SaaS Interviews with CEOs, Startups, Founders
1007 How Outbound.io Grew to $30k MRR Before Exiting to ZenDesk
27 Apr 2018
Chapter 1: What is the main topic discussed in this episode?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everybody. My guest today is Josh Weisberg.
He's the founder and director of GoToMarket at Outbound, a customer communication technology acquired by Zendesk in May 2017. He challenges businesses to rethink communication with customers by centering marketing, sales, and service teams on the human relationships they can build using this customer data. Josh, are you ready to take us to the top? Let's do this. All right.
Tell us about Outbound. We'll focus Outbound first, then acquisition, and then more about strategy inside of Zendesk. So when did you launch Outbound and what does it do for folks?
Yeah. So we launched it in 2013. And my co-founder, Dhruv, and I basically realized we were both working at Getaround, which is like Airbnb for cars, basically. Helps people do car sharing. And we needed a tool that was essentially a marketing automation tool.
So we would have these car owners who would get stuck in the funnel and they would take certain steps, but not complete, go all the way through. And we looked at all the marketing automation tools on the market. So like our exact target and Marketo and a lot of last generation tools. And we just were not happy because they were based on email and they were based on lists.
And we wanted something that was based on the actions people take inside a product and they could communicate across channels. And in 2013, not much of that existed. The markets exploded for those tools now. Because I think a lot of people have that. Name a few of those. Oh man, Autopilot, Intercom does some of this, Lean Plum does it, Appboy does it.
Yeah, so there's lots of new competitors in the space. But our core innovation was using events. So we realized customers don't need to use lists as much anymore. They need to use the actions people take inside a product. that we wanted to use actions instead of lists to figure out what messages people should get.
And that's the hardest thing for people. I mean, I come from the world where people brag about their list size. The problem is when they send a blast out, like 1% opens. But these people that understand, one, how to track events in their app, like I just signed up, I just bought a new investment here in Austin. It's an Airbnb. The onboarding there is incredible.
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Chapter 2: How did Outbound.io start and what problem does it solve?
So that was our subscription model.
That's great. Interesting. And can you give me a general sense of size? I mean, are we talking people on average paying $10 a month or $1,000 a month or $100 per month?
Yeah, when we started off, we wanted to make a self-service product, which is actually one of the reasons we ended up at Zendesk is that they have that in their DNA too. It's really hard to do. So we have an API integration. And everybody, of course, wants to start off, no salespeople. We'll just build it like Atlassian. We don't need any salespeople.
And eventually we realized that the API integration is a big hurdle. So you need to help people over that hurdle. And at first it was cheap. And so we were self-serve. And then we realized over time we need to be more sales-assisted. And now we're actually trying to move it back towards self-serve. So we're trying to lower the price point.
That's always been our dream is that we can get this product out there and we can give it to everyone. Yeah. At different levels of sophistication. But we started off, you know, and you were paying, I think when we started off, we launched, it was under a hundred bucks a month for our first couple of customers.
And now, you know, it's, it's definitely risen to at least a few hundred dollars a month for, for most businesses that are using us. And some of them are paying us much more than that.
Call it maybe 300 ish on average.
Yeah. I mean, it, you know, it varies by, it varies by industry and it varies by use case. Um, but yeah, there's, there's kind of a lot of growth stage companies who are probably paying, paying somewhere around there.
And then more again of the backstory here, pre acquisition, did you bootstrap the company or raise? And if you raise how much.
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Chapter 3: What was the business model of Outbound.io before acquisition?
make more money and grow those businesses faster. And we'll have to see what happens with those businesses, but I'm buying them. I'm buying them very quick. And I'm using nathanlatka.com forward slash hot jar for all of my website analytics. You can too. I work with them. It's totally free. You can go to nathanlatka.com forward slash hot jar, no credit card required.
Again, use it as much as you want. nathanlatka.com forward slash hot jar. I'll see you there. building up to the acquisition, what were you looking at in terms of growth rate year over year at that point?
I'm not sure that I can share numbers for kind of what our growth rate was, but it was definitely, we went through kind of an acceleration period, I think after YC. So we did the class of 2015, winter 2015. And that really kicked it into higher gear where we probably doubled our growth rate after that.
Got it. Okay. I mean, so, I mean, we're talking like, well, at the, at lower numbers, like, well, I don't know if there are low numbers, but you're not doing a hundred million a year, but I mean, you're able to weigh more than double year over a year pretty easily, right? Yes.
Yes, definitely. And, and, and, uh, you know, one thing that I learned from YC is that, uh, if you can pick a, the whole mantra is, is kind of, you can grow some metric that's very important to the business 10% week over week, then, you know, you're, you're, you're having some success. And so they would just kind of
Pick a metric, and then they will rake you over the coals every week and say, how are you doing on that metric? And that's a lesson we absorbed, and we were able to kind of keep doing and saying, okay, what is it that we're growing? And that led to our acceleration and growth.
take that lesson home because the theme I see, whether you're an entrepreneur just starting out or, you know, the guys, you know, at Qualtrics about to go public, they know the one metric that they got to get these users to hit in the first seven days, like using right to drive growth. And if that thing's not growing, you're cooked. A lot of people that I've seen, they don't even know one.
They don't even know what that metric is. Or if they do know, Josh, what that metric is, they lose focus on it. They want to do more stuff every week instead of improving incrementally on it.
Mm hmm.
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Chapter 4: How much funding did Outbound.io raise and from whom?
And last question here before we wrap up with the famous five. Did you also create additional leverage by actually getting a term sheet from a VC so you had the option to raise if you wanted instead of exiting?
We were in discussion. So remember at this point that we were profitable. And so you can't kind of run you, you know, it's easy when you're talking to VCs or you're trying to get acquired to run out of time. And that's really your worst time is your worst enemy. If you're running out of money, you're running out of time. You had plenty.
Because we were able to pay our own bills, we were talking to investors and we were kind of exploring all the options. And so that's what gave us the ability to kind of find a really good deal. Yeah.
All right, Josh, let's wrap up here with the famous five quick answers here. Number one, what's your favorite business book?
Ah, yes. So I'm going to give an off the beaten path tribe by Sebastian Younger. So this guy, uh, The thing I love about this book is that it's all about how everybody needs belonging and connection. Underneath all the products and all the things that you think about building every day, there's this deep human need for it. And it's been in our DNA for hundreds of thousands of years.
And understanding that at a deep level has helped me build better products.
Number two, is there a CEO you really respect or you're following or studying?
I mean, Yvon Chouinard of Patagonia. This guy just doesn't give a shit about anything and he changes the world every day. He constantly reinvents his business.
Number three, what's your favorite online tool besides your own?
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