SaaS Interviews with CEOs, Startups, Founders
$0 to $12m: The most successful SaaS Paid Ads Story of All Time?
23 Nov 2020
Chapter 1: What is the main focus of Hop Online's services?
Well, right now we are optimizing for a cost per acquisition in the high 20s. Let's say $27, $28. And the trial conversion rate is about 60%. So they have a pretty good understanding of the maximum customer acquisition cost right now.
Sorry, 20% convert to paid?
No, about 60%.
Oh, 60% convert to paid. Okay, got it. You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatka.com. When you subscribe, you won't hear ads like this one. You'll get the full interviews. Right now, you're only hearing partial interviews.
And you'll get interviews three weeks earlier from founders, thinkers, and people I find interesting. Like Eric Wan, 18 months before he took Zoom public. We got to grow faster. Minimum is 100% over the past several years. Or bootstrap founders like Vivek of QuestionPro. When I started the company, it was not cool to raise.
Or Looker CEO Frank Behan before Google acquired his company for $2.6 billion.
We want to see a real pervasive data culture, and then the rest flows behind that.
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My guest today is Paris Childress. Since 2009, he's founded and run Hop Online, which has pivoted in recent years to focus entirely on SaaS growth marketing. Services include SEO, content marketing, paid search, paid social, CRO, data analytics, and creative. Paris, are you ready to take us to the top? Absolutely. Let's do it. I never have services people on my show.
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Chapter 2: How did Output.com transition to a SaaS model?
And then it flattens out. And then lifetime value from that point on is very steady.
Got it. So you have about 30% turn in the first six months. But then after that, it really flattens out and they stick for a very long period of time.
Right, right. So we get to the most loyal cohort. after four to five months after they start the first payment.
Super effective. So let's take a step back now. When they go out and obviously raise a bunch of capital, right? 45 million is not a small number. How much of that deck says, just look, our paid spend math makes sense. We're going to plow a bunch of this stuff into paid spend.
I think most of it, is relying on that logic. We were brought into the investor due diligence process and we had to answer these types of questions.
What is a question that an investor asked you that I haven't asked you yet?
The investor asks, you're doing, so right now we're doing a thousand new trials a day. What would it take to make that 3,000 or 5,000? And could you preserve the unit economics if we wanted to triple this?
And how do you answer that?
How? The answer is yes. We can because we still felt like there were certain ways that we could continue optimizing. We hadn't exploited international expansion to the fullest degree possible. There are some analytics solutions as well that we haven't implemented where we think we can improve and eliminate a lot of wasted spend. And the product itself will evolve.
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Chapter 3: What strategies were used to acquire the first 100 customers?
Like, what do you think just from them using you, you can help drive them that revenue too?
I believe getting three times bigger is possible within one or two years.
Interesting.
And what's your model? Well, we are right now just charging them a percentage of ad spend, basically.
Is it under 10%?
Yes, it is.
Got it. With a new customer, if they hear you today and go, I want Paris to work on my company, would you let them use you at under 10%?
Maybe not at the beginning, but as it scales, yes.
Yeah, yeah. 10% of a million per month is a big number, but you could probably get away with only taking 2% there as you scale, which is nice. Super interesting. Last question here before we wrap up, Paris, this is fascinating stuff. How do you go about finding new channels, right? Do you get into sponsoring musicians' YouTube channels or podcasts or magazines or billboards?
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