SaaS Interviews with CEOs, Startups, Founders
1407 Ex Facebook Now Happily Bootstrapping in UX Research Tool Space Past $125k in MRR
01 Jun 2019
Chapter 1: What insights does Nate Bolt share about his experience at Facebook?
I've had the fortune of meeting a lot of you guys at B2B SaaS conferences all around the world. And one of my favorites is coming up in New York City, June 4th to 5th. That is SaaStock East Coast. Now, it's my favorite, and I can say that because I'm getting asked to speak at almost every major SaaS conference because my data set is so large. Nobody has anything like it.
And the reason SaaS Stock is my favorite is because it's the most curated. It's a large group of extremely intelligent individuals.
In fact, many CEOs I've had on the show will be at SaaS Stock East Coast on June 4th through 5th in New York, including many you guys have heard of, like Rajit Thomas, CEO and founder of Sprinklr, Daniel, CEO of Greenhouse, and Stacey Bishop, partner at Scale Venture Partners. So I hope to see you guys there. If you decide to come,
I will get coffee with you, and I can get you guys a great discount, I think, as well. You can check it out at this link, NathanLatka.com forward slash SaaS Stock East, SaaS, S-A-A-S-T-O-C-K East, and then use code LATKA-20 to get a 20% discount. That's L-A-T-K-A-20, L-A-T-K-A-20. And then shoot me a text if you decide to come so we can get coffee, 703-431-2709. I hope to see you guys there.
He's cranking along with Ethneo, again, launched in 2006, really as a side project, then did a stint at Facebook, quit Facebook full-time to go full-time into Ethneo in 2014, still bootstrapped now, five or six people, all remote, really helping, again, with UX research and really recruiting for UX research, using different things that they have built in, like screeners, dynamic testing, and things of that nature.
Today, doing about 125 grand per month in revenue, growing 30%.
year over year so call it 90 grand a month just about a year ago serving about 150 customers that pay on average call it 10 grand per year oh about 100 net revenue retention annually again growing at a pace that he loves being bootstrapped 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 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, everybody. My guest today is Nate Bolt. He's the founder of Ethneo, a five-person SaaS company. He's the former research manager at Facebook and Instagram.
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Chapter 2: How did Nate transition from a side project to running Ethnio full-time?
Yeah, I mean, in FBO's case, we're very niche. You know, we're targeting professional UX researchers, teams of like two or more. That's FBO. It's the logistics that come into play at scale. You know, if you and I just need to watch somebody use our kind of early stage SaaS, it's pretty easy to do that. You know, we can grab somebody at a coffee shop, we can even get family.
There's not really a logistical challenge around small scale, one-on-one human observation. But when you're talking about 50 researchers, 75 countries, 30 studies, you know, 22 product teams, All of a sudden, the challenges in finding the right participants, scheduling them, paying them, tracking them, storing them, they magnify.
And you're talking about the age-old SaaS competitor of spreadsheets, just spreadsheets on spreadsheets on spreadsheets. So that's really our thing. So I have my own product. I'm working out Intuit. We're launching a new app. I want to target based off device, browser, location, operating system, something like that, maybe purchase history.
I launch a survey inside of Intuit so that I know that I'm getting my users who already know Intuit to take this kind of user testing. So you get their contact information. I'm the Intuit employee. What do I do? Do I set up a Skype call and they screen share and I watch them use the app? Like how is it actually done? Yeah, that's that's exactly right.
But there's a key point there that's a little bit different. And that's for a company like Intuit, who's had over the years, like 45 different, you know, ethno integrations. They pass the variables to an ethno screener. Screeners just are like word for survey. It's the same thing.
But functionally, instead of it being about aggregate data, they can pass all those things that you just said to our intercept. But the thing is, when you're internally using a survey tool, like let's just say Qualtrics or 4C are these tools that are designed for aggregate data.
There's all these little things that don't work the same way when you're talking about getting a real human for one-on-one research. So they implement Ethneo JavaScript or like iOS or Android, whatever. They're passing all that stuff straight to Ethneo because their researchers can go in and modify that stuff dynamically, like on the fly.
You get two people using QuickBooks and you're like, oh, we should have asked about their XYZ criteria that we forgot. So they can dynamically modify the screen or modify the targeting. And then their next participant, let's assume it's a remote session in Zoom or Skype or all those tools. It's up to each research team for the testing, but they can modify the criteria and ethno really quickly.
That's kind of our game. I see. I see. Okay. Talk to me about pricing. So I'm sure you have a bunch of cohorts, but I don't want to go down every kind of use case story. Well, what's the average customer pay you per month? Would you say? You know, most of our customers at this point are enterprise. So our license, you know, they range from, you know, on the enterprise side.
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Chapter 3: What unique challenges does Ethnio face in the UX research space?
That's exactly right. Although, you know, we see some enterprise churn. You know, these teams very understandably need different tools, different teams. You know how it goes. Yeah. Well, I mean, the reason I ask is these kinds of tools I have before, you know, seen serious seasonality where like Q1, they're doing a big test. Right.
And they want to like check all this stuff or they're like on six month sprints. Right. So every like once a month, two times a year, they they ramp up these kinds of, you know, paying you and then they go away for a while. Do you see this kind of churn? You know, we used to see it a little bit on seasonality, but the size of the teams buffers against that a little bit.
So once you're more than five researchers, like somebody's usually always actively engaging. Even if a couple people are like on that long term, we're taking a break now before we get ramped up again. Yeah. Okay. Talk to me about getting these new customers. So a $10,000 ACV account, what are you willing to spend to acquire that customer?
You know, we right now spend zero dollars on marketing and sales. And that's like, it's kind of cool, but it's really stupid on my part long term. So that's an area we're looking to, like, get better at. We just do inbound word of mouth. All of our accounts, we have we do zero outbound. zero sales and marketing, which it's like, what? But that's like dumb. I'm not proud of that in the slightest.
That's a big area. Yeah, I mean, look, it's something that I always, like if you don't know the number, it's good because you haven't spent money, but it's bad because, well, how do you scale, right? Exactly. Yeah. So of the six people you have right now on the team, break them down. Okay, just you. Four engineers and me. Yeah. OK, one salesperson, you and then four engineers.
OK, so theoretically, you could take your salary plus the salesperson's salary divided by the number of new customers per year and kind of back into something. Yeah, totally. And that's one of our big priorities for, let's say, early next year. Are you guys all spread out, remote locations? Yeah, so you got it. That's awesome, that's very good.
What do you, so as you do, start launching some paid experiments, how do you think about setting up the framework for a good experiment and the decision tree that you'll use at the end to determine whether to do that more or less? Well, you know, for me, when I'm looking at all the types of marketing and sales initiatives we can do, I keep landing, you know, because people do content marketing.
They do different kinds of spending on sales and acquisition in our weird, weird niche space because we're not even like let's say user testing is in the much more broad arena of like consumer research. So they get tons of different types of customers using it. We're literally professional UX researchers are like 75 percent of our customer base.
So how do we build and, you know, market to those people who have incredibly specific needs? I actually think we're going to build a spinoff brand just to offer value to them as like a way of doing functional marketing. I know it's a bit weird as like a growth strategy. You mean like professional services stuff? Yeah. Yeah. Yeah. Yeah.
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Chapter 4: How does Ethnio differentiate itself from competitors like Hotjar?
So I don't have to worry about it. But I mean, I think it's just we're in such a little niche here that we're providing value for these specific types of researchers and we're able to keep growing. And I'm happy to do that. Good. All right. Let's wrap up here with the famous five. Number one, what's your favorite business book? Favorite business book? I mean, I guess Innovator's Dilemma.
Is it cheesy to say that? No, it's not cheesy. Number two, is there a CEO you're following or studying right now? You know, I like the Buffer guy. I forget his name, but his transparency is awesome. Yeah, Joel. Yep. Number three, what's your favorite online tool for building your business? Man, I guess right now Clubhouse. Clubhouse. Good.
Number four, how many hours of sleep do you get every night? Six to seven. Okay, that's pretty good. Situation, married single kids? Married one kid. One kid, how old are you? He's a year old. And how old are you? Oh, I'm 40. 40, okay, last question. What do you wish your 20-year-old self knew? Oh man, that's a great question.
I think you don't have to stay in San Francisco quite as long as you did. Guys, there you have it. You don't have to stay in San Fran as long as you think you need to if you want to build your own company. He's cranking along with Ethneal again, launched in 2006 as a side project, then did a stint at Facebook, quit Facebook full-time to go full-time into Ethneal in 2014.
Still bootstrapped now, five or six people, all remote, really helping again with UX research and really recruiting for UX research using different things that they have built in like screeners, dynamic testing and things of that nature. Today doing about 125 grand per month in revenue, growing 30%. year over year.
So call it 90 grand a month, just about a year ago, serving about 150 customers that pay on average, call it 10 grand per year, about 100% net revenue retention annually. Again, growing at a pace that he loves being bootstrapped. Thank you so much, Nate, for taking us to the top. Thanks, man. Good talking to you.
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