SaaS Interviews with CEOs, Startups, Founders
868 SaaS: The Argument for Spending 100% LTV on CAC
09 Dec 2017
Chapter 1: What is the main topic of this podcast episode?
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 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.
Chapter 2: How does Paymo generate revenue through its SaaS model?
All right, good morning, everybody. My guest today is Jan Lugacci. He's the CEO of Paymo, and he's been doing this for over nine years, founded back in 2008. He plays in the project management, time tracking, and invoicing space. Jan, are you ready to take us to the top? Yeah, sure. Thanks for having me. Thanks for coming on. Okay, tell us about the company and what's your revenue model?
How do you make money?
Chapter 3: What strategies did Paymo use to acquire its first customers?
We're a SaaS model in the project management space. So we're basically selling subscriptions to customers in the SMB, SME market and freelancing markets. We charge per seat. And we offer a free trial so customers can try the product and then they can pick a subscription and start using. And again, what's the company do? Tell us a story about a customer. Sure.
We're an online project management tool. that does all kinds of things on the same roof, like time tracking. I get that.
Chapter 4: How has Paymo's growth trajectory evolved since its launch?
Cause you just told us that. Tell me a story of one of your customers, like name a customer that's using you and tell me how they're using you. Yeah, sure. So for example, we, uh, just signed on, uh, customer like Acor Hotels who use us for time tracking their digital marketing division from France.
They use us for time tracking and collaboration within the team, like sharing files, managing tasks internally and tracking their time. And what's the average, just to get a sense of your kind of your customer cohort base, what's the average seat price that you charge? We charge from $4.95 to $23 per seat, depending on what kind of features you are using.
And what would you say the average is if I forced you to just pick one number? Around $15.
Chapter 5: What is Paymo's customer acquisition cost and how is it managed?
Okay, around $15 a seat. Yeah. Okay, good. That's helpful to understand. So you're kind of playing in a small business, maybe touching mid-market a little bit, project management, task management space. Yeah. So we started out with freelancers and slowly moved upmarket. Got it. Okay, let's hear more of your backstory. So what year did you launch this company in?
Chapter 6: How does Paymo maintain a low churn rate among its customers?
We launched the company in 2008 in Romania. We had a design and development studio and we developed a tool internally to track our time. We saw that it was good and there was nothing really on the market that sort of we liked. And we decided to publish it for free. So it started out as a free software online. Among the first ones in the time tracking space with a cloud model.
How did you get your first few users? We just launched the website and started reaching out to people we knew, other agencies, and then started talking to bloggers. Back then, this worked really nicely. How were you reaching out, though?
Chapter 7: What unique growth strategies has Paymo employed to boost visibility?
Was it via email of people you knew or agency clients that you already had, or what? Agency clients, friends, and then we just started sending out emails, talking to bloggers. to freelancers and organically it started growing. Got it. That makes good sense. And you guys are all, is the whole team still based in Romania? Yeah, we're still here. You like it over there? Yeah, it's great.
Cheap labor?
Chapter 8: What are Paymo's financial goals for the upcoming year?
Not really. How, how big, how big is the team now? We're 13 people. 13 people. And have you decided to bootstrap this or have you raised capital? Yeah, we're, we're still bootstrapped. So we kept reinvesting our own money. into the company and we're still bootstrapped at the moment. So Jen, I'm going to call you king because I love B2B SaaS companies that are bootstrapped. It's so much better.
There's no dilution. You're not having to bend over the table for anybody. You just do what you want, right? Yeah, sort of. We still bend over to the customer. So our main focus, we're very customer centric and our main focus is to keep our customers happy. Guys, I get asked all the time, Nathan, you host all these interviews, hundreds of them per month. How do you do them efficiently?
And guys, the answer is simple. People always agree to my calendar, back-to-back meetings. I batch my interviews to stay very efficient. And the way that I do it is I use a tool called Acuity Scheduling at nathanlatka.com forward slash schedule. And the reason I use them is very simple.
They keep my no show rate very low because they send out reminders about when the interview or the meeting is coming up. And also they make it very easy to schedule time, right? I don't have to go back and forth via email 10,000 times with people I'm trying to meet with. Okay, at nathanlatka.com forward slash schedule. Helps me so much. And by the way, look, I like have so many meetings.
I'm the best at meetings. Okay, I do them back to back. Very, very efficient. You guys know me. many people say I'm the most efficient they've ever seen. Okay. So I use the tool. It's so efficient. And by the way, I got Gavin. I said, Gavin, he's the CEO. I said, I want a great deal for my people. He said, Nathan, well, most people get a 14 day trial. Isn't that great?
I said, no, he's given us a 45 day free trial at Nathan Latka.com forward slash schedule. That's not going to stay up forever. So go get it now. Nathan Latka.com forward slash schedule. How many customers are you serving now? About 4,000. And is that like businesses or is that the number of seats? That's businesses. So in terms of seats, it's over 20K. Okay, so 20,000 seats over 4,000 businesses.
So what the average size is, they're signing up for five seats, something like that? Yeah, five, 10 seats. Five, 10 seats. And if I take, I mean, if I do 20,000 seats times that average price of 15 bucks, it's fair to say you guys are doing about $300,000 per month in revenue. Is that around accurate? We're doing a bit less because we started with lower pricing.
And then as we progressed over time, we played around a bit with pricing. So we'll probably be doing around $1.5 million this year. Okay, got it. Are you currently at a $1.5 million run rate or that's what you hope to hit by December? That will be hitting what will be hitting by December. And do you mind sharing what you did last month? Around 100K. Around 100K. Okay, good.
So 100K now, and you're trying to get up to 1.5 by the end of the year, which means you want to get up to, you know, what is that? About 120, 130,000 bucks per month? Yeah. Yeah. Good stuff. Okay. Now what about kind of acquisition? So, so, I mean, you've gone from, you know, a few early customers in 2008 who were your already agency clients or friends, you now have over 4,000 customers.
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