SaaS Interviews with CEOs, Startups, Founders
1080 15,000 Customers at $35 ARPU is $500k+ in MRR right? "No"
09 Jul 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 Danny Weitzman.
He's the co-founder and COO of Lucky Orange, the conversion optimization suite responsible for helping 90,000 plus websites turn more visitors into customers. He's got a background ranging in brand management to lead generation, and he understands exactly what businesses, agencies, and clients expect and demand. He can be found contributing regularly at Forbes.com.
Danny, are you ready to take us to the top? Yeah, man, let's do it. All right. Tell us about Lucky Orange. What's the revenue model and what's the business do? Yeah, great question. So really, we are a typical SaaS model subscription as a service. Users start with a free trial, all features included in all plans.
And from there, we really help guide you into a plan that works best for you and your business. That could be dictated based upon if you're an agency and you want to track many sites. if you're a high volume site and you need a lot of page views, or maybe you're a site that you want to have a lot of operators logged in, we're going to find a plan that works best for you.
All plans, all features start at just $10 a month for unsampled data, and it really scales up based upon your needs. And really, we like to say kind of from a holistic standpoint, the value we provide should way outweigh the cost. And so we understand that
analytics or insights as we like to refer to them is just one part of a sound business model so we really believe from a pricing perspective how we fit into your overall strategy should allow you to then have money left over to then implement on the insights you're going to learn from lucky orange you go from 10 you go from danny from 10 bucks a month all the way up to 100 bucks a month what's the average customer paying per month would you say
Yeah, we typically see transaction values around that $35 a month price point. So it's kind of a hybrid. And that really is dependent on, you know, are you coming to us from a third party partnership we have where you have a lot of high volume customers that are more self-serve.
But then we also have a whole separate really revenue that comes from users that are more enterprise custom plan focused. What percentage of your revenue comes through the partners that you have? A good chunk of it. It's really... Like more than 50%? Not from any one specific partner. Altogether, though, as a channel. Altogether as a whole, revenue partnership is probably closer to about 40%.
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Chapter 2: How did Lucky Orange achieve rapid growth?
What have you been able to scale that to? How many customers are you serving today? Yeah, I mean, we just looked and I mean, we're probably mid 15 plus thousand active paying customers or more. So it's
Um, it's definitely growing from that perspective, but that doesn't necessarily reflect the amount of websites we're tracking as, um, one account could have a hundred sites underneath it, you know, count as one paying customer. So it's, it's been really unique to see how the customer need has evolved, allowed us to kind of evolve the product to fit that need.
So Danny, just to be clear, you've got 15,000 kind of unique people paying you. They may have 10 websites under them of varying sizes. One might get a million hits a month. One might get 10 hits a month. Yeah, and really that number kind of ranges.
Again, you can have a client, as you mentioned, who's doing hundreds of million page views a month, and it could be the first time Shopify or a big commerce store who's got 100 page views a month.
What's, I think, really interesting about that and what that story is telling is that whether you're a huge enterprise and you have analytics divisions and people who can analyze these numbers, or you're selling bicycles and you can't be behind a computer all day,
We all have this thirst for understanding of what's really happening on our website and what are the simple things I can do to learn from my visitors to improve these conversion rates. It might be as simple as a certain call to action did not work or a price point was confusing or a capture on a lead form.
But we all want this knowledge and we want to, what we say, pull back this digital curtain to provide this transparency. So that way, again, whether you're... Yeah, Danny, I think we totally get the value of the product. So I want to shift from kind of you sharing what the product does to actually how you've driven the growth of the company. Most of my listeners are CEOs, private equity VC.
They're more interested in that. So I totally get the value proposition. You made that really clear. When did you launch the company? And were you there at the beginning?
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Chapter 3: What is the revenue model of Lucky Orange?
I know you're COO. Yeah, absolutely. So... Co-founded with, funny enough, my brother-in-law, Brian Gruber. Our wives are twin sisters, not identical. So the important distinguish there, people always ask about that. This really started, we like to say, started with Brian creating the technology and we really came together to form this business. In what year? This was probably 2014.
Okay, so fairly recently. Yeah, fairly recently. And you've already scaled, I mean, if I'm doing the math, you've scaled to 15,000 customers at a $35 ARPU. I mean, what, you guys are around 525 grand a month in revenue currently? Well, we don't really disclose full revenue amounts. Well, Danny, just tell me where the numbers are wrong. You just gave me those two numbers.
It should be a simple math equation. Why would that math equation not be accurate? A lot of different variables, but I want to get back to you. You had a really good question, which was the evolution of the business. Danny, but I want to make sure I get the numbers right first because those are wrong. The evolution story will be different.
So do you not have 15,000 customers or is the price point higher or lower? Well, price point, it's variant based upon what match we're looking at in terms of is it subscription from the subscription model, credit card, is it from invoice? So there are some other variables that will go into that equation. Okay, but you are a pure play SaaS model.
Everyone is paying you on a monthly recurring basis. I don't really care if it's via credit card on your website or invoice, right? Well, I mean, it's not always, um, it could be biannually too, or annual model. Okay. But regardless, if you take, if it's biannually or if it's annually, you divide by 12 months, that's how you get a monthly ARPU. So generally folks are paying 35 bucks a month.
So yeah, correct. Okay. So where's my math wrong? Cause if I take 15,000 customers times 35 bucks, that's 525 grand a month in revenue. It sounds like you're not there yet. Well, we're not there yet, but there, there, I mean, there are some other variables to it, but we'll share those. That's what I'm, I'm interested in the variables. Which variables in particular? Well, I don't know them.
That's why I'm asking. What variables would lead that multiplication problem to not equal that? Well, again, we're looking at other things in terms of how the revenue is coming in from the different sources, the different price points, customers that are on and offline, etc. So again, there are a few other variables that will play into the fact to it. Okay.
Before Danny, you get more into the evolution and I will promise we'll shift away from the numbers here in a second. I mean, can you give me a general range of where you're at today? I mean, are you guys above 300 grand a month or is it significantly lower or significantly higher? Uh, it's currently lower. Okay. Lower than 300. Yeah. Okay.
And have you guys bootstrapped this thing or have you raised capital? Totally bootstrapped the whole way through it. Um, you know, we took part in an accelerator earlier on that was more meant to be kind of just a milestone of where are we, how we, you know, are we getting some early on guidance? Um, so a small accelerator we took place in, but really it's been bootstrapped.
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Chapter 4: How does Lucky Orange handle customer onboarding?
So the first one is, yes, would we love to have a customer paying you $10 a month? Sure, who wouldn't? But then to your point, you're going to staff up 10 people. Well, what happens a year from now when that customer, after their first annual cycle, says, thanks, but no thanks, we're done? What do I do with those 10 employees? Redistribute them?
Chapter 5: What is the current customer count for Lucky Orange?
You know, Danny, sorry, tell me about your model. I mean, look, I can make the same argument about 15,000 customers. You have 15,000 customers paying you nothing, but they send you three support emails per month, which takes up an hour of each person's time to reply to. That can be risky. Right. So what I talk about is looking at the internal business.
metric for like capacity that we're referring to. It's we know we want to have a healthy dose of customer support where we're actively working on chats coming in, feedback coming in through the website and those tickets and then balancing that with
user enhancement what are the features that are being requested what is the next tier things that we want to provide so that way we're not always just kind of chasing our own tail of resolving issue resolving issue but also enhancement enhancement so we try to look at at our daily and weekly capacity from at both the development standpoint and sales standpoint of how much of that time is spent supporting customers versus what can we do to keep growing our user base what are you growing at right now year over year in terms of revenue would you say
Uh, it's seen about anywhere from a hundred percent growth to 80% growth. Okay. So between 80. So if you're doing, I mean, it sounds like you're somewhere around a hundred grand ish or something like that. Maybe 200 grand today. You're about half that about a year ago. Yep. Okay. Got it. And what is driving most of the growth, getting new customers or getting current customers to pay more?
Uh, good question. So certainly just, creating a larger pool. So top of the line funneling, you know, bringing in more users and creating that, you know, more partnerships and brand awareness through traditional PPC to other distribution models. But then recently new efforts into growing, you know, average transaction value.
That could be through things like increasing storage lengths of the customer. So if your typical customer stores for 30 days, incentivizing them to store for 60 or 90, finding ways to help people realize they're reaching capacity and probably should be on a larger tier plan.
And it can be tough, sure, because we really provide the same level of value and service from our entry plans to our higher paid plans. So there is sometimes difficulty and wiggle room into increasing that transaction value. Yep. Last questions here. We're out of time, but last few here. CAC, what do you spend to acquire a customer quickly? Yeah. Difficult one.
But again, we typically try to get it around that $50 price point from a PPC model. But a lot of our users are virtually zero customer acquisition costs, but we pay rev shares behind them. Okay, cool. Makes sense. And if you're paying 50 bucks on a $30 a month plan, you're getting paid back in two months, which works for bootstrap company. It allows you to stay cashflow positive.
All right, let's wrap up here with the famous five one word answers. Number one, what's your favorite business book? Disaster artist. Number two, is there a CEO you're following or studying right now? Brian Gruber. Brian Gruber? Brian Gruber, CTO. Okay, number three, is there a favorite online tool you have for growing the business besides your own? ProfitWell. ProfitWell.
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