SaaS Interviews with CEOs, Startups, Founders
SMB Tax App hits $20k MRR by getting 1k+ Signups and Converting 20-50% to $35/mo paid accounts
16 Dec 2022
Chapter 1: What is Earner and how does it help small businesses?
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 Enzo Anz. He's the co-founder and CEO of Earner, the robo-accountancy for small businesses.
He's a recovering management consultant, a delivery writer, and former chief of staff at Loot, Bow, and Metal. I'm sure I butchered that name. Enzo, you ready to take us to the top?
Yeah, let's go.
Come on, give me the real, how do you pronounce that?
All the different challenging fact names?
Yeah.
Yeah, you did perfect. Bow, Metal, and Loot.
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Chapter 2: What trends are driving the growth of self-employed income?
Okay, I nailed it. Very good. All right. So tell us what earner is and why SMBs, you know, SMBs go out of business all the time. So your turn is going to be an issue.
Yes, it's a growing kind of part of the business markets. Like a lot of people are turning to self-employed income as well as starting small businesses after the pandemic. So the kind of trends are your gig economy, your passion economy, your sharing economy. And what does earner really do? So what we've seen is that a lot of these people still use accountants. They're very, very expensive.
Why can't you have software that does the work of an accountant for you for a fraction of the cost?
Chapter 3: How does Earner compare to traditional accounting services?
And so how do you model this? And what's the average customer pay you per month, would you say?
So a traditional accountant for most users costs anywhere between 500 to 1,000 if you're a sole trader and up to 1,000 pounds if you're a small business. We charge them subscription-wise 30 pounds if you're a sole trader, and then limited companies anywhere between 50 and 100.
What do you mean sole trader? Do you have a lot of bankers, traders who use you, stock market people?
So sole trader is the British term for someone that's self-employed.
Ah, I see. Okay. But it's about 35 United States dollars per month on average.
Yeah, exactly.
Very cool. Okay, put this on a timeline for me. When did you launch the business?
So we first launched the business in 2021. And then we kind of went through one tax turn season at the end of the year in 2021. So in the UK every January and now going into our second tax turn season.
That's awesome.
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Chapter 4: What strategies did Earner use to acquire its first customers?
How did you get your first customer?
Our first customer was through a small business community called Mindful Markets.
Mindful Markets.
Yeah, exactly. So during the pandemic, a lot of markets that were first in person turned online. So a lot of new business propped up that helped people move from an in-person marketplace to online. So they were doing Zoom calls. And that's kind of how we got our first customers.
Yeah, but was that like a Facebook group or a LinkedIn group? Or how did you find this group?
Uh, it was initially we found the person that ran it through a Facebook group and then we started doing, um, calls with them over zoom, helping them with their taxes. And then they were the first customers that then started using the app.
That's amazing. And I'm sorry, what was the name again? Uh, mindful markets, mindful market. Very interesting.
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Chapter 5: How does Earner achieve high conversion rates from free to paid accounts?
Okay. And then fast forward to today, how many customers are you working with?
So we now have 1000s of customers. We don't like to disclose the exact amount because we're still quite early, but we're doing pretty well.
Is it fair to say like between 1000 and 2000? Something like that?
Between 1000 and 10,000.
Oh, okay. 1000 and 10,000. Very cool. Now, that's not easy to go from, you know, 1000 or, you know, nothing to over 1000 customers in under a year and a half. So how did you do that? How are you growing today?
It's a bit of a mix. So our most effective channels is when the need is highest, which is during tax return season and is classic performance marketing. Something to keep in mind is that your average retention when it comes to accounting is 10 years.
And on a product that you pay anywhere between Ā£30 to Ā£100 a month for, we can be quite effective when it comes to performance marketing during tax return season. Outside, we just use a collection of referrals and SEO that works best.
What do you consider effective during tax season on your paid marketing? What are you willing to spend to get a new $35 a month customer?
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Chapter 6: What marketing channels are most effective for Earner during tax season?
Yeah, so coming from a challenger banking background, the average there that we had was anywhere between 100 and 200 pounds or in dollar terms, like 120 to 250 dollars. If we can acquire somebody for less than 100, that's already really effective because the payback period is so short. We've seen stuff way lower than that. So anything less than 20 dollars.
What enables you to do that? That's not cheap. I mean, as you know, in the challenger and bank world, people are willing to spend a lot to get a new customer. So have you found like a unique keyword you're targeting with paid or you're doing like TikTok ads or there's not a lot of competition for yet, but why can you get under $100 CAC?
I think it is TikTok that we've used exactly like you said. I think what really worked well for us were personable ads. So kind of talking in the camera, kind of saying, hey, we're this new app. It's really amazing. You should try and check it out. We built... No, but come on, Enzo.
That's very boring. What do you actually say?
I think that is literally what we say.
No, come on. If I saw that on TikTok, I'm skipping it immediately. There's no way that's converting me.
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Chapter 7: How does Earner measure customer retention and engagement?
Well, you're also not our target audience. Like most of our customers are women. Most of our customers are kind of people that like Etsy sellers, gig workers. It's literally a simple, the thing that did the best was just talking into the camera while you're walking somewhere and be like, talking like a normal human being saying, you know, this kind of stuff is really hard.
I found a tool that works really well. You should try and download it and check this out. That's kind of as simple as it was.
Are we, is this right now considered tax season?
No, not yet. So for us, it's December and January.
So give me a sense of like what you'll scale to in terms of paid spend. Are you talking like you're spending 10 grand a month unpaid or like a million per month unpaid?
No, no, no. Way less than that. We last tax return season, I think the highest we went is maybe two grand a week.
Okay.
But never higher than that.
Yeah. Yeah.
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Chapter 8: What are Earner's future growth plans and market expansion strategies?
Okay. So call like you'll cap maybe like 10 K per month and paid, but that was last year. You double it. Who knows?
I think for us, it's really about the payback ratio. If we get enough customers to go directly to our monthly subscription, then why not?
Now, when you look at the cohort you signed up exactly one year ago, and folks were recording this November 2nd here, if you go back and look at the cohort, Enzo, from last December, how many of them are still paying today? Like, what's your churn look like?
I think it's quite sticky. So most of our customers are still paying after one year.
Do you use any tools to measure this? I mean, net dollar retention is the name of the game in this world, right? If you can have above 100%, that's really fantastic, especially at this price point.
Uh, we kind of track monthly active usage. Um, like we use platforms like post-hoc that works quite well, uh, for us to track that. Um, but most of our payments kind of done through Stripe. So it's quite easy for us to measure that as well there.
Well, yeah. So when you look at this in Stripe, I mean, are you guys above a hundred percent net dollar retention year over year?
We're not actively measuring all the dollar retention figures. We're focusing more on just what we've built so far. We're looking a lot more into monthly active users and what different features within our app our customers use. Revenue is obviously an important metric of that, but it's not the thing that I look at every single day.
Well, let me paint a picture for you. If you spend $100 on a TikTok ad to get a $35 a month user and they cancel after the second month, you only made $70, so you're losing money. How do you know if you're losing money or making money if you're not tracking retention?
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