:18
secret is, is like the secret underneath the growth?
23:22
Because, yeah, again, like the the total penetration amount is
23:26
so large that it's it's like, it's like a remarkable.
23:32
Is it, is it just that you found this use case that other people
23:34
just would not have thought of? And you're like now going into
23:38
these other markets and you're realizing like, wow, that like I
23:41
can't think of a single company that serves that use case in the
23:45
US. Actually, I literally can't,
23:46
which is crazy, right? And so I'm like, you just have
23:52
to, I mean, how you now, how do you like resonate with that use
23:55
case here? Like that's a hard problem, but
23:57
I don't know anyone filling that need.
23:59
Like I I literally don't. And most likely we are also not
24:03
going to fill that need within the US actually.
24:05
So that is also like our product, right?
24:07
You can use perspective for so many different things like if
24:10
you care to do that, you could do that like you for your local
24:13
club, you could spin up a survey, right?
24:14
Like the technology would be like you could do so many
24:17
different, have so many different use cases.
24:19
And I think having figured out that recruiting use case back in
24:22
Germany that allowed us to have this very, very unique type of
24:25
product market fit within the US.
24:28
It's all of a sudden again way more focused on lead generation,
24:31
growing your business like running funnels to to grow your
24:33
business etcetera. So it's most likely not going to
24:36
be a big share in terms of recruiting.
24:38
We have seen some demand, but the other demand is definitely
24:42
way bigger so far for us and that's what we're focusing on as
24:44
well. Really Legion?
24:46
So Legion for SMBs or Legion for large companies?
24:50
A Legion for SMBs primarily like our main customer is our main
24:55
customers is the classic ad agency that focuses on one
24:58
specific local type of business, right.
25:02
For example, Legion for bakeries or Legion for lawyers, whatever
25:07
and they then use our software to do their entire service
25:10
delivery. So that is that is the main use
25:12
case and that is also how we can like on the back and also grow
25:15
into some larger Acvs because at the end of the day we have we
25:20
have agencies that have use cases for huge volumes of of
25:25
like capacities within their accounts, right.
25:27
So that's the focus. So basically an agency might
25:32
have 100 clients and they come in and they spent a bunch of
25:34
different funnels. Exactly.
25:37
They have to have a minimum of 100 different funnels.
25:39
In that context, let's say. So correct, Correct.
25:42
Yes, exactly. Why do you?
25:44
Think, why do you think that the is it just that in the US, the
25:48
labor market is so tight right now, so there's just not a lot
25:50
of recruiting happening? Like what, what, what about the
25:54
way that your product gets used? Does it teach you about what's
25:57
happening in that country? Like why is recruiting so big in
26:01
Germany but Legion so big in the US?
26:06
Recruiting is huge in England as well.
26:09
I'm not sure why, but there's like a everyone's spinning up
26:12
recruitment agencies like the agencies in the US.
26:17
Taking a note, but like in general, yes, we've seen also
26:19
like depending on the country we've seen different different
26:23
interests in very different use cases.
26:25
For example, Netherlands, on the other hand, right, that was the
26:27
first market that we expanded to and it was basically like a one
26:31
to one copy to the German market, but touch speaking,
26:36
right. And so I think it's a it's a
26:38
great question for shop that like what does the use of a
26:42
product tell us about what's happening within that country?
26:44
And we've done a lot of research as well and we tried to figure
26:47
out exactly what is it going to like, what are our chances to
26:51
resonate within a specific Geo location with different types of
26:53
messaging. But to be honest, like I found
26:56
that the truest form of that research is just like half 10
27:00
thesises and figure out which of these resonates.
27:04
And in US the predominant one was legion and is still growing,
27:08
growing your business. And so we're focusing on that.
27:13
I think it's because European businesses are lazy and they
27:16
don't want to hire people themselves, so they go to
27:18
recruitment agencies. Yeah.
27:21
And I, I figured maybe like in the US, but you guys would know
27:24
more about that. It's like there's so many
27:26
different ways of hiring and maybe also way more established
27:30
ways of hiring within Germany. Like there's no so many SMBs
27:33
right where, where they're like, oh, damn.
27:35
Like I don't know how to get more people.
27:37
I I don't know how to, how to get more applications.
27:40
I don't know how to hire the right people.
27:41
And it's literally that like doing Legion for recruiting,
27:44
like running ads to make sure somebody that might be a fit for
27:48
the job somehow sees your ad, clicks on it, applies to your,
27:50
to your, to your job, is in many ways the most effective way to
27:55
do so with the cheapest cost for hire.
27:58
And I would assume maybe in the US, it's just not that way.
28:01
Yeah. I mean, I can only think of two
28:02
things, which is the US labor market is really tight right
28:06
now. So we have like record low
28:08
unemployment basically and so people.
28:11
And then the other one is that, but this, this must be between
28:14
Germany too. But like the total number of
28:16
people who are in government jobs or government affiliated
28:19
jobs is extraordinarily high. So you have like this massive
28:22
bucket of government and government affiliated and then
28:25
you also have a massive bucket of independent business owners.
28:28
And so the like labor dynamism in the US under a tight labor
28:33
market is actually very low, which which is like something
28:37
that not a lot of people are, you know, you don't generally
28:40
think about, especially in tech it, it feels very dynamic, but
28:43
that's just not represented about the whole country.
28:45
And also within Germany, like we've, we've seen, we've seen
28:48
different type, like different amount of demand in different
28:52
seasons, All right? So when there's a, a market
28:55
downturn, essentially more people also are moving into the
28:58
Legion angle because they need more customers.
29:01
They want to make sure that they're like their cash flow is
29:03
safe, right? The revenue is stable.
29:05
And when the market is on an upswing, more people want to
29:08
hire again. So like, it was like there was
29:10
one very successful campaign that we did back then where we
29:15
also started to move a little bit more into international
29:17
markets, but that was not still specifically for Germany, where
29:20
literally the campaign was all about, OK, if you're an agency
29:22
now, right now is the time to pivot, make sure you're doing
29:25
both recruiting and legion. And people loved it.
29:28
People loved it. And it was actually like a quite
29:31
a decent boost back before we then shifted full focus on other
29:34
markets. On the point of like the, you
29:37
know, the employment funnels, I wonder too if part of us, just
29:40
like in the US, we have different, maybe there's just a
29:42
different mindset around how people apply for jobs and where
29:45
you go. And we've got indeed, we've got
29:47
all these different things, which maybe is also true in
29:49
Germany. I have no idea.
29:50
But like that may actually change the way people go out
29:52
about applying for jobs. And if the, the way that and,
29:56
and also I think there's probably a massive difference
29:58
too in the way that like running a tech company, I recruit people
30:00
differently than if I owned a small business with a store.
30:04
That's going to be different too.
30:06
So it could just be that those I got enough nuance there with how
30:08
things are different in the US versus Germany that it just
30:11
doesn't make as much sense for AUS business.
30:15
Nils, why'd you guys bootstrap? Why?
30:20
Because first of all, what we truly value is the freedom that
30:25
we have, and it's going to stay that way.
30:30
We have many, many friends that didn't bootstrap and like we
30:34
have decided before that this is this is the way we want to
30:38
continue to do it. We want to maintain that
30:40
freedom. We want to be able to shape the
30:41
product into what we truly believe is the best, best way
30:44
forward. We want to run the company in
30:45
the way we want to run it. And we also, you know, want to
30:49
be, yeah, like at the end of the day, what will be free At the
30:53
same time, like we've been also very, very profitable, although
30:58
paid outs like a bigger spent expense on our, on our PNL.
31:02
And the main challenge would then still be like, how can we
31:06
deploy more capital? Because like we have, we have
31:08
our principles also in terms of wanting to, for example, grow
31:11
efficiently. Like if we were to take on
31:13
funding, what would it be invested in?
31:15
Most likely two things. First of all, like getting the
31:17
best people on the job, right? Making sure like we have the
31:20
best freaking team because we're we're actually on a like
31:23
globally very competitive mission.
31:25
And then second thing is user acquisition.
31:27
I think at the end of the day, we like within the financial
31:30
situation that we're in, like we still have so much more
31:33
opportunity to Max that out and to efficiently like spend that
31:36
money before it would even make sense for us to consider getting
31:41
capital because that is just not a problem.
31:44
Yeah. The only reason to raise, I
31:46
mean, for what little it's worth, not that you need my,
31:50
but, but the, the, the I think that your cash payback cycles
31:56
are the thing that determine whether or not you need to raise
31:58
money for what little it's worth.
32:00
Like the fact that you guys have such high efficiency on your
32:03
cash flow of CAC to then pay back based on the way that you
32:08
have set it up like that. Yeah.
32:11
I mean, by definition, when you talked about customer
32:14
acquisition, you were talking about more of that same cycle.
32:17
The only reason it won't work is if for some reason that cycle
32:19
changes. So I'm making something up, but
32:22
let's just say you started to sell an enterprise deal where
32:25
the, the cycle like you have to hire sales people and it's going
32:30
to take finite time before the cash comes in the door.
32:32
It's like, yes, that cash conversion cycle is what is the
32:35
definition of what requires investment, right?
32:39
And so that's, that's like the only way that I could even
32:42
imagine that you would even in the future consider it.
32:46
Again, not saying that that's good or bad, but the yeah, I I
32:52
get it. It makes a bunch of sense.
32:55
Yeah. But it's a, it's a very good
32:57
thought, man. And like I, I honestly like in
32:59
terms of our entire GTM function including sales and we do have
33:03
two sales, sales people on the team as well, but they're more
33:06
focused on expansion right now. It's not necessarily the
33:08
acquisition side of things. And I think at some point if we
33:13
decide to do move up markets, which I think is a viable option
33:16
as well for us in the future, then yes, definitely that that
33:18
will be a different conversation maybe, but also depends on what
33:22
situation we're in that when we when we make that decision.
33:24
Yeah, cuz if you're, you know, shopping your case, I don't
33:27
let's say you're trying to close a half $1,000,000 deal and it
33:30
costs you 6 months worth of the revenue, first year revenue in
33:34
order to get that deal done. Like you probably have high
33:36
confidence that's a multi year deal at that point you feel good
33:39
about it closing, but if it's going to cost you 1/4 of
33:41
$1,000,000 to close it like like you probably don't just have
33:44
that capital sitting around if you haven't raised money.
33:46
So first of all, that never happens, Jeremiah.
33:49
It costs you, it costs you more like 750 to 1,000,000 to close,
33:54
to close a first year or half, $1,000,000 deal.
33:57
So, so like, okay, so the math, the math is totally off.
34:01
Yeah, yeah, yeah. Because because the whole point
34:04
is that you have more confidence that it's more sticky, right?
34:06
And so it's like that it's like half a million year 11 million
34:10
year 2, like 2,000,000 year 3. And so you're like talking about
34:14
3 1/2 million over three years. And so you're going to like
34:17
spend 3/4 of $1,000,000, which is where your cash conversion
34:21
gets totally messed up. The math absolutely makes sense,
34:24
but you're like, there's no way you get that money back even in
34:26
a year in that context. I mean, look at Wiz, like I mean
34:32
this like what I just described to you is whiz.
34:35
They had to spend ridiculous sums of money to sign people in
34:39
the first year with the knowledge that the contracts
34:42
were going to grow in the out years and it and it worked.
34:44
But it takes like, serious, and I mean they raised ridiculous
34:49
sums of money to make that work. Ram.com would be another case
34:53
exactly the same thing where it's like huge contracts and
34:55
like so much investment into the customer acquisition.
34:58
But the beauty of that is like, and that's of course like if
35:00
you, if you run an SMB type business like Zacus or like we
35:04
are right where we are focused more on the SMB side of things
35:06
and not the enterprise side of things.
35:08
We don't have the beautiful thing called like 100 and 10120%
35:12
NR where you know like, OK, over the like over the next year is
35:17
going to be this customer that we acquired today is going to be
35:19
20% worth more next year. Like if you have that
35:21
confidence, of course that is, that is also how these companies
35:24
grow. So like in such a into such a
35:27
crazy size. For, for us, like one of our
35:30
largest churn reasons is that the person's business went out
35:34
of business, you know what I'm saying?
35:36
So it's like it's a completely different sort of dynamic or
35:39
like they're, it's either a businessman out of business or
35:41
they're not running ads anymore, which they're probably going out
35:44
of business. So it's like, yeah, it
35:48
definitely is. Different.
35:49
Yeah, yeah. Our and our is like, yeah, yeah,
35:52
it's like well north of that. So yeah, it totally changes the
35:55
dynamics basically. 100 percent, 100%, yeah.
35:59
So you have a. Little bit of a balance between
36:01
your growth and your profitability on acquisition,
36:03
right? How are you selling targets for
36:06
profitability on acquisition? What I mean is you stepped on
36:08
the gas pedal and you saw attrition in your efficiencies,
36:12
right? And you were paying more to
36:14
acquire each incremental customer and then you hit break
36:17
even. Is that the sweet spot for you
36:19
or is there a profitability on acquisition target that you're
36:22
looking at? It's a, it's a great question.
36:24
So we, we do look at at efficiency targets in terms of
36:27
cost per trial, customer acquisition costs in general and
36:30
then measure that against the LTV.
36:32
Like if we're just looking at that at that free trial funnel,
36:34
right, in general, we have a like a company profitability
36:39
goal in general for, for the entire year and also for the
36:42
month. So we do have APL, for example,
36:44
if we see an opportunity, let's just say we figure out this new
36:47
creative, that new funnel, whatever it might be in, in
36:50
July, and we would have the opportunity to go and spend
36:53
double the amount of money that we would have spent the, the,
36:56
the month before then. That is of course, a very, very
36:59
different question. And you need to shift around
37:01
money a little bit, a little bit differently.
37:02
But we have a bunch of safety mechanisms within that.
37:05
So for example, this upfront revenue that we that we have, we
37:10
want to spend. So first of all, we want to
37:11
spend the maximum, for example, of 25% of our total MRR.
37:14
That will be the Max. That is just the upper line.
37:16
We're not necessarily spending that just the performance is
37:19
good. And if we can like get in a
37:21
bunch of customers. So that grows with the MRR that
37:24
we're actually generating that extra Mr. that is that is
37:27
growing on the basis of of our acquisition would be then
37:30
funneled back into into the acquisition budget based on that
37:35
rule. The second rule and that now
37:37
relates more to the annual, the annual customer acquisition is
37:41
we allow ourselves to invest the chunk of that upfront cash.
37:45
So the upfront AR that we're basically generating into the
37:48
next month and that also helps us basically.
37:52
How much of it? It depends on on how, how good
37:56
we're feeling about the next month and about the performance
37:59
that we currently have. So, yeah, if, if, for example,
38:03
if there's a lot of cash flow, right, like going back to where
38:05
do you invest the money going back to that question, it's like
38:07
if we if we have a lot of cash and if we are confident in
38:11
investing it, then we could invest 100% of it.
38:14
Because we know that through the the upfront revenue that we've
38:17
generated, there's loads and loads of trials that are coming
38:19
from the sidelines that are basically free by them.
38:21
If you just look at the acquisition, right, without the
38:23
marketing team costs maybe about like just how much money we're
38:26
making back on the campaigns and So what?
38:29
Would happen. Well, what happened if the rule
38:31
became 100% of what you collect, you spend back in?
38:34
It would grow quite exponentially most likely if we
38:39
for example, like depends on on how profitable the month is,
38:42
right? It's like if we just stuck on
38:43
last month. If we, for example, like if we
38:47
made it happen to to get 2X the amount of money back that we
38:51
spend, then all of a sudden like we'd be able to double that
38:53
budget over the next month and. That's I guess what I'm asking
38:56
is why aren't you doing that? Like so, so by the way, like the
38:58
reason I'm asking this is like this is roughly what Monday did,
39:01
right? Like roughly what they did is
39:04
everything that they sold and that they collected upfront,
39:07
they just immediately reinvested into growth.
39:11
And so I guess like, why would in in your system?
39:13
Why would that break or would it not break?
39:17
It would only break if we're underperforming, It would only
39:19
break if we're investing sums of money and we're making less
39:22
back. That is when it's breaks, when
39:25
it breaks when the odds performance or the funnels
39:28
performance would break. But if not but it but.
39:31
It's self correct, but it's self correcting because then the next
39:34
month hundreds, 100% is going to be lower.
39:37
So it's so like it's a self correcting system, right?
39:40
That's why it's safe, that's why it's safe, but it doesn't
39:42
necessarily promise you or doesn't necessarily mean that
39:44
you're in a guaranteed way be able to double your budget over
39:47
and over again. Yeah, So you're correct.
39:50
It wouldn't break in terms of it will be like devastating for the
39:53
business because yes, through that these rules, you're in a
39:56
safe space. If you're only investing what
39:57
you actually have, that's a good spot to be in.
39:59
But of course, if we're underperforming in a given
40:00
month, then we. Might not grow as fast as we
40:03
want to be which is what's truly on the line.
40:05
Yeah, good question, man wild. Well stuff.
40:11
And Zach, are we spinning up your pay?
40:13
That's motion then together going forward so.
40:15
Yeah. I mean, we've been spending more
40:16
now on paid ads and we're working together.
40:20
We haven't got our first funnel up yet, but I do think that like
40:23
the webinar funnel piece for us could work really well.
40:26
Like even when I look at our GTM on like the sales side which is
40:31
like what? We've been pushing a little bit.
40:32
More to with like the launch of a new product, we've noticed
40:35
that like a lot of like the demo calls, a lot of the sales calls
40:39
are actually demo calls and not sales calls.
40:43
And so there's like potentially a chance in which we could, one,
40:48
do more demo calls at greater efficiency.
40:51
I mean, I will say, like for the length that I've ran foreplay as
40:56
a company, there's like two things I've always wanted to do.
40:58
1, unlock paid advertising because it is like the highest
41:02
leverage thing. And like for like 1,000,000
41:06
reasons. Like one, it's like, yeah, you
41:07
don't really need to hire that many more people to grow the
41:10
business. And like, I also kind of miss,
41:12
you know, a million credit card points a month.
41:15
Like that was really nice. That's a nice side effect, dude,
41:18
100% yeah. Zach says he wants to unlock
41:22
paid ads by the way, while we have like a $17.00 cost booked
41:26
call right now, which is not so bad.
41:28
There you go. It's definitely not bad.
41:30
Yeah, it's. Not bad.
41:31
The webinar strategy, is it sending people to a live
41:35
webinar? Is it pre recorded webinars?
41:38
Or is it kind of a combo? Both.
41:40
We always start with Live just because we need to figure out
41:42
the messaging, we need to like read the room, we need to figure
41:45
out what does actually resonate, especially for something like a
41:48
new market that we're in right now for ourselves.
41:50
And so we've been doing that decently successful and the
41:55
decently successful webinar is now being automated and then
41:57
we'll be on to the next. So that is basically the process
42:00
we're doing the Live 1, as long as that is the thing that's
42:02
bringing in cash and then we're automating that.
42:05
And of course, usually automated webinars are just a little less
42:08
effective. So you need to have the
42:10
optimizations dialed in a little bit more.
42:13
And once that's done, the question is what's the next
42:16
thing? Yeah.
42:17
I worked at a software business out of college that was focused
42:22
on F&B. They acquired almost all their
42:25
business through paid ads. And there was a guy who do
42:27
webinars every hour, not every hour he'd do like 4 a day, but
42:31
he actually, what he did is he, he would get on the call, talk
42:35
for a minute, say hi to people. You have a pre recorded webinar.
42:38
So you just sit back, let it run for 30 minutes or whatever it
42:40
was. And then you'd hop on at the end
42:42
with questions. And it actually was like a
42:44
pretty good setup where it was kind of a blend of like the live
42:47
versus pre recorded. And then there was a, hey, we
42:49
missed you. Here's the recorded webinar
42:52
thing that would get sent out. And yeah, it was interesting.
42:55
It sounds very similar to kind of the approach that you all
42:57
have taken. And it did work, but we were
42:59
talking about like a, it was like a 2020 to $40 a month
43:03
subscription. I don't know what the exact
43:05
numbers were. I want to say like I run 120
43:08
bucks to acquire a customer in that context.
43:10
But it was like when Madden was like cheap.
43:13
It's not so cheap anymore, so I've always been skeptical of
43:17
how well it would work and current context.
43:19
Yeah. Yeah, like Niels and Zach, I
43:21
don't. I've got to hit you guys up
43:24
after this. I'm going to.
43:26
I want to do the same thing for firm.
43:27
I don't know what you guys are doing but I want to do the same
43:29
thing cuz I love it. Yeah, that's what we can do it
43:33
man, 100%. Yeah.
43:35
I think the thing with with ads and it's the reason I don't
43:37
think that we've like been able to scale our budget to like
43:39
hundreds of thousands of dollars a month is that I don't think
43:42
we've carved out enough time for testing because like we're doing
43:46
so much other stuff. I do think that I'm just, I'm
43:50
going to say this to be true, right?
43:51
Like the read the way we can potentially do this for us is
43:56
almost like burn the boats on everything other acquisition
43:59
thing that we should be doing. You know, like I think as you're
44:02
running a software company, you get larger.
44:04
It's like we should be doing this sponsorship, we should be
44:08
doing this. But like it is true that like
44:11
all of those things hair in comparison to the leverage you
44:16
could potentially have on like paid advertising, you know.
44:19
And so I think. And just like that, this podcast
44:21
ends. Yeah.
44:25
Just like that in favor of static ads.
44:29
The flip side of that though, is it's really risky, right?
44:31
Like if you can't unlock it and you burn the boats, then you
44:36
know you're in trouble. I.
44:36
Don't think it's that risky you. Don't think it's that risky.
44:40
Because like I would say, we have no acquisition thing right
44:43
now where if it like turned off tomorrow, I would be kind of
44:49
scared. Like the only thing I would say
44:51
like if our if our, if our website got completely delisted
44:57
amongst all of like the search queries that we come up for like
44:59
that, I would be like pretty worried about everything else.
45:04
I don't think it would be like that.
45:05
And that means it goes to 0, not like we're not putting that much
45:09
attention into it. So.
45:13
What channels are you growing through primarily right now?
45:16
I mean, honestly for us it's always been SEO and now ChatGPT
45:20
is becoming is taking some of the SCO market share.
45:26
But I wouldn't say, I mean I don't think I've ever been able
45:28
to answer the question of like where do most of your customers
45:31
come from? I mean, I think the actual
45:33
answer to that is share links in our products.
45:36
Do you have like a post purchase survey in salt in the app?
45:40
No, I've been Jeremiah's probably going up.
45:42
That's what that's. There's this.
45:44
There's like so many things in our business that we like, it's
45:47
kind of crazy that I don't have yet.
45:49
We didn't verify emails until like 2 weeks ago.
45:52
Like we didn't have e-mail verification, millions and
45:54
millions of dollars and I've never verified an e-mail.
45:57
And like now we have e-mail verification.
45:59
The other thing that we've never tested and we should test it
46:04
soon is credit card upfront free trials.
46:06
Because I actually think that's also a piece that would like
46:09
make our paid advertising potentially grow like wildfire
46:13
is if we were collecting some revenue on the breakage of sign
46:15
ups. Whereas right now if someone
46:17
signs up for a trial, they never come back.
46:19
Like we never get any money, so. And that is such an important
46:22
piece, man. The reality though is unless
46:25
you're a shop with 75,000,000, which I'm sure to be clear, this
46:29
is probably hard for you too, but like, what do you
46:31
prioritize? There's so many things to do,
46:33
you can never do everything right?
46:34
So yeah, I'm sure even if you have 75,000,000, this is the
46:37
problem. So yeah, I get it on the e-mail
46:38
verification and all those things.
46:40
We also don't look for e-mail verification, but typically
46:42
you're signing up to Shopify. So like time helps.
46:44
But then we can't contact you either because it's like a
46:47
nympho at e-mail address. Yeah, it's all those.
46:49
There's like so many unoptimized things that just there's not
46:53
enough time to do them. Yeah, I think one of the the
46:56
tricky things with attribution understanding where your
46:59
customers come from is you know, where did they first come from.
47:03
I'm happy we have the expert on post purchase surveys here
47:06
because how do you deal with that recency bias?
47:09
I can definitely outline like how I think about it because I
47:13
think there's, I, I will say like, first of all, every source
47:17
of data is plot. So that's kind of like the, the
47:19
starting point that I have for this.
47:21
So if you're looking at, let's say Google Analytics as your
47:23
source of truth, you have to understand what the bias is
47:25
there. And the bias is going to be
47:27
wherever somebody clicks from. That's what's going to get the
47:30
credit. In this context, post purchase
47:32
surveys, kind of the opposite impact or the, the opposite
47:35
problem. And I actually one of the big
47:37
issues with post purchase surveys is people aren't
47:39
specific enough about what they ask.
47:40
So I actually don't like the question.
47:42
How did you hear about us? It's pretty stressful.
47:45
It lets somebody, if they have multiple touch points with your
47:48
business, they have to think about which one is more
47:51
important to them, which is OK, but that's the bias in that
47:54
question, right? You have to understand that
47:56
that's not bias. And then you're asking them to
47:58
interpret, is it the first time? Is it what brought me here
48:00
today? Is it this thing that I saw a
48:02
week ago? Like what is that thing?
48:05
So I actually really like asking the question, how did you first
48:07
hear about us, which asks the person to recall the first
48:12
interaction they remember with your brand.
48:14
And it's not necessarily the actual first interaction, it's
48:16
the most impactful first like early interaction with your
48:20
brand that you're asking them for.
48:22
And so that's what I always recommend and that's the what we
48:25
ask because I want to know what was that thing that made you
48:28
remember us? And that's where I want to
48:30
invest my resources. So like on our end, we know
48:33
that's agencies, marketing agencies is like the number one
48:36
thing that people will recall. And so that's where we invest a
48:40
lot of our resources. We haven't really ever run paid
48:43
ads effectively. So who knows, that might be
48:44
really good too, but it doesn't so far hasn't played out well.
48:48
Yeah, same for us honestly. So like post purchase surveys,
48:51
big point for data collection, but like especially if you scale
48:55
paid advertising across different channels like that
48:58
attribution also becomes a a bigger question, right.
49:00
And then like we for to this day and that is something I'm super,
49:03
super keen on anyway shop you would also know a lot about
49:07
that, but is incrementality testing that we have just not
49:09
done so far. We have never done a Geo hold
49:12
out and we we basically optimize primarily on on attribution in
49:18
terms of specifically for making the choice of the creative, but.
49:21
That's such a flex. We've never done a Geo hold out.
49:23
We get it man. You scaled in only Germany, it's
49:27
not possible to do a Geo hold out.
49:29
I get it. You know what A flex we've never
49:33
done a Geo hold out. It was not being vulnerable,
49:36
Sir, because I I actually truly want to do it and I think we're
49:39
way behind for not doing it. So was the intended the other
49:42
way around? I will say though, I actually
49:44
don't think incrementality is going to.
49:48
I shouldn't say it's not helpful.
49:49
Like I actually it can be helpful, but I don't think it's
49:51
going to to be as helpful as you think it might because of the
49:55
fact that most of the time when it comes to software, there's a
49:58
longer consideration window and usually the things that are
50:03
actually getting somebody interested in your software are
50:04
happening outside of what's going to be tracked with
50:07
incrementality. So I'm not saying it's totally
50:08
useless, but I actually think that what you would find is that
50:12
in that context, the survey is probably going to give you more
50:14
interesting information. So I think like somebody is, if
50:18
you're showing an ad to somebody for like, I don't know, some
50:22
I'll pick like Lollipop or something and you're just trying
50:24
to get them to like buy a six pack of Lollipop and they just
50:27
saw it for the first time that like incrementality works well
50:30
in that context. I don't think it works when
50:32
somebody's on a six month buying timeline, so.
50:34
I agree. It's fair, yeah.
50:36
The other thing, just for what little is worth is it would
50:38
literally never work for us because we know that the top two
50:41
things are social content and events.
50:43
And it's like you can't Geo hold out social content and events
50:46
that that's just like not a thing that you can do.
50:48
It's like a literal it's like a literal impossible thing.
50:51
And, and in fact, when you talk like the number of people who
50:54
have walked up to me and told me like, why they bought Vermont is
50:59
like ridiculous. And so we know that it is like
51:02
these two things. And so like, unlike Zach, I
51:06
can't not do this podcast because like it is an important
51:11
driver of why people trust a tool that is as expensive as us,
51:16
right? Like, like the more expensive,
51:19
the more you have to go on trust based marketing channels and
51:22
trust based marketing channels are the worst to measure because
51:26
it's like, did I interact with the person?
51:28
Do I feel like I know them? Like, you know, those those
51:31
sorts of things. And for you, like by the time
51:34
from the time somebody gets into a sales process, it could be a
51:36
year before you close that person, right, Let alone
51:38
whatever happened before that. So yeah.
51:41
Yeah, it's, it's that luckily we're not there yet.
51:44
Like luckily we're not at year long sale cycles.
51:46
But yes, you're like the part before that is the thing that
51:51
kills us, Yeah. Guys, we have a 5 minutes left.
51:55
Neil's Why Don't You Charge More?
51:59
Yes, best question, only good question.
52:05
OK. So we're working on a little
52:07
something. That's all I can say.
52:09
It's not going to be necessarily more, but it's going to be a
52:12
little different. That's all I can say.
52:15
Yeah. Yeah, good question.
52:17
Though, Jeremiah, why don't you charge more?
52:19
What did you, what are you doing with stamped?
52:21
Why did you why you got to be like that?
52:24
Dude, we're cutting costs. We're we're cutting pricing.
52:28
Oh, it does, yeah. No, I think though it's also.
52:32
Wait, wait. I have a question.
52:33
You're cutting pricing as in the plans that people are purchased
52:37
that that they're paying for right now is going to go down in
52:39
cost. Eventually, yeah.
52:42
Like the way that we are. We are we're building a new
52:46
product and that product is going to eventually be better
52:50
and cheaper than what we offer to them.
52:53
And I think like the, there's a few reasons for that.
52:55
One is just like it's a very competitive space.
53:00
And so you kind of either you go into like really investing in
53:04
the sales or you find a way to make it something that's
53:06
appealing at scale. So like the Sean Frank example
53:08
is a great example. The brands I want to work with
53:11
won't bad night, what we're going to charge and then once we
53:14
ultimately get that relationship, get that trust.
53:17
There are other things that we're building in the future
53:18
that I see as potential additional revenue drivers.
53:21
But in terms of like getting you the the basics in your hands,
53:24
those things are going to be very affordable.
53:28
I have one question, Neil's for your free trial funnel.
53:31
Go ahead. How how much so you guys are
53:33
credit card upfront free trial? I've never tested credit card
53:36
upfront free trial. What percentage of like breakage
53:39
do you have on that, on that trial?
53:43
And I know we've had the conversations about people using
53:44
fake cards and stuff like that in the past.
53:46
And then do you consider that in your churn or do you guys only
53:50
look at churn as like one month post, let's call it rebuild?
53:56
And with breakage you mean trust rate conversion or?
53:59
Or just like people that signed up for a child, put a credit
54:01
card in and they either cancelled the trial, didn't
54:03
convert or like you charged them, but then they reached out
54:07
the day after the charge. Like how do you, yeah, how do
54:09
you look at those metrics? Is it like?
54:11
Is it messy like? It's an amazing question man.
54:14
And at the end of the day, like we we've also struggled to look
54:17
for a longer time to really figure out how we want to
54:19
measure that. But we measure two things right
54:21
now. So first of all, a customer is
54:22
only a customer once they paid us a dollar.
54:24
So that is very strict. Once they like successfully gave
54:27
us money, that is when they're a customer, that's when they're,
54:29
they're called an acquired customer.
54:31
And we measure two things which is the adjusted, sorry, the
54:35
trial to pay conversion rate in general and the adjusted trial
54:37
to pay conversion. And the adjusted basically is
54:40
the trial to pay conversion minus maybe people that reach
54:43
out asking for a refund because they forgot to cancel that trial
54:46
that happens or unsuccessful payments, thumbs up.
54:49
And so we always start with that as the lowest base.
54:53
So for anybody, so for any of the stunning cancellations that
54:56
might come in, so the failed payments, anything where there
54:59
is not a successful payment so far is not even counted towards
55:02
that. So we always know what's, what's
55:03
the worst case scenario. Of course there might be 100
55:06
customers all of a sudden reaching out saying, hey, I'd
55:07
never wanted the subscription, please refund.
55:09
But that usually doesn't happen. So that's how we measure it.
55:13
Sorry, why don't you also include They must use the
55:16
platform just as like do you have a usage metric before
55:20
somebody becomes a customer or or like how do you how do you
55:23
think about payment versus? Usage, it's a great question.
55:27
We met. We measure both.
55:28
We measure both in terms of like the payment metric or the trial
55:31
to pay conversion. It's just very important
55:34
primarily for that paid ass funnel exactly cash flow because
55:37
that is that is the oxygen. But in terms of indicators for
55:41
how likely is that paying convert the paid conversion
55:45
going to be, we have usage metrics for that.
55:49
Yeah, sweet, awesome man. Well, I appreciate you taking
55:51
the time. Come on.
55:51
This is my next podcast. Yes, Sir.
55:54
This was amazing. Yeah, this was so fun.
55:56
Yeah, Neil, Congrats on such an amazing business, truly.
55:59
Yeah, I appreciate that. Thanks so much, gentlemen.