SaaS Interviews with CEOs, Startups, Founders
1648 How He Spun $4m ARR Influencer Marketing SaaS Out of Agency
28 Jan 2020
Chapter 1: What inspired the launch of Upfluence in the influencer marketing space?
launching the company back in 2016, spinning it really out of the agency, Upfluence, an influencer marketing platform. They've just passed $4 million in terms of ARR, another $2 million on top of that in terms of professional services revenue. They have 1,000 customers currently. That's what they just passed. They just recently raised $4 million in equity.
Chapter 2: How did Upfluence achieve $4 million in ARR?
62 people between New York City, Paris, and Switzerland. Net revenue retention about 75% annually. Spending about four months of ACV to acquire the customer, so a healthy payback period there. They are burning about $100,000 per month, but again,
They have about two, three, four years of runway because of the money they just raised as they look to scale and maybe raise some additional venture debt. Hello, everyone. My guest today is Kevin Kruse. After launching three companies in e-commerce, he identified an opportunity in the influencer marketing space.
He grouped up with three other entrepreneurs and became the founders of his current company called Upfluence. They then spent the next five years building the company into an industry leader. We'll talk about it today. Kevin, are you ready to take us to the top?
Yeah.
I am ready, Nathan. Okay. So first off, so industry leader is a big word. How do you know your industry leader?
Well, I mean, you have a couple of different ways to think about leadership, right? You have a technological leadership that we definitely have. We've been in here longer than almost anybody else. And then there is a market share leadership, which according to service, we are too. According to what? According to surveys, we are too.
I mean, like client surveys, we have a thousand customers and paying customers for our industry, most of them enterprise. That's not something most of our competitors can even get close to.
Okay. And technically, well, actually, let's back up here for a second. So for people that are not familiar with influencer marketing, help them understand what you do.
Of course. So I think a very easy way to understand what we do is think about Coca-Cola, right? They have a new product, they want to launch a new drink. And to talk about that drink today, you want to go to social media influencers, people on Instagram, people on Facebook, people on YouTube that can talk about your product the same way.
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Chapter 3: What strategies does Upfluence use for customer acquisition?
So they want to really find these people. To do that today, it's really finding a needle in a haystack. It's really about finding the one person that matches exactly what you want them to say on the right network, on exactly the right audience. To do that manually is almost impossible. So you need software to help you out.
You need a way to easily search for the right person amongst millions and millions of profiles, find the right person, go after them. partner with them, and then, of course, structure a deal to make them talk about you. So if you're Coca-Cola, we help you basically find the right guy. We help you work with them.
We provide you with all the tools to draft a contract, pay them in the end, and monitor how good they're doing. So it's really what we do as a software for influencer marketing.
And just to be clear, this is a SaaS model or is this something more like professional services agency model?
This is 100% SaaS. So all our clients are independent. They're actually using the software on their own and using it to do everything they want.
And Kevin, give me a general sense here.
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Chapter 4: How does Upfluence define its position as an industry leader?
So in terms of what customers are paying you on average per year, are we talking, you know, a hundred grand or a million or 10,000? What is it usually?
Our pie is close to $30,000. So it gives you a month or a year. Per year. Per year. Okay. Yeah. So it's an expensive piece of technology. But once, I mean, once again, the RPI has been growing really,
a lot this year so people that came onto the software let's say two years ago would have had a much better deal let's say yep yep yep no that makes sense well hold on so okay so it sounds like that is your that's your 30 000 acvs your starting price point today but if you look at your historical you see your entire customer base today on average you're saying they're maybe paying you more like 10 grand a year or something like that yes actually the overall the entire company over five years a thousand customers i believe the average
The average card value of all our years was about $9,000. I see. Interesting. Still inexpensive software. Our smallest price that we have ever done was about $4,000 a year for a yearly contract, which is how we sell our tools today. The most expensive we've ever done is in the high six figures. A little more than $150,000. So it's pricey.
An average ACV across a thousand customers of nine grand, obviously we can kind of do backwards math there, but just put you at about 750 grand a month in revenue or 9 million in ARR. Is that generally accurate?
This is generally accurate, correct. If you take away a few other factors, correct. What other factors? Well, some of our users have one license that is used by, let's say, 16 different subsidiaries, for example. And it's not exactly structured the same deal. We see them as one customer, but as 16 users.
I see. Well, if we ignore customer count and ignore output, generally speaking, in terms of ARR range, you're right in that 9 million range today?
We're closer to 6.
Closer to 6. Okay. By the way, thank you for correcting me. I know it's always tricky to like... Correct lower than correct higher. But listen, a lot of people listen and they would know. They go, we know Kevin was lying. Now they're going to, oh, Kevin's a good guy. He's accurate.
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Chapter 5: What is the business model of Upfluence: SaaS or services?
And the rest is spread out across Paris, France, Lyon, and Switzerland, where we do a lot of tech development over there. And of course, European customers management.
And how many of the 62 are marketing sales, doing demos, things like that? I think it's 16 people brutal, but I might be wrong. That's good. It could be 16 to 20. When did you start the inside sales model? And did you start with a co-founder leading it? Or did you hire an external VP of sales? Or what? So it's actually funny.
As a European, there is a big fear going to the US because we hear about... It's a new market, right? You don't know anything here. So when I moved here, I was really alone, right?
Chapter 6: What are the average customer payment structures at Upfluence?
I just stepped down from being CEO to launch a software business inside the same company. So a startup inside a startup. And I met through a job offer on LinkedIn. I met this former actor of Shakespeare in the Park that wanted to do sales. And so he was this kind of funny guy. I had him and now he's our SVP managing the entire team worldwide. So I hired an American to help me with the sales.
I also sold myself. I think you cannot delegate something if you can't do it yourself. So I actually worked with him to make sure that we could grow the business to actually... The first hundreds of thousands of monthly revenue, I was here with him on the ground effort.
And Kevin, when you started hiring external salespeople and you have to put together a comp plan and you have to project, you know, what the quota is and how many months to ramp up. I mean, what is that number today? How many months to ramp up? And then how do you, what's the ratio of their kind of base pay relative to what their quota is?
Is it like 10, 10 X or five X or how do you think about that?
Interesting. Um, yeah, it's a really interesting question actually.
Um,
Basically, today, somebody follows a training program for about five days when they get in. And right away, we throw them in the pit on our smaller value calls. For three months, they're going to be trainees. After the third month, we see that the old cabs, so a typical salesperson at our company, a senior sells about half a million a year, a junior between 250 and 300.
So junior is before one year, senior is after one year. So it's kind of... by using the term little broadly here um and they used i mean the salary is about a third uh a fourth of that's also yeah between which depends on obviously how much you're doing because there is a a commission component and then there is a a fixed component but yeah
So let me repeat that back to you. They come in, there's a five day training program. There's three months we're on our own training calls with smaller ACV kind of accounts. And then the juniors where they start out, they're expected to close about 250 grand in new ARR each 12 months. And when they go to year two, they'll go up to senior, which is a $500,000 ARR quota for the year. Correct.
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