SaaS Interviews with CEOs, Startups, Founders
1467 Olark Founded 2007, $14.4M+ in ARR, So Why Did New Live Chat Players Get All The Love?
31 Jul 2019
Chapter 1: What is the main topic discussed in this episode?
My new book, How to Be a Capitalist Without Any Capital, is out. You can get it at capitalistbook.com. Here's what Nicholas said on March 6th on Amazon. Incredibly incisive, useful, and sensible. The author is not greedy and is in fact extremely generous and does not hold back on the knowledge he imparts.
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Now, you guys that listen to the podcast know I'm detail-oriented, so that review might not surprise you, but I hope you grab the book. It's now a Wall Street Journal Instant National Bestseller. Grab it at capitalistbook.com. Audible version is available too. Founded Olark as a side project back in 2007. 2009, got more serious about it. Today, they're well north of 12,000 paying customers.
He shared average price point just around a hundred bucks per month. Obviously, if you multiply those, it comes out to about $1.2 million per month. Churn is kind of like an industry range, call it 3% logo churn per month range. Really now starting to experiment with how to drive expansion revenue around healthy pricing axes that are friendly to small business owners. That's really the key.
And he's able to do that because he's bootstrapped. So they drive the company however they want to drive it. Growth is less than 50% year over year, but again, totally bootstrapped team of 35 based all over the country in remote locations. 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 Ben Congleton. He is the CEO and co-founder of Olark Live Chat.
It's a bootstrap, profitable and proud, helping over 12,000 businesses grow by communicating with the right customer at the right time. He's passionate about building strong work cultures where teams bring their whole selves to work. Ben, are you ready to take us to the top? Let's do it. All right.
First off, I love that you're bootstrapped and I love that you are competing with giants who are raising probably way too much money for their own good. So this is going to be a good story for people that have not heard of the company. Tell us what the company does.
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Chapter 2: What is Olark and how did it start?
Basically, we were the first company that made it really easy to add live chat to your website. So when you're shopping online as a visitor, you can chat with an operator from the business. But more importantly, as a business, you can get more value from the traffic that's currently on your website. So if you're an e-commerce store, you can capture more leads and convert them into sales.
If you're a B2B business, we have customers that have generated upwards of $5 million a year from leads coming off of chat. So we basically help businesses grow. That's great. And I'm sure you have plenty of cohorts and you do all kinds of analysis, but on average, what does one of these customers pay you per month?
On average, a customer of ours pays us like, you know, in the range of, we'll say under a hundred bucks. Okay. Somewhere near a hundred. Fair enough. And what, before we kind of get your timeline here, what pricing axes do you, do people kind of, they'll pay higher for or less for is like number of seats, number of chats. What is it? We're just, we're just number of seats.
We have a couple of add-ons you can add like onto a plan, but primarily it's just number of seats. Very simple pricing. Yeah. All right. Timeline. When'd you launch? We launched, I guess like the early, early beta was probably 2007. And then we launched Paid in 2009. And so we've been going strong for, I guess, full-time for almost 10 years. And then you're bootstrapped, right?
So we raised under 85K. Well, we raised 85K total. So you can figure out whether that's bootstrapped or not. But I think for any modern company, that's nothing. Well, when we look at some of the others in your space, Intercom and Drift, I mean, what they're raising, I would say, yes, you're very much bootstrapped. Between 07 and 09, what were you doing?
So like to walk me through those first kind of struggle years, how were you paying yourself? How were you surviving? Yeah. So at that time, 2007, I was a PhD student. So I was working on a PhD. This was just a side project. So basically, like on Sundays, me and a couple of friends would get together and hack on this thing on Sundays. We were running a
uh it's probably like a more important backstory here so basically i was running a web hosting company through high school uh through undergrad running this web hosting company it was just sort of generating more or less passive income how much graduated from a senior year grossed like over 170k it's pretty good for a senior you're popular senior then i'll help pay for college for for us so uh
So then by the end of undergrad, my two friends who were doing this with went on one way out to California to do a band. One was just doing freelance consulting and getting paid. And I was doing a PhD. And so we're doing a bunch of freelance consulting as sort of a secondary source of income program. And we hated doing it. So we decided like, hey, we're building software for startups.
We could do better than this. We could build a better product than this. And so that was like 2007 when we built the first version of Olark, which we called Abla. That was basically funded by that consulting firm. Interesting. Yeah. Interesting. Okay. And then fast forward to today. So 10 years later, what are you guys at in terms of total customers on the platform?
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Chapter 3: What challenges did Olark face in its early years?
So we needed to come up with a new channel. And the existing team was completely built around that partner marketing channel. And so, and so we were unable to like really adapt internally and had to bring in, uh, you know, want to bring in some new, some new thinking, some new expertise there to help us try some new, new, uh, new channels. Ben, just to be clear.
So like, I'm making this up, you know, HubSpot maybe was an early partner, but then they released their own chat product a year ago and you're like, crap, now we've got, we're another competitors, not partners. You got it. And so that happened a couple of times. Yeah. Like basically anyone who has chat now was an Olark partner in the past. So it's a great growth channel.
But like, you know, some of these guys have relatively bad products. So it's still like, you know, our chat is far superior to these bolt on chat products like say HubSpot or Zendesk hasn't evolved their chat in like four years since they bought Zoho. open. But so like we still get customers and have many customers using those channels.
But what ends up happening is those partners don't want to market for you anymore. Yeah. So even though you have all these customers in common that are very well served, you can no longer use that as a marketing channel. So that was one of the challenges that we've been facing a bit. Talk to me, churn is critical in this space, especially at this price point.
What is your churn today and how do you measure it? We don't have a public number for churn, but basically we measure it the standard way. Ben, that's not helpful for my audience. Teach us, how do you measure churn? We measure churn based on, you know, you take, you can do monthly churn, right?
So you take your MRR for one month and then you look at the MRR from that set of users at the end of, you know, the beginning of the month and the end of the month. And that gives you a number, right? So you can just look at the negative churn. You can just look at the people who left and you can also look at upgrades.
So you can kind of break those out into two parts and look at like how much are people growing during a month and how much are people leaving during a month. And then what we try to do is survey the guys that leave to try to understand why they're leaving and break that out. Because we have a lot of small business customers. Many small businesses churn out. They just die.
You have customers who outgrow you. For example, there's a lot of... you know, let's say you're HIPAA or you're dealing with a very strong, like kind of more enterprise compliance requirement, you might move up to someone who has a, has a situation better, this better serve that like large enterprise need. Uh, and then we try to like figure out like, okay, is this journey we care about or not?
And right now we're very happy with our journey. And it's, uh, And it's solid from industry standards. And we've benchmarked it against other companies' churns for companies with similar levels to us. Yeah, I would say just from our data, we've done about, I think you're over 3,000 interviews like this. So we have an interesting benchmark data here.
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