SaaS Interviews with CEOs, Startups, Founders
1117 $3m Agency to $20k MRR SaaS, Here's How
15 Aug 2018
Chapter 1: What journey led Arun to transition from an agency to a SaaS model?
Slow down and enjoy. Back in 2013, launched an agency, grew it to a couple million bucks in revenue before just two years ago. Launching and really starting thinking about a SaaS product related to funnels and optimization for B2B folks, not B2C folks, which obviously there's a lot of competition there already. He's scaling it. He's upselling agency customers on the SaaS product.
They've done that to seven so far.
Chapter 2: How does FunnelEnvy differentiate itself in the B2B optimization market?
paying on average a minimum $30,000 per year on those deals. So they're doing, call it $20,000 per month right now. That's just the pure play SaaS revenue. Obviously, they have cash from the agency fueling the growth of this side of the platform. Too early on many of the economics. Their team of 15 remote with him, Arun, based in California.
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Chapter 3: What revenue milestones has FunnelEnvy achieved since its launch?
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.
Chapter 4: What is the average customer value for FunnelEnvy's SaaS product?
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 Arun Sivasankaran. He's the founder and CEO at Funnel Envy, a startup solving B2B website and marketing optimization challenges with a SaaS business model. He and his team have optimized websites for some of the largest brands in the world.
As an engineer and serial entrepreneur, Arun wants to transform the way marketers experiment. Arun, are you ready to take us to the top?
Absolutely.
All right, this is a tough, tough space. Optimizely, unbounce, all kinds of no-touch solutions.
Chapter 5: How does Arun leverage his agency experience to grow the SaaS business?
How are you competing and what kinds of deals are you winning?
Well, first of all, from a market perspective, we're focused on B2B. I think B2B marketers have some unique challenges. And some of those challenges have been overlooked by a lot of vendors. Now, we're also partners with some of those companies that you mentioned. So it's really about what's the best solution for a customer based on the problems that they're trying to solve.
And so tell me about something you're saying if a B2B, someone who has a B2B website is looking at you guys versus Optimize, you'll win that deal because they're focused maybe more on consumers or prosumers, people like that.
Well, first of all, we think about optimization and personalization as primarily a data problem and delivering the right experience using data. Now, a lot of platforms like Optimize, they've primarily been focused on B2C customers, and that's fine, but they have different challenges than B2B customers. So we can take
our data capabilities and integrate with Optimizely or service the customer ourselves. So we have some flexibility there. Ultimately, it's about delivering the right experience to our customers' customers that ultimately turns into revenue.
And so that's what we do. Okay. And give me a general sense of the size of customers you're working with in terms of your average ACV. Are we talking 10 grand, 100 grand, 1,000? What's it typically?
Yeah, so from a SaaS perspective, we're still in the relatively early stages. So there's a pretty wide distribution. And we also do services. So from a product ACV perspective, that can run anywhere these days from like $30K to $100K. That's pure SaaS annual. That's the SaaS part of it. And then services, optional, but they're additional on top of that. Because personalization, optimization...
It's an interesting space, but it's also relatively new. So people have to understand kind of how to do it and be successful.
Over the past 12 months, what's the breakdown percentage-wise in terms of professional services revenue versus pure play SaaS revenue?
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Chapter 6: What challenges does Arun face in scaling his SaaS product?
So 70% SaaS company. No, no, no. Other way around. 70% professional service. More recently we're starting to flip the other way, but you look at like trailing 12 months, it's about 30% SaaS revenue.
And so what's your team size today? It's about 15 of us. 15. Okay, got it. So that gives me a sense. I mean, it sounds like you guys are really an agency. You saw this problem. Now you're developing a SaaS product to deliver a problem that a lot of your customers were having.
That's exactly right. Like we were, we were an agency for years actually doing conversion optimization and across like B2C, B2B, a wide variety of things. I'm a product guy by background, but it was a way for us to sort of learn about the space, learn about where the opportunities were, where ultimately the white space does also build capability and knowledge.
Over the last year, we have transitioned to a product company. So that's been fueled by a lot of the learnings and cash from the agency business.
Before you started that transition, give me a sense of the size of the agency. I mean, were you guys doing a million a year, two million a year? Generally, where were you at?
A couple million a year.
A couple million a year. Okay. And what was the catalyst that made you start thinking about moving into software?
Well, actually, I was thinking about moving into software on day one. In fact, for one of the customers that I had, I built an integration between Marketo and Optimizely because I wanted to use the data that was in marketing automation to drive better sort of experiments and experiences on the website.
That, over the course of a lot of iteration and evolution, led us to where we are now with the product.
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Chapter 7: What strategies is FunnelEnvy using to acquire new customers?
Okay, and year one was which year? Year one was 2013. We started mid-2013. The agency or the SaaS product?
The agency.
And the SaaS product, two years.
Two years ago is what I technically consider. If you discount the first year or so of goofing off as a side project.
And what have you scaled to in terms of total customers now using the SaaS product?
There's seven customers on the SaaS product.
Okay, seven, yeah. So this is kind of an enterprise-ish sale at $30,000 ACV minimum. But I can do some back-of-the-napkin math there and assume you guys are doing, what, somewhere north or somewhere around $20,000 a month in revenue, just pure play SaaS, right? Right. Yep, very good. And what is that, about $200,000 a year in pure play SaaS? Interesting. What does...
what does that kind of revenue predictability enable you to do from a hiring and growth perspective that you couldn't do when you were just an agency?
Well, nothing right now. I mean, it, it, We feel like, and with some of the new things that we're doing in the product, the pipeline's getting significantly bigger and pilots are there and things like that, but it's still early, right? So the hope is we build a lot more predictability in the pipeline to be able to do the long-term hiring and longer-term moves that we want to make.
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Chapter 8: What future plans does Arun have for the growth of FunnelEnvy?
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Again, it's just SaaS today. Are you growing 100% year over year, 200%? What's it look like?
Well, shooting for 100%. Yeah. Yeah.
What'd you do over the past 12 months though? Do you know? Product sales? No. So like today you're doing call it 17, 18 grand per month in revenue, just on the SAS side. If you go back 13 months, was that around five grand, 10 grand? What, where was it at?
Oh, it was, it was less than five.
Sub five. Okay. So really just launching. Yeah, absolutely. And where is, is most of the growth coming from just upselling your agency customers or are there people entering your world strictly from SAS, like the SAS product side?
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