SaaS Interviews with CEOs, Startups, Founders
876 SaaS: Selling Discounted "Lifetime Subscriptions" For One Flat Fee is Huge Risk
17 Dec 2017
Chapter 1: What is the background of Daniel Kemp and how did he start his career?
Good morning, everybody. I wanted to just quickly remind you if you love B2B SaaS and you're loving all these CEOs I have on, remember you can get all of their data in a big, beautiful spreadsheet at getlatka.com. That's G-E-T-L-A-T-K-A dot com. So I hope you're enjoying the month. I love December. I love the holidays. And here is our program for today.
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. Hello, everyone. My guest this morning is Daniel Kemp.
He's one of the co-founders of Q. We've got his co-founder with us as well. We'll get to Matt in a second. But they provide hand-curated content suggestions for social media, and part of that content is promoted via Q Promote. He's a father of two and has been married to his wife, Samantha, for almost 10 years. He left school at 15 to work full-time.
From there, he learned design and started freelancing. Marriage life and children meant focusing on a more secure method of employment. So he secured a telecoms and networks engineering role. After five years, he knew that working for somebody else was not his calling. So with his co-founder, they started a branding agency using Daniel's skill of design and Matt's skill of sales and marketing.
The venture was obviously cut short when Q started taking off and the rest is history. Matt, Daniel, are you ready to take us to the top? Yeah. Good. All right, Daniel, tell us about Q. What's the business do and how do you make money?
So the overall idea of Q, so the first side of Q is hand-curated content suggestions for social media. So the idea came about when we needed to curate content ourselves. We thought the idea of automating the content curation was great, but having always good quality content going through, pushing through to social media was the main issue. So we thought,
we would create guidelines for all the content that would go through the system. This meant we could apply the same guidelines to every piece of content that's in queue so that we could be sure that anything that we shared or anything our users would share is really good, awesome quality content that others would like to share as well.
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Chapter 2: What is Q and how does it help businesses with content curation?
the average revenue per user per month right now because we use bare metrics to track our stats, right? You heard of bare metrics? Yes. And basically, because we've just moved from a transactional model where there was such a huge range, like anything from like $10 to hundreds of dollars, and now it's people paying monthly.
How many now are paying monthly? Only monthly?
I think it's 5,000 people.
Well, then you should though, be able to take an average, right? You look at what you did last month in total recurring revenue, you divide that by 5,000 and you get X number, right?
Yeah. It's, um, it's, it's not going to be able to be worked out until the end of this month because it's literally changed last month. So we don't know, uh, because of trials and because of all these different things, it's basically,
blurring our stats so i mean that's not very convenient for the purposes of the interview no no it's very convenient because uh it's never straightforward everyone's always changing models and pricing i mean this is very typical what you guys are going through um so no it's very it's very helpful um i mean maybe the better question i just want to get a sense of your scale what'd you guys just do last month in revenue in one month so i think it was around 25 000 uh
No, that was pounds though.
So what does that work out in dollars? I'll convert it, but about 25,000 pounds. And that was only transactional, right?
Yeah. And now you... Yeah, well, it was a mixture of some very small, lower scale recurring. It was a real mix up of some recurring revenue, some transactional. So it's all over the place.
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Chapter 3: How did Daniel and his co-founder raise funding for their startup?
It's true. But do you matter as a young startup CEO if you get like a big chunk of like tens of thousands of dollars for doing not much work?
Well, it can be a huge negative. And I'll tell you why. You now have strings attached to you to serve that shitty customer base. And you can't move as fast. And pricing increases are harder. And you have this legacy SEO page stuck up that's a lifetime deal attached to your brand name. So you can't close enterprise accounts. Like it can be a huge drawback.
I agree with that. Actually, this is something that Josh Pigford talked about in a blog recently. He's the CEO of Bear Metrics. Yeah, he's great. And he was saying, you know, low paying customers are a pain in the ass. You work your balls off to try and satisfy them. You take very little reward and they're never really truly satisfied because they're for that deal.
And, you know, we recognize that.
Look, and I'm shitting on Noah a bit. He's a genius. He is. Like the way they're doing it is brilliant. I just think it's horrendous. Look, vultures only eat dead animals and he is a brilliant vulture because the only kind of CEOs that are gonna run a deal like this are desperate ones.
So they're either a declining business or they're brand new with very little in savings and they need some extra cash immediately, which might've been your situation. The trick now is how do you use... any kind of momentum you got from that and use it in a good way to move forward, which is what you guys sound like you're in the middle of.
I think because we always had the plan to upsell people a year later and the fact that we only raised $200,000, the fact that we needed to build the team, we needed to scale the team because of QPromo and reviewing the content, it made so much sense for us to run an AppSumo deal. It gave us 30, 40K in the bank It allowed us to scale our team and the product.
We learned a lot about it from all the people that came in, not from all the feedback that we got. So basically, we just got paid to get a shitload of feedback.
Yes, there's some shit to use. The trick is, though, Daniel, these are people that buy not based off your feature set. They buy off price.
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