How Geni CEO Jesse Lakes grew to $1.6M revenue and 9K customers in 2019.

hello everyone my guest today is jesse lakes he's a former global product manager for the itunes affiliate program at app1 consultant to the microsoft store affiliate program geniuslink ceo jesse lakes has seen many affiliate programs from various perspective perspectives he's also the pleasure of working with influencers and creative creators worldwide to help them monetize their work that's the focus of again genius link jesse you're ready to take it to the top yeehaw let's do it all right so first off if people want to follow along with this what's the url to the company geni.us okay good g n i dot yes very dot it's good okay and then tell us what the company does and what the revenue model is are you pure play sas or something different sure it's an intelligent link management platform so a lot of people are familiar with bitly the url shortener bitly does a great job as taking everyone from one place to another that doesn't work so well for commerce works great for content but not so well for commerce our intelligent links are more dynamic so we can have different shoppers in different work parts of the world go to a store that sells or caters directly to them even if they're selling the same product so give us a use case i think people might have troubles following this so give us a use case of how someone uses you so your your book right you've got your your book right there and in the back um your book is available worldwide amazon's doing a great job selling it worldwide uh but on your page on the um the book.your yourname.com um you have a link directly to amazon.com so someone coming from germany or the uk click on that link then go to amazon.com amazon.com does a great job selling to us here in the u.s amazon has spent billions of dollars optimizing storefronts across europe uk in particular to sell to a european audience the uk audience in particular so it'll be local language english is not a big of an issue but local currency uh their amazon prime account is uh country and storefront specifics they'll be able to take advantage of free shipping etc so using a genius link to promote your book versus just a raw amazon link will make sure that your worldwide readers get sent to the place where they can most easily buy that book and it gets a little more complicated with your book in particular because it looks like you're running through a more traditional uh distributor where the ids will change etc that's not a problem for our technology it'll map that all automatically uh finds it so ryan holiday uses you does he use you on all of his book launches to make sure international sales are what they should be exactly as well as the books that he recommends as well so yeah uh ryan's a great client of course that's interesting um let me ask you another use case uh whenever i email about the podcast i never know like i have to always put like two or three links like android if you're on android open this if you're on itunes open this or you know spotify open this could you could i essentially set up a url with your platform where it says if they're opening on an android device send them directly to the play store if they're opening on itune on apple go to itunes exactly so that was the original thesis is that by using some basic logic you can take advantage of people's location language device operating system et cetera and build this smarter link what we're finding now is that logic worked great in early years where it was a difference of itunes versus android but now you have spotify right spotify is on on both platforms spotify is also a great place for for podcasts so kind of this evolution of the company we've been we've been doing this for a number of years now as it's when you launch we started building the technology in 2009 um started working full-time in early 2012. um so yeah where were you in 09 what company were you building this inside of i was a raf guide bomb that would spend my summers in colorado winters in costa rica and then fall in spring i crashed my parents house to work on these websites that were listing out soundtracks from extreme sports films using itunes and amazon's affiliate program so i was um living living the illinois summer lifestyle but uh at that point found these itunes affiliate program in particular was incredibly lucrative for these soundtrack websites but there was zip for documentation uh so 2009 i wrote a well my uh my best friend my roommate from college helped me kind of build out this basic technology to allow my links to be uh my websites to be intelligent with kind of the international users i started writing a book about kind of the problems that i saw on the affiliate program fragmentation that book uh sent over to some people at apple who um i thought were going to love it because they were missing a bunch of documentation and i got to see some desist so kind of went from from one extreme to the other in that day of finally having the book ready to go and getting threatened to be sued by apple but we uh we talked shortly afterwards they offered me a job uh as a program manager for the affiliate program um so went and uh yeah gave up the endless summer lifestyle moved to cupertino uh traded my flip-flops for for for a commute and helped take this affiliate program that i loved and made it uh significantly bigger and significantly more what year was that so that started that 2010. so 2010 2011 when my my apple days and then you left in 2012 and how are you able to keep the tech with you i imagine apple would say no we own this just you know don't do it so built the tech before before i came to apple but yeah exactly so disclosed that the tech disclosed the websites to close the other pieces but i was the only person they knew that could kind of solve this um these problems they were having that there was a woman that was managing it she was she was awesome but she was not technical there was an engineer that built it that was really the extent of their affiliate program um and then so they needed someone to kind of glue these pieces together so i got very fortunate apple's an amazing place i work with some amazing people um but the other day i was an entrepreneur i saw that we were making this problem worse i got paid handsomely to double nearly triple the size of the program program which doubled and tripled the size of the pro problem because it's all digital rights at the same time amazon was also significantly increasing their global footprint and amazon is again very very geo fragmented where you have storefront specific affiliate programs those storefronts are optimized for a region so there was no real clue that was holding together a single link to work across multiple multiple storefronts work for a global audience okay and then back to you here for a second obviously to scale this you need to hire people you need to make money obviously revenue to invest in growth are you charging on a kind of a pure place sas model we we were for a while so that's been one of our biggest challenges when we first started out we uh we used this whole model we called click share or we would take a percentage of the clicks that we were optimizing for our clients would use the affiliate revenue uh with our own house affiliate token so we were essentially up money being left on the table we were taking a portion of that and helping our clients typically you know double if not triple their affiliate revenue but also keeping a chunk for ourselves which worked incredibly well it was a team of three of us we were doing doing quite well uh amazon threw a fit about that affiliate revenue uh model so forced us to move to this kind of pure place wait wait wait wait wait wait wait wait wait wait wait wait wait wait hold on hold on what year did amazon throw a fit that was 2014. and why did they throw a fit like how much volume were you doing in revenue where it was enough to show up on their radar and make them throw a fit um we were making 30 40 000 a month in affiliate revenue so jesse that's like a blip on their radar why were a lot of people doing this yeah we well there there are now a number of people that are definitely in our space but the the model that we use we were as far as i know the first ones to do it there are more people kind of showing up it was it was a lawyer in the uk team that didn't like the idea of us syndicating clicks so this is where things get really interesting we actually purchased one of our competitors uh shortly beforehand so i did this whole round of due diligence and talked to the head of the affiliate program in the uk for europe as well as out here in the us and everyone loved what we were doing we were solving a real problem everyone was winning amazon's selling more the publishers were making more affiliate revenue in consumer was a better experience et cetera uh just this one one lawyer didn't like that we were important with syndicating clicks which was against their terms of service so essentially threw a wrench in the whole revenue model which was unfortunate because it was essentially free for everyone so that was that was 2014 this happened yeah so 20 end of 2014 uh january 2nd 2015 um got an email from the uk team saying hey we're taking all your money back and we're kicking on the affiliate program whoa hold on guys what's going on here so what happened after that you're doing 30 40 grand a month and what you lose like all of that overnight we that one actually was a little bit better we uh we actually gave us a two and a half months to essentially move everyone and this is yeah we've gotten to the thousands of clients at this point we had to move everyone off of this cliche model over to a paid per click model so we rolled out a kind of a volume pricing thing so it was i believe ten dollars for every ten thousand clicks uh and kind of went went from there as you scaled up i'm sure you have a lot of different customer codes i don't wanna go down everyone cause we don't have time but i mean what would you say like a fair average is like we're talking like 10 bucks a month is the average customer yeah we exactly it's it's definitely uh the distribution is a long tail and so that that price point that minimum price point is typically the uh the mean of where the the price ends up you know that the average revenue per user is is you know it's a bit higher you know 15 16 17 um but that's also due to some bigger clients and bigger enterprise clients offsetting that yeah you you have 20 of your customers making up more than eighty percent of your revenue which are your big games yeah exactly yeah yeah okay so i kind of wanna understand this dynamic so 2014 well how many like i want to understand the heavy lifting edit in 2014. so you said you have thousands of customers today but back then we had to make this change how many customers did you have and and how did you manage the communication to all of them switching your whole pricing model that was that was a challenge um yeah so we had thousands that um we've yeah we're closer to the ten thousands now but um but like maybe actually maybe two or three thousand back then something like that exactly i don't remember the specific numbers sorry uh that's okay but yeah it was yeah a lot of messaging you know as soon as it happened to us we knew that something was gonna have to change so within a couple of weeks we let all of our clients know that within a couple months we're running a new revenue model unfortunate but this is how it has to work uh and then yeah every every few weeks we just send them an update you know this is coming this is what it looks like etc and we didn't have it really finished until um actually it was a week after amazon cut us off so we went for a couple weeks with no revenue um before we can start charging but okay yeah it was um if i guess there's one lesson to share with uh with your audience is that it's uh can be incredibly convenient to build a tool or a service in the shadow of a major ecosystem we did it for itunes first we did it for amazon second but in both cases uh amazon in particular it's um it's turned around to to cause significant pain at a later date so we've had our it's very extreme right see you were in the case like a rounding error to them but if you were doing 300 million a month all of a sudden you're a whale that they have to actually deal with they can't just shut down because it would it would so drastically shock their ecosystem so it's either like you're so big where you really matter or it's so small where they run you over unfortunately you've nailed it and now yeah we've been run over a few times but what's your team look like today how many people we're 11. okay remote no well mostly here in seattle uh we've got two guys that are remote uh in missoula montana and jesse did you decide to bootstrap the company or did you decide to raise capital and take delusion we uh we were very fortunate early on we were able to see money from the get-go so we've been fortunate to uh to bootstrap all the way through it's amazing okay so after the pivot in 2014 like how are you experimenting with new growth channels today where what channels are using to get new customers we are constantly experimenting we're constantly learning um it's becoming more and more proud of a space so the the tricks that worked previously are not working as much in the past one that used to work really well that doesn't work now so just being active in forums was was huge people have a problem we have an easy solution for or took the problem so just when people ask just being there to answer name a form that worked really well for you uh warrior forum was it was a pretty good one which is really affiliate marketing yeah exactly um it brought in a good number of clients there um but that just kind of petered out as people stopped carrying as much so education in general education has been our biggest marketing um solution challenge i guess as well solution and just kind of the distribution of that is kind of the new pieces so we've been doing a lot uh we've put a new emphasis on our blog in the last few months and we really tried to ramp up the thought leadership pieces there and kind of making sure that we're helping people solve problems that are not being solved in other places when you look at your fully weighted cat for like a new 15 a month customer how aggressive are you being well i mean will you spend the full first year acv to get them or where where do you fall we will uh we'll break even after four and a half months that's great so 60 bucks 70 bucks to get a customer exactly it we would like to see that lower but of course everyone would it's not bad though four-month payback isn't bad yeah where are you spending the 60 bucks so we we definitely run a fair amount of um adwords but then the adwords is probably the biggest expense but probably the most effective is the retargeting that we do on facebook so adwords to draw them into the website of the blog um and then facebook to do retargeting to make sure that even if they just uh bounce after that we can we can get in front of them interesting so adwords to the website cookie them retarget on social outlets especially facebook and that works the best for you huh yeah very cool i think bing was good for a bit but that kind of ebbs and flows but yeah it's you're constantly experimenting core is kind of our next big experiment that's good now i imagine that you're bootstrapped you're operating right at break even or profitable today right or are you burning uh it's been a wild ride we're we're burning right now but we've got uh we've got more runway than probably gonna start up so who's covering the gap if you have no funding are you i just as a founder covering that gap every every month uh since we've been through a number of ups and downs we've uh learned to put money in the bank so we are still um yeah coasting off the bank account uh you built the cushion knowing that you have to deal with this okay okay and when you say i mean why are you burning right now just to drive growth yeah um i've got some some big visions um i'm kind of the future the future of affiliate links requires a lot of development i don't want to slow down a development to be able to hit those goals i feel like kind of our next massive wave of growth is going to be coming out before building these choice page tools which actually we'll get back to your podcast question from earlier i was going to share kind of this this evolution of what we're seeing but there's there's a handful of different pieces i really want to see built and i i don't want to pull back on on engineering resources um more than we have to so so i mean how aggressive will you be you talking like 50 grand a month and burn or 100 grand a month or less we're nearly back to break even uh okay so yeah so like less than 10 grand a month in burn about ten yeah okay fair enough and that's mainly again engineering salaries to make the sprint cycle a little bit faster there's a number of different places we could cut but yeah engineering i don't want to cut engineering i don't want to cut operations i'm fine with the burn we've got you know plenty of runway so turns critical at this price point and most people find it very difficult to manage what is yours today and how do you manage it churn is a massive massive challenge um we have education again is is that the key piece when we get people to that magic moment they understand the value um typically that the churn is is less of an issue links are incredibly sticky right you throw links on social media email etc you don't want to move from that service you don't want to churn because you're going to essentially be breaking those links so once we have you in building links seeing value from those links we're we're in a pretty good spot but again that education you come in you want to use the tool amazon's affiliate program is is relatively technical to get set up if i'm asking you to set up across seven or eight different countries i'm asking a lot of you before you actually really see a lot of value so that that's what i mean what would you pack it at today you're talking like 50 annual return or more uh we we do it on a logo turn on a monthly basis um and right last month we're like four and a half percent so okay that by the way that's not horrible for this price point it's not amazing but i've seen way worse we went from two dollars it's kind of entry fee to ten dollars in the last uh 14 months and we're really kind of noticing some differences between churn when it's a low price point versus a higher price point yeah but engagement is a separate piece of that yeah four and a half a month is about 54 in annual churn now do you have a healthy expansion muscle yet where you can upgrade plans so you make up the 54 churn hole or no so you asked about the size sas pricing and initially it was kind of multiple plans and there was a number of clicks included and then most clients didn't kind of go over that we've actually started to kind of pull that back a little bit and a lot of it is around over to pricing more kind of utility pricing so a lot of our clients we find are using our tools or generating less clicks during certain periods and then significantly more clicks during other periods so kind of a flat pricing across the year doesn't work for them charging them more when they're seeing more return you're charging them less when they're not using as much is is really kind of tight are you generally seeing expansion though on customers they pay 10 bucks a month for the first year then it's 50 bucks a month into year two or something not as much i would like to say we see expansion kind of within the first three or four months as they're getting on board but then they'll be relatively flat most of the expansion honestly comes when um they will build out a website or they'll set up a channel they'll kind of get that streamlined um operationalize and they'll kind of move on to the next so it's very kind of i do want to get a sense of this year so 2019 kind of wraps up i mean does it feel like a totally realistic goal for you to break that magic kind of 2 million ar rate number or does that feel like very uncomfortable and probably not likely to happen i would be delighted if we kiss it it would be hard if we break it um i think 2020 is going to be the year that we we go past it um i feel like you could do i mean basically what you told me right and you if you have 9 000 customers with 15 bucks a month that's 135 a month you need basically 160 right to get up to that beautiful 2 million mark it doesn't feel like it's totally unachievable i completely agree um the best months are typically here on the holidays anyway so if um yeah i would like to be pleasantly surprised the economy is doing well and people buy a lot right then boom you hit your metrics exactly and what's growth rate been over the past 12 months so if you're 135 today were about half that a year ago um revenue wise it's been you know we've had this wild wild journey as we've uh relied less and less on the affiliate revenue more and more on the revenue that our clients pay us uh we've doubled the number of sign-ups yeah uh over the last year or sorry double the number of uh active clients um you know triple the number of paying users has revenue doubled though unfortunately no okay so it's lower price points we did those price point experience between you know two dollars and ten dollars obviously the rpoo changes a bit with that as well so yeah that's that's 30 percent 30 year-over-year revenue growth or 40 or what do you think that's at um i would like to say we're going to hit 20 year-over-year uh after this year of experimenting it's been again kind of a slow year um again have these grand visions of where we're going with the technology there's nothing wrong with that by the way everyone goes through that so it sounds like you know kind of kind of flat right now as you're pivoting but you see some growth opportunities in the future absolutely all right very good jesse let's wrap up with the famous five number one what's your favorite business book uh hard thing about hard things i haven't gone through a number of uh challenging spots myself know just hearing that story was great number two is there a ceo you're following or studying um this might be a little a little weird but um the the ceo of bitly mark joseph i think uh has a lot to a lot to teach a lot to learn from are you in acquisition talks with them uh i wish no um we've had some conversations i hope he knows of me and will offer offered advice at some point we would definitely compliment his portfolio what would you sell for um that's a good question um we've got some internal numbers that we'd like to hit i don't know if the uh the revenue justifies it but um yeah 10 million would probably be a good good walk away 20 million would be better number three what's your favorite online tool for building your company i'd love to say intercom uh but they continue to to disappoint unfortunately use them for a ton but they just uh are not as polished as we like so slack or maybe convertkit probably from the emotional side uh stripe is probably from the uh from the realistic side you gotta gotta make sure those credit cards are processed number four how many hours of sleep to get every night goal is seven and a half uh i rarely hit that goal uh but probably between six and a half 6 45 and what's your situation married single kiddos uh married uh the the wife is actually one of the co-founders of fun we have one one kiddo with another showing up in september so very fun that's success but exciting times jessie um okay last question here uh how are you today and then what do you wish your 20 year old self knew so 38 now uh my 20 year old self i not to feel guilty about not having a regular job again i had this endless summer thing for a while i spent some time at apple um but just really for the most part of my 20s um had adventures one places did things uh learn various various spots so i guess that's steve jobs quote about connecting the dots uh yeah it really applies so i'd share that with myself guys genius g e n i dot u s making links smarter call it nine thousand paying customers fifteen dollars a pop hundred thirty five thousand dollars a month right now revenue basically flat though year over year as they've transitioned with rule changes related to amazon but sees a lot of growth opportunity in the future they're bootstrapped so he can do whatever the heck he wants they have enough cushion to buy them time team of 11 people burning call at 10 grand a month right now 54 revenue churn annually again doing some pricing experiments to scale spending 60 dollars to get a new customer so a four month payback period there jesse thanks for taking us to the top thank you so much nathan