SaaS Interviews with CEOs, Startups, Founders
994 Why Forbes Uses Quizzes Instead of "Opt In Landing Pages"
14 Apr 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 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.
Chapter 2: How does Forbes utilize quizzes for engagement?
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, everybody. My guest this morning is Josh Hanum.
He's the co-founder of Interact Quiz Builder, a tool used by more than 30,000 businesses, including the American Red Cross, Home Depot, and Forbes. He's probably seen more quizzes than any other human on earth. We're going to dive into it. Josh, are you ready to take us to the top? Yeah, let's do it. Okay, so how is Forbes using you?
So Forbes has this college quiz that they've used for almost four years now. Basically, it's find your perfect college match, and it's a personality quiz that directs you to one of a series of colleges, and then it ties into another tool that they have that actually gives you a ranking of the top schools for you. And that quiz gets taken about a quarter million times a year.
It ties in directly to other stuff that they have. It ranks really well in search and it's just been a pillar kind of for their content for a really long time. So that's their quiz. They must also monetize the data somehow. And I bet this somehow ties into your business model. Yeah.
So they, they use all that data and that's where we are able to charge a subscription fee for people like Forbes to use our tool because we've got a ton of data that we pass over to them that they use. Okay. And what's the average customer pay you per month? Would you say? Average is about 60 bucks a month. Okay, got it. So good. Okay, you're in kind of low ARPU, but probably high volume, right?
Yeah, high volume. How many quizzes were taken in the last 12 months on your platform? Last 12 months, about 250 million. Holy mackerel. Okay, so are most of these media brands? A lot of media brands, a lot of retail, a lot of course creators, actually. So people selling online content as well. And then also nonprofits. We work with all the big nonprofits.
And is this the so there's a lot of companies that are kind of jumping into the advertising space where the instead of interruption marketing, they're kind of trying to get creative. Like, you know, are you more like Elon Musk or Steve Jobs? Click here to take the quiz. And it goes through a few things.
But really, one of the questions is like, you know, you know, if you had to give up a kidney, would you? And what it actually is doing is like it's a lead for like some kidney transplant company that the advertiser, the quiz person is making 10 bucks or 100 bucks a lead for. Is that like your model or no? Yeah. No, we usually go directly to the actual brand.
So most of our clients are companies using it for themselves. A lot of times it is used as an ad. So Facebook is the biggest driver of quiz traffic. Obviously, you see them all the time on your feed and things like that. So Facebook is the number one channel, but it's typically directly from the brand that's using it to advertise themselves, get leads for themselves.
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Chapter 3: What data do quizzes provide to companies like Forbes?
Really, really smart. OK, so let's talk more about your business model. What do you got now today in terms of total paying customers? So total paying customers, we were just over 800. Okay, 800. And when did you launch the company? We launched in 2013. All right, and bootstrapped or have you raised capital? Totally bootstrapped. Dude, I love that. Where are you based?
We are based in Oakland, California. Nice. And what's the team size today?
Chapter 4: What is the average revenue per customer for Interact Quiz Builder?
We have six and one of them is like mostly full-time. Mostly full-time. Okay. And, uh, well, wait, hold on. Uh, you have six part-time and only one is full-time. We have six, six, uh, five full-time one. That's like, Oh, we're about to bring her on full-time. That's got it. And are you the sole founder or are there other founders? I do have a co-founder, Matt, who's on the technical side.
Chapter 5: How many quizzes were taken on the platform in the last year?
Okay. Did you guys just do the lazy way split 50, 50 or what? Yeah. For the most part, for the most part. And I've known him for a long time. That's a conversation that sounds like, Oh, like, I don't know. It's hard to, we don't know who's more valuable. Let's just put it down the middle. That's fair. But then 10 years down the road, you go, you know what? I did so much more.
I should have been so much different. I mean, I hear this story all the time, but it is fair. Yeah. All right. And okay. So launched a few years ago, 800 customers, $60 ARPU per month. So what you're doing about 48 grand per month right now. Yep. That's right about it. And where, how are you acquiring these customers? So we actually do influencer marketing.
We have a network of just over a thousand influencers. These are bloggers, course creators, that kind of stuff, marketing strategists, and they get to use our platform for free. And in return, they promote it by writing blog posts and sending it out to their Facebook groups and things like that. Interesting. And do you pay them? Is there a kickback? We do have an affiliate program as well.
So a 30% ongoing commission for any affiliate that sends us a direct sign up. But a lot of times it ends up being a longer term approach. So it's more the value for them is getting the software for free. And then they're able to kind of promote us in the long run. What's your CAC today, customer acquisition cost? That one's hard to know because of the way that we run that.
It's very much like people kind of read a bunch of blog posts. They kick the tires for a long time. They sign up for free. And then three or four months later, they'll upgrade. So we have a very long life cycle in terms of how long it takes somebody to actually sign up. And it's hard to calculate that back to the actual cost.
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Do you do any direct paid spend stuff or no, it's all inbound organic stuff? All inbound organic stuff. Okay. How many people on your team are dedicated to sales, marketing, or content creation? Uh, two and a half cause I'm the half.
So, so you could, in theory, take those two and a half salaries, add them up and then look over the past 12 months at how many new customers you've gone and kind of divide to like back of the napkin, get a CAC, right? Yeah, exactly. Exactly. What are you growing at? So you're doing 48 grand here, December, 2017. Where were you at a year ago? A year ago, we were at about 24. Okay, got it.
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Chapter 6: What are the benefits of using quizzes over traditional landing pages?
I mean, do you just, do you just do the kind of one divided by 0.05 cause that's the 5% churn and then kind of back into it that way? Yeah. I mean, we use bare metrics as well. So it's about a thousand dollars right now, a little over a thousand, um, depending on how things go, but, uh, and that fluctuates as well, depending on churn. And that's what it is right now. Yep.
At 5% logo churn monthly. That means folks are sticking with you for about 20 months at a $60 ARPU times 20 months. It's a little over a grand. It's about 1200 bucks in lifetime value. Yep. Yep. Makes good sense. So how do you scale this thing? Yeah. So I think for us, it's a matter of two things. It's, changing perception because quizzes are very new marketing strategy.
We don't work with hardly anybody that's ever done this before. It's usually us introducing the concept and then also providing the product for it. So we have to try and kind of change marketers perception of how to use quizzes and that's why we're doing influencer marketing stuff. It helps us build a tribe, an army of people that also convince other people that this is worth trying.
And then the other thing is that there's a broader general perception that has to change in order for this to be adopted as a true pillar in marketing strategy. And as those two things happen, one of them is on us, one of them is kind of out there. It depends on what happens in the market. As those things proliferate, that's where we will be able to grow more.
And are you, a company like Forbes, right? Do they, I mean, how many years have you been working with them?
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Chapter 7: Can you share a success story of a quiz implementation?
Are they pretty sticky? Yeah. So we, we started working them really early on 2013. So it's been four or five years. Yeah. And what, where were you at? First off, how old are you back when you launched? Like 20, 21. And I mean, where were you at? Did you already have a big exit? Did you have a bunch of student debt where you broke and had to make this work? Where was your mindset?
Um, this was my third company that I started. The first one that's actually a technology company, but I was always starting companies in high school and college and that kind of stuff. Um, Um, that was our last year in school. So we were at UCLA, Matt and I, and we, we got Forbes signed up when we were sitting in a library conference room working on this. So tell me about that.
How did you, I mean, did you cold email them? How'd you get it? Oh, no, that was, that was through content marketing. So I wrote a bunch of articles about how to use quizzes for marketing and they found that and just came and signed up. So we didn't even know they never said anything. And I just looked at our recent signups and who was building content.
And there was one from Forbes and then it popped up on Twitter. Somebody had shared it and we're like, well, it works. So that's how we got them initially. But yeah, that was when we were still in school. Was that like an intern at Forbes or like their CMO? Do you know? It was somebody not, it wasn't an intern. It was an actual content person. I don't know the exact level, but yeah. That's great.
So what's the plan for the business? I mean, what do you want to do with this thing? You want to keep growing it for a long time and then sell it? Or you want to kind of get a quick win under your belt, exit this one, use the momentum to launch something else? Where's your head at? I want to see where it goes. I think, especially the last couple of years, the perceptions really changed.
I've been doing this for four and a half years. At the beginning, we had to really, it was like pulling teeth to get people to try and use a quiz. Things have changed. People are willing to try it now. And I've seen that change. So what happens in another three or four years? Is this an actual strategy like email marketing where everybody does it?
And if so, can we keep our position kind of as one of the leaders in this space? And if that happens, then we can become a really large company. So I want to see where it goes right now. We're in a very stable position because of being bootstrapped and you know, keeping the team small and costs low and that kind of stuff. Cashflow positive. Yeah. Yeah.
So we can keep going for a while and, uh, just see where it goes. So that's what I'm really excited about. I love the concept of, of inventing things, kind of be in front of being in front of a market and the conversations that come out of that. So. We'll see where it goes from there and no plans to get out anytime soon. All right, Matt, let's wrap up here with the famous five.
Sorry, Josh, let's wrap up here with this. It was your partner's name, Matt? Matt's co-founder. Got it, yeah, that's why. All right, Josh, yeah, let's wrap up here with the famous five. Number one, what's your favorite business book? The Seven Habits of Highly Effective People. That's a good one. Number two, is there a CEO you're following or studying right now? Jeff Bezos.
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