SaaS Interviews with CEOs, Startups, Founders
She's a 1 person bootstrapped founder with $500k in ARR, here's how she did it
19 Jul 2022
Chapter 1: How did Melissa Kwan achieve $500K in ARR?
So we just crossed 500K ARR. Congrats. Thank you. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey folks, my guest today is Melissa Kwan.
She's the co-founder and CEO of eWebinar, an automated webinar platform that saves people from doing the same webinar over and over again. She's a third-time founder, bootstrapper, and digital nomad. Her previous company, Spacio, was acquired in 2019. Melissa, you ready to take us to the top? Yeah, absolutely. That previous company, did you bootstrap that one as well? I did. Nice.
It was much harder. I was going to say, so do you have the yin and the yang? Have you raised on one and then bootstrapped the other? Can you compare? Well, we have never raised venture capital. I mean, we had some family and friends. So I mean, do you consider that bootstrapping?
I consider bootstrapping... Someone to me is bootstrapped if they're very capital efficient, which means the way I measure that is you've raised less than 1x your ARR. Yeah, absolutely. So I've never raised venture capital. Actually, my LinkedIn post today, the title of that is, I once took money from an investor and it's private investor. He invested about 250K.
And that made me realize the only person who needs to give you money is your customers. This is in Spacio? Yes, it was. Okay, come on. Give us the quick detail. What happened? What did you not like about it? Nothing against this person, maybe personally, but just in general. Yeah. I mean, it turns out, Nathan, that there is no free money.
And so it turns out that when you take someone else's money, you are responsible for reporting to them and all these things that you didn't have to do when you were truly your own boss. And I don't think people realize what that means. I didn't even take venture capital. I had nobody on my board and it was still an added layer of pressure that I didn't have.
And while bootstrapping is extremely difficult because I'm also doing it now, I just would never give up the freedom that it comes with. Guys, if you're sitting there watching this on YouTube going, amen, give Melissa some love here. Hit that like button, comment below. Melissa, tell us about eWebinar. What's the product do?
So it's exactly as you say, it saves people from doing the exact same webinar over and over again. So you can imagine demos, onboarding trainings, especially for SaaS companies. You are probably constantly doing those things, maybe live on Zoom or something else or putting it on YouTube, which isn't as interactive. So this product was actually designed for bootstrappers.
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Chapter 2: What challenges did Melissa face while bootstrapping her company?
Well, I think it's only tricking your users when you start by telling them it's live when it's not. Because authenticity, especially when you are bootstrapping, is your currency. You can spend years building your credibility and just seconds to destroy it. So we are advocates of please do not trick your customers. Do not tell them it's live when it's not.
You should be open and honest to tell them, hey, this webinar is recorded, but I managed the chat. which is exactly what we allow you to do. Ah, so that's the trick, right? Because that's my problem. If I say it's a recorded webinar, people are going to go, well, then I'm not going to click through the email and attend because it's just recorded. That's boring.
But you say, and I'm live managing the chat. That's what you say. That's the trick. Yeah, I mean, it is a trick and it's not because the chat is asynchronous, right? It's like intercom, it's like Zendesk. So we interact with asynchronous chat every single day on websites, on our support. Why can't we have that on an automated webinar?
This is actually the feature that allows you to fully automate your webinars 24-7 and never miss an opportunity to communicate your customer, your prospect. That was actually the missing thing that I had in my previous company.
And I think, Nathan, anyone who even says like, oh, I feel like tricking my customers, they've probably looked at other solutions before and thought, oh, this is super scammy. And I was one of those people. Or they got suffered into someone else's marketing that was selling a live webinar. They spent time, they showed up and they realized it wasn't.
And then they just hated those automated webinars for everyone. Well, yeah, exactly. I think this is actually one of the biggest hurdles that we have to get through is how do we change that preconceived notion and build truly the Netflix of webinars, not the scammy automated webinars that people might know of previously. So Melissa, what do you charge for this?
What do customers pay per month on average? So it starts at $49 a month. We charge by number of published webinars. So once you publish it, you can set a recurring schedule. So you can run it 100 times, 200 times per month. And then it kind of goes up from there. So we do not charge by number of users or number of attendees like most other people do. Interesting.
And so obviously some people pay 50. What is the big... Can you tell me what the big... Don't name the customer. What's the biggest customer pay you per month? So we max out at $10 per webinar per month. And our biggest customers has about right now 210 webinars and counting. Per month? Per month. That's like two grand a month then from your biggest customer. Yeah.
And you can imagine the manpower that actually substitutes to run 200 webinars concurrently every single month. Crazy. Huge. I totally get it. It's amazing. I mean, we do webinars and there are a lot of freaking work. So that makes sense to me. All right. So you started at 50 bucks a month and then put all this on a timeline for me. When did you launch the business? What year? July, 2020.
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Chapter 3: How does eWebinar differentiate itself in the market?
And I was like, wait a second, you're actually like the 1% of the 1% coder. So I was like, why am I paying these people? Why don't I just end my relationship with them? And we work at an arrangement for you to be my co-founder. So he actually came in about a year into the business and we worked on an arrangement that works based on that. And now he's my co-founder.
So we built that for a year and a half before we put eWebinar out on the market about two years ago. Let me break that down for a second. So tell me the painful number. How much money did you sink into this dev shop that didn't work before you cut it off? $350,000. Oh, my God. But it would have been more if I kept going. Yeah. Okay. Fair. Wow. Okay. $350,000. I mean, could you not tell earlier?
Why did it take you $350,000? Why couldn't you cut off at $35,000? Well, okay. So here's the number, right? So we sunk a lot of money into branding and design. I am not a founder that's like, okay, let's do this cheap. I'm all about ROI. So what is the maximum output that I can get for the minimum input? And that doesn't mean paying the least, right? That means finding the Pareto efficiency.
So what we did was- And you have a beautiful website, so it pays off. Thank you. So we hired the best person we thought we could get to do all the branding, the design. And that costs a lot of money. I mean, that in itself was probably $65,000. And I'm saying like every single page of the website, every single page of the first version of the app and the branding and all that back and forth.
And then you've got like DevShops charged in phases. So it was broken down into four phases. So we basically went through three phases before I was like, okay, I actually don't think continuing this makes sense because another mistake was my friend owned this dev shop.
So it was really difficult for me to say, hey, you're not delivering because there was no reason for me to doubt him because I am not technical. So it wasn't really until David was looking through the code because he was always going to be the bridge between this dev shop, and us moving our quote-unquote in-house team to Vietnam.
So we actually, all our developers are from Vietnam, and David is our CTO who still codes but actually manages the team over there. So as he was looking at the code, he was like, wait a second, this isn't the way it should be done. And that's when he stepped in, and that's when I had to have that hard conversation with my friend and say, hey, I actually... don't think this is going to end well.
And you are actually sinking too many resources to try to make this happen. So it was a no-win situation for both of us. Do you guys care about valuation right now, specifically your valuation? Do you think you might raise soon or sell a portion of the company?
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Chapter 4: What strategies does Melissa use for customer acquisition?
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Again, both plural founderpath.com forward slash products forward slash valuations. So you bring in David. Now negotiating with a life partner for equity in business is not easy. So are we talking like 10%, 20% here or was it like a 50-50 split?
So, another thing I learned in my previous business is while I have no doubt that there are some CTOs out there that can also build a business, but I am a firm believer that a CTO is a great product technology partner, but the business is built by the CEO.
So in my previous business, it was a 50-50 split, but coming to this one, and because David had been there for my previous life, I was like, hey, based on my previous experience, what do you think is a fair number for you to feel invested and for you to feel like a co-founder, but also know that I'm going to be building the business around the product? So the split between us is 35-65%.
And it was something that... Melissa, holding to her guns. I love that story. Yeah. I mean, he put out that number. It was something that he felt was fair. And frankly, I also think it's fair. I love that. Okay. Talk to me a little bit more. There's people watching this right now here on YouTube, on iTunes going, man, I want to use contractors too. I don't like full-time employees.
So you learned what not to do, but you still... How many contractors did you pay at least a dollar last month? So our burn right now, so I don't pay myself. David and I don't pay ourselves because I had previous exit. We were able to kind of ride off that. So we're lucky in that way. Are you super rich or was that like a million dollar exit and you have a year?
So I'm not allowed to say the number based on our previous contract, but it was my personal exit was like in the low seven figures. Okay. So plenty of flexibility. Yeah. Some flexibility, but for people hearing this, don't forget that I sunk a decade into that. So if you take that exit, absolutely life-changing, but if you divide it by 10, that's like having an amazing sales job at SAP, right?
Yeah, that's a good analogy. And having all the benefits and all that stuff. But it could have gone the other way as well. Yep. So what are you, can I ask what are your total expenses now per month? Sorry, I lost my train of thought. It's about 60,000 is our burn. So for where we are, and if you've seen the product, like that is extremely efficient. Like we do not hire.
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Chapter 5: How does Melissa manage her business expenses and profitability?
39. Happy early birthday. Last question. Something you wish you knew when you were 20. Start your own business early. Guys, there you have it. Really great story here. E-webinar launched back in 2020. She burned 350K on MVP before she learned that DevShop just wasn't going to work. She ended up bringing in her life partner, giving him 20, 35, I think 35% is what she said. But guess what?
She's really the only full-time employee here. And they're now doing $42,000, $43,000 a month in revenue, 550 customers to help you run automated webinars with asynchronous live chat or asynchronous chat next to the webinar. That's the secret sauce. They're up again from $10,000 a month just a year ago. So healthy growth all year. bootstrap. She's a one woman wrecking machine.
Melissa, thanks for taking us to the top. Thanks so much, Nathan.