SaaS Interviews with CEOs, Startups, Founders
Castos Helps Podcasters Distribute Content, $480k in ARR
19 Sep 2020
Chapter 1: What investment strategy did Castos use to grow?
We took a small amount of investment and joined the Tiny Seat Accelerator about just over a year ago. So we were part of the first patch there. So we got a little bit of money there, but otherwise have been bootstrapped.
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My guest today is Craig Hewitt. He's the founder of Castos, a full remote team remaking how podcasters create great shows, grow their audiences, and further their brands. Craig, you ready to take us to the top? Yep, I'm ready. So what came first for you? Were you a technology guy that got into podcasting or a podcasting guy that wanted to scratch his own itch and learn the tech?
Yeah, definitely the second. I kind of got into podcasting a roundabout way and kind of the business side of it. And yeah, it's been just over three years since I've been running Castos and it's been a lot of fun. Very cool. Okay, so for folks that have not heard of it, what does Castos do? Yeah, so we're a podcast hosting and analytics provider that also has a built-in production service.
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Chapter 2: What services does Castos provide for podcasters?
Yeah. Um, so I mean, you know, being in the podcasting space, we're not, you know, a CRM where we're going to be around forever and we think we could be around forever. You know, there's just a ton of kind of velocity in the podcasting space these days. And so we expect something to happen with our business in the next five years, say. And so that's a lot of why we joined TinySeed.
And that's kind of the path I expect us to take is something will happen. I don't know what that is. We have a lot of options because now we're profitable. But I'm surprised to hear that you're surprised by that because I view TinySeed getting their money back being mostly in exits for founders. Just because I think that's the way a lot of businesses go.
I think a lot of people will fix it at some point. See, my thought, though, is when I interview bootstrap founders, many of them have built extremely comfortable lives sitting on cash flow from the business. They are the exact opposite DNA of a founder that wants to scale big and sell for a bunch of money. It's the exact opposite DNA. So the fact that...
And by the way, when I listen to how Einar and Rob and the team sort of talk about Tiny, it feels very much to me like we are for the bootstrapper in Kentucky that's happy with a $5 million AR company and $2 million a year in profits that never wants to sell. So that's why it surprised me when Einar said, no, we think 80% of our fund returns will come from companies exiting.
Yeah, I would guess that the founders are maybe a little more ambitious than the person you described.
Why do you equate an exit to ambition? I would argue that there are extremely ambitious founders that have built great, profitable companies, and that's actually sometimes harder to do than get some big exit.
Yeah, I think that's a fair point. I think that, you know, if you look at really kind of changing your life and putting you on a different trajectory, you know, selling a business for 20 million and taking home, you know, whatever, 10 changes your life versus a business that cash flows, you know, half a million dollars a year. That's great.
But you can't just go off and do whatever you want for the rest of your life. Like if you sold for a bunch, a bunch of money. and you could just put that into dividend funds and things like that, then you have complete control over your life. And there's a different kind of risk, I guess, involved with your path from there.
Sure, sure. No, that makes complete sense. When you came back on on January 9th of 2019, you'd said you passed 1,000 customers at that point. What are you at today? Yeah, we're right at 2,000 customers today. Oh, wow. Good timing on the show then. Exactly, exactly double.
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Chapter 3: How does Castos balance software and human services?
We also have a WordPress plugin that we own and maintain called Seriously Simple Podcasting that is kind of the way a lot of folks find us is through our WordPress integration. So if you have a WordPress site, it's called Seriously Simple Podcasting. So if you have a WordPress site, you want to kind of plug in a blog to it or a podcast, I'm sorry. Then you install our plugin.
It lets you kind of add a podcast area to your site, manage RSS feed from there. And then Castos as a hosting platform is an optional kind of add-on that you can have there.
Interesting.
Was that intentional that I was going to be sort of your mousetrap at the top of the funnel? Yeah, that's really how the business started is I acquired the plugin. It was a free plugin before and I acquired it from the guy that created it. And we kind of built the hosting platform around that. And for a while, it was the only way that you could use the hosting platform is through WordPress.
Since then, we've opened it up to be either use it with WordPress or use it by itself. If you don't want to have a full website or you're not on WordPress or whatever, you can use Castos by itself. you know, like you use Lipson probably.
Interesting. Okay, good. So that's driving most of your top of funnel. And again, 2000 customers, 20 bucks a month. So you guys are like 40, 45,000 bucks a month right now in revenue. Yeah. And so the window services were right at 60,000 a month. Okay. So let's dive into this, the services component.
If I sign up to you today on the $20 a month plan, what will you recommend to me in terms of services I should buy from you as well?
Yeah, so we have opt-ins and messages and new email and onboarding within the app to say, hey, you don't have to do this all by yourself. We have a team of professional audio engineers and people that know podcasting in and out. If you need help with starting your show and then ongoing editing and producing your show, we have teams that can help with that.
And when you do a cohort analysis of your 2,000 customers, the ones that have paid for some professional services and the ones that have not, do you see the same trend that other founders tell me they see, which is the ones that you give services to the net retention rate is through the roof compared to ones you don't touch at all?
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Chapter 4: What pricing model does Castos use for its services?
Okay, that's pretty high. I would say that's pretty high. Yeah. Okay, 150 to 200 convert. And then again, they stick on average about 98% every month. Yep. That's great. Okay, very good. So not really a good massive paid strategy. They're mostly SEO and inbound. Good stuff, Craig. Let's wrap up here with the famous five. Number one, favorite business book? Built to Sell. Built to Sell.
Number two, is there a CEO you're following or studying? Yeah, it's the same one I answered last time. Jordan Gall from Cart Hook. Just really respect him. He's kind of like one step ahead and just love listening to what he's doing. Number three, what's your favorite online tool for building a company?
Notion. Number four, how many hours of sleep are you getting every night? Oh, at least eight. Okay, good. And situation, married, single kids? Yes, all that. Married, two kids.
Chapter 5: What tactics does Castos use to upgrade customers?
Married, two kids. And how old are you, Craig? I'm 40. 40, the big 4-0. All right, last question.
What do you wish you knew when you were 20? Well, I wish I would have started this before. Yeah, I mean, I spent about 15 years of my professional life in kind of the corporate world, and I wish I would have started as an entrepreneur sooner. It's a lot of fun and really invigorating. Guys, there you have it.
Castos, helping podcasters get going, but not only get up and going, also distribute their content once it's live, manage the hosting, production, etc. Now serving over 2,000 customers each month that pay $20 per month. So call it $480,000 in monthly recurring revenue as Craig continues to scale the company. Seven people, they work for Tiny Seed early on and raise $120,000. Otherwise,
completely bootstrapped, spending nothing on CAC, mostly using a Chrome plugin strategy to get new top of funnel users along with an SEO and content strategy. Craig, thanks for taking us to the top. Thanks, Nathan.