SaaS Interviews with CEOs, Startups, Founders
1066 Optimove CEO: "Conditions Were Right To Stop Bootstrapping w/ $20m Raise"
25 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 Penny Yacouel.
He's the founder and CEO of OptiMove, provider of the Science First Relationship Marketing Hub. His extensive experience in analytics driven customer marketing, business consulting and sales, along with his innovative approach to entrepreneurship, business building and marketing have earned him recognition as a thought leader. Penny, are you ready to take us to the top?
I am.
All right. Tell us about OptiMove. What does it do and how do you make money?
So we make money by selling a SaaS software. Essentially, we work with companies. They pay us a monthly fee. This is how we make money. And what we do, as you said, a relationship marketing hub, this means that we help brands to thoughtfully communicate with their customers at scale by leveraging machine learning and data science.
So every time they talk to a customer via one of the channels, whether it's email, Facebook, Google retargeting, call center, whatever the one-to-one channel is, that conversation that they start with the customer is that much more meaningful and engaging because it's based on the data.
It's based on the wisdom of the machines learned to understand really what drives customers to detect patterns, things like that.
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Chapter 2: What is the main focus of Optimove and how does it generate revenue?
Especially when you sign with a company that owns multiple brands or multiple entities. So it's 300 brands. It's on our site. And we're 150 people in the company.
Okay. 150 people, 300 brands. Is that generally a one-to-one ratio though, in terms of company to brands? Like do you have about 300 companies or no?
No, no, no. That's what I know. So it's a, I forget the exact number, but essentially it's a, sometimes a company could have more than one brand. I think the average is probably 1.4 or something like that.
Okay. So you've got, you've got somewhere than around like 120 companies, 300 brands, something like that.
Not exactly, but let me keep something for myself.
Fair enough. Yeah, because you know what I'm doing here. I'm going to do the math. If you do have around 120 times the ACV you gave me earlier, are you guys doing about north of a million bucks a month right now?
You can think of a 150-people company and it is profitable, right? So you do the math and you can get pretty close.
I mean, that math would give me if I want to be exact 1.6 million in monthly recurring revenue. Is that about what you're doing today?
It's a no, but let me keep something for myself.
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Chapter 3: How did Pini Yakuel transition from a consulting gig to a SaaS model?
And I mean, look, I can put a better minimum on this, right? So if you say you have 150 employees, and you're in a healthy, you said, quote, a healthy area in the range between 150 grand a year in revenue to 220 per employee, I mean, at a minimum, you guys are, I mean, you're north of 22.5.
Dude, you're obsessed with that number. Let's carry on with the interview.
I'm absolutely obsessed with it, but because you're giving me data points, that makes it easy. I'm just multiplying your team size by the minimum of the range, 150K.
Okay, you can guesstimate whatever you want.
Well, I'm not guessing, though, Penny. I'm just using your numbers.
All right. You want me to you want me to what to confirm a number to.
No, no, no, no, no. I just I just want to now I'm understanding because you just revealed that you've actually raised. And now I'm thinking about what you said, which is sometimes people hire up front and there's a lag time for growth, which is.
Yeah, but that's not the case with us.
That is not the case. OK.
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Chapter 4: What percentage of Optimove's revenue comes from SaaS versus services?
So it's worth something. You can buy a company with the combination of cash and your stock. Is that why you raised? It's one of the, again, it's like I'm saying, it's like if you do things at the right moment and at the right terms, then. there's many good positive outcomes that could come from it. One of them is acquisition that I couldn't do before.
I'm doing now many things which are pretty more aggressive than I didn't do before. I'm still profitable, but there are some things I would never fund as a bootstrap because your state of mind and your mentality is more survival kind of a state of mind when you're bootstrapping.
Name one of those more aggressive things.
Post funnel. So we've built a newspaper. We have our own publication that covers everything to do with relationship marketing. It's a separate brand called Post Funnel. We've actually built a publication.
A real magazine.
A real magazine. You can check it out. It's called Post Funnel. Like everything happens after the funnel, hence relationship marketing, retention marketing. And, you know, we have external writers. We have an editor. We have designers. What's it cost you to run? It's like, all together, this year, it's around half a million a year.
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Chapter 5: How many customers does Optimove currently serve?
And you just put that in a marketing expense? Exactly. Yeah.
I like it. I like it. It's a unique idea. I like it, too. That's why I did it. Yeah. But probably, with the bootstrap state of mind, I would... Yeah, that makes sense. You... It's more of a survival. You never know. You want to prepare for a rainy day. So even if you have some extra funds, you keep them and you handle yourself differently.
So it's a mind... Still, I'm not pre-hiring like crazy and I'm not changing my philosophy because of the fact that I've raised money. But I'm trying to always open my mind and listen to the investors and to best practices and see if it's a good fit for Optimove. But... And that's the story.
What payback period are you optimizing for today? And have you increased what you're willing to, you know, how long you're willing to wait to get that money back after you raised?
You mean the investors are waiting to get their money back?
No, no, no. Your payback period. So when you acquire a customer, how long you, you're comfortable waiting to make that money back? Like CAC to LTV? Well, kind of, but it's payback period, a little different.
I would say we're good with a year.
You're healthy. And has that drastically changed pre, you know, bootstrap mindset versus fundraised mindset?
Yeah, I think before that we were, you know, we had like amazing CAC to LTV ratios because we got a ton of business word of mouth. So for many, many years, we've got like with very limited marketing investment, we got very strong, you know, business. However, as you scale and as you grow, we came to the U.S.
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