Interview
How LiveAgent Bootstrapped to 2,000 Customers and 80 to 100 New Paying Customers Per Month (Interview with Head of Growth David Cacik)
- Interview Date
- May 22, 2019
- Interviewee
- David CacikHead of Growth
Company Metrics at Interview Time
Paying Customers (2019)
2,000
Team Size Across Both Products (2019)
About 50
Historical Snapshot
These numbers were reported by David Cacik during the interview recorded in May 2019 and are a historical snapshot, not current figures. See LiveAgent’s current numbers.
Key Takeaways
- 01LiveAgent serves 2,000 paying customers as of 2019, with an additional 4,000 on a free or very low-cost tier
- 02The company generates 1,500 to 2,000 new trial signups per month, of which fewer than 400 become active
- 0380 to 100 of those active trials convert to paying customers each month
- 04LiveAgent started as a live chat product in about 2009, and the company has been bootstrapped since it began; counting both of its products, it was in profit
- 05Asked for a profit margin, David first said he was not sure he could share the figure, then said it was "probably somewhere between 10 and 20%"
- 06The team totals about 50 people shared across LiveAgent and sister product Post Affiliate Pro
- 07Customer lifetime value is estimated between $2,000 and $2,500
- 08The acquisition-cost aim is to spend no more than 40%, or half, of a customer's lifetime value; David called about $1,000 per paying customer "the best price point", a target rather than what a customer actually costs
- 09A year of fast growth came from building a presence on software comparison sites such as G2Crowd and Capterra while improving the onboarding experience
- 10The key activation action that predicts trial-to-paid conversion is connecting an email address in the app
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Paying Customers (2019) | 2,000 | Interview, May 2019 |
| Free or Low-Tier Users (2019) | 4,000 | Interview, May 2019 |
| Monthly Trial Signups (2019) | 1,500 to 2,000 | Interview, May 2019 |
| Active Trials Per Month (2019) | Fewer than 400 | Interview, May 2019 |
| New Paying Customers Per Month (2019) | 80 to 100 | Interview, May 2019 |
| Customers Lost Per Month (2019) | About 50 | Interview, May 2019 |
| Customer Lifetime Value (2019) | $2,000 to $2,500 | Interview, May 2019 |
| Profit Margin (2019) | 10% to 20% | Interview, May 2019 |
| On-Premise Licensing Share of Revenue (2018) | About 5% of revenue | Interview, May 2019 |
| Team Size (2019) | About 50 (total across LiveAgent and sister product Post Affiliate Pro) | Interview, May 2019 |
| Products | 2 | Interview, May 2019 |
| Year Founded | 2009 | Interview, May 2019 |
Growth Breakdown
Customers
LiveAgent had approximately 2,000 paying customers at the time of the interview, with an additional 4,000 users on a free or very low-cost tier that the team did not count in their main bracket. The company was adding 80 to 100 new paying customers per month after converting from a trial funnel of 1,500 to 2,000 monthly signups.
Team
The total headcount was about 50 people, shared across LiveAgent and its sister product Post Affiliate Pro. The customer support team in particular was split between the two products.
Profitability and Funding
The company has been bootstrapped since it started, and at the time of the interview it was in profit counting both of its products, LiveAgent and Post Affiliate Pro. Asked for a margin, David first said he was not sure he could share the figure, then said it was "probably somewhere between 10 and 20%." The company started with the affiliate business, which stopped growing, then shifted its focus and most of its resources to LiveAgent, which became its main source of revenue.
Revenue Mix
Besides the LiveAgent subscription service, the company sold standalone on-premise licenses, mostly to enterprise businesses. Asked how much revenue that part of the business did the previous year, David said it was "probably gonna be like 5%."
Growth Strategy
Software Review and Comparison Sites
David credited building a strong presence on sites like G2Crowd and Capterra as a primary growth driver. Combined with improvements to the onboarding experience, this approach enabled a period of rapid growth that then stabilized into consistent gains.
Onboarding Optimization
The team worked to improve the onboarding experience in parallel with their review-site strategy. The single most important activation step they identified was getting trial users to connect their email address inside the application.
Trial Funnel Management
David tracked trial signups, active trials, and trial-to-paid conversions as his core daily metrics. Depending on the season, the team would focus either on driving more top-of-funnel trial signups or on improving the conversion rate from active trial to paid customer.
Seat-Based Expansion
LiveAgent did not really sell plan upgrades. Its customers kept adding more seats, and that was how the average revenue per customer grew. Asked about net revenue retention, David said he could not give those numbers from the top of his head.
Bootstrapped Capital Discipline
The company was bootstrapped and, counting both of its products, in profit. On acquisition cost, David said the focus was "not spending more than 40% of the, of the lifetime value or half of the lifetime value," and called about $1,000 per paying customer "the best price point." That is a target; he did not say what a new customer actually costs.
Best Quotes
“So we are a customer service software. Our biggest competitors are Zendesk and Freshdesk. So we are in this space. And I guess the the biggest difference between us and them is that we are a bootstrapped company ever since the company was started.”
“So that would be around 2,000, but we also have about 4,000 on a low tier plan, is from the free range, like zero per month until about like $15. So we don't really count that into the main bracket.”
“So so the growth trajectory of LiveAgent was quite stable for the first two years when I joined.”
“So what I look at is the number of trial sign ups, the number of active trials that make interactions with our app based on which I can predict like how many upgrades we're gonna have this month.”
“Somewhere between 1,500 to 2,000.”
“Somewhere between eighty and one hundred.”
“Oh, from our experience, it's adding seats.”
“Oh, probably it's going to be connect their email address.”
“Yeah. We somewhere... Probably somewhere between 10 and 20%.”
What Happened Next
At the time of this interview in May 2019, LiveAgent was a bootstrapped customer service software company with about 2,000 paying customers. The company also made the affiliate marketing software Post Affiliate Pro; across both products it had a team of about 50 people and was in profit. David Cacik said churn, especially from failed payments, was becoming a big problem and that the team was trying to fight it better. Visit the LiveAgent company profile on GetLatka for current figures and updated metrics.
View LiveAgent’s current profile and metricsFull Transcript
Chapters
- 0:01Introduction and MRR History
- 0:15Confirming Current Revenue and Growth
- 1:20What LiveAgent Does and Its Market Position
- 1:46Customer Count and Free Tier
- 2:45Company Timeline and Origins
- 3:45How LiveAgent Has Been Adding Customers
- 5:01Churn and Expansion Revenue
- 7:54Trial Funnel Metrics and Conversion
- 9:22Trial Activation, Acquisition Cost Target and Lifetime Value
- 11:22Team Size and Bootstrapped Profitability
- 12:31Profit Margin and On-Premise Licensing
- 13:46Famous Five: Favorite Book
- 14:00Famous Five: CEO to Follow and Favorite Tool
- 14:39Famous Five: Personal Questions
Introduction and MRR History
Nathan Latka
00:01Hello, everyone. My guest today is David Cacik. He is the head of growth at LiveAgent. He's led all their initiatives for the past six years and helped grow MRR from $20,000 a month to $250,000 a month. David, you ready to take us to the top?
David Cacik
00:13Yeah. Let's do it.
Confirming Current Revenue and Growth
Nathan Latka
00:15Alright. 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 $250,000 a month?
David Cacik
00:22Yes. That's correct.
Nathan Latka
00:23And what is that up from exactly a year ago? Do you remember?
David Cacik
00:27Oh, it would probably be about 60 or 70,000. Yeah.
Nathan Latka
00:32Okay. So a year ago, you were at 60 or 70?
David Cacik
00:35No. The the growth was 60,000.
Nathan Latka
00:38Oh, got it. So if you're two fifty today, you were maybe call it 160, 170 about a year ago?
David Cacik
00:43Yeah, about that. Yeah.
Nathan Latka
00:45Very good. And do you remember what you closed twenty eighteen December, 2018, six months ago at?
David Cacik
00:50From the top of my head, don't because,
00:54to be honest, we did lose a very important client at the end of the year. So that made the end of the year quite worse.
Nathan Latka
01:04How much revenue did that one customer represent? Like 10 to 20 grand a month?
David Cacik
01:07It was, I think it was $8.08 a month.
Nathan Latka
01:10Okay. Well, that's not that's not the end of the world. That's what 4% of your total revenue monthly?
David Cacik
01:15Yeah, but still, it was one of the biggest ones. So it was quite a loss.
What LiveAgent Does and Its Market Position
Nathan Latka
01:20Yeah. Okay. Let me let me take a step back for a second. Tell everyone what liveagent does and kind of how the company makes money.
David Cacik
01:26Yeah. So we are a customer service software. Our biggest competitors are Zendesk and Freshdesk. So we are in this space. And I guess the the biggest difference between us and them is that we are a bootstrapped company ever since the company was started.
01:45I guess that's about it.
Customer Count and Free Tier
Nathan Latka
01:46That's good. And how many... What's the average customer pay you per month?
David Cacik
01:51The average per month, I can tell you the lifetime value would be about 2,500.
Nathan Latka
01:58Okay. Well, let me ask you this differently. How many customers are you currently serving?
David Cacik
02:03So that would be around 2,000, but we also have about 4,000 on a low tier plan, is from the free range, like zero per month until about like $15. So we don't really count that into the main bracket.
Nathan Latka
02:25Yeah. I mean, so can I take can I take basically, again, 2,000 customers divided by your current $250,000 a month in revenue, you're doing about a $120 per customer per month?
David Cacik
02:25Yes. Somewhere around there. Yeah.
Nathan Latka
02:25Okay. That's good. So so... And then when... Put this on a timeline for me. When did you guys launch?
Company Timeline and Origins
David Cacik
02:45Oh, well, so the story with LiveAgent was that it only started as a live chat first in about 2009. And then it was two separate products. It was a live chat and a customer service app. Then we merged them together in approximately 2013. By the time, by the time things settled, it was about 2015. So that's, that's, I would say like the official launch of LiveAgent as is
Nathan Latka
02:45Okay.
03:13Yeah. Yeah. Well, but but but you had important roots that go all way back to 2009.
David Cacik
03:18Yes. Yes. That's very, the first roots of a LiveAgent where
Nathan Latka
03:22And 2,000 paying customers, you said you have 4,000 on the free tier or paying very little?
David Cacik
03:22Yes.
Nathan Latka
03:22Okay. Like how how little are they paying?
David Cacik
03:32Oh, well, I I was mentioning this, it was, like, from zero, like, like paying nothing, like a free complete
Nathan Latka
03:40So they're free. These are your free users?
David Cacik
03:43And until, like, about $15.
How LiveAgent Has Been Adding Customers
Nathan Latka
03:45Okay. Got it. So so you have really led growth. Help us understand how you guys have been adding customers the past several months.
David Cacik
03:52Yeah. So so the growth trajectory of LiveAgent was quite stable for the first two years when I joined.
Nathan Latka
04:02Which were what years?
David Cacik
04:04Oh,
04:07thirteen, twenty fourteen. Yes. The first two years, we didn't, we weren't really growing that much. It was like a small organic growth, a couple of thousand a month. But then, at the same time, we started building our online presence on like a software comparison sites like G2Crowd and Capterra and all of the others. And simultaneously
04:35we worked really hard on improving our onboarding experience. So by combining those two, we were able to, during a period of one year, were really able to grow really fast. And after that period, the growth was quite stable until now.
Nathan Latka
04:57Okay. And now you're growing at 60 or 70% year over year?
David Cacik
05:00Yes.
Churn and Expansion Revenue
Nathan Latka
05:01Yeah. Okay. 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?
David Cacik
05:12Actually, I was, I was looking at churn, the past couple of weeks and because it's been, it's becoming a big problem for us these days and especially churn connected to like failed payments and payment related churn. So we are trying to fight fight that fight it better now, you know, and
Nathan Latka
05:40so what are the let's start with how what it is first. So what is churn right now percentage wise?
David Cacik
05:47Percentage wise. So we lose about 50 customers a month.
Nathan Latka
05:57Okay, so 50 out of 2,000?
David Cacik
06:00Yeah, that depends on on how you look at your and how we calculate it, like we gain 100 lose 50.
Nathan Latka
06:07Well, gaining customers has nothing to do with churn. Right? So that has to with with new revenue growth. So I'm just talking churn. So if you're losing 50 every month out of your current 2,000, that's about 2.5% churn per month, right? Or about 30% annually. Is that right? 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% of them you're saying will have
06:32canceled. 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.
David Cacik
06:41Well, we don't really have like up sells like 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 average revenue per customer.
Nathan Latka
07:01Well, I mean, I would say that's an upsell. You're just upselling seats. Yes. So on average, what does a customer expand to year over year? Do they expand 200%, 50%, 10%?
David Cacik
07:12I don't wanna like give you false numbers, but maybe like 70% out from the customers that upgrade currently get upsell or like...
Nathan Latka
07:28What I'm really asking is do you drive enough expansion revenue from that same cohort that signed up a year ago to make up for the 30% of churn?
David Cacik
07:37Yes.
Nathan Latka
07:38So you have at least 30% expansion revenue on the accounts that signed up a year ago?
David Cacik
07:42Yeah.
Nathan Latka
07:42Do you
07:43know what net revenue retention is?
David Cacik
07:47Yeah, but from top of my head, I don't think I'll be able to provide all these numbers.
Trial Funnel Metrics and Conversion
Nathan Latka
07:54Yeah, what are the numbers that you... I mean, these... If I was a growth credit company like LiveAgent, 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?
David Cacik
08:05Yes, so what I look at is the number of trial sign ups, the number of active trials that make interactions with our app based on which I can predict like how many upgrades we're gonna have this month.
Nathan Latka
08:22But let's let's go through those. So new trial signups monthly is usually about what?
David Cacik
08:28Somewhere between 1,500 to 2,000.
Nathan Latka
08:31Okay, and then how many of those will actually be active in a month?
David Cacik
08:36No active probably less than 400.
Nathan Latka
08:39And then how many of the 400 actually at the end of the month upgrade to a paid customer?
David Cacik
08:44Somewhere between eighty and one hundred.
Nathan Latka
08:47And which of those points in the funnel do you spend most of your time trying to improve?
David Cacik
08:52Oh, well, that depends on the season. Like sometimes, our long term project, like a three month project would be focused on gaining more traffic. So like the first level of the funnel to gain more trial sign ups. But then in the other time, like quarter one, I was focused on the last step of the funnel, like trial sign ups, converting into paying customers.
Trial Activation, Acquisition Cost Target and Lifetime Value
Nathan Latka
09:22And what's the number one thing you have to get a trial to do action wise to increase the likelihood they convert?
David Cacik
09:27Oh, from our experience, it's adding seats.
Nathan Latka
09:27Okay.
09:32Yeah. But no, no. 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?
David Cacik
09:41Oh, probably it's going to be connect their email address.
Nathan Latka
09:46Interesting. Okay.
09:47And then
09:48when 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, call it, $120 a month customer?
David Cacik
09:59That's a great question. We want to be like, our focus is to be not spending more than 40% of the, of the lifetime value or half of the lifetime value.
Nathan Latka
10:10Which is what?
David Cacik
10:13Like, the the best price point would be like a thousand bucks for for a paying customer.
Nathan Latka
10:19Okay. So if you spend 1,000 to get a new customer paying $120 a month, that puts your payback period of what about eight, nine months?
David Cacik
10:19Yeah.
Nathan Latka
10:19And you're saying that that's fit 1,000 is 50% of your lifetime value. So you're forecasting a $2,000 lifetime value?
David Cacik
10:33Somewhere between 2,000 and 2,500.
Nathan Latka
10:36Interesting. So your churn must be more than 2.5% per month, then if you're only forecasting that lifetime value.
10:48The math is I'm taking one divided by point three, right, I'm taking one divided by point Oh, two five. Basically, as you four sorry, by point two five, you're getting forty months of lifetime value out of them, which would be $4,800 in lifetime value. If you have less than that, just said your lifetime value is more like 2,000, not 5,000. That would mean your churn is actually higher than 30% annually?
11:06Or how do you get your
11:07lifetime value projections?
David Cacik
11:11Well, we calculate the retention of how much, like how many months is the is the average time of the subscription and then the lifetime value.
Team Size and Bootstrapped Profitability
Nathan Latka
11:22Yeah, that's fair. Well, at least you're conservative. At least you're not overestimating, which is good. Talk to me about the team today. How many people?
David Cacik
11:29Oh, well, so we also have another product, which an affiliate marketing software. So some of the team, like the customer support team is shared and it been in between these two in LiveAgent and Post Affiliate Pro, but the total is somewhere around 50.
Nathan Latka
11:47Okay. 50 people. And you're a boot bootstrap. So I assume you guys are breakeven or are you burning capital?
David Cacik
11:54Actually, we are in profit. So if you take in account both the products.
Nathan Latka
12:03Okay. Just talking LiveAgent though, is that, is that, is it a profitable business or is the affiliate business underwriting the agent business?
David Cacik
12:11Well, started, the company started with the affiliate business and, then at some point, it it, like, stopped growing. So we... And we shifted focus on LiveAgent.
Nathan Latka
12:11Got it.
David Cacik
12:11So most of our resources went went into... And but... And now it's the main source of
Profit Margin and On-Premise Licensing
David Cacik
12:31revenue
Nathan Latka
12:31So what for percent would you say, since you're profitable, are you talking like 10% profits or 50% profits at the end of each month?
David Cacik
12:41Oh, I'm not sure if I can say this figure. These are
12:51something I'm really not
Nathan Latka
12:53Well, David, do your best to give a rate. Your best. You've already said you're profitable. So that's the main thing. You already said that. So I mean, me a general range.
David Cacik
13:01Yeah. We somewhere... Probably somewhere between 10 and 20%.
Nathan Latka
13:05Okay. Good. So on $240,000 a month in revenue, you're taking something like 24,000 to 50,000 to the bottom line every month. That's healthy.
David Cacik
13:12Yes, also, we have to, there's another thing we have to calculate in, which is completely like a separate licensing program that we have. Not only we offer like subscription service for LiveAgent, but we also have like a standalone licensing on premise licenses, which are mostly, for the enterprise, businesses.
Nathan Latka
13:37How much revenue did that business, that part of the business do last year?
David Cacik
13:41Oh, it's probably gonna be like 5%.
Nathan Latka
13:44Oh, so very, very small.
David Cacik
13:45Yes.
Famous Five: Favorite Book
Nathan Latka
13:46Okay. Okay. Got it. Very good. Let's wrap up with a famous five. Number one, what's your favorite business book?
David Cacik
13:53Business book? Actually, it's not the business book, but it's the Sapiens book.
Nathan Latka
13:59Sapiens is good.
Famous Five: CEO to Follow and Favorite Tool
Nathan Latka
14:00Number two, is there a CEO you're following or studying right now?
David Cacik
14:04I'm sorry?
Nathan Latka
14:05Is there a CEO you're following or studying?
David Cacik
14:09Well, to be honest, yeah, the most of the competitors I am so I
14:13guess,
Nathan Latka
14:13name CEO you're following or studying?
David Cacik
14:17Miguel from Zendesk. Yeah.
Nathan Latka
14:20Number three, what's your favorite online tool for building your company?
David Cacik
14:24Online tool for building company?
Nathan Latka
14:29Dude, you're the head of growth. How do you not have a favorite tool that you use to build the company?
David Cacik
14:34Oh, like, I was... Yeah. So Google Analytics.
Famous Five: Personal Questions
Nathan Latka
14:39There... Okay. There we go. Number four. How many hours of sleep do get every night?
David Cacik
14:43Seven.
Nathan Latka
14:44And what's your situation, David? Married, single kiddos?
David Cacik
14:47Married.
Nathan Latka
14:48No kids?
David Cacik
14:49No kids.
Nathan Latka
14:49And how old are you?
David Cacik
14:50Yeah. 26.
Nathan Latka
14:5226. Last question.
14:54What do wish your 20 year old self knew?
David Cacik
14:59I guess, I don't know. I think I'm pretty satisfied
15:04with with
Nathan Latka
15:04Not about something you would change.
15:07It's just about something you wish you knew.
David Cacik
15:11Really, I don't think I would, like, change any change anything.
Nathan Latka
15:14Okay. 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.
David Cacik
15:24I guess knew more people.
Nathan Latka
15:27Alright, guys, there you have it liveagent growing about 60% year over year now doing about $240,000 to $250,000 a month in revenue across 2,000 paying customers currently, they are converting and getting about call it 2,000 ish new new trial signups every single month 400 of those become active and about 100 of those convert to paid customers churn's an issue, they're churning about 30 to 35% of our customer every single year, but expansion tends to make up for that. The
15:52nice thing is they're doing this all bootstrapped. 50 people on their team taking 10% to 20% EBITDA margins every single month, so they are profitable, spending $1,000 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.
David Cacik
16:07Thank you.