SaaS Interviews with CEOs, Startups, Founders
Lemlist CEO Guillaume Moubeche: Gives Employees this bonus when 5x revenue growth target hit
11 Apr 2021
Chapter 1: Why did Lemlist's CEO turn down a $30 million deal?
The CEO of Lemlist, Guillaume Mubes, recently turned down a $30 million deal that a private equity firm was offering into his company. $15 million of it was going to be secondary, meaning each of the three founders could take $5 million each. The other $15 million was going to go directly into the business at a $70 million pre-money valuation, $85 million post-money valuation.
The company just broke the five and a half million bucks of actually $6 million in annual recurring revenue. Now, Guillaume and the founders said no. The question is why? We do the exclusive story in the new issue of Latcom Magazine, which you can get right now at nathanlattcom.com forward slash magazine.
But for today's podcast episode, I thought it'd be interesting to go back and listen to how Guillaume talked about the business seven months ago. Enjoy. Enjoy. You are listening to Conversations with Nathan Latka. Now if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatka.com. When you subscribe, you won't hear ads like this one.
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Chapter 2: What insights did Guillaume share about Lemlist's growth strategy?
Hello, everyone. My guest today is Guillaume Moubache. If you haven't heard of them or his company, he's running a tool called Lemlist, which is growing extremely quick. He just broke $2 million in ARR, maybe north of that. It's a platform that helps sales teams book more meetings and close more deals with their prospects.
In less than two and a half years, again, they've grown that team to 8,000 plus customers without any funding. Totally bootstrapped. He's also the founder of the Sales Automation Family, which he calls the coolest and biggest Facebook community about sales automation. Guillaume, you ready to take us to the top? Of course I am, Nathan. Thanks for having me.
You do have a bit of a cool factor to you. You stay very close to customers. You record videos in that group every day. You engage with them. How do you have so much time to stay so engaged with 8,000 customers? Yeah, I'm not alone, first of all. So I have a great team helping me out. But I think for me, it has always been important that our users are really successful.
So I invest all my time and energy in that specific purpose and I don't do anything else. So I try to say no to many things that are irrelevant to helping our customers. And so my focus is very narrow. What's like the number one thing that you get asked about that you have to just continue to decline over and over again? I guess I keep helping. I don't do that for all of our customers, but I keep
need you know for advice on how to set up you know their outbound pipeline so that's something where i'm doing like kind of like free consulting sessions uh depending on on some customers where i could just like spend maybe like either 20 minutes recording a video for a customer like going through his cold email templates see how things are set up all these type of things and always trying to help but i think it's also part of the dna of the team so now i'm
and it's easier to scale, I would say. What does the team look like today? How many folks? So we were like 12 people when we reached 2 million in ARR, and in September 2020, we're going to be 19 people. Okay, so 12 right now. How many engineers?
engineer team is my two co-founder plus two more people and three more people now so it's five total five total interesting and do you have any quota carrying sales reps or no they're just they just focus on helping helping your customers So we have like two person in the support that I'm going to call like outreach experts. We have one sales like SDR was in charge of outbound prospecting.
And then the rest is more like gross and marketing. So content and helping users to basically find the best resources and be successful in their sales prospecting. Guillaume, do any of them carry a quota or no? What do you mean? Like for the sales?
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Chapter 3: How does Guillaume prioritize customer engagement with 8,000 users?
A sales target. Yeah. Yeah, of course. Yeah. Like RSDR, like she has a quota of a deal that she took close. Okay. So there's one quota carrying person sort of on your team. Yeah. And then it's more like we have objectives and goals, but based on the growth, like monthly growth. So everyone is basically like incentivized on the same goal, which is MRR. How do you incentivize that?
It's not easy to get these incentive structures, right? Yeah, so we do that per quarter. So we do that exactly the same as the way we incentivize sales teams. So it's, for example, because I know a lot of people, you know, they're trying to put bonuses on number of qualified leads, marketing qualified leads, sales qualified. And I think people tend to always optimize things based on.
So, for example, if I tell you, you need to reach that amount of marketing qualified leads. What you're going to try to do is book, let's say, as many meetings you can for your sales team. However, the quality of the lead is not going to be that great.
However, if everyone is focused on growing the MRR and then we set up like the MRR goal at the beginning of each quarter, now everyone is focused on one thing, which is revenue and revenue for us equals profit. So it's like everyone goes to the same direction. And I think it's like it's a better way to incentivize.
So we have like different levels and each level you reach, you will get a bonus and then you have like higher levels and higher bonuses. Can you walk us through this a bit more? So June ended the second quarter. You guys, it sounds like broke that two million right around there. That's an easy number to talk to. So your team meeting at the end of Q2 and you're setting goals for Q3.
What is the new MRR target for Q3, Q4? Yeah, so our goal essentially was to do like 5X from December 2019 up to like December 2020. So the monthly goal, I think it's around like 14 to 60%. each month, month over month growth rate. So I think it's 16% to reach like 5x more or less. And basically like this is the goal for the year. So we don't really adapt anything.
So the growth, for example, if it's faster and then we cut it per quarter. So for example, if the growth was like faster in, let's say, I don't know, like April and March or like in Q2, if the growth is faster than 16%, Then, you know, like the goal at the end of Q3, it would still be the same as I decided at the beginning of the year. I see. So what was revenue in December of 2019?
So in December 2019, we were around a bit less than a million. Yeah. So I think it was like 600K or something like that. Yeah. So it's six times five. Yeah. It's something like 600K ARR or something like that. Yeah. So you came on in March of last year and you were at about 250,000 in MRR. So through last year, you 3X'd or maybe more than 3X'd.
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Chapter 4: What is the structure of Lemlist's team and their roles?
And what you're saying is between December of last year when you're at 600 in ARR and two or three months from now in December of this year. That's crazy, by the way. We have like three months, four months left in the year. But end of this year, you want to be up in the 2.53 million ARR range. Yeah, exactly. Yeah, yeah, yeah. And what's the reward? How do you incent the team?
So let's say everyone hits the goal. What's the reward? They get like a bonus on their salary and a big smile. I like the smile part, but there are people that are going to listen to this and are going to want to copy you because they're going to like them. They're going to agree with you that like MQL, you know, things are like bullshit to incentivize these things.
So let's say, let's not talk about any one of your individual employees, but let's say I was one of your employees and my base was 50,000 a year, just hypothetically. And we hit this goal. What would I make on top of the 50K? So the goal is basically, let me say, it's like 25. So it's every quarter you can get 25% of your salary, of your monthly salary. Every quarter. So what would that mean?
Let's make my salary easier. Let's say it's a hundred grand. The numbers are just easier. So what would that actually mean? So it would mean that you can, so if it's a hundred grand, it means, let's say, let's say 120. So it's 10K each month. It would essentially mean that per year, if you reach your goal, you can get like a bonus a bit higher than 10% at the end of the year.
If you reach your goal each quarter, the total would be a bit more than 10%. So a bit more than 10K. I see. I see. I see. So if I help the team hit our 15 to 16% monthly growth goal or five X year over year goal, I will make an extra maybe 12 grand on my 120K salary. Yeah, exactly. Exactly. And the only reason I would readjust the goal is if the first two quarter we wouldn't hit the target.
For example, because I know Q1 is really strong, Q2 is also really strong for us. I know Q3 is sometimes a bit less strong because you have July and August, those are the months where we sometimes see small companies, especially like cheap French bastards that usually decide to churn and come back in September. So it's usually like a bit less growth in July, August, more people on holiday.
But then I know like September is strong. And then again, December is a bit less strong, but I know October and November are really strong as well. Interesting. Okay. So how many customers are you now serving today? So regarding our customers, we launched on AppSumo. So essentially, that was kind of like our, let's say, bootstrap round of funding.
And at that time, we had, so I would say like 8,000 something customers. And basically now, you would add, so those were not recurring, those were mainly like Recurring, we have more than 3,000 companies paying on a monthly basis, and total customer is more than 10,000. Got it. Yeah. So 3,000 recurring, then you have 5, 6, 7, 8,000 or so from that AppSumo lifetime deal. Yeah, exactly. Yeah.
I see. Did you uncover any strategy that was particularly effective in converting the AppSumo one-timers to true recurring plans? A lot of people that go through AppSumo, the ones that love it are the ones that convert them to recurring. Well, the ones that hate it are the ones that don't. don't end up converting well.
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Chapter 5: How does Lemlist incentivize its employees for growth?
No, no, no. So that was like revenue and AppSumo took around like 70% of that. But then we did another round with AppSumo and we made another like $200,000 sales. And I think so total with AppSumo, essentially, we made, I think, $150,000. Yeah. Yeah. I was gonna say doing the math, you take 49 bucks for that lifetime deal times 8,000 customers is basically $400,000 in total sales.
And if AppSumo is keeping about 70%, you would make somewhere in the 100 to 150 K from that. Yeah. Yeah, exactly. Yeah. Yeah. Second, it was a bit different percentage, but yeah, around that. Yeah. No, good, good, good way to good way to do it. If you can make the, make the numbers work. So, okay. So 3000 recurring customers now today, and what are they paying on average per month?
So right now they're around like, yeah, something in dollars. It would be maybe like $60 or something. Okay. And what do they get? So we haven't actually talked about what Lemlist does. What does Lemlist do? What are they paying for? So Lemlist basically allows you to automate your multi-channel outreach. like messages on LinkedIn, create tasks for your sales team so they can do calls as well.
That's like the latest version of Lemlist, which is called Lemlist 3.0, where we're basically like, we have onboarded about like 200 companies on that latest version. And it's not live for everyone yet, because initially, as you know, we were just focusing on cold emails.
And now we're expanding towards like the entire like sales automation, because as you can guess, we're going a bit upmarket on the on the customers. So, yeah. And you're still bootstrapped, right? Yeah, still bootstrapped. So basically like right now we're making, you know, like each month we're making a bit more than $100,000 profits. Yeah.
So because like our fixed costs are very small, like we spend only money on the servers. We don't spend any money on paid ads or paid acquisition or anything else. And our employees are contractors. So essentially, it's like the biggest chunk of the fixed cost is basically the founder's salary. The rest is profit and in the bank. So we're pretty happy with cash.
So what do you as a founder that I assume you and your two other co-founders, you guys own 100% of the company, basically, right? Yeah, we all have like a third of the company. Yeah. So when you guys get together and go, hey, guys, we have an extra hundred grand in the bank. Now there's like 700 grand sitting in the bank.
That's obviously not a good use of cash to let it just sit there outside of making you feel comfortable, which there is value to that. But what do you do with it? Do you give it out as dividends? Do you reinvest it? What do you do with it? Yeah, so we take the cash for ourselves. So first thing is we try to make ourselves very comfortable.
So being in comfort with your company, I think it's quite nice because you make like smarter decision. Second is give ourselves dividends and do like some of our personal investments. So buying houses, etc. And then obviously it's a big part right now, especially with the new strategy and it's to invest in hiring more people.
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Chapter 6: What challenges does Lemlist face in customer retention?
Right now, we're also going to start like putting some gamification within the task people have to do. And because I think like sales is amazing for gamification because the better you do actions and spend time on researching your prospects, the higher your booking rate is going to be. And hence, your bonus will be higher as well.
So I think it's like literally the best place to have fun while doing something, you know, like and care about people. And that's basically all the things we're implementing. So small things within the platforms that makes it more human, like little comments whenever you're doing specific actions, et cetera, et cetera, just so people feel more comfortable. and happier in their job also.
Are customers sticking once they start paying? What's your revenue trend look like on a gross basis? So for me, I don't think it's a question we can answer straight to the point just because I prefer answering in terms of persona and churn. So basically sales team that are with more than five sales people, so from five to let's say 30 or 50, that's kind of our sweet spot.
And those people are not churning. Like we have negative net MR churn, so something around like minus five, minus 6%. However, if you look at also a big chunk of our business, which are smaller business, so I would say like startup, less than 10 people, et cetera, the churn is around maybe 10%. But the net MRR churn is basically around maybe 3% to 4%.
we see those people, for example, as I said, they're going to say, hey, guys, we love the products. We're churning because it's August. But no worries. We're coming back in September and they come back in September, you know, and sometimes it's like, oh, yeah, we finished our campaigns. We're going to come back in one or two months and you see them come back.
So every time I look at the so we have like a questionnaire when someone churns and every time I see like someone leaving, it's usually because they're going to come back and they're just short on cash or just, you know, like watching their spendings. But for the customers we're really targeting and where we're really focusing, they don't leave.
What are you paying fully weighted to get a new $80 a month customer, would you say? So our CAC, it's difficult because, as I said, like we don't spend anything on ads. So our CAC is more linked to, let's say, like the time we spent and based on our salaries. So I don't really put a number on it, to be honest. I could say, you know, based on, you know, like...
How many community managers you have or something. Yeah, exactly. So for example, our sales rep, for example, she's going to bring like, yeah, she's going to bring. So I would say like, yeah, it depends again on the size of the customers, but she can bring maybe like 40 to 50 like new seats every month. So it's like something around like 2K divided by 50, you see. So it's like 40 bucks.
something like that. Obviously that those make a lot of sense. Um, last question I want to talk to you about before we wrap up you, there's a lot of B2B SaaS brands that are trying to create communities. Some just flop and it's horrendous. Others do extremely well. I'd put you in the extremely well category, just watching you build community. What's sort of been, there is no secret.
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Chapter 7: How does Lemlist convert AppSumo customers into recurring users?
And how old are you, Guillaume? I'm 29. 29. All right, last question. What's something you wish you knew nine years ago when you were 20? start your own company sooner. Just go out there, fail, fail, and then one day eventually you get there. Guys, Lemless is helping sales team do sales the right way. You don't have to be extroverted. You don't have to be crazy.
You don't have to always be closing. You can just add value. He's building a product with that in mind. They were doing about $600,000 in terms of ARR back in December of 2019.
now just call it eight nine months later they're already up to about two million in ar with eyes on 2.5 or 3 million in ar by the end of this year they've done this all bootstrap profit being almost 100 grand per month going to the bottom line team of 12 people five engineers uh one quota carrying sales rep plans to expand the team here to introduce some new product lines but recently lemus 3.0 just came out encourage you guys to check it out guillaume thanks for taking us to the top thanks a lot nathan