SaaS Interviews with CEOs, Startups, Founders
1490 His $3m ARR Tool Lost Instagram API Access, What Now?
23 Aug 2019
Chapter 1: What is the main topic discussed in this episode?
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built a $3 million platform on top of Facebook, loses API access, now shifting completely to Prepper, which is Instagram kind of automated scheduling using AI. They've got four people, currently about 400 customers, $17 ARPU, so six grand a month right now in revenue.
Bootstrap, 5.8% monthly churn, that's on a revenue basis, and Net, they're spending about 17 bucks to acquire a customer, so about one or two month payback period there. Again, founded just about four or five months ago here in 2018. 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, everyone. My guest today is Jörg Benders. He's a product-driven entrepreneur, continuously improving products and services through hustling and data analytics.
He first built and sold a company called Quill, an online marketplace for buyers and suppliers of custom-made parts. Currently, he's building a SaaS portfolio company. First, Stop Prepper, an Instagram scheduling and publishing solution powered by AI. After that, Informed.plus, building the world's largest library of medical animations to empower patients.
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Chapter 2: How did the guest's previous business experience shape their current venture?
And now we, uh, we launched, uh, let's say commercially in, uh, May this year. Okay. And, and kind of get me in your head. So like, where were you a year ago? Were you still selling your other kind of old company and you're now focusing on these two new ideas or where are you at life-wise?
Uh, life-wise, I was, uh, after my exit in, uh, in, uh, in Quail, I, uh, did some, some, some investments and, and, uh, did some advice work. Next to that, I was running a company called Inc. 361, which was one of the largest Instagram web interfaces until Facebook blocked the whole API business. And then that whole business went down the drain.
And one of the most number one requests we got from customers is to help them schedule content to Instagram. So we started building then and think about it around the time to make a new service. How big was the business before Facebook shut it down in terms of revenue? In terms of revenue, it was about $3 million AR, or yearly revenue, only based on advertising income.
We had 21 million users on a monthly base on our platform, and it was only advertising-based. That's incredible. Okay, so went from that to where are you at now today in terms of total customers paying? We have about 400 paid customers at this point. So that's actually not bad, right?
So you take, you know, you kind of harvest who you could from the old idea, bring them onto the new SaaS platform. And if I take 400 times that $17 a month price point, that puts you at what, like 6,800 bucks a month right now on revenue, something like that? So how much? 6,800. Okay. Yeah, that's correct. A little bit less. It's 6,500. Okay, very good.
But still, the playbook you're running right now is kind of take people off the old product, put them on the new one, right? That's correct, yeah. So Inc. 361 still exists, and we leave them over to Prepper. What does that company do, though, if Facebook shut off the API access? It's not doing anything anymore, but it's just shifting and promoting more or less Prepper in this case.
Yeah, I see, I see. And why, like you were doing a three million bucks in terms of run rate, Facebook shuts it off. Most people would say, okay, I learned the lesson. Don't build something that's reliant on a Facebook API. And then you go on to Instagram scheduling, which I think still relies on Facebook's API. Why still deal with that risk?
That's a good point because basically we love this business and we want to solve the problems for our customers and our customers want to have a lot of scheduling on Instagram. So we decided to build that. Obviously, there's a dependency there on Instagram.
we're trying to, let's say, limit that dependence by adding more networks in the future and by adding other tools to the platform where we don't rely only on Instagram. Got it. Okay, that makes sense. Now, are you bootstrapping this or have you raised capital? No, we're bootstrapping and we finance it based on all the, let's say, the cash flow, free cash flow we have from Inc. 361.
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Chapter 3: What is Preppr and how does it generate revenue?
The churn is 5.8%. Okay, that's logo churn per month? That's per month here, churn per month. But on a logo basis or revenue basis? On a revenue basis. Okay, revenue churn per month. And that's net or gross? That's net. Okay, so you're adding back any expansion? Yeah, correct. Do you have a lot of expansion revenue yet or is it too early? No, it's too early to tell actually. Yeah, yeah.
What are your variable price points? So like what's your cheapest, what's your most expensive and why do people go up or down? Our most cheapest one is a plan of $9 a month. The most expensive one is, let me see, is about $78 a month. And we sell both on monthly package and on yearly package.
And our challenge is more to get people more to the yearly plans instead of only sticking to the monthly plans. Sure. So what's the difference? Why would someone pay $9 versus $78? Is it number of social profiles connected? Or what are the pricing axes? Yeah, all the functionality is across all plans the same. It's only depending on the number of social accounts you connect to the tool.
Okay, got it, got it. And talk to me about CAC. So what's your fully-weighted CAC right now, your cost to acquire these customers? We pay about $17.80 per customer. Okay, so you get paid back on average kind of in a month or two months? Yeah, correct, yeah, that's correct. And where are you spending most of that money? We're spending most of the money on salaries. Yeah, okay. Yeah, okay.
But at this point, it's content marketing. And that's where, apart from some technical development, it's on the growth engine. It's only on marketing and it's content marketing. So just to be clear, this is like your fully weighted CAC, 17 bucks includes the salaries of your content people, your sales people, et cetera. There's no direct paid like Facebook ad stuff in there. Yeah, that's correct.
This is fully CAC. Very cool. Any plans to raise capital or you want to stay bootstrapped? Uh, we have plans to, to, to, to raise, but it will be, uh, somewhere in the beginning of the, of the new year that we will start up the process. At this point, we'll, we'll stay as, as, as is.
And, uh, we'd like to continue, uh, let's focus, uh, like to take, take the business a bit further before you go into, uh, to raising capital. Yeah. Jörg makes a lot of sense, man. Let's wrap up here with the famous five. Number one, what's your favorite business book? I don't like, I don't like a lot of business books. Uh, but so, uh, my favorite book is into thin air for John Krakauer.
It's, it's, uh, it's, it's about climbing. Um, but, uh, if I need to pick a book, it would be, uh, let's say, uh, principles from Ray Dalio or, uh, what else do we do? Do we have, uh, uh, the, the, let's say the hard things about the hard thing about hard things. Yep. Those are both good. Number two, is there a CEO you're following or studying right now?
Preferably one that the rest of us don't know about. Cool. Uh, no, no, it's, it's, it's again, this case, uh, Ray Dalio. Okay, good. Number three, what's your favorite online tool for building your business? Uh, besides Prepper, it's, uh, it's, uh, it's, uh, it's Slack. So yeah, sorry. I think it's probably the first time you hear it or not. Slack. Yeah. Oh yeah. What's, what's Slack do?
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Chapter 4: What challenges did the guest face after losing API access?
Last question. What do you wish your 20-year-old self knew?
uh keep it simple and don't worry guys keep it simple do not worry again this coming from a guy who's talking about do not worrying who built a three million dollar platform on top of facebook loses api access now shifting completely to prepper which is instagram kind of automated scheduling using ai they've got four people currently about 400 $17 ARPU, so $6,000 a month right now in revenue.
Bootstrap, 5.8% monthly churn. That's on a revenue basis and net. They're spending about $17 to acquire a customer, so about one or two-month payback period there. Again, founded just about four or five months ago here in 2018. Jörg, thanks for taking us to the top. You're welcome. Thank you.