How Privy CEO Ryan Pinkham grew Privy to $11.4M revenue and 19K customers in 2020.

hello everybody my guest today is ben jaboe he is the founder of privy.com a marketing automation platform used by over 250 000 marketers around the globe he's worked with companies like lisa hubbell contracts lifetime fitness the ellen show dr x and many more to rapidly accelerate e-commerce conversions and sales ben are you ready to take us to the top absolutely all right this is a hot space let's hear it what do you guys do and how do you make money yeah so we found that in the small midsize e-commerce market there was really a gap so much of those marketers are focused on driving traffic to the site and then on automatic you know nurturing campaigns after conversion but you know if 98 of the traffic's not converting that was the opportunity that we found to build a really easy to use quick time to value sas platform focused on converting more website traffic into leads and sales okay got it and what's the revenue model is it pure play sas or what um yeah it is so it you know we go to market through a freemium model um but you know it's basically premium sas subscription based on you know the level of features that you need uh in terms of targeting coupon integration uh and certainly we have some scaling metrics based on traffic to the site it's pure play sas though yes okay there's not like a there's not like a transaction fee on sales driven if your tools being used or things like that nope okay yeah great and pure sap and give me it before i i wanna learn more about your backstory here but before we do that i don't wanna go down every customer cohort but on average what would you say customers pay you per month yeah we have kind of two segments that we look at we have a fully self-serve funnel uh the average there is about 50 bucks a month okay and then we have kind of a product qualified inside sales driven effort that's growing that's about three hundred dollars a month okay it's a little variety there uh can you give me the revenue breakdown on those what percent is coming from self-serve what percent coming from the other one yeah so uh right now let's see it's about uh eighty percent of the business is self-serve we actually just brought on our first member of the sales team um about four months ago so uh ramping quickly um but already twenty percent of the mrrs coming from direct inside efforts and let's just keep going down that team path here for a second what's total team size today uh we're 20 today we'll be 30 by the end of the year breakdown is 11 on the engineering team uh a handful of customer support uh small marketing team of three and uh one sales person i can always tell who's listened to the show before you've listened haven't you yeah absolutely big fan all right good i'm glad you're enjoying it so okay 20 people right now and when did you launch the company um we launched this product we had a completely separate product that failed um but we launched this product in january 15. okay wait hold on i got it tell me the thing that failed what was it oh man we so it's a long story i'll make it short we were focusing on brick and mortar retail uh giving them kind of a a sas platform to help them track uh which of their kind of online audience was actually walking into their store with phones using offers so this online yeah super cool a bunch of techies got a kind of a groupon groupon-ish living social like about hard hard to do the attribution thing exactly and and just hard to sell into so how much how much money you think into that about two million dollars okay and how did you know like it's always hard because entrepreneurs we have to be optimistic so we always tell ourselves it'll get better next year let's keep pushing it takes balls to say you know what we put two million in we have to shut this thing down and move on what prompted you to be able to do that that's that's very i mean self-aware that's really nice of you to say unless your bank account was at zero that makes it easy right no we we were we kind of had a suspicion that this was going to be a slog so we had two m a offers on the table um more like aquahire type situations so we decided to pursue those um and then we were kind of right on the finish line with one of them and and it fell apart um so you know the bank account was basically zero we had about a thousand dollars in the account yeah and the deal fell apart so we were really forced to say are we shutting down what was revenue by the way at that time uh it was maybe 150 000 a year yeah okay all right good okay so then the pivot right so uh obviously you pivot to what you're doing today privy um that was in you said 2016. did you keep the same cap table or did you restart totally uh we actually kept the entire you know the cap table as is okay so do you have investors and if so how much have you raised across both companies across both efforts uh we've raised four million to date okay yeah because just to be clear people that put in money back and like before 2015 they're still on your cap table right yeah yeah yeah does does that ever eat you up inside you're going oh man they bet on me for like a whole different idea and like i could own like 100 of this company if i just started from scratch but like you know obviously you want to do good by your investors how do you manage that in your head yeah i mean we were like the structure of our rounds has been very much seed and angel focused so a lot of the people that came in originally were the people that came back in uh the second time around um some of those are you know very close friends some of them are just awesome hugely supportive investors um and they've been relatively hands-off so you know at the end of the day yeah i have had some of those thoughts but um you know at the core you know it's still the same brand it's still the same kind of handful of people that take place exactly all right and then uh what are you today in terms of total customers um paying customers yeah we're about to cross five thousand oh great okay good yeah yeah i can tell you're reading off a sheet what other data you have for me um so uh what do you what do you want to know what does it say you have it there i might as well just let you say whatever you have in front of you and then if i have here if i'm curious about something else i'll ask it yeah so we have over 100 000 active users about 5 000 of those are paying customers um and today we're at 3.1 million arr yeah i was gonna say at a minimum 5 000 times that 50 price point obviously puts you at about 3 million in ar but i know you have some of those on the on the new plan which is 300 ish exactly where were you a year ago uh a year ago [Music] uh 1.3 million ar in june okay so call it what is that about a hundred grand ish something like that and monthly so you've more than doubled you every year yeah exactly yep that's great i mean look that's healthy growth where's most of growth coming from um i mean honestly we do we do a lot of integrations with kind of different storefront platforms like shopify uh wix weebly you name it and then on the esp side as well we really sit between those two core uh things in the stack so we integrate there's a clear value prop and then you know we work on bd for distribution um with each of those partners so most of it comes through this marketplace freemium distribution model that we have i bet i'm going to ask you to pick a baby which of these channels drives you the most new customers shopify right not you didn't even hesitate i mean for sure you know that it's kind of like a rocket ship over there and we we're the number one app in that ecosystem for what category like what search term uh we're the number one app in marketing uh but i think we're also like the number two app in the entire app store um depending on the day so that drives a ton of demand um it's taking a lot of hard work to to figure that out and to get there but um a great product that adds value quickly even for free users is kind of at the forefront of that oh yeah i'm looking at this now so if you have 15 478 reviews on shopify that doesn't happen by accident you've done something on your onboarding flows or something that says hey don't forget to rate us on shopify walk me through what that process is like yeah for sure so we do onboarding you know you owe off your shopify or weebly account or any one of those we walk you through setting up your first campaign and then you know because it's a free product uh after a series of kind of onboarding steps you'll be prompted to say hey if you know if you're seeing value out of this product and you like our support we'd appreciate a review um and you don't have to do that it's not required but we certainly see a lot of people doing that i okay i want i want to make sure though i capture all your genius here because you've done something with the verbiage on that ask where a significant portion people have actually went and left the review you're making people feel guilty or there's some incentive what care and what stuff like what is the actual verbage there do you know um or...