SaaS Interviews with CEOs, Startups, Founders
953 Why Wishpond Pivoted Into Marketing Automation Space and $7m in ARR
04 Mar 2018
Chapter 1: What is the main topic discussed in this 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 of 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: What is Wishpond and how does it help businesses?
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 Ali Tasekander. He is the founder and CEO of a company called Wishpond. If you're not familiar with Wishpond, they play, obviously, in the social media marketing space. We'll dive into the story right now. Ali, are you ready to take us to the top?
Yeah, let's do it. All right. Tell us about the company. What do you do and how do you make money? Yeah, so basically what Wishbone is, is a marketing automation platform, and it's focused on helping businesses of all sizes run successful marketing campaigns. So when we talk about marketing campaigns, we don't want to just focus on one part of it.
It takes a lot of different things to make it successful. So we help them on providing them with tools for capturing leads with landing pages, contests, pop-ups, and so forth. And then giving them tools for tracking to better know who these leads are and what they've done and who are the best ones to convert.
And then also giving them marketing automation workflows to warm up those leads, send them nurture drip campaigns and so forth to be able to close them. So it's basically vertically focused on running successful marketing campaigns. Now, your verbiage on this has changed because back in 2011 and 2012, you were very much in the wildfire Vitru buddy media space. Two questions for you.
One, why on earth did you not sell in 2012 when everyone else was exiting and the market was hot as hell? And why the pivot? Well, actually, that wasn't the first time we pivoted. We pivoted a few times. The first time was we started as a local product search engine, so it has nothing to do with what we do right now.
And the whole genesis of it was we wanted to help local retailers, specifically small businesses locally, to be able to get leads online. So the way to do that was you would come on our website or the mobile app and you would search for local products from local businesses, let's say a pair of sunglasses.
And then we would tell you which retailer has it in a store near you and for what price and who has it with the inventory. That version of the business didn't work well for many reasons, including attribution and data quality and so forth. What years was this? This was back in 2010, 2009, 2010, so early on. But through that, we started realizing, okay,
Our vision is still the same, helping businesses be able to make sense of online and getting leads. But that version wasn't going to work. So why don't we start focusing on building awareness and engagement for them on social media with social media contests and so forth?
Then as we started doing that and getting success with it, we didn't want to stop there because we realized no one wakes up in the morning and saying, oh, I wish I could run another contest. Instead, business owners and marketing professionals wake up every morning saying, geez, how do I achieve my KPIs? How do I grow the business? How do I get more leads? How do I get more sales?
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Chapter 3: Why did Wishpond pivot from its original business model?
Yeah. So we're a team of 50 people. 5-0 or 1-5? 5-0. And where are you based? In Vancouver. Everybody? Yeah. That's great. 15 Vancouver, 2,500 paying customers. 50, 5-0. Oh, 5-0. Yeah, sorry. 50, 5-0. What do these folks pay on average? Like if someone's listening right now going, I want to start with Wishpond, what's the average kind of price? What are they paying on average?
There's two different ways you can use Wishpond. So one is do-it-yourself. One is done for you. So if you want to use the do-it-yourself platform, average starting price is around $100 per month. So it's actually very, very cost effective.
If you want us to do it, at least to get you started on the right path and there's a service element to that, then that goes up and it could be $500 to $1,000 a month. Got it. So this is not a pure... When you say you're doing between $6 million and $10 million in ARR, that's not all true recurring revenue. That has professional services built in. Even the professional services has...
It's basically recurring. It's MRR. How is professional service recurring? Professional services would be for getting you started. Then after that, you just continue paying monthly for the services and then we'll try you to continue on your own. Give me an example of what someone might pay up front to get set up one time.
So it could be around, you know, $1,500, something like that, or $1,000 to get you started. And then after that, you can continue. And then sometimes the monthly packages after that could be more expensive just because you want to be first-line support and be able to go back to that account manager for your questions. Okay.
But the one-time fee, like upfront, do you include that when you tell me the 6 to 10 number? No. And actually, the other thing is... In terms of our revenue, I would say 70% to 80% of it is pure SaaS software. So the service actually doesn't amount to much. Well, that's what I was getting at.
So 60% to 70%, let's say on the high end of $10 million, so $6 million to $7 million of your annual revenue is pure SaaS, recurring product, people paying between $100 and maybe $200, $300 a month. The rest is kind of icing on the cake, professional services, starting fees. That's right, that's right. Got it. Okay. And just to be clear on this low end of that, right?
If you've got 6 million in ARR divided by 12, that's about 500 grand a month. If I divide 2,500 customers into that, that means they're paying each about 200 bucks a month on average. Sounds about right. Sounds about right. Yeah. Okay. Obviously with a SaaS company, and maybe this is why you have professional services, churn is always critical. So many times the setup fee will decrease churn.
What are you guys looking at right now in terms of annual logo churn? Well, we track it on the monthly, so it's around a little bit shy of 2% monthly. So that's actually pretty solid, especially for a business like ours that campaigns a lot of times are seasonal or event-based.
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Chapter 4: What challenges did Wishpond face in its early years?
And what we've recently focused on quite a bit is uh improving our onboarding and customer success and we've seen that really help yeah yeah so like of the cohort of people that pay you a setup fee how low does your turn get on those on that cohort um do you know i know not off the top of my head it's lower when we're when when
we're involved on customer success or account management, the churn definitely goes down. Yeah. But I don't have the number. Do you have a very predictable system set up to drive expansion revenue year over year? And if so, have you hit net negative revenue churn yet? We haven't hit a net negative churn yet. That would be great to have. No, we're not there yet. Got it.
What is expansion right now, like from year one to year two on average, would you say? In terms of... like one of our subscribers, how much more they're going to pay us next year? Yeah. I would say average they would start, you know, second year it goes, you know, another 25%, something around that. And what are they typically buying more of?
Is it more seats, more campaigns, more leads, more features? What is it? So our SaaS subscription is primarily segmented based on number of leads you have. So as they start getting more leads, obviously they will have to upgrade to continue getting benefit of the system. As I'm traveling the world on planes, trains, and automobiles, you guys hear it.
I'm closing loads of different deals, whether it's buying a company, closing a new account for getlatka.com, you name it, I've got to do it. And part of my issue is signing documents while I'm on the road. So I just found this new tool. I'm using it pretty aggressively. It's called SignEasy. So you can get started for free at getsigneasy.com forward slash sign. Tell me about growth.
So acquisition, like what do you spend to acquire a customer on average? That's an interesting question. We spend very little, very, very, very little on ads. Next to nothing. Like less than 10 grand a month? Yeah. Yeah, I mean, and what we spend is mostly retargeting for people who actually come to us already. But what we do really well, first of all, we have an advanced sales team as well.
How many of the 50? How many of the... 50 team members. Uh, outbound sales team right now is, um, total five people. Okay. SDRs and AEs, five people. So if you do a fully weighted CAC, like include marketing and sales salaries divided by new customers per month, like what are you spending per customer? Um, So I can separate them.
For the self-serve, most of it is coming inbound by people finding us through our blog or coming to our website or SEO. On our blog, we get around 200,000 to 300,000 visitors a month. Um, and, uh, we have around 300,000 subscribers to our blog as well. So there's a lot of traffic that's coming that way. And those basically, there's no CAC is, you know, it's just a content that we write.
And there's a salary of a person to write the content. That's right. That's right. Yeah. But, but most of that is already, you know, there, uh, the ongoing cost is very, very little on the sales side of it. When it's outbound, I would say cost of winning an account is around $500. And then the average long-term value of those deals is north of $5,000.
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Chapter 5: How did Wishpond achieve significant growth in revenue?
So outbound sales is where we can definitely invest more. And the more we invest, the more we're going to get very predictably at this point. Yep. What were you, just so we can understand growth, take me back a year in December of 2016. What were you in terms of ARR then, like three, four, five million? So we grew by around 25 to 30% versus last year. And our plan for next year is 50%. Okay.
So what, I can't do all that math in my head that quickly. So what is that? We were like at four or five million in ARR in December last year. Something like that. Yeah. Something like that. So do you like, let's fast forward 45 or 50 days. It's the holiday party at wish pond. Do you think you'll break like the $8 million run rate by the end of the year? Um, we'll be close.
That's a good stretch goal. It's close, but it's a little uncomfortable. Yeah, it will be uncomfortable. All right. Good stuff. Let's wrap up here with the famous five. Number one, what is your favorite business book? My favorite business book obviously changes from time to time. Recently, I've been a big fan of Predictable Revenue by Aaron Ross. I really enjoyed that. Really helped us.
Number two, is there a CEO you're following or studying currently? My favorite CEO is Warren Buffett. I really like how independent thinker he is. But generally, I don't follow CEOs that closely. I think I follow a lot of thinkers and try to model individual parts of each one.
So for example, one of the books that I'm reading and finishing now is The Long Walk to Freedom, the biography on Nelson Mandela. So on that one, I learned about bravery and things like that. I modeled that part from him and then so forth. Speaking of Warren and how he likes to buy companies, if someone came to you, let's say Mark Benioff at Salesforce and offered you, let's say 30 million.
So like three or four X ARR, do you sell the company? I think that's pretty low, but we'll start talking. What multiple do you think is like a good multiple these days? Honestly, it depends on your growth curve, right? So I think if we execute the way we're planning 50% for next year or 5,200% next year, then the multiples can be six to 10. Got it. Makes good sense.
Number three, besides your own, what's your favorite online tool? Beside Wishbone, my favorite online tool would be either Optimizely or Wupra. I don't know if you use Wupra. Optimizely, everyone knows, so I guess I'll go with Wupra. All right. Number four, how many hours of sleep do you get every night? Right now, I try to get eight hours. Okay. In the early days, I didn't. Okay.
And what's your situation? Married, single, do you have kids? Married with a 15-month-old, so that's why I say I try to. Yeah. And how old are you, Ali? Sorry? I'm 35. 35. Last question. Take us back 15 years. What do you wish your 20-year-old self knew? I think my 20-year-old self, I would say, hang in there. You're doing okay. Just keep at it.
To my 28 or 29-year-old, when I started Wishbone, I would say, code less and sell more. I think I was a coder way too long. There you guys have it from Ali. Code less, sell more for all of you technical co-founders listening. He launched Wishpond as something totally different back in 2009, pivoted many, many times.
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