How Typeform Reached $19M ARR and 40,000 Customers in 2018 (Interview with Co-Founder David Okuniev)

Intro and Fatman Collective origins

Nathan Latka

00:00Hello everyone, my guest today is David Okuniev who was born in Belgium and later educated in England and started

00:05his professional career as a musician. Expression through music soon turned to expression through product and brand design which led

00:11David to founding the Barcelona based design studio Fatman Collective. From working in the same co-working space he later met

00:17his co-founder Robert and the two co-founded Typeform. Today he's joint CEO and sweats over everything vision, product and design

David Okuniev

00:25related. David, are you ready to take us to the top? Yeah.

Nathan Latka

00:28All right, well first off Fatman Fatman Collective, you don't you don't look that fat.

David Okuniev

00:31Where did the name come from? Uh well the idea was to put together a a collective of designers and

00:38all together we'd make this kind of fat man. but yeah, no one was fat.

From agency to software product

David Okuniev

00:42In fact the first designer that I had in the in the collective was like this skinny.

Nathan Latka

00:48So yeah. So look, sometimes parody like that works, right? Fatman Collective led by a really skinny guy or gal,

David Okuniev

00:53it works. Yeah, yeah. All right. But I wasn't that skinny. So tell me Some of the most successful uh

01:00software companies that I see today actually came out of agencies because the agents in an agency you can see

01:06all customers have the same problem and then you build software for that.

01:09Was that the pattern you followed? You mean like 37signals? Uh like so many of them.

01:15Uh yeah, yeah. Uh I mean we we happened to be an agency and I think in an agency the

Nathan Latka

01:22thing you have is that you kind of have to deal with a lot of clients on a day-to-day basis

01:27and you're kind of context switching the whole time into other projects.

01:31So I guess it it drives people to think I I'd love to just be able to focus on one

01:35project and just have like customers instead of clients and I think in our case that's that that was one

What Typeform does and revenue

David Okuniev

01:40of the driving factors. That's right. So tell people that are not familiar what does Typeform do and how do

01:45you generate revenue? Is it a pure play SaaS company? Yeah, it's a it's a SaaS it's a SaaS play.

Nathan Latka

01:51Uh it's freemium product. What we do is allow people to create conversational forms essentially.

01:57Um so you have your your you know your your standard web forms, they're not very interactive.

02:04What we do is split uh the each question into kind of a conversational format uh presented in a better

02:11UI with uh you know it allows you to also like add your brand add interactive elements like video uh

02:19images and so forth. Yep. And when when you look at folks that are paying you again give me a

02:23general sense, what are they paying you per average per month each month?

Pricing, enterprise, and team size

David Okuniev

02:27Yeah, it's the ASP is around $40 a month. Okay. And are these that's kind of for each user or

Nathan Latka

02:33are you actually selling kind of enterprise bulk deal plans as well?

David Okuniev

02:36Uh we do some enterprise. We're not an enterprise tool, so we don't go out there trying to land enterprise

02:41clients. Uh we we just we have some enterprises that would that want to come on to Typeform.

02:45Our sales team is about three people, so uh it's very much self-service.

02:49That's great. And what's the total team size? We're now 190. 190 all all in Spain?

Nathan Latka

02:56No, we have an office in San Francisco as well uh building out a small team out there uh working

Platform play and customer count

David Okuniev

03:00on partnerships. Uh we have kind of a platform play which we're rolling out this this year, so we want

03:06to be close to uh the partner ecosystem. Tell tell me more about that.

03:11What does platform play Yeah, so uh we figured out that we can't cover every use case with Typeform, but

03:17we have a kind of interface which people can use uh for conversational data and then we want to partner

Nathan Latka

03:24up with companies that want to integrate with that. So you know pushing our data into their platform uh or

03:30even partners that would want to build directly into the into our our creation process.

03:35Mhm. And what have you kind of with the kind of this goal in mind right of it continuing obviously

David Okuniev

03:39to expand via the platform, what have you scaled to today in terms of total customers using you?

03:44Uh total customers around 40,000 plus we have a bunch of free customers as well.

Deciding when to charge

David Okuniev

03:49So this is an interesting dynamic. There's very few people that have successfully kind of monetized the freemium model, right?

03:55You're I I don't know how many freemium users you have and what the percentage conversion rate is, but 40,000

03:59ready to pay is obviously no small number. The question I have for you, how do you decide when to

Nathan Latka

04:04make people start paying? Uh are you asking like from the start like when you start off the business?

04:12I mean for My audience my I'll tell you my audience a lot of times will say Nathan uh we

04:17have a product that's based off like some amount of usage, but we don't know when to show the paywall,

04:22right? How did you make that decision? So we took our time.

04:25Uh we launched the product 2013. Uh we spent a year uh in what we called a beta, but I

04:33think we just called it beta because we weren't we weren't charging at the time.

David Okuniev

04:36Uh after a year we got we rolled out the the the the payment plan.

04:41It was just one one plan called the pro plan. I guess it was just time to start monetizing, but

04:48we weren't we weren't really soft. Like we didn't put a lot of the features uh we didn't put a

04:53lot of the features behind the paywall. We still like kind of left a generous helping for for free users.

04:59Mhm. But what is is so is there a usage metric? Is it after you've collected 100 entries in a

05:04given month you're shown a paywall? How do you get the We we do have that, but initially what we

Nathan Latka

05:08started with was uh just feature based. So one of the things we did for example if you wanted to

05:15like customize the thank you screen or use logic inside your form or the calculation feature, then we show we

05:22we would show the paywall there. We also have another dimension which is we have this um pro plus plan

05:28where we sell seats as well. Yep. Yeah, well that's 60 bucks a month, right?

David Okuniev

05:32Exactly. So you can create a shared workspace and you know collaborate with people on creating Typeforms.

ARPU and MRR math

David Okuniev

05:36That's great. I mean now can I do the math? 40,000 folks times that $40 ARPU, you guys are north

Nathan Latka

05:41of 1.6 million a month today, right? You're good mathematician. Well no, I want to give you I want to

05:47give you cred I want to give you credit. My research team has a note here that says they found

05:50something I think on Novo Brief in 2015 that you guys had passed 8 million forms per month growing 20%

05:56month over month, half a million users and monthly revenue around 200,000 euros.

David Okuniev

06:00You're now much bigger than that. Yeah, we're bigger than that. I think it's half a million users that's probably

06:04the signups at the time. Um but yeah, we're we're roughly in in that neighborhood.

Funding rounds and investors

Nathan Latka

06:09That's great. Talk to me about uh funding decisions. So are you bootstrapped or have you raised and if you

David Okuniev

06:13raised how much? Uh we've done few rounds. We've done four rounds.

06:17Uh we stayed bootstrapped for a while because uh we had resources from our design agencies which we like kind

06:24of pumping into Typeform. So we managed to stay you know the first year without any any without raising.

06:31Uh in total we've done four rounds as I mentioned and we raised uh $52 so far.

Nathan Latka

06:37Yep. So and what um I mean I know some of the obviously the folks you have involved are also

David Okuniev

06:41people that serve the same kind of customer like obviously Squarespace, right?

06:44So how did you decide who to take funding from um and and how to build the syndicate?

06:50Um so we tried to raise capital in Spain. Uh that didn't happen early on.

Nathan Latka

06:56They told us we weren't we didn't know how to run a business.

David Okuniev

06:59They were completely correct. Who was they? Uh I don't want to mention any names, but some local VCs basically

Nathan Latka

07:07told us we were too green wet behind the ears to actually uh run a startup.

David Okuniev

07:12Uh but we had a really good product and uh a German VC called uh well it was a German

07:19and Polish VC. I was uh uh ACT Ventures and uh Point Nine Capital actually saw the product and thought

07:26wow, there's something here. So they they knew we had no idea how to run a business, but they invested

07:32in any case, but they taught us a lot about you know you know about SaaS.

07:36I mean to be honest with I didn't even know what a KPI was to start off with or even

Nathan Latka

07:41MRR. So so our our early investors really helped us. Um we did another bridge round with uh with Connect

David Okuniev

07:48Ventures and then uh Index Ventures came in for our series A and really I mean we had Index Ventures

07:55at the back of our mind. We knew that they were you know one of two really important firms in

08:00Europe and we knew that you know getting them would kind of help us uh give give our brand more

Nathan Latka

08:06visibility and and more attention in the market. The KPI story is a funny one.

08:09I remember my first ever meeting with potential investors. We sit down at the table and David they look at

David Okuniev

08:14me and they go um well Nathan, where's ARPU? And I'm going we don't have anyone named ARPU on the

08:21And I'm like oh, average revenue per user. You're you're asking for a data set.

08:25Okay. Um And there's many ways to say ARPU as Yeah, exactly.

Nathan Latka

08:30Exactly. It's very confusing. So talk to me real quick but uh before I dive kind of more into your

Growth rate and doubling

David Okuniev

08:35story, I want to talk more about your how you kind of gamified internally AB testing with Mad Gambler and

08:39some other growth tax tactics you've used. Growth rate today, what are you at?

08:43So if you're doing kind of 1.6 today, take me back a year, what were you doing?

08:46Uh we're kind of floating around uh with we're aiming to double year on year at the moment, so we're

08:51kind of following this unicorn path. Yeah, that's great. So I mean is it fair to say about it June

Nathan Latka

08:572017 you're doing somewhere around 800k a month? Uh June to A year ago.

09:05Yeah, more or less. Yeah, that that would put you on the double track.

David Okuniev

09:07Yeah. What um what makes I mean obviously once you get bigger and bigger but doubling becomes trickier and this

Nathan Latka

09:13price point also SM yeah SMB space churn is always always tough.

Managing churn and reactivation

David Okuniev

09:18How have you managed churn? Yeah, yeah. It gets uh well it's it's it's difficult.

09:22I mean it's it's just an upward battle and you have to just work at it the whole time.

09:26I mean what what we're doing right now is trying to like increase activation to uh to to combat that.

09:32It's uh it's kind of like churn is a long-term thing and it takes a lot of time to kind

09:37of hit at that, so you can't just change that overnight. So you have to like build more more sticky

09:42use cases, find better ways for people to stay in the funnel.

09:45So we're kind of just very very focused right now on just like activating as many people as possible.

09:50So so working kind of top of the funnel. What are you hovering around right now?

Nathan Latka

09:55In terms of churn? yeah, around the 5% mark. Okay, that's not horrible.

David Okuniev

10:01So, 5% gross logo churn per month. this scale, it's you know, it's it's tough.

Nathan Latka

10:06Yeah. Uh you know, if we didn't have have churn, then we wouldn't have so much pressure in terms of

10:11like adding new users every month. That's right. Yeah, five 5% 5% of 40,000 can get big.

10:18Yeah, but but by the way, some of these users that churn, they reactivate.

10:21We have a lot of serial reactivators in Typeform cuz people come in, they do Typeform, they churn, then the

David Okuniev

10:26next Typeform, so they come back. So, there's kind of a cyclical thing going on as well.

10:29much time do you spend like just sweating over, "Gosh, how do we make it so that these people stop

Nathan Latka

10:34canceling every other month and then reactivating?" Can't we provide some part of the product that makes them sticky in

10:38between? How much time do you spend thinking about that? A lot of time.

10:42I think our future strategy is is is aligned to that. I think it's it's it's all about understanding what

10:48is the job to be done that people are using Typeform for and really packaging packaging that in a much

10:53more compelling way for them. At the moment, people come into Typeform and it's kind of this open playing field.

10:59I can do all sorts of stuff. But really like packaging those ideas together into real kind of mini products,

Activation metric and five results

Nathan Latka

11:06I think is is going to be key for us. So, right now today, you talk you mentioned the word

11:10activation, you know, many times already. What do you know you've got to get a new user to do in

11:14the first couple hours they sign up or log in so that they become sticky over the long term?

11:20Um well, we need to get them to create a form for starters.

11:24And then our activation metric is is they collect five five results.

11:30Over what time Uh first 7 days. First 7 Okay, good. So, so five five new kind of leads or

11:36inputs in the first 7 days. our that's our activation metric. That's great.

11:40You um I don't know if this is true or not, but when you talk about conversational marketing, the reason

11:44a lot of people have trouble building product around it is you have so many variants of if people are

11:49typing entries, they could say anything. And so, how do you make meaning of an anything response?

NLP and system of engagement

Nathan Latka

11:53My question to you is what does your tech team look like and how much really like hard tech is

11:58behind processing the natural language people are putting in these forms? That's not something that we're doing yet, but definitely

12:05something that we need to look at. So, but all about making the product smarter.

12:09So, essentially right we just show you what people have said. That's it.

12:13And we're not doing that interpretation for you. Interesting. Okay. Um last two Go ahead.

12:18One thing one thing to just add like Typeform, we see ourselves as a system of system of engagement.

12:23Um as opposed to a system of record. Although we do record the information, it's really about you know, people

12:29come to us because they really care about the interactions that they're having with their customers or their employees.

12:34And we really we really play well in that space. So, typically people download the data and plug it into

12:39other areas and then analyze it in other places. So, you could run a NLP on our data set just

12:45by integrating with a different service. How many forms now are you processing per month?

Powered by Typeform viral loop

Nathan Latka

12:52So, there is I think it's 20 now 50 million uh unique landings a month on on on on forms.

13:0050? But that's unique. 50 million. Yeah, 50, not 15. Yeah. Yeah, 50 uh landing on Typeforms every month.

13:09That's great. And then obviously your your the things you focus on are how many of those 50 then go

13:13and complete one question, two questions, and full completion. Yeah, and actually that's what drives a lot of our business.

13:19There's this fiber loop going on. They land on a form, they click powered by Typeform, then they create a

13:23Typeform, distribute it to their audience, and and so forth. You ran and documented a pretty sophisticated uh it depends

14:23where you look look at it. We the different which pocket you look at.

14:27Some were above three to one CAC, some were a bit underneath.

14:30Yeah. Do you assume if you have a 5% logo churn per month, that means the average customer would stick

14:35out for 20 months at 40 bucks, it's an $800 LTV. Is that the LTV you assume when you talk

14:40about your LTV to CAC ratio? Um it's roughly around that. Okay, roughly.

14:45So, what I hear you saying then is sometimes you might might spend half that, which is higher than what

14:49you want. Sometimes it might be way below that depending on the cohort you're attracting.

14:52It depends what you're doing as well. Like with with pure branding stuff, like it's really hard to measure.

14:59But you you you invest because you know if you get your brand out there, you know, they they could

Famous five and wrap-up

Nathan Latka

15:03be some effect. Yep. Makes a lot of sense. Let's wrap up here with the famous five, David.

15:08Number one, what's your favorite business book? Favorite business book. One that comes to mind is that Jason Fried one.

15:17I can't remember the name. Yeah, really like that one. Good. Number two, is there a CEO you're following or

15:22studying right now? The CEO I'm following or studying, no. Number Number three, what's your favorite online tool for building

15:30a business besides your own? I'm a big fan of Mailchimp. Uh been trying Wix recently actually.

15:40I find it quite quite quite usable. How does Anthony How does Anthony feel about that?

15:45I'm sure he'll be fine. I I think Squarespace is a is a great product.

15:50Uh but but uh yeah, it was I I always thought really badly of them and I've been trying it

15:55recently and I I was pretty impressed. Number uh four, how many hours of sleep do you get every night?

16:04Yeah, seven. Something like that. That's good. And what's your situation? Married, single, do you have kiddos?

16:08About to get married. Oh, congrats. That's good. No no kids? Thanks.

16:12That's I have kids. I have two kids. Two kids. Okay, very good.

16:16And how old are you, How old am I? Yeah. I'm 41 now.

16:2041. All right, last question. What do you wish your 20-year-old self knew?

16:24Oh, Jesus. Know that everything's going to be okay. Guys, it will all be okay.

16:34This is coming from a guy that that named his agency the the Fat Man Collective because he's putting a

16:38bunch of people together, right? And it's going to end up working out.

16:40What ended up happening is Oh, sorry. Yeah, Fat Man Collective. What ended up happening was he saw the same

16:44need across many things, wanted to double down instead of changing between clients every day, started building a Typeform with

16:49his co-founder uh David or sorry, Robert. And now today, they're serving over 50 million kind of unique landing pages

16:55on a Typeform every single month. That's up from just eight a couple years ago.

16:59They've also scaled revenue uh about a year ago doing 800 grand per month in revenue, now up almost double

17:04that 1.6 across 40,000 users using them. So, healthy, lots of growth tactics, lots of good stories here.

17:10Uh over 50 million dollars raised to help drive that growth. Healthy economics.

17:13David, thank you for taking us to the top. Pleasure.