How Riddle CEO Mike Hawkins grew Riddle to $2.8M revenue and 700 customers in 2024.

hello everyone my guest today is mike hawkins he is the co-founder of a company called riddle.com he's also a californian who fell in love with living abroad in europe over a decade ago since then he's helped a string of startups and european companies like gaming gaming companies like kabam and marvelous aql monster and restaurant find rap city hawk he wears many hats he's our quiz maker makes it his quiz maker makes it easy for brands like the bbc and the nfl to engage their audience and collect leads with their own buzzfeed style quizzes polls and more mike are you ready to take us to the top i am indeed all right so tell us about riddle what's the company do and how do you make money what's your revenue model yeah so revenue sorry revenue riddle is a sas company we started in 2014 uh we are a quiz marketing platform and the idea is we've been in the quiz industry for about 12 and about 15 20 years and the idea is that companies need to engage their audience with quizzes and buzzfeed like polls things like that but they also need a way to engage and potentially qualify customers so using quizzes to gather insights about potential customers uh qualifying as leads and then send all that data to marketing software that's what we do got it and and walk me through i mean it's a pure play sas company and if so what's the call the average customer paying per month yeah so it's a pure soft pure software uh as a service model uh we give a free 14-day trial that's normally enough to kick the tires uh we don't do a credit card we like having like a low threshold of entry yep we generally find that once people are kind of engaged and actually see the tools they're more than willing to sign up uh in terms of pricing plans we have a basic plan at 19 bucks a month uh and that's designed for pretty much like independent bloggers things like that it has our labeling on it but in terms of features it's pretty robust the other features that the professional and then our enterprise plans they're much more designed around white labeling and a lot more call to actions and things like that that agencies and larger brands would need okay now would you say to the folks on the 19 per month plan pull that average down so the average is closer to call it 20 25 bucks a month versus whatever your enterprise pricing i would say probably about 75 of our businesses fall into the pro pro plan okay um i pros 49 a month and then enterprise is 249. okay got it so your average is north of 2010 call maybe closer to 50 something like that yeah yeah okay great um i want to talk more about kind of how you came up with those plans the pricing the pricing axes in a bit but put i want to put this on the timeline first when did you launch the company company yeah we started back in 2014 okay and initially i think like so many startups we decided we pivoted many times the idea initially was to be a consumer facing kind of frankly like a buzzfeed like uh quiz portal but then we found is that we kept on having uh companies and brands in particular saying hey we want pure white labeled highly customizable quiz thing you know quiz embeds that we can put onto our sites without having to go to an agency without having to go to um our developers and so we pivoted about 2015 and haven't looked back since that's great now abby bootstrap the company are raised we raised initially but we are privately held now okay we are yeah we have the luxury of having a fully functioning quiz marketing platform but also controlling our destiny well just to be clear there's a lot of privately owned companies that have raised capital so so you those two things aren't mutually exclusive so i'm sorry so how much how much have you raised total we raised i think about two million okay one and when was that uh that was in 2015 i believe so pre-pivot or post pivot uh post pivot oh post pivot okay good so you had some good traction with the pivot and then boom that was a great time for you to go raise yeah and and generally what'd you do there i assume that you were in europe at the time what was funding like in europe at the time uh funding is actually pretty robust you know whether it's in london or manchester um our actual founder named boris pfeiffer he's based out of germany and he you know when he used to work with kabam he worked out of luxembourg and so he knows actually a lot of both silicon valley investors but also people whether it's like mangrove investors who had raised with us um or also in luxembourg as well so a mixture of angel investors but also firms okay great but you did it did you do a convertible note or you actually sold equity i'm not going to talk about that okay well tell me why strategically you might do one versus the other so really that conversation probably more towards boris than me i'm actually more than marketing yeah got it okay good so when did you actually join the company i mean are you equal co-founders or no i joined in 2014 uh boris is by far the the biggest founder i'm a co-founder in that i was there from the get-go but he's in terms of actually raising money investing some of his own uh dealing with investors that's why he gets to wear the big hat got it we've interviewed a couple folks doing this you know in the marketing sales tech stack space and they're always our churn issues because quizzes can be seasonal or or you know during the holidays or things like that what's your churn today and how do you manage it it turns about three percent we were in about five uh one of the main things as you mentioned is just getting people to to roll out consistent content instead of saying hey i want to do one quiz a month for one quiz every three months you want people to say hey i want to have a range of tools that i can use across a wide variety of use cases whether it's a survey to qualify our customer service accounts or a personality test or just a straight poll and so we're up to i think 12 types of quizzes now and what we've seen is that that actually reduces churn and that people are saying oh well i can do this for this i can do this for this they view it more as a tool kit they need to have on a consistent basis just because it's three percent logo churn per month sorry just to be clear that's three percent logo churn per month could you explain logo i've not heard that acronym well you could measure churn based off revenue or logos right so if you have two customers yeah i just never heard the term with logos before so it's three percent of subscribers okay yeah but again is it are you is that three percent representative of the revenue those lost subscribers make up or the actual count of the logos lost this would be three percent of actual account of subscribers okay got it yeah yeah okay good so yeah that would be logo churn for customer return per month there um that's great and then so you know the what are you doing anything besides just offering more quizzes though to create lock-in and stickiness for example when you when they collect data via these quizzes do they have to keep paying you to keep having access to that data or do have you done anything like that to drive continuity yeah i know he actually hit one of our main strategies so on two levels one our quizzes always stay live so that's a good sales point when people start to use the platform and say hey if you have a quiz on your site it will always be live however if you stop paying us it's going to revert to our branding and also all those lead generation data capture pieces they're going to be turned off so in general people who are actually using this on a consistent basis to qualify customers things like that they go well you know it's a modest price i'm getting valuable data and i don't want to turn this off yeah mike i'm curious though if i'm buzzfeed and i hear that and i'm going they basically have us by the balls if we build this into our tool system and are installing you know one or two new quizzes per day for four years and they decide one day they want to start charging a million bucks a month we have no choice it would be such a technical nightmare to go take out all those quizzes that they they have us total i mean that might even drive them to build their own thing internally just to avoid having to be dependent on you how do you manage that well if you think about it most cos most customers that we deal with uh they don't want to actually devote their development resources to even remotely tackle that uh but they would at a certain price point at a certain price right yeah but but in general i mean ever since we've started we have been completely transparent with people so people who come in at a certain price threshold and if we decide to raise our prices we always grandfather and the people who've been with us it's like hey you know you're an early adopter you guys are consistently on that price point yep got it that makes sense um with three percent logo churn what do you assume in terms of lifetime bio these customers are typically are typically sticking with you on yeah generally across this is across all three plans so generally our lifetime value is around 600 bucks okay and how many months do you do you assume that is that's about i think about 21 months yeah about two two years there yeah no that's right i assume what you're probably assuming a...