How Hop Online CEO Paris Childress grew Hop Online to $4.1M revenue and 100K customers in 2025.

hello everyone my guest today is paris childress since 2009 he's founded and run hop online which is pivot in recent years to focus entirely on sas growth marketing services include seo content marketing paid search paid social cro data analytics and creative parish you're ready to take us to the top absolutely let's do it i never have services people on my show how the heck did you give me agree to have you on i don't know how i squeaked in nathan i figured i wasn't going to raise any alarm bells but yeah we're an agency it's because you buy it's because you buy the magazine you buy the data you buy all my stuff so i said i got to have paris on right that's how it works that's probably what happened yeah all right well let's here's what i'm going to try and do today instead of focusing only on your business model i'm going to try and dig into a case study or two where you work with a b2b sas company so that our listeners can take some of those things away for free and maybe execute them sound good yeah perfect all right so now why are you qualified to help sas businesses do this did you have your own sas company that you grew and sold or what got you into sas well we no i did not have a sas business before this but we have worked with sas companies for years and through that experience we've really learned a lot about the metrics that the marketing metrics that really drive these valuations and outcomes for sas so what really helped us determine that we wanted to focus only on sas was the success of some of our current clients and the the realization can you name it can you name one or two of those sure output.com okay is one of our one of our largest sas customers they recently raised 45 million dollars from summit partners about a month and a half ago and help me understand this is their their develop innovating software and gear for musicians composers and producers now what percent of the revenue is true software versus margin on a hardware sale right now i'd say probably 70 of their revenue is sas oh great okay so are you when they hire you are you focused exclusively on the sas side or do you focus on the gear sales side as well on both when we started working with output.com they were only traditional software and we were they we helped them pivot and launch their sas product about 18 months ago and basically got them from zero to 100 000 customers in about 16 months okay so let's this is a fascinating story so let's break this down so they engage with you 18 months ago they had no sas product at the time they launched sas with you 18 months ago correct and they passed a hundred thousand paying subscribers musicians on that sas product now today yes okay so how did they do that how did you get the first hundred customers well the first 100 customers was through paid search and we we max we thought we had maximized paid search but then we got into facebook and into youtube and there were some breakthrough moments um one was switching to data-driven attribution which really unlocked the value of youtube and the other was facebook ads basically leveraging all the great creative content that they were producing to drive acquisition through facebook so in a month what will they spend on paid through you high six figures okay and about how many keywords are you covering hundreds of thousands hundreds of thousands okay so let's talk about the first hundred grand and spend how did you decide which keywords to go target the first keywords are the branded and competitive terms because this is a product that's a new category it's basically a loop synthesizer so people aren't really looking for this so we went after competitors terms platforms that are selling loops and samples that musicians use to make music and we wanted to basically catch that adjacent search intent after that we we started going after other types of keywords that had slightly less intent but we were just moving further away from the the bull's-eye so to speak mm-hmm um and we we continued to do this even now building out more and more keywords around the digital audio workstations and other popular brands that music producers are familiar with so that we know we have the audience so how do you work through economics so i'm looking at the top search terms there was almost none a year ago call it a hundred today i mean you're ranking you know in terms of ahrefs and what they see for over 5 500 keywords i'm sure when you do all the adjacent categories it probably gets up to hundreds of thousands but your most popular ones are studio desk right and the second one is output arcade and when i go to arcade product on output it says ten dollars a month 30 days free it looks like this is the digital product that's driving most of their revenue is that accurate yeah that's it yeah so so let's now because you can't talk too much about them because i'm sure you have ndas but let's just talk about a sas product like arcade charging ten dollars per month what sort of unit economics are you looking for is you spend your first 10 20 hundred thousand dollars in ads well right now we are optimizing for a cost per acquisition uh in the high 20s let's say 27 28 and the the trial conversion rate is about 60 so they have a they have a pretty good understanding of the maximum customer acquisition cost right sorry twenty percent convert to paid no about sixty percent oh sixty percent convert to paid okay got it so just to be clear there you can you can go spend uh you can go spend let's just say to get 100 100 clicks right you can go spend 2 800 28 cost per click and then what you're saying is to get those hundred clicks uh how many of them will actually sign up for the free trial version of arcade oh the conversion rates are about between five to seven percent from click okay so of a hundred clicks let's say let's give you a benefit about seven let's just do ten ten of them convert to a paid account or sorry a 30-day trial and 60 so six of them convert to a new 10 a month account so 68 dollars a month or 60 a month in revenue something like that yes so how with all that funnel built out how do you back into effectively a 30 cost per click as being effective because a 30 it's not 30 cost per click it's cost per acquisition it's cost per free trial oh i think it's in cpc okay uh i'm sorry i meant cpa cost per acquisition which is in our definition that's a free trial i see okay got it so let me take that math back then if you spend three thousand dollars right so it's 28 cost per trial times 100 right you're getting a hundred new trials for about three grand of those 100 trials 60 of them will convert to a 10 a month plan or about 600 a month in revenue so your effective payback there is between three and four months that's correct people stick that long they stick much longer what we see is that the cohorts once people make that first payment there's about 60 percent of that starting cohort that will stick for many many months so there's a big drop off in the first few months so the cohort sheds about 30 and then it and then it flattens out and then it lifetime value from that point on is very steady got it so you lose you have about 30 tournament in the first six months but then after that i really flattened valentine's stick for a very long period of time right right so we get to the most loyal cohort after four to five months after they start the the first payment super effective so so let's take a step back now when they go out and obviously raise a bunch of capital right 45 million is not a small number how much of that deck says just look our paid spend math makes sense we're gonna plow a bunch of this stuff into paid spend i think most of it is relying on that on that logic we were brought into the investor due diligence process and we had to answer these types of questions what is a question that an investor asked you that i haven't asked you yet the investor asks you're doing uh so right now we're doing a thousand new trials a day what would it take to make that three thousand or five thousand and could you preserve the unit economics if we wanted to triple this and how do you ask them the answer is yes um we can because we still felt like there were certain ways that we could continue optimizing we hadn't exploited international expansion to the fullest degree possible there are some analytics solutions as well we haven't implemented where we think we can improve and eliminate a lot of wasted spend and the product itself will evolve so right now the product is really geared towards professional music makers and i believe that the founders and the team's vision is to move downstream and eventually make this tool accessible to uh hobbyists and even people that are brand new to making music so it's right now it's basically like the adobe of music making but in the future it could be the instagram of and if that happens then our addressable audience gets massive this is a mistake like monday went through this exact thing they were killing it with keywords early on i had roy on it was called the pulse back then they were just plowing money to paid spend and they had to keep inventing new channels right to you know to define the same economics and ultimately with unlimited money the economics will get worse because you're plowing more money and the question is how long until they get worse and the way you can measure that is things like you know your current volume on some of your top five keywords like output arcade there's only 12 000 searches a month for that so if you assume you get 100 of those clicks which is again rare but assuming you get 100 all this you you know at some point you can't spend more money in the channels so how do you balance that how do you say we're going to spend this much in this channel and then the second question is you have to be super creative to go find new channels that's really the magic right yeah you're right you're exactly right i think one untapped territory for us is programmatic and a lot of that is display advertising we haven't gone there yet and i think that's the next frontier tell me what that would look like for output um that would unlock advertising inventories that are way beyond the google display network and youtube and facebook and as an agency we haven't really developed that as a service yet so we're working on it but i believe that there's massively more inventory ad inventory out there for us to reach people that would like to use their tool to make music and we need to do that through programmatic how effective is advertising at our for the software product at output arcade because you have an email list from people that have bought their studio gear their instruments their effects products their speakers how were you able to use the hardware sale email list and customer list to drive better economics on the software sale paid ads um there's a close relationship between the soft the perpetual software and the hardware but their customer base was only maybe 15 20 000 before they went sas so this got us started but it wasn't really at some point we had already cross sold to all the current customers so what do you think comes first like if as if output grows to a 10 billion dollar company will it be the software sale is the first sale and you upsell hardware after that or it'll be hardware is the first purchase and you're upselling software i think the first purchase will be sas and eventually the software will go away you'll make the software free eventually possibly or the software will just be a very very small piece of it um the the people who are buying the software are really the most professional music makers so this this is relatively expensive software but at nine nine nineteen he said it's expensive or inexpensive uh it's pretty expensive ten bucks a month right that's the subscription for the for the sas product i thought you were referring to the the perpetual software the e-commerce software no no sorry i'm talking about our arcade like do you think arcade will be the starting point that new musicians learn about output or will it be they go by a desk or sorry as a music stand and then in the box we deliver the music stand there's a there's a little piece of paper that says you should check out our 10 a month arcade product oh it's it's definitely going to be software that's the entry point i mean the hardware business is really a very niche business for them they have they have a desk and they have speakers but this is the 99 percent of the value of this company is in the sas the sas model interesting now did they share what valuation was on the raise um i believe no i don't think they did that but they raised 45 million and the the owners still maintain a majority so you can yeah yeah i mean usually in a round like that especially if their first round of financing they're going to sell somewhere between like 10 and 25 of the company probably which you can sort them back into evaluation but i mean we this is public i mean over 100 000 subscribers right at 10 bucks a month means the software is doing over a million dollars per month by itself right yeah that's interest i mean so what do you think if i can grow to using like how they whatever they pay you for it like what do you think just from them using you you can help drive them that revenue too i i believe getting three times bigger is is possible within one or two years interesting and what's your model oh we uh well we are right now just charging them a percentage of ad spend basically is it under 10 yes it is got it with a new customer if they hear you saying go i want paris to work on my company would you let them use you at under 10 maybe not at the beginning but as it scales yes yeah yeah 10 of a million per month is a big number but you know you could probably get away with only taking two percent there as you scale which it which is nice um super interesting last question here before we wrap up paris assassinating stuff how do you go about finding new channels right do you get into sponsoring musicians youtube channels or podcasts or magazines or billboards like how do you think about that yeah um this is our biggest challenge right now uh one thing that we did recently is we went and found a partner in china who can help us get into china that unlocks baidu and wechat and then there's another one so finding international partners starting with china that's a big one i mentioned programmatic and then on the analytical side i think there are ways that we can move this might get a little technical but we'd like to move from what's called target cpa bidding to target roas bidding so we want to train the algorithms to bid for a return on ad spend like an e-commerce product as opposed to bidding on a target cost per acquisition for a new user because then we can control um we can control much more uh or we can eliminate a lot of the wasted spend that we're paying right now for users that will churn during the trial yeah paris this is good stuff man let's wrap up here with the famous five number one favorite business book uh favorite business book i would say longevity david sinclair sure number two is there a ceo you're following or studying um i'd say it's greg lehrman he's the output ceo number uh three what's your favorite online tool for building uh hoppin favorite tool would be right now pipe drive sorry i meant hop online hopkins also topped my mind because we just did a story on them but pipe drive all right yeah interesting story there uh number four how many hours of sleep breaking every night eight and situation married single kids married and one kid very cool how great and how old are you 43. paris take us home here with some english new and your i think i wish i would have gotten started with my agency much sooner and i don't know if i could have done that at 20 but i probably could have started it in my 20s instead of in my 30s so i could have i could have picked up an extra 10 years maybe guys there you have it hop online helps b2b sas brands scale their business their most recent customeroutput.com been working on them for about 18 months they're now driving over a thousand new trials per day of which 60 convert to paid they've scaled that ad spend up for that company to over six figures per month and it's been so effective they just did a major round of funding 45 million dollars from summit to help drive extra growth paris thanks for letting us get in your head man thanks for just stop you bet thank you too nathan one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime 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