Rock Content Took Its Contract Value From $2K to $20K by Letting the Cheap Customers Go
In two years Rock Content's average contract went from $2,000 to $20,000. Diego Gomes did it by moving the small customers to self-service and letting them self-select out.
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In roughly two years Rock Content took its average contract value from about $2,000 to about $20,000. It did that by deliberately losing the customers who were paying the two thousand.
The thesis. Rock Content did not move upmarket by adding an enterprise tier. It moved the whole company — two sales teams, a self-service funnel for anyone below the line, and a suite built so a customer who arrives cheap has somewhere to go. COVID then accelerated the part that was already happening.
Four products, one customer
Diego Gomes describes content marketing as a complex process that no single tool covers, so Rock Content sells four things:
- Visual.ly — a talent marketplace of more than 80,000 freelance creators producing infographics, videos, PDFs and ebooks.
- Rock Studio — the content marketing platform: plan the strategy, schedule the distribution, measure the results.
- Stage — a WordPress-based experience platform for building high-performance websites and content hubs.
- ion — an interactive content platform for lead generation and data-rich experiences.
Not every customer buys all of it, which is the point. The cross-sell path Gomes describes runs from cheap to expensive: a customer typically starts on Stage, a simple hosting platform, and moves to Studio and then to ion.
The number that moved tenfold
The last time Gomes had been on the show, in July 2018, the average contract was about $2,000 a year. Now it is around $20,000, with some customers in the hundreds of thousands.
We really shifted the organisation focus to scale an enterprise sales team. Today we have two sales teams — the velocity team which focuses on smaller businesses and mid-market, and the enterprise, we call it solution sales team, which is the fastest growing right now.
Latka asks the uncomfortable version of the question: did you let the cheap customers churn? Gomes says yes without hedging — they moved the smaller segment to a self-service model and let it self-select.
The revenue mix tells the same story from the other side. In January 2018 about 60% of revenue came from small business. By January 2020 it was around 20%. COVID pushed SMB churn higher and took it to roughly 10% — and Rock Content replaced every dollar of it with enterprise revenue.
What the revenue is actually made of
Latka multiplies 2,000 customers by a $20,000 contract and gets $40 million, which is well above where the company is. Gomes explains the gap: a large share of customers use only the marketplace, which is transactional rather than subscription.
The split he gives is roughly 50% SaaS, 40% marketplace, 10% professional services. On a run rate around $24 million, that is $12–13 million of pure SaaS. The GetLatka profile records $13M for the close of 2019 and $24M for this conversation, with Gomes expecting to finish the year between $25 and $26 million.
The professional services line is the one Latka expects him to apologise for. He does not.
I actually see professional services as a great R&D tool to evolve the product. And I love the services team and the services revenues, and the investors are super aligned with us on that. It enabled us to be super capital efficient and increase retention.
The month retention went negative
Gross revenue retention was 94% annualised in the prior quarter — about half a percentage point of churn a month. The month before this conversation was the first where net revenue retention crossed 100%.
Latka misreads it as gross at first, which produces the most useful correction in the interview: net went to roughly −3% churn, driven almost entirely by cross-selling ion across the existing base. Expansion that month ran about 6% in Latin America and 2% in the US.
Gomes is immediately careful about extrapolating it.
I don’t expect to sustain 125. My personal target is to close the next year closer to 110, which is the median for publicly traded SaaS companies.
That is a founder talking down his own best month, in the middle of a pandemic, on a podcast. It is worth more than the number.
Why the payback is three months and not seven
Blended global cost to acquire a customer runs $12,000–$14,000 against a $20,000 contract — nominally a seven-month payback. The real one is much shorter for a reason that has nothing to do with efficiency.
Effective payback = CAC ÷ cash actually collectedAbout 70% of Rock Content’s contracts are paid up front, which turns a seven-month payback into three or four.
Cash collected on signature is what let a company that raised $11–12 million total compete against Contently, Skyward and NewsCred — which had raised roughly $20 million, $60 million and over $100 million respectively.
I see these companies, they hyper-scale too early. My personal take, and that comes with a cost — they didn’t have the efficiency we always valued.
Buying the interactive product rather than building it
Rock Content has made two acquisitions, and the larger one brought both ion and Visual.ly into the company. ScribbleLive was doing around $6 million a year on ion and about $2 million on Visual.ly — roughly $8 million in total.
Gomes raised $10 million to fund it, in a mix of cash and stock, with equity going to key people who stayed. Latka does the maths out loud: a company doing $8 million did not sell for barely more than 1x revenue on cash alone, so the stock component must have carried the deal. Gomes confirms it.
Acquisitions are a tool that most entrepreneurs and SaaS companies do not leverage often. If you find the right strategic partner, you should pursue that.
What he wants next is anything adjacent — creation, distribution, analysis, hosting — and specifically marketplaces that add skills Rock Content’s talent network does not have. He names audio, and language-specific marketplaces in Spanish or German. Visual.ly itself was bought because they had no North American talent network at the time; now they do.
The HubSpot inheritance
People call Rock Content the HubSpot of Brazil, and the DNA is not metaphorical: Mark Roberge, who built HubSpot’s sales organisation, mentors Rock Content’s CRO, who came from HubSpot. Gomes calls The Sales Acceleration Formula one of his favourite books.
Asked whether he would sell to HubSpot at the right price, the answer is short.
No, no. We are really committed for the long term.
Asked what he wishes he had known at twenty, the founder who just described restructuring an entire go-to-market picks something else.
I wish I knew how to better lead and communicate by inspiring people and by setting the example and tone. I am an introvert, so I’m working a lot on my personal communication skills and leadership skills. It’s an ongoing journey forever, but I wish I started studying that earlier on.
Sources Diego Gomes’s interview with Nathan Latka, recorded August 2020; revenue, headcount and funding rows from the GetLatka Rock Content profile.
