SaaS Interviews with CEOs, Startups, Founders
EP 482: Snip.ly $50k MRR, 1000 Customers For Lead Gen on Social Media Sharing with CEO Michael Cheng
18 Nov 2016
Chapter 1: What is the main topic discussed in this episode?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. Five and six million. He is hell-bent on global domination. We just broke our 100,000-unit soul mark.
And I'm your host, Nathan Latka. Okay, Top Tribe, this week's winner of the $100 is Zach Ferron. He's a 22-year-old Apple employee, and he's listening to the show and loving it. For your chance to win $100 every Monday, simply subscribe to the podcast on iTunes now and then text the word NATHAN to 33444 to prove that you did it to enter.
So many people tell me they love my email marketing and I use a tool to do this email marketing in a way that is so powerful and it works so much. I was shocked when Clay at Leadpages announced that he acquired the tool. It's called Drip. I'll tell you how I use Drip and why I use it. It's more powerful than Infusionsoft, but as light as a feather to actually use.
If you want to get six days of it free right now, go to nathanlaca.com forward slash drip. Again, nathanlaca.com forward slash drip. I'll tell you how I use it and why later on in the episode. Top Drive, this is episode 482. I'm Nathan Latka, and coming up tomorrow morning, you'll learn from Timo Rehn.
His company is called Pipe Drive, and they just passed $10 million in annual recurring revenue, helping over 30,000 paying customers with their customer relationship management platforms. Top five. Good morning. Nathan Latka here. And our guest this morning is Michael Chang.
He is the co-founder of Snip.ly or Snip.ly, an innovative new marketing tool that has been developed to help companies capture the value of content sharing on social media. Snip.ly links have generated over 150 million clicks and are used by notable brands such as IBM, Salesforce, Greenpeace, and many, many more. Michael, are you ready to take us to the top? Definitely. Thank you. Let's do this.
Okay. First things first, tell us what simply does and how you generate revenues.
Yeah. So simply is a content marketing platform. It allows people to generate an ROI from the links that they share. The most primary way to do that is that it allows you to add a call to action to the link itself. So when people click on the links you're sharing, not only do they get to read the article, they'll see your branding, they'll see your message.
And most importantly, the call to action where they can click through to do something. And a SaaS subscription model, premium features that comes with customizability on the call to action, different colors, advanced functions like retargeting, being able to retarget people who click on any of your links, white labeling, removing of the Simply brand using their own custom URL, and so forth.
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Chapter 2: What is Snip.ly and how does it generate revenue?
It takes a lot to impress. I just, I like how. I like how you have the free plan under the enterprise plan, kind of on the buried on the right side. So only people really looking for it will find it. I like how they can click the enterprise plans. Those people will see that. And then I see it goes from 300 to two grand per month. I like the custom body, the custom kind of offer.
I like the Neil Patel and Kevin placement, and then the breakdown of the features. And then at the bottom, you've kind of got the wall of Twitter love. I mean, it's just, it is a guys, this is a very, very smartly laid out pricing page. We'll link to it in the show notes, but Michael, tell us how it's working. How many customers are you guys serving in October 2016?
So right now we are hitting about 130,000 registered users. And so we're looking at revenue, about 600,000 annual. So that's about 50,000 a month, US dollars. And so that's how it works in terms of financials.
So is it fair to say 50,000 in monthly recurring revenue divided by a $70 ARPU means you have about 700 monthly paying customers?
It's been more than that. Monthly paying customers sits at around a thousand. So maybe my ARPA is a little off.
That's okay. So a thousand paying customers from 130,000 total free users. Talk to me about funding. Self-funded or have you raised?
Bootstrap. That's something we wanted to do from the very beginning. And something that I wanted to talk about on here too is... It was probably one of the best decisions we've made, having that flexibility to be able to pivot and change. And in a space like what we're working in right now, it's so important to be able to be nimble.
And we've definitely adapted our tool many, many times as the industry changed.
So I have to ask you, you have on your team page 13 people listed, but you're making 50 grand per month. Something's happening here, whether maybe it's low salaries because some of these people are remote or maybe you're forfeiting a salary. How are you covering just even headcount expenses on that on that revenue?
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Chapter 3: What is the business model of Snip.ly?
I get a great tech article and then I'm dead. Why do I do this?
I think it helped us a lot because it forces us to prioritize. It forces us to make very intelligent hiring decisions. You know, instead of hiring all 14 people core full time, we're forced to make the decision of who are the most important roles that we need to keep or what's the absolutely most important feature we have to build today.
And I think at least in many cases and definitely not in all cases, a lot of startups do burnouts from investing in the wrong features and the wrong people. And there's just so much inertia and momentum to pivot and turn around. Whereas for us, we have that flexibility. And the four core members are intentionally 50-50 on both design, user experience, and software engineering and development.
So we try to cover a jack-of-all-trades core small team.
Where are you guys based? Vancouver, Canada. Oh, Vancouver. Very good. Okay, Vancouver. And then take me through some more of the economics here. So what is gross turn, gross customer turn per month?
We're looking at about 5%. We'd like to keep that down for sure. Yeah.
And then what about customer acquisition costs on average?
So customer acquisition costs is very interesting. We've never invested in customer acquisition costs outside of my own time. And so we don't do ads or anything like that. We don't pay for any customer acquisition. What we've done from the very beginning is really cultivate relationships with bloggers. So I would classify that under earned media. So cultivating those relationships.
One of our key customer acquisition method is evergreen content. There's over 300 blog posts that mention Snipply. One thing we've noticed is that when serving marketers, marketers also tend to be bloggers. And that's helped us a lot in the sense that as marketers pick up the tool and they enjoy the tool, they tend to write about the tool, which other marketers read about.
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Chapter 4: Who are the primary users of Snip.ly?
Yeah.
Okay. So we need to work on churn, which is one of the things that we've really been focusing on.
Yep. And let's just assume now Michael spends his time on other things besides just customer acquisition, but let's just assume a very average salary of maybe 70 grand divided by call it, you know, 60 new customers per month that you can maybe back into LTV there, but you guys really don't have a large enough cohort to really get a good, a good CAC there, uh, especially as most of it's earned.
Um, So walk us, uh, take us through, take us through then customer value. Like, do you know how long the average customer, uh, well, I guess actually if you have 5% monthly churn, I can just do one divided by 0.05 and the average customer is going to stay with you for about 20 months and paying you 70 bucks. So that's like your LTV. Is that right?
Yeah. So based on the numbers that we do have and LTV based on two and a half years, so it's not like the cohorts super long, but it's about $700 per customer and about $5 per free user.
Yep. Yep. Okay. Makes good sense. Hey, Michael, as you keep building this, where's the best place for people to connect with you online?
They can definitely connect me over Twitter, Michael HSC, or send me an email anytime at Mike at snip.ly.
All right, guys, earlier I mentioned I used a little unknown tool to do a lot of my email marketing and marketing automation called Drip. Nobody knew about this. Nobody. Until Clay Collins comes along with his big old, you know, fat checkbook at Leadpages, buys the company, and now like everybody's using it.
If you're not using it, let me just tell you very quickly why I use it, now that the secret's kind of out of the bag. It's very simple. I don't like hiring developers. My favorite feature of Drip is the drag and drop interface where I can drag the email sequences together. Like, once someone views this blog post or opens this email, then do this, right?
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Chapter 5: How does Snip.ly's pricing strategy work?
They've got 24-7 support. which I love. So what I've done is I've worked with him. You guys know I make great deals. If you go to hostgator.com forward slash Nathan, you can sign up, get your own domain for 30% off and a 45 day money back guarantee. Okay. Again, I make great deals for you guys. Go to hostgator.com forward slash Nathan to grab that now.
All right, guys, we'll link to that in the show notes at NathanLacka.com forward slash the top 482. Again, forward slash the top 482. And Michael, before we get into the famous five real quick, I meant to ask, what was total 2015 revenue?
Total 2015 revenue was around 400K. That's year two revenue.
Got it. 400K on track to do, you said about 600 this year? 600 this year, yeah. That's great. That's good growth. And what do you want to do with the business? I mean, you just want to keep scaling it? Do you think you will raise capital ever?
No.
I think right now we're investing very heavily in the future of video. When we first started two years ago, links was huge. People were curating, sharing content. I think as you probably know very much yourself as well in the space of content, people are sharing videos.
Now we're investing very heavily in a new platform that's going to automatically convert blog posts into videos using natural language processing and a bunch of artificial intelligence. It actually summarizes the article and spits out a 30 to 60 second video, which gets you a lot more Facebook reach.
And so that's the type of flexibility that we look for in bootstrapping that we leverage to be able to build new things that we envision as the future of marketing.
If HubSpot comes to you today and offers you $4 million for the business, do you sell?
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