SaaS Interviews with CEOs, Startups, Founders
1722 "How $2m+ Enterprise Email SaaS Tool Plans To Survive COVID "
11 Apr 2020
Chapter 1: What urgent changes are being made to the podcast's release schedule?
Hey guys, I'm recording this here on April 5th. It's Sunday. Everyone's trying to survive the crisis. Quick note to you guys, we are moving, you know, we used to delay these episodes by, you know, four to eight months after we recorded them in terms of releasing them on the podcast. We've changed that.
A lot of these interviews you're gonna hear over the next many months are gonna be ones we recorded only
days prior we think that's a smarter way to run the show i've made the change so expect more urgent information coming out secondly i am getting destroyed on itunes reviews by these people that say nathan's rude he's hard-hitting blah blah blah which by the way i am it's part of my style it's what works the problem is people that love that style never take the time to go leave a five-star review
So I only get one or five star reviews on iTunes. And right now there's a streak of one star reviews that is driving me crazy. It would mean the world to me, guys. If you're loving the show, you love how direct I am. You like the style. If you go leave a review on iTunes now, if you do that and tweet it to me, text it to me, email it to me, whatever you want.
I'm going to reply with a very special surprise. I think a lot of you guys will really like it is heavy, heavy data oriented. All right. So I appreciate that. Thanks, guys. Enjoy the show. Building knack.com founded back in 2015. They're now serving between 100 and 600 customers, mainly more enterprise now than they were three or four years ago.
He's built this company completely bootstrapped with these customers paying anywhere between call it $6,000 ACVs all the way up to way, way north of that as they've moved more towards enterprise. The virus is impacting them.
The Adobe summit is really where they get a lot of their new customers connecting new customers that's obviously canceled, but they're still looking to scale their team of 25 people, eight engineers, Three quota-carrying reps, again, serving the enterprise space in the email marketing world, hoping to expand more to a platform play. Hello, everyone. My guest today is Pierce Eugene Walla.
He is the CEO and founder of a company called NAC, an enterprise email creation software for teams. NAC's the first platform to help enterprise folks do this, empowering marketers, writers, and designers to collaborate and create beautiful, responsive, on-brand emails quickly with no coding required. Pierce, you ready to take us to the top? do it. All right.
So people are going to hear enterprise email and go, no, there are plenty of companies that help brands send out, you know, enterprises send out mass email. How are you different?
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Chapter 2: How did Knak.com start and what is its mission?
Okay, so how many smaller customers have you let churn off? Are you down to like 100 customers now today?
Yeah, so I mean, that was the other thing was that Those $99 a month customers, what we learned, took a lot of support, churned very quickly. Whereas our enterprise customers, we've got net revenue churn of under 2% now. So yeah, so we were happy to kind of not lose customers, but really focus on that enterprise space where I think we can add the most value.
Yeah. Well, Pierce, just to be clear, the reason I'm pushing on these numbers is this is something that I think actually more people should do. They test a more freemium approach, like 99 bucks free to 99 bucks a month. They get a thousand customers and they don't have the courage to say, this isn't economically viable.
We need to turn some of these folks off and move enterprise quadruple price points and churn their customers back down. So what is that updated number? Like, is it about a hundred customers now today or less? I mean, what's that number today?
Yeah. I mean, I, And it's a great point, right? It's very attractive to have a $99 a month credit card product where people can just put in a credit card.
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Chapter 3: What challenges has Knak faced due to COVID-19?
They don't have to talk to sales. It's a very quick sale and not a lot of effort, right? But the issue with those types of customers is that just as easily as they came onto your platform, they're going to get off it as well.
So what we realized, especially as a bootstrap company, was that we need to focus on our customers who we can add the most value to, who are going to pay us for that value that we're able to give them. So I can tell you, we definitely lost a lot of customers, right?
Well, Pierce, what's a lot though? I'm agreeing with your strategy. I'm trying to get to like an actual number.
So we still are in the hundreds of customers, Kaya. So that's what I can tell you. It's not 600 anymore. It's significantly less than that. But north of 100. Yeah, absolutely.
And your ASP has grown. So let me ask you a question. One of the big challenges with SaaS CEOs when they do this transition is they don't know how to communicate the price changes to their older grandfathered cheaper accounts. So how did you approach that? Did you make people either decide to leave or upgrade to your new pricing? Or did you grandfather them at 99 bucks a month?
Yeah, I think The only reason we got to where we are today is because of those initial customers who trusted us with our business from the beginning. What was really important to us was those customers who allowed us to get here, that we took care of them and that we gave them a way to either join us on our kind of new mission, in which case we did grandfather a lot of our initial customers on.
Or some people simply said, yeah, you know what? you know, we're, we're going to opt out to that, which we totally respect. And we still thank them for their business. Well, but that's okay.
And that's not good though. Right? So if you told them they could have stayed on your platform without paying the new pricing and, and hundreds of them turned off, that's not a good sign. If you didn't force them into the higher price point. And they said, even if you give us the 99 bucks a month, still, we don't want to continue. That's not a good sign.
Sorry. Let me clarify that any of our customers, who wanted to stay with us with what they were paying us are still doing that.
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Chapter 4: How does Knak differentiate itself from other email marketing platforms?
We used to have like one time payment customers or $99 a month customers, uh, in order to get onto our new product, there was in some cases, uh, a price increase or, you know, they felt like, Hey, we have all the templates we need now. We're good. So we recognize we're going to lose some customers and we're, you know, we recognize this is the future of Knack and what we wanted to do.
Okay. So it's fair. Then if you update now today, you take your grandfather customers plus your new customers or new price points, et cetera. You're saying your ASP is significantly north of $99 per month at this point.
Yeah. Well, last time we spoke, we set our ASP was 6,000 a year. Okay. So 500 a month. Yes, I can confirm that our ASP is significantly higher than that, which is what's allowing us to grow at 100% year over year.
Significantly? I mean, is it fair to say it's more than double that?
Yeah, you know, I wish I could share exactly what that is with you, but, you know, I'll let you come up with your own estimations.
Well, I don't want to, I mean, if I was going to come up with my own estimations, I would just do the podcast without you being on it. That would be a lot of fun, me talking to myself, basically. But the point being here, like you've made the strategic decision not to put pricing on your pricing page, which drives some people crazy.
But for you and from the SaaS CEO watching, it's also great leverage because you funnel those leads to your sales team and they can work up a custom plan. And if someone's willing to pay more money for the value you provide, then you get more money paid to you, right? So how do you handle that? How many sales reps do you have right now?
Yes. So up until two months ago, we've been 100% inbound. Wow. Everyone that we've sold to has come to us through our website in an inbound manner. So up until a couple months ago, we hired our first outbound reps. So we have three sales reps right now.
And they all carry a quota? Yep. Okay. And what percent of the total team is that? How many total people on the team?
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Chapter 5: What strategies is Knak using to diversify its revenue streams?
You continue to be bootstrapped today, which means you've been operating a company at either break-even or profitable already over the past five years, correct?
Yep.
So it's not like you raised a bunch, burns too high, and now you have to cut a bunch to get back to profitability to survive something. You're good in terms of surviving.
Yeah, we have a lot of runway ahead of us. And I think what this has also showed us is how resilient a SaaS business can be, as opposed to that kind of one-time payment business where you need those customers coming in all the time. This has been an incredible advantage for us.
And those 25 team members, are they all based up there in Ontario with you?
So we have... most of them in Ontario, and then there's other remote employees across Canada. So all of us are in Canada, but not everyone here in Ottawa.
Okay, I see. Got it. And where, so where do you think the next, again, considering a recession virus, I mean, where do you think, how do you get your next million dollars in ARR? Where's it come from?
Yeah, it's a great question. I think One thing that we really see as a company is that when we started this, we thought, hey, this is a platform for marketers who are going to help build their communications. But what we have realized over time is that this is actually a platform for everybody in a company that needs to send out on-brand communications.
And so I think there is a ton of potential in expanding NAC beyond that marketing department to... in-house communications, development communications, partner communications, sales communications. There's so much more to go there. And then we also do see a lot of growth potential in the platform expansion strategy, which is something that we're doubling down on right now.
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Chapter 6: How has Knak's customer base changed over the years?
If you look at the past five years of the business in terms of how the Canadian government has potentially helped fuel the development growth of NAC, I mean, can you quantify how much money you've gotten back from the government? You think it's more than a million?
Uh, so we, we actually just started taking advantage of these programs last year. So I think we've just scratched the, you know, the tip of the iceberg on what they can help us with, but it's an incredible program and I'd encourage other bootstrap companies in Canada to try and take, you know, leverage it to help them grow.
Very good. Last question here. What's the next big revenue goal? You think even in a recession, you guys can get up to five, 6 million bucks in AR this year, or is that more of a stretch?
Yeah, I think, you know, I I've spoken with our team about what, if we want to move the target that we had set for ourselves at the end of the year and, you know, fully putting it to them, like, Hey, I understand if we need to adjust this based on everything that's happening. But what we're seeing in our pipeline and how we're seeing our deals close, we're keeping that same number again.
And that's going to put us at, again, 100% year-over-year growth.
That's great. What is that target? I mean, can you drive additional growth to get up to 5, 6 in ARR this year? Or is that more of like a 2021 goal?
Yeah, like one of the things that happened to us during this COVID was that, you know, the Adobe Summit is our biggest marketing event of the year. we put it, you know, that's our Super Bowl for us. And, you know, this year, we don't get that. We don't get to interact with our customers. We don't get to see them and have that face time.
So to me, that's really the biggest thing is, you know, is are we going to be able to replicate that virtually? Are we going to be able to change our marketing spend to enable us to continue to create that pipeline. And based on what we're seeing so far is flipping it to digital. is that we're still having a lot of success driving new leads and pipeline.
Guys, those of you watching live, this is one of the first times we're doing one of the podcasts live. If you do have questions for Pierce, he's the CEO of NAC, an enterprise email marketing solution, but expanding quickly to be more of a platform play between 100 and 600 customers. If you have questions for him, you can post them here on Facebook.
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