Boomerang Revenue & Funding (2024)

[00:06] Hi, everybody. My name is A Mo. I go by my last name. Mo is a Burmese name, and there's a whole different story on why we don't have a paternal last name system. [00:22] I'm going to talk about well, before we talk about what we're gonna talk about, I'll tell you what Boomerang is. We are the OG of the email productivity category. We invented the snooze button you now see in Gmail, Outlook, Superhuman, even Slack. It's a freemium SaaS product that allows you to manage your inbox, follow ups, and meeting scheduling, and we've been doing the PLG route before it even had a name. [00:52] And at the beginning of this year, we decided that 2024 is going to be the year of experiments. So far this year, we have executed 44 experiments, about one experiment a week, about that pace, a little bit more. They range from marketing, product improvement, product virality, billing practices, and a few more. And these experiments resulted in about 500 k of ARR, 6% of our total revenue. And over the next twenty minutes, I'm going to talk about [01:30] the three most interesting tests that we run, our journey to bootstrapping to 8,000,000, and what's the benefit of choosing to run the company that way? [01:45] So the first one that I picked was because it's the highest impact in terms of revenue. We are a freemium SaaS. So as a freemium company, many of our trials will convert to free basic user at the end of their trial. And this is just part of the funnel that we initially didn't spend too much time optimizing because our free to pay conversion was pretty good compared to the benchmark, so we kind of neglected it over [02:12] the year. And when we were kind of looking at what experiments to start, it seems like a very good high impact with low effort ratio two star. And over the four experiments, so it was four iterative experiments, we got about $2.50 k worth of extra new subscriber from free users converting to pay. And it's really kind of stupid simple. Right? We have this blue link. We're asking them to buy a subscription. We just switch it to [02:48] the red button. And at some point, our team was joking that, should we rename the year of experiment to the year of big red buttons? So if you're on a marketing team or a founder with a marketing team, you go back and ask them, have you tried a red button? [03:10] The next one is is the easiest experiment you can do. No code required. A marketing team, a marketing person, a founder can do it in one day. But before I do that, I want to ask, does everybody know what Dunning emails are? No? Okay. So in a in a recurring subscription business, we have to charge them at the time of renewal. And for various reasons, credit card, bank account, any kind of technical anomalies, some of those [03:43] payments will not go through. And they are called involuntary churn. And you want to really reduce involuntary churn because these customers are already paying for it. They love your product. They are already using it. They don't want to leave. So why would you let them go? Right? [04:00] And as we have tons of thousands of individual subscriber, for us, it's a great ROI to work on this part. Examples of done in emails are one on for b to b Slack. Is your payment information up to date because something didn't go through? The one on the right is the Amazon b two c email. They are both violating the red button rules here. So all we did was add three extra email that extended the time [04:31] period from thirteen days to twenty one days and added the three extra email in the middle. Sorry, I'm not talking about three extra email for every single experiment, but somehow that's what happened. The rules are you learn to increase urgency as you write the email. The one really little known fact is you don't want to send those email on the same weekday. If there's a really weird quirky thing with bank account and credit cards, sometimes you're [05:03] like, oh, I'll just send, you know, every seven days a reminder to update your payment. Bad idea. You want to vary the cadence between the three, five, seven, so that you are not dropping on the same weekday. You want a clear CTA, again, ideally a red button. So we put three red button in the middle, and people are afraid of losing what they already have. So if you put like basically point out what they are going [05:34] to lose by not going and fixing this payment problem, that usually convert better. And I really think or don't think I need to say this. Right? Remain polite and professional. I have gotten some businesses getting more desperate call salesman, tactic of like, you gotta do this now with the, you know, red exclamation point. You don't need to do that. You can be polite, professional, and courteous, and that works a lot better. If you have b to [06:04] b subscriber by invoices, it's still the same thing. There are some reason the invoices are not going through. You want to recover that, you can still do that. [06:14] So what's the results? Our recovery rate went up about 12%. That's like a big boost in retention. These subscribers are subscribers. They already use Love Your product. Don't you want to retain 12% more every single month? And we went from 29 percentile in our industry in our ticket side. This is from Recurly, so they have a benchmark for everybody who uses Recurly to fifty second percentile in the industry. So we went up quite a bit. Right? [06:44] Bottom third to slightly above average, but that means we still have room to grow. So we intend to add a couple more rounds of experiments in the same vein. [06:57] Before? Uh-oh. Alright. [07:03] Can [07:06] okay. Let me see. [07:10] Talk through it. Okay. Okay. Before I talk about the next experiment, most people don't know Boomerang now offers a fully integrated meeting scheduling built into your email. And Rajesh, talk about how important AMP interactivity in email is and how it reduces the click through friction. Right? What we are doing is a live image in your email of your calendar right in there, and it will update real time with your availability as it go by, and it [07:45] works across all clients, not just in Gmail, not just in Yahoo Mail, everything that email client that can display image, our technology works. So we wanted to do so [08:03] to talk about this experiment and understanding, you need to know that we actually do meeting scheduling. So one, Boomerang users are sending out meetings. The guests are clicking through. So the in email image, are clicking through. They got here their confirmation. So this is the virality of our product. Right? If you have one Boomerang user sending out 100 meetings, there are 100 people coming across Boomerang experience. And the pitch is very simple. You just had a [08:34] great meeting scheduling experience. Don't you want that for yourself? If you if we improve this from whatever the current conversion is to a little bit better, the virality is keeps improving. 100 people come across. Two of them convert. We have two new user for free. Then those two people send out another 100 messages. You get another two users for free. It goes and on. So we have a very good hypothesis. It's a high leverage page and [09:07] the designers are like, let's put more value prop. Right? Explain. So the first the one on the top is the control and the variant a and variant b. So pop quiz, anybody wants to take a guess on which variant won? B? Why? [09:25] Image? Images are convincing. That was a trick question. Both variants lost to control. [09:36] So what do you do? Right? You have a great hypothesis, great theory on why this should work. [09:44] You go the opposite direction. We took out all the bright color buttons. Branding is gone. No marketing info. We kept the original one line scheduled meetings with Boomerang, and it went up from 1% to basically 20 blended across maybe like 14% because we have less Outlook users in general. So [10:12] what I'm trying to say is sometimes you will have a hypothesis, very convinced it will win, one is lost, do you throw it up and just say, done. This was a bad idea. I was wrong. No. You can try going the completely radical opposite direction and see how it works. And what I want you to take away from this is not, hey, go try a minimalist page design. I don't know your customer. I don't know your [10:42] industry. I don't know your product. What you have to take away is, when something doesn't go the way you expect it, your original thesis is not proven, try a different way and be happy to eat the humble pie. Right? The point of the experiment is not to prove you're right. You're right. It's about finding the truth, and it's really a great experience for getting the team aligned in the same direction. If you have a designer, they [11:15] hate this. They are like, why would this win? Right? [11:19] And what you want for a team is your team to not have the attitude of everybody trying to prove themselves right and trying to prove their hypothesis is good. You want everybody completely aligned on every experiment, regardless of whose idea it is. You want the team completely aligned to win or lose. And losing is fine. Right? If the experiment fail, you learn something. The point of experiment is, again, to find the truth. [11:50] And from those 44 experiments in eight months, we learned a few lessons. We have 19 successes. Those are now part of the product, making us extra 500 k of ARR. 10 failures that we learned. Some of them are like, there is no way this can lose, and they did. And 15 currently in flight. And to make our original goal of 52 experiment in a year, we have eight more to go. [12:20] From the lessons, second order effect is really subtle, and I have this horror story of one of the experiment, if you look at it in isolation, it was a winner. We put a download button on our one of the help tutorial page. From the conversion, it looked great. It was a very good, high traffic, organic SEO tutorial page with no conversion button at the beginning. We added a conversion button. We got new free extra installs. Then [12:53] Google started penalizing us because we have a button. So then all our organic SEO traffic went away. So it went from a page with lots of traffic, no conversion, to page with traffic with a conversion button, and then the page that didn't get traffic anymore. So we are trying to basically get our get back out of that trouble. Right? But it's not like one of the major pages, but we sometimes you don't always think of all [13:26] the second order effect that can come through. And it's really important to make sure what are your guardrail metrics and make sure that you are looking out for them. No peeking should be self explanatory. It's rational. When you when the experiments in flight, don't look ahead and react or change things, but it's really hard to have self control. Rationally, we know that, but then when it's actually there, everybody want a peek. Somebody from my team is [13:54] here. They have done it too. So the other one is big swings, like the biggest effort, don't necessarily bring the largest results. Our most ambitious experiments where we change how a product work at a one funnel stop in a major way, didn't really bring the most valuable results to the company. The gains was tiny incremental, and we just like we spent, you know, two and a half month building something, and it didn't even bring the same [14:26] results as putting a big red button somewhere. So sometimes just adding a red button might give you a extra 7% in conversion. And I wanna put a note on how to start this experimental culture. I wanna know I wanna do a quick poll on where you are. [14:46] You are all well optimized across the entire funnel. You don't need to optimize anymore. That's a. Anybody on a stage? [14:56] No? So nobody gets a gold star? B, too many ideas to start. You have, you know, a kind of working funnel, and everybody has ideas on how to fix something, how to change something, or you're just starting out and nothing is quite optimized yet. All of those are hard to know where to start because you have 200 ideas, you have a small team, you need to execute. So I have product background as a founder. So you [15:25] go back to the RICE framework. Everybody familiar with RICE framework? Should I get into it? So risk impact confidence and effort. And there's a reason the confidence is strike through on the spreadsheet. So this is our real life experiment prioritization framework. And we put all the things. And then when we look at the confidence, are like, but why would we estimate the confidence? If we're so sure this is gonna work, you just do it. The whole [15:59] point of experiments is you don't know what will work. So confidence doesn't really matter what you think. But the c actually is complexity. And it's kind of subtle difference between complexity and effort. They are very high effort experiments that are quite simple to run. You just have a very clean two cohorts run it, versus they are something that's like a small simple change, but the cohort setup can be very complicated or very easy to mess up. [16:30] So one thing we learned in the experimentation framework that we pick up is take rice, but see is now instead of confidence is complexity. And the I is really tall. I wanted to get this visual in your mind and bring it home because impact basically beats everything else. If you have a high impact results or or hypothesis that you can know that can bring you a very high leverage thing, stop there. One impact being equal, you [16:57] can kind of, you know, figure out what's easy, what's risky. And then the risk part, if you're starting out, you don't have that many customer, you don't have that many revenue, don't worry about it. For us, it does matter because we have, you know, tons of thousands of customers, subscribers, millions of users, and several millions of ARR to protect. So we needed the guardrail and really estimating the risk. [17:25] This is our experiment dashboard. I'm happy to share this with folks. It's one through about four to five iteration as we go through. Templates and checklists to retain the learning from every mistake that you make. Trust me, you'll make it regardless of how much, like, [17:45] preparation and thinking through and planning. You'll still make mistakes once you run. We actually have a proposal template. Anyone can propose the experiment if they write up the proposal. And if that proposal is green lit, they become the owner of the experiment and move it through the whole life cycle. So from the time that I say, hey, this is the year of experiment to the time that our first experiment went live, it was two weeks. [18:13] And our core experiment team is only five people. We didn't spend any money on any fancy AB testing framework. If you have a product like that, please don't come pitch me, so I don't have to tell no to my team. Why and how can we move this fast at a fourteen year old company with millions of users and millions of revenue? I wanna go back to zoom back out a little bit and talk about our company [18:40] history. We started back in 2010, three engineers, first time founders with no money. We were actually at the stage where we were putting our moving expenses on credit card. We came out to California and raised our first 400 k. [19:01] And then we somehow got to profitability within about eighteen months. And mainly because we were very, very lean. It was, you know, that 400 k gave us three founders, one employee, one contractors, and it lasted about eighteen months. And we never raise again. We have grown to 8,000,000 in ARR with our own revenue, being profitable every single year since about 2012. So our like, the the ratio that I love that most people don't give enough credit [19:34] for software founders is we have turned every single dollar of investment into about $125 in revenue to date. And it's now cool to be profitable, cash flow positive, post zero interest rate era, but it wasn't popular or cool back then. Right? We we are the OG of like 2010 era where everybody was raising money, spending money, you know, growth above anything else. And our team was actually in the habit of making more revenue than we spent. [20:10] And we are pretty out there in our fanatical focus on keeping everything lean and simple. So when I talk to founders, they ask, okay, how do you get to this? What are the what what would you say as things to remember? One is keep it simple. Sometime maybe to the point of stupid. We actually make always keep it as simple as possible until it breaks. Right? So there are a lot of things that my team wants [20:41] to buy, instrumentations. So this experiment that we run, we didn't, you know, spend three months trying to find the right framework to install. Another three months implementing it, and then getting the right feature flex or whatever that you do. We just want and go ahead and do whatever we can with what we have. [21:06] That mentality of keeping it simple has been ingrained in our team for a decade. And then staying lean, zero to one simplicity is hard to maintain as the company grows, as the revenue grow. And I want to make sure that we don't fall into the trap of more people hiring more people, meaning they can build more things or build things faster. I think we have a lot of engineering founders here. Do you guys remember the book [21:35] called Mythical Amendment? [21:39] Yep. And it's a OG, you know, old engineering principle book. What they're saying is just because you add more people, it doesn't mean you get things done faster. Because of the communication overhead and square between the people, you actually slow down. So we treat our employees really well. We have a very high expectation for their performance. So we kind of run like a elite squad model. Right? We have only had one voluntary departure in the last [22:10] five years. And what's the typical team size? Would you guess for a company with [22:24] 8,000,000 ARR? Anybody wanna take if you guys are about there, how was your head count? [22:32] We have 19 people. What? 25. 30. 30. We're 19 people, and this is [22:40] where are we? Okay. And then one question for the founders is, anytime I get confused or not clear or need alignment with people, what's the point of this? We have empowered everybody on our team to ask this question. Blunt, to the point, what's the point of this? If basically, if your manager asks you to do something and you don't know why why you're doing it, they are empowered to ask what's the point of this. If I [23:09] am as a CEO, I am not explaining things. I'm not explaining why things are being done. They are empowered to ask me, what's the point of this? And that's a very simple thing that you can kind of crystallize why you're doing the thing that you're doing. [23:27] So what's the point of again, what's the point of running a company this way? We are not the most flashy, high growth, crazy start ups that are, you know, just crushing it. Right? There is an upside to running it this way, owning your destiny. I think Nathan was talking about this. Valuation is temporary. Control is forever. And that's what you get. You control your destiny. And I wanna ask, for founders and investors, how do you get [24:04] paid? When do you get paid? What are the paths? [24:10] Venture? What would you say? Four paths. Right? One, you sell the company. You get paid. Investor get paid. Two, you go IPO. Your stock is now liquid, and you get paid. Secondaries, and you can issue dividends. That's because so for the first three ways, you are giving up your stocks. Right? There is the ownership transfer of a piece of your company giving to somebody in exchange for the money. But when you issue dividend, you actually still [24:49] own the same company, the same amount, but you do get paid. So we have issued dividends for all our shareholders, employees, investors, founders. So employees actually the investors have been actually making five x return on their investment. And for because of that, they are pretty happy. So we've been able to build schools in Burma. I have actually grown up in Burma. I went to college with a scholarship. So we are paying it forward. We take our [25:26] teams to the French Laundry, and that's that's what Nathan wants me to put the picture there. So to wrap it up, I want to say all the founders, builders out there, there is a path that you can build things that you love at a pace that you're comfortable with, and there are people telling you that that's not possible. So try to keep that in mind.