How Loom CEO Joe Thomas grew to $50M revenue and 120K customers in 2023.

hello everybody my guest today is shahid khan he's the founder of loom he previously worked as an entrepreneur in residence at nfx a venture capital firm focused on investing in networks and marketplaces prior to that he was an analyst at los angeles-based venture capital firm upfront ventures shahid you ready to take us to the top yes all right very good yeah so you're building loom now which i think a lot of people have heard of you guys have really taken off kind of asynchronous video communication for teams um what am i missing anything else you want to add in terms of what you do nope that's that pretty much nails it um loom is the easiest way for people to record a quick video of themselves and share that video with the team member uh whether people are remote or distributed um it's easier than hopping on a video conference call or sending a very lengthy email or you know screenshots with air with arrows kind of scattered for them there was i think the way i came across you is um i buy and sell companies and one of my little tactics to find companies to buy is to go to the google chrome web store sort by productivity look at highest users to fewest and then if the update date by the developer was more than like a year ago i assume it's inactive and they think it's worthless so then i go out and try and buy and i remember coming across you guys earlier when you had like 100 000 users clearly very active though now you're up at i think almost a million on chrome is that your number one growth channel uh so i would say our growth channel is pretty organic if you send someone a loom video they'll watch it they're curious and they'll sign up uh there are a couple of growth tactics that we have implemented uh such as once a user is done watching a video we try and prompt them to sign up uh to either reply to a loom video with another loom video but we use those different product hooks and triggers to kind of continue the um the growth uh loop have you actually gone deep into kind of k factor invite sent and then try and figure out how to shorten the viral coefficient cycle yeah we so we experimented quite a bit with like a referral system where we would give say like five dollars in loom credits for every person you'd refer back to loom um and that kind of encouraged people early on probably when we were at 100 200 000 users uh to invite their co-workers because there's like inherently you know a network effect when if i invite another person from my company who's also using loom and we share videos with each other um we're kind of like in congruency when it comes to like relaying information back and forth um and now it's just part of our process so we experimented with uh to-do lists checklists um various formatting we actually had a growth engineer at one point whose uh job was solely to launch an experiment once a week um and a lot of those experiments those that you know exceeded uh we launched into production those that did not work um we ultimately just moved move forward what was the frame so i'm always interested in testing frameworks because if you believe that whoever tests the fastest today wins and you look at amazon that we're probably running a billion tests right now facebook same thing then you want to understand testing frameworks so how did you set this growth mark you know whatever you want to call him or her what structure did you give them so they could get the velocity of test as high as possible yeah so we we came up with a bunch of ideas you know there's there's a lot of things that we can experiment around whether it's um triggering someone to record a loom video giving them like jobs to be done specific use cases or if they're writing up an email um it's like hey you know we noticed that you're spending a lot of time drafting up an email just record a loom video it'll take you two minutes to you know convey your message inside gmail uh inside gmail yes so we at one point we actually had a um so anyone who had the chrome extension was able to uh either compose a new email with text or create a loom recording and then that video would natively insert uh into the uh the compose window and for anyone who uh had the chrome extension they'd be able to watch the video in line in the email and for those that didn't have the chrome extension which was obviously most of the users or sorry most of the recipients are receiving the email um it would just be a thumbnail with the play button that they would click on and it would take them to loom's website got it really interesting yeah there's something to be said for this i mean i even find myself now when i get texts i'm just busy it's just so easy to hit the record audio button and literally even if it's only a three second audio i'm way more likely to do that than try and like knock out a text i mean there's something about the like communication and moving away from even text like video audio thing and you're potentially in a very interesting spot to go after that what feels like it's going to be a natural big market yeah so the one thing that we talk about quite a bit um here at loom and also uh to our customers is you know we we see that consumer behavior tends to lead the path of enterprise by around two years so what we saw with instagram snapchat where people would pull out their phones and they're pretty um you know like they're social it was socially acceptable to record yourself uh and send a video of yourself speaking to the camera and like these bite-sized video uh like video recordings files um we're starting to see that trend and behavior kind of come into the workplace and that's why we feel you know with video and as more companies are becoming remote and distributed you know synchronous calls aren't always the best answer um so sending an asynchronous quick message that takes you just two minutes three minutes to record um tends to be the better option guys there you have it shaheed is saying he is snapchat but b2b right that's how it works uh so he'd walk me through okay so we've talked about a lot of stuff here um what do you care most about right now i assume it's just it's so much just free user growth right uh yeah right now so it's completely free user growth and we've you know as we've been uh launching experiments um we haven't necessarily paid anything uh there hasn't been any paid marketing done on our and it's normally been like the community uh has been talking about loom and you know if i'm a designer at one company um and i hang out with one of my other designer friends i'll bring it up in conversation so word of mouth is also very key for us um is there a paid model though uh so right now we've been completely bottoms up and actually as of february 19th we just launched loom pro which is our first premium product um wait so how does that code for your first paid product correct okay yeah so it's at ten dollars per user per month and that basically allows you to do um things on top of uh the existing free product such as if you're a salesperson and you record a video for one of your clients um and you're trying to you know upgrade them or if you're recording a video for a lead and you're trying to convert them you can basically attach a button um at the end of your video that'll allow them to go straight to say your upgrade uh page so there's a lot of things that were allowing um we're trying to take the behavior of people recording videos and making them more tactical in nature um so there is like a call to action or there is you know analytics in terms of who watched the video how long when did you launch the company what year uh so we launched loom the product itself june of 2016. okay and so here's what i'm going to ask you right um people listening well how did he have the luxury of not having to worry about you know revenue and a pricing page until now right he's two and a half three years in so what's the answer to that i'm gonna guess here you potentially raised right out of the gate because you were in the ir uh yes so i would say we started off the company my two co-founders and i uh we i mean obviously very humble beginnings we lived in a apartment in san mateo my co-founder joe actually stayed in my room with me and it was basically us just bootstrapping in fact we actually launched um loom used to be called open test which was a completely different idea that we spent three months building couldn't find product market fit pivoted into a different idea uh same scenario built a product didn't find product market fit and then at the very end as we were running out of cash uh we had to come up with some hail mary and that's when we realized that people were actually using the chrome extension we had built um that was mainly targeted towards user testing uh people were actually recording these videos and sending updates to their co-workers with the exact same extension so we decided to follow that path and then launch the product in june of 2016 and then in two and a half years we went from zero to now 1.1 million registered users in about 21 on about 21 000 companies around the world okay so 1.2 registered users and sorry how many companies uh 1.1 million registered users and on 21 000 companies around the world and and so the the question i have to follow up with there is that number is great it's a good it's a good bite but how do you measure who's active or engaged so we look at so we have video uh recorders and we also have video viewers so anyone who engages within the video platform whether they're recording video commenting on an existing video reacting to videos with emojis um that's kind of like what we dictate our active users which is what right now in terms of mau so we have around two hundred thousand monthly activities okay that's pretty good on a 1.2 registered i mean it's you know pushing twenty percent yeah yeah that's not bad at all um interesting why is now the right moment to put up a paywall uh so initially when kind of going back to your initial question around like how did we finance this and like how did we put off um you know putting up a play wall for about two and a half years we did you know raise some venture financing um we raised just under 14 million dollars in total uh it was a pre-seed a seed and then our series a was most recently led by kleiner perkins uh partner ilya fushman who comes from a background um from dropbox and we announced that on february 19th as well but initially you know as we started to see the momentum growing early on we realized that this was a new behavior so we our initial goal was to get as much option and become ubiquitous um as a product within a lot of these organizations so one company we went from 20 employees when we were raising our seed round to today about a year and a half later we're at just over a thousand employees from that company had naturally adopted loom because the product is inherently viral and there are some product triggers that led people to also signing up so what is the i mean you know we've had the tight form focus on we've had a lot of people that have gone like from freemium to paid where they've built like a million plus base and then introduced paid it's always interesting to me to ask the question when you're taking your first stab at a test like this like how do you come up with a price point and how do you decide what to put behind the payload what to keep in front and so what how many users in the first month of this ten dollar paywall being live do you think will hit the pay wall and what percent do you think convert yeah so i mean because we already have the existing user base um and we've been kind of promoting uh and you know playing with the idea of loom pro we actually had a coming soon video that we launched so we're hyping it up with our existing user base and once premiere or once loom pro had launched um because we're still like in the mid month we're expecting anywhere from three to four percent of the existing user base of active users converting over to pro and then also putting in triggers where the next step for loom is to build team accounts where right now everything is a very individualistic product and experience so if i wanted to collaborate with say another sales person at my company um on a particular project and we're using loom right now to send these individual videos and files and folders to them so if if i can just get my entire team onto loom um to create again like that network effect uh that's kind of like what we're striving for with team accounts that will ultimately also be a big uh revenue player for us 200 000 active users they engage with the video at least one video view it whatever send a video each month three percent of those converted when you put the paywall up that's six thousand at ten bucks a pop so sixty thousand bucks there in terms of monthly recurring revenue you think is going to happen how quickly um i would say roughly out the gate so that's because that's existing users that's like immediate conversions yeah and that's that's more on like i mean i'm putting i'm pulling that number from uh like a financial model that we put together so the numbers are a little bit more on the conservative side but i do think um we you know as a company and as as a community uh we we definitely will do better yep yep no that's great and then um you mentioned a little bit getting in like the team space that's then starting to push up to some companies that have raised a crap ton and you're talking like the mondays of the world this kind of space why kind of get that i mean is there not an opportunity to just like be the video that like the video thing back and forth and just api or add to the app exchanges of these kinds of tools or actually go build a team and kind of project management tool yeah i would say there's there's a lot of avenues we can go down um the one that's been the most fascinating i mean we've gotten a lot of inbound from a lot of you know like you said the mondays of the world um that have reached out to us saying hey you know we want to take loom and build it inside of our product using your api did they offer to acquire you what's that did roy offer to acquire you uh did roy the founder of monday oh no no no okay um no but like i mean there's companies similar to monday that have reached out um some who've tried to acquire you know for the sole purpose of like you know this uh like basically what we're doing um on the asynchronous video side but for us what's most fascinating right now is seeing how a lot of the uh knowledge worker behavior is going from more you know text-based to uh in live video conferencing to an asynchronous format and people because you know like we said and talked about are more comfortable broadcasting themselves um we're starting to see that trend and we want to be the leaders of that trend and we currently are you know riding that wave which is why now it's like the best time to be working on um working on limb for us what's the team size today how many people sixteen one six everyone in san fran uh no so we are actually um due to the product you know due to us being like a remote friendly and distributed friendly product uh we are a remote first company so half of our team is scattered uh kind of across europe and in canada um and we actually have our devops engineer based in omaha nebraska and what if that's funny what if you said you're just now announcing a raise um how much is the raise that you just closed uh 11 million okay so you've had you basically have three money in the company up to date before then correct yeah okay how much of that three million would you say went towards driving the growth of the 1.2 million users or was most of three million towards salaries over the past two three years it's it's definitely uh i would say it's definitely like uh people budget so like the just like head count and things like that um whereas i would say most of it was investing into people and also investing into product so let me ask you a question and i don't know that you're going to answer this but i'm hoping you can still be help us learn something here um most b2b sas companies which i wouldn't put you in this category yet because you're you're your be your economics are more like a consumer app right now and but most consumer apps that hit a million bucks a million users are actually not valued that highly you gotta get like 10 million right or like 15 or 20 million before you really start getting good valuations so in the in the meetings with vcs that you just recently had when you closed the 11 how did you frame it to make sure you didn't get pushed down on valuation being compared to consumer apps but try and paint the picture of your b2b sas yeah i think i think a big part of that is showing like looking into the data and the cohorts of how engaged a lot of the um users are and like what are the jobs to be done and like desired outcomes that they're performing with loom that they you know couldn't have done prior to loom being a product so i think if you look at the specific behaviors and seeing how loom is adopted um say from like an individual contributor all the way up into uh all the way up to an executive and then an executive records a video summarizing say like a quarterly update and send that to his entire marketing team um and then you have like this trickle effect where like now the entire marketing team is signing up because they see their manager their boss uh using the product as well so i would say like looking at those behaviors that we start to see in a lot of these companies with loom um was one of the bigger selling points and that's kind of what's going to allow us to um you know see how loom evolved just to be clear that is what allowed you to get more of a b2b sas evaluation i would say i would say it was a it was a big part of it yeah i mean because most i mean look if you raised 11 and i'm doing very much back of the napkin here but if you're only selling 20 of the company right at 11 million that means pre-money valuation is whatever it is 40 50 million pre-money right on basically a million kind of a million two registered 200 000 active and and hopefully what becomes a strong b2b sas revenue stream almost like an asynchronous version of zoom right um which is interesting um eric is potentially about to go public uh would you sell to zoom um i i love eric he's a very nice guy we have like conversations about selling the company have not been a topic here i would say everyone is generally excited about like the opportunity that's ahead of us and i think we're pretty we're you know we're in we have a we have a very clear path to get there last question before we wrap up with the famous five in terms of going out to raise 11 you just did did you get the company to break even before then so you had the most leverage or were you still burning uh so we i mean like from a financial perspective we were still burning because we were completely bottoms up and we just launched our premium tier so it was more so looking at you know from a cost perspective uh so there are a couple things that went into place we did patent like the way we do our upload and like how we save cost being a video company so that was one thing you know investors looked at like can this scale say if we were 15 20 users tomorrow um and then one of my like my co-founder vinay who is our cto also has a background in video um and his previous company he worked at and led an engineering team at a company called up there that was acquired um and that was you know uh basically taking on dropbox and for storage so i'm sorry just go back to my original question what i'm trying to understand is how how much time did you give yourself in terms of runway before you started raising the 11 you just closed so if you were burning 100 grand a month and you had 600k in the in the bank still you gave yourself a six month kind of time frame to raise what what time frame did you give yourself to raise yeah so i would say we had about um we had about eight months of verb yeah when we started to think about our series a and then the process itself like going from initial meetings to term sheet took about two weeks uh that was mainly because we were building relationships um from our seed to our a uh so it made it a lot easier for us to go in and have some of these uh initial conversations yup and in terms of burn i mean can you share generally what you're at are we talking like a hundred grand a month in that burn or more um i would say uh above 100 grand so 16 people half remote half here uh in san francisco i would in the ultimate video company i should have guessed a little higher you're in san fran we can we put a cap on that and say between 100 and 500k yes okay fair enough good i won't push you more there good stuff all right let's wrap up with the famous five number one what's your favorite business book favorite business book um it's not necessarily business but it's growth related and it's i would say it's something that we handed to all of our um employees here at loom and actually did a book club around um is uh near eol's book hooked uh hooked yes it's it's actually it's a big driver of how we thought about growth and then also um brian belfort it's not a book he's a person he's also been a big advocate and like that's kind of helped uh guide us in terms of how to think about um user behavior and user triggers as it relates to chronic lead group number two is there a ceo you're following are studying right now um i am i mean i'm following the vault pretty pretty closely yes big fan of the ball um i love how he thinks and how he uh communicates and articulates his thoughts around business around everyday life work-life balance good number three what's your favorite online tool for building the company besides loom notion notion yep number four how many hours of sleep to get every night around seven and situation married single kids single not married no kiddos nope all right and last question uh oh sorry not last question how old are you 23. okay now last question what do you wish your 20 year old self knew [Music] um so 20 year old self basically where i was before i started the company um that being a founder is very very tough and you only understand how tough it is once you just jump in into the deep end guys there you have it this is how you know he just closed around to funding as he grew his beard out to look older he probably got a couple points on the valuation just from that alone again launched a loom with his co-founders back call it three years ago in 2016. they've been pre-revenue today but they've gotten 1.2 million users and 200 of a thousand of which are actively using their product they're launching a 10 per month price point now it's live today hoping for three percent of the 200 000 registered users to convert at 10 bucks a month so call it 60 grand a month there in revenue fairly quickly we'll see what happens they've raised 14 million bucks today's team of 16 all remote burning between 100 and 500 grand a month as they uh as they did that last race shaheed thanks so much for taking us to the top thanks nathan