How Instantly AI Reached $2.4M ARR and 2,900 Customers in Under Nine Months (Interview with CEO Raul Kaevand)

Introduction and Company Overview

Nathan Latka

00:00Folks. My guest today is Raul Kaevand. He is the CEO and founder of a company that does cold email outreach at scale called Instantly dot a I. He's the founder of multiple failed startups who grew his outreach software company to $200,000 per month in nine months. Alright. We'll jump into it today. Raul, you ready to take us to the top?

Raul Kaevand

00:17>> Yeah. Let's get it.

SaaS vs Service Model and Market Positioning

Nathan Latka

00:18Alright. So you 0 to $200,000 in MRR in nine months. And just to be clear, is this a service model or SaaS?

Raul Kaevand

00:25>> SaaS.

Nathan Latka

00:25It is SaaS. Okay. Because I hear cold outreach and I hear consulting, but there is software here. So should we put you in a bucket with, like, Lemlist and these kind of companies?

Raul Kaevand

00:33>> Yeah. Exactly like that.

Origin Story: Agency Roots and Building the MVP

Nathan Latka

00:35Amazing. Okay. So you launched nine months ago. There's a lot of other players already in the space. What made you go, you know what? They're already doing it, but I'm gonna launch anyway. I'm gonna win, and I'm gonna do it better.

Raul Kaevand

00:45>> So we had our own lead generation agency, and we used all the other tools on the market. But as soon as we started scaling, our prices rose a lot. Just, you had to pay per account. So every email account you use to send, you pay per account for other software. And if you scale, you want get more accounts, you want to send more emails, it's just at some point we're paying like thousands a month, and there's

01:10>> sort like, we just should build our own tool because we had a really good developer, and that was the main reason why we built it for ourselves. We didn't do it for anything else, like, we didn't give a plan of launching it just for our own agency, but when we did it and started talking to people about it, then we really saw, like, we have something. It's unique. It's something that's proven, but has unique twist, something

01:32>> that's gonna help a lot of people like us. And we're right.

Agency Revenue and the Decision to Launch Instantly

Nathan Latka

01:35So I wanna learn more about the agency because that's the secret unlock here in terms of how you grew your SaaS so fast. But the $200,000 you're making right now per month, how many customers is that from?

Raul Kaevand

01:45>> It's twenty, twenty nine hundred.

Nathan Latka

01:482,900. Okay. Well, this is amazing. Alright. Let's go back to the agency. What year did you launch the agency?

Raul Kaevand

01:54>> So we launched it around July last year.

Nathan Latka

02:00Okay. Got it. So they this isn't an old agent. So I guess how much revenue was the agency doing before you launched the SaaS?

Raul Kaevand

02:06>> So, yeah, so, like, my background, I've done other agencies. So it was, like, more like combination and, like, pivoting into lead generation agency. I've done, like, SEO and stuff like that. But in July, we started lead generation agency, and then we grew it to around $10 to $15k when we started building Instantly. And when we launched Instantly publicly, the agency itself was around $30 to $40k MRR. Then we decided, like, okay, like, Instantly is doing so well. We

02:36>> don't wanna focus on the agents anymore, like, the consulting stuff. And then we just, like, off boarded all the clients and focused completely on Instantly. But you're right, like, agency was the secret sauce that made it work. The first clients that we got for Instantly were all the clients that we jumped on a call, offered a service in our Leaders'agency, and then used instantly to help them get those leads.

Nathan Latka

02:58That's amazing. Okay. And how many customers did you have at the agency before you launched Instantly?

Raul Kaevand

03:03>> So it was around, like, around 20, like, 22, something like that.

Nathan Latka

03:0722 customers. So you had about 22 customers paying a grand or $2k per month. And then you said, you know what? We're helping you with stuff. Let's build our own software. How many people were full time at the agency?

Raul Kaevand

03:17>> Full time, around four or five. We had, like, the core team, three people, and then bunch of, like, contractors that we used to work really full time.

Nathan Latka

03:26Okay. But one of those three core was the engineer that built the MVP for Instantly?

Raul Kaevand

03:30>> No. He wasn't a part of the agency. Agency was just like so Instantly has four co founders, one the developer that built it, and then three other guys, all marketers, sales background like me, that were in the agency.

Nathan Latka

03:45Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second. But you log in, you connect

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Finding the Technical Co-Founder on Reddit

Nathan Latka

06:08the interview. Okay. So the three core folks from the agency are part of the founding team and Instantly plus this one engineer. There's a lot of agency owners that have ideas like you, but they can't find the engineer to build it. How did you do that?

Raul Kaevand

06:21>> That's actually a funny story. So it was like, I think, two years ago. I just had another, like, failed startup, and then I've had some success, so I posted on Indie Hackers, I posted on Reddit, which is, like, a full stack market there looking for partners. And this dude randomly messaged me on Reddit.

Nathan Latka

06:40Who was it?

Raul Kaevand

06:42>> The developer.

Nathan Latka

06:44No. What was his name?

Raul Kaevand

06:45>> Sumeet.

Nathan Latka

06:47Sumeet. Okay.

Raul Kaevand

06:48>> Yeah. And, yeah, on Reddit, I just made a post, like, co founder subreddit. We messaged. We talked. And we started another idea back then. Didn't work out because of COVID. It was like a travel related idea. And then we linked up last year again around, like, summer, July. And, yeah, that's like how I found, like, completely randomly, but it was, like, proactive that I messaged and put myself out there on multiple platforms.

Equity Split Among Four Co-Founders

Nathan Latka

07:14Interesting. Okay. So you found him in the co founder subreddit group. How did you guys I mean, there's four of you. How did you decide to split equity?

Raul Kaevand

07:22>> So in the beginning, it was just me and the developer. And then I decided to bring on more, like, more

Nathan Latka

07:31Were you guys fifty fifty at the start?

Raul Kaevand

07:33>> No. That developer had more because he had already, like, built something, and then I joined up. Like, a little later, he actually, like, reached out to me with an idea. We pivoted, and then we decided to go fifty fifty. And then from my side, like, previously, what I've done wrong is I've given, like, too much equity in, like, wrong places and focus more on, like, software, like, other stuff. But I realized, like, the marketing says it's

07:58>> so important, so I brought on board two other cofounders from the agent side, and now we split the 50 part of the sales and marketing with those guys.

Nathan Latka

08:07Got it. So the developer still owns 50% of Instantly, and then the three of you guys split the other 50%? Yeah. I see. Okay. Very cool. Alright. So that that's a really good story. So you eventually decide to shut down the agency because you guys are selling the developers a bunch of their his software, his little MVP that he built, and you said, let's go all in on this. Right? Yeah. How much MRR was the SaaS

Shutting Down the Agency to Go All-In on Instantly

Nathan Latka

08:30doing before you shut down the agency?

Raul Kaevand

08:33>> I think it was around, like, $10 to $15k. I still remember that exact moment when we decided to do it. We're walking in Barcelona with one of the co founders, Niels, and we had like, why are we doing this? Like, we have something unique, like, it's growing so fast. Like, even then, we felt like, why are we doing, like, wasting our time on something that's, brings money, but it's not long term as it doesn't have that potential?

08:59>> And then we just decided, we have to do it. And it took some time, two or three months. We didn't really just want to abandon the clients. The off boarding process took some time, but it was like, like, we have to do it. And then it was just like it was hard, but, like, we should have done it sooner.

Nathan Latka

09:15Yep. Yep. Okay. And so what month did you guys hit 15,000 a month in revenue at instantly?

Raul Kaevand

09:20>> Let me check exactly. It was in May.

Nathan Latka

09:27Of this year?

Raul Kaevand

09:28>> Yep.

Nathan Latka

09:29Wow. Okay. So you've gone from $15k a month in May to six months later here in October, 200,000 a month. That's incredible growth. You only started the agency. The agency had 20 customers. Those were your first customers at Instantly, but now Instantly has 2,900 customers. So how have you added so many customers? What's your growth tactic here?

Growth Tactics: Cold Outreach, AppSumo, and Content

Raul Kaevand

09:48>> So, like, it's against this biggest power is, like, we grow instantly with Instantly. Can actually use our own tool to get more clients, and we can use our own success story as selling point. And because we used it for our agency clients, all of those were instantly success stories. So we had a lot of potential already built up that we could use. Then we did something that I wouldn't recommend for everybody. And I remember when we

10:14>> were at SaaStock, people were roasting us, we launched on AppSumo, which is not like a viable strategy for most companies, but for us it made sense. And we got our word out there, we had a unique offer. So we had a really good, promo going on already, word-of-mouth. And then it was up to us just to offer really good support, build features that people actually want that actually moved the needle. And then on the

10:38>> marketing stuff, we were just instantly sending hundreds, thousands of emails every day. And now, what really has piqued our growth is content. So we've been going super hard. Twitter, YouTube, doing videos, doing documentations. We have a Facebook group now with like 6,000 people. So cold email, main one, but now content is a huge, huge one.

Nathan Latka

11:02You say AppSumo is not right for everyone. Why?

AppSumo Strategy and Its Tradeoffs

Raul Kaevand

11:05>> Yeah. Because, like, if you launch there, you get wrong kind of customers. You don't get the kind of customers that are gonna be with you, like, long term. They don't count towards churn, like retention. It's a lifetime plan. It's, like, only good for, like, very specific companies when it makes sense, and you go into it with the knowing that, like, this is not a viable strategy. It's just to get your start, and then you move completely

11:33>> off that lifetime deal model. Like, AppSumo has asked us to go back, like, to, like, no more lifetime deals. Like, it's out of the question.

Nathan Latka

11:40Yep. Yep. Now how many of the 2,900 customers I imagine a bunch of those are AppSumo. How many are actually paying you a monthly amount?

Raul Kaevand

11:47>> These are all monthly. I didn't count AppSumo.

Nathan Latka

11:49Okay. Okay. That's good. Usually, when I ask this question, people will include the AppSumo number in there. So I'm glad that you didn't. So you've got you've got then so I guess so okay. So you're saying the 2,900 customers that were non AppSumo have all come from content, the the the Facebook group of 6,000 people, and you using instantly the cold outreach to people directly?

Cold Email Copy That Converts

Raul Kaevand

12:10>> Yeah.

Nathan Latka

12:10Okay. So tell us about that. What what is a cold how would you use your own tool to cold Outreach to sell your tool? Like, what's the subject line?

Raul Kaevand

12:19>> So subject line is, like, simple. The best one is, like, quick question, name, or weird question, name, company name, like super simple. The subject line is overrated. Just keep it super simple. It doesn't really matter. It's all about the copy and the targeting that it actually resonates with the people. It's super short. The email is like, you can skim it in ten seconds.

Nathan Latka

12:41Read me one. Reopen one that you sent. Read read me the content of one of them.

Raul Kaevand

12:46>> K. Let's see.

Nathan Latka

12:47I'm curious what copy you use.

Raul Kaevand

12:50>> Yeah. So I can paraphrase, like, I know, like, one of the main ones. So it's, like, super simple. Like, hey, Nathan. We built a tool that helped us get 100 k MRR in few months. Do you wanna see if we can do the same for you? Mind if I send more info. Like, that's it.

Nathan Latka

13:09Ah, that's so smart.

Raul Kaevand

13:10>> It's a little bit little bit like different, like, angles. Like, for some people, it's like MRR if you're targeting SaaS. If you're targeting, let's say, recruiters, it's a different angle. Like, do you wanna more help to get, like, more people, like, help more people get hired? So we just, like, play around with the wording. But it's, short one to work best. Like, we've tried everything, but this is what's working right now.

Nathan Latka

13:30Tell me how you built the Facebook group. Right? Because it's that's hard to build. So how did you build that?

Building the Facebook Community

Raul Kaevand

13:36>> So, again, this is where AppSumo, like, helped, like, AppSumo users. We got that around, I think, 3,000 people from AppSumo. We had the Facebook group already ready. We knew we wanted to do that. And all the people from AppSumo, when they made an instant account, we have the onboarding checklist, like join our Facebook group. And when they get, like, a trial emails, it's like join our Facebook group. So just, like, funneled all the traffic into our

14:01>> Facebook group, and AppSumo, like, huge up to building it up. And now it's, like, our job to just, like, keep the momentum and keep the engagement up.

Nathan Latka

14:09That makes tons of sense. What's the name of the group?

Raul Kaevand

14:12>> It's a cold email masterclass by Instantly.

Nathan Latka

14:15Cold email okay. So tell me more about that. A lot of people will name their community like their company name. You named it cold email masterclass. Give us a lesson in naming communities.

Raul Kaevand

14:24>> So, like, honestly, for that, like, strategy, we didn't wanna have the main thing be our company name because we want that cold emails first. So a little like Facebook SEO. So it comes up when people search for cold email. So it's not only for us. And then just the masterclass because it's like a super branded name right now. Even though it's a masterclass, it gives like higher perceived value. Then still, we just, like, added the branding

14:50>> at the end to so people can differentiate it. And now, like, a lot of people know the name instantly. When they're searching it, it's, like, these guys.

Nathan Latka

14:59Interesting. Yeah. Because there's a lot of content. There's a lot of people that have created content called cold email master class. Interesting. Okay. This makes a ton of sense. Has Lemlist tried to buy you guys?

Raul Kaevand

15:10>> No. Not yet.

Nathan Latka

15:11Would you buy them? You have a 100

15:13and you have a $200,000,000, $150,000,000?

Raul Kaevand

15:17>> I guess a good question. Like, we've been, like, we've been getting a lot of offers from investors, for example, and, like, people want to invest into us so we could have, like, more more money. But, like, right now, completely bootstrapped. And, like, we love it. Like, there's no pressure like that. There's no certain goal we have to hit. And I feel because of that, we're much more loose. Don't feel like burnout. And these things, like acquiring

15:41>> different companies, it might be cool at some point, but I wouldn't raise money for it to do it. Maybe it's like a stupid business wise, but just for, like, our like, the way we built this company and we like working right now, I wouldn't do it, I think.

Nathan Latka

15:55I don't think it's stupid. I I mean, look, I raised a $150,000,000 fund specifically for bootstrappers. It's non dilutive money. Right? For you, you're doing 2,400,000 a year. I could approve for you in twenty four hours, you know, 1,500,000. Right? And you pay it back over four years. And there's no board. You're gonna get no calls from me. It's like, here's the money, Raul. Go grow. Make a great company. Get rich. You know?

Raul Kaevand

16:16>> Yeah. Like, that makes sense. But like, even for us right now, we're finding it like hard to, like, invest that money because like, with our main acquisition channel, like, using Instantly, like, we're not paying anything for Instantly. Yeah. Yeah. Associated costs with acquisition costs. It's, like, crazy. Like, we're trying to figure out, like, where to put the money.

Nathan Latka

16:34Yeah. I know. This this is a good problem to have. How many folks are full time on the team?

Team Structure and Headcount

Raul Kaevand

16:37>> So we have the four core team members. Then we have around six or seven now on support. So the support is a big focus for us right now. And then there's really we have we just hired, like, two more developers. We worked a long time versus, like, one. So two full time developers. So it gets, like, around, like, 15 now total. And then we have some contractors that are helping us with some marketing stuff, hands off,

Churn Rate and Retention Strategy

Raul Kaevand

17:03>> but not full time.

Nathan Latka

17:04That's amazing. 15 folks and $2,400,000 in revenue. Obviously, nice growth. Very cool. What am I missing here? Anything I should have asked that I haven't?

Raul Kaevand

17:14>> I think you Turn. These

Nathan Latka

17:16tools have really high churn usually. What's your churn?

Raul Kaevand

17:19>> Yeah. So it's around 10% right now.

Nathan Latka

17:23Monthly?

Raul Kaevand

17:25>> Yeah. Monthly.

Nathan Latka

17:26Okay. Obviously, there there we go. That's that's that's hard to build a big company on that. Is there a way that you guys can decrease churn by building new products, making your product more sticky?

Raul Kaevand

17:34>> Yeah. So this is like our, like, main focus right now. All the content we're building, helping people. We started doing webinars. So we've, like, most we did, like, a churn survey. Most people, like, just churn, like, because they don't get success. The only reason. It's not a problem at the tool, but it's on us that we can help them get better results right. So every How

Nathan Latka

17:53do you run the survey? The churn survey?

Raul Kaevand

17:55>> When they, like, select, like, cancel, then they get, like, automated, like, type form. They fill it in. We get the answers, and then we just, like, take the information.

Nathan Latka

18:05Interesting. That's great. What are some of the questions you ask them in that type form?

Raul Kaevand

18:09>> So mainly it's like, mainly, like, what is the main reason that made you quit? Is there something that will make you come back? This is like always money. Like people say, like pricing. And I think like those like two are the main ones, just like understand them. And then we can do like some like email flows where you like reach out to them like manually, do, like, a call, one on one call with one on one

18:31>> call help. We've starting doing that. But we've, like, noticed that, like, a lot of people just wanna do the churn survey. They just do it, like, quickly to get rid of it. So we wanna avoid that instead. So do it before. Like, we know they're gonna churn around, like, this time, then we send, like, emails, hey, do you wanna jump on a call? Hey, we noticed you haven't done any campaigns recently. Do you wanna jump on

18:51>> a call? Do you wanna jump on a webinar? Just, like, avoiding that problem instead of doing it after, like, after it already are churning.

Famous Five Rapid Fire Questions

Nathan Latka

18:58Raul, that's a smart strategy, man. Let's wrap up here with the famous five. Number one, favorite business book?

Raul Kaevand

19:05>> Zero to one.

Nathan Latka

19:06Number two, is there a CEO you're following or studying?

Raul Kaevand

19:11>> It's a good question.

19:15>> Like, I'm following a lot of, like, Naval Ravikant. He's good. I know he's, a CEO, but

19:20>> He's great.

Nathan Latka

19:21Number three, what's your favorite online tool besides your own for building instantly?

Raul Kaevand

19:26>> Intercom. Intercom is legit.

Nathan Latka

19:31Number four. How many hours of sleep do you get every night?

Raul Kaevand

19:35>> It's like eight, nine. I sleep right

Nathan Latka

19:38That's awesome.

Raul Kaevand

19:39>> Situation, married, single, kids?

19:41>> Single.

Nathan Latka

19:42Okay. And how old are you?

Raul Kaevand

19:45>> 33.

19:46>> 33.

Nathan Latka

19:47Last question. Something you wish you knew when you were 20.

Raul Kaevand

20:01>> Not to get complacent when things go well. Like, I struggled with that. Like, I had some early success, but then I always, like, get super lazy. So that's, like, a hard part. Even right now, when you have, like, some success, just keeping it going. So I wish somebody had, like, pushed me and told me, Raul, don't get like, still keep pushing. Still still keep doing it.

Closing Summary

Nathan Latka

20:19Guys, in 2021, he launched an outbound agency, got 20 customers and $30 to $40k a month in revenue, then said, man, the software we built internally is taking off. They shut down the agency. They launched instantly.ai. Today, they've got 2,900 customers paying on average $70 per month for $200,000 a monthly recurring revenue all in under nine months. They've done this with a team of about, call it, 14 or 15 and all bootstrapped, which we loved. Congratulations, Raul, and thanks

20:42for taking us to the top.

Raul Kaevand

20:43>> Thanks, Nathan. Pleasure.

Nathan Latka

20:47One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. 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 1PM

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