OmniSendrevenue & funding

hello everyone my guest today is reedus loras he's the co-founder and ceo of omniscient the powerful marketing automation platform that's focused on moving e-commerce marketers beyond the generic email marketing tools all right you ready to take us to the top yeah of course nathan nice to be here again you made the mistake of telling me that you're a listener to the show which means i don't have to do any work just tell me all your data right now okay sure so okay so what should they start from we have i'm agreeing i'm just kidding i'm kidding i'm kidding all right so so if you guys want nathan let's start with a famous five now there you go all right so hey so for people that missed your first interview right uh uh you know email you know marketing in general marketing tools it's very fragmented what space specifically are you targeting yeah that's good question so we are targeting towards e-commerce sites so those who sell online mainly physical goods we help those uh online retailers merchants to better do their retention marketing interest communicate with existing customers okay very good and so is this like is this like basically a better version of lifecycle emails yeah similar to that so we do combine uh lifecycle we do add uh campaigns on top and a part of emails so we have started as email service provider currently on the service email service provider on top we have text messages we do have facebook messenger messages would you have whatsapp and synchronization with facebook and google ads so it's kind of entire suite of tools for your retention marketing in one place and you have single customer profile and can choose a better channel to outreach your customers in the most effective way now you share last time you launched in 2014 at that time uh you had about 3 000 customers that was about a year ago how many customers today yeah more than 7 000. that's amazing okay good and then what are they paying once you're paying once sorry i say that again yeah paying once we talk about paying ones what do you mean paying oh oh paying customers i mean yeah we are freeman models so we have more like in active installs but yeah one year ago there were three thousand paying customers now we have more than seven thousand and are they all still paying an average of cost sixty dollars a month uh more seventy five now seventy five yeah we have not managed to include that trick which is which is really great as last year i told that we are at that time we have like starting to go up market and hunting after larger customers so we are kind of succeeding by doing that but you know acv that has increased by 25 percent which is quite a good number and we continue and it continued to grow like month on month uh but hcv so it's just great so ritus you know i'm gonna do the math 7000 customers 75 bucks a month that puts you out 520 000 a month in revenue is that right uh or are you below a bit more a bit more than that so being precise 7 200 paying customers yeah all right but is that number right last month you did about five you know 550 000 dollars yeah something like that i mean that's redus i mean that's really impressive growth just just about 11 months ago you told me you're doing about 180 dollars a month yeah that's correct that's incredible that's incredible growth how did you drive that growth uh so two factors here one is uh going up market increasing our cv and and then the and hunting uh logic customers as i have shared that like uh uh one year ago i have shared that you know those larger customers their churn uh is much lower so currently we do have negative churn on average it's just you know small like a little bit below the zero but it's like 0.8 minus negative a net churn which is which is great so you know are retaining more more paying customers it's one thing so like hunting larger and very another very important factor for us so it's a clash between shopify and the mailchimp yeah okay so you would credit most of your growth to moving you moved up market a bit but you also added over the past 11 months another like 3200 customers where are you adding so many customers from how are you finding them yeah so we have worked a lot on on brand awareness general fundability seo as well as shopify which is important platform for for us so uh i'm not sure how how much are familiar but like shopify and mailchimp they had a clash and mailchimp is not long anymore available on shopify app store you can use third-party apps to integrate those two tools but there's no native integration in place anymore so it drives a lot of traffic for us uh on top of a funnel how much per month it really varies it depends on you know shopify i have uh rankings and sometimes you're being more promoting some sometimes a bit less so there is no uh what was like give me a general range last month like how many how much traffic from shopify and how many new trials um that's a quick question i don't know this specific number currently while you're looking that up i'm going to read the listener i'll let you look up that data over here but guys when i go to when i go to omnisend on the shopify app store what you see is they've done a great job getting reviews over 3000 reviews uh 4.8 uh average out of five so i imagine you're ranked pretty high ritus yeah that's correct and especially like in email category email marketing category or marketing automation category however you call it away number one on shopify so it drives us a lot of traffic from there yeah i'm going to categories marketing and then email marketing what you're saying is mailchimp used to be uh kind of the number one uh you you are now ranked now how do you know how do you rank when you say number one you mean number of ratings or the the average the 4.8 yeah 4.8 well in position like shopify has algorithms so uh you see you see the ranking which you have not been logged in so if you log in so shopify has kind of based on relevancy what what do they recommend on the app store uh in in in which position so uh we usually kind of uh in in the top position in the listing in the recommendation list yeah this is this is interesting so you're up there with privy who we've had on the show and pagefly advance page builder reconvert post purchase up shell they're kind of like point solutions for different things a shopify owner might need yeah that's correct and if you go like on the home page like apps.shopify.com uh yeah so various kind of top email marketing solutions and and you know it it varies it depends on how you're logged in or not so understand is being quite usually uh promoting as like uh the best option for so so as a company as a company altogether with all of your channels how much traffic are you getting per month and how many new free trials yes so free trials uh currently we do get let me check that number uh yeah per month for rise like 1 000 200 to 2 000 free trials okay and how and how much traffic generates the 1200 new trials uh traffic like websites yeah to website so uh that's another yeah again it varies but it's like around like 20 20 000 visitors so okay so you have about you have about what is that a five percent conversion rate something like that yeah yeah which is yeah that's good so we kind of we we have challenges to increase the top of the final but uh but like conversion rate is really really good so we kind of managed to get uh to get uh visitors which are really willing to at least try this out and and yeah so we don't have problems with uh with conversion but our challenge is currently is really to expand the top of a funnel into outreach small so let's keep going down 20 000 visitors a month 1200 new trials of those trials how many convert to paid typically um let me check i have i have some statistics here so uh a month um what tool do you use by the way to track all this chart model yeah which is which is really good and once you're gonna ask a advent uh advanced uh would i recommend those that tool or like one specific tool so i would i would say yeah this is this is very handy still a lot of bugs in the tool but they're getting better so um which is which is really great yeah in terms of subscribers so let's say you know how many new customers were last yeah yeah you knew paying customers that was around like 400. okay again that's that's pretty good 400 on 1200 that's almost a 30 conversion rate from trial to paid so yeah your problem is how do you get more top of funnel yeah that's correct yeah interesting okay now when you look at your full funnel right what are you painfully weighted to get a new 75 a month customer yeah so our payback period is around three months so you can remember yeah that's what is that 225 right where are you spending most of that money uh so mainly it's uh seo we marketing remarketing channels we do pay commission for our partners what's the commission typically like 30 percent oh yeah up to 30 starting from 10 and going up to 30. and do you pay that in perpetuity or only for the first year it depends we have two different programs one is kind of referral program which is really generous so we pay uh three times uh three times what what the lead pays for first time so 300 percent of the first payment it's just one off thing it's mainly for referrals bloggers etc influencers and we have perpetual uh program for agencies so if someone so if a new customer referral person sends you an annual contract at 75 bucks a month right so it's about call it let's just make it easy 900 you pay them three times that per month so it's it's monthly so we pay it's 220 or so i see i see okay that makes more sense okay very good and how much so like last month how much told did you pay out to referral partners uh that was around around it was it was not much it was around uh yeah 10 000. okay that's not too bad and then how much when you look at all your retargeting and all your direct paid stuff how much was that last month yeah that's very good question i mean yeah the the expenditure was around six six seven yeah it were high six seven thousand per month okay that's still yeah this is very very little compared to your five hundred fifty thousand dollars monthly of top line so you're not doing a ton of paid stuff it's a lot of organic yeah it's a lot of organic get a lot of seo for a lot of listings like uh g2 captera getapp uh we are working with those we do have some uh some paid like retail dive of initiatives like uh good quality content we publish very good quality content and we drive they drive leads for us as well yep do you do are you on the paid portion of d2 crowd or the free one yes yes on paid paid yeah so i mean is that like four or five grand a month something like that it's small it's small uh i i'm not sure it's like 10 to 12 something something in that range yeah i guess it's kind of 12 but we managed to negotiate a little bit yep and if you're paying 12 000 a month do you know what you're paying like per trial from g2 crowd uh so we have just started uh two months ago so i don't have like proper data too yeah you've you've got other people ahead of you obviously hub spots paying a bunch active campaign market are the big ones and then already station clavio get response part sharp spring then you so this is actually considering how many total are listed here you're actually up pretty high obviously because you're paying two but i'd be curious to see how that performs over time yeah yeah so i don't have that data currently but yeah but a part of like you know last click or like first click attribution we see that like g2 or capterra obvious other listings video uh they do uh assist in the sales funnel uh maybe it's not like you can't attach your good directly to them but we see that you know someone has visited and especially when we have calls with uh with uh prospective customers like dark false democrats and we asked how did you find about us so they have mentioned they they usually mention like you know uh couple of like i have googled i have yeah i have really great view views on like g2 and then i booked a demo and read us are they sticking so look at your your churn your gross revenue turn over the past 12 months what's that at yeah so monthly it's uh it's uh 0.8 percent negative yeah yeah basically sorry what's gross so gross can't be negative what's your gross churn per month crosstalk you mean logo or revenue gross revenue turn per month yeah actually um i'm not tracking the data and that is the most important okay but what you're saying is net net wise when you add back expansion you said you're negative 0.8 yes that's correct okay so that would be negative 9.6 annually or the inverse of of net negative churn is your net revenue retention is about 109 yeah that's correct yeah okay interesting but do you have any you don't have a general sense of what your gross just your gross number is your gross churn um it's much higher because we managed to expand from a customer uh from yeah expansion is pretty good so gross gross it's around like five percent or so monthly monthly yeah okay so it's about 60 percent annual churn but what you're saying is you expand by about 70 so net revenue is 110 or it's negative point you know yeah that's correct that's correct yeah yeah that's good how are you expanding yeah larger customers very intent expense so we do charge for uh for the size of the list of your subscribers less so usually for like sustainable established businesses they grow their list and therefore they're paying us more uh it's one thing and i think we're upgrading from standard to pro plan uh so a bit 2.5 times more expensive plans so uh we you know adding more better features on pro plan and convincing them to to move pro when you were on last time you'd raise about 160 000 a little angel round have you raised any additional capital if so how much no no still 160 000 yeah still and actually from that we have paid off a lot as we had this opportunity and we're profitable so we kind of you know uh paid off vast majority of that 160. yeah so that was debt yeah that was convertible notes so you just paid it off instead of converting yeah yeah yeah and so when you say profitable i mean are you talking like 20 grand a month to the bottom line or 100 grand how profitable um let's keep this data for myself i guess what i'm really asking is are you letting money build up in the bank account or are you staying right about a break even uh no no i mean that's that's that's okay i mean we're reinvesting a lot so our goal is just to grow but but yeah i mean it's it's it's more than just you know just break even okay so i mean can i can we say more than 10 ebitda margin monthly yes we can say okay you know me i push but i won't push you harder because i like you because you listen to the show all right so more more more more more than 10 on 550 000 a month means your bank is growing by about 50 000 and cash every month potentially way more than that bad some math guys when you're good at math what about team size today how many people 51 51 okay interesting now do you do any kind of employee rev share programs um for sales people yeah okay how many sales how many quarter-carrying sales reps and yeah and a part of like only one we have only one okay how many engineers and the part of that we do have a program we kind of constantly increase our salaries and it's it's it's uh linked with a company results so if we achieve every quarter we have a goal for our growth mrr growth in general and then if we achieve that goal so the salaries are growing and each each team leader is agreeing on kind of individual programs so what what each employee expect the salary to grow in one year and then we divide in four quarters and each quarter we do uh like with inside the company publicly declare all the numbers like our armor our churn our new business again etcetera etcetera and if we achieve those goals uh salaries are constantly growing interesting now if you grow a salary that's like fixed cost are you paying this out as a bonus or our salary is actually like increasing yeah it's salary actually increasing yeah so i mean don't you get to a point where people are making like a million dollars a year uh not yet but if we're gonna be heading there so so really uh uh kind of some time ago i remember myself and my co-founder were talking that we would like to have uh ability to pay like netflix does you know paying the best salaries in the market and hiring the best talents in the market so at that time that was not possible for us but uh we're kind of heading uh towards that direction it's still gonna take some time but that's our dream to have best balance how many engineers are on the team uh so let's say half of the team is somehow related to product like engineers we have engineers product uh product uh managers designers etc and then the half is somehow related to administrative or go to market customer operations et cetera yeah now readers before we wrap up with a famous five i mean it sounds like you're doing 75 customers there's sorry 75 bucks a month 7200 customers 540 a month or about 6.5 million in terms of ar run rate right now i love the fact that your boots dropped your cash flow positive i mean someone would see this as a really great asset to add to their portfolio i mean if someone came and offered you something like you know 50 million bucks to buy the company in 9 or 10x valuation uh would you be able to resist selling at that price yes we did resist okay a few months ago what was the actual offer and was it verbal or an actual term sheet uh i mean i kind of disclosed all the data but yeah so valuation was something like you know the multiple was similar to what you have mentioned was it was it all cash or more like a stock deal uh mix okay it was a mix okay interesting and was it from uh was it from a strategic or a private equity firm that's strategic okay good yeah actually currently we have we have uh like for free free offers in a row we had free offers in a row so uh like private equities they didn't come with a bad good offer let's say and strategic uh was was with the best offer but we stepped down it does so we strongly believe that you know it's just the beginning of our agree journey if that 50 million ish offer had been all cash instead of a combination of cash and stock would you have been more likely to take i mean look because the upside here is let's say you get with a company that's much larger than you and you can grow amnesia like much faster you could still essentially have upside for you and the team inside of a bigger company just a question of strategically is that something you want to do or not no no i mean we see a lot of opportunities in the changing market as we believe that marketing automation is really going into into verticals and e-commerce is growing by itself and like mailchimp has moved from e-commerce vertical to like all-in-one tool for smb so we don't have that we don't have that huge push that we used to have from like the market leader which is mailchimp it's one thing so another thing we kind of have started uh feeling that it's really taking off like our brand awareness has increased and etc etc so we kind of still feel that it's just the beginning of um what if it sounded what if that deal sounded something like this it was shopify making the offer and they said read us listen we've decided we want to get into the email game we're buying a company in the email space we'd love for it to be you but you've got to accept 50 million in cash otherwise we're gonna go buy one your competitors and we're going to remove you from our app store uh i hope it would never happen you'd sell you'd sell to shopify if that was the term i mean uh you know it's like in a mafia deal yeah i will take my money take my bullets so in that case i would probably take your money instead of a wallet of course but i like that that's a good analogy all right let's wrap up with the famous five number one what's your favorite business book uh hard thing about the hard things the same as one year ago number two is their ceo you're following or studying um yeah a lot of them currently know one specific number three what's your favorite online tool for building your company besides your own uh char mogul is good and g suite is great number four how many hours you sleep to get every night ah six to seven and what's your situation married single kids married to one kid three years old boy i love that all right and how old are you 36 36 last question what do you wish your 20 year old self knew uh build a sass product guys omniscient freaking love this 7 200 customers paying 75 bucks a month doing 550 000 a month in revenue up from 180 000 just a year ago basically bootstrapped which i love so doing about 6.5 million bucks in ar really in the smb space relying on shopify as a partner launching now in g2 crowd and other markets to try and add additional customers per month currently adding about 1200 new trials per month 400 new paying customers as they look to scale payback period about three months again healthy economics they do have high churn 60 annually but they more than make up for that with expansion of 70 so 110 net revenue retention on their entire cohort 51 folks on the team as they look to continue to scale reedus thanks for taking us to the top thanks nathan see you in one year