How Omniconvert CEO Valentin Radu grew to $1M revenue and 250 customers in 2022.

hello everyone my guest today is valentin radu he's a serial entrepreneur from bucharest romania he has founded four companies and had one important exit at one and one useful failure currently he's the founder and ceo of omni convert a growth marketing platform for websites looking to become customer centric valentine are you ready to take us to the top of course nathan all right thanks for joining me so tell us about omni convert what do you guys do and how do you make money [Music] we are making a platform which is empowering marketers to do a b testing web personalization and surveying their their audience because as you know the conversion rate is around one two or three percent worldwide we are making money by selling the software and of course by assisting the large enterprise companies which are looking to also uh some help from uh from ourselves and from our data experts okay and i mean how does this differ from something like you know optimizely or any other a b testing tool uh first of all is better uh second what do you mean by that what would be better why so in order to make someone convert you also need to understand who's the buyer persona and who's there on your website and while optimizing and parse marketers do a b testing something that we do as well we also empower them to do research and to survey their audience so that they can understand what keeps them from converting what barriers do they have which are the frictions and then to to treat the their objections in real time so imagine that you are on on a website and that website becomes uh dynamic according to your objections that you have i don't know what you mean by dynamic i land on a website i'm seeing an a b test you're on you're on a website and you are trying to to to buy something and you you are about to abandon the car by and we perceive that as an exit intent and we pull a survey towards yourself and we are asking something like hey what keeps you from converting so you can have any kind of objection like the price the trust the delivery time you mean like as my mouse moves over like the x button in the browser or something exactly yeah and based on that we can prepare conversation scenarios and we can treat those objections in real time so that's one different uh that's one point of difference and another one is that you can also do surveys and you can change the whole a b testing according to that so let's say you want to do an a b test only for the p staff customers you can do that or only for the ones which are having the lifetime value more than 3 000 us dollars you can do that as well so you you can change the website according to the answers of the surveys and according to the data that you have in your crm i think the challenge or something like that is it become can become so complex literally anyone could create a million different funnels based off a million different survey answers and ultimately that decision tree becomes overly complex where nothing actually ever gets done yeah that's right you need to to use your brain to to to make that what are people paying you per month on average on average a customer is paying us around 600 euro per uh year so that's the the lifetime the the annual revenue that we're getting from from a customer taking into account the companies which are not into conversion rate optimization and the time to first value is around two to three months and that's why we have a a few companies which are churning but afterwards the after they break the the three months barrier they can they are staying us with us for three and or four years so that's about seven hundred dollars per year on average and united states dollars are about 58 bucks per month i don't to value understand do you mean by that so what if you are doing an a b test you need to have traffic and you need to orchestrate it properly so that takes time so our product is not delivering instant value like i don't know you name it any any other any other tool which is uh either more simple or either uh let's say automated so mainly in order to get the the value out of our product you need to have a strong data driven insight and we are assisting you with this as well because we are having a tool called upbe convert insights and we grab the insights for conversion rate optimization directly from google analytics but no matter what happens if you let's say stay for a month or two to orchestrate the a b testing and to understand what's going on in the heads of your audience then you deploy the a b testing then you need to to be happy about the results from your ab testing so usually that takes time when did you found the company what year we are we founded in 2013 2014 and how many customers are yet now today we have around 250 250 okay and is this your only business model this this 700 bucks per year kind of model or do you have another revenue model uh we have also another revenue model by assisting large and blue chip companies with the data driven experts that are providing them the the insights and they are doing the ux audi and mainly that johnson is an agency yes okay as an agency but we we are not uh that's not our focus so mainly like hubspot is doing for their top customers and assisting them with an onboarding fee and sitting at them with some uh email marketing experts that's what we we are doing as well what so what's your total monthly recurring revenue today we are sitting at around 95 k per month okay and how do you get that because if i take that 700 price point you gave me earlier per year times your 250 customers you're doing about 14 000 bucks per year or about 150 000 sorry per month or about 150 000 bucks per year so why isn't that math checking out uh because we also i'm not considering those uh blue chip companies into into this model as well yeah but those are that's not recurring revenue those are set up fees onboarding stuff like that correct no they are recurring revenue as well so they are they are also paying us uh monthly but we we can't rely on them because the they we can't rely on them like on a subscription model okay that's recurring yeah so it's not recurring revenue uh it is recurring revenue but the the dynamics of an enterprise are different than the dynamic of uh i don't know software as a service or a small e-commerce website which is just uh starting to do a b testing so it's much more for for us having a blue chip company it's these are annual contracts and it's another business model for us okay and that's why we are but but why i i'm confused here your ma the map doesn't make any sense 58 bucks a month on average comes out to 700 usd per year which is what you said your average customer pays you per year if i take 58 bucks per month times the customer account you just told me 250 that gives you 14 583 bucks per month in revenue not 95 000. why is there such a big gap there the the gap is from the large companies as i've told you so then the average is not 700 usd what is the actual average so the uh the average is uh something like uh let me let me check to if i take if i take 95 000 bucks per month divided by your customer account of 250 that the average is about 380 bucks per month but you valentin you've already told me i don't believe that this is recurring revenue i think this is like professional services that you get one month and then you have to work the next month to get another set of professional services or onboarding fees to stay at the 95 000 per month level it's not true recurring revenue yeah i don't know how you are considering this but for us it is as as we have annual contracts okay but okay give me an example one of the enterprise deals what's the annual contract size typically the annual contract is around 50k per per year okay 50k per year and and and so what's included in that how's that breakdown it's uh it's an audit so it's an initial audit where we are checking out the what's going on on the website we are doing uh uh qualitative research quantitative research and new x audit we are checking the data hygiene on the web analytics tool that they are using and then we are coming with a strategy to to convert based on the potential that the the funnel of that website has and afterwards we are assisting that that company to actually do the experiments using our platform okay so it sounds like it's a lot of strategy yeah it is okay initially we have a lot of sweat initially but then we are catching up and that's why we decided to have annual accounts so when they were when they were new in year two what are they paying when uh when they are renewing on year two they are paying the same the same amount of money but they've already you've already done the initial review you've already done the strategy why are they paying for that again because strategy it's dynamic so you you can't like have a mapping and you you you think that these let's say we are giving a map with 50 experiments but after three months we are checking it checking out and we are revisiting this because at some point you not all the experiments are winning of course and sometimes you win sometimes they lose and based on the loses we are getting a lot of insights and we are changing that uh ongoing if people didn't pay for your strategy they just paid for the software what would they be paying per year if they would be paying only for for the software they were paying uh based on their website traffic so they can pay anyway we have now 50k visits we are giving this for free because of google optimized so that well so valentine that 50 000 contract per year strip out the strategy and the initial review if you take out the strategy initial review what does that 50 000 go down to those 50 000 can go down to something like 20k because we are not getting customers which are not having enough traffic so based on the traffic that they are having they are they would be paying us something like 20k for the software only okay all right what does churn look like so so if you're at 95 000 per month this year what were you at last year last year we've been at something like 70k okay and where has most high growth come from sorry the the most growth where has that growth you go went from 70k a month to occurring revenue up to a year later 95 000 bucks a month in recurring revenue i i believe by the way i'm still not convinced this recurring revenue for the sake of the interview will caught recurring revenue but now you're up to 95 000. so where where does that come from uh this is coming from the the two revenue streams but mostly from bigger customers because we've seen that the they have less share so our revenue churn is around two percent for them while for the other ones it's around six percent and we so you have six percent just to be clear yeah i want to make sure i understand that metric you have six percent revenue churn and is that gross or net sorry is that gross or net revenue churn that is gross revenue okay and um and is that monthly or annually this is month okay monthly so yeah by the way back to my point right you're churning 75 of your revenue per month a per year right so even if you're selling huge consulting packages that you're still i mean you're turning a huge amount of that every year how do you build a base on top of that that churn is for uh the low low end customers right as i've told you after three months they are churning and that's why we are not we are we've actually got from 18 churn two years ago to where we are now yeah but valentine's sorry the the reason revenue churn was invented was to make up for discrepancies in our poo so the exact thing you just said where you said hey nathan our churn is high in our low paying customers and low in our high paying customers the way you erase that discrepancy in your core analysis is you look at overall on a macro level you look at revenue churn because if you lose one customer who's paying you nothing your revenue return is going to be very very low but if you lose one customer that makes up you know that pays you 50 grand a year right or makes up a big chunk of your revenue revenue is gonna be really high so when you say six percent revenue churn you say that's just on your small cohorts what's the revenue turn across your entire customer base three percent three percent per month yep okay so you're turning about 36 and that's on a that's gross monthly yep okay got it um very good when people walk me through are you acquiring these customers what are you spending to acquire them we're not spending too much we we've been focused right now on a machine learning product so that's why we've decided that the the old model of uh doing uh extra work for large companies or selling a manual product for the mid-size or small companies is not working anymore and that's why we are now focused on on a machine learning product so mainly at this point we are just grabbing the inbound leads which are they keep on going what's your team size today 47 people four seven reason three seven okay and have you bootstrapped or raised capital we've raised capital in 2016. how much total 1.1 u.s million million u.s dollars okay so 1.1 million and and are you casual positive today or no yeah we are you are casual positive yeah okay um and where's the whole team based uh the whole team is based in romania and uh in poland romania and poland very good so what's the next step for you do you raise more capital do you sell what do you want to do we want to build that machine learning product which uh doesn't use the talent of the people anymore and we we are going to be focusing on the e-commerce websites only and on we we've also built a magento business intelligence dashboard that's segmenting their whole customer base automatically and they can use personal our personalization engine towards that so the first step we are releasing the magento product next year we'll be having beta with the machine learning product which is going to be trained with the whole amount of users which are keeping their our our code snippet on on their website and we are grabbing a lot of intelligence out of that great valentine let's wrap up here with the famous five number one what's your favorite business book the famous business book is uh the play bigger number two is their ceo you're following or studying sorry is there a ceo that you're following or studying uh yeah it's a romanian one it's called the his name is florian talbesh he's uh building a big defender it's one of the let's say unicorns from romania number three how many hours sorry what's your favorite online tool for building your business sorry nate and i haven't got you that's okay what's your favorite online tool for building your business phantom buster phantom buster number four how many hours of sleep to get every night seven eight and what's your situation married single kids married any kids two okay how old are you 48 48 last question valentine what do you wish your 20 year old son 38 i was gonna say 40 last question what do you wish your 20 year old self knew that your mind is tricking you a lot and that you always need to check on your decision making system so data driven for the win guys there you have it omni convert launched back in 20 uh sorry 2014 now doing about 95 grand in recurring revenue that's from 70 grand just a year ago healthy growth 1.1 million raised but cash flow positive now 37 people based between romania and poland again helping folks do better a b testing real time feedback especially in cart abandonment like scenarios now working on a machine learning product valentine thank you for taking us to the top thank you as well nathan and all the best