How Yoast CEO Thijs de Valk grew Yoast to $12M revenue and 200K customers in 2019.

hello everyone my guest today is jose valk he is the web developer seo and open source fanatic from the netherlands he's the founder and ceo of yoast which provides software and training for website optimization seo yoast seo yoast main software product currently runs on over 10 million wordpress websites yost you're ready to take us to the top all right i always am good all right so tell us about the company uh we know what's it do obviously seo is obvious but what's to do specifically on wordpress and then how do you make money is it pure place ass um no not really so uh we build us a software plug-in for wordpress that is basically an extension that allows you to optimize your site better and there's a free version of that plug-in and a premium version of that plug-in so it's mostly a freemium model um some of it is sas now because it connects to a service called my yoast which has some added features but most of it right now is a pure freemium software play okay so let me quickly touch on the frame and then i want to go towards how you introduce the sas model so the freemium kind of plug-in when did you launch the tool uh right from scratch uh so the first version of yoast seo was released in 2014 early 2014 no 2013 and then the first premium version of yoast was somewhere around 2014. okay and premium version means what paid paid yes okay it started out with a free plug-in and had a million users and then decided maybe i should make some money from it okay yeah so first year in 2013 you got a million users uh yes now it's so how'd you do that i mean that's impressive um i've been a speaker on the seo speaking circuit for ages so i just told my friends and they told all their other friends and so people at seo conferences started talking about it um and at that time wordpress was growing almost just as fast as it was now and we were one of the better seo plugins and that word spread rather quickly so mostly through word of mouth how did you get on the speaking circuit before you had the tool i was an seo consultant and have been seo consultant for the last decade but don't take offense to this but there are a bunch of really stupid seo consultants right so like how did you have credibility before you had the tool i know you were a seo consultant but what what credibility did you have i was working for some of the biggest brands on the planet uh i've done seo for ebay the guardian facebook uh so i let the migration from guardian co uk to theguardian.com uh so there was uh projects i i was also allowed to talk about which helps a lot at conferences because a lot of the seo work is also it's always hard because you're not allowed to talk about it um and uh well i i had a lot of friends in that circuit was thrown into it by a friend of mine when i i attended a conference i started asking questions that were too hard for the speakers so they basically invited me on stage interesting so you got on stage because you were doing work for these big brands that you were allowed to talk about how many then in 2013 how many conferences did you speak at in 2014 not as much anymore because i was focused on building this business okay uh but you said that so you got most of your new users yes i i told my my friends in the industry and then they started speaking about it more so i think i did like 10 or 12 in that year but a lot of other people talked about it as well so did you incentivize them at all besides word of mouth was there an affiliate program no okay they just share they just shared it because they liked you they knew the tool worked for them it's it's open sources i mean at that point it was uh most of the people still most of the people are using the free plug-in and they're not using the premium version yeah okay when people upgrade a premium what are they paying on average per year per month would you say uh they're paying eighty nine dollars a year okay eight eight or nine or eighty nine eighty nine okay eight nine per year okay and what do they get for that what's in premium that they can't get in the free a couple of features uh uh reader expiration uh easy easy social previews uh good internal linking suggestions a couple of things like that and access to our support team and that's it there's more coming but we're that's what we're building on the sas side so we're we're slowly transitioning a bit into sas because more and more of the services that we need to provide require us to have a connection to the site and then connect from our platform to the other platforms that we need to connect to so yes if you look between kind of 2013 actually 2014 when you introduced premium and today for you know five years later how many people have upgraded to premium hundreds of thousands okay so i mean can we say like 200 300 000 or is it closer to 800 or 900 no it's closer to 300 okay two or three hundred thousand that's great so and then where are you introducing you know a lot of people struggle that are on these freemium plans we've had like tight form on and a lot of other people that kind of fit this same kind of mold in terms of price point and number of free users and they always are testing where to actually put up the paywall like what is the limit how did you decide that and how do you test that every month um i would wish to say that that was a really conscious decision on all sides but we basically just decided to introduce freemium we didn't want to take any features out of the free plug-in so we added some features that we thought were useful um but we have a pretty strict rule within the company on everything that we think every every site on the planet needs to do the basic works we put into our free plug-in and then stuff that saves you time we put into the premium plugin and so that is basically how we go by choosing what goes and where it's not necessarily optimizing for making more money even though we're doing pretty well in that regard yeah and we're definitely not optimizing for that so how many on the free plan today uh there's about nine to ten million sites okay and uh there's a couple hundred thousand on the paid one so there's a oh that's it yeah so when you say 10 million free users or free sites is it is your ratio about one to one in terms of an actual person to the site uh and we don't have real numbers on that i wish we did but uh it's hard for wordpress.org to track all that um but the difference probably it's probably more like two to three users on average because there's a lot of sites that have like 30 or 40 users i mean there are sites like the nextweb.com or um microsoft.com that run our software where there's hundreds of people working on that site and it's only one site and under then there's also a lot of sites that are single blogs by single people and even some affiliates that have a hundred sites and and use our plug-in on all of them but it's all only one person so it's probably about 2x what we have in sites but it's a that's still a guesstimation and then capital wise i mean have you bootstrapped the company or did you decide to raise no we've bootstrapped bootstrapped i love that it's great we're now at uh well last year we did about 10 million euros so about 12 million dollars in revenue there's about 100 people here so uh yeah we're doing well yep 100 people and then look you told me earlier you had about 200 000 customers 89 a year would be seven bucks a month that would put you about 1.4 million a month today is that a little high so it's somewhere around there yeah okay and and what would you say you said you finished last year at a 10 million run rate yeah so yeah we our uh total revenue was about 10 million euros so that's real money yep yeah yeah why do you say that's real money oh it's not dollars well you think the euro is stronger than the dollar right now well at the moment it seems to be which is not necessarily good for us by the way because a lot of it is so our we have a couple of currencies that people pay us in yeah and uh a strong dollar is usually better for our uh bottom line than a strong euro so yep no that makes sense good all right so good so you're doing about a million a month then in terms of in terms of euros obviously scaling that nicely team of 100 people where are they all based uh 80 of them are around me here in beacon the netherlands which is a relatively small town on the east of the netherlands and then about 20 are spread out across the world because they're in our support team and they're hired in part based on times and help me understand how effective you've been with this team so if you're doing a million a month today do you remember what you're doing exactly a year ago we've grown about 60 year-on-year for the last five years okay it's pretty good so about 700 000 bucks a month a year ago something like that yeah that's nice and is most that growth coming from getting expansion revenue on accounts or actually adding totally new users uh most of that growth is new users um and we're slowly getting better at expanding it but most of its growth on new users yeah churn's critical at this kind of price point with smbs what's your churn today...