Ryan Allis

“I had lunch with a friend of mine, Jed Bowman in Raleigh where I lived and he said, Ryan, how much does it cost you to acquire a customer? This was 2005, the science of unit economics wasn't nearly as developed. And in fact the word SaaS, the acronym SaaS was just coming out, was called ASP at the time, Application Service Providers. And so he asked me, Ryan, how much does it cost you to get an average new customer? I said, don't know. I'll go find out. The next week we had another lunch. I came back with the numbers. It was $500 to get an incremental new customer in sales and marketing expenditures.”

“he gave me this magical formula called one over churn, one divided by churn, which you can approximate your lifetime value pretty easily. And he said, well what's your monthly churn rate, your account churn rate? And it turned out it was 3.3%. One divided by 0.0033 is about thirty two, thirty three months of life. And I figured out very quickly that we were an annuity cash flow stream engine that trading $500 up front for $1,800 over three and a half years.”

“Heidrick and Struggles called a guy named Rick Rudman, was the CEO of Vocus at the time, tried to recruit him to run icontact. He said, no, don't want to run icontact, I want to buy icontact. And that turned out pretty well”