SaaS Interviews with CEOs, Startups, Founders
Slack Tool KarmaBot Doubles to $400k ARR, Turns Down $1m Offer
23 Sep 2021
Chapter 1: What is KarmaBot and how does it work?
And one thing that helps in terms of revenue is actually we integrated automated gift card purchasing. So some of the teams, they convert karma into rewards and we get a cut of that. So the cash flow is being maintained by automated rewards and that really helps as well.
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 Stas Kulish.
He is building a very cool tool called karmabot.chat if you want to follow along. It's people, culture as a service. He grew up in Siberia, studied computer science and nuclear physics, played in a band, got excited by the indie games making, and then left Unity to become a digital designer. Since then, he's been working remotely, traveling, and blogging.
Now settled in New Zealand and growing Karma. Stas, you ready to take us to the top?
Yes, yes. Nice to see you again.
All right. I'm glad, I'm glad you're here. Let's jump in.
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Chapter 2: How has KarmaBot evolved since its inception?
So last we spoke, you're really focused on Slack. It sounds like your positioning has changed a little bit, uh, or maybe not. What are you working on today?
Right. So today we working on fixing bugs in the recently released departments, kind of big piece in, um, Microsoft teams. That means that now big organizations on Microsoft can create a Karma bot sub installations. So. If I'm talking about, let's say, McDonald's, I don't have to purchase Karma Bot for the whole organization. One tiny shop can purchase Karma Bot now.
And that helps because before it wasn't possible technically. So the whole department thing, it's huge. And it's been, it's out there now. And we're testing it and we, you know.
Sorry, just take a step back. For people that are not familiar with what you do, why are customers paying you?
Right, so remote work is here, like you know that, and it's getting bigger and bigger and it will stay most likely. it's really hard to maintain a healthy people culture in a remote company. So karma is one of those tools that helps companies to appreciate each other more to record this appraise to, you know, convert that praise into rewards.
And so we, we automate one on ones, we do all sorts of things to keep this remote people culture healthy.
Got it.
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Chapter 3: What challenges does KarmaBot face in the remote work environment?
And how many customers are you serving today?
We've got a three million solution. So altogether, I think it's more than 3000, but 350 of them are paying. So that's teams, 350 teams.
Got it. So 350 teams and about how much do they pay you each month?
Approximately a hundred a month.
A hundred dollars per month. Okay. So your ACE, I believe, so have you generally increased or are you moving up market or staying sort of where you're at flat?
The departments was a huge block on the way and we're trying to solve it so we get into big organizations. So far, it's pretty much, yeah, around 100 people paying around 100 a month. So this is the regular size of the team and the regular bill.
And can I take 350 customers times 100 a month, you're doing about $35,000 a month in revenue?
Yeah, exactly. Um, and one thing that helps in terms of revenue is actually we integrated automated gift cards purchasing. So some of the teams, um, they, they re convert karma into rewards and we get a cut of that. So the cashflow is being maintained by automated, uh, rewards. And that really helps as well.
Now you were doing about a year ago, $17,000 a month.
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Chapter 4: How does KarmaBot generate revenue and maintain cash flow?
So you've more than doubled in size and I believe you've done this bootstrapped. Is that right?
Yeah.
Got it. So completely bootstrapped. And you still are bootstrapped today. No outside capital?
No outside capital.
Any plans to raise?
Could be, maybe. Depends on how this remote thing is going to go. Because when COVID started, we had a huge surge. And I think this was around the time when we spoke the first time with you. And we were really hopeful that this is going to stay. But then a year ago, we saw a huge plunge because people, they want to change things. It's in their heads.
Maybe remote work wasn't working for many of them, but then maybe they panic buy it. They were doing panic buying initially, and now they're kind of trying to sort this out properly. So it's still unclear how fast this can grow.
And tell me more about how you're growing so quickly.
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Chapter 5: What are the customer demographics for KarmaBot?
You had 240 customers a year ago. You now have 350. Your primary sources of customers earlier were a product hunt launch and then the Slack app exchange, I believe. Where are most of your new customers coming from today?
Uh, it's, it's well, fortunately it's, it's word of mouth because product market fit is 84% and NPS score is standing around 80 ish. So we kind of have a happy product for happy people. So they talk about it. Uh, and this portion increased, um, uh, since the last time we spoke and, uh, otherwise it's still. Slack and Microsoft marketplaces.
So how many new users or trial sign up over the past 30 days from Slack?
Five, 30 days would be about 500.
And how many for Microsoft? Well, I guess they're sort of the same, right?
Yeah, similar. Yeah, yeah, yeah. Microsoft is up and down because they're still figuring out their featuring mechanism. You know, it's like an app store. They always change things.
So 500 new trials. And then what do you do with those trials?
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Chapter 6: How does KarmaBot handle customer churn and retention?
Take me down your funnel. When they hit your website, they give you their email, then what?
Well, they actually installed it from Slack. In Slack, you can have the application installed just through this plus button right there in the Slack. And then we have an in Slack onboarding experience. If that's not enough, they are taking outside in the web. And there we try to explain what we have, what we do. Over the first, we've got a free 30-day trial.
And then over that period of time, we sort of reach out based on your activity. If you're a champion, if you're really digging it, we're going to be inspiring you to do more.
How do you know that? What are you measuring to quantify really digging it?
Right. Well, you're sending Karma. I'm sending Karma to Nathan every other day, and Karma can see that. We don't really track people's activity on Slack. We don't really track their activity on Microsoft Teams. We're not that kind of company. We see what they do with us, how much they enjoy using Karma, and then based on that, we encourage them to use it more.
Um, for the first 30 days, it's mainly an in-chat experience.
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Chapter 7: What future plans does KarmaBot have for growth and development?
Well, as usual, we also have the marketing chain going on in the email, but that's, um, I don't know. It's helpful. I don't think many people converted just because of that.
And talk to me about team today. You were four people a year ago. How many today?
Uh, well it's five or six contractors coming and going. We're trying to stay lean and mean and keep this to the minimum because we're bootstrapping, obviously. And as I said, it's still not clear where this would go because that's why the investment trouble is not happening and we're not really taking it.
And what were your profits last month on $35,000 top line?
$25,000 approximately.
So what do you do with that capital? I mean, this is great bootstrap founder. You're traveling the world. You're living the life you love. Do you leave that money in the company? Do you buy real estate in New Zealand? What do you do with it?
Um, all of the above and also just to simplify the answer. Yeah.
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Chapter 8: Why did KarmaBot turn down a $1 million acquisition offer?
And we, we hoping to get big, uh, somewhere in the future someday, um, we trying to like playing the loan game, this capital will be needed in the future. We try different things in marketing, maybe reaching out here and there, spending money in this campaign or another, but still none of that actually proved that it can work 100%. Spend $10,000 and get $12,000 back. That didn't happen yet.
That's why we're still cautious. And maybe one day we'll spend it on marketing and convert thousands of people and make it happen for them.
So you're not spending anything right now on paid ads?
No, none. It's so difficult because the main decision makers, they are at the top of the chain. We don't like Trello. engineers don't come to the superior saying like, let's buy Trello gold. It's so cool. We've been using for a while with karma. It's usually the culture, the culture is coming from the head. And then we need to convince those people.
It's really difficult to target them and convert through ads.
Yep, that makes sense. Now you were thinking about selling the company if you got the right price a couple years ago, maybe a year and a half ago, where are you thinking about today? If somebody offered you you know, 10x ARR, would you sell?
Well, 10X maybe. 10X we've been offered and 15X we've been offered. Oh, sorry, 10X ARR now. We have never been offered that, but we may consider it, yes. I don't say it's impossible.
What have you been offered?
Good question. That was 2X ARR, so approximately half a million. And that doesn't count it. It's like we're getting six.
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