SaaS Interviews with CEOs, Startups, Founders
1449 How Dad of 3 Manages Life and $600K ARR Business
13 Jul 2019
Chapter 1: What inspired Ryan O'Donnell to write his new book?
My new book is out on Audible, How to Be a Capitalist Without Any Capital. You can grab it right now. Here's what a user, Thomas Lornaviticus, said. Latke is the real deal. Five stars. Hey, Nathan, I just listened to your podcast with JLD. You killed it. I saw your book earlier last week and thought, meh, I'll wait when Kindle costs $1.99 or whatever, as I have over 150 books to catch up with.
But then I sensed that this book may have something I need right now. I bought it for full price, but didn't really start reading it. Then talking with JLD, you mentioned that the strategies may not work if you wait. And that's so true. I read it. I'm feeling pumped to devour it even more. Thank you for sharing it all and kicking ass.
Chapter 2: How did Ryan's experience at Yahoo shape his career?
Guys, all of you that listen to the podcast, you were the reason I wrote the book. SaaS CEOs, founders, entrepreneurs, go grab it today at capitalistbook.com. Especially if you like audio, go grab the audible version right now. Again, capitalistbook.com. Launched for Plyify in 2017, today doing 50 grand in a month. That's from about 2,000 customers paying 25 bucks a month.
Totally bootstrapped, turning about 7% of revenue annually, but expanding about 10%. So 103% net revenue retention. Too early on CAC and LTV and things like that, but they're starting to test some of those channels right now as they look to scale. This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burned.
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 two point seven million. I had no money when I started the company. It was one hundred and sixty million dollars, which is the size of the IPOs. We're a bit strapped.
Chapter 3: What is Replyify and how does it work?
We have like twenty two thousand 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 Ryan O'Donoghue. He lives at the top of the funnel ever since he landed at Yahoo via acquisition in 2007.
He then co-founded Replyify to automate cold emails and follow-ups because other solutions on the market were either glorified mail merge apps or too cumbersome to work with. He's trying to fit right in the middle. Ryan, are you ready to take us to the top? Let's do it, dude. Which company were you with that was acquired by Yahoo? Red Media. Red Media. And so was that kind of a pure play agency?
Chapter 4: How does Ryan manage customer churn in his business?
No. So it was Red Media. It was the first online ad exchange company. Just shaking up how buyers and sellers transacted media. Every platform has it now, buying on a dynamic CPM model, not just your traditional CPM based. So I got in there early on, ended up joining the international team there, grew it from zero to about $20 million in revenue. Yahoo came in, acquired the company.
Stayed there for a while on international team. They were like, hey, move to London, Hong Kong or Singapore or take a package. I took a package left. Thought I'd get rich by building a startup and flipping it to Facebook. And, you know, five or six iterations later, here we are. As I say, some of some of your other Yahoo friends went down that path and did it pretty successfully.
Yeah, AppNexus, right? Well, WhatsApp, those guys were, I think, at Yahoo in the early days.
Chapter 5: What strategies does Ryan use for customer acquisition?
Yeah, Yahoo was a company that's produced a lot of people who've done some cool things. Yeah. Okay, let's talk about Replyify. So when was launch date? 2017. 2017, okay. And for folks that don't know, explain what it does. Cold email automation that doesn't suck, right? So built for salespeople who are either sending emails one by one,
trying to get a new prospect to engage or, you know, sending cold lists over to their marketing team who uses MailChimp and then ends up getting their MailChimp account shut down because he can't send cold emails with MailChimp. Right. Yeah. And what are people paying? I know you probably have a bunch of different customers, but on average, what do they pay per month? Around 99 bucks a month.
Chapter 6: How does Ryan balance running a business and family life?
We have plans everywhere from, you know, zero bucks a month. So traditional kind of SaaS freemium model, free plan, take the branding off for a buck and then, you know,
fits into it really you know nets out on how many contacts you need to prospect per month right and every company kind of grows into that number and figures out their their sweet spot we've got plans that fit all across the board yeah and over the past 12 to 24 months how many customers have you scaled to uh users over 10 000 customers around 2000 okay churn is critical in this space because people have to keep sending emails for them to stay sticky with you what is your turn today and how do you manage it
Seven to 10%, depending on how you look at it, right? Pure churn or is it seasonal churn where they take three months off because no one's buying in Q4 for a particular business model. How we manage it? Well, hold on real quick. Let's just avoid all the nuance and just look at it on an annual basis. So on an annual basis, what's revenue churn? Seven to, and we're in the
you know, just crossed 12 or 14 months old. Yeah. Yeah. So about seven and a half revenue churn that's, that's annually. Right.
Chapter 7: What are Ryan's plans for scaling his business in the future?
And that's net or, uh, or, uh, or gross. Do you know? I have to pull up. That's okay. The, the, the, well, actually that would have to be, you know, net unless you have some mechanism to drive expansion revenue. Are you driving significant expansion revenue at this point? Or is it too, probably too early? How do you define expansion?
Uh, a cohort that signed up a year ago for a hundred bucks a month is now paying 200 bucks a month. There's expansion of a hundred bucks. I'll give you an example. So we work with a lot of agencies and those agencies will do their own business and then they'll go out and sell a cold email automation done for you service into their clients. An SEO business will create a new revenue stream.
We're seeing folks coming out of companies doing sales development, not wanting to become account executives, but wanting to become founders and CEOs. So they hang a shingle up, become an agency agent.
Chapter 8: What advice does Ryan have for aspiring entrepreneurs?
find companies who don't want to build prospect lists, write cold emails, manage campaigns, and we're seeing a lot of growth in that space. Well, again, so back to the question, do you have a means to drive expansion revenue, like additional features, additional seats, things like that, or no? Yeah, and I would look at our agency model, our team model as being that expansion revenue, right?
So agency comes on, they start with five seats, they continue to, you know, they continue to grow into it and expand their license model, but not necessarily like a, you know, other than this account type to do this or, you know, to get Salesforce access or switch accounts into different plans to jump in, you know, at a certain account level, but might not be
The same expansion, we might be having a disconnect there on expansion. Expansion revenue is just, you take the cohort that signed up a year ago, a portion of them are going to churn, which it sounds like you have 7.2% of that revenue will churn. What I'm trying to figure out is what does that same cohort expand by? So if it expands by 10% and you churn 7%, net it's 103%, right? 10 minus 7.
So we're doing those. So the expansion then is over 10. So we're netting out. better than our churn on the expansion. Okay. So good. So you got about seven, 7.2% revenue churn annual on a gross basis. And it sounds like maybe 103% net revenue retention because these agencies are expanding. Correct. Yeah. That's great. And, um, I mean, can I walk, I mean, can I do the math?
2000 customer times a hundred bucks a month that puts you about 200 grand per month. Is it accurate? No. Okay. And why is that? Yeah. We're, well, we're doing, cause we've got plans starting in a buck a month. Uh, right. It's going all the way to $99 a month. It depends on how you look at our user base and how we define what the average.
So we have an agency owner, CEO, who has a plan and pays us money and has multiple seats under their plan that they're paying for. We're doing around $50,000 a month in revenue. Okay. That's fine. So 50 grand a month right now in revenue, I can just then obviously divide that by the 2000 to essentially get, you know, a form of, a form of ARPA.
But what you're saying is again, 99 bucks a month is not the average. That's actually your highest price point. 129 is our highest price point. 99. Right. Right. Okay. So you got about 2000 folks on average, maybe paying you 25 bucks a month. That brings up about 50 grand per month today in revenue. And now where were you at a year ago? I mean, you were just starting.
Did you have any revenue a year ago? Yeah. July, 2017, 15, $5.84 in revenue. August was $1,200 some dollars, right? So we've been kind of hockey stick up to the right. Yeah. Well, and to be fair, and I'll give you credit, but obviously growing from a hundred bucks to a thousand bucks is pretty easier than going from a million to 10. Hey, it's part of it. I was digging into your podcast and
When you guys sent the note and said you wanted a jam, you bring some hitters onto the show, which is ā it was interesting to go through and see some numbers that are ā What did you think? Did you enjoy it? I dig your style, man. You're straight to the point.
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