SaaS Interviews with CEOs, Startups, Founders
1105 Should you develop every customer request?
03 Aug 2018
Chapter 1: What is the main topic discussed in this episode?
Demand Generation, Trump's product every time their guys have it. He reinvented himself over the past six months. He's now focused on transitioning 5 to 10K in MRR over to his new product, Workflow Management.
He's focusing and trying to understand which cohort he wants to serve over the long run, trying to do a Series A early next year, which means he's got to go from where he is today to about 100 grand in MRR. 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.
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Chapter 2: How did Amit Kothari transition from agency to software?
Hello everyone, my guest today is Amit Kothari. He's spent a decade in London at the cutting edge of collaboration technologies for the enterprise. His clients were the world's largest companies, law firms, and government entities. After seeing the platforms with emerging chat tools, he realized that the disruption of the industry depended on combining unstructured chat with structured processes.
Processes that help every business scale their operations and chatting on Slack or project management is not the same as process management. The result of this was his company Talify, which has raised $1.3 million to date from top investors in Silicon Valley and elsewhere, including 500 startups and Alchemist Accelerator. Amit, are you ready to take us to the top?
Yeah, thanks for being on the show. So tell me more. Obviously, we've had you on before. I remember one of the things we discussed last time you were on is you were a lot more agency than you were software at the time. You were doing way more kind of professional services revenue than you were subscription revenue. Tell us what the company does and do you still see that revenue mix?
We effectively relaunched the company. So you have a pivot and then you have just like the whole product just got rebuilt. So what we did for the past eight months is rebuild the product from scratch and really took like a design first, UX first, API first, mobile first approach to everything. And the result, we launched it in January, 1st of Jan.
So it's only been like a month of the product being live. And by the way, if your listeners want to know right now, we're on AppSumo. So if you want to bag an amazing deal, $39 for three users for life, AppSumo.com.
So I mean, why on earth? I just have to ask you a question. I think it's the stupidest thing for CEOs of SaaS companies to put deals on AppSumo because Noah's a genius. And he knows if he can convince a SaaS CEO to sell a lifetime subscription, by nature, it's going to get a lot of signups.
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Chapter 3: What challenges did Tallyfy face during its product rebuild?
By the way, it also kills your lifetime value. Why on earth would you put your deal on AppSumo?
Well, for starters, it's a constrained deal. So it's only three users. Yeah, but it's life. It's for life. It is. But we launched in the first week of January. And to be honest, what we've learned in about a week, it's probably about six months of learning if you had a normal pace of growth.
Because you have like, literally, I'm not kidding you, we had one person signing up every 30 seconds at one point last week, right? Telling us stuff that You know that face pop moment you get when you just like smack your own face and think, oh my God, that's just so obvious, right? We had like 50 of those moments last week in terms of improving the product.
I get the velocity. I mean, I get the velocity argument, but I mean, how does it feel when you think about this in a quiet time of your day and you go, I just basically have told these people, if they give me their money today, I will support this product, do all the bug fixes for life, for life, for life.
Yeah, there is the cost issue, for sure. But then what we do is, you know... It's also a promise that's hard to make for life. We weigh up what we get in return. And in these early days, what we get is... by far greater than the money because we saved like seven bucks.
But what about the customer? What about the customer who paid X amount of money for life? I mean, four, five, six, 10 years from now, if you either shut the company down, raise more and exit to a bigger company and they shut you down or you don't do bug fixer or for any reason over the life, so forever, forever is a long word. If anything happens, that basically comes back on you.
How does that make that customer base feel that came in through AppSumo?
Well, you know, we see them like free users. We have a freemium app. They just happen to be free with VIP benefits.
Well, they've paid, so they don't see it as free.
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Chapter 4: Why did Amit choose to offer a lifetime deal on AppSumo?
It's not enterprise plan, so it's not like we have phone call support or anything like that. It's just like every other user, except you have more features. So the cost base isn't that great for us, because you had to support them anyway, whether they were free or paid.
Yeah. Just to be clear though, it's what they're expecting.
They pulled out their check, they're put out their credit card and wrote and, you know, and gave you amount of money and they're expecting for life that, that I always wonder, you know, when SAS, here's, here's what I see that when SAS companies do a lifetime deal, what it tells me is they haven't figured out growth because that literally kills every, every aspect of your SAS economics.
There's no lifetime value, you know, it increases, you know, support costs. It's over life.
I get you. So it's great for validation and that's really it. And really, that's what we crucially needed at that time and at this time right now. So what we're learning is one thing. But the other thing is add-ons. So our pricing strategy actually has add-ons too. So we have in our pricing plan put together a bunch of add-ons. And remember, above three users, you don't get anything.
we have kind of left that door open for a bunch of revenue down the road. In fact, many of them have upgraded.
So give me those numbers, right? So how many people have it? What percentage have you been able to actually upsell into a new plan?
You know, we don't even have numbers. Like literally, we launched a month ago. So it's very unrepresentative right now.
Well, you said it's a pretty big cohort, though. You said you were signing up a customer every 30 seconds. You have plenty of customers to look at.
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Chapter 5: What insights has Amit gained from customer feedback?
Yeah. We're looking more at retention though. So again, it's like an experiment to see like who logs back in every day. Why do they log back in? You know, what have they done? So the data we're collecting is actually the gold. It's actually the oil. It's not the revenue, right?
And that means we now tune our onboarding, our trials, our pricing, our features, everything to what is the value that we're delivering to the customer.
So what are you learning? What are they using the most? What's the activation metric?
We found something really strange. The first thing you do when you log in is change your logo, like your face and your organization logo. Well, hold on.
I mean, let's back up. People don't know what you do. What do you do?
Oh, okay. Let's back up. So I'll tell you a very quick story, okay? I spent like a decade mapping flowcharts for processes and things like that in companies. And I thought making process documentation made me really successful. Like, oh, wow, our process is documented, guys. Clap your hands. Well, you know what? No one looks at it.
That's a problem we set out to solve, that how do you make it easy to follow a process for people doing it? So we rebuilt the company in that vein. And now people are telling us, hey, look, you know, I actually work in Gmail.
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Chapter 6: How does Amit measure customer engagement and value?
I work in Outlook. Can I do my stuff there? So now we're building plugins for Gmail and Outlook. So we built it for that. You know, ugly, boring process software is well overdue. So we want to bring this to everybody for small businesses. And we target medium sized companies ideally. Okay. Um, and that's really the mission.
So do you, do you, do you have any organic customers, not app Sumo related right now, or they're all apps related?
Yeah. In fact, for my old version, we have an overhang of a bunch of MRR that we are transitioning over to the new platform. Again, you know, painfully because change and habits and stuff.
So, I mean, just understand the scale of this transition. I mean, generally speaking, you're talking sub a million in ARR that you're trying to transition over or, you know, sub a hundred grand. Generally, where are you?
No, it's nowhere near. So, you know, well, I told you last time, which I think was like five, five, 10K type of MRR. That's what we're trying to, and some of them are starting fresh, which is awesome. you know, they start new. So we don't have to transition them. But it's very painful.
Yeah. How do you decide what the right kind of customer is to listen to? What you just told me is you've taken this audience, which is a discount audience. They are the Groupon shopper. By the way, Groupon's out of business. They are the Groupon discount shopper. You are now putting your product roadmap basically as what they request. Is that a smart move?
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Chapter 7: What strategies are in place for Tallyfy's growth?
From what we get back in return, yes, it's a very small move. What do you get back in return? Well, we get their opinions. We get the same bug report like five times. And we think, oh, yeah, that's a thing now. So we get that in terms of how we do product roadmap.
That's not my question. My question is when they send you ideas and that's how you come up with Gmail and Outlook plugins, you are getting user feedback from a very specific cohort of users which don't like spending money. In fact, they are a discount audience. They are the JCPenney shopper, the Groupon user, both out of business. Is it smart to listen to a discount audience to drive your roadmap?
Yeah.
You have a great point. I would say 5% probably or less are bad apples in the sense that they're just out for a deal. The rest actually care about the value that they're getting from us. How do you know that? Well, they're actually offered to pay for add-ons. Literally, they invented an add-on and said, can I pay you for it?
So quantify that. How many people have paid for something else that's not the AppSumo deal?
just started happening in the last four days. One, for example, is live chat support in the app, right? The second is advanced features like webhooks and use of the API. The third is help me map my process into your system, which is kind of like a paid kind of onboarding call, if you will. Imagine doing a demo, but you get paid for it.
Yeah. What is a product request you've said no to from these guys in the past week?
Many people think we're time tracking, but there's many time tracking apps like Toggle and a whole bunch of others. So we're going to integrate with them using Zapier. We do repeatable processes.
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Chapter 8: What lessons does Amit share about entrepreneurship and resilience?
We help you scale. And by the way, Nathan, you need to scale too, right? So anything you're doing that needs to scale is a process. And by the way, a process is not a project. And to be honest, that language, that psychology, is what I wanted to test with these AppSumo people. If I just say to you, hey, this is a process tool, did you think it's a project management tool or not?
I mean, you're talking about a definition of a word, right? Perceptions of reality.
It's so big because a project isn't a process, right?
My point is, I don't think that's a buying point for people. I don't think people are going to say, oh, I didn't want a project tool. I want a process. So I don't think anyone wakes up in the morning and says that.
No, you're right. I mean, it's just a word. But when the value of the word is expressed, like you can scale this way, but you can't scale this way. Right.
Well, I wouldn't believe that because I would say I put projects into Trello and Basecamp and I scale fine.
Now, when you get to 15 people or 20 people, so that's when I say midsize company, as soon as you get to like that sort of range, 100 people, for example, it then becomes like a serious process issue. Right.
Yeah, sure. But you don't have people using AppSumo are not 100 person CEO companies. They're not spending time on AppSumo hunting for a $10 discount.
Sure, but you'd be surprised at some of the sizes of companies. There's been four enterprise customers that bought an AppSumo deal. And they just said, I don't care about the AppSumo, just talk to my IT guy, we'll talk enterprise. So it's funny, it's not just that kind of audience. Yes, I agree with you. You get bad apples, right? Like 5% that are just looking for that.
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