Expresspigeon Revenue & Valuation (2024)

hello everyone my guest today is igor povoy he is the president of a company called express pigeon the easiest way to send professional email he's got a passion for developing high quality software you can find him all over the internet he's also the creator of open source project javalite.io he leads large i.t products at abm walters kluwer sears groupon and a handful of other large companies but now doing his own thing which i love igor are you ready to take us to the top i'm here all right express pigeon talk to me what's it doing how do you make money um well the the business model is really simple um basically it was pioneered by any um software as a service company that sends email such as constant contact mailchimp sendgrid and others so express pigeon is one of the players on the um on the same kind of uh playing field got it what are people paying you per month on average would you say are you like an enterprise or an smb kind of model we are kind of all over the place uh would like to hit like the sweet spot in the middle a small to medium enterprise and kind of built a number of advanced tools that mailchimp and constant contact lack um specifically to target those people since i was in the receiving end running large projects that integrated with external email providers i kind of um know how painful it is to integrate and ask for a specific feature or data back so what would you say the average customer today is paying you per month uh about 500 to 1000. okay got it so between 500 1 000 and give me more of the back story here when did you launch the company uh the company was launched a few years ago basically we were kind of uh running in a stealth mode for a couple of years one year though it was launch it was launched in 2013. okay 2013 and then you were installed for a few years before charging for a couple well we started charging a little bit at the end of 2013 i believe but we also had quite a number of customers that were just using for free and giving us feedback okay and uh so that was kind of uh the the model at the time we weren't sure what we were so the original system was built to compete head-to-head with mailchimp but um we quickly realized that that's that was a bad idea for a number of reasons and uh we kind of pivoted away from that model uh more towards professional and have you bootstrapped to date or have you raised capital oh raised a little bit of from friends and family uh that's that's private but it's not a lot of money like are we talking under 500 grand uh yes or around somewhere around there less than a million yes then less than 500 grand got it okay good less than 500 grand and that was all obviously just friends and family convertible note or was it actually priced equity uh price to equity it was priced okay good how did you price the company i mean especially when you're dealing with you know relationships that are family it was uh i i don't think it was fair to my friends and family at the time but i just uh painted the number in the sky and they convinced them to give me money that's funny okay good so so no institutional capital but about less than 500 raised from friends and family and then what have you scaled to today in terms of total customers using the platform we have about 20 000 registered users we have over a thousand users that uh use us regularly and that would be a non-disclosed information okay but but we i don't really care about how many users you have because people can brag about that all day long you can go out of business with a bunch of free users how many though are actually paying i mean give me a range we have less than a thousand paying customers okay but can we say more than 800 we could say you know less than 800 and i would like to leave it at that well i mean put a bottom on it though i don't want people to think you have zero customers just put some no no wait we're we're profitable we're paying for themselves we're making some profit and we're growing in other words we have a healthy team and uh we we are not going broke or you know close the doors because we we have no paying customers got it but usually when people give me that answer they say we have at least this many they don't say we have less than which is an interesting way to phrase it that's what i'm trying to get at so just put some i mean do you have more between 100 and 800 is that fair to say oh yeah oh yeah okay that's fair i just don't want to i want to give you credit i mean it's hard to get a new car we certainly have more than 100 paying customers i mean you can put whatever minimum you want i'm just you're giving me nothing so i'm making something up all right so so we'll say between 100 we'll say between 200 800-ish customers okay that's helpful to understand one of the tricky parts about a business like this is churn how are you managing churn we are managing churn by uh providing uh the services that other companies do not um so our target customer uh we don't it's not to say that every customer is a target customer you know some some customers have been with us for three four years four years ever since the inception and they've been very happy i'm not talking about um flower shops that sell that you know send their newsletters about flowers i'm talking about professional corporation that send let's say hundreds of thousands of transactional emails per month and they depend on us for their business so um we provide high quality of service our system is rock solid our system has a lot of features that a lot of competing companies just do not have so what is all this is great but ultimately it comes down to the number i mean what what is churn how many companies are you churning every month we uh we do not turn large customers pretty much at all churn right so constant contact mailchimp they all have logo churn three four five six percent per month what's your logo term per month we probably have less than that oh so less than four percent per month less than four percent per month you got it now what yeah if if a customer leaves us it's it's a big you know five uh five uh five star alarm and we're kind of going to know like why why this happened you know can we bring it back um does anybody does any one customer make up more than 10 of your revenue uh yes we have a couple of large number large customers that actually go over that and that's troubling got it yeah yeah so so so you're very much well let me ask you your team size what are you at today we have less than 10 people on the team how many of them are dedicated to handholding those enterprise clients uh we all are they all oh so you don't have any just only engineers or only i mean do you have are you talking about like like uh account managers yeah like who are the sales people how many sales people on that team oh sales people we have one sales person okay got it so they manage all those enterprise accounts now if there's a technical issue obviously it goes to you but they manage the accounts yeah here's the first line of defense and then then it's me and then the team behind me okay got it i mean house i'm curious how skewed this is for you guys i mean do you have like if i add up your top five most paying customers do they make up more than 70 of your revenue is it that skewed or no no it's probably less than that it's it's certainly it's probably less than 50 got it i mean and this makes sense i mean you came from companies like groupon right which would be enterprise accounts if they were using a solution like this yeah i'd be florida if they you know but they they would never use express pitch and they'd probably just hey let's acquire express pigeon and use it as a product or a project yeah yeah so how are you how are you acquiring customers what are you spending to acquire them we uh basically we're uh we're using zoom info uh we do a lot of calls uh we use salesforce uh we've tried a number of different advertisements uh we do a lot of uh you know what's the scale of that like in the largest month how much did you do in paid spend just as a test uh in the largest month we only did like maybe three four thousand dollars okay so now so we haven't we haven't really been uh serious about that uh we cannot outspend companies that are in this space so we have to be a little smarter so what does it cost you to acquire these customers uh the the we do not acquire good quality customers like uh small customers come and go sometimes you know they pay the 10 15 you know 50 100 we don't really pay much attention but uh larger ones uh there sometimes takes uh a long time to acquire so for instance a local chicago company fuda i ever heard of fooda.com they're they're they're uh they were uh they're funded by light bank just like groupon and their camera of their incubator about five years ago and they've been growing um they just raised like 25 million dollars and they uh they're in the business of uh scheduling lunch food to professional buildings and they're operating in every metropolitan area today so they send hundreds of thousands of uh so did you close them how long did it take you to close them a year and a half oh wow okay basically they were with mailchimp and uh they but they are a professional company they they're basically they're an email marketing company because they send uh emails with uh lunch menus like a few hours before lunch and then a half hour before lunch and everything has to deliver everything has to look great and mulching would just shut down their account really nearly left and right because they they would uh exceed the threshold so what's a company like that i mean are we talking like they're paying you like eight nine ten grand a month or more no they're paying less than in ground a month okay no i'm just looking at your pricing page your most expensive one is 67 or 6 800 bucks per month for 1.6 million subscribers we go more than that uh for some customers and but but for them we kind of uh craft a custom pricing plan got it for someone like food uh mailchimp could not and will not provide them private ip addresses and we do uh so we do a lot of stuff that other customers do of course there are other uh systems that or companies that do provide ap addresses but provide a lot of um you know value add on top of that how do you look i mean do you measure things like lifetime value or no we are not there yet i guess left-hand value yes we we're probably estimating that the lifetime value of a customer is roughly 24 months yep which makes sense by the way if you do one divided by four percent monthly churn that gives you 25 months of lifetime value multiplied by 500 bucks a month they're worth about 12 500 bucks for you on average obviously you have enterprise big enterprise ones worth more right but uh but we haven't really lost a lot of large customers and uh the few that we did lose was for reasons outside their control they were required or they were given like a um you know they can contract at the uh a marketing company which quote unquote included email marketing for free and of course nothing is free but uh it was very difficult to convey them to um to convince them to stay so what do you when you look at kind of the growth of the company i love that you're bootstrapping this what are you able to grow at year over year totally bootstrapping you mean revenue yeah we're we're under a million dollars if that's a question sorry i mean how fast are you growing so if you're not growing fast unfortunately and one of the reasons you don't always have to grow fast by the way the right answer is not always a big big number right so the uh we we probably experienced about 40 growth last year um but uh the reason for that is acquiring some large uh volume customers which is always a risk of losing that uh so it's kind of i i don't view this as a um you know healthy situation got it so when you're doing you're doing about 80 grand a month today is that accurate if you're under a million we are under a million annually yeah so a million divided by 12 months comes out to about 90 grand or 88 grand per month so i just picked a number below that we we're a lo we're doing less than that okay got it are you doing more than half a million a year we're doing right about right okay that's okay it's still a healthy business so half a million a year um half a million a year is basically you know 44 grand per month so if you grew 40 percent year over year what you were doing about 12 months ago you're doing right around 34 35ish grand a month so something like that yeah and are is most that growth over the past 13 months has that come from like one big enterprise account closing or is that like 100 people paying 200 bucks a month we picked up a number of customers but i'd say that uh probably 70 percent of that new growth came from a few large uh senders yeah yeah that makes sense that makes sense very good well let's wrap up your igor with the famous five number one word answers here number one what's your favorite business book my favorite business book i don't know if you don't read them don't make it actually actually it's a book that was put out by uh the 37 signals uh found rework rework exactly that's one number two is there a ceo you're following or studying right now uh jeff bezos even though he's so far away number three besides you're on what's your favorite online tool my favorite online tool is email which which one though well my favorite online tool you mean email yeah like well just in general what's your favorite online tool for building the business for oh for building the business that would be being a technical person i would say that uh it would be mock-ups the one that allows me to quickly build and prototype it's like mockups.com yeah okay with a with a queue with a q okay number four how many hours of sleep to get every night no more than six no more than six and what's your situation married single you have kids yes yes yes how many i mean yes married yes kids how many kids two two okay and how old are you igor i am 55. 55. last question take us back 35 years what do you wish your 20 year old self knew that i can do a lot more than i thought i could there you guys have it for me gore he he wishes he knew back then that he could do more than he thought he could he's now flying solo doing his own thing no pun intended his company called express pigeon so on flight doing well growing he obviously wants to be growing faster but launched in 2013 team of 10 people focused on really beating mailchimp and constant contact especially in the enterprise email marketing space they've got about 200 customers currently doing about forty four thousand dollars a month in revenue or five hundred grand a year they've grown that about forty percent year over year less than four percent monthly churn which is healthy uh and again acquiring customers uh quickly usually be the one sales person but also doing a lot of zoom info stuff just cold outreach agora thank you so much for taking us to the top right thank you so much