SaaS Interviews with CEOs, Startups, Founders
1695 How He Used Video Ads To Get First 450 Customers, $1k in MRR
15 Mar 2020
Chapter 1: How did HQ.app achieve its initial customer base?
Founded HQ app back in 2017, now has about 450 customers paying three bucks a month, so $1,200 per month in revenue. Getting signups right now via video advertising, spending about a dollar to get a new trial. They need about six trials to get a new paid customer. So payback period there of about, call it two, three months. They've got a team of five in Belgium and other remote locations.
10% annual churn, $400,000 raise, burning about $16,000 per month right now as they look to scale and hit 10K per month by the end of 2019.
Chapter 2: What role do video ads play in customer acquisition?
Hello, everybody. My guest today is Florian Hendrix. He is the founder of a company called HQ.app, working on building and really helping people get more efficient when they're switching between a gazillion tabs to collect, create, and share information. It allows you to find your documents, pin them, and work in a centralized format to avoid distractions. We'll jump into it today.
Florian, are you ready to take us to the top? Yes. Thank you for having me. All right. So HQ.app, I mean, is this like another one of these kind of task management, project management kind of tools? No, not really. So it's basically the idea is to replace the way people currently organize bookmarks and files in their typical places.
So you connect your apps, Google Drive, Dropbox, Slack, Gmail, etc. And you get this central search engine. You type, you find stuff. And when you want to reorganize it, you can reorganize it from our interface instead of visiting all those other apps. Okay, and how would this compare to like, I mean, the use case you just gave, I really just use Google Drive for.
I drop everything in it, I search it when I need something, and I find what I need.
So yeah, the idea is that some people, they have multiple Google Drive accounts, they have Dropbox accounts, especially, well, me, I came from a background of consulting, so I visit one company, they have a SharePoint, I visit another company, they use Dropbox, et cetera, and I was really tired of always trying to learn some new interface, so the idea was just, yeah, let's create one thing that I can take everywhere,
I can put everything in it and it's smart enough to help me be efficient. And what's the business model? Is it a SaaS play? Yeah, so it's a SaaS premium model. So currently we have about 60 new free users that sign up and we added a pro version a few weeks ago. What do you mean? 60 new free signups daily? Yeah, so, and currently, yeah, we just added a pro plan.
We're just emailing every one of our users to upgrade. How did you, WalkMe, you know, getting 60 new free trials a day needs some context around it. So when did you launch the company, what year? Yeah, so it's about 50-50 organically, I think, currently. So we're doing a lot of ads, video ads, actually. Video ads on where?
Facebook and Google in stream ads inside your, yeah, wherever you're reading something. Okay. And what will you pay to get, what would you say is the 20 seconds inside Facebook and Google on average to get a new free signup? What would you pay across your page? Currently we're at, I don't know, I think we're about a Euro customer acquisition cost. Okay. So call it $1.10 USD for a new free trial.
And how many trials do you have to get to get a new customer? So currently we've upgraded about one in six users, which is a lot. But we think it will drop off once we start targeting less and less relevant users.
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Chapter 3: What features make HQ.app different from traditional tools?
So that's the cost. So call it you need six leads at $1.10 USD. So call it seven bucks customer acquisition cost there. What are they paying when they sign up? What's the average customer paying? Uh, so yeah, the pro plan is eight euros, uh, per month. And yeah, uh, most of our users currently have upgraded, uh, to a year plan directly. So that was a big win for us. And what's the year plan?
Uh, the year plan is 20% off. Uh, so it's, uh, eight times 12 minus 20%. Okay. I assume that you make that an easy number. You don't know it off the top of your head. Yeah. I don't know. It's, I think, uh, it's 60 or something. I rounded it enough to keep it easy. That's what I'm saying is what'd you round it to? That's what I'm trying to figure out. You know, you don't know. Yeah. 80, 80 euros.
80 euros. Okay. So about 80, 86 USD or something like that. That's great. Yeah. Well, we, we let dollar Euro. We, we just charge the same. Sure. When did you launch the company? What year? Well, yeah, I lost you again. Florian, when did you launch the company? What year? In 2017, actually, we stayed a long time secretly working without actually having autonomous signups.
So directly with companies who wanted to work with us, mainly small consulting businesses of 20, 30 people. We were looking for a solution like this. And then in August, we started working on something that's completely self-serve that you can just sign up online. And now, yeah, the goal for this year is to go really big. What does that mean? That's like a very difficult goal to go after.
It doesn't mean much. What does really big mean? Well, we have about 400,000 raised right now. So from all kinds of small investors and a bit from the government here in Flanders. And yeah, the idea is to reach 10K monthly revenue by the end of the year. What do you got now? We're now at 1,200, so I actually don't know how realistic it is. But yeah, I have to be a bit ambitious, of course.
And well, the idea is to maybe add an enterprise plan where we get single-time revenues when we onboard a new client who wants some kind of customizations done. So yeah, that's how we're thinking about revenue right now. So Florian, how many paid customers do you have right now? Currently, it's 450, I think. 450? Yeah. Okay, so 450, but you're doing 1200 kind of euros per month.
That would mean on average, they're paying three euros per month. So something's wrong there. Yeah, we gave a lot of... We gave a lot of discounts on our first users.
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Chapter 4: What is the business model behind HQ.app?
Basically, we have a referral program. The more people you refer, you get a discount. And you can upgrade to the pro plan and then the discount goes off. So most of those users are on a year plan and then they got the discount. So it's... I get discounting to try and drive viral growth, but buying a $9 a month tool is not a question of cost.
Like if it was a $9,000 a month tool, maybe it's a question of cost. But like why discount something that you already get at the dollar store? It's more a marketing thing, actually, I think. People talk about it, and then at the end they say, yeah, why don't you upgrade? You get a discount. People like discounts, I think. Yeah, I don't know.
We wanted to give something in our referral campaign, so maybe it's something we should optimize a little bit further, but I think we're just going to lower the amount of credits we give for referral.
uh until yeah we get it right but i guess what i'm trying to understand is why did you decide to make the incentive for people inviting their friends dollar discounting versus i mean look at what drop look at what all these other companies do that do it very well dropbox they give away their utility value not dollars discounts they give away free storage so like why didn't you decide i mean why didn't you follow dropbox's path and give away whatever the utility was of your tool versus dollars
It's difficult to find something that's not dollars in our case because the idea is that you use the storage of the apps that connect with us. So we don't want to be a competitor of Dropbox. We don't want them to see us as a competitor. So we don't want to sell storage. And then the easiest thing was to find credits.
But now we're also looking into doing a referral plan where you can gain rewards that are basically... merchandising or merchandise goods, which seems to be popular nowadays. But yeah, of course, it has lots more logistics for our side, so. Yeah, I mean, that sounds extremely complex.
I mean, is it really that difficult for you to look at your power users and say, this is the thing they're doing the most on our platform and then incentivize around that?
uh yeah we could build in some limitations uh basically inside the platform uh based on usage i'm trying to get the floor i'm trying to get out what is the usage is it number of apps connected per month is a number of files connected like what is the value like the value metric that shows a power user metric yeah yeah that the the thing we're we're trying to boost is the amount of
stuff that people connect to it, not in apps, but in content, like the number of bookmarks that people make inside the app. So number of bookmarks. Yeah, the more they make, the more likely they are retained, both free and pro, so we don't lose people after they connect a certain amount of content. And maybe we could create pricing plans that's related to the same metric. That would be cool.
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Chapter 5: What is the customer acquisition cost for new trials?
Last year, over the whole year, we made about $6,000, I think. Okay, got it. It was all one-time stuff. Yeah, so I assume right now you're burning cash? Yes, yes. How are you managing as a CEO? You raised $400,000. How much are you comfortable burning every month? We're now burning around $16,000 a month. Most of our employees work partly for equity, actually.
And so I think half of our spend actually goes to advertising and content creation with external firms. And what's the team size today? How many people? We're five people right now. Three founders and two developers. All in Belgium? Yeah. No, two are remotely in Ukraine, and the rest is here. Ah, very good, very good. Okay, talk to me a little bit about driving additional growth.
Can you keep pouring ad dollars on these video ads to drive 10,000 new customers, or are you seeing diminishing returns on that already? Currently, I'm already seeing diminishing returns on it, but I think it's partly because we're not optimizing our targeting well enough, especially on Facebook. Because it takes a lot of time, of course.
We now launched the referral campaign a week ago or something, and we're seeing it grow every day. So I think our long-term strategy is, of course, to get as much organic signups as possible. And for that, we really have to start creating more content because currently, yeah, we rank very badly in terms of search in Google.
And we have absolutely, well, I think we post one thing organically every month or something. So it's... Very good. All right, Florian, let's wrap up with the famous five quick answers here. Number one, what's your favorite business book? My favorite business book is, I think, Habits by Nir Eyal. I don't know if you know it. It's a good one.
Number two, is there a CEO you're following or studying? It's probably an easy answer, but Elon Musk. Number three, what's your favorite online tool for building the company? Asana. Asana. That's a good one. Number four, how many hours of sleep do you get every night?
uh on average six and a half something okay and out of curiosity how are you using asana uh well it's basically our entire company runs on its boats uh we have we have boards for product and marketing and uh basically it's the best tool i've ever seen in terms of keeping the priorities are did you always use that from the beginning or did you switch to it from something else
Initially, we were using Workflowy, but that didn't scale very well in terms of theme size and was a bit too complex for some use cases. And then we moved to Asana. A lot of us worked with Jira when we were in enterprise and we were looking for Jira, but better.
uh and you think it's it's basically that so guys very good yeah guys if you want to listen to us or if you want to try us on for free they gave this podcast basically a great uh deal you can go to nathanmaca.com forward slash asana to check that out it's fun flooring to hear that you're using that and having fun and it's uh effective for you uh number four how old are you i'm 26 26 and seven in a few weeks that's good happy birthday and what's your situation married single kids
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