How Liveagent CEO David Cacik grew to $20M revenue and 2K customers in 2023.

hello everyone my guest today is david chochik he is the head of growth at live agent he's had all their initiatives for the past six years and helped grow mrr from 20 000 bucks a month to 250 000 a month david you ready to take it to the top yeah let's do it all right so just to jump in real quick to make sure i got those numbers right there in the bio so you said currently you guys are doing about 250 grand a month yes that's correct and what is that up from exactly a year ago do you remember oh it would probably be about 60 or 70 000 yeah okay so a year ago you were at 60 or 70. oh no the growth was 60. oh got it so if you're 250 today you maybe call it 160 170 about a year ago yeah about that yeah very good and do you remember what you closed 2018 december 2018 six months ago at oh from top of my head i don't because uh i i to be honest we we did lose a very important client at the end of the year so that that made the end of the year quite uh worse how much revenue did that one customer represent like 10 20 grand a month uh it was uh i think was eight eight a month okay well that's not that's not the end of the world that's what four percent of your total revenue monthly yeah yeah but still it was one of the the biggest ones so it was quite a loss yeah okay let me let me take a step back for a second tell everyone what live agent does and kind of how the company makes money yeah so we are a customer service software um our biggest competitors are zendesk and freshdesk so we are in this space and uh i guess that the biggest difference between us and them is that we are a bootstrapped company uh ever since the company was started um i guess that's about it that's good and how many uh what's the average customer pay you per month oh the average per month i i can tell you the the lifetime of you would be about 2500. okay well let me ask you this differently how many customers are you currently serving so oh that would be around 2000 but we also have uh about four thousand on on like a low tier plan which which is uh on on from the from the free range like a zero uh per month until about like 15 bucks so we don't really count that into the main bracket yeah i mean so can i take can i take basically again 2 000 customers divide it by your current 250 000 a month in revenue you're doing about 120 dollars per customer per month oh yes somewhere around there yeah okay that's good so and then when put this on a timeline for me when did you guys launch oh well so the story with live agent was that it only started as a live chat first in about 2000 2009 and then it was two separate products it was a live chat and a customer series app and then we merged them together in approximately 2013. and uh by the time by the time things settled it was about 2015 so that's that's that i would say like the official lounge of live agents is correct okay yeah well but but you had important routes that go all the way back to 2009. oh yes yes that's like the first route of a live agent where and 2 000 paying customers you said you have 4 000 on the free tier or paying very little yes okay like how little are they paying oh well i i was mentioning this it was uh like uh um from zero uh like like paying nothing like a free competition so they're free these are your free users and until like uh about 15 bucks okay got it so so you have really led growth help us understand how you guys have been adding customers the past several months yeah so so uh the the growth trajectory of live agent uh was uh quite stable for the first two years when i joined and what years uh 2013 2014 yes i so the first two years we weren't really growing that much it was like a small organic growth a couple thousand a month but then uh at the same time we started building our online presence on uh like a software comparison sites like gt2 crowd and cafetera and all all of the others and simultaneously we world we worked really hard on improving our onboarding experience so by combining those two we were able to uh like during during a period of one year we were really able to grow really fast and after that period the the girl was uh quite stable until now okay and now you're growing it caught 60 or 70 percent year over year oh yes yeah okay um good and then what so talk to me about churn because churn makes growth tricky right so what's what's your current churn and how do you keep it low oh actually i was uh i was looking at churn uh the the past couple of weeks and because it's been uh it's it's becoming a big problem for us these days and especially children connected to like failed payments and payment related churn so we are trying to fight fight that uh fight it better now or you know and so what's what are the let's start with how what it is first so what is churn right now percentage-wise oh percentage-wise um so we lose about 50 uh customers a month okay so 50 out of 2 000 um yeah that depends on on how you look at your and how you calculate it like we gain 100 lose 50. well gaining customers has nothing to do with churn right so that has to do with with new revenue growth so i'm just talking churn so if you're losing 50 every month out of your current 2000 that's about 2.5 churn per month right or about 30 annually is that right yeah okay so if you're churning again we're only talking about the cohort that signed up a year ago so today they're all renewing 30 percent of them you're saying well can't we'll have cancelled what percent of them will kind of increase their revenue so they'll go from a 30 a month plan to a thousand dollar a month plan uh well we don't really have like uh upsells like uh from from the from the plan change like somebody would sign up for a lower tier and then upgrade to a higher tier what our customers do that they keep adding more seats and that that's how we like increase the the average uh revenue per customer well i mean i would say that's an upsell you're upselling seats yes so on average what does a customer expand to year over year do they expand 200 percent 50 percent 10 percent uh i don't want to like give you false numbers but uh maybe like 70 percent out from the customers that upgrade uh uh currently uh get upselled or like i guess what i'm really asking is do you drive enough expansion revenue from that same core that signed up a year ago to make up for the 30 of churn yes so you have at least 30 expansion revenue on the accounts that signed up a year ago yeah do you know what net revenue retention is uh yeah but no from top of my head i i i don't think i'll be able to like provide all these numbers yeah what are the numbers that you i mean these if i was a growth guy at a company like live agent i wouldn't know these numbers like the back of my hand so you're clearly not focused on them what are you focused on what numbers do you like look at every morning yes so what i look at is the the number of uh trial sign ups the number of active uh trials that that make interactions with our app uh based on which i can uh predict like how many upgrades uh we're gonna have uh this month hold on let's go through those so new trial signups monthly is usually about what somewhere between 1500 and 2000 okay and then how many of those will actually be active in a month now active probably less than 400 and then how many of the 400 actually at the end of the month upgrade to a paid customer somewhere between 80 and 100. and which of those points in the funnel do you spend most of your time trying to improve oh well that depends on uh on the season uh like sometimes uh over a long term project like a three month project would be focused on gaining more uh traffic so like the the first level of the of the funnel to gain more trial signups but then in the other time like like quarter one i was focused on on the on the last uh step of the funnel like uh trial signups uh converting into paying customers and what's the number one thing you have to get a trial to do action-wise to increase the likelihood that they convert oh from our experience it's is uh adding seats okay yeah yeah but no no what what do you actually have to get them to do in the application usage wise so that is the best predictor of if they're going to add additional seats oh probably it's going to be connectdale their email address uh interesting okay so and then when you look at your whole funnel and you look at your total your fully weighted customer acquisition cost right what are you paying to get a new 120 a month customer yeah that's a great question uh we want to be like our focus is to be not spending more than 40 percent of the of the lifetime value or half of the lifetime value which is well um like the the best uh price point would be like a thousand bags for uh for a paying customer okay so if you spend a thousand to get a new customer paying 120 a month that puts your payback period what about eight nine months yeah and you're saying that that's a thousand is fifty percent of your lifetime value so you're forecasting a two thousand dollar lifetime value somewhere between two thousand and twenty five hundred interesting so um your churn must be more than two point five percent per month then if you're only forecasting that lifetime value the math is i'm taking 1 divided by 0.3 right i'm taking 1 divided by 0.025 basically as you for sorry by 0.25 you're you're getting 40 months of lifetime value out of them which would be 4 800 in lifetime value if you have less than that you just said your lifetime value is more like two thousand not five thousand that would mean your churn is actually higher than thirty percent annually or how do you get your lifetime value projections uh well we calculate uh the retention of uh how much uh like how many months uh is the average time of the subscription and then the lifetime value yeah that's fair well at least you're conservative at least you're not overestimating which is good um talk to me about the team today how many people uh well uh so we we also have a another product poster for libra which is an affiliate marketing software so some of the team like the customer support team is shared and it's been in between these two and live agent and positively pro but the total is somewhere around 50. okay 50 people and you're bootstrapped so i assume you guys are break even or are you burning capital uh actually we are in profit uh so if you take in account both the products okay just talking live agent though is that is that is it a profitable business or is the affiliate business underwriting the prop the agent business so well it started uh the company started with the affiliate business and uh then at some point uh it it like stopped growing so we and we shifted focus on live agent got it so most of our resources went went into and but and now it's it's the main uh main source of privilege what percent would you say since you're profitable are you talking like 10 our profits or 50 profits at the end of each month oh i i i'm not sure if i can if i can say this figure these are uh i'm really not though well do david do your best to give away do your best you've already said you're profitable so that's that's the main thing you already said that so i mean give me a general range yeah it will be somewhere probably somewhere between 10 and 20 okay good so on 240 grand a month in revenue you're taking something like 24 000 to 50 000 to the bottom line every month that's healthy yes uh we also we have to there's a another thing we have to calculate in which is uh completely like a separate uh separate licensing program that we have not only we offer like subscription service for live agent but we also have like standalone licensing on premise licenses which are mostly for the enterprise uh businesses how much revenue did that business that part of the business do last year oh it's probably gonna be like five percent oh so very very small yes okay um okay got it very good let's wrap up with the famous five number one what's your favorite business book [Music] business book uh actually it's not the business book but it's the sapiens book uh sapiens is good number two is there a ceo you're following you're studying right now i'm sorry is there a ceo you're following or studying um well to be honest yeah the most of the competitors i i am so i guess name is ceo you're following or studying miguel from zendesk yeah uh number three what's your favorite online tool for building your company online food for building company um dude you're the head of growth how do you not have a favorite tool that you use to build the company oh like uh i was yeah so google analytics there okay there we go number four how many hours of sleep to get every night [Music] seven and what's your situation david married single kiddos married no kids no kids and how old are you yeah 26 26 last question what do you wish your 20 year old self knew um i guess i don't know i think i'm pretty satisfied with it's not about something you would change it's just about something you wish you knew um really i i i don't think i would like change and change anything okay never mind it's not about something you're gonna change david it's just about something you wish you knew when you were 20. it's not about a regret or something you change or something anything like that just something you knew wish you knew when you were 20 um i guess new more people all right guys there we go there you have it live agent growing about 60 year over year now doing about 240 250 000 a month in revenue across 2000 paying customers currently they are converting and getting about call it 2 000 ish uh new uh new trial signups every single month 400 of those become active and about 100 of those convert to paid customers uh churn's an issue they're turning about 30 35 of their customer rates every single year but expansion tends to make up for that the nice thing is they're doing this all bootstrapped 50 people on their team taking 10 to 20 percent even to margins every single month so they are profitable spending a thousand bucks to get a new customer for an eight month payback that also is about 50 of their total ltv on that customer david thank you so much for taking us to the top thank you