How RevenueCat Grew to 130 Paying Customers and $1.62M Raised Helping Mobile Developers Monetize (Interview with Co-Founder and CEO Jacob Eiting)

Introduction and What RevenueCat Does

Nathan Latka

00:00Hello, everyone. My guest today is Jacob Eiting. He's a longtime mobile developer who's made apps used by millions of users. Now he's the co founder and CEO of RevenueCat, where he helps mobile developers make more money with their applications. Jacob, you ready to take us to the top?

Jacob Eiting

00:16Yeah, let's do it.

Stripe for Mobile Apps Analogy

Nathan Latka

00:17Alright. So first off, help us understand what this is. It sounds like a Stripe for mobile apps almost.

Jacob Eiting

00:23Yeah, that's not a terrible analogy. We take the difficult and messy task of integrating with payments on the App Store and Google Play Store, and we make it... We give it a great developer experience.

Nathan Latka

00:34Okay. So you... Just to be clear, you don't allow developers to get around the 30% kind of cut from these platforms. You still have to pay that. You just have to manage it.

Jacob Eiting

00:41Yeah. But we also, like, will you let integrate with payments on your website, right, which Apple is kosher with as long as you're not selling it directly inside the app.

Pricing Model: SaaS Packages and Usage-Based Scaling

Nathan Latka

00:49I see. Okay. And then how do you price your model? Is it a pure play SaaS model or percent of GMV? Or how do you price?

Jacob Eiting

00:56So it's it's a bit blended. We have some packages start at $119 a month, $499 a month, but then we do scale that up with the amount of revenue people are tracking through our system.

Average Revenue Per Customer

Nathan Latka

01:05Okay. Interesting. If we talk just... If you look at the blood... Kind of the average, just talking about the the SaaS side of the business, would you say it's fair to say it's about $120 a month or more something like $3.02, $300 a month?

Jacob Eiting

01:16Yeah. I think average is probably closer to like $300 to $400 a month.

Nathan Latka

01:20Okay. So more on your higher tier.

Jacob Eiting

01:21Yeah. Yeah. It's interesting. It really follows a power law about, like, who ends up... You know, we have breakout apps and then, like, a long middle and then a long tail. Right?

Nathan Latka

01:30Yep. That's fairly typical. Put this on a timeline for me. When did you guys launch? What year?

Jacob Eiting

01:35So we we launched in beta right at the end of twenty seventeen, got our first app at the beginning of January of twenty eighteen, and then YC, and we launched in the summer of last year.

Nathan Latka

01:47What is... So hold on just to be clear. So 2018, first customer January. You then went through YC?

Jacob Eiting

01:53Yeah. We were YC between June and August. We launched in June. By launch, I mean, we came out of beta. We had a few users before that, like 10. Yeah. And then we launched and and announced that we were in YC and all this stuff. And and that's when we really started to take off.

Customer Count: Paying vs Free SDK Users

Nathan Latka

02:09That's great. So how many customers are you now serving today?

Jacob Eiting

02:12So paying customers is like a 130 or so. But we have, like, 600 apps using our SDK on the App Store right now.

Nathan Latka

02:19That's nice of you. So what what allows people to, like, keep using you for free? What threshold do they have to hit before you ask them to pay?

Jacob Eiting

02:25So if you just need the basic, like, user experience or, like, developer experience improvements that our SDK provides and, like, a very basic dashboard, it's... And you're making less than 10 k a month, like, we don't charge anything.

Nathan Latka

02:35Okay. Okay. That's great. So it's it's it's... Again, it's not based off, like, number of transactions, number of volumes or downloads. It's just less than $10,000 a month. You're good to go.

Jacob Eiting

02:43Exactly. Exactly.

GMV Take Rate and Pricing Philosophy

Nathan Latka

02:44That's great. Okay. Now how aggressive or not aggressive are you being once they pass that threshold? Are we talking, like, 1% of GMV or 3%?

Jacob Eiting

02:51Less. I think it depends. Like, we step it down as you get bigger, but it's somewhere like a half percent.

Nathan Latka

02:57Is that competitive?

Jacob Eiting

02:59Yeah. I mean, I think for the value we provide, like, we definitely... I think we make your monetization strategy 1% more effective at least. So a half percent, I think, is reasonable.

Nathan Latka

03:11Fair enough. And if you look... Before I capture kinda more of the growth story and why you got excited about the space, if you look at the past of twelve months of revenue, what percent would you credit as pure SaaS versus your GMV model?

Jacob Eiting

03:22Oh, jeez. I don't know. It's a really hard thing to untangle. Is it power law stuff though? Yeah. I mean, so... Yeah. I mean, like our top customer make 10 times more than like our base high end package price.

Nathan Latka

03:33Sorry. I meant your pricing. In other words, does the SaaS model make up more than 80% of the total revenue and GMV is based is about more like 20%?

Jacob Eiting

03:42Let's see. Maybe maybe, like, 60/40 or something like that for the, like, for the, bill. It's it's it's all kind of just positioning and packaging. I kinda don't look at it like that. It's it's almost like you have to buy... So let's say, like, our our high tier is $500 a month, but you also get a 100 k in GMV based pricing for free with that. So it's almost like bundling these, like, minimum price points, which

04:06kinda just, like, helps us to, like, weed out and, like, create some, like, levels of, like, basic commitment from people to, like, use our platform.

Nathan Latka

04:13Right? Yeah. Yeah. For example, your grow $500 month plan, you get $100,000 in monthly tracked revenue for free. Then once you're over that threshold, there's some GMV component. What you're saying is over the past twelve months, 40% of your revenue has come from people on these plans that have gone over the MTR level.

Jacob Eiting

04:30Exactly. Yeah. Roughly. Something like that. Right? Yeah.

Nathan Latka

04:33Yeah. We're splitting hairs here. I don't really care the actual number. I'm just curious about the pattern. Right? Yeah. So what I mean, I guess my question to you is to simplify things, why not go hard one way or the other?

Jacob Eiting

04:44Because, frankly, if you tell people you're gonna take a flat percentage of their revenue, people don't like thinking in that terms. It's just... It's like, oh, like, I earned that. I... I'm already giving Apple 30. I don't wanna give RevenueCat point five. Right? So it's a bit of a Jedi mind trick to kind of be like, oh, well, you can buy this package. It's a little more predictable. Right? But for us, like, the only way

05:03our business works and that we stay aligned with our customers is if we're able to scale with them. Right? And so that's why, like, I'm really adamant on the usage based pricing because otherwise, we really are... Have some misaligned incentives with our customers.

Nathan Latka

05:16Yeah. So what's the reach today look like? So across your 600 apps using, I mean, how many downloads are you processing per month or how many, like, individual transactions per month do you think?

Jacob Eiting

05:24I'm not sure about... So, like, total monthly volume is in the... It's, like, 6,000,000 or something right now in revenue that we're tracking for our customers. And so... And as far as, like, users, it's... I think it's gotta be close to, like, 30,000,000 monthly active users. Yeah.

Nathan Latka

05:42That's great.

Jacob Eiting

05:42Interesting scaling issues from an API perspective. Yeah.

Nathan Latka

05:45But What's your... Well, obviously, it sounds like you've probably built a good team around you. What's your team look like today?

Jacob Eiting

05:51So there's just six of us. It's my cofounder and I and some some basically all engineers.

Nathan Latka

05:58Okay. So six of you guys. And it sounds like you've raised capital. How much have you raised to date?

Jacob Eiting

06:02So 1.5 in our seed plus the YC 120. Yeah.

Nathan Latka

06:06Okay. So call it kind of $1.7 million.

06:14Jake, could be cut out there. Sorry. 1,700,000.

Jacob Eiting

06:18Sorry, it's like 1.62.

Nathan Latka

06:19Yeah, 1.62. That's good. And then take me back to kind of like day one, right? So one of things I always like to understand is, how how quickly were you able to get your first dollar revenue in the door? So what do you guys spend kind of all in building the MVP before your first dollar revenue? Do you remember?

Jacob Eiting

06:35It's interesting. So my co founder was working part time. So he was working full time at our... The previous company that him and I worked together, like, he was still working there. I had left to start a company. So I was living off of my wife's salary and wrote... And him and I... Him on his weekends and nights and me, like, full time, like, wrote in the... In, like, three months or so, the first version. And

06:56I think we invoiced our first customer from starting writing code in September to our first customer we invoiced in January or February.

Nathan Latka

07:05Okay. So call it four months. Yeah. Yeah. That's great. And did you... Mean, again, most of was sweat equity, it sounds like.

Jacob Eiting

07:12Yeah. I mean, of course, like, was the... There's a, opportunity cost. Like, I wasn't working at the time, but, like, yeah, it was it was it was us just doing it ourselves.

Origin Story: Discovering the Problem at Elevate

Nathan Latka

07:20How did you discover this was a problem?

Jacob Eiting

07:23So my cofounder Miguel and I previously worked at Elevate, which was an app of the year, big subscription based brain training app. And we were building a ton of this infrastructure internally, and it was sucking up a ton of our developer resources. And so I just knew that, like, lots of other companies were suffering from this. So I, like... I I actually asked around. Right? When I was thinking of ideas for, like, what I wanted to

07:45do next, I, like, asked just, like, a handful of companies that I knew that were working on... In this space, and they were all like, yeah. We hate this problem. And so I was like, okay. That's a probably a pretty good sign.

Nathan Latka

07:53How was everybody doing it back then? Were they all building it internally?

Jacob Eiting

07:56Yeah. It's... Yeah. It's basically, like, rolling your own. And, like, I think people get tricked because they think Apple and Google handle all the hard work for you, and they do do a lot of it. But they kinda just give you enough, like, enough to enough stuff to get started. But you really need to you really need to end up building a lot of infrastructure to provide the user experience that most people want.

Churn and Retention

Nathan Latka

08:15Yeah. Have you had any, you know, churn is critical on a SaaS company? What's your churn been over the past month?

Jacob Eiting

08:20So net dollar churn is negative. So Negative,

Nathan Latka

08:23like negative five, negative two?

Jacob Eiting

08:24Percentage wise? Yeah. I think last month, we had a thousand dollars in negative churn. So over, like, 30 k in revenue. So it's like 3%. Right?

08:35Yeah. We do have some... We we have very little churn. Like, mostly, our churn tracks with apps just shutting down. Because, like, once we're in, we tend to just passively provide value, and there's not a big incentive to switch. And there... We don't have competitors nipping at our feet right now. So

Nathan Latka

08:50That's good. So if you've got a... If you've about a 130 customers today paying call, like, $260 a month if they're about $30,000 a month in MRR, do you remember what you were at exactly a year ago?

Jacob Eiting

08:59Oh, like, I think $200 in MRR.

Nathan Latka

09:00Okay. So you were really pre-revenue.

Jacob Eiting

09:03Yeah. Yeah.

Nathan Latka

09:04Well, if I put in 200 to 33,000, I have $30, you know, that's like an infinite growth rate, right?

Jacob Eiting

09:09Everybody loves that. It's not bad. It's not bad.

Customer Acquisition: Blogging and Word-of-Mouth

Nathan Latka

09:12Alright, cool. How are you getting customers today? Is it an SEO play word-of-mouth? What's the what's the situation?

Jacob Eiting

09:17Yeah. Blogging. Like, I've done a lot of writing about this... The problems in this space and kind of, like, break it down. Not from a, like, here, use RevenueCat RevenueCat perspective, but just, like, writing stuff that the people experiencing our problems are searching for, and just being genuinely really helpful with that. And so that brings in a lot of people, like, organically, I guess. It's not really organic because I'm putting a lot of work

09:36into it, but that's that's one bringer. And then, yeah, a lot of word-of-mouth. Like, you know, people use this in their app. It works well. If we provide a great customer experience and great developer experience, top to bottom, they'll tell their friends. Developers love to, like, share when they find something that they found helpful. Right? Yep.

CAC and Developer Gifting

Nathan Latka

09:54And and are you... I mean, so are you subsidizing this at all with anything paid? Like, I've asked you your fully weighted CAC to get a new customer. Do you know what that is? Or just too early?

Jacob Eiting

10:01It doesn't matter. I send people a T shirt box when they ship. So that's, like, 10 to 15 dollars or something.

Nathan Latka

10:07Do have one do you have one with you by chance so we can see it?

Jacob Eiting

10:10A T shirt?

Nathan Latka

10:10Or, like, what's the box?

Jacob Eiting

10:12Oh, no. I don't have I don't have one of the... I haven't I haven't sprung for, like, the super fancy, like, experience box yet. I'm Printfection, the provider we use. They charge an extra more money for that. I was like, okay. Maybe after a Series A.

Nathan Latka

10:23Who do you use?

Jacob Eiting

10:24It's called Printfection.

Nathan Latka

10:25Printfection.

Jacob Eiting

10:26Pretty solid. Yeah. Very cool.

Series A Timing and Fundraising Philosophy

Nathan Latka

10:27Alright. So you mentioned Series A. What's the right amount to raise and when do you think?

Jacob Eiting

10:31As as much as you can for as little dilution as possible.

Nathan Latka

10:34Good answer. Wait. Wait. Timing wise, when do you think it'll happen?

Jacob Eiting

10:39For us? Yeah. Oh, I mean, I don't know. I think we're still in... I'm still in this phase where, like you said, what's our CAC? I don't even know. So what would I do with millions and millions of dollars? I'm not sure I have a great answer for that question. So I think we're still, as a company, our growth is good right now. Like, things are going well. We're still learning a lot about this space. Like,

10:58we're the first company to be doing something like this. So I think we're still kind of kinda like feeling our product market fit. But but when does that time happen? I don't know.

Nathan Latka

11:08Yeah. Yeah. Fair enough. Very good. When was the last round?

Jacob Eiting

11:12We closed it, I think, in September last year. Yeah.

Nathan Latka

11:16Okay. Yeah. So I mean, if you're looking at, like, twelve to sixteen months after that, right, is the typical trend you see. You know, you'll think about this maybe middle of next year or something like that.

Jacob Eiting

11:23Yeah, we'll see. Yeah, see if things keep going well, maybe.

Nathan Latka

11:26Very good. Well, I mean, unless you want to pull a weight and a kind of a Zapier model and buy out the one six.

Jacob Eiting

11:31Yeah, I don't know. Nothing wrong with that. Pull a Notion, raise 10 on 800.

Famous Five: Books, Tools, and Personal Life

Nathan Latka

11:36That's a good way to that is a good way to do it as well. Alright. Let's, wrap up here with the famous five. Number one, what's your favorite business book?

Jacob Eiting

11:43So this isn't really a business book, but the, Wright Brothers documentary... Or, sorry, biography by, David McCullough. I think it's a great exploration of, iterating on a product, in this case, to find product reality fit, but it's just one of my favorite books.

Nathan Latka

11:57Number two. Number two, is there a CEO you're following or studying?

Jacob Eiting

12:01Sid from GitLab.

Nathan Latka

12:02Guys, if you wanna hear Sid on the podcast he was on a couple of weeks ago, just search Sid or GitLab and my last name Latka. That'll pop up for you. Number three, Jacob, what's your favorite online tool for building your company?

Jacob Eiting

12:13We're we're strong on Notion right now. We're doing all kinds of crazy stuff.

Nathan Latka

12:18Number four, how many hours of sleep are you getting every night?

Jacob Eiting

12:21I try to get eight. I try.

Nathan Latka

12:22And how how how

12:24old are you?

Jacob Eiting

12:2632.

Nathan Latka

12:2732.

12:28And situation, married, single kids?

Jacob Eiting

12:31Married for eight years, and I just had a daughter two months ago.

Nathan Latka

12:35Oh, wow. Can... Congrats... Congratulations on the eight years and the daughter. That's great.

Jacob Eiting

12:39Yeah. A lot of growth. Yeah. It's a lot of growth everywhere. Right? Yeah.

Nathan Latka

12:43Next, you're gonna have four dogs. Right? Alright. Last question. Take us back to your 20 year old self. What do you wish he knew?

Jacob Eiting

12:48I don't think he would listen.

12:58Am a dummy something.

Nathan Latka

12:59You're good. No. You said it sound like you said he he wouldn't listen anyway. You're stubborn.

Jacob Eiting

13:03Yeah. There's no point.

Nathan Latka

13:04Guys, Jacob building RevenueCat helping mobile app developers better monetize serving 130 paid customers right now 600 free apps using the platform. They've done over 6,000,000 last month in terms of tracked app revenue volume over 30,000,000 active users on those applications. So nice reach as they look to expand 1.7 or 1,600,000 raised to date, call it 3% ish churn per month revenue churn, but still early team of six as they look to scale again, finding new customers

13:29mainly through word-of-mouth. Jacob, thanks for taking us to the top.

Jacob Eiting

13:33Thanks for having me.