SaaS Interviews with CEOs, Startups, Founders
898 SaaS: SnapApp Lands Amazon as Customer, Passes $8m in ARR
08 Jan 2018
Chapter 1: What is SnapApp and what does it offer?
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.
Chapter 2: How did Seth transition from banking to entrepreneurship?
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 today is Seth Lieberman. He's the founder and CEO of SnapApp. As a repeat entrepreneur, Seth was previously the founder and CEO of Pangea Media, acquired by AdKnowledge, and co-founder and CEO of FocalX, acquired by Intermix slash MySpace.
He started out as a banker at Credit Suisse First Boston. Seth, are you ready to take us to the top?
I'm ready. I love my own bio. It's like hearing your own voice in a movie. Like never sounds interesting.
Am I hired? Was that good?
It was good. It was good. You should consider a blog casting.
So you go from, you go from banker to social networks to snap app. How, how do you decide what to work on?
Uh, well, I'll tell you the story arc and then I'll tell you what I've learned, uh, through, uh, I've got a couple of years on you. I You know, the history there is I was always the worst banker at the table, right? So I was doing technology banking, and I was always on the wrong side of the table.
Was it M&A stuff, like IB stuff?
Yeah, investment banking, technology, right? I always thought I was in charge, and I was always... Not the guy in charge. I was the guy supposed to be getting coffee and shit. Right. So I learned a ton. It was awesome experience. But I knew I had to leave and start my own company, which I did in the late 90s.
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Chapter 3: What unique value does SnapApp provide to marketers?
I don't know my exact logo churn, to be honest, because part of the reason is, and this is one of the things we do at the end of every quarter and end of every year, we look back at all the churn and we look at why did you churn? And so part of when we think about our ideal customer profile, we've found customers under 50 million, very high churn rates. Right.
Um, in terms of, in terms of their size.
Right. Yeah. Right. Right. So we look at, we think about churn in terms of the customer, um, you know, and, and people, they may not be ready to try something new at the scale that we want them to try that. They should maybe use a point solution, go use survey monkey, do 20 surveys. It's dirt cheap.
And then when you're ready, you come and buy us something like, would you say it's like definitely less than 24, like 20% or 10%? I mean, pretty average. What? Our churn rate? Yeah, your annual churn, logo churn.
Yeah, it's probably about average. It's about average. Maybe a little worse. We have a little extra churn as we've moved and focused. We're 100% on B2B, though we still have a bunch of legacy large media companies and some brands. Our roadmap doesn't really support them anymore. So some of those guys fall off every year, right? Because they're just They should. They should. Okay.
Now, you mentioned earlier, and the only way net revenue retention can be at or negative, at zero, is if your current customer base, you're upselling, and that makes up more for the logo loss. What are you upselling typically?
Yeah, so we price on a classic two-axis model, right? So content for one is ours, how much content or experiences you want to produce, and functionality on the other. And the third we have is we typically sell by divisions.
So some of our largest customers, whether we're talking about Citrix, Cisco, I can't name them, but they're a super large company that recently moved to Boston, IBM, VMware, Juniper, some of these folks, they have multiple divisions, they have multiple teams, and oftentimes they have multiple instances of a Marketo or an Eloqua, which is pretty important because we generate so much data and insight
if you don't have a place to put that and make it actionable, it's sort of like taking unstructured data. If we were able to, you're asking me all these questions, if it automatically went into your system and said, well, this podcast is now characterized for companies under X million with more than X, Y customers and whatever, like that'd be pretty cool.
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Chapter 4: How does SnapApp's business model work?
2011, okay, good. And then bootstrapped or have you raised capital?
We started bootstrapped. I put in a bunch of my own money, did some angel money, and then we've raised money out of Providence Equity Partners down the road from us.
How much total?
They put in about 22.
Okay, so total in...
20, I don't know, five, six, something.
Okay, does that include money you put in? Yeah. How much, so other people that are maybe leaving a big corporate gig where they've made a bunch of money or they're exiting their own company and they're launching their new company going, how much of my wealth do I now put into this before I go raise capital, right? To try and keep my share. How much, I mean, how did you go through that decision?
Yeah, that's a great question. There's no good answer, right? So I have a lot of scar tissue. So you gotta take it all through my scar tissue, right? But increasingly, I think you should do one of two things. You should either figure out how much money you can raise and you should raise every dollar plus one, right? You know, this is, again, David over at Drift. This is other folks.
They just announced a $32 million, I think, round today.
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Chapter 5: What are SnapApp's current revenue and customer metrics?
So we're getting close on time here. Let me fire a few just questions at you. And let me just hear your thoughts on them. So lifetime value. How long do you assume these customers are staying with you?
So we view it this way. We've never lost a customer. We just haven't won them yet. And so even a customer who churns, we actually have a high rate where customers come back and sometimes they even churn again, right? And that's part of being earlier than we even thought. On average, I'd say our lifetime customers are with us three to five years.
i mean we're still early so it's hard to tell right yep yep but i mean look if you take the 30s at a minimum right 36 months or sorry uh three years times you know your 30 000 buck acv you know they're worth about 100 grand you had a minimum right the reason i asked that is let's go back into cac so what do you spend to acquire a customer on average fully weighted including sales team uh i don't have that number actually okay is it something you is it something you guys track or no it's not important to you guys so here's my problem with cac um i actually don't
The problem with CAG is it's a customer acquisition number and it doesn't account for the difference between closing up Amazon or closing HubSpot, right? You know, so if HubSpot buys a $20,000 license from us and Amazon, and they're not a customer, Amazon is a customer actually, and Amazon buys a $20 million, our CAC is still the same, right?
So I actually, the way I think about it a little bit differently is, yeah, we look at CAC, though I don't know what it is off the top of my head because I haven't looked in a couple months. I like to look at dollars in versus dollars out, right? So how many dollars of contract value did we sign versus how many dollars did we have to pay to sign that
So you track, you're able to track that at a count by count level? Yeah. Oh, wow. Okay. Got it.
We'll get it for the month. We'll look at an aggregate. So if this month we signed $500,000 of bookings, whatever it is, right? And our total sales and marketing expenditure, including bodies, including programs, including technology was $311,000 or $300,000. Then we are net positive $200,000. It works.
Yep. Makes good sense. Last two questions here before we wrap up with the famous five. First year revenue. Do you remember what it was? 2011?
A hundred and $11,000. All right.
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