SaaS Interviews with CEOs, Startups, Founders
1192 HIPPA Copmliant Email Tool Breaks $1.2m in ARR
29 Oct 2018
Chapter 1: What is the main focus of Paubox and its unique value proposition?
Launched the company back in 2015. Today, they're serving over 1,200 customers, paying 80, 90 bucks per month. They've tripled year over year in terms of MRR, now doing about 100 grand per month. So that makes them obviously north of a million in ARR. 7% logo churn annually, so super healthy churn. They're spending 900 bucks to acquire customers and getting that back in under 12 months.
Lifetime value, because churn is so low, is approaching kind of 11, 12 grand. They've got a team of 12, all based in Silicon Valley. Again, focusing on HIPAA-compliant email. This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn.
Chapter 2: How has Paubox achieved significant customer growth 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. 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 Huala Grevy.
He's the founder of a company and CEO of a company called Palbox, a B2B SaaS startup that focuses on being the easiest way to send and receive HIPAA compliant email. The company is located in San Francisco and has over a thousand customers in all 50 states. Huala likes to go kayak fishing in his spare time. Huala, are you ready to take us to the top?
Let's do it, man.
All right. So interesting take here on email marketing, HIPAA compliant. So tell us what the company does and who your main customers are.
Yeah, so like you aptly described, we're the easiest way to send and receive HIPAA-compliant email. We launched in 2015. I'm from Hawaii. Now I live in San Francisco. And our value proposition for our customers is that we removed the friction typically involved when people need to send a secure email in healthcare. So we got rid of the portals, the app downloads.
The key installations, we just removed all the friction.
And what's the business model? Is it a peer-play SaaS or what?
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Chapter 3: What is the average customer profile for Paubox's services?
And, and what, I mean, what do they get for that pricing? Is it based off number of seats or what's it based on?
Generally it's on the number of seats. Correct.
Okay. So a hospital might have 10 people that need it and they'll pay a grand for the year for it.
Yeah. So our model, we, uh, we encrypt all email for all users and every device. So we wrap around, um, an organization's domain name, and we provide blanket protection for all the employees.
Okay. So, so hospital, I mean, how, if a hospital signs up, I mean, how many seats are they buying in one shot typically?
I, for our hospital customers, it's at least 500 typically. Okay.
So they're getting 500 seats for just a grand a year.
No, the average customer pays a thousand.
Okay. So do you have kind of power laws? You have a long tail, but then you have four or five customers that are huge.
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Chapter 4: How does Paubox ensure HIPAA compliance for its users?
What is the, I mean, so someone, someone that you signed up that has 500 seats. I mean, what is that contract value at for you for a year?
Yeah. So that'll be a six figure contract.
Okay. Got it. Good. So you are, I mean, so on a per seat basis, what are you typically charging? Ooh. Or it depends.
It ranges on price volume.
Yeah. So if they buy a lot of seats, you give a cheaper per seat.
Yeah. And we'll do like other people, you know, we can be flexible if we can do customer success or a logo, pretty standard SaaS flexibility for a startup.
Tell me about churn.
Well below the average churn. Which is what? So we'll be well below 7% this year, annual churn, customer churn.
7%, okay, is that logo churn annually? Yeah, we'll be well below that. Now, what is your revenue churn?
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Chapter 5: What are the financial metrics that indicate Paubox's success?
What happened?
We had a bad month. How so? A lot of people walked.
So you had a lot of churn.
Not churn. They just didn't buy. The prospects didn't buy.
If they have this need and they don't buy from you, where are they buying?
Oh, it's a rather crowded space. And, you know, the other products introduce tons of friction, right? So remembering to type in a keyword, forcing the recipient to go to a portal, create a password, log in. I mean, just...
Complete nightmare, but some of these prospects, they're just looking to be compliant and they just want to check a box and they'll go buy the cheap stuff, even though in the long run, if you factor in the cost of your staff and help desk, it's going to be much more expensive.
So does your tool, like if I'm a patient emailing, you know, my local emergency center that I went to last week because I broke my finger playing football and I'm emailing them via Gmail, I mean, can I use Gmail and you figure out a way to make that HIPAA compliant somehow or I have to go and log on to some membership site somewhere?
Great question, Nathan. That's one of our top blog posts. So gmail.com is not a HIPAA compliant email solution, but if you're using G Suite... It can be configured to be HIPAA compliant. And that's where we come in. We can seamlessly wrap around a G Suite account and provide that HIPAA compliance for our customers.
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Chapter 6: What challenges does Paubox face in the competitive landscape?
Why do you listen?
Well, I wanted to be prepared for today's call, man.
So you listen just to prepare for today's call.
But now I'm starting to listen to more stuff now.
Yeah, so I'm hooked. Good, you're hooked. That's good to hear.
So our CAC's 900. Okay, good.
So you're spending 900 bucks. And so that means that it takes you a little under a year to get that money back.
That's correct.
Okay. And what do you assume lifetime value is on these customers?
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