SaaS Interviews with CEOs, Startups, Founders
1212 Chatbot company SmartAssistant: We'll pass $50m in next few quarters
18 Nov 2018
Chapter 1: What is the main topic discussed in this episode?
be more persistent. And he was. This agency was growing, growing, growing. And in 2014, they turned on a SaaS product, did a small venture round for about $3 million, raised an additional $6 million recently, so $9 million total raised.
Smart Assistant is basically helping folks, whether it's online or banks, et cetera, have conversations and do kind of need-based or questions-based selling and support with folks, scaling and making teams significantly more efficient. They've got a team of 100 people based between New York City, London, Poland, Austria, and other remote locations.
Over 100 customers paying north of 10 grand per month, so well north of 12 million bucks in AR, but south of 50. They hope to cross that maybe in the next couple of quarters, growing 100% or 200% year over year, so healthy growth. This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn.
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Chapter 2: What is the main focus of SmartAssistant?
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 Marcus Linder. He's the chief executive officer and co-founder of Smart Assistant, the leading global technology provider for digital advice and guided selling technologies for online retailers, manufacturers, and service providers.
Over the last 11 years, under Marcus's guidance, the company has grown internationally with offices at several locations in three continents. Marcus, are you ready to take us to the top? Very excited. Okay, good. You have a new title. Tell us about the new title and what prompted the change. Yeah, I'm now president and CMO of the company.
So we decided to bring a new CEO on board, like an external, very experienced CEO, because we see a huge opportunity and we're growing like crazy. And at the same time, none of us, to be honest, had a proper job before founding Smart Assistant. And now was really the right time to bring some professional management into the company. And that's why I'm From now on, serving as president and CMO.
I want to talk more about how you kind of made that transition a smooth one a little later in the interview.
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Chapter 3: How did SmartAssistant transition from an agency to a SaaS model?
But first, take us to the top, right? Smart Assistant. What do you guys do and how do you make money? So Smart Assistant is a software as a service solution that allows brands and retailers to build and optimize intelligent sales assistants. So our software would do the job that millions of great salespeople do out there every day.
figuring out what your needs are, what your requirements are, then recommend the right product, explain why there's great fit, and allow you to take choices.
Chapter 4: What growth metrics is SmartAssistant currently achieving?
So just to give an example, if you today want to buy a new mattress and you're not an expert in mattresses, you would really struggle online to figure out, hey, do I need a foam mattress, latex mattress? But what Smart Assistant does, it engages with you, would ask you questions like, do you sleep on the back, on the side, on the front? What's your weight? Do you suffer from allergies?
And then map those needs onto the right product pictures and recommend the right products to you. And we do that not only on websites, but also through chatbot, on Facebook Messenger, or even through voice on virtual assistants like Alexa or Google Home. So it's almost question-based selling, especially for e-commerce products. Yeah.
Yeah, I would say need-based selling, but it's not only for e-commerce products. Our customers are banks, our customers are telcos, our customers are retailers, brands. It's a very broad set because if you think about it, we as consumers, every day we take choices in so many domains and we are confronted with a huge amount of choices and at the same time,
we are expected to almost become an expert within each and every of those domains before we can choose. And that obviously leads to a lot of abandonment. People don't buy stuff at all. So Marcus, just to be clear, though, all your kind of questions you're asking or your needs you're identifying, the goal is to drive to a sale.
In other words, you're not doing like customer support for a bank with automated chatbots. Yes, we do that as well. So we have a marketing product, we have a commerce and sales product, and you can use Smart Assistant for customer service as well for guided troubleshooting. Like, hey, I have a problem with my card. What's the problem? Lost, stolen, rejected. Which country are you in?
Then it guides you to a solution. So it's digital advice. Okay, got it. And walk me through, give me a sense of kind of what the average customer is paying you for this product per month. That's a difficult to answer question because you can start with smart assistant free of charge. So we have a freemium product that allows small brands, retailers to start completely free of charge.
Our large customers, you know, it goes up into the millions. So it's difficult. Yeah, I understand. I understand the nuance, but we're short on time and I don't want to go down every customer cohort. Just give me a general average. Are we talking 100 bucks a month, 10,000 bucks a month? Generally, what are folks paying per month? No, it's, it's, it's right on top of that.
So, uh, my tip of 10 to a hundred thousand and more, uh, per month. Okay. 10, 10 to a hundred thousand per month. So very much in the enterprise space. Yeah. Okay. Very good. Um, and then walk me through some of the backstory here. What year did you launch the company in? Sorry, say it again. What year did you launch the company in? Uh, when, so when we launched the company. Correct. Yeah.
We launched the company, uh, back in 2006 as an agency.
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Chapter 5: How does SmartAssistant generate revenue and what are the pricing models?
So I had another chance to say, okay. And in Austin, that was also like a fun situation because we hired a girl in Vienna as our first professional services team member for the US market. And she wanted to go back to Austin. And so that was the obvious choice for us to start our professional services team in Austin.
And later we figured out that we need to bring the team together and really focused on New York City. We also have Sunnyvale, but the core team is New York. Okay, Top Drive, many of you ask me all the time, how did I get my website up so fast, so quickly, and why is it doing so well? The answer is simple. I use postgator.com to keep the thing cranking along.
They've got a 45-day money-back guarantee, which is great. I used their free website builder to get the site up because it's ideal for WordPress. It's just what I use. They've got 4,500 templates and a free e-commerce plugin as well. And 24 seven support, which we love, right? We love that. I bug the hell out of them. They always get back to me.
So I've got you 30% off along with $100 in free AdWords credit. To grab it, just go to HostGator.com forward slash Nathan. But you got to do it now. Again, HostGator.com forward slash Nathan. Tell me about churn. Churn, we have a single figure churn rate in terms of annual churn. And that's logo or revenue? So in both areas, it's one figure percentage number year over year.
Customers, we see churn. And sorry, Mark, is that gross or net? That's our gross churn. So we have a positive net retention rate. So our customer base is growing quite nicely despite the fact that we churn customers. And churn really clearly comes just from one segment, which is retail. Yep.
our early retail customers are in serious troubles at the moment and just simply can't pull that strategy off anymore to become their customers' trusted advisor and don't have the manpower and the resources to pull that off. And unfortunately, some of them are also going out of business. And this is where we see the generate coming from.
When you look at net revenue retention annually, I mean, how far above 100 are you? Are we talking 105, 110, 130? Yeah, in the range, 110 plus. 110 plus. Okay, that's great. And most of the expansion revenue, where is that coming from? Is it upselling additional seats or upselling additional products or something else? So we sell with multiple drivers. We have advice and starts.
So how many people actually engage with Smart Assistant, the amount of countries, the amount of brands. So some of our brand customers like Microsoft, like Canon, like Whirlpool, they all typically start small. For example, in one country and a couple of domains, and then they expand into multiple countries, get more and more users into the advisors, get into more categories.
And this is how they move on to higher license pockets. And what do you, you know, as you, as you focus on kind of not only driving expansion revenue, but also adding additional customers, what are you currently spending to acquire new customers? In the past, we really had to go out and we had to evangelize.
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Chapter 6: What types of customers does SmartAssistant serve?
Yeah, I know that. Yeah. What'd you say? Yeah. And, and, and, and more. Yeah. Got it. I mean, but sorry, Marcus, an average is only one number, right? So, so again, average can't be like this plus this plus a different one.
We simply don't, don't, don't share that number, but, uh, just like, I can just tell you the range that our customers, you know, you can start free and it goes up to, uh, yeah, uh, six, six, uh, so, seven figures annually. Okay. Fair enough. Talk to, so payback period sounds like it's pretty healthy, uh, uh, at about a year. Um, that's obviously, that's obviously good. Um, lifetime value.
What do you assume lifetime value is on these guys and how effective is the lifetime value metric for you in terms of actually guiding the business and marketing? So, um, we see that, um, uh, so the ratio between, uh, uh, customer acquisition costs, lifetime value is at about, uh, eight, nine.
So we, once we have, we have one customer, they are very loyal, uh, and they really grow and expand and grow into bigger and bigger, uh, buckets. which is very healthy. And they do that because they really see that it works. They see great KPIs.
They see that customers have a higher conversion rate, have a higher average order value, and that they really become more loyal, come back to them again and again. Yeah. Last question here before I move to much easier questions, the famous five and wrap up. Goals for this year. You have a new CEO coming in. Fast forward to December of this year.
What AR goal, if you hit it, everyone's going to be popping champagne. It's a stretch goal, but it would be a big miracle. You are trying so many ways to get to numbers. It's amazing. That's what you're famous for, right? Well, I mean, look, I think numbers are important. There's a lot of people that are just, honestly, Marcus, full of shit, right? They just are.
I mean, I've read articles before on TechCrunch. You know, we're doing $100 million in revenue, but then I know the CEO, and he or she has told me they're not doing anywhere near that, right? So I like to just cut through it. That's all I'm trying to do. So share what you can. So we will... Again, I mean, we will be triple digit growth.
We want, we are still significantly below the 100 million, unfortunately. Are you north of 50? Are you between 50 and 100? Do you think you'll break 50 this year? Is that a fair stretch goal? No. 2020? No more comment on that. Sorry. How many years do you think it will take you to get past the 50 million mark? That's what I'm curious about.
That's definitely a goal that we have set ourselves for the next couple of quarters, but which is not realistic for the next year. Okay, got it. So sometime over the next couple of quarters. Well, that's healthy. I mean, that's great growth. And look, thank you for being transparent on that. That helps people go back and not go, wow, this guy knows what he's doing.
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