SaaS Interviews with CEOs, Startups, Founders
DesignPickle: Bootstrapped, $10m Revenue, Helping 3,000 Brands Get Design Work Done
01 Jun 2020
Chapter 1: What is Design Pickle and how did it start?
We are bootstrapped. And then about two years ago, we did a debt lending and just borrowed some money. And that has been the best for us because we cash flow really well. Our LTV is well over $4,000 and our CAC is anywhere from $600 to $700. So we can return on a client in two to three months, as long as we have the cash available.
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My guest today is Russ Perry. He is building a company called Design Pickle, which is a platform that allows you to grab flat rate creative services. He's the world's most successful flat rate creative service. He leads a global team as they rethink and deliver a remarkable new way to find the perfect creative. All right, Russ, you ready to take us to the top? Let's do it. All right.
So this is obviously a competitive space. I've used tools, obviously, like Fiverr and Upwork and things like this before, Dribbles, maybe on the other end. Where do you put yourself on the spectrum of these content services, creative services?
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Chapter 2: How does Design Pickle differentiate itself from other design services?
And we just ran out of talent. Now it's all, we have an entire dedicated recruiting team. So of the 470, not all are designers. They all at one point were, but we have HR training, recruiting, all of the functional side of that is included in those numbers as well.
Interesting. Okay. So let's fast forward to today. How many customers are you serving?
Actively, we have 3,300 subscriptions. So a customer could have multiple subscriptions depending on how much of our service they want.
How many unique customers? I would say on that, a little shy of 3,000. And can you explain to me why one customer, like one person might have two plans?
It's unique economics on how much volume you get in a day. So each subscription you have guarantees you a certain amount of creative output. And if you just want more done per day, you can pay more and sort of buy up more of their time. Also, we do more than graphic design. We do right now graphic design and illustrations. Later this year, we're doing motion graphics.
Next year, copywriting, video editing. So eventually, you could build your own virtualized team with multiple subscriptions across each service.
Yeah, I mean, I wonder what a platform like what you are building is the moat that you're building, as Buffett would say, your ability to recruit globally, right? And get people in a system that can deliver that talent also globally. And then there's a spread between what an American company would pay for a great design from someone in Argentina. Or is your competency a design competency?
I think it might be a recruiting competency.
It's not the design competency. Yeah. We're not winning any Madison Avenue awards here. Yeah. What we are is we've built a system that optimizes creativity, really. And anyone... I joke. Anyone can go out and make a couple hundred thousand dollars a year copying what we do. But there's legitimate and really complicated, scalable challenges that you have to have. We'll do...
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Chapter 3: What challenges did Russ Perry face while running his first agency?
Oh, I see. Our entry plan is $400 a month. We have a pro real-time plan which plugs a designer into your Slack. So you can actually have a 9-to-5 designer in your Slack into your own channel for $1,000 a month. And that's the flat rate. So it's all about
utilization there so a request is just anytime you log into the app and you need something so what i mean obviously people can pick one of these plans what would you say the average price point is that a customer is paying per month i mean our our arpu is is like 512 dollars okay got it
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If you just count by popularity, it's sort of an average. Is your $9.95 the most popular or the $3.99 per month most popular?
So by volume, it's the entry plan because it's been around longer. But I laugh the day we launched the $1,000 plan. It's easier to sell. The clients stick around longer. Our cost is negligible. It was like the running joke, like, why didn't we do this sooner?
Interesting, interesting. Yeah. And so the upsells there are real-time collaboration, same-day delivery, API integration, and a couple others. Which one of these upsells that are not available in the $400 a month plan were the most powerful in terms of converting people from $400 to $1,000 a month?
So I wouldn't actually say it's an upsell or a conversion. They're two different audiences. But what people value the most, the value metric that's the most powerful is I can talk to my designer real-time. Got it. The collaboration. Here's dropping in a file in Slack. What do you think about this? Take a look at this. And their little green dot turns on at 9 a.m. and it turns off at 5 p.m.
And they're there. They're available. It's pretty cool on that front.
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Chapter 4: How did Russ transition from agency work to Design Pickle?
And which firm? SaaS Capital? Lighter Capital?
Lighter. The guy's at Lighter. Interesting.
Yeah.
I love it. I mean, I always joke it's like the sketchy college credit card you get, you know, high interest and it's super easy to get. But they were easy. I mean, they understand it. It was a great decision for my business because of my numbers. But if I was selling a $25, $30 product without a big return immediately, I don't know if that would have been the route.
What year was that that you did that with Glider? In 2018. Yeah, so people that sat, founders that have come in that looked at Lighter and ultimately passed, you'll commonly hear, Nathan, it was too hard to figure out what the interest rate was. It was four to 8% of our gross monthly receipts plus a 1.2 to 1.8 X repayment cap over like a targeted three to four years.
But if we grow fast and we pay it back faster and then the cost of capital goes through the roof.
Yeah.
Yeah. So we actually, I don't know how many people have gotten this. We just got a term loan with them. Got it. Got it. I think it's a new, a newer product and they saw our numbers and it was just three, three and 36 payments. We know what it is. We can budget for it.
Easy peasy. Can you, are you comfortable sharing a range of what that rate is? Usually these you see between like 14 and 25%.
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Chapter 5: What is the business model of Design Pickle?
So yeah, something's wrong. I mean, unless it really is as high. So if you're paying like 60 grand a month, that basically means that you're paying like a 40% interest rate. If you're 60 grand a month for three years, it can't be that high.
It's not that high. I know that. So I must have gotten something off in that. I'm the creative guy, remember?
Yeah. I mean, I have a thesis that a lot of these lenders right now are lending based off the spread they have to make to cover their expenses, not based off the true risk of the SaaS company defaulting. So I look at what you've built on the surface, and it seems like a stable, predictable thing. I just think over time, the cost of capital for folks like you are going to come way down into the
11, 12, 13, 14% range.
Yeah, I know it's not the cheapest out there. It was just the easiest for us at the time because we are not a pure SaaS business. We're a tech-enabled service. So it was harder for us to try to find other lending that would have been when we were smaller.
Yeah. What did Fiverr offer you?
The first round was $3 million. The second round was $20 million. And then I said no to both. The second round was what year? Last year? Last year, yeah. Interesting.
And why did you say no to $20 million?
Off the record. There weren't any term sheets. These were casual conversations. Yeah, yeah, yeah. Technically, they didn't offer us anything for the record.
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Chapter 6: How does Design Pickle manage its global team of designers?
He's an author, but he does do a little coaching and speaking. So I'd count them.
Number three. All right. What's your favorite online tool for building the company?
Right now, it would have to be ProfitWell. I couldn't live without it.
Number four, how many hours of sleep are you getting every night? Seven to eight. Situation, married, single kiddos? Married with three daughters, 14, eight, and four. Wow. Okay. And how old are you? I'm 37. Last question. What do you wish your 20-year-old self knew?
Stop drinking immediately. It's not helpful.
Okay.
Guys, there you have it, Design Pickle. He built his own agency up to about $3 million. Now has over 3,000 customers, closer to a SaaS model, 68% gross margins. They pay for designers' time. They built a team of 470 offshore designers that are very talented, making six, seven bucks an hour. Those customers pay. between 500 and 600 bucks per month on average.
They will do about 14 million this year, did 10 million last year in 2019, processing over 12,000 design requests per day as they look to scale. Own 100% of the company. They bootstrapped, raised $1.2 million in debt a couple of years ago, building the company the right way. Russ, thanks for taking us to the top. Hey, thank you so much.
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