Interview
How Zembula Grew About 600% in Twelve Months Helping Clients Launch Interactive Lead Campaigns (Interview with Robert Haydock)
- Interviewee
- Robert HaydockCo-founder and CEO
Company Metrics at Interview Time
Growth (Year over Year) (2017)
About 600% (approximately 7x)
Avg Enterprise Starting Contract (2017)
$50,000 a year
Enterprise Customers (2017)
50
Total Funding Raised
$1.1M
Team Size (2017)
10
Historical Snapshot
These numbers were reported by Robert Haydock during the interview and are a historical snapshot, not current figures. See Zembula’s current numbers.
Key Takeaways
- 01Zembula was originally launched as Scratch It in 2013 and rebranded in March 2016 at the LAUNCH Festival in San Francisco.
- 02The company grew approximately seven times over the prior twelve months, equivalent to about 600% growth.
- 03An enterprise customer paid $50,000 a year on average when it started, and large enterprise customers paid up to a couple hundred thousand dollars a year.
- 04The company has 50 enterprise customers and launched an SMB self-serve plan at $99 per month about three months before the interview.
- 05Annual logo churn was about 5%, on a customer base that had mostly been large corporations.
- 06Alpha Industries used Zembula over Black Friday and got over a 30% lift in revenue.
- 07The company raised about $1.1M in total outside capital and has a team of 10 in Portland, Oregon.
- 08Organic SEO and a content team of three drive inbound traffic; no paid ad spend had been deployed for the SMB plan at interview time.
- 09Zembula adds a Powered by Zembula badge to SMB accounts to differentiate them from enterprise and to promote the brand.
- 10In 2015, the year the company really started building out its product, revenue was around $100,000 to $150,000 a year.
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Year Founded | 2013 | Interview, 2017 |
| Growth (Year over Year) (2017) | About 600% (approximately 7x) | Interview, 2017 |
| Avg Enterprise Starting Contract (2017) | $50,000 a year | Interview, 2017 |
| Entry Plan Price (2017) | $99 per month | Interview, 2017 |
| Large Enterprise Annual Price (up to) (2017) | A couple hundred thousand dollars a year | Interview, 2017 |
| Enterprise Customers (2017) | 50 | Interview, 2017 |
| Annual Logo Churn (2017) | About 5% | Interview, 2017 |
| Total Funding Raised | $1.1M | Interview, 2017 |
| Team Size (2017) | 10 | Interview, 2017 |
| Annual Revenue (2015) | $100,000 to $150,000 a year | Interview, 2017 |
| Customer Outcome: Alpha Industries Black Friday Revenue Lift | Over 30% lift in revenue | Interview, 2017 |
Growth Breakdown
Revenue
Robert Haydock declined to state an exact revenue figure. In 2015, the year the company really started building out its product, revenue was around $100,000 to $150,000 a year. By the time of the interview the company had grown approximately seven times over the prior twelve months.
Customers
Zembula was serving 110 customers at interview time, 50 of them large enterprises, and an enterprise customer paid $50,000 a year on average when it started. The company launched an SMB self-serve plan at $99 per month about three months before the interview, adding a new cohort of smaller customers whose churn profile was still being assessed.
Team
The team consisted of 10 people based in Portland, Oregon, including a dedicated content team of three focused on writing about interactive content and securing guest posts.
Funding
Zembula raised about $1.1M in outside capital since founding, which Haydock described as modest relative to the company's age, framing the business as operating closer to a bootstrapped model than a typical venture-backed company.
Growth Strategy
Organic SEO and Content Marketing
A team of three was dedicated to writing content around interactive content, publishing regularly and pursuing guest posts. Haydock noted that organic traffic expanded dramatically over the six months before the interview as interactive content became a more widely discussed topic.
Powered By Brand Attribution
Zembula added a Powered by Zembula badge to SMB accounts, giving smaller customers a lower price in exchange for promoting the brand. It also set the SMB tier apart from enterprise accounts, which Haydock said would never carry the Powered by Zembula mark.
Self-Serve SMB Launch
Recognizing significant inbound traffic that was not being converted, Zembula launched a $99 per month self-serve plan to capture the SMB market. The team invested in better onboarding, using a tool called Chameleon to guide new users through the product.
Enterprise Focus with Expansion Revenue
Pricing based on the number of experiences and impressions gave Zembula a natural mechanism for expansion revenue: as enterprise customers succeeded and used more of the platform, they moved into higher tiers, with large accounts paying up to a couple hundred thousand dollars a year.
Reveal Psychology and Product Differentiation
Zembula's core product is built around the psychology of reveal and ownership, modeled on scratch-off cards. Haydock said focusing on psychology is what's driving performance these days: when people reveal something, they take much more ownership in it, and they respond better to it. He tied the low annual logo churn of about 5% to a customer base that had mostly been large corporations, adding that once people put Zembula on their website, they tend to stick around.
Best Quotes
“So what we found is focusing on psychology is what's driving performance these days. And what we're focused on is when you reveal something, you take much more ownership in what you reveal. And so by giving marketers an easy way to deliver that by using our platform, they're able to create these experiences very easily and then deliver them to the market and people respond better to them. So this is a total psychology play.”
“So we have Alpha Industries out there. They're an online retailer. They sell kind of bomber jackets and other retail items. And they used us over Black Friday for a massive campaign on their website and got over a 30% lift in revenue by capturing email addresses and promoting their product on their website.”
“So our churn is fairly low. We're about 5% churn”
“We're talking 50,000 a year.”
“So we start at $99 a month now, and goes all the way up to large enterprise paying us a couple hundred thousand dollars a year.”
“So we're probably about seven x where we were.”
“Our organic traffic has expanded dramatically over the last six months, and I think we're seeing interactive content become more popular in the market right now and becoming a real topic. And so it is... We're not actively out there. What we did was we recognized we had a lot of traffic and we weren't serving them. And that's why we launched SMB because there was the need, but there was no solution out there.”
“I mean, we were like a 100,000, $150,000 a year.”
“Well, I think when you look at a company that's run for four and a half years on less than a million and a half in outside capital, that's not typical of a true, like, venture company.”
What Happened Next
At the time of this interview, Zembula had just launched its SMB self-serve plan and was in the early stages of learning how that cohort would perform. Robert Haydock described the company as mostly bootstrapped, having raised about $1.1M to date, with a team of 10 in Portland, Oregon. This page captures the company as it stood at that moment. Visit the Zembula company profile on GetLatka for current figures.
View Zembula’s current profile and metricsFull Transcript
Chapters
- 0:01Introduction and Company Overview
- 0:24Why Zembula's Interactive Format Drives Higher Engagement
- 0:54Alpha Industries Black Friday Campaign Case Study
- 1:48Scratch-Off Psychology and How the Product Works
- 2:57Churn Rate and Enterprise Focus
- 3:37Pricing Model: From $99 a Month to Enterprise
- 4:28Customer Count and Enterprise vs SMB Split
- 6:22Company History: From Scratch It to Zembula
- 6:45Funding and Bootstrap Philosophy
- 8:08Early Revenue in 2015
- 8:39SMB Growth Tactic: Organic SEO and Content Team
- 10:34Powered By Zembula and Cannibalization Concern
- 11:09Year-over-Year Growth Rate
- 11:35Famous Five Rapid-Fire Questions
Introduction and Company Overview
Nathan Latka
00:01Hello, everyone. My guest today is Robert Haydock. He has a background in the performance optimization of digital marketing and advertising campaigns. And as such, he cofounded Zembula in 2016 after seeing a need for a new marketing format that intrigued consumers. The company has quickly found its place in the market by delivering consistently better engagement than traditional marketing techniques. Robert, are you ready to take us to the top?
Robert Haydock
00:22Yeah, absolutely.
Why Zembula's Interactive Format Drives Higher Engagement
Nathan Latka
00:24All right. You're twenty sixteen, you're late to the market, but you have something brand new. Why is your stuff so interesting and why are you seeing higher engagement rates?
Robert Haydock
00:31So what we found is focusing on psychology is what's driving performance these days. And what we're focused on is when you reveal something, you take much more ownership in what you reveal. And so by giving marketers an easy way to deliver that by using our platform, they're able to create these experiences very easily and then deliver them to the market and people respond better to them. So this is a total psychology play.
Alpha Industries Black Friday Campaign Case Study
Nathan Latka
00:54What does that mean? So like tell me a story of how a customer is using you right now.
Robert Haydock
00:58So we have Alpha Industries out there. They're an online retailer. They sell kind of bomber jackets and other retail items. And they used us over Black Friday for a massive campaign on their website and got over a 30% lift in revenue by capturing email addresses and promoting their product on their website.
Nathan Latka
01:19Okay. So what is the Zembula thing? Mean, lot of people, you know, we have email marketing companies all the time where they have a little opt in form on the site, but, I mean, what are you doing differently? By the way, I love... Are you on... You're on one of those workout balls, aren't you?
Robert Haydock
01:29Yeah. I am.
Nathan Latka
01:29Show us. Put the camera down. Wait. Show me what what... I'm gonna judge you based off the color.
Robert Haydock
01:33Here we go.
Nathan Latka
01:34Okay. Blue. I like blue. That's good.
Robert Haydock
01:36Yeah. I always try to stay on a ball. I'm like
Nathan Latka
01:39I'm like I'm like, what seat what seat is this guy in where he's like floating on air? Love it. Okay, yeah. So tell us specifically, like what makes it so unique?
Scratch-Off Psychology and How the Product Works
Robert Haydock
01:48So what makes it so unique is if you remember like scratch off reveal cards, maybe you got one from Macy's like ten years ago in the mail where it's like, this is our annual sale and you get it and you scratch off and you're like, you got 30% off. You're excited to use that because you feel like that offer was specially delivered to you. And so what we're bringing to the digital world is that same sensation
02:12of receiving something personally for you that you then take ownership in.
Nathan Latka
02:16Okay. So you're looking at what IP address hits the Bomber Jacket website and based off the IP address, let's say they're in Austin, Texas, you say, hey, You need bomber jacket x. It's not too hot, not too cold, just perfect for weather on the lake.
Robert Haydock
02:28Exactly. That or it's based on odds. Like, they're just giving away either 15, 30, 40% off. And based on who you are and what time you land on the page, you might get 30% off or you might get 40% off.
Nathan Latka
02:40Okay. This is less about knowing who the user is in terms of an identity and more about scarcity, urgency, things like that.
Robert Haydock
02:46Exactly.
Nathan Latka
02:47Okay.
Robert Haydock
02:48Yeah. And what we found is as we've gotten into this, there's just a lot of different ways to use it. And it really is about that relationship with the user and then taking ownership of the message.
Churn Rate and Enterprise Focus
Nathan Latka
02:57This sounds like a very campaign driven thing. In fact, you use Black Friday as an example. A lot of people in this space have big issues with churn because it's campaign driven. What's your churn annually?
Robert Haydock
03:07So our churn is fairly low. We're about 5% churn
03:10year
Nathan Latka
03:10Yeah,
Robert Haydock
03:10over
03:12logo churn.
Nathan Latka
03:13And that's annually, not monthly?
Robert Haydock
03:16That's annually, but we're very enterprise focused. We only just launched a small medium business version about three months ago. So our customer base has mostly been large corporations, not small businesses.
Nathan Latka
03:27Okay.
Robert Haydock
03:27That's But recently we've opened up to small businesses, so I'm sure we'll have higher churn. But once people put this on their website and it's a better mousetrap, they tend to stick around.
Pricing Model: From $99 a Month to Enterprise
Nathan Latka
03:37And it's... So it's a SaaS product. Right?
Robert Haydock
03:39It is.
Nathan Latka
03:39So what's
03:40the average so we understand how big you're talking about? What's the average enterprise paying you when they start? Are we talking $10, a $100, 1,000,000 a year?
Robert Haydock
03:46We're talking 50,000 a year.
Nathan Latka
03:49That's helpful. And how are you pricing it? Is it based off number of campaigns, number of seats, number of leads captured? What is it?
Robert Haydock
03:54So when you have an experience on your page, which is what we call one of those scratch offs, you may have 10, 15 of those in a library on our platform. So for every... We count the number of those experiences in our platform, and then we also look at the number of impressions. And the combination of those two indicate which plan you're on.
Nathan Latka
04:13Interesting. And that gives you enough leverage where if someone has success with you, you have the power to drive expansion revenue because they hit the limits.
Robert Haydock
04:20Exactly. And so we start at $99 a month now, and goes all the way up to large enterprise paying us a couple hundred thousand dollars a year.
Customer Count and Enterprise vs SMB Split
Nathan Latka
04:28Interesting. And how many customers today are you serving?
Robert Haydock
04:31So we're serving right now a 110 customers. 50 of those are large enterprise. And then what we just launched three months ago is the SMB market.
Nathan Latka
04:39So what that would have been late August, early September?
Robert Haydock
04:42Yeah.
Nathan Latka
04:43Okay. And is it fair to say, I mean, can I take 110 times that 50,000 annual price point you just gave me, and you guys are doing what about $450,000 a month or about 4 or 5 million a year in revenue?
Robert Haydock
04:53You know, we don't talk about exact revenue, but you can definitely calculate it for yourself.
Nathan Latka
04:58I don't wanna push you to reveal anything you don't wanna reveal, but just taking those numbers, I mean, it fair to say you're doing maybe around $400,000 a month in revenue? Is that fair?
Robert Haydock
05:04A little less than that, but
Nathan Latka
05:04Okay.
05:07Yeah. And that's because you just opened a much lower price point plan. Right? You're onboarding self
Robert Haydock
05:07Yeah.
Nathan Latka
05:07Serve
Robert Haydock
05:12Exactly.
Nathan Latka
05:12Can we say it's between 300,000 and 400,000 per month? Is that fair?
Robert Haydock
05:16I'm not gonna, like, give you specifics.
Nathan Latka
05:16Okay.
Robert Haydock
05:16We're just in an industry where we're growing, and it's not something we publicly share.
Nathan Latka
05:22Yeah. I... There are... Look. I asked because you say you have 50 enterprise accounts. So it could actually be significantly less if not all 100 are paying a $50,000 ACV. So if we just take
Robert Haydock
05:22Yeah.
05:31And not all are. So Okay. Just to be clear, we have 50 enterprise customers.
Nathan Latka
05:35Got it. Got it. Got it. So what I really should do again without pushing you too hard here is basically just take the 50 customers paying that big contract value and assume you guys are doing much closer to maybe $200,000 a month. But you're looking to now scale in a self serve model that maybe has more customers.
Robert Haydock
05:49Yeah. Exactly. And we decided to go self serve because we feel like they're more innovative and they move faster. So we're really excited about what we're seeing those customers do and how they're using our product.
Nathan Latka
06:00Do you have enough data yet to know? Like, again, they do move fast, like you just said, but they move fast into your platform and sometimes they move fast out. Do you have a sense of how the cohort's performing in terms of stickiness?
Robert Haydock
06:09We don't really have a good idea yet. We have a thirty day free trial. So we'll probably get a better idea of that kind of midpoint next year. Yeah. So it's early days for us in the SMB.
Company History: From Scratch It to Zembula
Nathan Latka
06:22Okay. And I've hit you hard on numbers here, but let me take a step back here and get a little... Let me get more of the backstory here. When did you launch the company?
Robert Haydock
06:28So we launched as Scratch It about four and a half years ago.
Nathan Latka
06:32Okay. Just 2013?
Robert Haydock
06:342013. And then we changed the name to Zembula in 2016 in March and launched at the LAUNCH Festival in San Francisco that Jason Calacanis runs.
Funding and Bootstrap Philosophy
Nathan Latka
06:45Yeah. Very cool. And bootstrapped or you've raised capital?
Robert Haydock
06:48Mostly bootstrapped. We've raised about 1,100,000 to date.
Nathan Latka
06:53Okay. Why do you say... Like, it's always funny when people say like, mostly bootstrapped, but we've raised capital. Like, it's pretty black and white. Why do you say mostly bootstrapped though?
Robert Haydock
07:01Well, I think when you look at a company that's run for four and a half years on less than a million and a half in outside capital,
07:10That's not typical of a true, like, venture company. Yeah. And so my view is kind of you you lose your bootstrap title as soon as you raise money and spend it at a rate that's venture based.
Nathan Latka
07:23Got it. Interesting. And where are you guys based? What's team size today?
Robert Haydock
07:26We're based in Portland, Oregon, and we have 10 members on our team.
Nathan Latka
07:30Okay. And did you... Back in kind of year one, was this more of an agency? You were doing custom stuff and then you built the the tech?
Robert Haydock
07:37Yeah. So this was... I was doing consulting in B2B and a little bit in B2C on just helping with ad buys and copy and content. And this started as an idea for that, and then ended up being its own company. So the first about six months to a year, we're just experimenting with existing customers and a few outside customers. And then 2014, we decided this is a product. In 2015, we really started
08:07building it out.
Early Revenue in 2015
Nathan Latka
08:08That's great. And can you give me a sense in that first year where you were really focused on in December 2015, how low was revenue? Do you remember?
Robert Haydock
08:14I mean, we were like a 100,000, $150,000 a year.
Nathan Latka
08:18Total. Yeah. Hey, everybody's gotta start at zero. Sometimes you start at negative something if you put a bunch of cash upfront. So that's pretty good for first year. Okay, that's great. And then walk me through, I don't wanna talk about the enterprise guys, because everything you're telling me indicates that you're trying to go more mid market out of that $99 price point. So let's just focus on that cohort. Where are you finding those customers?
SMB Growth Tactic: Organic SEO and Content Team
Robert Haydock
08:39So we've actually... Our organic traffic has expanded dramatically over the last six months, and I think we're seeing interactive content become more popular in the market right now and becoming a real topic. And so it is... We're not actively out there. What we did was we recognized we had a lot of traffic and we weren't serving them. And that's why we launched SMB because there was the need, but there was no solution out there.
Nathan Latka
09:03But it's a very different model though than like the high enterprise where you can afford to put like touch on it and make sense.
Robert Haydock
09:03Yeah.
Nathan Latka
09:03Has anything surprised you yet about the economics of the $99 a month person?
Robert Haydock
09:15Just learning how to, I guess it forces better communication and automation and better product. We've been, I mean, it's been exciting for us because we've been forced to do better onboarding. We use a company called Chameleon that does the tour through our product. And so a lot of that stuff is what we've had to shake out is just making it so that as a user paying $99 a month, you can come on to our solution, easily
09:40figure out how to do it and set it up on your website.
Nathan Latka
09:42What are you spending to acquire these $99 a month customers?
Robert Haydock
09:46We haven't really... We haven't put any ad spend behind it yet. So we'll be looking at to put ad spend probably beginning of next year.
Nathan Latka
09:54Okay.
Robert Haydock
09:55We've just been taking the inbound and trying to learn what is the value proposition they're looking for, experimented with our homepage and starting to figure out what exactly they want to buy.
Nathan Latka
10:05Do you have anyone on your team though dedicated to writing the content, which makes the inbound
Robert Haydock
10:05Yeah.
10:10So we have a team of three that are dedicated on writing content, publishing around interactive content, and looking for guest posts.
Nathan Latka
10:19So if you take the, like, all their work and their energy and each month, right, and then divide that by the number of new customers you're getting, you kinda get a fully weighted CAC. Do you have a sense of what that is or you're ignoring that right now because it's so early?
Robert Haydock
10:31We're ignoring that right now. If we did that right now, we would close down our business.
Powered By Zembula and Cannibalization Concern
Nathan Latka
10:34Yeah. Yeah. No. It makes good sense. It makes good sense. Do you ever worry about cannibalizing your $50,000 a year revenue because these enterprises are gonna go to your website and say, wait, Robert, can get this for $99 a month.
Robert Haydock
10:45So that was a major concern. When we looked at it, it ended up not being a huge concern. We also added a Powered by Zembula to those SMB accounts so that we could offer good differentiation. And also, we're kind of sharing the value with the SMB. If you're going to help promote us a little bit, we're going to give you a better price. For the large enterprise, there's no way they're going to have powered by Zembula.
Year-over-Year Growth Rate
Nathan Latka
11:09Yep. That makes good sense. Last question before we jump into the famous five and wrap up. I wanna get a sense of growth rate. So take me back twelve months from today, now you're call it, you're doing around $200,000 a month. Do you remember what you were doing about twelve months ago?
Robert Haydock
11:20So we're probably about seven x where we were.
Nathan Latka
11:23Oh, wow. Okay. So you're grow... I mean, you're growing super quickly.
Robert Haydock
11:23Yeah.
Nathan Latka
11:23So what is that? You... I mean, you were at, like, 25,000, maybe 30,000 a month back then?
Robert Haydock
11:34Yeah. Again, you can calculate it.
Famous Five Rapid-Fire Questions
Nathan Latka
11:35Yeah. That's great. No. I'm just taking your number. You're making me do the work versus just doing the math yourself, but about $30,000 a month in revenue back then. Okay. Very good. Let's wrap up here, Robert, with the famous five. Number one, what's your favorite business book?
Robert Haydock
11:48Favorite business book is, oh, right now it's The Hard Thing About Hard Things.
Nathan Latka
11:54Number two, is there a CEO you're following or studying right now?
Robert Haydock
12:01Not really an individual CEO. I follow more SaaStr and Jason Lemkin than a particular CEO.
Nathan Latka
12:09Number three, what's your favorite online tool?
Robert Haydock
12:12Favorite online tool right now is definitely Chameleon.
Nathan Latka
12:14No, besides your own.
Robert Haydock
12:15Oh, sorry, sorry.
Nathan Latka
12:16Chameleon is your onboarding tool, right?
Robert Haydock
12:17Yeah.
Nathan Latka
12:18Okay, Chameleon, good. And number four, how many hours of sleep are you getting every night?
Robert Haydock
12:22I get eight and a half.
Nathan Latka
12:23Oh, that's pretty good. And what's your situation? Married, single, you have kids?
Robert Haydock
12:26Married, no kids.
Nathan Latka
12:27No kids. And how old are you?
Robert Haydock
12:3035.
Nathan Latka
12:30Alright. Last question. Take us back fifteen years. What do wish your 20 year old self knew?
Robert Haydock
12:35Oh, what was I... What did I know?
Nathan Latka
12:38Or What do you wish what do you wish you knew?
Robert Haydock
12:40I wish I knew that tech was where to be. I started life as a tennis coach and built a tennis club when I was 20.
Nathan Latka
12:48Well, hey, that's pretty good though for a 20 year old, but there you guys have it from Robert. Tech is where he should have been after cutting his chops in the tennis industry. Now he's building Zembula, which was launched many years ago in about 2013 up there in Portland as a consultancy. They landed about 50 customers paying $50,000 a year in revenue, and now they've launched their self serve platform at about a $100 a month. They're
13:08doing in total right now about $200,000 per month, up seven x year over year doing about $30,000 per month in December 2016. Only raised about 1,100,000, which is great. They're building something really just focused on slow growth and doing it the right way with their team, again, of 10 up there in Portland, helping you drive interactive campaigns on your website to capture those email leads. Robert, thank you for taking us to the top.
Robert Haydock
13:27Thanks.