SaaS Interviews with CEOs, Startups, Founders
1293 How Plivo Broke $20m in ARR on Only $2m Raised Helping 70,000 Businesses with Communication Integrations
07 Feb 2019
Chapter 1: What is the main topic discussed in this episode?
start a company faster. Again, launched his company, Plevo, back a couple years ago. Most importantly, really focused on this usage metric model, which is, I think, unique. I think more SaaS companies are starting to think about this, but he's really dialed it in. Over 70,000 customers. They've only raised $2 million, which is great. Over 100% year-over-year growth. Healthy metrics there.
North, or call it between $20 and $100 million in ARR. Negative 5% net negative revenue churn per year. They've got a team of 200 people based between San Francisco, Dublin, and Bangalore. Again, helping folks specifically do SMS messaging, things like that, push notifications, verifications, things like that, growing rapidly.
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.
Chapter 2: How did Plivo achieve $20 million in ARR with only $2 million raised?
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. Hello, everyone. My guest today is Venky B. He's the co-founder and CEO of a company called Plevo, a cloud-based communications platform that simplifies how businesses integrate communications into their applications. Today, the company has grown to over 200 employees across three offices globally and has been profitable since 2015.
The company has expanded exponentially over the last few years, serving over 70,000 customers and now handles billions of voice calls and SMS every year from businesses around the world. Before this company, Venky has a number of years in the telecom industry, working in technical capacities with global telecoms giants like many that we all know very, very well.
Venky, are you ready to take us to the top?
Absolutely.
All right, 70,000 customers. What are they paying for? Tell me what you do.
Sure, yeah. I mean, like you said, right? I mean, Plevo is essentially a cloud communication company where we enable businesses to kind of interact and engage with their customers. So the way they do that is enable their applications with voice calls and SMSs and workflows around that, right? So use cases like two-factor authentication, customer activation, call centers,
Car tracking, where you can track your leads over phone calls, all of those different use cases across sales, support, and marketing functions.
And walk me through, is this a SaaS model? Are these customers paying on a monthly basis?
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Chapter 3: What unique model does Plivo use for customer pricing?
That's the aha moment for us as a customer. Obviously, we have various different segments, self-service, SMB, enterprise. And depending on each of these segments, you know, the timelines to kind of them doing differs depending on our use cases and the consumption.
After their first, that point, the setup though, what I'm asking is, do you see big fluctuations in usage, which is directly tied to essentially upgrades and downgrades or what they're paying you? In other words, is it very seasonal? You see bumps and spikes on the same customer?
Yeah, so it's pretty, you know, I would say it's segmented by use cases. So let's say they're in a consumer app, which is a messaging app globally, wants to enable, you know, customer activation on their mobile use case. A lot of times what you see is like it's pretty consistent in terms of like how they're growing their business, right?
But let's say it's a political app where, you know, there is an election campaign going on, that becomes pretty seasonal, right? And then in some use cases, we help customers, you know, or businesses kind of book their reservations in-house or like, you know, hotels kind of book like essentially kind of reserve stuff. So that's like pretty stable in terms of like how that works.
So I would say like it's pretty segmented by use cases across the globe.
That makes sense. Give me more of your backstory here. When did you launch this company?
Yeah, that's an interesting story. We started back in 2011. You know, my co-founder and I, we met over GitHub. GitHub is obviously hot right now after the acquisition.
Everyone's leaving. They're moving to other, they're scared of Microsoft.
Yeah.
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Chapter 4: How does Plivo measure customer retention and churn?
We actually became profitable in early 2015. Today, we are a team of 200 employees across three offices, you know, San Francisco, just this year alone, we started Dublin in our office and then another office in India, Bangalore.
Got it. So San Fran, Dublin and Bangalore. Correct. And give me a sense of total capital raised. How much?
Oh, we just raised like our seed round with just $2 million.
Oh, I like you so much. I thought you were going to say, I thought you were intentionally not saying that you, you know, raise some ridiculous, absurd amount of money. I love that you went through YC, you did all these things, but you're being very conservative with what you're raising.
Absolutely. I mean, in fact, you know, we have double digits of millions of dollars cash in the bank and super profitable. We pretty much put all of our profits back into the company in terms of growing faster.
Yep. Give me a general sense of where you're at today in terms of revenue.
Well, we don't disclose the number, but yeah, I mean, ballpark. On the higher double digits in terms of millions of dollars in revenue.
Okay, got it. So, I mean, I won't push you harder here, but is it fair to say somewhere between kind of, are you saying between like 10 and 20 million in ARR?
More than that.
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Chapter 5: What strategies does Plivo use to acquire customers?
Yeah. For us, I mean, uh, you know, like, like the way we solve our customer problems is by kind of what's critical here is it's not like a recurring model, right? It's consumption based. So we scale and grow only when our customers kind of started adopting the actual platform and they, they kind of scale that usage.
So for us, I think if you look, go back and look, like first few years, we just focused on making sure our customers are happy. And, you know, that was the overall focus, right? Like retention and making sure every single customer grows because we only grow when our customers grow.
How do you measure that though, Venk? That's what I'm curious though, is on a usage-based model, you're not, you don't have typical metrics like retention and churn and things like that, like a typical SaaS company. How do you measure retention and churn under your business model?
Yeah, we do measure that, right? Like, we do measure both growth and net in terms of growth, right? And then, obviously, we have our NPS coupled as well with the customers. But NPS is, like, a better indicator than just revenue because, like, revenue is, like, a trailing one. A lot of times, you don't even realize the customer's gone. But, like,
We engage with our customers on a strong engagement model there. So we do measure all these numbers, but it's just not your traditional indicator of saying, okay, you have a recurring model and it's pretty predictive. Consumption models are not predictive by nature. So we obviously measure. And what we realized is a lot of companies talk about...
lifetime value, when can I get my customer into the positive number segment, and all of that. But for us, once they're integrated into the core, customers just keep growing and scaling. So when you look at our cohorts, they look pretty weird, right? You don't see the graph going down, you just see the graph going higher and higher.
What graph going down?
in terms of the cohorts and in terms of like how, how customers are spending over, you know, two, three, four years. And then the consumption kind of, kind of, kind of going down.
You're talking about a consumption chart.
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Chapter 6: How does Plivo differentiate itself from competitors?
Okay, that's great. I mean, are we talking like negative 20% or like negative 5%? Negative 20 would be incredible.
No, I mean, we're in the single digits right now.
Okay. I mean, even single digits, by the way, is great. But I was just, I was curious if you had some unbelievable number based off your usage model. But even negative five, something like that is obviously a fantastic place to be in your line of business. So what exactly are you charging these 70,000 customers on? What's the actual consumption point you're measuring?
Yeah. So typically, customers integrate voice calls and SMSs, the actual calls and SMSs. So voice calls get charged by the minute. And then text messages obviously get charged by what you send and receive. So that's what we charge customers for. And in a lot of cases, customers also buy phone numbers for things like call conferencing, call tenders, all of that.
So phone numbers are charged on a monthly basis. And that's less than $1 per month in terms of subscription there.
Okay. And walk me through, I mean, you have incredible growth, 70,000 customers. How are you getting all these customers? What channels are you using?
It's interesting, pretty much inbound so far. And like early last year, till early last year, like gen timeframes, we just had one sales guy and one marketing person. And now like early this year, we've started kind of investing in our sales team and marketing teams and kind of, we're trying to like go a little bit more aggressive on the growth side.
But yeah, pretty much all of that has been like organic inbound, you know, self-serve.
What does that mean though, right? Like people don't just like randomly find a website they know nothing about. There's a reason inbound works. So why is your inbound working? What are you doing specifically?
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Chapter 7: What challenges does Plivo face in the communications industry?
What's that? I don't understand that. Give me an example.
Yeah. One of our competitors, essentially, does a lot of marketing. If you search for their term and alternative, we rank number one. That drives a lot of traffic. That drives a lot of traffic. That's how we started the company. A lot of customers are unhappy with existing pieces out there or competitors out there, so they search for alternatives. They come to our website, sign up.
Like we exactly, uh, you know, do a great job in terms of giving them that experience where they don't have the great experience with their existing providers. So they start scaling without us having to kind of educate the customers.
And for that term on Google, you're not doing paid ads there. You've just done a great job at SEO.
We do a bit of paid, but it's pretty much, uh, pretty much inbound organics. Yeah. We do a bit of, bit of, uh, SEO, uh, SEM, uh, most, mostly our brand keywords, uh,
Okay, but just to be clear, the reason you're able to rank number one is because you have kind of unique insight into how to rank that specific term on a free kind of SEO, SEM optimization basis.
Not just that, but there are not too many competitors in the space who do a good job of solving their problems. If you search, we are number one pretty much on most of our competitor keywords. I don't think we are, I would call ourselves SEO, SCM experts, but it's primarily by the virtue of this market being not too many players in the space.
Okay, got it. So why aren't there more players in the space?
I think it's a hard problem to solve, right? Like it's not just a software layer. We have to work with carriers like AT&T, T-Mobile, just in the US, where it's like do that into 200 countries. And then you're going to have to build that globally, right? In terms of like your servers, data centers, pops, all of that. And then comes your software.
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Chapter 8: What advice does the guest give to aspiring entrepreneurs?
It's fascinating that the Citrix guys didn't let him build Zoom inside of what they had just acquired and go to webinar. It doesn't make any sense to me. But hey, if you can spin it out and sell it right back to them 10 years later, then do it over and over. It works, right?
Yeah.
Yep, absolutely, absolutely. And he's done really well, right? The focus has been keeping customers happy and make sure, you know, customers are for more customers.
Yeah, my favorite line from that interview he did with me is he talked about when they added, they were thinking about adding like Instagram filters to Zoom and they realized that was too gimmicky for like business calls. So what they do instead is they don't tell you they do this, but they add essentially like a light layer of virtual makeup.
So everyone looks better when they use Zoom, which means they use it more because they like looking good. And that was like a key growth tactic they used.
Absolutely. I mean, it's pretty interesting the way you build a company.
Yeah. All right. Number three, you can't say Zoom here. What's your favorite online tool for building your business?
Well, that's interesting. Okay. So, I mean, email is obviously an important one. Gmail, we use that pretty, you know, intriguing. But Slack is another one, like the team, keeping everybody in line and aligned across the company.
Number four, how many hours of sleep are you getting every night?
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