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 5 10 15 what like a 40 50 price point there you're just taking 600 divided by 21 months i mean actually the number does come from our stats i just haven't actually broken it down into but it's it intuitively makes sense it's around our pro plan price point well the reason the reason i ask is because a lot of people when they calculate lifetime value in terms of of months they'll just do one divided by their churn so one divided by 0.03 for you would be 33 months you've chosen to be more conservative at about 21 months which is not a bad thing or a good thing it just is what it is um how do you use those lifetime value metrics to drive like new marketing strategies you're thinking about launching this week well so it's actually interesting so we are we've been around four years uh we're profitable but in terms of actual paid marketing we actually haven't actually tipped our toe into that so we're a small team so basically we're just growing up the platform and it's all organic down the road what does that mean though mike it always drives me crazy when people say it's all like magic organic they make it seem like they wave to one and it just happened how are you getting new customers uh well it's a good question um i think our seo strategy is quite good we've been around for four years so we rank highly on those quiz maker personality test things that people uh search for but secondly it's frankly it's word of mouth um i'm in manchester i met the bbc in person just to you know a mutual friend that got us on that um chicago the chicago bears and the chicago bulls came from that so you can just kind of see this linkage of people who see us talk to you talk to their friends and pass this on okay marketing we actually don't do anything yeah well and what is your team size today we are five folks okay and how many um and how many of those folks so obviously you're focused on marketing how many of those folks are focused on marketing or sales or onboarding things like that uh so basically boards to myself this is the multiple hat scenario um i technically wear the marketing hat both of us handle a bit of product and customer service and then we have two full-time engineers front-end back-end and then we have a finance a finance wizard who does about half half let's spend about half his time with us okay so with that team mix and the and that and the you know word of mouth strategy just articulated earlier what have you guys been able to scale to in terms of total customers over the past four years uh so we have to i think so let's say 700 7 800 okay 700 so so good you're kind of it's interesting it's you're kind of in an interesting spot because it's it's it's not like you're charging enterprise you know 100 enterprise brands 10 grand a month but you're also not like a you know hubspot or constant contact where you've got a million people paying you know six bucks a month for whatever their base crm or their marketing tools you're kind of like right there in the middle um how does that work in terms of how does that work in terms of you know do you put touch on these people once they sign up do you have do you get them on board or what yeah it's kind of funny we actually call ourselves and i think we are massive customer service geeks so both boris and myself handle all intercom chats so basically people ask us questions we respond directly we actually race each other this is kind of an internal thing but uh the person who answers the most intercom tickets gets beers yeah and so it keeps us in um keeps the two of us in tune with customers and also in terms of product development in terms of customer outreach anytime someone comes in at our pro or enterprise plan um i reach out directly and say hey you know how can i help um a surprising number of our of our customers are based out of london in manchester so i'm actually saying hey i'll be in your neck of the woods next week probably do an in-person uh training for your team so at some point scalability will be an issue but right now we're actually doing pretty well that's great well look 700 customers you said it earlier you got about 70 80 percent of folks on your pro plan which is i think you said 49 50 books a month i mean that would put you guys somewhere around 35 grand per month today is that generally accurate i'm not going to comment but you're you know you have some pretty good estimates going on well just be clear those aren't estimates those are i'm just multiplying numbers you gave me are those numbers wrong for any reason 700 the numbers i gave are as accurate as like i sound like trump the numbers are are pretty accurate i'm not going to specify beyond that okay got it um good so 750 uh 35 grand and then take me back talk to me about growth right so where were you guys a year ago uh so we're about i think we've grown about ten percent year on year okay so we're instead of we're definitely not doing the unicorn thing but we're just doing constant steady growth yeah well what does it look once you raise 2 million bucks you put yourself on a certain path i mean you know 10 years over your growth is is not great for a company that's raised 2 million bucks right so like how are you you know what are the board meetings sound like how are you trying to drive growth faster no that's well that's what i meant by the my this is where this is actually where boris would actually be the better person to talk to but essentially we control all of our stock and so we control the direction and so basically we decide what we want to do sorry just to be clear mikey how do you control your stock if you've raced why would someone give you two million bucks for nothing they usually people are buying they're buying stock right right that's a fairly long story and i really think you should talk to boris on that one okay i mean that's a big deal though you don't know what your cap table looks like i do but i actually don't want to talk about it with you right now okay well just help me understand if someone else is in your shoes and they're wanting to raise capital but not give up any equity that's a pretty big golden nugget did you do grants or something so again i really want to talk to boris there is kind of an involved story about it it had a good outcome for us but i'm not sure what he feels comfortable with us telling you about okay fair enough fair enough okay good so temperature of your growth um that was helpful um you guys are both kind of handling onboarding uh you know onboarding customers things like that so look you say you're you know you're basically doing no marketing and cac is nothing right now but if you take your two salaries and divided that into the number of new customers per month there is cac there it's just you're using sweat equity in your time right now correct right yeah um what what kinds of things are you looking at i mean in terms of scaling faster you have to eventually find paid channels obviously that work for you guys right to free up your time and things are you do how do you think about running tests on new paid channels it's gonna be interesting um so we actually wrote a book um we were basically been in the quiz face for a while we actually wrote a book called quizmaster and there is a profound need in the market for people saying hey how you know because obviously creating a quiz is easy 10 questions whatever but writing a good question whether it's ryan levisk's ass method or whatever there is a bit of a science to writing successful quizzes so essentially we wrote a book about it uh we're going to use that as some good assets in terms of lead generation saying hey look this is some good content that will help guide your quiz strategy and then oh by the way you know look at riddles as far as a quick platform mm-hmm good let's wrap up here with uh last question then we'll jump into the famous five um team sizes five where's everybody based we're uh so the four of the guys are based out of subrook in germany which is a university town kind of by the luxembourg french border and then i'm the lone well i'll say brit uh american slash brit got it good all right let's wrap up here with the famous five number one what's your favorite business book oh business book gosh that's going to be such a cliche uh when friends are seven ways to be uh influence highly influential people sorry sorry but you combined like three books there so seven habits of highly effective people that's the that's the one sorry okay got it uh number two is there a ceo you're following or studying right now not really no okay number three uh what is your favorite online tool for building your business oh god we love slack i'm sure you hear that all the time that's a good yeah it's a good one number four how many hours i sleep to get every night well six okay and what's your situation married single kiddos single no kids that's good and uh that's yeah plenty of time what's your uh how old are you uh it's 46 now 46. and last question what do you wish your 20 year old self knew uh university is overrated guys there you have it university is overrated coming from mike teamed up with his co-founder back in 2014 uh tried one product then i've eventually pivoted today they are building riddle a quiz platform specifically for companies looking to capture leads and information about people viewing their websites and then feeds directly into their other marketing and sales tech stack tools they have now scaled over 700 customers 70 to 80 of those folks on their pro plan caught 49 bucks a month they raised 2 million bucks growing about 10 percent year over year 3 logo churn per month with their team of 5 based between germany and mike the lone man and britain mike thanks for taking us to the top and cheers thanks so much for your time