How Tapfiliate CEO Thomas Van grew Tapfiliate to $960K revenue and 1K customers in 2018.

hello everyone my guest today is thomas van der kley he's the founder of tap affiliate a company that builds world-class tools for tracking managing and growing affiliate programs and referral programs in previous lives he's created an ad supported free printing service for students in a social network for startups he loves ad tech vinyl records and needless to say cats thomas are you ready to take us to the top yeah definitely let's go all right tap affiliate tell us about the company what do you guys do and is your model revenue model pure sas yeah so we build affiliate tracking software uh we help affiliates uh e-commerce businesses and other uh sas businesses to set up affiliate programs so we sort of like google analytics for affiliate marketing and yes we're 100 sas that's great so so on average kind of what what does a customer pay you per month would you say uh that's about 80 oh 80. okay so so fairly hopefully this is like high volume then right at that price point um what kinds of customers are you signing up typically uh everything we have from well there's a lot of eco e-commerce we got like food supplements fashion travel like everything that is being blogged about basically uh so that's that's one end but we also have you know porn uh everything is in there basically crypto interesting you said porn crypto smbs all of it yeah yeah i actually have one of them sorry god i would say uh what this is kind of interesting what can we learn what can sas ceos learn about their affiliate programs from how effective you see the porn company running theirs well to be honest we we don't meddle a lot with uh with our customers we have no touch models so we don't really go into um into like individual clients we just you know we do our questionnaires and we do our you know interviews but we don't i i don't have any specific insights to share about about specific businesses okay when did you launch the company what year uh it was 2013. okay 14 14 14. and um and what have you scaled to today in terms of total customers on the platform uh we're a little over a thousand okay a little over a thousand so that's i mean that's pretty healthy growth i mean i can take thousand times 80 right you're doing about a million bucks a year right now that's it that's good what's growth where were you at about a year ago well we used to do uh 100 year-over-year um but we launched a new website in february of this year and that completely completely killed our conversion rates uh and it took us quite a while to sort of like find out what was going on we got a lot of things we liked about the new website because we like we realigned our mission and vision we're looking for a different kind of customer um but it took a little while to find out what was actually you know holding back customers from signing up uh and we actually just you know we got back on track about about a month ago so we're now like starting starting to pump again so you're about 80 80 grand per month today where were you a year ago were you flat basically no a year ago it was rather like i think it's like 60. okay so still some growth there just not a hundred percent exactly yeah that's good and then um have you funded the company are you bootstrapped bootstrap i love that congratulations that's great thank you very much uh how many other founders are there um it's basically just me and uh i have one partner but he's more of the old wise wise man thank you thank you he's a wise man strategic advisor is a minority shareholder who might just wanted to have on board just to to be with me that's great how many people are on the team today uh we're five oh five people gosh i love stories like this like small nimble bootstrap thousand customers um walk me through customer acquisition what are you paying to acquire customers uh so we pay if we only look at adwords which is fully weighted include any sales people or customer success or onboarding uh so i think that's about for a trial customer it's about 20 to 30 dollars and we have a child's paying ratio 40 okay so said otherwise you need a hundred trials for 40 you need two trials basically for one new customer so you're spending 17. yeah yeah so you're spending like about a hundred bucks to acquire a new paying customer some logo that's that's pretty good if they're paying 80 bucks a month your payback's about you know a month two months yeah exactly healthy um so you know here's the other question right i mean if you found growth channels why not why not go get some additional capital and and you know drive growth uh there are multiple answers to that question um for one this company was founded from multiple angles one was because i had some experience with affiliate marketing from both sides as an affiliate and as an advertiser and i didn't really like how everything was set up so i set out to change that the thing is that i had a different companies before and part of this setting up this company was modeled around the things that i didn't like before uh my first company had a very bad experience with an investor or with multiple investors actually how about like when they forced you out or what happened no they were just it they ended up not really understanding the business uh and they were putting a lot of pressure on us and making us do the wrong things um and in the end i wanted to you know it really depends also on how you define success right so for some people hyper growth success for me in this company is much more uh it's a much more holistic thing so i you know i'm for for when i'm very very picky about whom i work with uh like extremely picky because you know like working is my hobby so i if i want to go to the office i wanted to be i wanted to be like amazing there i want really nice people uh thomas what what actually happened like specifically what happened did they like do something behind your back or like what what happened nah it worked we were several it's it's such a long story that it's hard to sort of compress that into into like into into a couple of sentences but basically there were multiple investors on board one was a big company who was sort of i think you'd say spotting us working capital by giving us our products for free then we had financial investors on board and they were basically playing games together uh and we were just young guys we were like 21 22 didn't know what was going on you know didn't know anything about business and they were sort of like big forces fighting each other and we were sort of like the ball being kicked around at that point so interesting it's it's i can't put it you know how much how how large that company in terms of ar that company no we we sold ads so that was not that was not recurring revenue that's also one of the reasons why i started sas business because back then we had quite large customers we're nice customers we had like dell and how big was the company i'm just curious and like your best 12 months how many how many revenues we did like we did like uh 400k in yearly revenue okay okay well you made a smartness you made a smart decision yeah yeah by the way the new website's gorgeous it's so funny when you look at websites that are gorgeous many times they convert way worse than the ugliest websites you've ever seen exactly it's the ebay the ebay uh the ebay thing craigslist right oh craigslist yeah yeah there you go um well this is great okay so i love this five people bootstrapped doing your own thing having a lot of fun where's the team based uh we're in lovely amsterdam everyone's in amsterdam everyone is in amsterdam yeah i'm uh i'm a bit of a uh i'm a bit old school in that sense i like everybody being together in an office and it also has to do with what is before you know for me like going to work is has to be as much fun as you know my free time so yeah i like to be around people so i want to be around the people i work with yeah churn what's your churn today yeah so logo churn uh is about seven percent which is quite high per month um yeah per month um but it could be way lower uh if we you know if we took a different approach in the sense of you know getting more people on faster because like for for a long time it was only like three people the company so there's only so much you can do so the revelation what's the revenue churn the revenue churn is a little bit lower is around five percent uh but that's because you know we've been on our current price points for quite a while so we don't have a lot of you know we started out at 29 now the lowest price plan is 69 but we we still have some of those guys around but we don't have a lot of those food shows yeah that's interesting um i'm going to guess you don't have a ton of expansion revenue because the delta between your cheapest and most expensive isn't in the thousands i mean do you have meaningful expansion or no no that's right we just have a little bit we but we don't really push for it at this moment it's one of those things that you know we need to get done but uh we're a small team and there's only so much you can get done in a week yeah it's interesting i mean when i look at your pricing no matter what the price point is there's zero transaction fees um that's right you add on in your pro plan for 150 month custom domains five team members multi-domain and then like bonus incentives i'm i'm not sure what that means but what's the main reason people go from 70 a month to you know 150 a month yeah it's usually the custom domain team members um it really differs like it's so hard to say like we we don't have like one specific customer we have such a wide array of customers uh that they they're all you know upgrade for different reasons yeah this is like so this is by the way thomas is the future imperative yeah yeah yeah this is an interesting thing though right so there's so many founders that i talk to that are like in the million two four five million range and they're trying to figure out like expansion and pricing and like the biggest issue i always see is they can't identify like a single like the single value metric that their customers like value the most and it's like when i think about it if i was a customer of you you know the best value of what top affiliate would give me would probably be how many sales affiliates are driving me if you can't if you can't get that data right the next would be maybe how many affiliates or how many clicks they're driving through their links right but like you don't put either of those metrics in your in your pricing plans to drive up sales why is that um there is a very good question now there's there are several reasons like um i think that if you want to do affiliate marketing yourself as opposed to doing it through a network i'm not sure how familiar you are without jb's yeah yeah exactly so like you pay them you pay them a percentage but if you want to do affiliate marketing yourself um you have to make a very enticing offer for affiliates um because you know they like affiliate attention is scarce basically so you have to make something really cool for them so they want to promote you over other people now it gives you an extremely big edge if you don't have to if you don't have to pay any per transaction fees because because you can use the money either you know for your own bottom line or even better to create a more enticing offer for your affiliates so you know we think that's not huge though thomas right i mean usually those are like one or two percent well it's like 15 percent of commission is sometimes for growth sumo say that again for growth it's 15 percent you're not talking like payment transaction fees you're talking about the networks and typically the cut that they take yeah exactly so debt is all taken out which means you know you have you are way more you can be way more competitive that's interesting okay let me ask a couple questions here a thousand customers how many affiliates have they all signed up all together ah that is a number i'd rather not divulge okay is it typically though like is it i'm just curious like is it typically like a one to one ratio or it's like one to ten or oh it's way more it's it's and again it really depends we have like our tools pretty flexible so we have people using our our tool as a referral uh marketing tool so what they do is they have like an uber or like dropbox style affiliate program where it basically just uses infrastructure so when when a customer signs up they sign them up with us through the api they grab their affiliate link present that you know within their own portal so basically they would you know sign up each and every one of their customers as affiliates um uh so they can get really big that's not really a that's not really a fair number and then we have like these other customers who already work with an affiliate network but have one or two very large affiliates with whom they have contact directly and for with whom you know they're like okay we we we already like have all the contact together uh we can pay you out directly like why would we do this through an affiliate network and pay them a cut yeah so they sort of like they go around the affiliate network so this is like really different so it's hard to to get a mean or an average in there that's interesting um yeah can i ask you because range is like just like some people like our biggest customers ever had like 40 000 affiliates uh and then uh and then there's um customers one at one or two doing like extremely high high sales rates let me ask you a different question over the past 12 months how many affiliates have you paid like at least a dollar i don't have that number right now but it is uh it is like over a hundred thousand okay got it so a thousand customers what you're that are paying you directly what you're saying is they you know on average this is obviously an average you have very different customer cohorts but on average they've maybe got a hundred affiliates signed up that they've paid at least some money in the past 12 months yeah that's interesting um your full owner and i mean any any thoughts on raising capital or no uh it's something that always lingers in the background um you know like doing things bootstraps like we're actually getting to a point where we where i'm starting to find out okay so if i you know if i i've gotten capital from the from the start i might have taken some turns uh in a different way uh but all in all like that's just like 20 80 volume less i guess but like i'm super happy about how things are going you know i'm super happy which is very important to people who i work with are happy everybody's basically happy so it's our unit it makes it harder to to make a step like that are you and it's already needed because we're growing fine you know we're we've been profitable since year two uh everything is just going really well so there's not really a need at this point yeah well it's hard to measure opportunity cost right so you're growing 25 percent year over year right the question is if you had five million bucks could you triple your over here you it's hard to actually measure that and actually feel it yeah exactly and that that's why it's always lingering but we used to grow a 100 year over year just this year that you know we've been stunned by a new website um are you in any discussion are you in any discussions to sell the company to anybody uh there's always people knocking yeah what um if you did sell what things what checkboxes would you have to check that's a very good question uh you know the the multiple has to be good obviously um and it's you know it really depends on the the kind of buyer you know what what i would love is to uh you know get someone who wants to do a strategic acquisition you know to uh for example to enhance their own product or to um yeah for that for it to be part of their product development um so we can sort of like grow into that company learn something along the way you know because i've never been in a situation like that where so i think that will be the most interesting for me and for my team from a growth perspective so um yeah let's just let's just keep it at that that's good when you say good multiple i mean are you talking 3x 10x 4x what what do you consider the ranger rev ux right yeah your arr yeah so yeah i know i uh i'd say five times would be good okay interesting well i think you might get this we need to really wrap up yes sir i want to say that we really need to like ramp up growth like harder than this to get that's something better than that yeah i was gonna say even 5x was seven percent churn and 20 to 30 year over year growth i think you'll have a challenge but but uh it sounds like you historically have had better numbers and you're working on getting back to those so that's great there's lots of wins that's good all right thomas let's wrap up here with the famous five number one what's your favorite business book influence number two is there a ceo you're following or studying not a ceo but it's a desk trainer of intercom yeah chief strategy officer yep uh number three what's your favorite online tool for building your business boopro spell it out w w double o p r a oh yeah okay number four how many hours of sleep to get every night very healthy eight that's good and what's your situation married single kiddos married and obviously two cats two cats no kids and and how old are you thomas i'm 31 31 last question what do you wish your 20 year old self knew um you're on the right track keep going you're on the right track guys there you have it tap affiliate founded uh many years ago call it let's see 2014 now serving about a thousand customers paying 80 bucks a month so about a million dollars in run rate seven percent logo turn per month five percent revenue churn per month working on bringing obviously both those numbers down he's bootstrapped which i love team of five people based in europe they're spending about a hundred bucks to get a new customer so two month payback looking good thomas thanks for taking us to the top thank you so much