How Saasquatch CEO Will Fraser grew to $1.1M revenue and 100 customers in 2018.

hello everyone my guest today is Wil Frasier he's the CEO and co-founder of a company called sasquatch he studied electrical engineering and business before starting his first company and since becoming an entrepreneur he has worked with some of the world's largest companies to help them build digital growth channels that have touched many millions of people all around the globe we'll are you ready to take it to the top let's do it I love this name sasquatch what are you doing how do you make money yeah so sasquatch is started as a customer referral platform for SAS companies we kind of you know hacked it with SaaS but since then we've really expanded into helping companies increase their lifetime value at every stage of the funnel so be that from a newly acquired customer to a churn risk we just help companies run marketing programs that increase revenue makes a lot of sense now when did you start this what year we started this in 2013 actually okay and was it a like a consulting gig or was pure-play SAS from the beginning it was a peer play SAS from the beginning we actually basically formed the company out of an itch we experienced at a previous company and just went for it I love that did you did you how many co-founders did you have you said we so yeah we had three originally when we started Sasquatch we have two now things happen but yeah I was three of us kicked it off got a little bit wild we gave ourselves five days to kind of start the company and in those five days went through ideation customer testing and sold our first five customers okay I want to learn how I got those first five customers but sorry you cut out what year did you launch Oh 2013 2013 ok great walk me through how you got your first five customers so we have been working on another product and the it was very plaque and dependent on how Facebook worked and needless to say Facebook changed so me and my co-founders sat down and said you know do we want to do want to roll the dice do another one and we said yes hell yeah let's do it again so we I would say what is wrong with you we were addicted to it right I can't stop so we went ahead and fix me two days putting together a very basic idea really basic pricing basic product concept really had what was the price so the price started originally as a cost per acquisition model so we would take the first month revenue from each new customer interesting entry you're basically affiliate on steroids that was that that was our original model charge now now we charge in a subscription basis okay what we just discovered the reason we made that shift was because we sell primarily to product marketers and product marketers don't have that same acquisition budget as the acquisition marketers do so we learned along the way but we gave her suppose basically three days and any way we could we sold those clients so we said if you asking us for a case study or you're asking us for any you know evidence this thing exists we'll talk to you later but we just can't make the deal right now and so we we know one of our more fun ones we started with one of the large SEO companies and we started on support chat just talking to a frontline support person and after about an hour and a half of slowly being moved at the channel moved up the channel all of a sudden we were talking to the CMO pitching them this product so really it was just any way we could hard hustle would you say to the support person because you know they're nervous about introducing some random person on live chat to their boss know for sure so it was really just a level of escalation so just a matter of hey you know we want to talk about this I think it'd be a good fit and we just got a keener off the bat and said oh let me pass you up and we got a you know let's say a bit of a Keener Support Manager and that manager thought hey I know someone in marketing let me pass you over and that's what we really started pitching and then that marketer was like okay this actually sounds like a problem we have right now let me pass you up so what they pay you so they were they agree to the CPA model how much did you do they pay you per lead you brought them so that would be about $40 a new expense okay but only when they close the deal only close right so yeah that was only when they actually pay yeah that's tough cuz you got to pass them off and then hope that they have good stuff and understand it of close people otherwise you get nothing exactly so you know as we build them the business the subscription model ended up working for our customers but exactly at that point it does also work for our business you know now we say we're providing you with the platform all the resources you need to succeed we're here to help you but we're not gonna take a pound of flesh if you do succeed and all so we we do from our business take a little less risk on your business so what's our puta day what's the average customer pay you per month yes the average guys for today is closer to 900 a month okay and so that's a wide range you know we work with you know publicly traded companies that pay us ahead of a lot more than that and we work with two guys in a basement working on their startup so then what if I sell to team size wise so team size were about 15 people oh wow keep it tight keep it lean you know really we were trying to build the best product and the the best revenue we can and we don't necessarily think that's a team size thing you know at this time where are you based is everyone based in one spot no so we're primarily based up in Victoria Canada on the west coast but we have team all over so we've got team members in Mexico Phoenix team member actually he's just moving up to New Zealand for a little while now so we keep it very flexible we have a work anywhere policy just kind of get the job done that's great and what have you scaled to in terms of total customers yeah so we're of just over 100 customers right now and like I said it's been interesting because we've been scaling up and up and up and those enterprise customers so that's been an interesting change for us over the last couple of years 100 customers times 9 are bucks a month you guys are doing what about 90 grand per month right now that's about right yeah that's healthy and what's growth look like what were you doing 12 months ago yeah so we've been seeing about a hundred percent year-over-year growth little greater than 110 year-over-year growth for the last two years that's so it's about 40 grand yeah good we just this year just brought out on a very expanded version of our platform which we're calling the growth automation suite so up until early this year we were really focused on just customer referral programs but what we discovered through really our own customers they started a if you will is that a hacking our system or abusing our api's and we started looking into what was going on and we realized that customers were using us for all sorts of different things some are using us actually to manage their coupons some were using us to manage their account credits some are using us to build these elaborate you know in-app growth programs and so we said well why don't we productize this and so our customers basically showed us the way we've got this new product out in early access right now the growth automation suite and that's that we think is gonna drive some pretty substantial growth to getting this here which turn looked like today yeah so we have net negative M our our churn how negative so part of how negative about two percent you annually sorry yeah yeah so our net negative rows through we have a subscription model but then as you add more users to our platform at some point you scale us out of your your included users and we charge you a little more for it and that's been really good for us so basically if you will as our programs become more successful by customer adoption we end up charging a little more for that and that's right hey I'm from well what is gross revenue Turin look like I'm curious yeah so gross review turns pretty low okay look around like the four 3/4 mark annually it's it's mostly to be honest because we do still like to work with some like really cool early startups a lot of that churn just comes out of company failure yeah you know it happens right like we're not if the company's in trouble we're not gonna be the only thing that saves them but that's ok you know it's we like working with those companies we like working with young teams and new startups cuz you never know when it's a rocket ship right yeah so just to be clear you churn 4 percent of revenue annually you add back six that's how you get to negative 2 percent net negative yeah makes sense bootstrap Derby raise capital so we have taken some debt financing so it's an interesting model we work with one of Canada's largest super angels so firms called the called Wesley clover Leslie clover Wesley it's a it's a family fund out of central Canada ok and these old two companies one was called my columns called Newbridge both got sold for north of 6 billion and they've just been playing for a while know they've been dedicated to to funding companies in Canada so how much did they fund you with so they fund us with a couple million dollars Canadian and they've you know really we like working with them because they're extremely founder friendly you know I know Leslie will say they're founder friendly but I would argue that these guys are probably founder friendly to a fault they are are just as keen because it's family money they don't have limited partners they don't have a return horizon they are just as eager to see a company that takes you know ten years as one that sees five years - how do they make money though what's the interest rate so yeah so they're they have a they'll do it on convertible notes so Oh got it got it got it good so so this is like a typical commercial note a discount rate and interest rate but they're looking to convert at the equity round they want to convert yeah so it's not like it's not actual debt equity or bangle - no yeah that's no big like I saw like a mor financing firm or anything like that no no and then they are you know it's interesting the partner for the west coast of Canada is actually based in my office oh that's cool they're they're a very active firm super super cool like that that's good okay so a couple million raised there let's shift back to some of the unit economic stuff so we talked about churn what are you spending to acquire these customers yeah so we're spending about six to nine months revenue to acquire a customer right now yep and primarily that for us is actually spent through our sales team yeah just be clear that's about you know nine hundred bucks a month if you spend six months of revenue that's fifty four hundred bucks to acquire them you get paid back in nine months yeah that's about right yeah yeah and so you know the big thing for us is we do a lot of organic work so a lot of content you know we have I wrote a content piece at the very beginning it's actually a fun story if you have time for it but I was sitting at a bar waiting for my wife to finish work and at a hotel just be clear wasn't just out of mana and I thought I'd write up an article and one of the things that have been annoying us what there didn't seem to be a clear Dictionary of terminology in our space so we just wrote down the ten terms you need to know to run a referral program very simple to find a few things and the cut that piece of content started getting you know more and more traction and ultimately actually led to us being asked to bid on an RFP by one of the biggest tech companies in the world because we defined a few terms that no one else used and they they started looking for those other groups that did those things and of course we were the only ones talking about doing it and so we have a lot of organic I then wants to go through organic traffic content videos ebooks really most of the cost isn't people and commissions and things like that and what do you assume minimum lifetime value is on these guys once you land them yeah no so we would expect a client to stay for no less than two years you know we look more we plan more for 30 months right so that you know that's kind of where we look at for it for lifetime we see that increasing right now which is wonderful you know we are you know if we're working you're never gonna cut us right if we're you know you imagine a tool that's installed in your product that's giving you new customers every month for very little work very unlikely we're gonna get removed but also as we expand our platform offering we're able to help you know there are there are certain products we found that just aren't particularly referral yeah you could probably guess so the products you wouldn't refer we've tried to work with them but now they're expand a platform you know we can help you you know help any product really that's got a consumer or a small business base grow so we'll just to round that out real quick you know you expect 30 months of lifetime value at 900 bucks a month it's about 27 grand and lifetime value on 5,400 bucks and kack yeah that's all right that's great those are good economics what do you think you know if you've raised several million I think I mean I'm gonna assume you it's probably two or three something like that right now you're doing about a little over a million per year what do you think you have to grow revenues to so that you can actually go raise at evaluation where the valuation is not under the you know too far under the cap you got on the note yes I mean we look at the basic economics out there today you know you would hear somewhere between four and optimistic six times on revenue right and you got to imagine that an investor is gonna want to take no less than ten but probably 15% in that round so you know we would look to try to push for a triple of our revenue this year yeah and we think that would put us in a good place to go do that yeah but you know I mean really we are talking probably closer to two million at the minimum yep so you think by the end of the you know we're recording is Ammar at the end of March so we're three months into the year you're doing about nine two grand a month you'll think you go to grow that's about 150 160 by December this year that's the plan yeah that's great and and just to be clear you think at that right you can go raise at favorable terms for you or you need a couple more months to get up to 180 200 so the interesting thing I mean we've spent a lot of time doing the you know building relationships with investors you know partly because we are just active in the community and we meet people and know people but at the same point you know we want to make sure we're talking about what we're dealing with people well before it's time for that raise and so you know we've done a lot of work to identify who's on board with our strategic direction and so for us a big part of what we're doing is is making sure that when we are ready to raise it's picking up the phone and calling the six people that are already and try to get that round done less than less of it than just saying hey here's some numbers and we're a random company off the street let's get to it so yeah we believe we can raise favorably based on the relationships and that trust we've built as well as you know the shared belief in the the future vision that's good right well let's wrap up here with the famous five number one what's last business book that you read last business book that I read was the four disciplines of execution four disciplines of execution number two of there is there a CEO you're following or studying yeah so cheating on this one a little bit there is but it's a CTO or it was a CTO and it's Edie Catmull from Pixar yeah he's a visionary and a fighter his book creativity Inc was was a solid one I was just gonna say I just got done reading that book I don't know where I put it but it's a good one yeah it's a good one and I just I love any anyone who's got that much guts but I keep going yep number three what's your favorite online tool my favorite online tool is it's a tough one I use that I use a ton every day but I'm gonna go with and I know this might get me shot with JIRA JIRA alright number number four how many hours of sleep to get every night you know I do I do hit the eight that's I think it's super important to get that sleep in wake up refreshed have a clear mind and get to it and what's a situation married single you have kids I am married no kids no kiddos and how old are you 31 alright last question what do you wish your 20 year old self knew it can take a lot longer than you think so have fun on the ride there you have a guys it can take longer than you think have fun on the ride from the founder of Sasquatch founded back in 2013 got their first five clients in the first week or so selling on a CPA basis people would pay him 40 bucks per new closed customer about one the first month's revenue they get to keep realize that was really really tricky so pivoted to a SAS model he's got now got almost a hundred couple over a hundred customers paying about nine hundred bucks a month doing about 90 grand per month in revenue that's doubling you over a year twelve months ago they were only at forty five K hoping to go to about 150 hundred sixty K by December of 2018 he's got net negative revenue churn of negative two percent spending fifty four hundred bucks to acquire a customer gets paid back there in about nine months with his team of fifteen basic they're in Victoria Canada again helping and understanding how to make referral work at scale with his company sasquatch will thank you for taking us at the top thank you