SaaS Interviews with CEOs, Startups, Founders
1044 How This Engineer Went From $0 to $44k/mo in Revenue
03 Jun 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 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 everyone, my guest today is Igor Povoy.
He is the president of a company called Express Pigeon, the easiest way to send professional email. He's got a passion for developing high quality software. You can find him all over the internet. He's also the creator of open source project, javalite.io.
He leads large IT products at ABM, Wolters Kluwer, Sears, Groupon, and a handful of other large companies, but now doing his own thing, which I love. Igor, are you ready to take us to the top? I'm here. All right, Express Pigeon, talk to me. What's it do and how do you make money? Well, the business model is really simple.
Basically, it was pioneered by any software-as-a-service company that sends email, such as Constant Contact, MailChimp, SendGrid, and others. So Express Pigeon is one of the players on the same kind of playing field. Got it.
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Chapter 2: How did the guest start Express Pigeon with no initial funding?
And what are people paying you per month on average, would you say? Are you like an enterprise or an SMB kind of model? We are kind of all over the place. We'd like to hit the sweet spot in the middle, a small to medium enterprise, and we kind of built a number of advanced tools that MailChimp and Constant Contact lack, specifically to target those people.
Since I was in the receiving end, running large projects that integrated with external email providers, I kind of know how painful it is to integrate and ask for a specific feature or data back. So what would you say the average customer today is paying you per month? Uh, about 500 to a thousand. Okay. Got it.
So between 500 and a thousand and getting more of the backstory here, when did you launch the company? Uh, the company was launched a few years ago. Basically we are kind of, uh, running in a stealth mode for a couple of years. What year was launch? It was launched in 2013. Okay, 2013. And then you were in stealth for a few years before charging?
Well, we started charging a little bit at the end of 2013, I believe. But we also had quite a number of customers that were just using for free and giving us feedback. And so that was kind of the model. At the time, we weren't sure what we were. So the original system was built to compete head-to-head with MailChimp. But we quickly realized that that was a bad idea for a number of reasons.
And we kind of pivoted away from that model more towards professional. And have you bootstrapped to date or have you raised capital? I've raised a little bit from friends and family. How much? Mostly bootstrap. That's private. But it's not a lot of money. Like, are we talking under 500 grand? Yes. Or somewhere around there, less than a million. Yeah. Yes. Then less than 500 grand. Got it.
Okay, good. Less than 500 grand. And that was all obviously just friends and family convertible note, or was it actually priced equity? Uh, priced equity. It was priced. Okay, good. How did you price the company? I mean, especially when you're dealing with, you know, relationships that are family.
It was, uh, I don't think it was fair to my friends and family at the time, but I just, uh, painted the number in the sky and based convince them to give me money. That's funny. Okay, good. So no institutional capital, but about less than $500 raised from friends and family. And then what have you scaled to today in terms of total customers using the platform?
We have about 20,000 registered users. We have over 1,000 users that use us regularly. That pay? That would be a non-disclosed information. Okay, but I don't really care about how many users you have because people can brag about that all day long. You can go out of business with a bunch of free users. How many though are actually paying? I mean, give me a range.
We have less than a thousand paying customers. Okay, but can we say more than 800? We could say less than 800, and I would like to live with that. Well, I mean, put a bottom on it, though. I don't want people to think you have zero customers. Just put some... No, no, no. We're profitable. We're paying for themselves. We're making some profit, and we're growing.
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Chapter 3: What unique features does Express Pigeon offer compared to competitors?
I mean, you can put whatever minimum you want. You're giving me nothing, so I'm making something up. All right. So we'll say between 200 and 800-ish customers. Okay, that's helpful to understand. One of the tricky parts about a business like this is churn. How are you managing churn? We are managing churn by providing the services that other companies do not.
So our target customer, it's not to say that every customer is a target customer. Some customers have been with us for three, four years, four years, ever since the inception, and they've been very happy. And I'm not talking about flower shops that send their newsletters about flowers.
I'm talking about professional corporations that send, let's say, hundreds of thousands of transactional emails per month, and they depend on us for their business. So we provide high quality of service. Our system is rock solid. Our system has a lot of features that a lot of competing companies just do not have. So all this is great, but ultimately comes down to the number.
I mean, what is churn? How many companies are you churning every month? We do not churn large customers pretty much at all. Give me logo churn, right? So Constant Contact, MailChimp, they all have logo churn 3%, 4%, 5%, 6% per month. What's your logo churn per month? We probably have less than that. So less than 4% per month? Less than 4% per month. Okay, got it.
If a customer leaves us, it's a big five-star alarm and we kind of go into, like, why this happened? Can we bring it back? Does any one customer make up more than 10% of your revenue? No. Uh, yes, we have a couple of large number, large customers that actually go over that and that's troubling. Got it. Yeah. Yeah. So, so, so you're very much, well, let me ask you your team size.
What are you at today? We have less than 10 people on the team. How many of them are dedicated to handholding those enterprise clients? Uh, we all are. They all, oh, so you don't have any just only engineers or only, I mean, do you have any insights? Oh, you're talking about like account managers? Yeah, like who are the salespeople? How many salespeople on that team? Oh, salespeople.
We have one salesperson. Okay, got it. So they manage all those enterprise accounts. Now, if there's a technical issue, obviously it goes to you, but they manage the accounts. Yeah, he's the first line of defense, and then it's me, then the team behind me. Okay, got it. I mean, I'm curious how skewed this is for you guys.
I mean, do you have like, if I add up your top five most paying customers, do they make up more than 70% of your revenue? Is it that skewed or no? It's probably less than that. It's probably less than 50%. Got it. Well, I mean, and this makes sense. I mean, you came from companies like Groupon, right, which would be enterprise accounts if they were using a solution like this.
Yeah, I'd be floored if they ā but they would never use Express Pigeon. They'd probably just, hey, let's acquire Express Pigeon and use it as a product or a project. Yeah, that makes sense. Yeah. So how are you acquiring customers? What are you spending to acquire them? We ā basically, we're using ZoomInfo. We do a lot of calls. We use Salesforce.
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Chapter 4: How many paying customers does Express Pigeon currently have?
Is that accurate? If you're under a million, we are under a million annually. Yeah, so a million divided by 12 months comes out to about 90 grand or 88 grand per month. So I just picked a number below that. We're doing less than that. Okay, got it. Are you doing more than half a million a year? We're doing right about right. Okay, that's okay. It's still a healthy business.
So half a million a year, half a million a year is basically, you know, 44 grand per month. So if you grew 40% year over year, what you were doing about 12 months ago, you're doing right around 3435 ish grand a month. So something like that. Yeah. And is most that growth over the past 13 months? Has that come from like one big enterprise account closing?
Or is that like 100 people paying 200 bucks a month? We picked up a number of customers, but I'd say that, uh, probably 70% of that new growth came from a few large, uh, senders. Yeah. Yeah. That makes sense. That makes sense. Very good. Well, let's wrap up here with the famous five number of one word answers here. Number one, what's your favorite business book? My favorite is business book.
I don't know. Uh, if you don't read them, don't make one up. Actually, it's a book that was put out by, uh, the 37 signals, uh, Founder. Rework. Rework, exactly. That's one. Number two, is there a CEO you're following or studying right now? Jeff Bezos, even though he's so far away. Number three, besides you, Ron, what's your favorite online tool? My favorite online tool is email.
Which one, though? Well, my favorite online tool, you mean email? Yeah, just in general. What's your favorite online tool for building the business? Oh, for building the business? Yes. That would be, being a technical person, I would say that it would be mockups. The one that allows me to quickly build and prototype products. It's like mockups.com? Yeah. Okay. With a queue. With a queue. Okay.
Number four, how many hours of sleep do you get every night? No more than six. No more than six. And what's your situation? Married, single, you have kids? Married, yes, yes, yes. I mean, yes, married, yes, kids. How many kids? Two.
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Chapter 5: How does the company manage customer churn effectively?
Two. Okay. And how old are you, Igor? I am 55. 55. Last question. Take us back 35 years. What do you wish your 20 year old self knew? That I can do a lot more than I thought I could. There you guys have it for me. Gore, he wishes he knew back then that he could do more than he thought he could. He's now flying solo, doing his own thing. No pun intended. His company's called Express Pigeon.
So on flight, doing well, growing. He obviously wants to be growing faster, but launched in 2013, team of 10 people focused on really beating MailChimp and constant contact, especially in the enterprise email marketing space. They've got about 200 customers currently doing about $44,000 a month in revenue or 500 grand a year,
They've grown that about 40% year over year, less than 4% monthly churn, which is healthy. And again, acquiring customers quickly, usually via the one salesperson, but also doing a lot of Zoom info stuff, just cold outreach. Igor, thank you so much for taking us to the top. Right. Thank you so much.