How Lior Abhidar Grew Lob to $40M Revenue with a Unique SaaS Plus Model

In the competitive world of SaaS, growth stories are often filled with unique strategies and innovative business models, and Lob is no exception. Founded by Lior Abhidar, Lob has reached impressive revenue targets by pioneering a hybrid business model he calls “SaaS Plus,” combining traditional subscription models with usage-based fees. In this article, we’ll dive into the tactics and strategies that helped Lob grow to over $40 million in revenue, with insights directly from an interview with CEO Lior Abhidar.

2013: Launching Lob with the SaaS Plus Model

Lior Abhidar, previously a technical business developer at Amazon Web Services, co-founded Lob in 2013 with a vision to connect the online and offline worlds through a suite of APIs. The company offers two core products: an address verification API and a print-and-mail API. This innovative approach allowed Lob to cater to businesses looking to streamline their direct mail processes, a market that had yet to be disrupted by tech advancements.

Lior’s previous experience at Amazon, combined with his co-founder Harry’s role at Microsoft, provided them with the technical expertise and industry connections needed to get Lob off the ground. Their focus on APIs was inspired by the success of Amazon SES, which Lior had witnessed firsthand.

2013: Early Customer Acquisition through Strategic Partnerships

In the early days, Lob focused on acquiring its first 100 customers by leveraging its network in San Francisco. They targeted companies interested in direct mail as a marketing channel, including those from Y Combinator startups and enterprise clients like Microsoft. This strategic approach was facilitated by Harry’s connections at Microsoft, which helped them land significant early contracts.

The company also launched on Hacker News, which brought a surge of interest from enterprise customers, demonstrating the power of community-driven platforms in gaining initial traction.

2016: Scaling through Venture Capital and Controlled Growth

By 2016, Lob had raised $29.4 million in venture capital, which allowed them to scale operations and refine their SaaS Plus model. The model was innovative, combining a flat subscription fee with a usage-based component, which allowed Lob to generate revenue from the volume of mail processed. This dual revenue stream provided stability and growth potential, appealing to both enterprise and smaller self-service customers.

With an average annual contract value of $52,000 for mid-market and enterprise clients, Lob was able to maintain a healthy customer base of over 5,000 paying users, with 600 being mid-market and enterprise customers.

2018: Achieving $40 Million in Revenue through Diverse Growth Channels

By 2018, Lob had surpassed $40 million in revenue, largely due to its diverse growth channels. The company employed SEO, trade shows, webinars, and exclusive dinners with thought leaders as part of its marketing strategy. These efforts helped Lob maintain a low customer acquisition cost (CAC) of around $13,000, with a payback period of just four to five months.

Furthermore, Lob’s strategic positioning as a “SaaS Plus” company allowed it to monetize both its software and the physical mail it processed, leading to significant usage-based revenue.

2019: Eyeing IPO with a Strong Vision for the Future

As of 2019, Lob is on track to double or triple its revenue annually, aiming to achieve $80 million in revenue by the end of the year. Lior Abhidar plans to take the company public by 2024, with a goal of crossing the $100 million revenue mark. This ambitious target is supported by Lob’s consistent revenue growth and its potential to redefine how businesses approach direct mail.

Lior’s strategy involves maintaining a balance between venture capital and operational profitability, ensuring that Lob has a runway of over five years while being prepared to raise a substantial round of $100 million or more to fuel further growth.

Conclusion: The Power of the SaaS Plus Model

Lob’s journey from a startup to a major player in the direct mail industry showcases the power of the SaaS Plus model. By combining subscription and usage-based revenue, Lob has created a resilient business model that scales with customer needs. As the company continues to innovate and expand, its story serves as a testament to the potential of hybrid business models in the SaaS landscape.

For more insights on Lob, visit their GetLatka profile, company website, and explore similar companies in the Account-Based Direct Mail Software industry.