How Ripl CEO Carey DiJulio grew Ripl to $6.2M revenue and 70K customers in 2024.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is clay mcdaniel he's a ceo of a company called ripple a marketing software company used by millions of small businesses and independent marketers worldwide he spends most of his career at the intersection of software marketing and emerging media and lives in seattle and rides his bike in the rain clay you're ready to take us to the top yeah thanks do you code in the rain too or no do you raise capital in the rain uh unfortunately when you're on a bike you can't really talk by much so mostly i'm in my head when i'm on a commute fair enough all right talk to us about the company what's ripple do and is it pure play sass uh it is yeah so we are a marketing software tool for small businesses um really the focus of ripple since the start has been helping small businesses create their digital content and get it published to all their social channels okay when you say small business i mean give me give me a sense here on average what are they paying you per month we're talking like 10 or 20 bucks yup you got it and um unlike a lot of uh sas tools that are out there we focus on businesses that have 10 or fewer employees and a meaningful part of our customer base is actually just single entrepreneurs solo why have that target well i mean from the outset really the mission of the company has been to kind of empower people that didn't otherwise have marketing knowledge or technical skills and just let the magic of software help them stand out online and on social media so we figured the least served piece of the market for small businesses were young entrepreneurs people just starting out who didn't even have any team at all around them and so we figured if we could build a tool that was beloved by them it was a great value prop you know we kind of have a bit of a moat around ourselves and wouldn't get a lot of pressure from above from the bigger software providers and that's proven to be true and who would you say are your bigger enterprise competitors well i mean canva has really shown the way um they've proven that you know a simple easy to use digital content creation tool can just absolutely explode in the market but they're not enterprise right no no i think talking about small medium business tools um we look at the ones that have a focus on small businesses but have managed to kind of creep up into mid and large sized companies just through the beauty and the sort of elegance of their product from an enterprise standpoint i mean honestly we don't see very many i mean many of the companies that have built marketing automation tools email platforms they're not really pushing into our piece of the company sorry mike my question is if someone starts on you guys and they get big they start taking off 10 30 40 50. where do they graduate to yeah i gotcha um well i mean i tend to think they graduate to the adobe creative cloud for digital content video creation and then to kind of the larger email platform tools um but one of the things that um even the website hosting companies like squarespace and wix and weebly and these guys have shown is that you know they can scale as companies get bigger and bigger and provide that solution for those larger companies similarly you know we're coming out this year with tools that enable multi-person marketing teams to use ripple so that's our goal is to kind of continue to build the product roadmap so that we scale as our customers find success okay and put this on a road map for me when'd you launch the company what year uh company has been around about seven years but in market for about four and a half as ripple um actually the first incarnation of the company that my predecessor our founder he brought out was really a video creation and influencer engagement tool and about four and a half five years ago found that the video creation and publishing capabilities were of greatest interest pivoted the company rebranded and renamed his ripple and since we've been in market with the ios app the android app and now as of last year our web app um we've just found that being much more broad based and kind of agnostic as to which small business vertical we serve it's um really driven the growth when did you join the company what year i've been here about three and a half years uh came on as coo and um uh middle of last year um was asked by the board to take on ceo so did you come in in 2017 as co as part of a funding round um just after um the second funding round had happened and then about a year into my tenure we did a third seed round brought on um a little bit more funding from our existing vc and a whole range of the previous investors out of the angel base and um haven't needed to raise since how much total have you guys raised uh just shy of seven okay just just shy of seven okay so just to be clear there wasn't a moment in 2017 where it was like hey we need capital where they basically told the prior fountain or that they told the founder hey we're happy to be more capital but we need clay to come in the company as ceo no it was actually 2016 so mid-2016 i came on and i joined when the company was only about seven eight people i had worked with the founder and the chairman of the board previously on a couple of startups and um they reached out because it was starting to kind of get air under its wings and they knew that um you know as a business person i liked growing businesses and wanted to help yeah i mean i guess the reason i'm asking is i think there was a debt around back in 2014 which by the way i love debt it helps founders keep more equity uh and then there was something i mean that aligned the elect the alliance of angels that wasn't a debt that was not debt financing no no no so um you may be seeing old data falling through crunchbase or something that um we actually bought the rights and the brand from a previous company that had folded early in the 2010s okay and maybe a little bit of some legacy data but we've only done um three rounds we had a convertible round early on um that converted into equity but yeah that would have been listed essentially as debt right it kind of convertible note so was there a 1.4 million dollar like angel round early on control note yeah so that was back in 12 13 something like this yeah yeah i guess the reason i'm asking is because typically once you see that round of funny come in like you are saying we're on the vc train i mean like you're in and and you know fast forward two three years when trilogy equity came in that was you know around the time you joined in 2016 it looked like it was like a two million dollar round so so not a lot of you know you know there's like a little thing in between there so you kind of go hey what's going on here was something flat was that a big down round no actually that was the explosive period of our growth um we've taken a non-traditional approach to financing um you know maybe it's because we're up here in the pacific northwest um maybe it's because we have such a significant and healthy list of angels um maybe it's just because we were able to grow quickly and generate say again what would you say is non-traditional uh not kind of going for these like monster big impressive like written up in techcrunch rounds um you know we have wanted to keep the balance sheet in the board compact we've wanted to keep the discipline around financial management in place and i think that's served as well because there have been periods where we've had dips either cac went up or ltb came down and we needed to be able to manage through that and having you know a balance sheet that's adequate but not um bursting with cash i think has been useful yeah yeah no it's fair enough i'm all about managing delusion obviously um okay so 2013 launch date you come in three years after that 2016 some capitals raised you launched the web ios and android apps double down on video focus on smb where yet today how many customers are you serving so we've got about 70 000 paying um any given month you know quarter million 300 000 plus in maus we've got that mailchimp model of how do you define sorry how do you define an mau folks that come into the app more than a couple times in a month so one session alone doesn't do it for us you know we might just have somebody respond to a push notification or just be coming to check their stats they really need to come in with intention um so um but yeah serving more than 70 000 i'm paying subscribers today um we're a little north of 10 million are um and looking to kind of put the foot down and grow faster this year ahead where was uh if you're at about 10 million a day do you remember we were at about a year ago we've only been up by about three four percent year over year from 18 17 to 18 we had huge growth more than 200 percent and so part of that was intentional we kind of backed off the accelerator a little bit on customer acquisition we saw creeping up early in the year we wanted to get that under control bring our cac back down we're entirely a direct response marketing driven uh customer acquisition model so no sales team at all and that means when we see an efficiency creeping in on cac we kind of back off a little bit go back and look at our approach and uh so for the year ahead you know we're looking to push harder on the revenue growth yeah so just to be clear like right now you're doing something like eight hundred and thirty thousand dollars a month about a year ago you were doing like 800 000 a month something like that that's the right about right on ballpark for gross sales okay a lot of people do not have a discipline that you had to understand that their cac has grown to a point that's not scalable and to pull back so how did you know when that moment happened for you well um we are tracking monthly cohorts for tracking cohorts by customer acquisition channel and we run ltv cac and roas not only monthly but like weekly because we have a seven day trial period so we just have so much discipline around the instrumentation of our pack and the upper funnel that if it goes a few you know more than a few weeks with coming out of round where our ltv cac ratio needs to be that's where we'll back off and look at efficiency look at the quality of our ad creative look at the qualification of our customer acquisition you know we're running this stuff like week in and week out to make sure that we don't throw bad money after good yep so so how many people in a given month will sign up for a seven day free trial uh it depends on our ad spend right um but uh between 7 500 and 15 000 depending on how well we're doing our organic how efficient our ad spend is etc and and what do you know you have to get the users to do activation wise in the seven days to drastically increase the likelihood they convert to paid at least three pieces of content created and posted not just created but also posted yeah we can see when people save but they don't post and we've got integrations with eight of the different social media platforms so when they say but don't post we see that there's like interest in the core value prop of content creation but when they post what they're really doing is they're giving their trust and faith to ripple as an alternative to like instagram or facebook or one of the native apps yep to go ahead and publish that content for them and then to tell them how it's doing and that to us really signals like trust in the whole value prop the whole arc of the kind of user experience yep and then clay so same question going down the funnel but how many new customers would you sign up each month typically on a registration basis no like new paying costs so let's say there's between seven and a half yeah yeah yeah i got you we convert about half that's a big that's a massive conversion rate fifty percent well so yes um but obviously the conversion rate is much much lower if you were to compare it just to free users who are registering so um on a free user conversion rate we do about 20 of those right so in any given month you know we might get 60 70 80 90 000 new registered users in that's going to generate something like you know 10 to 15 000 less more depending on the month of folks trying the subscription and then we keep about half of those okay got it so yeah just repeat that 80k new register they give you an email 10k actually try the seven day trial do you require a credit card up front uh in most cases i mean apple and google actually administer that for us so we don't have to uh enter the credit card info if they've got valid information in their accounts um but for the folks we acquired through the web app um we go ahead and ask for that up front at the point of trial okay so ten thousand do that they try to seven day subscription and and you're basically saying about fifty percent of those people post three pieces of content they create it and post it and about again that leads to the conversion so about 5 000 new customers per month on 80 000 registered yeah sometimes more sometimes less depends and we've got a couple partner programs running too that just bring folks directly in um where they're at we're bringing them straight into the subscription so so then this is a tough question because i can tell you're extremely disciplined analytically so there's going to be a lot of caviar and i want to answer this with but looking across channel generally speaking to get a new 10 to 15 a month customer what are you willing to spend to get that customer in terms of payback period i mean i'll tell you our cac we've been running somewhere between 35 and 45 dollars for more than a year now okay um and that's that's cac against um you know first billing event right customers that are actually converting not to trialers but folks that become um billing customers for us so that's not horrible i mean that's a three month payback period yeah and um you know that's on gross right so we got to account for the commissions apple and google take a pretty healthy slug out of the first year um so you know if you're like looking at it net um it's a few more months than that but um the thing for us is like we just have always been about you know running and growing this business in a way that's sustainable and not sort of burning off cash for the sake of acquisition if we don't think we can keep those folks at least keep them long enough to make the ltv cac work for us so what is gross revenue churn over the past 12 months uh i mean it's significant like you know on average we only keep our customers across the whole base a little more than a year so it's so it's high right but that doesn't really provide the nuance of the cohorts right we've got a significant group of folks and we continue to sign up more and more on a proportional basis every day who are on the annual sku so we keep them you know for several years and we've even got folks that go back three three and a half four years of subscriber life for us back to the ios days when that was the only app we had so we lose a lot of folks up front the the steepness of the curve in those first few months is quite high we've got to improve that um everything we're doing the product roadmap is to bring that down but once we keep somebody for four five six months we're pretty confident we're gonna have a solid ltv out of those folks yeah you'll hum for many many years yeah that obviously that's a pattern you've seen a lot of sas but looking at a weighted average again the customers are paying you a year ago let's say they were paying total well we know the number actually you said about eight hundred thousand dollars per month if you ignore new customer sign ups what you're saying is about 700 grand of the 800 000 will disappear you have to replace that each year it is about right yeah yeah i mean so this is the reason it's interesting to me is like most people will look at that and say it's a massive weakness but if you can figure out knowing that your churn is high if you can figure out how to keep calc really low you can still build a great business yeah i mean every vc we've ever spoken to specialty is enterprise just is like wait a minute those are monthly churn numbers like you got to be using the annual you know that surely you mean annual right and no we say no this is a fickle audience they're extremely price sensitive they have a very high bar on the value proposition and the standard they hold for what they're going to pay for and what they're not but building a business around that if you can do in a way where your ltv cac you get the right numbers and the right ratio and you really deeply understand this target audience we believe there's just an enormous amount of goodwill there you know our ratings are like over four or 4.2 on the app stores we have incredible nps and so while it's a really challenging audience to manage that churn for look mailchimp canva many others have shown that if you do it great and you do it at scale like it can become a beautiful business what's your team size today how many folks 30 30 people okay how many engineers uh it's about half okay include qa engineers in washington everybody here we've got a couple folks helping us on overnight regression testing out of the country but um all the fts are here in bellevue washington now this price point is too cheap to have any full-time sales reps with quota correct i can't imagine this company ever having a sales person yeah yeah i was going to say just that math doesn't work now what does work are like channel partnerships and things like that so name name just paint that picture for us what channel works really well for you yeah i mean this is really nascent for us to be honest this has been a direct response direct marketing driven company from the start um we have one meaningful small business a services company a financial services company that i can't name but which will become public here in q1 which has been helpful for us in the last year it's kind of helping us cut our teeth and learn how to run a partner program and we just hired a couple folks here starting in february who are going to help us spin up partnerships so direct response mainly give me a sense of scale here last month how would you spend total on on direct ad spend uh it varies because we bring it up and down based on cac efficiency but um never goes below about two hundred thousand okay and what would be like the max be if the economics were holding that month uh when we see ltv real really pulling through which means our trial churn is looking good our month one turn is looking good um we'll go up to 400 thousand a half million or more okay we've got a lot of flexibility on being able to ramp up and down spend particularly on facebook but obviously in the display channels and in the long tail just because our balance sheet's solid and so because we drive that discipline weekly not monthly or quarterly around how we're doing on the return you know we're pretty nimble on ramping up and down based on efficiency yeah any last raise was back in 2017 any plans to raise capital right now or no uh we don't need it um [Music] so you're break even then yeah yeah we're we're on the right side of that right now and you know as we hire a few more folks who might step down to burning again but um the intent here is to run this thing at break even or better and to continue to scale it but at a faster rate this year so a little bit more aggressive reinvestment rate and customer acquisition um obviously again churn is something that anyone's gonna have to get over whether it's a vc a debt provider or an acquisition like a buyer but if someone came in and offered you something like you know 3x on the company for you to sell for 30 million bucks i mean would you guys take that deal that's a board decision and i'm only one member of the board um i think we're pretty optimistic i think we have a pretty um aggressive uh sense for the depth of understanding we have for this target customer audience and a pretty optimistic view of where we're going to take the product this year so i don't think 3x would do it for us are you married clay i am let me ask this question differently if you went home tonight and told your spouse you turned down a 30 million acquisition offer do they kill you uh no and i would tell her that um we don't reckon that's a fair valuation at this point and um we're pretty bullish actually especially in light of what's going on with investment marketplace and macroeconomic everything else i mean ironically there's a counter-cyclical effect small there are more small businesses that come in the market when the economy gets tight entrepreneurship explodes and uh our tam is huge we've got five years of slugging away having to be this really disciplined really grinded out uh kind of a company and so we reckon um you know fulfill our product roadmap ambition that we should be um growing faster this year yeah somebody listening right now is going to say yeah he's truly right on the macroeconomics the canva mailchimp they're doing great but canada mailchimp don't have 90 percent gross gross revenue churn annually they have to replace their whole base basically each year and oh by the by the way clay you know you guys are flat year over year there's no way you're worth 3x you would counter and say listen we got a great product we're not for this year well yeah and we're not churning all that revenue on an absolute like averages are averages right so um a meaningful portion of our customer base we're keeping a meaningful portion of our revenue we lose a lot right away in those first few months of those billing periods through that high churn but you know more than half of our paying customer base we've had for longer than a year well wait just to be clear sorry gross revenue churn again you take you know this i'm preaching the choir you're clearly know your metrics you take your total customers a year ago who are paying 800 grand a month and you look at how many of them and what they're paying than the dollars they're still paying today if you have 90 churn that means today they're paying about a hundred thousand dollars per month that cohort right yeah i'm running out metrics for you that have to do with looking at month over month looking at year every year my point is like we've got higher churn than what we want but we have kept a meaningful portion of our customer base for longer than that so the average is you know month over month year over year are not going to line up perfectly sorry that's not an average like gross gross revenue churn annually that's not an average of anything that's looking at the same customer base over the last 12 months i don't have that for you we look at it month over month so what we do is we run out our month over month and then we look at what that looks like on an annualized basis um if i went and i took the exact paying customer base at the end of calendar year 2018 and looked at the end of calendar year 2019 i think it would be well north of 30 actually so on a gross revenue basis it's not as high as that on an annual year-over-year basis sorry well north of 30 sorry north of 30 retention carried along that we carried along yeah i see so you think gross revenue turn annually might be more something like 70 not 90. we have we have not lost on a year-over-year calendar year-over-year basis as comparative end of 2018 to 2019 we have not lost that much but we pay the most attention a month over right the 75 80 of our customer base is on a monthly skew when we're looking at that month over month churn and we see month over month churn creeping up anywhere north of seven percent or so that's where we start to get yeah but that's what the actual average is like that's actually not you just told me you see when you look at your retention curves a lot in months one and two and then after they say past four or five months they could stay for years so why would you look at why would you split your cohorts yeah well because we want to see where the cohort gets set at the start of the curve we want to see that so that we can kind of run our ltv models and estimate what that behavior is likely to look like because as you know the shape of the curve never really changes but the position of it does depending on the quality where we're in flat lines exactly and so where that flat line is like we're running that out and looking really with discipline month by month by month at those cohorts and on a year-over-year basis you know we're keeping a healthy portion losing a significant number through our churn as well but if the economics are working straight away in those first few monthly events then our payback period is going to work fine and we're doing well on cash yeah very cool all right let's wrap up here with the famous five number one favorite business book uh i love dalio's principles um i just think that running a company is as much about your decision making and your philosophy as it is about the numbers number two is there a ceo you're following or studying hmm you can say none by the way i you know i honestly am learning every day on this job and um the folks that i tend to pay the most attention to their running companies are like me the folks that have come in second or third and have had to figure out can you share one though um i'll decline i'll think on that all right number three what's your favorite online tool for building the company send grid uh we use an awful lot of ripple for our social media activities but uh i love the flexibility of sendgrid for email number four how many hours of sleep you get every night i shoot for six okay it depends on what's going on with my kiddos and their homework how many kids three wow you okay busy guys so married three kiddos and how old are you uh 46 46 last question what do you wish your 20 year old self knew that it's okay to take significant career risk early anything you do before you're about 30 or 35 is all about learning guys there you have it clay mcdaniel building ripple think of it like quick video and content creation for small businesses over 70 000 small businesses pay them they're doing about 10 million bucks in ar right now they are flat year over years they focused on getting some new products to market ios android web apps looking to really stomp on that growth uh this year uh paying careful attention to unit economics got between about a four to six month payback period spending anywhere between 200 and 400 000 a month on ads depending on if kak and ltv stuff holds out but again looking to scale with their team over the next year uh up there in washington clay thanks for taking us to the top yeah thanks and i want to thank you man everything you do for um helping create transparency and a sense of community in this market is just incredible so i mean i should be i mean i should be thanking you for playing bond being vulnerable and sharing numbers i mean this is what people learn from so thanks for playing ball and coming on yeah you got it hey appreciate the time have a good one these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it 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