Moosend Revenue & Valuation (2018)

my guest today is janice soros he is the ceo and founder of a company called moose end he's been in the banking technology in the past including goldman sachs jp morganing morgan and also was marketing technology obviously now in the present he's a lender at heart using technology to cook beautiful dishes janice are you ready to take us to the top hi hi nathan how are you doing yes sir okay good so so tell us more about the company what do you do and how do you make money right so we're an email marketing and marketing automations platform um obviously we our clients use a platform to set up their email newsletters to design them to set them up to send them to their audience they can segment uh you know their audience lists or obviously um you know just do a normal email blast or they can do automations and uh you know uh the cost of our platform starts from free all the way up to depending on how many subscribers you have to you know as far as can go basically and so why would somebody use you over a mailchimp i mean this is a very fragmented space it is very fragmented uh you know and we have many many many clients that came over over to us from belgium we've actually created a technology that migrates the whole account from melting to okay but why are they switching using us uh yeah sure so the reason a few reasons as you said it's a very fragmented space and if you're in for in a fragmented space one of the main reasons is pricing so we're cheaper alternative mailchimp we have all the features at a cheap price second reason is we have an awesome customer support team while products like mailchimp you may have to wait two three days on a on a ticket or in a queue to get your answer and to be honest with you uh marketing tools these days are quite um quite advanced i mean to set up a marketing automation it is quite advanced i strongly believe it's all open and i'm biased on that but i strongly believe we have better marketing automations and we'll have the best marketing automations that you can find on um email marketing tools and there are yeah so what are what i mean the numbers don't lie so let's just jump into some of the numbers what is the average pay you per month so the average the average customer would pay us 200 okay that makes sense 200 per month now that's not cheaper than mailchimp i mean there are many mailchimp plans way cheaper than that sure but you've asked about the average customer so the average revenue per user per month h200 will have people that they you know they send 5000 emails for for 10 bucks and i mean if you compare the pricing between the two products there is no question about i'm about 40 on average every plan that we have is four percent cheaper than melting and actually um just to add to that um we don't have restrictions about the number of uh campaigns you can send so you can send one or one thousand campaigns a month and we don't basically restrict you on the number of your campaigns you can send well on mailchimp how do you make sure that you have kind of long-term viability as a company because you can have people come in and abuse the system drive your costs through the roof because they're sending unlimited sends and just take advantage of your system but i mean it could happen theoretically and but it's like um blue fair meal you know you pay ten dollars a year to buffet you know you can't have people that they can go in and abuse the system but overall it works uh it works quite well and actually it's uh you know abuse the system abusing the system would mean that they would send unlimited campaigns to their customers no one really wants to do that because at the end of the day they will get so many people playing i'm talking about spammers i mean spammers would not use a product like like ours and we would uh either find them before they started sending a campaign we would find them after the senate campaign but you know we we're in a space and that you know we don't we don't build products for spam and well this sounds like a a product perfectly built for spam it's a flat fee for unlimited sends that's that's a spammer stream no so it's not really flat fee friendly it's flat fee for the number of subscribers you have right um well let's see let's see how how a spammer could take could abuse that they could send let's say 10 campaigns a day to their customers well if their numbers if they get a good open rates good click-throughs if their audience reads their emails and opens them and everything they're not spammers if they're not then then the systems that would have in place will detect those people and block their accounts so you know to be honest with you you know many people say you know email marketing you know kind of spam technology well it's not um we we are a hundred percent against spam in any way my co-founder actually right now as we speak he's in san francisco in the messaging anti-abuse watching group which is a very big sort of forum on anti-spam it's just just to be clear everyone would say that no one's going to come out an animal marketing company's not going to come and say we love spam no one's ever going to say that the fact is it still happens right people still have a platform so i was just trying to understand more around your model let's move on to some other questions here so we're going to put your launch company in sorry you can get the question what year did you launch the company in what year okay so it was 2012 2013 when we got our first customer on the product okay and what have you scaled to today in terms of total customers so we are currently running at around one thousand one thousand a bit active users active customers okay and just to be clear those are paying active customers uh 70 of them yes 30 would be on our freemium plan which is up to 5k yeah so 700 of the thousand are paying you on average 200 bucks a month you're doing about 140 grand a month right now in revenue uh around yeah around around that okay what do you mean around that like is it way lower way higher no no it's 135 that sort of thing so yeah around 140 as you said okay and now let's get into some of the economics here so churn in this kind of business is obviously really difficult sometimes tell me about your church right so the the average turn in the industry from what we've gathered in terms of our data it's eight percent um we are below eight percent churn um on our product we're about six six percent churn okay is that six percent logo term per month uh yeah exactly okay so how do you draw i mean that's still really i mean that's still high right you turn 65 72 percent of your customer base every year how do you get that lower um you know it's tricky um that's where you know really good support really good product comes into play we keep you know at the end of the day what we do is we we try to understand where the turn comes from and i think personally that support in this business is basically the way to beat stern um as innovative people are turning because either they don't understand the product so that we're missing something with custom support or because they don't get what they need in terms of um sort of open rates so that's deliverability um we try to sort of to battle turn through those we do a lot of meetings with our clients to explain to them you know um what they can expect from from email marketing and what sort of operator industry gets where uh recently uh were haven't launched it yet but it is announceable we're launching a tool that when they type a subject line it will predict the open rate they're gonna get in the campaign so we kind of give them some expectations in that respect so that sort of thing interesting um what about the other economics what are you paying to acquire a customer what's your cac we right now we don't spend one dollar on on on ads we don't we don't spend money on not just what's your favorite what's your fully weighted cash so it includes the salaries of your marketing and sales people right so you know i guess we have the marketing team right now is two people um it's very low that's what i was gonna say i mean it's quite low okay you know what what's the total team size so two of them are marketing and sales what's the rest of the team look like so 25 people are in total in the company so have 10 10 12 people in product of around four people on sales two people on marketing um and operations is the rest okay and what do you assume lifetime value is on these customers lifetime value is interesting um we on average i would say about 18 months um i don't to be honest with you i don't have a recent figure in lifetime value and we do have a lot of people that have been with us for many years four or five years since the very beginning some of them and have people that they you know they turn after two three months we think that the two three months of um limit is quite crucial and if people stay after two three months they generally stay for a long time um if that makes sense yeah that makes perfect sense and those numbers run out if you just do the math right 1 divided by 0.06 which is your churn gives you average lifetime value in months of about 16.6 so that's close enough to the 18 number you said and then when you multiply that by your 200 rpm number that gives you about three grand a little more than three grand in lifetime value so healthy economics now what do you know you have to get a customer to do in the first two to three months to make them be sticky we need to get them to send a campaign and we need to make sure that this campaign goes really well as in they get their their money back they send a campaign in whatever they're you know they're trying to sell let's say they're trying to sell i don't know um televisions they sell enough televisions to make sense to buy a plant from us um that sort of thing it's really down to the numbers our campaign gets and you know as you said it's a very segmented market and that means that it's quite competitive so we need to they they're probably using some other tool right now so they probably have an idea of what they can expect from email marketing so we need to do better than that and what do you i'm curious where most your growth is coming from in terms of the the list size of your customers are most of them importing lists from mailchimp or other channels or are they installing an opt-in form you give them on their website and they're just getting organic new opt-ins every day 100 the first i would say 95 the first yeah you know people are unfortunately people are um you know we we obviously strongly prefer the second because that means that we have control over where they got their list from um unfortunately with the first in the first case you don't have that control but everyone has a list from some place some people have acquired it in um obviously a legal way and some people have acquired in a bit more sort of shady way at the end of the day um nine five percent of our customers import lists from some place some tool yeah okay good and then as you've driven the growth of this thing over the past four or five years have you bootstrapped or raised capital we haven't raised capital uh at all right now we're 100 bootstrapped and we have external advisors that you know we go to to sometimes ask questions or um you know make sure that our strategy aligns with what we're trying to achieve and but we haven't got any external capital in the company still okay and where's grassroots it was sure it was i just want to say it was a decision we want to take the early years and i think it has paid off in that respect yep now what does growth rate look like as a bootstrapped company you're doing 135 per month today what were you doing 13 12 months ago uh i would say we i'm not gonna take the last year into consideration but every other year we essentially doubled every 18 months um sorry we doubled every nine months and so if i go back you know 10 11 12 months you were doing what 60 grand then now you're doing you know 130 140. uh yes i would well to be honest last year was a bit slower but around that i would say that you know the numbers why was it correct it was uh tricky you know um companies like us you know we're still a small company uh so just make this clear we're still a small company and where are you going where's the team right so we the company is a uk company but the majority of operations from greece okay right so our office right now where i am right now is in greece in athens greece and it was slower so last year was quite slow because we lost one or two of our biggest customers they're still customer of us but they really downsize their marketing department and that obviously how much like you lost five grand a month in revenue 10 grand a month in revenue or more 15 grand 15 grand okay got it yeah so we obviously cut we we cut up to this number but um it really sort of changed the growth rate for last year to be honest with you do any of your current customers today make up more than 10 of your monthly revenue uh no we have one or two let's say wales on our uh um you know on a revenue sheet right now but overall uh uh we don't we don't you know we're quite quite segmented in that respect good good good all right yes let's wrap up here with the famous five number one what is the last business book you read last business book all right i love the books from the 37 signals guys 37 signal guys rework was the last one um i love that book number two is there a ceo you're following or studying right now excuse me is there a ceo you're following or studying right now um i really like uh um i really like the the the guy that runs microsoft right now exactly i love his story i love his background you know number three is their favorite online tool you have for building your business the we we use i'm very much a product oriented person we use a pivotal tracker um very heavily and another tool pivotal tracker pivotal tracker okay number four how many hours of sleep do you get every night five or six i guess okay and what's your situation married single you have kids i'm married any kiddos no kids all right and how old are you janice 35 35 last question what do you wish your 20 year old self knew not to start the business it's too hard not to start a business yeah too hard i mean you know you know what it's very interesting um i'd say that to my 20 year old but i would still start i mean obviously i would still start a business i when i was five-year-old or ten-year-old that's what i wanted to do so at the end of the day i would still start a business but i wish i knew how hard it would be yeah i am you know there you guys have it janice moose and his team of 20 plus people based out there in uk in greece launched in 2013 to make email marketing easier they're coming in and really just price undercutting mailchimp having some success they have about a thousand users 700 of which are paying about 200 bucks a month so today doing about 130 540 grand in monthly recurring revenue that's up from about 60 grand a month in revenue about 13 uh months ago or so they're doing six percent logo churn per month obviously focused on driving that down lifetime value about 18 months or three grand in total lifetime value in dollars janice thank you so much for taking us to the top thanks nathan bye-bye