SaaS Interviews with CEOs, Startups, Founders
980 How This Company Uses Free Goodie Boxes and Reviews to Hit $12m in Revenues
31 Mar 2018
Chapter 1: What is Influenster and how did it start?
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. 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 Aydan Akkar.
He's the co-founder and CEO of a company called Influenster, the leading product discovery and reviews platform. He was recently recognized by Entrepreneur as one of the 25 inspiring entrepreneurs under 40 who are creating the next big thing. Aydan, are you ready to take us to the top?
Yep, I'm ready.
All right. Tell us about this next big thing. What's the company doing? How do you make money?
We are the largest product review platform outside of Amazon at the moment. We started back in 2010 with the goals of transforming market research. I was working at a large market research company where market research was inefficient, very expensive, and my business partner was working at a sampling event agency, marketing services company.
And that was also almost like a backward industry where people needed more information about the products that they were receiving. So we came together and we said, why don't we combine the two industries and build a platform where we can target users for sampling purposes? see products to them and then collect a lot of information and then see what brands will say.
That was the goal back in 2010, but things have changed. That was also the time when, you know, like the social media is becoming much bigger. We started seeing products for some of our clients and clients were very happy, but they were not just happy about the insights that they were collecting. They were happy about all the buzz that was happening on social media every time we sent products.
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Chapter 2: How does Influenster generate revenue with product reviews?
It's reoccurring revenue because most of our clients are coming back. You know, when you look at like the relationship with L'Oreal, what they were spending last year was, um, basically a half of what they spent this year and the year before they just started the relationship. And I would say now we're talking about, um, you know, very healthy seven digit relationship.
Yeah. I was going to say, so these brands on average, what are they paying you per year or per campaign, whatever you track? I mean, are they all seven figure relationships?
No, I would say a typical contract size is anywhere between $80,000 to $150,000. Annually? But they're not annual. They're more like campaign basis. But a lot of clients like L'Oreal, they're very smart. They come and they say, you know, we would like to be an annual kind of contract where the savings can be significant for the brand. So we do those kind of things.
And those relationships are seven figures and obviously not
many brands can have that kind of um you know flexibility or in terms of size that's helpful for us to understand your business right so with 150 logos on the low side paying 80 grand a year it's fair to say you guys are north of 12 million in revenue now annually correct yes we're in the middle of the year at the moment um our year end is actually um you know march to march 31st sorry sorry
So we're like, we just finished eighth month. So we have four more months to go, two thirds of the year. And I would say currently we are at $12 million in bookings and around $10, $11 million in revenue. So we're tracking to around $17, $18 million in bookings to around $15, $16 million in revenue.
And what's the growth look like if you take that back? Oh, wait, sorry. Hold on. You just said 17 million bookings on 50 million in revenue? 15 million. Oh, 15. One five.
One five. There's some lag in recognizing revenue. So the way we do it is that, you know, we sign a contract and we run it maybe a month after, two months after. But last year, at Google basis, revenue was around just over $10 million. And now we're going to around $15 million.
Super healthy growth. Now, have you bootstrapped or raised capital?
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Chapter 3: What strategies does Influenster use for customer acquisition?
It's a little bit different, again, as far as the size of the company and what we should be making from that pie. So when you look at a company like Procter & Gamble and their marketing spend and how much they're spending, you look at that as like, this should be... a certain $5 million business for us for this year.
And if we need to, obviously this is as a corporation, a brand, and when you look at brand, like it's, it's obviously different.
Um, so it, again, it is, it is very, very difficult, but I know you have cohorts, but like, what's it, I mean, you know, your first year annual contract value is around 80 grand on average, right? So I'm just trying to assume like, are you, do you assume at least a two month relationship? I mean, sorry, a two year or three year relationship. What is it?
The ideal situation is at least three-year relationship. Got it. If they're not retaining them for the long term, like, you know, if a client is not coming back after one campaign, we decide, we deem that as like a failure. But again, that happens less than 10% of the time.
Okay, good. So 80,000 bucks kind of is the minimum spent on these accounts. You have much larger clients, three years, that's about 180 grand LTV, right? That's the worst case scenario.
Yeah, but also, like, keep in mind, the way we built this company is that we started, you know, sending these boxes and we signed on clients for free. We gave them free trial. We just said, include your products in our box and we're not going to charge you the initial trial. And now... They are spending seven, eight-figure numbers. That is the recipe for our success.
Yeah, I mean, look, if that's your recipe, that's very quantifiable, though. You have a cost per box. You know how many you have to send to see impact. You know it takes them three years to actually move from seeing all the reviews on your site to asking what the pricing is to close. I mean, that's a very predictable recipe.
Exactly. And the other thing about us is that I think that is another reason, another secret for our success is that our revenue, our marketing, like customer acquisition for members, our marketing budget for that is almost negative because we are making money by sending these boxes, which in turn brings us a lot of new members. So what we make money from is actually revenue.
making our platform much bigger. Yeah, no, it makes sense. You don't have to spend any money on that. So that's also like a soft, you know, consequences of these campaigns. It's not, so we don't, so sometimes when we look for, when we look at like really prestige brands, we give them really good deals because we know that's going to bring us a lot of new client and new members.
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Chapter 4: How does Influenster leverage social media for growth?
Um, Just don't worry so much. I worried so much in my 20s for like things that are like now seem super trivial. And if I go back, I would just I would just not do that at all because things always find a way working out somehow. Like, just don't worry about things.
There you guys have it from Aiden. Don't worry so much. He launched his company many years ago, Influenster, helping brands connect with people, leaving great reviews on their products. Over 4 million influencers or somebody with a platform signed up, but he's also working with over 150 logos, running almost 200 campaigns annually.
They've raised about 9 million bucks, doing about 12 million bucks in revenue each year, running many experiments right now around acquisition and lifetime value, but generally the numbers are working out great with a team of 65 based in New York City. Aiden, thank you for taking us to the top.
Thank you for having me.