SaaS Interviews with CEOs, Startups, Founders
1169 From $40CPA Model to $900/mo SaaS, 100% yoy growth
06 Oct 2018
Chapter 1: What is the main topic discussed in this episode?
It can take longer than you think. Have fun on the ride.
Chapter 2: What inspired Will Fraser to start Sasquatch?
From the founder of Sasquatch, founded back in 2013, got their first five clients in the first week or so, selling on a CPA basis. People would pay him $40 per new closed customer or about one of the first month's revenue they'd get to keep. Realized that was really, really tricky. So pivoted to a SaaS model.
He's now got over 100 customers paying about $900 a month, doing about $90,000 per month in revenue. That's doubling year over year.
Chapter 3: How did the CPA model work for Sasquatch initially?
12 months ago, they were only at 45K, hoping to grow to about 150, 160K by December of 2018. He's got net negative revenue churn of negative 2%, spending 5,400 bucks to acquire a customer, gets paid back there in about nine months with his team of 15 based up there in Victoria, Canada. Again, helping and understanding how to make referral work at scale with his company, Sasquatch.
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.
Chapter 4: What led to the shift from CPA to a SaaS model?
It was $160 million, which is the size of many IPOs. We're a bit strapped.
Chapter 5: How has Sasquatch achieved significant revenue growth?
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 Will Frazier. He's the CEO and co-founder of a company called Sasquatch.
He studied electrical engineering and business before starting his first company. And since becoming an entrepreneur, he's worked with some of the world's largest companies to help them build digital growth channels that have touched many millions of people all around the globe. Will, are you ready to take us to the top? Let's do it. I love this name, Sasquatch.
Chapter 6: What strategies contribute to Sasquatch's low customer churn rate?
What do you do and how do you make money? Yeah, so Sasquatch started as a customer referral platform for SaaS companies. We kind of hacked it with S-A-A-S. But since then, we've really expanded into helping companies increase their lifetime value at every stage of the funnel.
So be that from a newly acquired customer to a churn risk, we just help companies run marketing programs that increase revenue. Makes a lot of sense. Now, when did you start this? What year? We started this in 2013, actually. Okay.
Chapter 7: How does Sasquatch acquire new customers?
And was it like a consulting gig or it was pure play SaaS from the beginning? It was pure play SaaS from the beginning. We actually basically formed the company out of an itch we experienced at a previous company and just went for it. I love that. How many co-founders did you have? You said we. Yeah. So, yeah, we had three originally when we started Sasquatch. We have two now. Things happen.
But yeah, it was three of us kicked it off, got a little bit wild. We gave ourselves five days to kind of start the company. And in those five days, went through ideation, customer testing and sold our first five customers. OK, I want to learn how you got those first five customers. But sorry, you cut out. What year did you launch? Oh, 2013, 2013. Okay, great.
Walk me through how you got your first five customers. So we had been working on another product. Um, and the, it was very platform dependent on how Facebook worked and needless to say, Facebook changed. So, uh, me and my co-founders sat down and said, you know, do we want to do it? Do you want to roll the dice? Do another one? And we said, yes. Uh, hell yeah, let's do it again.
So we, I would say, what is wrong with you? We, uh, we're addicted to it, right? Uh, can't stop. So we went ahead and spent basically two days putting together a very basic idea, really basic pricing, basic product concept. What was the price? So the price started originally as a cost per acquisition model. So we would take the first month revenue from each new customer. Interesting.
You're basically an affiliate on steroids. That was our original model. What do you charge now? Now we charge on a subscription basis. But we just discovered the reason we made that shift was because we sell primarily to product marketers. And product marketers don't have that same acquisition budget as the acquisition marketers do. So we learned along the way.
But we gave ourselves basically three days and any way we could, we sold those clients. So we said, if you're asking us for a case study or you're asking us for any evidence this thing exists... Um, we'll talk to you later. Um, but we just can't make the deal right now.
And so we, uh, we know one of our more fun ones, we started with one of the large SEO companies and we started on support chat, just talking to a frontline support person. And after about an hour and a half of slowly being moved up the channel, moved up the channel, all of a sudden we were talking to the CMO, pitching them this product. So really it was just any way we could hard hustle.
What'd you say to the support person? Cause you know, they're nervous about introducing some random person on live chat to their boss. No, for sure. So it was really just a level of escalation. So just a matter of, hey, you know, we want to talk about this. I think it'd be a good fit. And we just got a keener off the bat who said, oh, let me let me pass you up.
And we got, you know, let's say a bit of a keener support manager. And that manager thought, hey, I know someone in marketing. Let me pass you over. And that's when we really started pitching. And then that marketer was like, OK, this actually sounds like a problem we have right now. Let me pass you up. So what did they pay you? So they agreed to the CPA model.
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Chapter 8: What is the current pricing structure for Sasquatch's services?
That's good. Okay. So a couple of million raised there. Um, let's shift back to some of the unit economic stuff. So we talked about churn. What are you spending to acquire these customers? Yeah. So we're spending about six to nine months revenue to acquire a customer right now. Yep. Um, and primarily that for us is actually spent, um, through our sales team. Yep.
So just to be clear, that's about, you know, 900 bucks a month. If you spend six months of revenue, that's 5,400 bucks to acquire them. You get paid back in nine months. Yeah, that's about right. Yep. Um, and so, um, You know, the big thing for us is we do a lot of organic work. So a lot of content, you know, we have, I wrote a content piece at the very beginning.
It's actually a fun story if you have time for it. But I was sitting at a bar waiting for my wife to finish work at a hotel, just to be clear. It wasn't just at a bar. And I thought I'd write up an article. And one of the things that had been annoying us was there didn't seem to be a clear dictionary of terminology in our space.
So we just wrote down the 10 terms you need to know to run a referral program. Very simple, defined a few things. And that piece of content started getting more and more traction and ultimately actually led to us being asked to bid on an RFP by one of the biggest tech companies in the world because we defined a few terms that no one else used.
And they started looking for those other groups that did those things. And, of course, we were the only ones talking about doing it. And so, yeah, a lot of organic. And then once it goes through organic traffic, content, videos, e-books, really most of the cost is in people and commissions and things like that. And what do you assume minimum lifetime value is on these guys once you land them?
Yeah, no, so we expect a client to stay for no less than two years. We plan more for 30 months, right? So that, you know, that's kind of where we look at for a lifetime. We see that increasing right now, which is wonderful. You know, we are, you know, if we're working, you're never going to cut us. Right.
If we're, you know, you imagine a tool that's installed in your product that's giving you new customers every month for very little work, very unlikely we're going to get removed. but also as we expand our platform offering, we're able to help. There are certain products we've found that just aren't particularly referable. You could probably guess some of the products you wouldn't refer.
We've tried to work with them, but now with our expanded platform, You know, we can help you, you know, help any product really that's got a consumer or small business base grow. So, Will, just to round that out real quick, you know, you expect 30 months of lifetime value at $900 a month. That's about $27,000 in lifetime value on $5,400 in CAC. Yeah, that's about right. That's great.
Those are good economics. What do you think, you know, if you've raised several million, I think, I mean, I'm going to assume it's probably like two or three, something like that. Right now you're doing about a little over a million per year.
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