How Knak CEO Pierce Ujjainwalla grew to $18.3M revenue and 750 customers in 2024.

hey folks my guest today is pierce eugene wallace he's a career marketer who's lived in the marketing trenches of companies like ibm sap and marketo he launched knack that's knak in 2015 as a platform designed to help marketers simplify email creation he's also the founder of revenue plus a marketing operations consultancy pierce you ready to take us to the top let's do it all right so you came on back in december last year so about a year ago and told me that knack had passed about 600 customers tell me more about growth today are you adding more customers or expanding the historical ones yeah we have continued to grow our our business at you know over a hundred percent year over year we're just named one of canada's top growing companies where we posted over five hundred percent revenue growth over the last three years and so yeah we're growing within new accounts within our existing accounts we see a lot where we'll get into an account with you know one team there and it grows globally across an enterprise so lots of exciting stuff happening and for the those folks that don't know knack or mr horst interview together what are these customers paying you for describe your product a bit yeah so knack is a a a codeless enterprise uh campaign creation platform and so for everyone out there you know you all receive these beautiful marketing emails with the banners and buttons well somebody is coding those most of the time and an average marketing email is like 800 lines of code and so marketers well they're not developers they're marketers and so what that means is that historically they've had to work with developers they're really expensive and slow agencies to get this done and with knack while we're giving them the power back to be able to do all of this themselves and really unlock the creativity that they got into marketing to do in the first place and it sounds like again folks are using it you said 100 year over year growth is that true of the customer bases well so 600 customers a year ago means about what 1200 now [Music] yeah so we don't disclose how many customers we have but we do have hundreds of customers thousands of users all over the world and yeah i mean that we are replacing the status quo 95 of the time and so yeah when customers what changed man i get before you raise your bootstrap you come on you show your customer account now what your board says pierce gotta be you gotta be more conservative be less fun on interviews no more no more customer numbers no i think you had a speculated our customer number i did a long time ago but we've had a lot of changes with our business model you know initially like any founder we went out let's get as many customers as easily as possible so it's 99 a month credit card no sales calls now we've we've really shifted and when we're working with these large enterprise customers they want us to they want to talk to a sales person they want to get comfortable we have to go through procurement security all that fun stuff that you get to do with enterprise companies well last question on customer stuff so i mean when you say hundreds uh and then thousands of users so i mean do you think you break a thousand actual paid customers next year over the next 12 months so we're we are continuing to grow you know triple digit every year um we're really focused on helping all the marketers out there that's why i'm so excited about our race you know so pierce if you go 100 over the next 12 months you're basically saying if you keep on that growth directory you'll you'll break a thousand paying customers next year so we're we're all about getting every marketer to be able to to unlock that creativity that they have within them and that's why we're raising to be able to get to as many customers you're raising you're raising again or you're talking about the raise you just completed no no the one that we just did yep so so you and and so let's jump into that then right so you raised how much capital and is this your first tranche or have you raised prior yeah so we are proudly bootstrapped right up until our series a we didn't raise any money before then um and we just announced the 25 million dollar series a with insight partners why'd you do it pierce i mean you give up a lot i mean you just give up a lot right you're going from bootstrap to raise and this wasn't a little raise this was like you're definitely on the vc track now you have to make it work yeah you know like i said we're proudly bootstrapped up into the race and we had our year-end in the summer time this year and we looked at hey what do we want to do to continue growing the business and grow it as fast as we can i'm a very conservative person by nature and you know i think that's how we got here bootstrapping we didn't have to raise but we we identified about 50 people that we wanted to hire on our team to accelerate growth and if we continued to bootstrap and do it that way it would have taken a lot longer and we all know with technology time is of the essence and we felt like hey you know the capital markets are great right now it's very founder friendly and we're able to find a great partner like insight who can give us a lot more than just the capital they have a huge network great centers of excellence around scaling out software teams that are our size and it felt like a great opportunity that we can say no to what's team size today pierce we are currently 45 people 45 great which sounds like some aggressive hiring plans now most founders especially going out doing like a first raise like this at this size like this pattern if you're picking insight many founders will pick insight because insight many times will let founders take secondaries especially if the founders or early employees or early investors angels etc uh you know i've been slicking away at it for a long time you guys were launched i believe in 2015 right so you've been at it for you know six seven years um was all that 25 million going directly on the balance sheet or were you able to create some liquidity for early employees you know founders etc yeah we definitely took out some secondary i think to your point you know we we proved that we could build a good profitable business and it felt like a good opportunity to take some of the chips off the table not just me but i also felt like it was important and fair to let everybody in the company who had vested options the opportunity to sell as much as they wanted to i have to say it was a pretty emotional moment for me when like the majority of our team didn't sell anything because they believe so much in our mission and what we can do in our future here at knack did you recommend they take some off the table to do things like buy a home buy a car start a family pay off student debt like life stuff uh i i definitely encourage them to do that i i told them that i'm gonna personally be doing that and that you know it's fully their decision and i think yeah that was something that that really did get me emotional was just that you know they had the opportunity to to really take chips off the table and make a good amount of money but you know they're in it for the long haul and i think they see the potential that we have ahead of us how much of the 25 million would you and insight you would have been comfortable letting go to secondary obviously it didn't all do that because people chose not to sell but what was the maximum that you guys were comfortable with that i i that's something that i i can't disclose but i will say that in talking to a lot of investors and i think this is where we're you know other founders who are out there thinking about this the market has changed right it's no longer that secondary is kind of like looked down upon for us it was something we always wanted to go into this deal with it wasn't an option we put that on the table to every investor and none of them had any issues with what we're looking at what did you say when you were kicking off the process did you phrase out of something like um we want to take at least five million off the table or we want at least 10 percent of the round to be secondary did you phrase it as a flat number or a percentage like how did you set the early expectations for this yeah we had a percentage and a number okay so what if only one of those things hit so what if what if you said 10 but then the round was only 10 million so you only had a million for secondary versus you know five you know if you want to take five million well they were like they were together like yeah it was it was a number that was the percentage that we're looking for okay got it so so by default when you put those two things together you can back into what the round size would need to be in order to hit both the percentage and the flat number yeah was insight the highest valuation or did you not optimize for evaluation listen i think there's a lot of companies out there right now a lot of firms that i will give you the highest valuation but what we found is that those firms are really just about the capital right they don't come with all of the resources that an insight does so of course valuation is important and and insight was close to the top but we looked at the full package right like i said before we're looking to me like half of the value is working with a firm that's done this hundreds of times and has the resources to help you grow mm-hmm and and help me understand sort of where this came in right so most people when they're doing a series a i would say industry standards you're selling somewhere between sort of 10 and 20 percent of the business did you sort of fall into that same average or were you on an extreme for some reason [Music] yeah again i can't disclose the valuation but i will say that like i said before the market right now is very founder-friendly and we were very happy with the deletion that we're able to achieve on this rand and our valuations so pierce it's really important for my listeners to try and understand things that they should negotiate for when they go into their rounds and so you providing any kind of range is helpful i didn't ask you name the valuation because i know you can't disclose that but can you can provide some sort of range for my audience i mean 10 to 20 again is pretty standard here yeah yeah to me if you're giving up more than 20 equity in a series say like everyone's different but personally i would never do that yep yep okay cool that makes sense yeah you were seeing you know chili piper just sold seven million seconder at a 625 million evaluation with 15 million in revenue but that's very different than what lemlis just did which was sell 30 million for 20 of the business at 150 million valuation with 10 million revenue very different multiple profiles there but obviously both included secondary so cool that makes sense to you and pierce were you able to make this decision yourself or did you have a bunch of co-founders you had to get everyone on the same page and agree with uh so i do have two other co-founders but we're we're really aligned as a leadership team and we all felt like this is the right thing to do for the business and did you guys when you launched back in 2015 you had a consultancy i think you brought in i don't know like if someone put up more money for the mvp or stuff or did you guys just split it evenly right at the beginning in 2015 or no uh so so i yeah so i actually founded the company in 2015 and then my co-founders came on later like 2017 2018. i said got it got it got it so you obviously owned more than it wasn't even split right tell me more about how the agency plays into this you still put that in your bio which means it's still important to you at least your pr people put in your bio for this interview so help me understand the agency plays in here yeah revenue pulse is the first business that i started so i think all entrepreneurs know that there's kind of a special attachment to that um i realized a couple years ago that really my focus was on knack and that's what got me out of bed every day and got me super energized so i hired an amazing ceo joe peters to run the revenue pulse business for me revenue pulse continues to grow every year and it's a great way that consultancy is where we keep our pulse on what is happening in the marketing operations community which is who we sell into at knack every day so there's a lot of synergy between the two companies both uh revenue pulse identifying new opportunities for neck and knack uh opportunity identifying opportunities the other way for services tell me more about like the typical kind of customer you mentioned early on price plans or 99 bucks a month no touch right sign up with a credit card i imagine price points like your average are sort of has increased since then i think last episode you said you were much closer to like a thousand bucks a month was sort of your sweet spot yeah so prices continue to to go up um i think we're really focused on the enterprise so the typical customer that works with us i think our sweet spot you know these are billion dollar plus a year companies they have marketers spread across the globe hundreds or thousands of marketers and uh they really need the collaboration capabilities that nac provides the brand control the ease of use and and the ability to empower all of their marketers to be creative and and integrate seamlessly into their marketing automation platform so we continue to work with a lot of marketo customers eloqua uh responsus marketing cloud part. all of those marketers need our help you have knack templates which are free that's sort of your top of funnel helps you know make maybe make cac more efficient you then have to work you know hard both in product and your sales team to move them into knack solo which is a ten thousand dollar a year commitment three to ten thousand a year is obviously a big move what sorts of things do you do in between those two plans to make sure people move up yes so again our goal is really to help marketers and a lot of marketers are still in the mindset that they need a template templates are kind of the old way of how marketers used to accomplish creating an email or landing page so that was our initial product nathan that that was the one that we used to sell for 99 a month we are giving that away now because again we want to position knack as the the company that is there to help marketers no matter where they are on their journey i think what we see is once those marketers use the templates and realize really that the pitfalls of using templates how they're slow and rigid and hard to change that's when they open their mind to like hey i actually do need a better way of creating a campaign and they naturally look to knack uh solo or enterprise to get that done and and were you able to ride that 99 a month plan i'm trying to figure out what took you to your first million dollar in revenue and what year that was i mean was that like 2016 2017 yeah so the 99 a month plan was so important for us like that is really how we learned how to onboard customers right when you're in that freemium model you need to know everything about how your product works where people can get stuck how you upsell them how you get their feedback and that is really what has helped us grow this whole time and by listening to our customers that's how we identify the opportunity to build this new product this product that you know has way bigger potential we think we're in a more than a billion dollar market here and we have less than one percent market share right so you're killing me man so so were you able to use 99 bucks a month to break that million dollar run right in like 2016 2017 i'm just trying to get a sense of what you looked like when you broke a million we didn't we didn't get to a million on the 99 month plan we only got there after we pivoted to sales uh procurement that whole process and that was in 2018 [Music] i i don't know the date off off the top of my head which year did you break a million dollar run rate again i we don't disclose that pierce this was years ago come on man you're making this very very difficult on me people like to understand the playbook zero to a million and then a million plus and then now you're not bootstrapped and moving into vc you've got to be able to give me some number here yeah no i i think the way you get to a million is you have to continue to listen to your customers and figure out you know look at your trends right if you're what year was that for you for an act we want we want to use numbers and then tie that to the tactics that you're communicating now i mean was that 2016 2017 somewhere in there yeah yeah you know you were i do want to help your listeners get to a million and i'm trying to give some some examples of how to do that and how we got there i think what we realized was that that freemium model wasn't going to do it for us um it was really high churn you have to realize your churn numbers right how are you going to get people to stay in your platform and how are you going to build a scalable business how long did it take you to learn that there's people listening right now maybe doing the same thing do i need to test this for a year two years three years i think we realized the freemium model wasn't going to get us to where we needed to probably within a year year and a half okay so by 20 mid 2016 you were thinking what did the sales motion look like and how do i think about a higher price plan yeah well and i think what we what we learned again was that templates uh were not sticky right and they were flawed still that was the biggest learning that we had was we realized we're solving one part of our customers issue the marketers issue with the coding of the templates but there were so many issues around that that we needed to really build a new product that would address all of those so brand control collaboration integration with the marketing automation platforms uh all of the flexibility and the creativity component were huge and that's what fueled a much you know stronger growth trajectory pierce this makes a lot of sense what are you most nervous about right now you just brought in money you have you have we we'll call it a vc sugar daddy now right board meetings coming up what are you nervous about yeah i think as we grow and i mentioned we want to hire 50 people one of our secret weapons that i think we have here at knack is our culture it's amazing you know everybody loves coming to work we just won best places to work in ottawa our employee enps is like off the charts i think it was 85 last time we did it and so we're we're growing quickly we're hiring 50 people we're doubling the team i want to make sure that we're able to you know grow this culture into something really positive as we continue to grow the company and i'd say that's something that's top of mind for me all right love that and then real quick round out the sales motion you mentioned that this is critical to the ultimate success moving away from templates how many like quota carrying sales reps do you have today yeah i mean this is another beautiful part of this business right now we only have one quota carrying rep that's down from a year ago you had told me you had three uh well we had two we lost one over the summer we're rehiring um but we've continued to double you know triple digit growth of our revenue every year and i think that just speaks to the need for a solution like knack in the market does that one sales rep talk to every single person that upgrades to the ten thousand dollar per year plan or do you have people that never touch your support or sales reps that go from zero to ten grand a year we have a big csm team and uh management team that is is working on the upsells and account expansion uh but our ra currently touches all of our new skills wow okay how many are on the css team csm team uh so i think we have five csms now should i ask more questions are you doing something unique there is a pretty standard playbook i think again it just speaks to when we get knack when we get our customers using knack they realize how this can transform their marketing department and how this can help them go way faster and way cheaper than ever before and so there's a lot of organic growth that is happening you're talking expansion revenue they go from 10 000 a year to 20 000 a year in their first 24 months oh yeah a lot of our customers like keep in mind we're selling to the enterprise right so we might get one group at a company maybe it's 10 people who try it in one location and then their global team says what are you guys doing over there that's pretty cool let's now roll it out to the whole company now we have a hundred or 500 users and so that's that's really how it's growing yeah and is that i mean that is the thing you put at the top of your pricing page individuals one user is knack nak netstarter is five and enterprise is five to a thousand users is that your most powerful upsell mechanism it's the number of seats yeah so our pricing model is yeah it's very simple right it's just how many how many people are going to be creating assets within neck that's more powerful than your feature-based upselling like built-in workflows on your enterprise plan or you know customizing user access rules and permissions um it it really depends on the company right so the smaller companies uh we find they just don't even need those necessarily need all of the features in the enterprise plan whereas big companies they need all of that stuff so it's usually kind of a combination of both and here's all this sort of there's all this code word for your guys's net dollar retention as well above 100 i can confirm it's over a hundred percent babe boom but hey we got a number give this guy a little little thumbs up on itunes or youtube give me something nathan hey gotta give me something to work with look i kind of got the million dollar run rate in like 2016 2017-ish i got on a percent dollar retention i mean this is nice growth couple hundred customers but not a thousand yet but your free plans driving a lot of new users because it's free obviously but not a good product because it's not sticky but again helps your csm team expand folks so makes a lot of sense here i know we're over time pierce let's wrap up with the famous five number one favorite business book uh what's one that i just read um [Music] uh yeah one that i just read well actually i just read the book with dyson so the guy who started dyson vacuums which is interesting number two is there a ceo you're following or studying um i'm loving michael saylor right now i'm a big bitcoin person and uh i think he just sees the future in ways that other people can what percent of your total net worth right now do you have at today's price is exposed to like bitcoin and ether some form of crypto over uh let's say a sizable amount but more than 10 percent okay i was i was waiting for you to go like 70 i was gonna go what all right more than ten number three what's your favorite online tool for building a knack uh i can i say knack no you can't say it and say nah it says the says the markup yeah let's say um hey you know we can run our business without slack and they're great customer reverse number four how many hours of sleep to get every night uh seven to eight okay and situation married single kiddos married with uh with a four and a six-year-old oh my god busy guy all right how old are you pierce 36. thirty three i gave you another number i know i'm getting all these i just gotta ask the family question numbers that's how i do this all right last question take us home something you wishing you when you were 20 yeah i think uh the the older i get the more i look at going for the long game and that's something that i i feel when i was younger it was kind of much shorter term thinking it's you have to be confident stay focused and keep your eye on the long game and good things happen guys there you have it knack launched in 2015 off the back of a marketing agency they now help enterprise brands do email much faster much better marketing teams don't have to rely on their development teams to get things out the door they're upselling like crazy over 100 net dollar retention mainly focused on enterprises with more than 50 seats again launched in 2015 just did a 25 million dollar round pierce feel selling to 10 to 20 of business is really what you should target in this sort of range anything above that feels a little uncomfortable 45 on the team but hiring fast up there in ottawa pierce thanks for taking us to the top thank you nathan that was fun one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark 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you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is pierce eugene walla he is the ceo and founder of a company called nac an enterprise email creation software for teams knack's the first platform to help enterprise folks do this empowering marketers writers and designers to collaborate and create beautiful responsive on-brand emails quickly with no coding required pierce you're ready to take us to the top let's do it all right so people are going to hear enterprise email and go no there are plenty of companies that help brands send out you know enterprises send out mass email how are you different yeah i mean my background is really on the marketo side of things you know one of the biggest marketing automation platforms serving a lot of enterprise companies and i had a consultancy that did a lot of professional services in this space and every customer we worked with had the same issue around this problem um so when we started knack it was really about helping marketo customers with it but the more we got into it we realized this is a way more widespread issue than just mercado when did you launch the company uh five years ago we actually just had our fifth anniversary oh congratulations yeah and you came on you came on actually back in september of 2018 and shared that you guys were you know flirting with 600 customers 500 rpo about a 3 million ish run rate right yeah that was that was your best estimation and uh yeah yeah wait so where um are you exclusively growing based off the market integration like are you have you dedicated yourself and kind of gone all in on one channel uh so in the past since we last spoke really we've been looking at diversifying our revenue and really looking to be make mac that platform agnostic platform so a lot of our growth is actually coming from other marketing automation platforms other tools that our enterprise customers use to communicate with their prospects and customers can you name it can you name a couple of those so what else for sure so uh we're seeing growth uh salesforce marketing cloud par dot uh oracle responses and then we're also just discovering all these new platforms a lot of in-house platforms that our enterprise customers work with very good and are you uh are you still serving out 600 customers has that grown significantly so when we last spoke we kind of were in the middle of transitioning to become more of an enterprise focused platform when we last spoke we still had like a 99 per month a credit card product as well so i'd actually say we've we have have less customers than we did before but our asp has gone way through the roof right so um we have grown a hundred percent year over year since we last spoke but really taking more of that enterprise focus and expanding our business that way okay so how how many smaller customers have you let turn off like are you down to like 100 customers now today yeah so i mean that was the other thing was that those 99 a month customers what we learned took a lot of support uh churned very quickly whereas our enterprise customers we've got net revenue churn of under two percent now so so yeah so we you know we were happy to kind of not lose customers but really focus on that enterprise space where i think we can add the most value yeah well pierce just because the reason i'm pushing on these numbers is this is something that i think actually more people should do they test a more freemium approach like 99 bucks free to 99 bucks a month they get a thousand customers and they don't have the courage to say this isn't economically viable we need to turn some of these folks off and move enterprise quadruple price points and churn their customers it's back down so what is that updated number like is it about 100 customers now today or less i mean what's that number today yeah i mean first and it's a great point right when it when it's very attractive to have a 99 a month credit card product where people can just put in a credit card they don't have to talk to sales it's a very quick sale and not a lot of effort right but the issue with those types of customers is that just as easily as they came onto your platform they're gonna get off it as well so what we realized especially as a bootstrap company was that we need to focus on our customers who we can add the most value to who are going to pay us for that value that we're able to give them so i can tell you we definitely lost a lot of customers right well there's what's a lot though i'm agreeing with your strategy i'm trying to get to like an actual number so we still are in the hundreds of customers okay so that's what i can tell you okay it's not 600 anymore yeah it's significantly less than that but but north of 100 yeah yeah absolutely and your asp has grown so let me ask you a question one of the big challenges with sas seos when they do this transition is they don't know how to communicate the price changes to their older grandfathered cheaper accounts so how did you approach that did you make people either decide to leave or upgrade to your new pricing or did you grandfather them at 99 bucks a month yeah i think the only reason we got to where we are today is because of those initial customers who trusted us with our business from the beginning what was really important to us was those customers who allowed us to get here that we took care of them and that we gave them a way to either join us on our kind of new mission in which case we did grandfather a lot of our initial customers on or some people simply said yeah you know what you know we're we're gonna opt out to that which we totally respect and we still thank them for their business to help but that's okay then that's not good though right so if you told them they could have stayed on your platform without paying the new pricing and hundreds of them turned off that's not a good sign if you didn't force them into the higher price point and they said even if you give us the 99 bucks a month still we don't want to continue that's not a good sign sorry let me clarify that any of our customers who wanted to stay with us with what they were paying us are still doing that right the ones who churned off um were more of our one time we used to have like one time payment customers or 99 a month customers uh in order to get on to our new product there was in some cases uh a price increase or you know they felt like hey we have all the templates we need now we're good so we recognize we're gonna lose some customers and we're hot you know we recognize this is the future of knack and what we wanted to do okay so so it's fair then if you update now today you take your grandfather customers post your new customers your new price points etc you're saying your asp is significantly north of 99 per month at this point yeah well last time we spoke we said our asp was 6 000 a year okay so 500 a month and yes i can confirm that our our asp is significantly higher than that which is what's allowing us to grow it 100 year-over-year significantly i mean is it fair to say it's more than double that yeah you know i wish i could share exactly what that is with you but uh you know i'll let you come up with your own estimations well i don't wanna i mean if if i wasn't going with my own estimations i would just do the podcast without you being on it uh that would be a lot of fun me talking to myself but the point the point being here like you've made a strategic decision not to put pricing on your pricing page which drives some people crazy but for you and from the sas ceo watching it's also great leverage because you funnel those leads to your sales team and they can work up a custom plan and if someone's willing to pay more money for the value you provide then you get more money paid to you right so so how do you handle that how many how many sales reps do you have right now uh yes so up until two months ago we've been a hundred percent inbound so everyone that we've sold to has come to us through our website uh in an inbound manner so up until a couple months ago we hired our first outbound rep so we have three sales reps right now and they all carry a quota yep okay and and what percent of the total team is at how many total people on the team uh so we have 25 people on the team okay okay so three three quarter carrying books and how many engineers uh our dev team is uh about eight people okay and so so let's shift now to like current day you can't do an interview like this today and not talk about the recession right the virus is impacting everybody right uh you're based i believe up in canada how is this impacting are you seeing a churn spike uh no so we haven't i think we're very fortunate in the sense that you know if you look at what companies typically dedicate their marketing budget do a huge amount of that is going to be in-person physical events or traditions now with with kovid you know digital channels i think are becoming more important than ever before we actually looked at our platforms data last month and saw that we had double the amount of emails that have ever been built before month over month so i think it's early for us still uh it's it's have you seen anyone churn i mean has anyone emailed you and said hey we need to can you pause our account no not yet that's fine i mean yeah we're we're definitely trying to work with our customers on that so we're here to help them i think uh one thing that we're we've communicated to our customers is you know if they have any issues with their subscription moving forward or they need to kind of pause their subscription renewal uh discussion we're happy to discuss that but at this point no one has tuned because of this and now you're you're in a unique spot as well because you're bootstrapped you can should be bootstrapped today which means you've been operating a company at either breakeven or profitable already over the past five years correct yeah so it's not like you raised a bunch burns too high and now you have to cut a bunch to get back to profitability to survive something you're good in terms of surviving yeah we have it we have a lot of runway ahead of us um and i think what this has also showed us is how resilient a sas business can be as opposed to that kind of one-time payment business where you need those customers coming in all the time this has been an incredible advantage for us and those 25 team members are they all based up there in ontario with you uh so we have um most of them in ontario and then there's other remote employees across canada so all of us are in canada um but not everyone here in ottawa okay i see got it um and where so where do you think the next again considering a recession virus i mean where do you think how do you get your next million dollars in arr where's it come from yeah it's a great question i think one thing that that we really see as a company is that when we started this we thought hey this is a platform for marketers who are going to help build their communications but what we have realized over time is that this is actually a platform for everybody in a company that needs to send out on-brand communications and so i think there is a ton of potential in expanding that beyond that marketing department to you know in-house communications development communications partner communications sales communications like that there's so much more to go there and then we also do see you know a lot of growth potential in the platform expansion strategy which is something that we're doubling down on right now what does that mean platform expansion strategy well like we were just connecting to marketo last time we talked now right we want to be an agnostic platform that can support you no matter where you're sending your communications out from i'd see i see and is this i mean is this something you go out and do potentially raise capital for to drive extra growth or are you happy being bootstrapped uh we are still happy being bootstrapped i think canada has actually some amazing programs to help fund startup companies um irap is one of them so we're able to access capital that way with how do you spell that company uh i r ap okay is that the same as the shred financing similar so shred is more about getting money back from your r d spend whereas irap you can nominate specific projects that you're working on and they'll cover the development of this interesting so basically it sounds like irap is almost like pre-approved shred they'll confirm it's an r d events and pre-approve you for it yeah it's similar to that it's a it's a much more streamlined process um that's more of like a business focus with a specific business outcome that's come from it if you look at the past five years of the business in terms of how the canadian government has potentially helped fuel the development growth of knack i mean can you quantify how much money you've gotten back from the government you think it's more than a million uh so we we actually just started taking advantage of these programs last year so i think we've just scratched you know the tip of the iceberg on what they can help us with but it's an incredible program and i'd encourage other bootstrap companies in canada to train to you know leverage it to help them grow very good last question here what's the next big revenue goal you think even in a recession you guys can get up to five six million bucks in ar this year is that more of a stretch yeah i think you know i i've spoken with our team about what if we want to move the target that we had said for ourselves at the end of the year and you know fully putting it to them like hey i understand if we need to adjust this based on everything that's happening but what we're seeing in our pipeline and how we're seeing our deals close we're keeping that same number again and that's going to put us at again 100 year-over-year growth that's right what is that target i mean can you get i mean can you drive additional growth to get up to five six in a r this year or is that more of like a 2021 goal yeah like one of the things that happened to us during this coveid was that you know the adobe summit is our biggest uh marketing event of the year we put it's you know that's our super bowl for us and uh you know this year we don't get that we don't get to interact with our customers we don't get to see us see them and have that face time so to me that's really the biggest thing is you know is are we going to be able to replicate that virtually are we going to be able to change our marketing spend to enable us to continue to create that pipeline and based on what we're seeing so first flipping it to digital is that we're still having a lot of success driving new leads and pipeline guys those of you watching live this is one of the first times we're doing the one of the podcast live if you do have questions for peers she's the ceo of knack an enterprise email marketing solution but expanding quickly to be more of a platform play between 100 and 600 customers you have questions for them you can post them here on facebook i'll fire them at them as we're wrapping up here right when we uh when we wrap up here with the famous five pierce you ready to wrap up yeah sure man all right number one favorite business book well we did this last time i feel like i gotta switch it up now well yeah hopefully you're not reading the same book you were reading three years ago you're slow we got a slow reader on the show today guys i uh you know one thing for me is about building our team right now so i recently read who which is about a book about how to hire your players and that was incredible number two is there a ceo you're studying or looking at right now yeah i think um recently i've really been following the base camp guys so um jason and dhh yep number three what's your favorite online tool for building mac um i'm gonna go with salesforce number four how many hours you're sleeping every night try and get my full eight hours that's good and situation married single kids married two kids the two and a five-year-old and i'm shocked that we haven't heard them yet as i'd say all my podcast over the past like three or four days with everyone at home i've i've always had a kid running into like dad's arms on the show and covering his mouth that's kind of how it works all right so two and five and how old are you i just turned 35 35 last question what do you wish your 20 year old self knew um i wish my 20 year old self knew that it's not all about making money and it's actually about doing what you're passionate about with people that you enjoy doing that with guys there you have it pierce building knack.com founded back in 2015. they're now serving between 100 and 600 customers mainly more enterprise now than they were three or four years ago he's built this company completely bootstrapped with these uh customers paying anywhere between call at six thousand dollar acvs all the way up to way way north of that as they've moved more towards enterprise the virus is impacting them the adobe summit is really where they get a lot of their new customers connecting new customers that's obviously cancelled but they're still looking to scale their team of 25 people eight engineers three quota carrying reps again serving the enterprise space in the email marketing world hoping to expand more to a platform play pierce thanks for taking us to the top thank you nathan always a pleasure all right stay safe see you cheers you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data points from the world's leading sas ceos click and watch

Nathan's introduction to today's show hello everyone my guest today is pierce eugene walla he started his career two company called cognos which went on to be acquired by IBM he didn't join two startups that both wanted to have successful exits where I let him implemented Marketo he then founded a revenue pulse a Marketo consultancy and nack a SAS application for enterprise email creation all right Pierce are you ready to take us to the top let's do it all right so tell me about the consultancy so are you still running the Marketo consultancy today yeah okay and so what does that look like how many Why they work with 40 to 50 active clients today in their agency clients what do you charge on average yes so we have at any given time around 40 to 50 active clients we work with some of mercado's largest clients and so you know these are companies where they're not really so concerned about the price more that they want to work with you know the best consultants in the business yep and how many people do you have on just the consulting team we're at 26 people now okay 20 is a pretty healthy and what was last 12 months revenue about we raised year-over-year revenue by 90 percent last year okay that's great and so again over the past twelve months about how much total revenue did you do yeah I mean we're private companies that we don't really release those numbers but fully bootstrap company and we're at 26 people okay obviously running it profitably since you're bootstrapped correct absolutely fair to say north of a million okay so why let me you know Ryan at HootSuite has it has a similar story it started off as a consultancy and one of the key decision points for him was wouldn't actually go fully into SAS you're kind of balancing both right now so why did you start you know coding you're the first application at all how'd you get the idea and when How he came up with the idea to transition to SaaS potentially do transition to full SAS yeah so you know with the revenue there is one particular project they were doing over and over for our clients and so we decided over time like hey let's just productize this and make it a better experience for the customer and that's really what led us so started knack and so what was that process yeah so we incorporated a new company we found new developers so brought on a new team essentially who could build out the application at first we started with a very basic platform you know MVP classic story where we built out what we thought our customers would need and started from there so it was initially a $99 per month credit card signup form you could do everything through our website and yeah we we had incredible attraction we kind of sponsored one main tradeshow and that's how we got the word of both businesses have really been a lot of word-of-mouth referral based pay period I mean before you get too far down this this track is we don't know what nack actually does what does not do okay sir so nack is an enterprise email creation Why they've developed knak. as an enterprise email optimizer platform so essentially we connect with Marketo and eloquent and we help their largest customers streamline the email creation for us those so can we think kind of email you know enterprise MailChimp built specifically for Marketo yeah I mean historically the big marketing automation platforms haven't really spent a lot of time on that asset creation part of it and so what we're trying to do is really build out a platform where when you have hundreds of users around the world trying to build out these emails and landing pages to give them the workflow the collaboration the approval and review processes that allows you to scale to creating you know thousands of marketing emails a month got it and now you know from the from your website in them what my research team told me when you've got kind of templates built in you know the builders are you just doing like the email templates and the email merge tags and How they've built out their entire process over time those things you know specific to regions are you also doing like landing pages and things like that [Music] yes so we we started off doing sort of templates that you would sink to your marketing automation platform and now we're doing the entire process you build that entire email with an AK and then you're using your marketing automation tool just to deploy it right now we do have email and landing page templates and we've got to have the enterprise version of that for emails only but our long-term goal is to be the platform that combines both emails and landing pages in one place and you mentioned you start off at a $99 a month price point it sounds like you maybe have run some experiments here what what's the average Chester paying you today per month Why the average customer is paying them around $6k annually significantly more than that so I would say sort of our self sign up business is about 20% of our revenue right now then we've got kind of a mid tier plan that's about six thousand a year that accounts for probably another thirty to forty percent and the restless' enterprise revenue so definitely we've seen and sort of through our experiments realized that hey if we really want to grow the business going to that enterprise market is what's going to allow us to do that okay I mean so is it fair to say if we look at your current customer base without going on every cohort a fare average might be that middle plan the average is call it six grand per year yes or about 500 a month probably about it okay and are you pulling that cash flow Ford or most these folks paying on a monthly basis so again yeah as we transition to sort of those higher ASP s we're pushing more for annual pricing right so pay for the entire year at once or do even multi year deals where it's an annual payment frequency what percent would you say of your new customers when you sign them up or say you know paying for the annual plan upfront versus paying monthly probably nine eighty ninety five so majority annual contracts yeah okay and they put all this on a timeline for us so when did you you know you know leave leave corporate and start doing your own thing what year was the consultancy launched yes so I started Revenue Paul six and a half years ago and then I started knack about three years after How they launched knak. in 2015 that's that's about three and a half years old okay so called 2015 yeah okay and and and what have you scaled to in terms of total customers on I just on knack let's ignore the consultancy moving forward so we've got over six Why more than 600 customers are using their software right now hundred customers on there okay and that's really healthy so how many of those have have come from the consultancy are most of them coming from they do consultancy first in software yeah there's definitely some overlap there most of our customers the knack find us organically you know through Google or through one of the marketing automation communities there is certainly overlap from both sides like some some clients will come in through neck and then it will work with them on the consulting side and vice versa yep and then look at $6,000 ASP on average divided by 12 to get monthly comes up to about 500 bucks a month and if I multiply that times obviously you're 600 customers that would put you at about 300 grand a month or about 3.6 million How they are close to $3.6M in ARR right now in terms of a r-run right is that fairly accurate today yeah I can we're private company so we don't what is that why this just to be clear Pierce I'm only multiplying numbers you gave me so I you just told me six on our customers and you just told me $6,000 ASP is average so are any of those two numbers you already gave me wrong yeah you know that would be roughly where we're at okay got it so so talk to me even about growth rate so if you're at call it you know three point six ish today where were you a year ago Why they are growing 70% year over year so yes growing at 70 percent you're okay so that's healthy so call maybe you know two million in terms of a our run rate twelve months ago now almost double that up to three point six ish something like that whereas most that growth come from same customers expanding or adding new customers so our biggest area for growth you know it's definitely our two new products so the the Builder and enterprise products that's where we're seeing higher aSG's much more upside and the ability to get you know more users so we have a user based pricing model on the filter and enterprise products so there's a lot more outside potential when we get into different customers thing and you've bootstrap an AK as well or know you've raised now this feed strip appears I like you even more this is great I love I love bootstrappers okay wonderful so bootstrap did is I also love I mean this is a pattern I see so many times of smart people leaving corporate starting an agency finding the same problem across many customers you know in their agency and saying we should just develop this they hire some developers they scale it up and before you know what they're doing 3.6 million bucks in ARR so what's the team right now in AK just only knack not the marketing consultants How they've grown knak. to 9 full-time employees isn't it yeah so nack we we basically are very heavy on the dev side so my personal belief is if you have a really good product you don't have to spend as much on sales and marketing and you don't need this big of team stuff over there so we are heavily focused on developing our products so we've got you know a head of development a couple of friend developers because we're in the email space that's obviously super important to us and we've got an email developer as well well so it's total team size yeah we're at nine people in Iowa and our most people are remote or they're all up there in Ottawa both companies they're fully remote fully remote I love that where did you first off is your background technical or business business okay so a lot of business founders they struggle making that first you know development hire where did you find your head of development or your first development hire so that was that's a tricky when I Why he's gone through a few technical leads initially and we've gone through a few okay so I think we're on our third you know how to development at this point and so initially was actually a friend of mine we kind of started things off things didn't work out what do they look like that was that like a consulting agreement or did you give him equity or what did that relationship look like I didn't know what I'm doing back then and I learned all through the process so feel like I got a business law degree as we run through that but yeah you know over time I've yes a business person learned so much of it what type of developer what's the relation should look like how do you set up a good employment contract oh yeah sorry Pearson this is like a very valuable lesson I would say 50% of my audience is gonna learn from this if you can give me a good answer here so like that first relationship you had was it like against like how did you structure that first engagement and what was wrong with it what was wrong with it was there wasn't enough structure because we're friends you know we we didn't do the paperwork the way that we should have when there was there no paperwork correct okay so it's kind of like a hey work this weekend on this scope I built on it in balsamic or Google's sketch and I'll pay you like 300 bucks for this weekend and they know it let's do it again next weekend and then before you know it you have revenue and you're like crap this is a real company now what so if they you know for the people that are listening I think it's absolutely critical no matter how good of a friend you are with somebody to get the proper legal advice as you start something even if you think it's not gonna go anywhere because when it does then you run into problems yeah yeah and this is never an issue if your idea sucks and tanks it's always an issue once the developer sees oh my gosh Pierce is making real revenue on this I've done all the code I should ask him for 20% of my company right and a real and a real thing so yeah when you took all the risk in the beginning cuz you were paying okay very good so and what have you transitioned to now I assume it's probably a standard employee agreement of the vesting schedule an all that jazz yeah absolutely yeah we we actually just put an employee stock option plan in place so you know it's something that we've always wanted to work towards and we want all over him of skin in the game with the companies so yeah so we're the develop the head of development Iran now where did you find How Pierce found his current head of development him or her yes so people that I had met around Ottawa before through through actually revenue palace clans we met some great development talent and our initial developer who developed a lot of the application not the friend relationship but we had another full-stack developer who developed on he introduced us to a lot of his network and that's how we found our current head of development okay take me back to the guy or gal you hired after your friend where did you find him somebody that I had known about in the Mercado community I didn't personally know him but I just reached out and LinkedIn and because we had very similar interests you know he came on board that was that was good Salesforce ended up poaching him from us so you know hard to compete with them yeah but yeah I current head of development is awesome and he's really aligned with the company goals and yeah I think it's it's the best fit you know you kind of learn over the years what you really need them I think we we've got our long term head of dub now good Why their churn varies based on the product talk to me about churn what's your turn today yes so as I mentioned we have three different products right templates builder and enterprise our template product I would say you know our churn is higher than I would like it to be but I think it's just the nature of that product it's a more transactional type where you can start it get your value and then you don't you know there isn't as much ongoing value that makes you hapy really instead of breaking down sorry and so everything on every because I'm sure you have a lot of different cohorts let's instead talk about a logo turn let's talk about revenue pterence when you'll get the whole the company as a whole like some products turned some but some expands so net net I mean our How they've gotten to net revenue retention north of 100 net or percent annually net were tension yeah yeah now in terms of revenue dad so just to be clear of everyone that signed up twelve months ago in January across all your products you take out all the ones that churned like today you take out other ones that churned then you add back all the expansion revenue and the expansion is more than making up for the lost revenue correct ignoring any new customers added yeah that's great that's really great and and where is most that expansion coming from like what pricing axes are you upselling on yeah the expansions coming from our builder and Enterprise Products that's you know in our opinion that's the future of email creation and so that's where people are naturally going now and and fully weighted what do you what are Why almost of their leads are coming through organic channels you paying to acquire one of these six thousand dollar per year customers we still do like no marketing we do a couple of trade shows that's all organic so our cost of customer acquisition that's pretty love that unless that first trade show you said you went to that you kind of used to launch what was that trade show how that was the market assignment okay I just could have guessed that and and would you pay to sponsor that ten twenty grand yeah that's like ten thousand yeah and you got that back in spades yeah that one that one was really good or way yeah there's rumor others obviously Marketo was taken private in 2016 by Vista partners there was rumors started actually yesterday that potentially Adobe is gonna be acquiring Do you think Adobe will acquire Marketo? Marketo do you think it happens I do you think one of the Giants will acquire Marketo at some point I'm not sure if it'll be Adobe but I think we will see some kind of consolidation happen yeah all right piers good stuff let's wrap up here with the famous five number one what's your favorite business book The Famous Five I'm Marcus God's dragon and number two is there a CEO you're following or studying right now I've got a save you on must number three is your what is your favorite online tool for building your business [Music] America Doe number four how many hours of sleep to get every night get seven or eight okay that's good and what's your situation married single kids married two kids kiddos and how old are you three and one year old and how are you I'm 33 33 last question what he was your 20 year old self now yeah I mean III think 20 years old I wish I knew that corporate America may not be everything it's cracked up to be corporate America ain't that great all the time folks coming from Pierce again did the whole corporate thing and then stopped in 2010 launched a consultancy has grown that to 20-plus people over million bucks and revenue and said he know what we're doing the same thing for multiple customers let's hire some developers he worked with a friend first and launched knack which is now scaling it has about nine people think you're like enterprise email marketing and landing page kind of automation they've bootstrapped the company serving 600 clients that pay on average six grand per year so about 3.6 million bucks run rank today going about 70 percent year-over-year so call it 2 million bucks and air are about a year ago in August 2017 economics look healthy most of the inbound most the customer position is organic or inbound you know spending almost basically zero bucks starting with a 10 thousand dollar sponsorship of Marketo conference many years ago over 100 percent net revenue or attention Pierce thank you for taking us to the top thank you thanks for having me