How Vidalytics Bootstrapped to Around $10K a Month Competing with Wistia (Interview with Founder Patrick Stiles)

Introduction and Company Overview

Nathan Latka

00:00Hello, everyone. My guest today is Patrick Stiles. He is a high school dropout turned serial entrepreneur. He started eight companies and has been the CEO of a public one. He sold several million with video online, but was frustrated with the existing video platform. So he founded his current company, Vidalytics.com, which is the highest converting video platform for online marketers. He also wakes up to the eye of the tiger every day. You don't wanna mess with this

00:24guy. Patrick, are you ready to take us to the top?

Patrick Stiles

00:26Yeah, man. Let's do it.

Backing the Highest-Converting Claim With Split Tests

Nathan Latka

00:27Alright. How do you know it's the highest converting video platform for online marketers?

Patrick Stiles

00:31Yeah. Well, that stuff that we've either split tested internally or we've had our users do. So they come back with that data. Sometimes we can't always publish it, but that's where we're getting

Nathan Latka

00:31Interesting.

Ideal Customer Profile and Use Cases

Nathan Latka

00:40And and walk me through, what are they converting? What's your typical customer, your perfect fit customer? What are they using you for?

Patrick Stiles

00:48So a lot of... Like, so our ideal clients right now are direct response marketers, people that are really video centric in their businesses. They tend to be SMBs, so they're small businesses, but they're able to do, you know, hundreds of thousands or even millions of plays a month. So it's a little hinge that swings a big door in their business. So that's why we've kinda built this tool for them because it has the aggressive features and

01:08tools for converting visitors and understanding how that works inside of the videos.

Pricing and Average Revenue Per User

Nathan Latka

01:12Interesting. And and give me a general sense of what on average one of these customers pay you per month.

Patrick Stiles

01:16Well, our average is a $100 a month, but it can go up to a thousand for some of our users.

Nathan Latka

01:21Okay. And then put this on a timeline for me. When did you launch the company?

Patrick Stiles

01:24So we launched about a year ago.

Nathan Latka

01:26Okay. Good. So fairly new 2017.

Patrick Stiles

01:28Mhmm.

Bootstrapping and Founder Background

Nathan Latka

01:29And bootstrapped today, your own money?

Patrick Stiles

01:31Bootstrapped it.

Nathan Latka

01:32How's that feel?

Patrick Stiles

01:33It it can be intense, but, you know, it's rewarding to have that freedom. So I'm I'm a big bootstrap guy. I've talked to investors. I haven't found the right fit, so I'm not really counting on that avenue.

Nathan Latka

01:43How committed are you? How much money of your own money have you put in?

Patrick Stiles

01:45It's 6 figures.

Nathan Latka

01:46Okay. Good. But less than 1,000,000?

Patrick Stiles

01:48Yeah. It's less than million.

Nathan Latka

01:49But still in... What was the public company you ran?

Patrick Stiles

01:52So actually, I'm currently the CEO of that company. It's Great Cloak Tech. It was a SaaS kind of before I showed up, then I have a background in health companies, we started some things, some businesses in the CBD space.

Nathan Latka

02:03So so is that what that company is? It has nothing to do with Vidalytics?

Patrick Stiles

02:06Nothing at all.

Nathan Latka

02:07Okay. Got it. Wait. So why why hold that spot? Why not, like, get out? I I wouldn't wanna be the public CEO of a publicly traded company with all the admin work that comes along with it.

Patrick Stiles

02:15Yeah. Well, we're still bootstrapping Vidalytics, and, you know, it was an opportunity that made a lot of sense to me at the time. It was enticing. So, you know, I went for it, and that's kinda how how I got involved in that.

Nathan Latka

02:24Emma, what I'm hearing you say is you get a salary there, and that's kind of a nice buffer for you while you get Vidalytics off the ground?

Patrick Stiles

02:29That's part of it, but I also have an equity stake in that public company that's that's sizable. And then I actually do own a supplement company as well that's still running in the background.

Nathan Latka

02:38I see. Trailing twelve months, how much revenue do that public company do?

Patrick Stiles

02:43I don't have that number in front of me, but it's not very much.

Nathan Latka

02:45Well, like, less than 1,000,000?

Patrick Stiles

02:47Maybe... Like, yeah. Less than 1,000,000.

Nathan Latka

02:49Wait. Why is it public?

Patrick Stiles

02:50Right. Well, I didn't take it public, but I started the CBD company that was acquired to buy it in an all stock transaction. So it's a penny stock thing. So it's not like a Nasdaq, like, you know, high flying kinda public company. So it's it's stock price right now is below a penny. So it's a... It's more of the kind of wild, wild west as far as public companies go.

Nathan Latka

03:08Interesting. Okay. Interesting. By the way, if I was in that position, I would also put that in my bio. It sounds really, really good, but it's nice to understand the economics behind, like, why it's that way, right? So I do know that diet and nutrition in the supplement space, a lot of these guys make bank off video AB testing. So it makes perfect sense to me why you ended up where you're at today. And it's cool

03:27to see you going into the SaaS space. Did you just hear from friends the margins were way better than supplements and said, gotta get in?

Patrick Stiles

03:34No. So I've had a supplement company for the last eight years and I tried... I've started several different health companies and it's just always an issue with either merchant accounts, with traffic compliance. You can also run into some government agencies with three letters in their name

Nathan Latka

03:34Yep.

Patrick Stiles

03:34And some things like that. So, SaaS is just... You know, it's way more scalable. It has the perceived value of a physical product, but at the end of the day,

03:55it's basically an info product. It's intellectual property on a server, and it doesn't have those compliance issues. And then also, I'm kinda geeky. I like tech. So I was building custom tech in my supplement companies, and that's kinda how I found my CTO and how I felt... Fell into this space.

Nathan Latka

04:07That's okay. So you... In in your kind of founder relationship, you're the business guy, not the developer.

Patrick Stiles

04:07Right.

Nathan Latka

04:07Interesting. And your CTO is, he or she is doing all that coding?

Patrick Stiles

04:16Yeah.

Nathan Latka

04:17That's great. Interesting.

Patrick Stiles

04:17Yeah,

04:18him and a team.

Team Size and Hiring History

Nathan Latka

04:19Yeah. Yeah. What's the team size today?

Patrick Stiles

04:21So the team size is five. Two of those people are contractors, but we've hired and fired 20 people to build this product.

Nathan Latka

04:28Okay. Why? Why what? I'm trying to figure out how to phrase that question. Why do you lead with, we hired and fired 20 people to build the product? I mean, you hired them and they're good, why not keep them?

04:44Patrick, my ending question there was

Patrick Stiles

04:44Wait.

04:46Are you just broke up?

Nathan Latka

04:46Yeah. Yeah. My question at the end there was, if you hired them and they were good, why not keep them?

Patrick Stiles

04:51Oh, they weren't good. But... Yeah. Or their job ended. You know? Like, say, like, UX design and we, like, build out the platform and stuff like that. We don't need to keep cranking out, like, new pages and things like that. So

Nathan Latka

04:51I see.

05:01It was a kind of a per project kinda hire.

Patrick Stiles

05:04Yeah. Yeah. Yeah. It's either... Yeah. They either completed their job or they didn't cut it.

Customer Count and Freemium Model

Nathan Latka

05:07Got it. And fast forward, so you launched about a year ago. Fast forward to today, how many customers are you serving now?

Patrick Stiles

05:12So we have about 500 users.

Nathan Latka

05:14Okay. And how many that are paying?

Patrick Stiles

05:17I'd say less than half.

Nathan Latka

05:19Okay. So call it maybe 200, something like that?

Patrick Stiles

05:23Somewhere in that range.

Nathan Latka

05:24Okay. Why do you... Walk me through what a user gets. Like, much can they get out of the platform before you make them pay?

Patrick Stiles

05:31Well, we killed our free plans and nothing. So all they can get right now is a two week trial without paying.

Nathan Latka

05:36Okay. Got it. So you've got you've got 500 people. Sorry. You've got 200 that are active paying customers, which means you got 300 or so on a trial right now. In about, you know, in sometime within the next fourteen days, they'll have to decide whether to pay or leave.

Patrick Stiles

05:48No. No. No. No. Sorry. Those 300 people, a lot of them are actual free plans. We had a free freemium model that we tried for a while, then we just kinda killed it off. We didn't think that it was working.

Nathan Latka

05:58Okay. Okay. I'm confused. So how many people are paying you today on a monthly basis?

Patrick Stiles

06:03You know, I don't have that exact number and I also don't want to get too specific with some of those numbers. So I would say less than half. So it's it's gonna be in that 250 or lower the range.

Nathan Latka

06:11Okay. 250. Well, but by the way, I like these numbers because people appreciate. They always say, Nathan, you always have CEOs that are too far down the line. It's not actionable for me. I want to get someone that has just turned revenue on because I'm about to launch my first paywall. The more transparent you can be, the more valuable it is for my audience. I know that for sure. So I appreciate you doing that. So look,

06:28two fifty folks, if you got them paying $100 a month, mean, what, you're somewhere around $20,000 a month right now in revenue?

Patrick Stiles

06:34Yeah, I mean we're below that but yeah it's in that range.

Nathan Latka

06:37Okay, like can we say between ten and twenty?

Patrick Stiles

06:40Sure.

Nathan Latka

06:41Or below 10.

Patrick Stiles

06:42Yeah, so it's gonna be around that 10 mark.

Nathan Latka

06:45Okay, 10 mark. Good, that's good. By the way, like I everything starts at zero, right? So like I appreciate you saying that even if it's uncomfortable to say it. So around $10,000 right now, walk me through what the first sign up was like, the first paid one. Was it someone that went through a trial then you converted them or or what did that first sign up feel like?

Patrick Stiles

07:01That first sign up was somebody that just found us from a Facebook ad. We're dabbling in paid traffic about a year ago, and it was... And when we launched the product a year ago, it was just video analytics. Since then, we've kinda pivoted a little bit to add a lot more things that have to do with more conversions on the front end and not analyzing the videos after the fact. So it's more robust platform. So at

07:20that time, that person was just really blown away with our analytics. And, you know, that was enticing, and that's kind of whatever experience was that some of the people that found us and really liked us were geeky and really kind of data inclined. But for the market that we wanted to go after, which was, you know, Internet marketers, we found that it wasn't quite kinda sticky enough to get that traction. So so after we kinda had

07:41that data early on after the first few months of launching a year ago, we decided to kind of pivot and start building these other features into the program, into the software.

Competing with Wistia and Feature Differentiation

Nathan Latka

07:49Yeah. I mean, when I think about what you do and I take a quick glance at the website, what I immediately think is like Wistia, people use Wistia for this. How are you trying to position yourself different from a company like Wistia?

Patrick Stiles

08:01Yeah. Right. So Wistia kind of is like the big company that we go after. They're like the use case or the competitor that everybody knows so it's kind of something that we cue off of.

Nathan Latka

08:01Yep.

Patrick Stiles

08:01And I mean, we actually have a compare page on our on our site that goes... You know, that compares our features against Wistia. And we have maybe like, you know, several dozen and they have like, you know, maybe three or four

08:20of those. So we're building a lot... A very different feature set. And like Wistia, they have things for, you know, like integrating with support or recording in your browser and things like that. But like I said earlier, a lot of our users are really kind of like... Video is like the single thing on their website that is converting visitors into buy... Visitors into buyers. So we're building things in there like an exit pop, like... Or not

08:43an exit pop, but an exit thumbnail, which is a thumbnail that the user never sees until they pause the video. Also, exit gate where they can opt into the video and watch it later from their desktop. A lot of people are finding that people don't convert on their mobile phones. So getting people to jump over to desktop is a big challenge for a lot of marketers. So things like that. And then our analytics just blow them

09:02away. And then on top of that, we cost less.

Nathan Latka

09:02Mhmm.

Churn Rate and Why Customers Leave

Nathan Latka

09:05Yeah. Interesting. Okay. Very good. Give me give me a sense of churn. Churn is obviously critical in this kind of business. What's your churn?

Patrick Stiles

09:11So our logo churn is about 5.7%.

Nathan Latka

09:14Okay. Yep. That's logo churn per month?

Patrick Stiles

09:18Yeah. That's like a... That's an average.

Nathan Latka

09:20Got it. And so when when people do leave, why are they leaving?

Patrick Stiles

09:25You know, what we have found is that a lot of the people that are churning are... Have a very low monthly ARPU. So they're probably just not getting value out of it. Like, they're not using it. They're still trying to kinda figure out their conversions. The people up the scale that are paying us more money are definitely not churning nearly as much. Right? They're really tall.

Nathan Latka

09:42Why price it? Okay. With that pattern that you're seeing, you know, like you have a $19 a month plan, you go up from there. Why not do the opposite? Why not say this is like $10,000 a month? It's the ultimate plat... Video platform for someone spending more than a million bucks a month on paid ads.

Patrick Stiles

09:55Yeah. For for me, for my personality, I don't wanna build a business where I have to build a sales team, at least not right now. So it's more of kind of like a lifestyle thing. And also like, you you know, then I would have to go up against people like Vidyard and, you know, Brightcove and, like, kinda like these bigger companies and try to get into more kind of the enterprise space. I used to own a

10:13recruiting firm. That was my very first business, and I would close deals for twenty, thirty grand a pop.

Nathan Latka

10:13Yeah.

Patrick Stiles

10:13And... But I was married to the phone, and I hated that. So I want something that, you know, kinda has that space, and I really just kinda believe in direct response and buying traffic and being able to, you know, grow that way.

Payback Target, Referrals and Affiliate Payouts

Nathan Latka

10:26So Yeah. Makes sense. Well, this next number then you have to have since you're direct response guy. What's your CAC? What are you paying to acquire customers?

Patrick Stiles

10:33Yeah. So I don't have a CAC number to share with you right now. We target about a three month payback if possible. But a lot of our users now have either come from masterminds, networking referrals, or from affiliates.

Nathan Latka

10:46Okay. Well, so what do pay an affiliate? 30% of first year sales or what?

Patrick Stiles

10:50It can be 40% reoccurring for life in some cases.

Nathan Latka

10:50For life?

Patrick Stiles

10:50Yeah. Yeah. We would like to do is move towards more a CPA model where it's like a flat fee upfront, like, you know, a couple $100 or something like that for a paying user. But, know, it just kinda depends on what that funnel looks like and what it and, you know, what it backs out for making money for the affiliate.

Nathan Latka

11:10So if you target a three month payback period and your average customer is paying a $100 a month, you're... What I'm hearing you says you're willing to spend up to $300 to get that customer in the door.

Patrick Stiles

11:17Yeah. That's where we're playing right now and testing things out.

Nathan Latka

11:20That's great. And where where is the company based?

Patrick Stiles

11:23Well, we're remote, but I'm out of Denver, Colorado.

Nathan Latka

11:25Remote. Okay. Good. So not everyone's in Denver. They just spread throughout The US or internationally as well?

Patrick Stiles

11:29International.

Paid Traffic Strategy and Relaunch

Nathan Latka

11:30That's great. Walk me through some of your growth channels. Mean, much are you spending per month right now on all your paid outlets to drive growth?

Patrick Stiles

11:35So right now, we don't have any paid ads running. We killed those off when they weren't profitable, and we... And this was back when we kinda had just the analytics built into the software. So then from there, we started building other features and, you know, and I've worked with my network to get, you know, users on it. And then once those people started, you know, sticking, upgrading, you know, referring people, that's when we kinda knew that

11:56we had something. We revamped the website, kinda did like a like a relaunch in a way, and now we're taking that out to paid traffic as we speak.

Nathan Latka

12:02Interesting. There you go. Any metrics on lifetime value yet or no?

Patrick Stiles

12:05It's too early.

12:06It's gonna be north of a grand, but, you know, it's it's also a bit speculative and not the most useful metric. I like to go with ROAS as far as the metric when when buying, like, for as far as advertising, as far as the kind of holy grail.

Fundraising and Valuation Conversations

Nathan Latka

12:17How long you wanna keep bootstrapping?

Patrick Stiles

12:20As long as I can, I mean, is the answer? But, you know, it... Yeah. But but if if I'm in a position where I think that money is gonna make me grow much faster and it's gonna solve my problems, then, you know, I'd absolutely take it if I found the right partner.

Nathan Latka

12:32Are you raising right now?

Patrick Stiles

12:32No.

Nathan Latka

12:32Okay. If if you did raise what... And it was from the right partner, what would you try and raise that valuation wise?

Patrick Stiles

12:40I've talked to some venture capitalists. This was a bit ago when our revenue was lower. But you know, I've had several venture capitalists say that we could do like a safe note at a 3,000,000 cap.

Famous Five: Books, Tools and Habits

Nathan Latka

12:49Yep. Yep. Yeah. Yeah. That's that's that's pretty standard for this kind of thing. It's an interesting space. A great product. Let's wrap up here with the famous five. Number one, what's your favorite business book?

Patrick Stiles

12:59Ready Fire Aim.

Nathan Latka

13:00Number two, is there a CEO you're following or studying right now?

Patrick Stiles

13:04Probably Ed O'Keefe. I'm in his mastermind.

Nathan Latka

13:06Ed O'Keefe?

Patrick Stiles

13:07Yeah. He's in the health space.

Nathan Latka

13:08Yeah. Yeah. Number three, What's your favorite online tool for building your business?

Patrick Stiles

13:13It's not online, but Scrivener is my absolute favorite software.

Nathan Latka

13:17Are you a big writer?

Patrick Stiles

13:18Yeah.

Nathan Latka

13:19Oh, really? Do you have books or what?

Patrick Stiles

13:21Copy.

Nathan Latka

13:21Just landing... You're one of those guys that puts together 30 pages on one landing page. You scroll for miles. Right?

Patrick Stiles

13:28Yep. People do it though. Right?

Nathan Latka

13:30They get hooked in and boom, they're sold by the end.

Patrick Stiles

13:33Yeah. I mean, if it converts, you know, if you have a self liquidating offer, then like, who cares how long it is or what it looks like or, you know, anything like that.

Nathan Latka

13:40What's self liquidate? What's a self liquidate?

13:41Sounds like a car salesman.

13:42It's gonna turn people off.

13:43What's a self liquidating offer mean?

Patrick Stiles

13:45A self liquidating offer is the sexiest thing in marketing. It's where you're acquiring customers and your day one money is covering acquisition cost.

Nathan Latka

13:52Yeah, got it.

13:53So all of you that got turned off that term, really what he's saying in sexy terms is your your payback is instant.

Patrick Stiles

13:58Yeah. Instant payback.

Nathan Latka

14:00There you go. Same thing. Very good. Alright. Number four. How many hours of sleep are you getting every night?

Patrick Stiles

14:05Oh, eight to nine.

Nathan Latka

14:06And what's your situation? Married, single, kids?

Patrick Stiles

14:09Married, no kids.

Nathan Latka

14:10No kids. And how old are you?

Patrick Stiles

14:11I... Today, I'm 34.

Nathan Latka

14:1330. Oh, and today's your birthday?

Patrick Stiles

14:15Today is my birthday.

Nathan Latka

14:16Congratulations, Patrick. That's exciting. So you're turning 34 or you're 34 now?

Patrick Stiles

14:20No. No. No. I'm turning 34.

Nathan Latka

14:22Okay. Sorry. That was a bad question. It's the same thing. You you just turned 34 today. Got it.

Patrick Stiles

14:27Yeah. Yeah. Good.

Nathan Latka

14:28So you you you have a year now at 34.

Patrick Stiles

14:30Yeah. Awesome.

Advice for Younger Entrepreneurs

Nathan Latka

14:31Alright. And last question. What do you wish you knew when you were 20?

Patrick Stiles

14:35That you don't have to learn or do everything yourself. That there's plenty of people out there that wanna partner up and not be an entrepreneur yourself... Themselves. So go and find a team.

Nathan Latka

14:44Guys, there you have it. Build a team. You don't have to do everything yourself. He did a lot of direct response stuff, sending a lot of traffic to videos, and then realized there's no good product for this. Let me go build it. He did this in 2017. Put in, know, 6 figures of his own money, build Vidalytics, currently now serving over 250 paid customers, doing about $10,000 per month. They're bootstrapped economic wise. They're doing about 5%

15:04logo churn per month, paying about $300 to acquire a customer. So three month payback period assuming lifetime value on these guys is about a grand, but still early. Team of five based remote across The US. Patrick, thank you for taking us to the top.

Patrick Stiles

15:16Cool, man. Thanks so much.