SaaS Interviews with CEOs, Startups, Founders
1132 How He Plans to Take on Moz, SEMRush, with 1500 customers, $180k MRR
30 Aug 2018
Chapter 1: How did Vaibhav Kakkar start his journey in SEO?
He would have capitalized on his opportunities faster. He built and sold an agency for about 5 million pounds. And in 2013, jumped into SEO with RankWatch, launching it with his brother. Very fair brother, by the way. They decided to split it 50-50.
Chapter 2: What is RankWatch and how does it help businesses?
Now they've got a team of 30 people based between the India, US, and again with a salesperson in the US as well, but mainly in India. Growing quickly, about 1,500 customers paying $125 a month. So about $185,000 right now in monthly recurring revenue. That's up from $140,000 just recently.
12 months ago so about 30 ish percent growth year over year in terms of revenue three percent logo churn per month which they're working on keeping low lifetime value about 18 months and payback period under six months which is obviously very healthy 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. Good morning, everybody. My guest this morning is Webhov Kakar. He's the co-founder of a company called RankWatch with an idea of making internet marketing an intelligent process.
Apart from helping businesses succeed online and writing about internet marketing, he's usually found digging deep into the beautiful world of search engine algorithms. Webhov, are you ready to take us to the top? Absolutely, I am. Okay, so when people hear internet marketing, they run the other way. They're stopping this podcast interview right now. Why should they keep listening? What do you do?
I make SaaS software, SEO SaaS software. And I've been into SEO since 2004. And almost, you know, since the very early days, I've built a company, sold it. And this is my second company right now. Okay, so RankWatch is a software platform and give us the lowdown. What does it do? It helps people do better SEO.
It gives you a lot of intelligence, a lot of data, helps you take better decisions on certain SEO parameters which you need to know to implement better SEO. Look at your competitors, see what they're doing, look at your own website, track it properly and grow your organic traffic. See, organic traffic is the best traffic and we help you grow it more and more. Great.
And what do you, tell me more about kind of how you price. What's the average customer pay you per month? So our average customer would pay us around $125-ish. Although, you know, we do have some enterprise customers who pay us thousands of dollars. Like our biggest customer would be over $10,000 per month. But yeah, most of our customers are small, medium businesses.
And we also have a lot of agencies which use us. And so how many total customers today do you work with? we have over 1,500 customers right now. Okay, 1,500. And you kind of just gave us the ranges of, you know, some are big, some are small, some are SMB. And is it fair to say 1,500 times 125 a month, you guys are doing what? About 180 grand a month, 187?
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Chapter 3: How does RankWatch's pricing structure work?
See, you don't think about these things while you are, you know, focusing on growth. Um, like I, I get to office by 9am and I work till what? Maybe seven, eight, nine. Um, and that's, that's all I like doing right now. I don't know what I'll do if I sell this. What did you sell the last company for? Um, last company was sold over 5 million pounds. Okay. 5 million pounds.
And what did that company do? Uh, we were into digital marketing. It's, uh, still, uh, it still exists. It's called digital next.co.uk. Uh, if you go check it out and, um, you know, we, we were providing digital marketing services. So it was an agency. Yeah, it was an agent. Okay. Got it. All right. Back, back to, uh, back to what you're doing today. So rank watch. So what does churn look like?
so churn is not very high it's in low single digit churn but still we are trying to is that logo churn per month 2 or 3% yeah around that some months are bad but mostly it stays around that okay why are some months bad See, lately, you know, SEO business, a lot of small agencies, a lot of small customers perhaps would just not want to do a lot of SEO sometimes.
So plus there was a point of time when we were, you know, focusing a lot on more development and, you know, we stopped perhaps taking good care of the customers, of our customers. But, you know, we quickly realized that, yes, something is not right. And then, you know, we stopped.
went back to our old ways of like you know making sure everyone is happy so so so what do you assume with with three percent logo term per month or somewhere around there what do you assume lifetime value is on these customers So what we have seen is the bigger customers really stay for long. Like we've had customers who pay us in five digits and they've stayed for over three, four years now.
It's only the smaller customers who perhaps would leave us because what happens is we really integrate deep into the processes of a company. Um, so if a company, if it is a big company and they're really using our software, it really, it gets very difficult for them to, uh, change, move to another software.
Uh, so, you know, that's, that's true for any, anyone would say all the people who really use our software and pay us a lot, they never turn. Everybody would say that. So on average, what do you assume a new customer is worth to you? What's the lifetime value? So, um, Around 18 months is right now our LTV for a small customer. Bigger customers have a 27-month LTV for us.
Okay, so when you take the 18, let's do a smaller one. When you take 18 months times your $125 ARPU, that's about $2,200 in total lifetime value. That's a no-touch sale, right? Yes, that's a no-touch sale. Okay, and then obviously your enterprise one is growing your revenue much faster because it's bigger deals, more sticky.
Yep, and we might give them a demo, a live one-on-one personalized demo to the small customer if required. We try and avoid that, but if someone asks for it, we are more than happy to give them a live walkthrough of the software. Sure, and what's your CAC? I know obviously it's different for enterprise versus SMBs, but on average, what are you paying to acquire a customer?
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Chapter 4: What is the current customer growth rate for RankWatch?
But I don't care about actually going deep down into that term. My point is you're scaling based off these keyword terms and they're each driving a couple hundred clicks per month and that's how you're getting free growth. Yes, we're on position 11. I think we just moved from page one to page two. And that's where RankWatch actually comes into picture.
Our team would have gotten the trigger from RankWatch that this keyword has moved from page one to page two. Time to put some work on this keyword. Yeah, yeah. Actually, I do see you. I see on the second page, it says, the future of SEO, what industry experts think, RankWatch. Yes, exactly. Yeah, interesting.
So you'll get a notification that you sunk in the rankings, and then your team will go back in and re-update it to try and go higher. That's just one example. Got it. It does a lot more, but yeah, that's one thing. So are you not spending any money per month right now on direct paid stuff? We are. How much per month? We are spending around $5,000 to $8,000 on social. Okay. Facebook.
And how much do you have to pay to get a new customer from Facebook? So our numbers right now are not like, I'm not very happy. We end up paying around $1,100, $1,200 to acquire, which is quite high, I feel. Because our other means of acquisition are really low, like the cost is really low over there.
So on your paid channels like Facebook ads, which you spend between five and eight grand per month on, it costs you $1,200 to get a new customer. So you're getting four or five new customers a month from Facebook ads. And those customers are paying you $125 a month, right? No. So some of them would be an agent. Like if it is a big agency client, they'll pay us a lot more.
Um, but, but yeah, a lot of them wouldn't end up being this one. How quickly do you like to get that $1,200 in CAC back? What's your payback period? I, uh, six months ish. Okay. That's what you like to optimize for. Yeah. Wait. So when will you shut off ads? Like when it starts getting to like 1500 per new customer, two grand per customer, like what's your limit?
So honestly, I've not really focused a lot on acquisition right now because our focus has been more on building the software because we are still, you know, we're not 100% we're not at a position to compete with the best players in our market. We still are like around six months to nine months away from, you know, having a couple of features which will make us, you know, head on competitive.
comparable with our top competitors yeah but web web move every c every ceo will say that every ceo will say we're behind we're behind we're so we're just just this feature one more feature and then we'll be equal that's never the case they're always they're always driving new products at the same time as they're driving acquisition and by the way i think you're doing a good job at it i mean you have 180 grand a monthly recurring revenue as you're growing yep
it is decent, but again, you know, like you said, no CEO is ever happy as well with their growth. I think we should do more and more every month. Yep. All right. Very good, WebHoof. Let's wrap up here with the famous five. Number one, what's the last business book you read? Sorry, say that again? What's the last business book that you read? Seventh Habits of Highly Effective People.
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