SaaS Interviews with CEOs, Startups, Founders
Video Platform Animoto up 20% YoY with $30m in Revenue, Will Canva Acquire For $300m?
30 Jun 2020
Chapter 1: What is the main topic discussed in this episode?
We run a cash flow neutral business, right? So everything we make, we basically put right back into Animoto. So technically it's like, we could probably hit 30, 40% if we want it, but we're reinvesting everything right now.
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My guest today is Jason Hsiao. He's the co-founder and chief video officer of Animoto, an award-winning online video maker that makes it easy for anyone to create professional marketing videos. Jason, you ready to take us to the top? Let's do it. So you guys have been around a while, huh? When was launch date?
We actually first launched in 2007, which sounds like ancient years ago. I think it was before the iPhone just came out, but MySpace was more popular. Facebook was still kind of up and coming. It was kind of crazy.
Jason, you're aging yourself.
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Chapter 2: What is Animoto and how did it start?
This was before.
Did you have people calling up going, wait, give me my money back?
Well, no, we had actually gotten that early around. We had actually, luckily we had already kind of gotten going with the family and friends round. Um, and then, yeah, we were actually about to raise kind of our first serious round, like literally the day, the week of that, where everything kind of like everything crashed and Sequoia posted their rest in peace, you know, memo or whatever it was.
And we were like sitting in waiting rooms at Sequoia and other places and then everything fell apart. So we kind of had to kind of step back and kind of figure out what we wanted to do.
Jason, let me step back on this first year. So the first line of code was written in 2007 or 2006? 2006.
And then we launched our website in 2007.
So how much total, how much cash did you guys sink into the MVP? So between your first line of code and your first dollar of revenue, do you remember?
Uh, well, if you're, if you count kind of like the salaries and everything that we kind of give, it was probably like, we probably put in a few hundred thousand dollars to three and $300,000 in total kind of our collective efforts and opportunity costs and the like that.
And tell me the story of, tell me the story of that first customer, that first money coming in. It must've felt great.
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Chapter 3: How does Animoto's revenue model work?
So you're talking really to churn here, right? Which is when people use you once, how do you make them really, really sticky? Um, at this price point, right? Churn is obviously an issue, uh, more, maybe not. How have you addressed churn?
Well, what we've realized because of our type of business, we have to kind of approach it in a very kind of multi-layered type way, right? So we know that, I don't know, about 20% of folks who come in will actually just stick around with us forever. And the rest, like I said, it just depends on where they are in the business. We have a lot of small businesses.
Some of them are just getting started. So the idea of jumping right into social media and posting all the time, it's just they're not ready for that. They're like, I need a video for my homepage or a cover video for my Facebook page or something. They're just trying to get the basics in place.
But if we feel like that we can serve that need really well, that in six or 12 months time when they are ready to do some more, like, start doing ads on Facebook or, you know, start promoting some of their regular product line or something like that, that we can kind of be there when they're ready at that next stage of the company.
So we've kind of learned that we just need to kind of, you know, kind of almost like sub-segment our businesses and really kind of understand where they are in their business maturity and their social maturity and their video maturity and kind of cater to each one of those. So I know that's kind of like a non-answer. Well, yeah.
I mean, there's a lot of specifics and the insight's good. But for the sake of time, I mean, if you look at the past, call it 12 months, the past year, what would you say gross revenue churn is at? Is it like 20%, 30% or higher, would you say?
Yeah, probably about 25%. Okay.
I mean, and you guys are happy with that? I mean, that's not horrible for this price point.
Yeah. I mean, it's always hard, you know, you look at other companies and I think it's, we just have to understand the type of product we are, which is video. And it's just different from like email or some other things. And so in some ways we're kind of figuring things out as, as we go.
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