SaaS Interviews with CEOs, Startups, Founders
1194 Screenrecord Testing Tool Hits $1m+ in ARR, Under 2% Logo Churn Monthly
31 Oct 2018
Chapter 1: What are the key features of Usersnap and its target market?
Launched user Snap has big customers like Google using him. Company was launched in 2013, raised a very small seed round of 600K. Now they're serving over 1,000 customers, helping them really get great feedback from their users and track bugs, whether it's internally or externally. They're driving great expansion revenue based off page views and other features and integrations.
about doubling year over year, a little less than 100 grand per month a year ago, now doing a little less than 200 grand per month. Churn is really in check, less than 2% gross logo churn per month payback period, less than 12 months with a team of 12 split between Austria and San Francisco.
Chapter 2: How has Usersnap achieved significant growth since its launch?
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.
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 Florian Dorfbauer.
He's the CEO of UserSnap, which helps digital businesses get feedback, track issues, and create successful products. Companies like Google, Facebook, Dow Jones, and Microsoft trust UserSnap to get actionable insights. Florian, are you ready to take us to the top? Absolutely. Let's go. All right. Thanks for joining me.
Chapter 3: What strategies does Usersnap use to maintain low customer churn?
So tell us about the company. What are you doing specifically? How do you make money? Yeah, what we do is we provide a feedback layer on top of digital businesses. That is, we realize that once you build a digital product, you somehow want to get feedback. And the feedback rather should be actionable. That is, writing things like, I am lost, is not very helpful.
So we introduced a new technology which allows you to capture the screen of your browser without installing anything. But that's the secret sauce. Hold on, Florian. So I have to ask you something because I follow full story and Hotjar and GDPR is a big issue with this stuff right now. How are you handling GDPR specific with capturing user screens? Yeah, that's a good question.
We're working with a couple of lawyers on that and we're releasing you an update version in a couple of days. Okay. So tell me how Google is using it. Google is using it to build internal products. So they put Usesnap on top of their internal projects and they give feedback back and forth between the different teams. Sometimes they're remote.
Facebook, for example, is using it to build internet.org in different languages. Internet.org? Yeah, that's a Facebook project. That's how they work with Usesnap. So is this kind of like usertesting.com but sexier and at scale? It's not like usertesting.com because they bring all of the tests to the table. It's like the best way to capture stakeholder feedback. Yeah.
Well, it's like the tech is like user testing. The nice thing is, though, you're not having to get freelancers to test. You're actually testing with your users on your site. Yeah, kind of. That's how it is. But the secret sauce is also that we...
plug into your existing workflow that is if you're using achira or trello or whatever you're using we connect with them and deliver whatever you want to deliver to their platform so it's a very easy to say yes with uh user snap well so let me ask you a question right now i own a product called the topinbox.com we always get bug it's a gmail plugin we always get bugs that are happening actually inside the user's gmail accounts when they're trying to use the tool
We have no way to know what's going on unless we can email the user, say, screen share your screen with us and show us what's happening. Can user snap do that instead? Yes. I would suggest to build some sort of trusted customers where you can ask them to install a Chrome extension because I'm not entirely sure if we could piggyback on your product into Gmail. I think this could be an issue.
But a lot of customers are having the same situation as you have. And we offer a Chrome extension where you can do pretty much the same thing as users that can do only without touching the actual product. Got it. Yeah, got it. That's good. So what's the average customer paying you per month? Are we talking 10 bucks or 10 grand? It's in the hundreds, right? So that's the average MRR.
But the thing is, average MRR, it's very diverse. It depends on the integration. And there are a lot of different knobs to turn. And frankly speaking, it's from a business perspective, there's so many use cases that the number is very diverse. And, you know, why would someone pay kind of 300 or a couple hundred your average versus, you know, five grand a month?
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Chapter 4: How does Usersnap handle GDPR compliance in user feedback?
We are 12 people. 12 people. And how do you kind of split between San Francisco and Austria as kind of engineering and development over there? And so what does your day look like? Are you selling mostly? Yeah, I do like 50% of my time. It was demos, POCs, and caring about the key accounts. The rest is like team meetings, good marketing, but the focus is primarily on selling.
And obviously in a company like this, churn is critical. Tell me about your churn. Churn is very diverse and the main differentiator between the different churn cohorts is actually the integration plugged in. That's very interesting. So I'm not going to share details, but the question with SaaS is always, how do you set up your cohorts and your buckets?
Because people are using products in a different way. And with UserSnap, it's really determined by the connected tools we offer, right? So a customer using Jira with UserSnap behaves completely different than a customer using Team Foundation Service from Microsoft, for example. And so we have a couple of cohorts with negative churn. We have a couple of cohorts with positive churn.
And it's also very related with the price they pay. But the general rule is the more they pay, the less they churn. If you guys are like me, it was quite a shock to me when I was building my first company, Heyo, and we reached like 10, 11, 12 people. And all of a sudden I'm going, wait, why am I getting notices from all these states?
And that's because I had to file payroll and stuff in these states as we started hiring people from remote locations. It was the biggest pain in the butt. I hated the paperwork. I hated the payroll. And so now today when I'm launching new companies, hiring new remote employees, I use a company called Gusto. It's very simple. Payroll benefits in HR for modern small businesses.
What I like most, and I've timed this, it takes about seven minutes on average for my folks to run payroll. It's got fast, easy to run payroll, including W-2s and 1099s. I love that they have health benefits and 401ks all built in for nearly any budget. So you kind of just pick what you want.
And they've got expert HR support just to call away so you don't have to hire, you know, HR people in-house. But most importantly, it frees up my time so I can go back to my monday.com Kanban board, you know, plan the next sprint, you know, put the next spec out on the line and talk to three more customers.
If you want more effective payroll, you know, a lot of people change payroll providers at the end of the year. Now is really the best time to switch. So listeners of the podcast, you can go to nathanlaca.com forward slash gusto to try a demo and test it out. Again, that's nathanlaca.com forward slash gusto, and you'll get three months free once you run your first payroll.
All right, I'll see you there. So if you look, I mean, because you're right, we could go down 7,000 different rabbit holes here. On average, I mean, how many logos are you retaining every month or every year? So the average churn number really doesn't take us anywhere here. What we do internally, that's of value. We really focus on the happy customers, right?
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Chapter 5: What is Usersnap's unique value compared to competitors?
So, it's a very harsh thing to say, but ideally, we wouldn't have customers who would churn in the long run because then we do something wrong in attracting them. So, the core problem of churn is, I think, of course, the product doesn't deliver value in the long run, but what we try to understand in a better way at the moment is, why did they come into our door in the first place, right?
So this is like the solution, I think, to join with... But sometimes somebody can come into your solution and actually really want what you're marketing. And then for whatever reason, the product just didn't deliver, whether it's a bug or whatever, it didn't deliver. And you obviously want to get to the bottom of that stuff because it was the right customer.
It just didn't deliver what you were kind of trying to attract. So, I mean, when you're kind of not answering the exact percentage question because you have many, many cohorts, and I understand that. But generally speaking, I mean, are you talking... 5% logo churn per month? No, no, no, no, no. Oh my gosh, 5%. It's roughly 2% on average. Okay, good. So I'm glad I asked, right?
Because I would have assumed it was much higher. So 2%. No, no, no, no. Yeah, yeah. Yeah, I mean, I really doubt that you can do a business with 5% churn. Yeah, and that's 2% gross logo churn per month? Yeah, roughly. Okay, that's great. Yeah, that's really healthy.
So do you, I mean, when you start looking at things like lifetime value, what's the minimum you think these customers are worth to you? Yeah, that's something the average wouldn't get you anywhere, but I think so because we also have customers paying only $39, right? And on the top end, we have customers paying more than $1,000. That's what I'm saying, like at a minimum, right?
It's interesting to kind of understand how you think about that back of the napkin. At a minimum to do like some sort of assistive selling, I would say is like 5K or something like that. Yeah, yeah. That sounds about right. Maybe a better question is because this could be true across many different cohorts, whether they're paying 10 bucks a month or 10 grand a month.
How quickly do you like to get your CAC back? What do you like to optimize payback period for? Yeah, ideally below 12 months. Are you there now? Are you below 12 months today? Yeah, absolutely. If you're a cash proposer, you really should be there. The question is, whom do you offer a sales call? Whom do you offer a demo? Whom do you deploy your customer acquisition costs?
Because the touch is the most expensive part. Yeah, that's an active decision. So like understanding if a customer is able to pay you what you want to have is a really, really crucial part because offering like all those Calendly links out there, free demo and stuff like that, I really liked it, but we don't do that, right?
So how do you quickly decide when a new customer comes into your solution? How do you decide if they're going to be a 10 grand a month customer or a hundred bucks a month customer? Good question. Yeah, that's a lot of snake oil in the world. We use Clearbit a lot. We have experience, right?
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Chapter 6: How does Usersnap determine customer pricing and value?
But generally you're doubling. That's great. Very good. All right. Let's wrap up here with the famous five. Number one, what's your favorite business book? Good question. There's so many. Or the last one you read to make it easy. The last one I read was Radical Candor. Radical Candor. That's a good one. Number two, is there a CEO you're following or studying right now? Aaron Levy.
Number three, what's your favorite online tool for building your business? Favorite or the most used? The most used. The most used is unfortunately Intercom. Hey, Pam, a lot of money. Number four, how many hours of sleep do you get every night? What was that? How many hours of sleep do you get every night? Uh, between five and seven. Okay. That's not bad. So we'll call six. They're averaging.
What's your situation? Married, single. Do you have kids? Uh, kids, two, one, two, two boys. Two boys and married. And how old are you, Florian? I'm 40. 40. Okay, good. So you gotta, you gotta follow. Sorry. I'm 41. 40. It was your birthday recently, huh? Yeah. Very last question. What do you wish your 20 year old self knew? Um, Don't be afraid of anything. Just do it. Don't be afraid.
Just do it. There you guys have it from Florian. Again, launched user Snap has big customers like Google using him. Company was launched in 2013, raised a very small seed round of 600K. Now they're serving over 1,000 customers, helping them really get great feedback from their users and track bugs, whether it's internally or externally.
They're driving great expansion revenue based off page views and other features and integrations. about doubling year over year, a little less than 100 grand per month a year ago, now doing a little less than 200 grand per month. Churn is really in check, less than 2% gross logo churn per month payback period, less than 12 months with a team of 12 split between Austria and San Francisco.
Florian, thank you for taking us to the top. Thank you.
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