SaaS Interviews with CEOs, Startups, Founders
1766 $700k Cash In Bank, $2m ARR, 100% YoY Growth, They're Hot!
25 May 2020
Chapter 1: What is Smartlook and how did it start?
launched Smart Look as a free tool in 2016 to compete with companies like Hotjar, basically a user session tool they spun out of their last live chat company. Both companies now doing about $2 million in terms of run rate. They got their first 100,000 sign with spending $250,000 on Facebook ads, signing free trials up at $5 a pop.
They've now grown that into 2,000 paying customers, paying on average $80 per month for about $160,000 per month in revenue, 100% year-over-year growth. They're profitable, taking $30,000, $40,000 to the bottom line every month, sitting on $700,000 of cash in the bank. So no rush, healthy company. They've only raised $250,000. Nathan Latka here, guys.
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Chapter 2: How did Smartlook achieve $2 million in annual recurring revenue?
My guest today is Peter Janasek. He's building a company called Smart Look, which records users on websites and in iOS and Android apps with features that allow you to find useful information even in thousands of recordings in no time. Peter, you ready to take us to the top? Okay, so talk to us about the product. This sounds a lot like Hotjar.
How are you differentiating yourself from other tools like Hotjar? This is a good question because it's the most common question. People ask us that very often. Basically what we do, we are combinating two markets. We are combinating session recording market and event tracking market.
Chapter 3: What strategies did Smartlook use to acquire its first customers?
And we can do both into one solution. So then you are able to filter session recordings through events. You can filter session recordings in funnels or in your cohort, retention cohort and so on. It's much better when you want to analyze your user behavior. And so I have a bunch of questions about this, but I want to understand kind of the backstory and traction here first.
So what year did you launch the company? We launched the company in 2016. Okay. Basically, we raised a small amount of money in 2016. How much? But it was 250,000 US dollar. Okay. And is that all you've raised to date? Sorry? How much total have you raised to date?
Chapter 4: What differentiates Smartlook from competitors like Hotjar?
That's it. Okay. Just two 50. Yep. All right. So here's the big question then. How good are you with investing that money to drive growth? What's revenue today? We have 2 million. I know the run rate. We grew quite well. Uh, we started with small customers in the beginning, uh, but then it was like, uh, after one year and how we launched. Smart Look, we changed our strategy.
We are going up market, so we are focusing on bigger customers right now. And that was a good decision because we are growing quite a lot.
Chapter 5: How much funding has Smartlook raised and how is it being used?
It's around 7, 8% month over month. So let's break this down real quick. You're at a $2 million run rate today. How many customers are you working with? It's 2,000 customers. Okay, 2,000 customers. And what do they pay on average per month? 2,000 paying one. What do they pay on average per month? It's around $80. Okay. Yep, that works.
So $80 obviously times $2,000 puts you at $160,000 a month or about a $2 million run rate. Now, where were you exactly a year ago? Do you remember how much revenue you were doing then?
Chapter 6: What is Smartlook's current customer base and pricing model?
Basically, we are doubling almost every year. It was like 90% growth. Last year, it was around $70,000 MRR. last year, the end of the last year. And now you're up to 160. Now it's February, so December 2019, it was 140. December 2018, it was 75, something like that. Got it, yeah, so about doubling year over year. So this is a great story.
So I love that you've done so much with such little capital. This is like my favorite kind of entrepreneur to interview, so I appreciate you coming on. So walk us through the magic, right? How did you get your first 100 customers? By the way, entering a market that a lot of people would say Hotjar is already dominating. Yeah. When we started in 2016, it was for free for 10 months.
We launched it as a simple recording tool for free. It was unlimited. You could record everything. And for 10 months, we were offering it completely for free.
Chapter 7: What are the growth strategies for Smartlook moving forward?
There was no pricing. There was just a free package. Okay, but how did you get the first 100 people to view the website and try it for free? Uh... Because it's not our first startup, we also had another startup before, which is called SmartSub. It's live chat. So we saw in Google Analytics where our customers are coming from. So we were able to predict that it can be the same.
So we target the same channels or we're trying to be visible on those channels. We were visible with our previous project. Okay, so let me just break that down. You had a prior company with a bunch of users. It was a chat product, and your intuition told you that those same customers would be interested in this new product line.
So you basically looked at what channels were driving your old company traffic, and you went to those channels for this new product, and that's how you got your first 100 customers for SmartLook. Yeah, basically like that. I see. Okay, so you're free in 2016. How many free people signed up before you launched a paid option? It was after 10 months, we have 100,000 signups because it was for free.
So it was kind of a while. A lot of customers or a lot of signups recommend us because it was free. Then after a couple of months, David from Hojar called me and asked me like, what are you guys doing? It looks pretty good. So we already know each other like We discussed it with, uh, David from, did he try and buy, did he try and buy you? Uh, not yet.
So what was he calling for then two years ago? Oh, it was like, it was in 2016. So it's, it's, uh, much sooner, but, uh, he was just wanting to know, uh, why we launched smart look. What'd you tell him?
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Chapter 8: What insights does the guest share about startup challenges and successes?
I don't remember exactly, but, uh, we used the session recording feature in our previous project. This is live chat, so we wanted to help our customers to see what customers do when they are chatting with them. So basically we started building this feature in our previous project, but then we just take the feature and build it as a separate project. So that's how it started.
uh so this is this is what i told him like it's uh we are just trying to see if customers are interested in uh this feature as a separate project and it seems that they are interested because we had a lot of signups every month so you had a hundred so you had a hundred thousand signups after 10 months is that when you launched your pricing plan it was 10 months in
then yeah after after after that we decided to launch launch pricing because we already had a lot of infrastructure costs so we decided we need to know like if it's if we are able to monetize that or not what was your what were your total cost per month when you were still free do you remember oh we used uh in 2016 we used a lot of facebook marketing uh paid facebook marketing like
performance marketing on Facebook and we get like four signups we paid like five seven euro maybe something like that to get one sign up mm-hmm okay well so how much did you spend on Facebook marketing that one that year uh, whole investment. I think it was like 2000, $200,000. Okay. So you didn't tell me this when I said, what was your growth channel? You said it was your prior company.
No, your real growth channel was you spent a quarter million dollars on Facebook ads paying five to $7 per signup. Uh, sorry. I didn't hear you like in a couple of seconds. Yeah. I was just saying your big growth channel in 2016 when I asked you earlier, you said it was your old company, but really it was, you spent $250,000, uh, to get signups at $5 a pop. You asked for first 100 customers.
So first 100 customers was from organic channels. But then we realized that let's try performance channels like Facebook, Google Ads and stuff like that. And we saw that Facebook was great for us. But then after a couple of months, we realized that there are just more customers. They were churning a lot. So we cut that channel and we don't use it anymore.
So $250,000 divided by five is about 50,000 signups that you got, of which a lot of those customers were very small. They churned a lot, but some of them told their friends and you had some viral growth and some of them were also potential enterprise leads. Is that right? In the beginning, it definitely helped us a lot. I see that I would do that same again if I'm in 2016. It was a good decision.
We find some first customers online They are small, they help us to grow, but now we have to focus on bigger customers. What was your product? What was your price point? Your first price point that you launched? It was very, very cheap. We started with, uh, I think it was 10 or 15, $15 per month. Okay. For like unlimited everything, that was your only option?
Oh, no, there was, I think 100, 100,000 sessions per month. Okay. And so what did you grow revenue to? When did you launch that pricing? Was that 2017 now? It was in December 2016. We launched it in February 2016 in December. After 10 months, we launched pricing. Okay. And then what was your total revenue in December, sorry, in 2017? For a whole year? Yeah. Not sure. I would have to check that.
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