How Keap CEO Clate Mask grew to $99M revenue and 45K customers in 2024.

quick context this was recorded March 28th and 29th so a couple weeks ago at my live event SAS open.com we had a thousand software CEOs there if you missed it we hope to see at the next one September 5th and 6th in New York City SAS open.com but for now let's jump into the recording today uh what I'd like to talk about is how keep has used onboarding as a part of what uh learning from from Wes's talk I would I would call an integrated plg approach in here I'll call it a hybrid because I didn't have the terminology that we just learned from Wes but we'll walk through talking about like the decisions that we made on that how we went about those decisions and then if if it would make sense for for your business but before we get into any of that like uh they talked about in in the kickoff I want to walk you through our Revenue growth and just as a a little hint I I I I joined ke about 2011 2012 and about 2017 is when I left I don't know if you see any correlation no I'm kidding it's not me it wasn't me that that drove that um but one of the things that's been interesting for for me now that I've been back is what led us to this incredible growth and then the struggles that we had after that well it wasn't me joining and leaving that that wasn't the difference um we changed our recipe we had decided that that not only were we going to shift who we were going after but it was also shifting what our product was and what we were solving so we had originally focused on sales and marketing software for million-dollar businesses and we went down market and said oh there's a lot more Downstream let's go after that so he shifted to a simple CRM for startups our competitor set increased exponentially over that time period about 8.5x we went from a paid onboarding to a free onboarding and then we had our our moniker of personalized automated followup and shifted that to talk about a simple one step and that's all that was needed but it missed the point of the problems that our customers were were experiencing and we decided uh over that time period where where things kind of teetered off that our human connection wasn't as important as we thought it was so we started to eliminate that in in the process now what we're starting to see is is growth picking back up and I'm super excited at at the results that we're we're seeing from from customers and the experience that they're having um and wow thank you no I'm kidding uh the but the return to growth really comes from us being able to redefine our strategy and our Target and then focus on usage and paid onboarding to be able to restore the human connection and then our Focus now is on what we call business automation so I'll walk you through kind of how we went about that and and the elements in my mind that helped us the most was one being able to identify who our customers uh ability was and what they could actually do the problem set and the complexity of the problems that they were struggling with and the need for humans in our process so what we what Wes just talked about in in trying to like steal some of your words here Wes I would call it an integrated plg in here I'll call it hybrid because I didn't have that that knowledge of of what Wes just uh just gave us here but if we looked at our customers we had been in that downturn focused on startups and solopreneurs this is you know plotted based off of growth of of customers excuse me of small businesses and their biggest hurdles you can see shift over time it goes from them not having enough time to then being able to say no I need systems I need structure and I need to be able to actually uh get my teams built up in into the place that I need and when we shifted our Focus down Market we saw a struggle we saw an uptick in the amount of customers but they weren't sticking around they weren't able to invest the time that they needed and they weren't getting the results that they were looking for so recently we've shifted our Target back to million-dollar businesses and in my view the the sophistication of customers actually come into play as to what type of onboarding experience is necessary for them and then in in the case of what I would call Universal reality uh sanjie talked about a little bit um we we heard it earlier today that there is power in simple or more Point solutions that solve a very specific and discrete problem and then there's value in platform solutions that have a more robust or or complex problem set that they're dealing with and in our case when we stepped back and looked at and said hey are we going after the the low end of the market those more simplistic customers or the the more sophisticated customers that have uh different sets and needs and challenges but what about our our problem set is our problem set more on the the the simple side of complexity or on the far side of complexity and so for us when we recognize that we realized that we needed to be able to support our customers in their onboarding and how they were getting in so if we take those two things and kind of put it together you can see where I would say keep sits we sit in this top left quadrant so if we look at the high high complexity problem to low complexity problem or the Soph sophistication of customers when when we kind of broke down and said what is it that different types of customers need and and for us what we saw was in the in the lower sophistication but the high complex problem they needed Human Assistance through that process and as much as possible we were trying to build things in the product but we wanted to recognize that perhaps people can make a big difference there um and and in our case and we'll actually show you I'll show you here in a minute how it actually performed for us but I'd like to break down kind of our experiment uh I love what Wes talked about the importance of high impact experiments and I'll walk you through a very specific one here in just a moment and then how we unified the the strategy to get closer to the product Le organization a and then integrated that experience using humans as a part of that process so the experiment that we ran we we basically took uh and had this hypothesis that if we were able to specifically identify a a goal that customers were trying to achieve in our product and then help them in reaching that very discreet and specific goal that we would see an increase in our month M4 retention and obviously M4 is an indicator of future retention right so we wanted to start with that and say what's what's the thing that we can figure out and over a six-month period we took 705 customers and took them through a different type of onboarding where in the past we would have customers come in and we'd basically say okay here's how you get set up and then and then if they needed something they would ask us in this case we were trying to be much more intentional I love that word that you used intention in our process to be able to say no no they're here to accomplish something what's the goal they're trying to accomplish and how do we help them in that process and of those we took our Baseline and said a blended average across all of our customers so these were customers that either worked with partners and were able to get onboarded or or coached or assisted and then any of our customers that came in through free- trial and different things along those lines we had a blended average of about 75% then in this set of customers where they came through a specific Channel and set them up with hey you have a goal that you need to accomplish we actually saw a downturn in that for for the ones that didn't achieve a goal but if you think about that that only makes sense right if I'm coming in and I have a specific goal I'm trying to accomplish but I don't reach that goal it's a higher likelihood that I'm going to I'm going to bounce and we actually want them to bounce earlier in the process than later in the process we don't want them to stay in the system if it's not actually helping the long-term objectives of the company but on the on the flip side the ones that achieved the goal we saw a big uptick in them actually staying staying on and our M4 went up to 86% we'll look at that more here in a minute but let's talk about the things based off that experiment we said what can we do to help integrate this across the system and make sure it's a unified effort across the organization so from our marketing efforts we created an assessment that we leveraged where customers coming in could get get oriented to what they were trying to accomplish and through that assessment we could identify what is the goal that they need to accomplish then in the sales conversations at point of sale we started saying hey let's make sure they get set up and that they're joining with the expectation of going through the onboarding and that that onboarding would and would be able to set them up for success and then on the on the coaching all of our coaching efforts shifted from uh a generic response to a very targeted conversation around the goal that the customer was trying to accomplish to make sure that they achieved that goal and then from a product standpoint we started to build out capabilities to support everything up the stack so that the experience that they received in the conversation at the beginning bled down through through from marketing to sales to the coaching into the product and what they were seeing um and after after Wes's talk I would change this to an integrated plg approach because I I I loved how you articulated that at the time I didn't had that that verbiage but in our view it was kind of we were kind of looking at a hybrid but I do think it's it's more accurately posed as an integrated version of of plg so from a from a product standpoint we enabled a couple things one we enabled our coaches to actually build out and walk through what the customer was trying to accomplish and build out different sets of information instructions that would be injected into the software so they could they could interact with what we called uh my playbook but it basically create a set of checklists that they could go through that the coach would customize based off of the goal they were trying to accomplish and the needs of that customer because in our case when customers come in sometimes they need help with materials that they're building other times they don't and so the the coach could actually customize what that checklist is for those customers and then we would inject other things that would assist the coach in that effort in Specific Instructions or or capabilities so this might not be right for everybody but I do want to walk you through some of the some of the data that led us to this and what the results are of that because I think it becomes very very interesting and uh Wes when you were talking about being intentional the way that I was thinking about it or what struck me was that's exactly what we've done we've took all those learnings from the things that we've built to then say all right how can we by Design inject humans at the right time at the right place to interact with customers so that they can get the results that they're looking for and there's a couple things that we we did in relation to that one we made sure our coaches were oriented to to the goal that's set by the customer and then two we also offer a guarantee so historically our coaching was set up where the the customer would come in and they have an allotment of five hours or what whatever it was instead we said hey why don't we guarantee that they'll be able to to reach the goal we'll set the goal up front but instead of giving just an allotment of 5 hours or 90 days or whatever the case is we would say at the end of 90 days if you don't reach the goal we'll continue to coach you and make sure that you you get to to the goal that you you intended now how did it impact nrr well if we break it down for those customers that came in um and kind of went through the the the guided Do-it yourself or the Do-it yourself we were seeing a a 41% net revenue retention earlier we were looking at unit retention then those that we did it with them we saw it bump up to 52% and we also built out capabilities to do a lot of the lift for customers so we could not only build it out but then instruct them in that process and in that case we saw it bump up to 73% now what gets even more exciting to me than just just how that being able to integrate that in so that not only the product Le growth elements but the product leg or organization and the overall focus on the customer yield yields the success for the customers that we look for when we look at our business and complement this with other initiatives what we see is the 41% like we talked about 52% the the done with you the done for you at 74% and if you couple just the coaching completing coaching with the other initiatives that we've integrated in the business it bumps up to 106% so for us it's made a seismic move in not only what we're doing with customers but also the results for the business on how we're how we're performing so over the over the last 20 minutes we basically covered how we evaluated and looked at our integrated plg approach and the decisions that went into that and then the impact now just to tie a bow on the experience that I had uh with with skiing about a week ago I went snowboarding with my family for the very first time and this time we took a slightly different approach as you can imagine those individuals that were my friends that were the expert skiers we don't really stay in touch but there are other friends that I have and we met up with a friend and went out to go snowboarding and my wife and I decided hey we're going to go get some instructions so the first day we spent the half day going going on this bunny slope getting in instruction uh and one thing that the instructor said that stood out to me is he said he said snowboarding is hard to learn and easy to master skiing is easy to learn but hard to hard to master and I thought I don't know what that says about me since I never figured out the skiing thing but we spent the rest of the day as a family out there the end of the first day as you can imagine bruised I think my tailbone is still a little out of whack um had a lot of rest but at the end of the second day I was riding the lift up for the second time on a blue with my son who was 11 years old and I said hey man how do you like it said I love it Dad now mind you this is the child that the day before was yelling at me halfway down the mountain saying Get Away Dad don't even talk to me and I think it was because we spent the time to get some of the foundational pieces in place with a professional instructor and then later spent the time with some of our friends who were just providing us little tips and tricks along the way and as you think about your business often times our customers I believe find themselves in a situation where we throw the skis or the boots at them and say go figure it out many times it takes a little bit of laying the foundation work for them to make sure that they have the basics in place and then investing the sufficient time so that they can be successful later thank you awesome thank you so much awesome hey folks if we haven't met yet my name is Nathan Latka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software Founders so far we've invested in over 400 software Founders totaling $150 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer

hello everyone my guest today is clade mask he's the CEO of Infusionsoft and they're currently on a mission to simplify growth for millions of small businesses worldwide under clades leadership the company has landed four rounds of venture capital he's a national speaker and co-author of the New York Times bestseller conquer the chaos he's got a BA in economics from Arizona State University and MBA and a JD from Burnham Young University as well clay Tarr you ready to take it to the top I'm ready of course so so last time we spoke I think was a little over a year ago real quick I'll summarize some of those metrics you had about 600 employees 125 million raised over 45,000 customers north or flirting with about a hundred million bucks an annual occurring revenue and last time you're all you were talked about how you're looking to really grow towards profitability so that you didn't have to raise money or IP or anything like that give us an update where are things today yeah you bet thanks so much well it's been we haven't made a lot of progress we we did get to profitability that's been a great thing so we're not burning a bunch of cash and I think that's probably the one of the nice things about getting to a certain level of scale and maturity as you control your own destiny a little bit more when you're not dependent on outside funding sources so that's been a huge thing for us we've got we now we went I think when we talked last time we're about a hundred and forty thousand users for an app to about a hundred seventy-five thousand users many of those are paying late customers 175,000 paying users so yeah we that we don't we don't report the non paying users in fact we just we just started our free trial work and so there's a bunch of now there's now we have free trial customers but that's not really what we really focus on the paying users so we've made a lot of progress I think the key thing is that we when we kicked off the new Mars mission as we caught and by the way you said it very nicely to simplify growth for millions of small businesses worldwide you know that's the Mars mission that's what we kicked off at the beginning of 2000 being of last year 2017 and that takes us through the end of two thousand thirty so that's our you know our B hag that we're working on you know we see the opportunity to serve millions of small businesses and help them by simplifying their growth helping them to conquer the chaos that they live in create order automate what they do and get the benefits of efficiency in their growth so that's what we're up to I think what you've seen in the rebrand and that work is much more around really focusing on CRM and helping helping our customers deliver great service to their customers and build great relationships with them played back in the day when I was boarding building my first company had the privilege of really learning a lot from you one of them was you know you said Nathan my favorite book is it's crossing the chasm by Geoffrey Moore I went on to interview him many times and recommend his book all the time but in addition to that you also I remember in your office you when you when you move in with a big football field your doors had these big kind of banners on them with the mission what was the one before Mars mission was Everest right it was the Everest mission yeah from beginning of to the it basically was 2007 to 2010 yep and I remember asking some folks working there kind of how you guys codified that and I believe the recommendation from the book perspective on that one was Rockefeller habits buy bribe earn right yeah so two major books Rockefeller habits and then one by Jim Collins called beyond entrepreneurship it's like nobody knows about that book because he's out you always hear about good degrade and built to last and great by choice and all those things but for entrepreneurs beyond entrepreneurship is amazing and it's the first book he wrote like I read it I didn't even know it was it was like the Jim cons it was like James C Collins when I realized Oh chapter two in particular talks about how to step vision and we've been big believers in that for a long time and our everest b hag was was those those For people right now listening to this going I want to plan similar to how Clate plans help us understand because they haven't seen it like I have on the door what actually is on Mars is it like a number goal of customers is it more soft like a vision statement what is it? is it it's literally five million small businesses worldwide okay and that's customers or users or? businesses five million businesses got it so when we say simplify growth for millions small businesses worldwide that's really what we're talking about got it and what are you at today? literally we're like, like I said we're about 175,000 oh so that's the number, it's the same thing? Yeah that's right just to be clear it's paying? I should have said by customers I mean number of customers using thesoftware confused yeah okay so while key that's a significant gold load up from 175 that's great hi so how do you obviously to do that you've got to invent a bunch of kind of better mousetraps on different product lines to pull in new users like an a/b testing platform but in every one of those mousetraps you try and launch you're gonna compete with another business that is only focused on that how do you think about that yeah yeah it's a great point I mean there's features that you compete on but really the platform is where we're where we really compete are we're not trying to be all features for everybody we're trying to provide small businesses the customer relationship management platform that they need to deliver great service show up to their customers follow up with them not have things slip through the cracks if any small business owner in the sound of our disguise my voice in this discussion knows that it's really easy to drop the ball and they do it all the time and and it's so difficult as your business gets going to deliver like you said you were going to deliver your customers and it's it's really frustrating to make those mistakes and drop the ball so you need a platform and a way to follow up and to show up to show up follow up delivers the great experience to your customers and so that's what we're doing it's not a it's not a feature war for us it's really a platform that allows our customers to get all their to get organized and get all their stuff in one place and to have you know stop the chaos that they live in and be able to serve their customers more effectively so what you see is really our focus on our CRM platform okay I want to talk more about the book here in a little bit as well so is CRM platform so let me ask a few questions here just to kind of codify that you know cabbage is doing very well their missions name is almost exactly the same but they're doing small business lending almost 5 million lent out would you ever get into that space potentially but more likely we would partner with those folks you know that we that's today that's the way we see it but I would yeah I'd never say never but no we love what they're doing from a lending standpoint about the fact that capital is is a constraining factor for small businesses but a lot of times their businesses is just kind of it's in chaos and so capital is not necessarily going to help they've got to get organized first they got to create a system they got to create a way to deliver their service and do it in in a really positive way for their customers has anything drastically changed economics wise on your end since last time we spoke besides profitability for example you ran a big test cuz you had bad churn numbers back several years ago and now you're down I think you said two to three percent last time has turned still the same calculus to basically the same yet churns still the same I think the big change that's happened for us since we talked is that when we jumped when we entered into the Mars mission it was really about I mean now we're talking about serving millions of small businesses not just the early adopters who are marketing savvy marketing enthusiasts that sort of thing that that's where our when when ten years ago we took our software to the market it was it was marketers who grabbed a hold of it and said oh wow I can see the power of this automation and I can really I can really get a great return on my investment with this and so that's really where we've been focused is these savvy small business marketers we've now expanded that to not only include those savvy small business marketers but serving regular everyday small businesses that that aren't great marketers but want to deliver great service to their customers well if you're going to expand in that way then you have to make some major changes to the way that you operate the business and this is what we've been doing over the last 18 months or so since the beginning of 17 and the Mars mission it's really been a change in our in our product a change in our partner strategy and the way we go about that and then a pretty significant change internally in the way we operate to deliver for many more customers so what does that look like in terms well the churn is the same the the customer the number of customers we bring in has gone up pretty dramatically and we're now serving solopreneurs as opposed to in the past we really didn't serve one-man businesses very well you know it was it was more for businesses that were a little bit more sophisticated particular than their mark in their marketing so you see is serving a lot more customers the LTV CAC is stronger than it was before which is really great because a lot of times when you serve a less sophisticated customer your khaks going to go up or your LTV will go down that hasn't been the case we've got a better ratio than we had before so ladies your CAC still about about 3k I think it's 320 last time no it's actually gone down to below 2k okay but our LTV has gone down as well because we're bringing on a customer because we now have a $99 price point and customers who can come in without paying you know 250 or 300 dollars out the gate it's so interesting you're doing that because I remember you tell me back in the day one churn was eight nine ten percent though these are the way you've tested to solve that was a big upfront fee and it sounds like now you're going back back direction you've learned something in between yes yeah what we've learned is it's about simplify simplify simplify so the mission is simplify growth for millions of small businesses and what we it all starts with product and so if you look at our product today versus our product two years ago the interface is dramatically different you can get a free trial and get started a bit much easier there's templates so that you don't have to create campaigns from scratch there's there's so much more to help you get started and get value quickly and that's the key thing so what we've done your remember well what we've done is we've used our customer success as the gating factor on the price and the opportunity that you know the way that we expand the market because if you if you remember I talked a lot about mark product market fit and and if you don't get the success rate right then your LTV CAC blows up on you and so you don't and you don't make this in one extreme move I mean the reality is we've been working on this for two or three years but we got to a point last year where we could start to expand the market and bring in customers who are a little less sophisticated and yet needed the benefits of Infusionsoft but we could only do it at the rate at which we could maintain that LTV CAC ratio and a simple way to put that as what does the churn look like and what is the what is the CAC look like I imagine people I mean look I think it's interesting imagine people listening right now are going well this is opposite of if investors are listening their way this is opposite of what we tell our portfolio companies to do which is expansion revenue increase wallet share move upstream this is the opposite they're gonna follow your story closely because they're gonna see if you can prove them wrong and execute it right so so so I like it uh quick kind of fireball questions here um are you making any acquisitions of other companies you think in the near term is that a strategy or no it is a strategy we're always looking at different things we don't have anything imminent but you know I I'd be lying if I didn't say we're looking at stuff we always are yeah flipping the stripper not for a second you and any serious acquisition talks to sell yourself to any other bigger competitor no not at all and still no IPO you don't need to not don't need to although I have to admit as I watched the IPO market over the last few months I'm I'm looking at that with a little bit more it's hard to ignore yes it's crazy unfortunately I think there's a few that could make it problematic for others but but but it's it's going well you know we're we're doing well we're not in a place where we have to have capital but we I you know we'd be silly if we weren't if we weren't I in the public market so yeah we certainly are there's nothing imminent there either we've got some more work we got to do but you know as the new Infusionsoft gains more and more traction which we you know as you know we just launched as that gains more and more traction then you get to a place where you have the predictability in the comfort level where it does make sense to go public and can you give us an AR update last time you say around a hundred have you passed 12 million a month yet yes so big big thing that happened is we are our revenue now is almost entirely subscription revenue so I think we talked beginning last year we were probably you know ninety ten down from about eighty twenty meaning at one point we're about 80 percent subscription revenue twenty percent service revenue early last year we were probably I think I Cameron when we talk was about a year ago yeah we were probably at about ninety ten at that point we're now like ninety-seven percent of revenue being subscription revenue so we've kind of pushed traded out some some service revenue which has caused the overall revenue growth rate not to be as high but but yeah we were over the hundred million revenue raising the margins better on SAS obviously far better our margins are over eighty percent we're doing great in there okay quickly before we wrap up concrete and chaos why should people buy it yeah because the actually they should wait till I do until I launch the revised edition I'm working on right now if they really want to see what conquering the chaos all about they can go look at the edition that we did eight years ago but really what happened is the conquer the chaos is we recognize that is the reality of what small business live in they're disorganized they're not they're dropping the ball they're not servicing their customers well because they're forgetting and both you know they're dropping the ball things are slipping through the cracks and there's an opportunity for them to get organized automate be very efficient in delivering great service so they can grow their business through word of mouth and so that's conquer the cast is really all about getting organized as a small business and serving your customers well and automating as much as possible so that you can grow efficiently love it clay let's wrap up with the famous five give me a new book favorite business book oh you know what I just I just read a story brand marketing I like that that was actually that was a quarter ago well I don't know I like that one a lot okay that was pretty good story brand marketing good number two is there a CEO you're falling or studying right now I I like B Zoe's a lot I've been watching a lot of what they were doing it's hard to ignore when you look at what they've been doing over the last couple years that's right number three besides your own what's your favorite tool for growing the business growing the business gosh we just started using drift and I really like that that's been a that's been a cool thing it's helped us on the conversion side it's great number numbers I say I anticipate there's going to be a large war between between you know HubSpot since they've invested and whoever else wants to come after a drift eventually David cancels a very impressive entrepreneur so it's good to hear you're using that effectively - number four how many hours asleep were you in every night you know I'm doing better now but I I probably get on average six or seven and some nights I'll get eight or nine that's great and remind us all situation married single kiddos married six kids they're awesome you got to hurry up and get a mold so they can start working you know for free in the company right that's how it works yeah I one of them just my oldest just graduated from college and just got a real job post post college so that's that's very cool and clayed how are you I'm 46 my last question what do you wish your 20 year old self knew I wish my 20 year old self knew okay I'm gonna be really open and vulnerable I wish that my 20 year old self knew the impact of my intensity upon others both the positive side of it and the negative side of it I love that guys there you have it from callate mask Infusionsoft you guys familiar with it they've been through quite a journey significant amount of capital raised they've completed their Everest mission now focused on their Mars mission which takes them through 2030 they want to service 5 million business owners and that's not like free users or anything that's paying customers they're currently at about 175,000 doing north of 100 million in ARR they've really shifted almost entirely to SAS higher marginal revenue at this point launching additional solutions inside of their platform so these businesses can get everything they need in one spot to truly conquer the chaos clay thank you for taking us to the top great thanks Nathan