Founder Interview
How Kissflow Grew 180% in a Year on Inbound Marketing and Stayed Profitable with 150 Employees (Interview with Founder and CEO Suresh Sambandam)
- Interview Date
- December 3, 2018
- Interviewee
- Suresh SambandamFounder and CEO
Company Metrics at Interview Time
Year-over-Year Growth (2017)
180%
Team Size (2018)
150
Total Funding Raised
$1M
Profitable (2018)
Yes, for 3 consecutive years
Historical Snapshot
These numbers were reported by Suresh Sambandam during the interview recorded in December 2018 and are a historical snapshot, not current figures. See Kissflow’s current numbers.
Key Takeaways
- 01In December 2018, Suresh put Kissflow's ARR at just under $10M and expected it to be close to $10M when the fiscal year closed in March 2019
- 02The company grew 180% year over year in 2017
- 03Average customer pays $300 to $400 per month for roughly 50 users
- 04CAC ranges from $600 to $10,000 depending on customer size, with a payback period of four to six months
- 05Kissflow spends $150K to $200K per month on all paid channels combined, including Google AdWords, LinkedIn, Facebook, and review sites
- 06The company ranks for around 3,000 keywords in positions one through 20 on Google
- 07Account churn is approximately 2% per month, while revenue churn is negative
- 08Kissflow has been profitable for the last three years and has no plans to raise additional capital
- 09The team numbered close to 150 people, only a few of them in the US, in Mountain View and Indiana
- 10The company raised $1M in 2012 and has been largely bootstrapped since then
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| ARR (2018) | Sub-$10M | Founder interview, Dec 2018 |
| Year-over-Year Growth (2017) | 180% | Founder interview, Dec 2018 |
| Average ARPU (2018) | $300 to $400 per month | Founder interview, Dec 2018 |
| Paid Marketing Spend (all channels) (2018) | $150K to $200K per month | Founder interview, Dec 2018 |
| CAC (range by customer size) (2018) | $600 to $10,000 | Founder interview, Dec 2018 |
| CAC Payback Period (2018) | Four to six months | Founder interview, Dec 2018 |
| Account Churn (2018) | 2% per month | Founder interview, Dec 2018 |
| Team Size (2018) | 150 | Founder interview, Dec 2018 |
| Total Funding Raised | $1M | Founder interview, Dec 2018 |
| Year Founded | 2012 | Founder interview, Dec 2018 |
| SEO Keywords Ranked (positions 1 to 20) (2018) | 3,000 | Founder interview, Dec 2018 |
Growth Breakdown
Revenue
Suresh reported Kissflow was at sub-$10M ARR as of December 2018, and expected it to be close to $10M when the fiscal year closed in March 2019. The company grew 180% year over year in 2017, and Suresh noted they had been roughly doubling every year.
Customers
Of approximately 10,000 total accounts, Suresh stated that 15 to 20% are paying customers, with the remainder on a freemium plan. The company serves customers ranging from small and medium businesses to large enterprises.
Team
Kissflow had approximately 150 employees at the time of the interview. Only a few of them were in the United States, in Mountain View and Indiana.
Profitability and Funding
Kissflow has been profitable for three consecutive years and raised only $1M in 2012, after which the company bootstrapped its growth from revenue. Suresh stated there are no current plans to raise additional capital.
Growth Strategy
Organic SEO
Suresh credited organic SEO as the primary growth driver, stating that close to 99% of leads and sign-ups come through inbound marketing. Kissflow ranks for approximately 3,000 keywords in positions one through 20 on Google.
Paid Digital Advertising
The company spends $150K to $200K per month across all paid channels, including Google AdWords, LinkedIn campaigns, and Facebook campaigns. This paid spend complements the organic inbound funnel.
Review Site Listings
Kissflow pays for premium subscriptions on review and marketplace sites including Capterra, G2 Crowd, GetApp, and Finance Online, so that it ranks at the top of their listings.
Freemium Model as a Funnel
Kissflow uses a freemium plan to bring in a large base of free users. Of its roughly 10,000 customer accounts, around 15 to 20% were paying; the rest were free customers on that plan.
Expansion Revenue from Existing Customers
Suresh noted that revenue churn is negative, meaning existing customers expand their usage over time. This negative revenue churn contributes meaningfully to overall ARR growth without requiring new customer acquisition.
Best Quotes
“We are a pure play SaaS company, and Kissflow is basically solving collaborative work management problem for companies of all sizes.”
“An average customer would pay something like 300 to $400 a month.”
“We are a 100% digital marketing company. So all our leads and sign ups are coming through inbound marketing, close to 99% of them, I would say. So we are pretty much very strong in organic SEO.”
“We have around 3,000 keywords for which we rank anywhere between one to 20 positions in Google. And then we do quite a number of Google AdWords. We do LinkedIn campaigns, Facebook campaigns on paid and a number of digital. We list in all the online marketplaces.”
“Oh, we'll be running totally somewhere around a 150,000 to $200,000 a month.”
“It's a spectrum. I think it can go anywhere between $600 all the way to some $10,000. ... It's a spectrum depending upon the size of the customer.”
“Four to six months.”
“We have raised 1,000,000 around six, seven years ago in 2012. After that, we pretty much bootstrapped the company. In fact, we spent that money and then we pivoted from there ... And then after that, we pretty much grew revenues from Kissflow itself.”
“Yes. We are we are profitable for the last three years.”
“2% account churn, and then we have negative revenue churn.”
What Happened Next
This interview captured Kissflow in December 2018, when Suresh put its ARR at just under $10M and expected it to be close to $10M when the fiscal year closed in March 2019. At that point Kissflow had 150 employees, was profitable, and was growing primarily through organic SEO and paid digital channels. For current revenue, headcount, and other metrics, visit the Kissflow company profile on GetLatka.
View Kissflow’s current profile and metricsFull Transcript
Chapters
- 0:00Introduction and Company Overview
- 0:24What Kissflow Does and SaaS Model
- 0:54Average Customer Pricing and Users
- 2:11Company Timeline and Launch Year
- 2:32Customer Base and Freemium Mix
- 5:16Paid Marketing Spend Breakdown
- 5:51CAC and Payback Period
- 6:27Funding History and Bootstrapping
- 6:56Profitability and Capital Plans
- 7:29Team Size and Locations
- 7:47Churn and Net Revenue Retention
- 10:09Famous Five Rapid Fire
Introduction and Company Overview
Nathan Latka
00:00Hello, everybody. My guest today is Suresh Sambandam. He is the founder and CEO of OrangeScape, makers of Kissflow, a disruptive SaaS based enterprise level work automation and collaboration platform with more than 10,000 customers across a 160 countries. He's an expert and around entrepreneur on a mission to democratize automation and create immersive work experience for enterprises of all sizes. So, Suresh, are you ready to take us to the top?
Suresh Sambandam
00:21>> Hi. Alright. Hey. How are you? Okay. Good.
What Kissflow Does and SaaS Model
Nathan Latka
00:24So let's it sounds like Kissflow is the main product here. So I wanna focus on that. Tell us what the company does, what Kissflow does, and specifically, are you a pure play SaaS company or not?
Suresh Sambandam
00:33>> We are a pure play SaaS company, and Kissflow is basically solving collaborative work management problem for companies of all sizes. At this point in time, have a large number of small and medium customers, although we have 50 plus Fortune 500 customers who are using our product as well.
Average Customer Pricing and Users
Nathan Latka
00:54Okay, so kind of large range here. We don't have time to go down kind of every cohort, but give me a general sense. Mean, what's the average customer gonna pay you per year or per month to get access to your technology?
Suresh Sambandam
01:05>> An average customer would pay something like 300 to $400 a month.
Nathan Latka
01:09And what would they get for that?
Suresh Sambandam
01:12>> So they basically get somewhere around 50 users who can use it on a monthly basis.
Nathan Latka
01:17Okay. But but people aren't familiar with it. So describe what the product does.
Suresh Sambandam
01:22>> So typically, when you go to a large company, like, it's a let's start with a mid sized company. If you go to a mid sized company, they basically have some sort of an accounting software and maybe some CRM, and that's about it. And most of the other
01:39>> processes, they do not have software in place. When you buy Kissflow, they end up automating these processes using our platform. This is a workflow automation platform as well. So for example, if somebody wants to apply for a vacation request or wants to make a capital expense, they need to go through a multi level approval, they can actually use Kissflow and make their own process. It takes them from step A to step B to step C, and
02:04>> then completes the process end to end. And they can do all of this without programming. So you don't have to be a technical person to do this.
Company Timeline and Launch Year
Nathan Latka
02:11Very cool. Okay, so we got the product now. Put us on a timeline for us. When did launch the company?
Suresh Sambandam
02:17>> We launched Google I/O in 2012, and we were for beta for a few months. We started commercial billing from 2013. So this is like roughly five years commercial production.
Customer Base and Freemium Mix
Nathan Latka
02:32And Suresh, said in the bio, you've scaled to about 10,000 customers. Those are all paying customers?
Suresh Sambandam
02:38>> We have around 15 to 20% of them are paying customers. Remaining are free customers who came on board to a freemium plan.
Nathan Latka
02:47So about 1,500 kind of organizations are paying and the rest are still on the free plan.
Suresh Sambandam
02:52>> Okay. Suresh, can I multiply?
Nathan Latka
02:54Can I take 1,500 times a 300 per month average? You're doing about $450K a month right now?
Suresh Sambandam
03:01>> We'll be doing more than that because we have some large enterprises who pay us like 250,000 to $500,000. Like, we we have customers who pay 20,000 who have 20,000 employees who are using our our software. So Okay. Well, we'll so
03:18>> correct me.
Nathan Latka
03:19Yeah. What what are you at today about in terms of ARR?
Suresh Sambandam
03:22>> So we'll be around sub 10,000,000.
Nathan Latka
03:24Okay. Sub 10 will you break 10,000,000 here before the end of year? You got about twenty days left.
Suresh Sambandam
03:29>> Yeah. We do our financial year is in March next year. So we will be hitting close to 10,000,000 next Yeah,
Nathan Latka
03:39very good. All right, that's great. And so we'll say maybe you're at call it maybe a 9,000,000 ish run rate right now. Where were you exactly a year ago so we can understand growth rate?
Suresh Sambandam
03:48>> So we are roughly doing doubling every year. So last year we did 180% growth.
Nathan Latka
03:56Okay. So if you grew between over the last twelve months, if you've grown 180%, that means you would have been doing about call it, $280K or about $300,000 a month a year ago. Is that right?
Suresh Sambandam
04:07>> Yeah, something like that.
Nathan Latka
04:08And where so educate us here, Suresh. Where is most of this growth coming from? How are you signing up all these customers?
Suresh Sambandam
04:14>> We are a 100% digital marketing company. So all our leads and sign ups are coming through inbound marketing, close to 99% of them, I would say. So we are pretty much very strong in organic SEO.
04:34>> We have around 3,000 keywords for which we rank anywhere between one to 20 positions in Google. And then we do quite a number of Google AdWords. We do LinkedIn campaigns, Facebook campaigns on paid and a number of digital. We list in all the online marketplaces.
Nathan Latka
04:53Name a few of those.
Suresh Sambandam
04:56>> For example, we are on Capterra, we are on G2 Crowd,
05:04>> GetApp, Finance Online. There is a number of such platforms on which we are listed. So we also pay their premium, take their premium subscriptions and rank top on their websites.
Paid Marketing Spend Breakdown
Nathan Latka
05:16So how much would you when you look at all your kind of direct paid stuff, so ignore organic SEO, but all your kinda, like, direct paid stuff. I mean, are you and you gotta spending, what, $20K to $30K a month on this kind of stuff or more?
Suresh Sambandam
05:26>> Oh, we'll be running totally somewhere around a 150,000 to $200,000 a month.
Nathan Latka
05:34Yeah. Yeah. Yeah. I was gonna say I know people that spend just $30K a month just on Capterra.
Suresh Sambandam
05:39>> Oh, yeah. Capterra alone will be maybe 15,000
05:46>> or 8,000. Yeah.
Nathan Latka
05:47Yeah. Per month.
Suresh Sambandam
05:48>> I I'm I'm putting together Google AdWords and everything together. Yeah.
CAC and Payback Period
Nathan Latka
05:51Yeah. So break this down for me in terms of your fully weighted CAC. Right? To get a new customer, what what do you spend to get to that customer?
Suresh Sambandam
06:00>> It's a spectrum. I think it can go anywhere between $600 all the way to some $10,000. So a fully weighted CAC is anywhere 600 to thousand dollars. It's a spectrum depending upon the size of the customer.
Nathan Latka
06:13So even a thousand is good though. Mean, you've got customers coming in paying 300 to $500 a month, I mean, you're getting paid back in four to five months.
Suresh Sambandam
06:20>> Yeah. Actually, our payback is pretty strong.
Nathan Latka
06:23Yeah. It's about four months. Right?
Suresh Sambandam
06:26>> Four to six months.
Funding History and Bootstrapping
Nathan Latka
06:27Yeah. Have you bootstrapped or raised capital?
Suresh Sambandam
06:32>> Kissflow, it's a sort of a mix. We have raised 1,000,000 around six, seven years ago in 2012. After that, we pretty much bootstrapped the company. In fact, we spent that money and then we pivoted from there and found Kissflow, launched date. And then after that, we pretty much grew revenues from Kissflow itself.
Nathan Latka
06:50Are the as the million bucks, are those investors still on the cap table in Kissflow?
Suresh Sambandam
06:55>> Yeah. Definitely. Okay. Yes.
Profitability and Capital Plans
Nathan Latka
06:56Yeah. That's good. That's obviously super good there. And I assume since you haven't raised a bunch, you've scaled nicely, you're cash flow positive at this point?
Suresh Sambandam
07:04>> Yes. We are we are profitable for the last three years.
Nathan Latka
07:07That's great. Are you looking to raise capital now?
Suresh Sambandam
07:11>> No.
Nathan Latka
07:12You like the bootstrapped life?
Suresh Sambandam
07:15>> Right now, no, actually, because things are looking good, and we have a recurring model. And every month, we are getting a predictable revenue base. So, you know, I think things are going good.
Nathan Latka
07:27That's great.
Suresh Sambandam
07:27>> Right now, no plans. Yeah.
Team Size and Locations
Nathan Latka
07:29That's great. And tell me more about team size. How many folks today?
Suresh Sambandam
07:35>> We have close to 150 people.
Nathan Latka
07:37Okay. And where's everyone based?
Suresh Sambandam
07:40>> I have few Mountain View, very few in in The US in Mountain View and Indiana. These are the two locations in The US.
Churn and Net Revenue Retention
Nathan Latka
07:47Okay. So kinda remote, all spread out. And then Yeah. Wrap out the last kinda critical economics here. So churn's critical. What's your revenue churn per year, would you say?
Suresh Sambandam
07:56>> Actually, are minus
08:01>> 2% to 3% every month, which means we actually gain, we have negative churn for revenue.
Nathan Latka
08:08Yeah, yeah, no, I understand that. So I want to break that down, right? So I want to know what gross revenue churn was, then add back expansion, and that's how you get net negative. So what is gross revenue churn?
Suresh Sambandam
08:20>> I don't know the exact math.
Nathan Latka
08:22Okay. So I think I remember the net revenue churn, which is minus 2% to minus 3% on a month.
Suresh Sambandam
08:31>> So on a yearly basis, like 25%. I think 1.86. Last month, I checked it was 1.86% on account churn on a monthly basis. 1.86%. 1.80.8%
Nathan Latka
08:44revenue churn per month?
Suresh Sambandam
08:45>> Yeah. Less than 2%. 2% account churn, mean. 2% account churn, and then we have negative revenue churn.
Nathan Latka
08:55Yeah. Okay. So people measure those things all kinds of different ways. Want to try and say this so that everyone understands. So you're churning 2% of your revenue per month, which is about 24% per year. However, your net revenue retention is about 125%, which means your expansion makes up the 24% you lose and adds another 25% on top of that. So your expansion is about 45%. Is that accurate?
Suresh Sambandam
09:20>> Yeah. That is right. But there are some semantics there, but technically that is correct. Yeah. When
09:28>> the churn happens with young accounts, their churn is very small in terms of revenue, but although the number is higher.
09:39>> But technically what you said makes sense. By the way,
Nathan Latka
09:43churn, when you measure churn though, mean, you measure expansion and churn, these are all on a cohort basis. So you go back and look at the cohort that signed up twelve months ago, x percent churned, x percent expanded. And what you're saying is that cohort that signed up twelve months ago on a net basis, the net revenue retention will be 125%.
Suresh Sambandam
10:00>> That's correct.
10:01>> Exactly.
Nathan Latka
10:02Differently, Or net negative revenue churn of negative two to 3% per month.
Suresh Sambandam
10:06>> Exactly. Yeah. That is exactly what I wanted.
Nathan Latka
10:08That's great. Very good.
Famous Five Rapid Fire
Suresh Sambandam
10:09>> Alright, Suresh. Let's wrap up with famous five.
Nathan Latka
10:11Number one, what's your favorite business book?
Suresh Sambandam
10:13>> So I have famous business book is Good to Great.
Nathan Latka
10:17Number two, is there a CEO you're following or studying right now?
Suresh Sambandam
10:20>> Nothing like that. Yeah. I don't have one.
Nathan Latka
10:24Number three, what's your favorite online tool for building the company?
Suresh Sambandam
10:29>> Other than Kissflow, of course, I use Intercom a
10:33>> Intercom.
Nathan Latka
10:34Number four, how many hours of sleep do you get every night?
Suresh Sambandam
10:38>> I sleep well. So eight to nine hours.
Nathan Latka
10:40That's great. And what's your situation? Married, single, kids?
Suresh Sambandam
10:44>> I am married with one son. My son is going to college. He's in the third year of college.
Nathan Latka
10:49Oh, great. And how old are you?
Suresh Sambandam
10:51>> I am 45.
Nathan Latka
10:5245. Last question. What do you wish your 20 year old self knew?
Suresh Sambandam
10:57>> I wish I choose marketing rather than programming technology. So I realized that marketing is everything and pretty much the world is controlled by marketing.
Nathan Latka
11:07Guys, learn marketing earlier. He launched OrangeScape back many years ago in 2012. Now over 1,500 customers paying $500 a month, doing about $750K per month in revenue for about a $9,000,000 run rate, hoping to break 10 by March 2019. They're up almost a 160% year over year. December 2017 doing about $300K per month. Most of their growth coming from organic SEO. They rank for over 3,000 keywords between spots one through 20 on Google. Also spending about
11:32$200K per month on direct paid. Capterra alone is $15K per month. They've been profitable for the last three years, raised only a million bucks about six, seven years ago. A team of a 150 people spread out across many remote locations, net revenue retention of 125%, again, to six month payback as they look to help companies scale effectively, especially
11:55driving that are
11:58additional seats and automating their workflows and reducing chaos. Suresh, thanks so much for taking us to the top.
Suresh Sambandam
12:04>> Thank you. Bye bye.