Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart.
And you know, we have this Premium program at Mixergy, where if you pay a little monthly fee, you get access to all the older interviews, you get access to the courses that we’ve done with hundreds of entrepreneurs. Anyway, a few months ago, I had dinner with my friend, Noah Kagan, and I said, “I want to get a sense of where our revenues are, where they’re coming from and how they’re growing. And I’d love a dashboard and Stripe does not do a dashboard well.”
We were talking about different tools that I’ve used and different ones that he’s used. And he said, “You know, there’s something called ProfitWell. Just go sign up.” I said, “Well, what does that cost?” He said, “It’s actually free. Most people don’t even realize it’s free.” So I signed up. I’ve been using it and I get a sense of where my revenues are, what my churn is and all that for free, and I kind of feel a little guilty because it’s free, but it’s great and it’s useful.
And around the same time, I guess we had some customer service issues where people couldn’t log in to their accounts, and it turned out that their accounts just were cancelled without them knowing and their accounts were cancelled because their credit cards expired or something. I guess it has to do with the whole idea that in the U.S. people are now getting chip cards and they have new credit card numbers.
Anyway, people complained to us. Our developer, Michael, just signed us up for this service that will let people know before their credit cards expire and will follow up with them via email if their credit cards do expire, and it makes it easy for people to change their credit card numbers. It turned out that was from ProfitWell too.
I said, “Who is this ProfitWell? What’s the company behind it?” And I got to know the founder via email a little bit and it turns out it’s a really interesting business. It’s grown really nicely. It’s bigger than just ProfitWell. It’s actually called Price Intelligently. That’s the parent company. Their goal at Price Intelligently is to help companies price their product right because it’s really hard. They have this sub-product called ProfitWell, which allows companies to see where their revenues are after and as they change their prices and allows them to recover lost sales.
Anyway, that’s how I got introduced to the company. I think it’s an interesting business behind it. So I invited the founder on here to talk about how he built it up, and I’m hoping he’ll share with you publicly what he shared with me, which is where his revenues are now because he’s grown it really nicely.
That’s what we’ve got here. The founder is named Patrick Campbell. I’m looking forward to hearing how he built up this company.
And the two sponsors who are helping to make this happen are HostGator, the company that will help host your website right, and Bench–if you need your books done right, make sure that your accounting is organized, you’ve got to check out Bench. I’ll tell you more about them later. But first, Patrick, good to have you on here.
Patrick: Yeah. Thanks for having me.
Andrew: This is a really big company that you discovered a problem that led you to create and the problem you discovered was what?
Patrick: Yeah. So, I started the company about four and a half years ago. The problem we had discovered was really around–there’s all these product folks and all these business folks creating really, really good product, really good product, helping customers, helping basically their customers with whatever they need, whether it’s procrastination with some sort of B2C product or it’s actually helping another company grow through a B2B product.
But people would put so much time, so much effort, so much blood, sweat and tears into their products and when it came to pricing them, it was probably the most guess and check, simplest thing that you’ve ever imagined to just set the price at, “Well, let’s just charge $50 a month or $100 a month.” It was just amazing to me that there were companies that were creating such valuable products and valuable things and basically throwing stuff against the wall to actually make money.
Andrew: And you discovered this. You used to work at Gemvara.
Patrick: Yeah.
Andrew: Am I pronouncing the company name, right? I am, right?
Patrick: Yeah. That’s exactly right.
Andrew: I had the founder, Matt, on here to do an interview back in 2011. The company was doing really well. Sorry?
Patrick: Yeah. It was probably a while ago. So the company was doing really well. They sold to like a Berkshire Hathaway subsidiary actually pretty recently. That’s exactly where we kind of discovered the problem.
Andrew: I thought that they were doing great. I invited him on because he was doing great. What was the problem you guys had over there with pricing?
Patrick: So they were doing great. But the problem is that like for that company at that period of time–that was right around definitely double-digit millions coming in per year.
Andrew: Selling jewelry online.
Patrick: Yeah, customizable jewelry, kind of like Blue Nile, which is kind of a bigger brand in the space. They were doing great. But the majority of the growth was coming through acquisition. So the idea is like spending a lot on ads, spending a lot on content, spending a lot on merchandising. All the growth was coming from acquisition. The problem, both for that business as well as software companies is acquisition gets harder and harder and eventually your ROI numbers become very defunct as you’re trying to basically build a long sustaining business.
So that’s where we started really attacking on pricing because we had pieces of jewelry that we were selling for, I don’t know, like $150 but the cost was $175. The problem was is because it wasn’t necessarily that people we were just naïve about this, it was because everything was so cost basis.
Then there were all these different problems with like pieces of jewelry that kept getting returned were like the very generic looking pieces that you could get at Tiffany’s, you could get anywhere else, but the more complex pieces of jewelry, things that were pretty objectively not pretty, like you or I would look at them and be like, “Oh, that’s an ugly piece of jewelry,” those were the ones that never got returned, so many repeat purchases and that’s because so many people put so much thought into what jewels should go where and it kind of created what we would consider an ugly piece even though it was like that was the color of her eyes, birthstone, stuff like that.
So, when we started discovering this problem not only on the costing side and also of the cost of acquisition plus this phenomenon with like so much more value being put into something that we thought was objectively not the prettiest thing in the world, we knew there was something to dig in on pricing.
Andrew: I see, where before you told our producer, “We just didn’t know what the fuck we were doing. We had no framework for pricing.” You would price things, you said, based on what it cost you.
Patrick: Yeah.
Andrew: That’s the before. The after was you realized there’s a lot more that goes into pricing, things like how customized is the product, things like–actually what else? What else went into pricing?
Patrick: Yeah. So in that business …
Andrew: Into intelligent pricing.
Patrick: Yeah. In that business, because it’s real cost, cost was a big factor, right?
Andrew: Right.
Patrick: We always say, especially in our blog you shouldn’t have a price based on cost because your customers, they don’t care what it cost you. They care about the value they’re getting. So, really what went into it was in terms of the actual pieces of a formula where things like the customization of it, the market, essentially how a solitary diamond–that’s a huge market, right? That’s a very competitive market, whereas a solitaire topaz isn’t necessarily as competitive.
So, really kind of the competitive nature of the piece of jewelry it was. And then there were a bunch of other factors like repeat purchases, how many stones they customized versus not. There were just a lot of different things that went in that were not related to cost, actually had bigger movements in the price over all of the value overall.
Andrew: I see. So, you saw this and you said, “This is a really tough problem. Someone needs to solve it. I think I can solve it.” I know that you work with a lot of SaaS companies that I use. Like I had a sense that you guys worked with Wistia when I talked to Wistia once about negotiating my price with them.
And I said, “Here’s what I see on the site,” and the guy didn’t know what I was seeing on the site. And he said, “Well, we’re kind of experimenting, trying to figure it out.” I said, “There’s something bigger here than just them trying to figure it out on their own.” You decided you were going to start this whole company just to solve this one problem?
Patrick: Yeah. It would be beautiful to say that we knew exactly what we were doing and we were just going to go after it. I think it was that phenomenon with like this is a huge problem. Then at Gemvara we would do these different movements in price and see either drastic cratering and revenue or we would see just huge swaths in revenue.
It wasn’t just the problem but we would see, “There’s a huge amount of impact here.” That’s where we were like, “There’s something in pricing.” We didn’t really know what. It was one of those things where we wanted to try to figure out how we could quantify or measure value. Ultimately that’s kind of how we set out on the road of really trying to build a company to solve this particular problem.
Andrew: And you’re a guy who worked at Google also, so you cashed in your 401(k). How much money did you get out of that?
Patrick: It was like–I can’t even remember what it was post the penalty because I’m a younger guy, so definitely it was penalized. But I think it was less than $20k. I was at Google for about 18 months and I had a small 401(k). I worked for the US intelligence community before that. I had this like cobblestone approach to basically putting some funds together.
I basically said I’m going to give myself six months, like six months where we get some traction. If we don’t get traction in six months, I can always find a job. It was very difficult for my parents to understand that. They’re very blue collar and very like, “I can’t believe you left Google. Now you’re going to leave this other startup. What are you thinking?” So, it’s definitely one of those things where thankfully it all worked out and I didn’t get an, “I told you so,” from my parents.”
Andrew: Was it going to be a consulting company at first, where you personally take on that work?
Patrick: Actually what’s really funny is it was going to be a pure software company at first. So, we built these algorithms that were based on some academic learnings that we had found and we broke them and made them better and all kinds of fun stuff. What we ended up doing was, “Let’s sell this product.” The way you fed your algorithm was through surveys. So, we built this little tool. Basically you could setup your survey. You could send it out and then you could actually crunch all the numbers.
The problem unfortunately was that a survey tool like there’s millions of survey tools. So, people were like, “Oh, you’re just a survey tool,” even though it was much deeper than that. Also, when people would get the data, they didn’t really jive exactly what they should do with the data. So, we had a customer and we I think had a couple of people sign up, not that many. We started doing some inbound marketing, no outbound at this point.
Then all of a sudden we had someone come to us. It was actually Paul Farnell at Litmus–shout out to them, first customer. They were like, “Yeah, I don’t really want to use this. Can you just do it for me?” And we were like, “Hmm. . .” Like everything says not to do service, right? Everything says stick to software and we’re like, “Okay, how much are you willing to pay for it?” which is like the worst pricing question ever ironically from a pricing company.
So we ended up doing that first deal for–I almost don’t even want to say it because it’s so different than what we charge now. But it was less than like $2,000. It was not a lot of money. We didn’t do a lot for him, but it was one of those things where we like, “Maybe we can start doing a tech enabled service as we call it.” That’s what it kind of morphed into, where we still won’t work with someone unless we use our software. But we purely work with our software and basically help people with this problem.
Andrew: Yeah. Now you guys charge tens of thousands of dollars to do this.
Patrick: Yeah. We charge a good amount of money at this point. We charge–I think our ACV last quarter was around $65,000. We also look to have retainer clients. That’s kind of our biggest thing is people who we basically become a member of their product or their marketing team. Those start around $10,000-$15,000 a month, essentially.
Andrew: And that’s different from what we have? What we have with you guys is we have a good dashboard that tells us how much money is coming in and going out in Stripe and we have you guys recovering lost customers for us.
Patrick: Exactly.
Andrew: And that’s much less expensive, one of those items is actually free.
Patrick: Yeah. So what we did–and I don’t know how much I can definitely tie this together–is about two years ago we were helping someone with their pricing. It was a company that was about to IPO. So, if you really want to figure it out you could probably find who it was. They were calculating their MRR completely incorrectly. This was a CFO who had taken two other companies public and we were just amazed that they were calculating something as “simple” as MRR incorrectly.
So we had started working on ProfitWell. There are a bunch of reasons we gave it away for free, but we were like ProfitWell makes our pricing projects easier. It allows us to sell other products like Retain, which you guys are on and ultimately it allows us to basically build what I like to call a platform for our company to help people more broadly with their SaaS economics.
Andrew: I’m looking at an old version of your website from February, 2011, the how it works section.
Patrick: Getting into the dirt here, Andrew, jeez. Yeah.
Andrew: Here’s what it says. It says, “Number one, describe your product. Number two, collect responses and number three actually is view pricing reports.” Number two, collect responses, is collect it from a survey and then drive paid search to the survey to understand how your prospects will be willing to spend on your product. It seems like a lot of this is survey-based. Drive ads to a survey, understand what people will do, right? But I thought surveys don’t work when it comes to pricing. People will say they’re willing to pay a lot more than they actually will.
Patrick: Yeah. Not to be too crass, but I think like surveys, they really work or people think they don’t work because we’re really bad at surveys. We’re really bad at designing the right surveys. The funny thing is if you ask in the right way–in our algorithm, it basically asks in the right way.
There’s a bunch of other like methodologies you could use, like conjoint is a really familiar one. You probably have heard of that at some point. The thing is if you ask in the right way, you can get into basically a very simple model. You can get into plus or minus 15% of reality. Our model is like plus or minus 3%.
We’ve actually seen this. We’ve collected about 20 million responses at this point and it’s one of those things where we can actually see, “All right, this is what the market said. Here’s what reality was.” And it’s kind of fascinating how like people don’t realize that the only people who can really help with your pricing and give you like directional information about pricing are your customers.
Andrew: So, what do you do to ask in the right way?
Patrick: That’s a great question. There are two methodologies we talk about. If you think about a pricing page, you have two different axis. You have the features or whatever you’re going to price upon. Like Wistia, it’s number of videos, whereas if you go to Stormpath or more of a traditional SaaS product it’s different features, right? Then there’s the price of that package. S, one methodology that we use for the packaging, it’s something called MaxDiff. It’s something that we’ve made better, we believe, in our algorithms.
But all it really is, is asking people, “Hey, out of these features or these value propositions or whatever you want to know value from, what’s the most important or most preferred and what’s the least important, least preferred?” It gives you a really, really nice output that you can see not only rank order but also magnitude. You know Startup Steve only cares about these three things or Miderprise Mary cares about these four things so you could start to put your tiers together.
On the pricing side, it’s actually much simpler. It’s all you do is you ask in ranged questions. So, I would ask you, “Hey, Andrew, at what monthly price point is Mixergy Premium way too expensive that you would never consider purchasing it? At what price point or monthly price point is it getting expensive but you’d still consider purchasing it? At what point is it a really good deal? At what point is it too cheap that you question the quality of it?”
What’s really powerful about that is if you just graph that data, you basically get a really nice diamond of where your pricing should be and you can also get what’s called an elasticity curve, which is just comparing how many sales you’re going to lose or gain depending on how you change your price.”
A lot of people are like, “That seems too simplistic,” or, “People are going to lie,” and all this kind of stuff. But it’s like the model bakes in because you’re asking in ranges, you can essentially throw out people who are the jokers who are going to put 000 in everything or a million, a million, a million in everything. Even if you get 30 to 50 people, you at least have directional information.
Andrew: What about this, Patrick–if you were to ask me what would I pay for ProfitWell, I might give you a number like $50 a month, right?
Patrick: Sure.
Andrew: But if someone on my team needs to know how much money we made last month and needs it right now so they can move on with the rest of their work, I’d be willing to pay $300 a month. At that moment, my price is more flexible.
Patrick: And that’s the reason ProfitWell is free, like in a nutshell, because when you look at a product like–and that’s why it’s so important. You’re not just asking one random person these questions. You’re looking at different segments of different types of customers. What we found particularly with ProfitWell is we looked at companies in startup growth and then even mid-market and enterprise stages. We asked, “What’s your willingness to pay for these analytics?” We actually spoofed this before we even built the product out.
What we found is that one, your $50 a month, that’s exactly given where you guys are in your size was willing to pay. The price didn’t scale that rapidly when we went to some bigger companies. We knew that and then we knew based on some other questions we asked that there was a very episodic value, exactly how you suggested. Based on that data, it was like, “Well, we either don’t work on this anymore or we use it as an acquisition funnel essentially for other products.”
Andrew: I see. All right. So what you’re saying is if you ask the right questions, then you will get the right number from people and your results have proven out that the surveys actually make sense.
Patrick: Yeah. Exactly. I think there’s some nuance, right? The thing is like pricing is just a big nefarious problem that a lot of people just kind of shy away from solving. They think they can A/B test their way to success, which most of the time they don’t have the traffic to even do a proper test. What you’re really looking for is to use a kind of metaphor is like a finger in the wind, like which direction should we be at. Then you can optimize even further.
If you really want to kind of go all out and ask a bunch of different questions, you certainly can get even more granular results. But knowing that you should be a $100 product versus a $50 product, that’s amazing amount of more revenue rather than making that mistake for six years and then realizing, “Oh crap. We should really fix our pricing.”
Andrew: Okay. Let me take a break and then we’ll come back and find out how you got your next group of customers. A large group of your customers came from you just working the phones, right?
Patrick: Yeah, yeah, hustle, hustle.
Andrew: Hustle, hustle. All right. Why don’t I talk about Bench first? Do you know Bench?
Patrick: Yeah. I know Bench pretty well.
Andrew: What do you know about Bench?
Patrick: So, Bench actually I think they have some of the most beautiful design as well as a beautiful process for one of the most boring parts of your business, which I think is brilliant. They wouldn’t think it’s boring and that’s why it’s so important from a product perspective, just because they allow you to basically offload a lot of your bookkeeping and your accounting.
Andrew: You know what? You’re right.
Patrick: We use them. We love them. It’s a good time.
Andrew: You use them?
Patrick: Yeah. We use them for part of our bookkeeping. We have another service that works on part of the stuff they offer that we don’t use.
Andrew: What kind of bookkeeping do they do for you?
Patrick: We do a lot of our expense reporting and stuff like that through them. Then for some of our tax and some bigger, higher level stuff we have a different accountant. But yeah, I think it’s Bench–we discovered them just because their design was so freaking beautiful. These guys clearly must take accounting seriously, let alone business seriously based off their design.
Andrew: Yeah. When you started talking about their design I thought you were thinking of a different Bench. Then I went to their website and you’re right. What seems like a group photo on their homepage is actually just a subtle animation, not so much that it distracts you, but enough that it points out that they’ve paid attention and were willing to put the extra effort into that one shot, right? That’s just one image on their whole site.
One of the reasons why people sign up for Bench is they don’t want to get a bookkeeper who doesn’t understand their online business. Often bookkeepers have a problem where they don’t get that you’re going to have a lot of revenue, a lot of small revenue coming in from Stripe and then maybe some from PayPal and then maybe a random check and you need to organize that whole thing.
And the problem with us is we keep thinking there’s going to be some software that’s going to suck it all in and make it all look pretty and in a chart. Frankly, ideally, in an ideal world that should be. But it doesn’t happen that way.
If that doesn’t work, we do what many people in my audience do which is go to Yelp and start looking for a bookkeeper and what they found is the bookkeepers they find on Yelp or even through friends don’t get the online world. They don’t get how to log in to Stripe using a secondary account login. They want your main account or they want you to send them a .csv file or an Excel spreadsheet. It becomes really complicated.
I also don’t like the idea of trusting my bookkeeping to any one person because if that person doesn’t show up because they’re sick or something is going on with their family, then I’m screwed. If I trust it to that one person and frankly they decided to do something a little whacky with that stuff, I have protection.
With Bench, you get a team of people who will actually do your books, give you the results and you get the protection that you want from a real company. And like you said, the design is beautiful. I’m on the new webpage they gave me to link out to my audience. It looks so good.
Patrick: It’s so good. Yeah.
Andrew: Sorry?
Patrick: I was just going to say the point you made about redundancy or like multiple people is huge, and I think that people don’t think about that, especially as their business is growing and it’s something that’s so important that it’s going to bite you in the ass at some point in your business.
Andrew: It really will. I don’t want the end of the year to come or April 15th come and then talk to Mary about how Mary has to do my books and Mary says, “Sorry, everyone else is sending me their books right now. I’m going to be a little bit late.” No. I need Mary to have 100 other people around.
Patrick: Yeah. That’s cool.
Andrew: And the design really is gorgeous. I should hire them not just for books but also for their design. Look at this. They created a page for Mixergy to give us 20% off. It just looks gorgeous. Go to Bench.co/Mixergy and you will see what I’m talking about with these images that kind of move a little bit. Look at this. They didn’t just pull out two different testimonials. They pulled out testimonials of people who I interviewed on Mixergy to highlight on this page they created for us, Jason Fried and Patrick McKenzie.
Patrick: Nice.
Andrew: All right. Guys, you should just go check out Bench.co/Mixergy to see how they created their landing page. If you don’t have someone doing your books right now, sign up. These guys will take care of your books. They’ll organize it right so that when it’s time for you to pay taxes, you’ll have the right numbers. Also, they’ll do it so that you know week to week, month to month, how’s your business doing so you can stay on top of it.
Go to Bench.co/Mixergy. Wow. I spent a long time talking about them because their design is so good. I wonder who they hired for design.
Patrick: I think it’s all internal.
Andrew: It’s got to be, right? There’s got to be like that one person who has the design eye who does it.
Patrick: Their onboarding–I am not a designer. I don’t play one on TV, definitely not my skill set. But their onboarding was a good litmus of like, “Oh, this is how good onboarding looks.” So it’s a good one to check out.
Andrew: Cool. Yeah. I was a little worried when you started talking about their design. I said, “Does he know the right company?” But you sure did. All right. Speaking of onboarding, your first customers you got yourself. There was a Boston Magazine article that helped get you your first business?
Patrick: Yeah. So, when I say we, it really was just me for the first six months. So, the classic 18-hour days, bootstrapping, not hiring. I think I had like four or five interns that I shouldn’t have hired all at once, but there was some movement happening.
Our first customers, it was a Boston Globe article written by the local tech beat reporter just on announcing what was happening. What was really great and we couldn’t have predicted this is that the problem that we’re looking at kind of hit a nerve in a number of different kinds of companies. So, we had a lot of inbound. One was Paul from Litmus, who ended up being that first customer.
Then what we did is we actually took care of these customers that came in. But all of a sudden we just started hitting the inbound marketing, the blogging, content world really, really hard. And we found the reason we did that so powerfully and went full force into it was because I think one, because we happened to get a free HubSpot account. So that was the reason that like …
Andrew: Because you were in Boston and they’re Boston.
Patrick: They’re just everywhere. Yeah. One of our board members, he runs product at HubSpot and was like, “Hey, use this account. I’m not using it.” I’m like, “Great. Perfect.”
Andrew: Who was this?
Patrick: Christopher O’Donnell. He’s kind of a protégé of David Cancel and now he runs product after David left. We just started going after it. The reason it worked well for us is because a lot of people, they don’t know something about pricing but they have a sneaking suspicion that it’s important.
So I always joke we would write articles that if any real economist or real pricing person would have taken a look at them, they would have been like, “This is kind of elementary.” But for the world of SaaS and software, it was like a goal mine for them in terms of knowledge. So, we got pretty lucky there, I believe.
Andrew: What’s one of the early articles that did well for you?
Patrick: One that did really well that like got completely misinterpreted, I think, was we wrote an article that was called “Fuck Freemium.” It just basically went into–four or five years ago we were still at the tail end of freemium is the way you build a business. Software was relatively easier to build. So it was one of those things where they had a lot of free plans. People were like, “If I have a free plan, I’m just going to successful, right?”
So we wrote an article about people who are using free don’t understand how to properly use free. That one did really well, hit Hacker News and that was a huge win for us. But some of the more basic ones like value-based pricing 101, those are the bread and butter that keep bringing us leads because it’s stuff people don’t understand but they know is important.
Andrew: Discounting apparently was a big topic for you too.
Patrick: Yeah. Well, it’s funny because a lot of the articles we would write we wanted to expose some sort of friction inside of an organization. So, if you think of like–I don’t know if this is the right move, but it’s worked for us–if you think of the insurance industry, like pet insurance. We didn’t have pet insurance ten years ago. It just became this thing of like, “Oh, you care so much about your dog. You want to make sure you’re insured,” which is great.
What we did is we started writing a lot of articles about that. The discounting one really went after the friction between sales and marketing and product because very generally–and I’m going to generalize–like a lot of sales people in general, they always want prices to go lower. They always want more discount authority, they always want this, whereas marketing is like, “Sales keeps wanting discounts. We need higher prices.”
So, basically we would get in the middle of that friction and then someone would be like, “You should talk to these guys. You should talk to them and figure out how we can get our pricing right.” We didn’t know this at the time. I’m being more like Nostradamus in hindsight, essentially. It wasn’t something where we were like, “Oh, we know this is going to work.”
Andrew: How did anyone even see these articles. What did you do to spread them?
Patrick: This is also like a really naïve thing. I think if we were smarter at this time, I think if we tried to do this now four years in, we would be like, “Oh, this isn’t working,” because it was like first six weeks of any blog, like you don’t have a list. You don’t have any leveragable tactics. So, we would write an article. We had a very small list of people that had filled out some forms and we were kind of running that HubSpot playbook of like, “Here’s an eBook you should read.”
What we started doing is we basically would just send it out to that list, make it tweetable, all that kind of fun stuff, and then the one place that we started to crack that worked really well was LinkedIn groups. So, since we’re serving a B2B audience, we found a bunch of SaaS pricing, all types of groups and that just helped us build our audience.
In those first six weeks, we were spending so much time writing articles. When I say we, again, it was like me up at 1:00 in the morning trying to get this blog post out even though I knew only like 30 people were going to read it and hopefully were going to read more of it later down the road.
Andrew: But you joined these LinkedIn groups and you then shared the post within LinkedIn groups and that’s where you got some of the early traction?
Patrick: Yeah. I think a lot of people discovered this around that time, but we definitely, the HubSpot Social group, we were the first people to expose this “hack,” where we would go to LinkedIn and there’s this thing where if you hit a LinkedIn share button, even on a blog post, you can basically add every single group that you–so, what I would do is I would hit that share button and I would go through every key on the keyboard and it would show the groups you were a part of.
I would hit every single group. I think the limit used to be like 80 or something like that. Now I think they’ve paired this down to like 40. But we shared it with everyone and that really started bringing us traffic. I remember talking to the head of HubSpot Social and was like, “You need to add this functionality so I don’t have to do it like this anymore,” even though it was a free HubSpot account I was being an asshole customer, basically.
Andrew: Did HubSpot even help you? What was it about HubSpot as a software that helped you do this that you couldn’t do on WordPress, for example, or on your own site?
Patrick: Yeah. So, this goes back to the naiveté. I just started using HubSpot because I had this resource that was given to me and I was like, “All right, let’s start leveraging it.” So, I don’t think there was anything inherently like magic about HubSpot. I think it really helped with things like workflows, like they had just launched that product.
So I had like a drip campaign, which was like, “Here’s testimonials, here’s a sign up for a pricing optimization assessment,” which was like our middle of the funnel offer and then just kind of go from there. But at this point, you could not take HubSpot away from us just because it’s so ingrained. But I think early on it was one of those things where it did help leverage with social scheduling things, stuff like that. But I wouldn’t say it’s a prerequisite to success.
Andrew: It was just really organized. It organized your marketing?
Patrick: Yeah. You’ve got to understand, again, I was the only person full-time cranking on this. It was one of those things where it did basically give us, I would argue, a half to another full-time employee because it was kind of scheduling all this stuff. If I was futzing around with WordPress or some of the other products out there, it probably would have been a little bit harder.
Andrew: You’ve been saying we. I’m on your AngelList profile and I see that there are two cofounders with you. It says you and Christopher O’Donnell and Aaron White. But it doesn’t have much about what they’re doing at the company. Are they cofounders? What’s their deal there?
Patrick: Yeah. It’s a complicated story.
Andrew: Yeah. Good. I want to get into that.
Patrick: So this gets into a lot of, I would say, first time founder mistakes on my own part. So, Christopher and Aaron, really intelligent guys, both good leaders in the Boston tech community. Aaron is kind of a CTO. He founded a couple of companies. He’s kind of in between searching for his new thing. I think he actually just started founding another company in the managed IT space.
But we started the company and essentially what happened is I was like a young kid with a lot of energy, smarts on the economics side and I had time because I was like, “I don’t want to work at Gemvara anymore for a number of reasons.”
Christopher was like, “Oh, we’ve been thinking about this problem too along with Aaron and their good buddies from their high school days and we think we should really get into this,” which was great, right? You had these two guys who definitely had bigger reputations than me, like had in my mind better software skills than me, definitely. It’s actually not even in my mind very objectively.
So we started the company and like Aaron built essentially the MVP of the product and then did some hacking, but it was one of those things–and this gets to the naiveté comment–where I had part-time cofounders that were kind of involved, weren’t involved, were really involved on their terms, which makes perfect sense, right? They had full-time jobs, so this was not their number one priority.
But I’m sitting there as like a first-time semi-technical, definitely not a technical person. I can run models. I can fix a bug here or there, but not someone who could build a stack or anything like that. In my mind, we didn’t set the expectations up enough to be like, “This is what you guys are in charge of and this is the implication if you don’t do that or if you don’t come on full-time,” and things like that.
So it caused a lot of horrible stress for me and probably stress for them too because it was just this weird cycle of like, “Hey, guys, I need you more. I need to set these expectations.” “Oh yeah, we’ll help you. We’ll help you.” And then I got distracted doing work for clients and stuff like that or selling. Then they kind of went away because I wasn’t like riding them, necessarily.
I’m happy to get in to more. The TLDR is like huge learning lesson from like equity perspective, expectations perspective, managing a team.
Andrew: What did you do about equity with them?
Patrick: So, we basically–they had a large chunk of equity early on. The one thing that I don’t think–I don’t believe they did this nefariously, but we didn’t do vesting correctly. So, our vesting was different even though I was like full-time and they weren’t. And then it was one of those things where we’ve made everything right, if that makes sense. So, I’m super comfortable. There probably is still like a stupidity tax or a first-timer tax comment.
Andrew: I actually don’t get this. You vested faster than they did or vested at the same time?
Patrick: No. They actually vested quicker than I did.
Andrew: They vested quicker than you? Why? Even though you were the one who was full-time in there.
Patrick: Well, the reason was because they had already done some work on this. So, they had already been building part of this MVP. They had the site up. They had all this stuff. They were doing a lot of things.
So, it was one of these things where from my perspective–hindsight is 20/20–but I’m from the Midwest, so we’re just like overly trusting. It’s not that they like overly broke the trust or anything, but it was one of these things where it was like, “Yeah, I’m going to trust these guys. They know what they’re doing. They’re super smart. We’ll make this right eventually if it gets in balance.”
But we didn’t put anything in the actual contract to be like, “If you’re not full-time by this date, this unlocks certain equity here, certain equity there which would have solved so many problems.
Andrew: I see.
Patrick: Let alone the vesting situation too. So it was definitely tough. I want to be careful because I’m not like, “Fuck these guys.” I’m not like, “These guys suck. They’re awful.” There were definitely some horrible fucking months, but it wasn’t necessarily because these guys are nefarious or anything.
It’s just we didn’t structure things appropriately in the first place and it was one of those things where they had never been involved with a bootstrapped company. They had always done very traditional VC-backed companies. It’s one of those things where they didn’t know either.
Andrew: Did you get less equity than they did?
Patrick: We were closer to equal in the beginning.
Andrew: And now?
Patrick: Now it’s not. Now it’s what you would–now essentially it’s in a place where you would look at it and be like, oh, yeah, them as board members, angel founders or however you would like to define it. You would look at the cap table and be like, “Okay, that makes sense.”
Andrew: I see. So it’s not like they’re full cofounders working in the business anymore.
Patrick: No. They never were full-time. They’d done plenty of work, but they were never full-time.
Andrew: I wish I’d heard your interview with Jerry Colonna in preparation for this. I didn’t even know you did one because I bet he got into this. How did you settle this out? It feels like–actually before we get this–at your worst, it sounds like you guys had some screaming matches, right, or big arguments? Give me an example of one of the big ones.
Patrick: Yeah. So we definitely had like–the problem too is if you look at–Jerry, this is the stuff he talks about and thinks about all the time. When you’re founding a company, you really have to think about who you’re founding a company with. I would argue you really need to know not them from like a trust perspective, but just like how they communicate, how they handle adversity, how they handle frustration, how they like to receive feedback.
Andrew: Right.
Patrick: The more intense conversations that we had I think most of those stemmed from like my expectations, their expectations not aligning, me being like, “This is more valuable than what you think it is. They think it’s more valuable than what I think it is and there’s just no alignment.
On top of that, the biggest kind of like gasoline on this fire was like I was still running a damn company and I was not hiring–we didn’t have money to hire until six, seven months in. We closed, I think, $150k our first like five, six months. But I needed to like serve that revenue, right? It’s a tech-enabled service. It’s one of those things where I didn’t have time to like, “All right, let’s fix this board situation.”
The arguments typically were, “Hey, guys, I need you to help.” And then being like, “Well, we are helping,” and me being like, “No, I need you to like do these things.” “We are doing it.” If you had talked to them, I don’t think they would say, “Yeah, we fucked this kid.” They would totally believe it. In hindsight …-
Andrew: It’s just because you weren’t clear about what your expectations were of them and what theirs were of you and you weren’t clear about how you each communicate, how you like to let each other know when they’re not doing what they’re supposed to be doing.
Patrick: Totally.
Andrew: What turned things around? It seems like you guys have a good relationship now.
Patrick: So I go back to–honestly, when I worked at Google, I didn’t know Eric Schmidt or anything, but one of the things he would say almost as a joke was revenue solves all problems. Honestly, like that’s what really solved the problem because as we got bigger–so, our first calendar year, like our first full year, we booked a million.
So it was one of those things where it was like, “All right, guys. . .” at that point, we were like eight or ten people–well, not eight to ten, I think it was like six to eight at that point. But it was one of those things where it was like, “All right, guys, this is where things are at.”
I almost had–it’s a harsh word, but I had leverage in the sense of like, “Well, if Patrick’s pissed and walks away, this thing that appears to be growing really rapidly and really well, maybe not in the exact way we would do it,” but all of a sudden that falls apart, right? It really was at that situation where it would fall apart now, I could get hit by a bus and I think everything would be fine. That’s kind of how we like to build the company. There are a lot of reasons for that. Long story short, that was really what solved it.
To me more personally, it took a lot of growing up and becoming a big diplomat because I had this situation where things were not setup correctly in the beginning through no fault of anyone and it just was like now I need to be like, “No, guys, this is the actually value that I’m bringing and this team is bringing.”
And at this point, I had someone who I still consider them a cofounder, maybe not in name for whatever reasons, but like it was this guy named Peter Zato here who basically has done just as much blood, sweat and tears as I have, minus six months, essentially. So, I would go to these guys and it became a big diplomatic mission, like, “Okay, how do we structure this? How do we claw back equity?” Once you give equity, you’re not taking it away. You have to basically dilute people.
So, we started and it started being like, “All right, well, Patrick you’re doing well. You’re doing this. Here’s what we think you deserve.” And then all of a sudden it turned into, “Here’s what we think these other people deserve,” and then the big kind of coup de grace was, “All right, here’s what we’re going to do. We’re going to put different marks in for revenue and at those particular marks of revenue, it’s going to unlock equity, essentially.”
Andrew: More equity for you, Patrick, and as a result they get diluted down but you get to earn that.
Patrick: Yeah. But actually–this is maybe another part of the discussion that’s worth it–to me it was actually equity for our team and myself. So, I was at a really good place. If I started the company on my own, we might not be successful, but I would have had so much more equity kind of thing.
But I just basically was like, “I want to maintain this amount. I don’t want to be diluted as we go and I also want to make sure that Peter gets taken care of.” Our CPO, who was like the first technical hire a year and a half, two years into the company gets taken care of. Basically everyone who’s been involved up to the first 20 employees or so. So, basically there’s a list. At this particular points, those folks get unlocked equity and invests and all that kind of fun stuff just to be super fair. But that was kind of how we got out of it.
But really it was like four years of probably conversations and frustrations that I wish I didn’t have to do but I learned an immense amount. I think we’re in a really good place now. The board meetings are super productive. These guys are super helpful. Again, it wasn’t that they weren’t helpful. It’s just things were so in balance that like I’ve gained 100 pounds since I started the company. It definitely was pretty stressful.
Andrew: Yeah. I’m looking at that old Boston Magazine photo of you. You look way thinner there.
Patrick: Yeah. It’s something I’m trying to work on now. It’s not all on that.
Andrew: It’s hard to make that a priority, isn’t it?
Patrick: Yeah. It’s so hard. That’s why Noah’s been–you mentioned him before–Noah’s been pretty helpful. He texts me like, “How’s the health at? How’s the health at?” I’m like, “I got it. I got it. All right, Noah.”
Andrew: Noah’s good that way.
Patrick: Yeah. He’s a good friend that way. Yeah.
Andrew: All right. Second sponsor is a company called HostGator. Do you know HostGator?
Patrick: I do know HostGator as well. So, they’re part of the Endurance Group, which is this huge company in Boston that people don’t know about. They just bought Constant Contact and they have a bunch of the hosting companies. But HostGator is like one of their gems. So, that’s great.
Andrew: Yeah. Sometimes people will tell me, “I don’t want to use HostGator. I found a better offer or a different offer with this other company.” Not a better offer. They keep it in line. But they’re owned by the same freaking company. I know there’s another podcaster talking about someone else–it’s the same company. HostGator now is bigger than most people realize, which is the only way I think they can do the customer service they do.
At some point, it’s really, really hard to do customer service, to keep people’s websites up, to actually keep up with whatever you need add, like WordPress hosting becomes big. If you’re not big enough, you can add stuff like WordPress hosting. Well, these guys, the people who own HostGator are big enough now they can give the service we need. Any time there’s something new that’s out there that customers demand, HostGator has the power to do that. And they’re just really good people.
Patrick: Yeah.
Andrew: Really, we had this customer, a listener of Mixergy who had a problem with HostGator. I emailed someone at HostGator. I said, “This guy’s not at all connected to me. But he’s just trying to reach someone. He wants to have this one issue solved. They got on it within an hour. And it was two different people who got in and helped out with that issue.
Patrick: That’s awesome.
Andrew: It wasn’t even their fault. It was definitely not my fault. It was just a guy who said, “Andrew, I signed up for HostGator and I didn’t even use your discount coupon code so you don’t even get credit.” But they care.
Listen to me–if you’re out there listening and you hate your hosting company, you should sign up for HostGator. If you do, you’re going to get great service from them. You’re also going to get a really low price and anything that you need as you scale up you’ll be able to get. Like if you start out with a basic WordPress package and you decide that you want managed WordPress hosting because you don’t want to manage it yourself, you don’t want to upgrade it yourself, they’ve got you covered.
Go to this special URL. You’ll get 50% off and, of course, because you come through me, they’ll take especially good care of you and I’ll take good care of you. Go to HostGator.com/Mixergy. You will get $100 from Google AdWords. They’ve got that offer for you. You get $50 search credit. You get so much.
If you hate your hosting company, better switch to them and you’re going to see what a good hosting company is like. Really, I prefer people switch even than start fresh because when you switch, you know how good HostGator is. Go to HostGator.com/Mixergy.
Patrick: Their command center in Waltham out here is pretty intense. I was there for an event and they like–you talk about their support, uptime and all that kind of stuff. It’s a huge part of their business. You walk in and it’s like TVs wall to wall. You’re not allowed in there unless you have certain credentials.
Andrew: Good. I want them protecting all that. Are they one of the gems of Boston, the Boston tech scene?
Patrick: You know what’s funny is I don’t think a lot of people know about them. They now know about them because they bought Constant Contact, but because they have so many different brands, not a lot of people know Endurance, but if you’re like, “Oh, HostGator,” but they own a ton of–
Andrew: They own Bluehost. It’s Bluehost that comes up.
Patrick: Yeah.
Andrew: That’s the thing. They own a bunch of different brands.
Patrick: Exactly. That’s how they’ve grown a lot. Again, they own Constant Contact but Constant Contact has a bigger brand than Endurance, but it’s one of those things where that’s their holding company, essentially.
Andrew: Yeah. I should interview the founder of Endurance. I Google them every once in a while to understand who’s behind it and I don’t know why I never asked them on. We’ve got to work that out.
Patrick: I know someone on their marketing team. Obviously you have a pretty big connection there too. If there’s anything useful, more than happy to help.
Andrew: Appreciate that. There was a period, you told our producer–we asked you for milestones for revenue growth and you said, “Let me give you my big personal milestone when it comes to revenue–when we actually made enough money that I could pay myself.” What was that big moment when you could pay yourself?
Patrick: Well, there were two parts. It was right when we hired Peter. So, Peter was our first full-time hire besides myself. He wasn’t going to come free. But he was a sales guy, started off just basically building our sales engine. If you’re bootstrapped, one of the easiest things to hire first is a sales person because you can tie a lot of their revenue to success, right? So, his base wasn’t great. His base was much better now.
So, at that point, I was like, “Maybe we have enough money to start paying me.” I was really masochistic on my salary. I think I started making three grand a month. That was basically nine months into the business around March of the first calendar year and it was just like–after taxes, I could cover rent and some other things in Boston. Thankfully my rent was pretty cheap at the time, which was good.
Andrew: I’m looking at a list of your people, including Peter. There’s a lot of via labels on AngelList next to a lot of your people.
Patrick: I love AngelList, yeah.
Andrew: Because you hire via AngelList?
Patrick: Yeah. It’s great. They make it really smooth to basically do the double-opt in. So, we can go through there and be like, “We’re looking for these types of people and basically click a bunch of different people and then they click as well and then we get the intro to the email. So, they’re really like hiring quality hiring leads, I would argue. So, we’ve just hired a ton of people through there.
Andrew: I can see that. The via that I’m referring to is a little icon that they put next to people’s names on your AngelList profile to show that you hired them via AngelList. Once you exhausted content marketing or once that was flowing, what was the next thing that brought in new customers for you?
Patrick: I don’t think we’ve exhausted it at all.
Andrew: I shouldn’t say exhausted. What else do you do beyond content marketing?
Patrick: Well, it’s funny on content marketing. We have yet to have a full-time marketer. This is awful. This is like a bad thing. We have yet to have a full-time marketer yet. We just made an offer to a director of marketing that we’re super-excited about. Hopefully he accepts, but it’s one of those things where that’s going to be our first soiree in actually getting our shit together. So, what we’ve done is we’ve basically–that’s the big thing, I think some of the other things we do, we have an outbound sales team.
Andrew: How does that work?
Patrick: That’s only on the Price Intelligently side. We basically have a classic–I don’t know if you read PredictableRevenue or some of the Aaron Ross stuff out there. It’s basically like two BDRs for an AE, two business development reps for an account executive. One of them is typically–one of the BDRs is typically handling our inbound traffic.
So, people fill out a form of some sort. The other is focusing on outbound. So, we do just kind of classic–I like to think we do above board like really good outbound email, meaning very personalized, like yeah, we use some tools to help us automate things, but it’s not like spray and pray. We research the lead, make a very personalized first, second email and then send a lot of content to kind of educate the market.
Andrew: How do you find your leads?
Patrick: We typically–so, we’re in a known space in terms of SaaS and software. It’s one of those things where early on where we’d look, I don’t know anymore where we’re finding them. That’s why I say early on. Typically funding announcements don’t work. When you see funding announcements, typically things are so out of control that no one cares at that point. We look at AngelList.
We look at different lists of companies and then what we started doing is we actually started scraping–I’ve been using Mechanical Turk to basically get different SaaS companies. So, we would put together a really, really big list of URLs that we would source that were kind of like a good 80% as a software company.
And then we would use Mechanical Turk to basically have people go through and determine if they’re a SaaS company or subscription company and paste the pricing page. All of a sudden we would have this big bevy of leads we could go after and really produce a really good kind of lead list.
Andrew: And how would you know who the right person is to contact there?
Patrick: Yeah. Then the BR, Peter, in the early days would go–we are huge about personas. It’s something that we write about a lot. So, on the pricing side, we focused particularly on–depending on their size, if they’re below a $50 million company, we’ll go for the CEO. If they’re below $50 million but a little bit bigger or if they’re above $50 million, we typically go after the VP of product or the VP of marketing. Typically the VP of marketing and the CEO are going to be the main people to bring us in.
Andrew: And you use servers to find their email addresses.
Patrick: Yeah. We’re probably not as sophisticated as we should be. What we do is we use Reportive and some of the more basic things. I know there are big systems people have built using Clearbit and some other things. As we continue to grow, I’m sure we’re going to have to do that a little bit more, but right now we focus a little bit more on the unscalable tactics.
Andrew: What do you do to figure out the revenue?
Patrick: Their revenue? So we’ve used Mattermark before. We have a little bit of a basic algorithm that can back into it based off of employees or funding.
Andrew: That’s what we do.
Patrick: Yeah. That’s like a basic way we do it. We can get trickier with it. But it’s one of those things where that’s kind of what we focus on.
Andrew: We just multiply a certain amount times how many employees they have and that gives you a rough sense of where they are, right?
Patrick: Yeah. Absolutely. Definitely. We do some other things. We host a conference, actually, called SaaSFest. I don’t know if you’ve seen–
Andrew: Didn’t you just have that recently.
Patrick: No. There’s a lot of SaaS-named conferences and I think we’re all getting confused.
Andrew: I know what it is. I just saw the most recent post on your site said SaaSFest 2016. I see. So, now it’s like the next one.
Patrick: Yeah, exactly. That’s in December. What we do is that was a big experiment last year, like a very expensive experiment. We broke even on it. I think we made a couple grand. The point wasn’t to make money, but it was like can we basically get some good customers out of this? Can we get some good ROI, essentially? We found the answer is definitely yes. We’re doing a second annual one.
The way we do it is we really focus on like not making money off of the event. So, we don’t do sponsors. We don’t do any of that kind of fun stuff. It’s really an education focus because our brand is very focused on educating customers and prospects and people who maybe never buy from us. That’s worked out really well.
We’ve kind of parlayed that into this year. We’ve done a lot of events or I’ve spoken at a lot of places as well. Those are typically like the return on investment is really good. Like I might go teach a pricing workshop, a basic one and we’ll get 10 signups for ProfitWell, which a few of those or all of them over time will sign up for Retain we might get one or two people to sign up for pricing services and software.
Andrew: So ProfitWell is that free dashboard that Noah Kagan told me about. Retain is what Michael signed us up for which helps us retain customers. I think that’s a little bit of money. I think we pay you a share of what you guys collect for us.
Patrick: Yeah.
Andrew: And then Price Intelligently is the big product.
Patrick: Yeah. Exactly. So what’s kind of cool–I don’t know how much time we have to talk about the vision–what’s kind of cool is what we do is the reason that ProfitWell is out there and I kind of alluded to it a little bit before is mainly because when I work with you on a six to eight week project or a monthly project and it’s big money, it’s good for us, we’re building a company. We don’t need to get VC money.
But what’s interesting about it is the time to value is so long. We’re not going to get a minimum it’s going to be two weeks before I provide value. The other part of it is it’s not giving you constant value, right? Even if you change your prices every three to six months like we suggest and it’s not just the price but different pieces of your pricing, like it’s still something you’re not doing every single day.
So with that moment about talking about that company that was doing MRR incorrectly plus these problems with pricing, we were like if I provide you constant value, Andrew, through a product like Retain, which is completely tied to how much revenue we make you–so, if we make you some revenue we’re going to take a fractional amount of that, or what I can do is eventually get you some kind of pricing product. So, the pricing product will likely in the next 18 months even eventually be in some way right on top of ProfitWell as well.
Andrew: So ProfitWell might be the eventual big product?
Patrick: Yeah. We’re starting to kind of combine the sales. So most Price Intelligently customers or prospects we’re talking to are starting to talk about ProfitWell. We’re starting to talk to ProfitWell customers about pricing, mainly because it’s one of those things where the reason we kept them separate early on is because we couldn’t sacrifice the Price Intelligently revenue if it went wrong because that’s what was feeding us, essentially. Now it’s one of those things where we can start to combine the brands or combine the offering a little bit more.
Andrew: The one thing I wish that ProfitWell did in the dashboard that it doesn’t is tell me lifetime value of each of my membership levels. So, I’d love to know–
Patrick: So it’s by plan.
Andrew: By plan, right. So if we have annual versus monthly, how much is an annual customer worth to us? How much is a monthly customer worth to us? Those are really important numbers that are so hard to find.
Patrick: Yeah.
Andrew: I talked to your team. I think you guys are working on that.
Patrick: Yeah. So we added lifetime value per customer to the export. But what’s cool–to make this applicable–we just launched plans. The next iteration is exactly what you’re talking about. But something that we’re thinking about–this is to make it applicable to the whole audience–is that business intelligence, we think, is dying out.
So eventually the most radical design of ProfitWell might be in like years that you can login and just have a search bar, like what’s the lifetime value of my annual customers and all of a sudden you get a picture of what you need. We’re adding some of those other things in and we want to make it more natural language because that’s the question you’re asking. What’s this? What’s that? And we want to be able to serve that to you in a really good way.
Andrew: Yeah. What you guys did for us, though, was we had these different ad campaigns and we said–we know what our lifetime value of a customer is. We have an estimate of it. It’s not great, but it’s an estimate. We wanted to know from each of these new campaigns that we’re doing, are these new customers worth what our typical customer is worth.
So, if we’re now going out to Facebook and buying ads that lead to customers, are Facebook customers worth more or less? Are they worth more because I don’t know why, I can see why they might be worth less because they didn’t know me that well before they signed up. So, your guys helped us figure out what we should code on our side to get that data and that was really helpful.
Patrick: Yeah.
Andrew: I’m concerned about you guys doing that though because I don’t think you charge for that. I don’t want you guys to do stuff you’re not making money on because then you’ll stop doing it.
Patrick: No. So, that’s the beauty of this. So, we talked about revenue a little bit. So, ProfitWell is on track to do $1 million by the end of the year in terms of ARR. So, its’ one of those things–
Andrew: Wait, how much is ProfitWell going to do?
Patrick: So we’ll be at a $1 million run rate, ARR, by the end of the year.
Andrew: $1 million run rate on this thing that’s a dashboard. Where’s the revenue coming from?
Patrick: Retain.
Andrew: Just Retain. Got it.
Patrick: Exactly. When you kind of joked in the beginning that you feel bad because you’re not paying, that’s almost exactly where we want you to be. Simply because what’s interesting is like this is where a lot of people get wrong. They offer not such a great product and then you’re like, “I had a crappy experience. Why would I pay these guys any money for anything?” whereas we’re like in the blog post when we announced why we’re doing it free was literally why we release a better product for free.
And that’s because we want to basically give you and continue to give you a ton of value and make sure when we come to you and we say, “Hey, Andrew, here’s this product we know is going to make you more money. Are you ready to sign up?” And it’s like, “Yeah, of course, we love you guys. This looks like it’s going to create money. Let’s at least do a 30 to 60-day test and that gives us the opportunity to basically prove our value in there.”
Andrew: Hey, you know what? I hate to admit it, but as you were talking, I was clicking around my dashboard, actually you now do have a lifetime value number. I can see what my lifetime value is for each of the membership levels.
Patrick: Okay.
Andrew: Yeah. I can see, for example–right?
Patrick: I think so. If you’re looking at–it depends on what section you’re looking at. So, we give overall lifetime value. And then the thing we did for you guys which we released to everyone as well–
Andrew: Right, for the campaign you did for us custom.
Patrick: Yeah. You can basically export it from your customers. I don’t think we have by plan, meaning, “This plan is worth this.” We’re not quite there on the plans tab, but it should be coming in the next couple weeks there.
Andrew: Are you sure? I think I see it. I see it on the plans tab. Maybe I’m wrong.
Patrick: I might be wrong.
Andrew: It says LTV by plan over the past year.
Patrick: That’s one of those things where you might have it.
Andrew: I think your video is cutting out there. What did you say about it?
Patrick: I was just saying product is getting a little bit ahead of where I am because I am no longer involved in it. It might be there. That’s okay. That’s what we’re cranking on is continuing to provide that value.
Andrew: Yeah. I can tell you, for example, that someone who signs up for a trial membership is like 10% less valuable than someone who signs up for a regular monthly membership. That’s not bad. I can tell you that an annual customer is worth more than a monthly customer, for sure. Yeah. I’ve got all that data, I think.
Patrick: Cool. Glad we don’t have to add it anymore.
Andrew: I can’t believe I don’t have to pay you for that. All right. Why don’t I–since the connection is kind of funky, why don’t I end it here on a high note? Actually, wait, revenues for 2016–I want to make sure that I got that–where are you guys?
Patrick: So on the–there’s a siren going past, sorry to all the audio listeners here. Boston is a very loud city. It’s like very loud. Anyways, on the Price Intelligently side, we’ll do right around $4 million. And then on the ProfitWell side, we will basically be at $85k MRR. So, that million run rate, essentially. And the growth is, I mean, the power of free has really kind of come through because we didn’t start charging until June. We basically didn’t’ really start charging for anything until June. So it’s been a pretty good six months, we’ll say.
Andrew: You mean on ProfitWell you didn’t start charging until June?
Patrick: Yeah. We didn’t start charging anything. So, basically we went from zero for the first year or so to basically the $1 million run rate.
Andrew: So you’re doing really well.
Patrick: Knock on wood. Yeah.
Andrew: The product is good. Revenues are strong. You’re profitable, right?
Patrick: Yeah. We have to be just because we have to pay the bills. Yeah.
Andrew: So now maybe now is a good time for you to start losing weight.
Patrick: As you were saying that, I was like, “I’m on the plan right now just to get moving.”
Andrew: What is your plan?
Patrick: It’s funny you asked that. There’s a guy that Noah referred me to named Adam Gilbert.
Andrew: I know it. Noah loves Adam Gilbert more than I think any of the girls he’s ever dated. He will talk about Adam Gilbert from My Fitness Tutor–is that what it’s called? Or My Body Tutor.
Patrick: I think it’s like My Body Tutor or something like that.
Andrew: My Body Tutor.
Patrick: So Noah, he referred him to–I’m pretty good friends with Chris Savage and Paul Farnell here in Boston of Litmus and Wistia. They both used him and loved him. So I had like maybe a year ago, year and a half ago I started working with Adam and then I was like, “Dude, I’m really sorry. I can’t work with you right now because I’m not going to follow this correctly.”
So now I think I’m going to get back on that train just to get more help there. For those of you who don’t know, he basically is a body tutor. You get paired with him or someone else, and then every day you have a check in via email or you can pay extra to have a phone check in. Basically it gives you that accountability, essentially.
Andrew: Yeah. I think you can text him and you say, “I’m about to–” I’ve seen people who work with Adam. They text him. They say, “I’m about to have an egg, but don’t worry, the yolks are left out,” and whatever.
Patrick: Yeah. So, Paul, before we go out to eat, he’ll text Adam. He’s worked with Adam for a couple years at this point. I’ll be like, “Here’s the menu. Tell me what I should eat.” And Adam will respond with a couple of meal choices. He’s like a full service kind of guy to help. He’s not cheap, but it’s something that like what’s your body worth? Having good health is worth a lot. So, it’s one of those things it helps with.
Andrew: I’ve seen the people that work with him. They end up with like really good chests and defined abs. That’s important.
Patrick: There you go. I don’t even need the abs right now. I’ll just take losing some weight without the abs. We can take care of that in my 30s eventually. We’ll go from there.
Andrew: How old are you now?
Patrick: I’m 28. Too young, I think.
Andrew: For abs?
Patrick: I think I look 35.
Andrew: You just think you’re too young.
Patrick: I feel 35, I think, just based off this experience.
Andrew: You’ve done a whole lot. Congratulations on everything you’ve accomplished over there. I think, frankly, this is a tool a lot of people should be using. I get no commission for referring anyone to you, but I do think they should check out ProfitWell. Do you guys work only with Stripe?
Patrick: No. We actually work with Braintree, Zuora. We have an API. We’re building every integration under the sun.
Andrew: So, anyone who’s collecting money using any of these platforms can easily link up to them and then they get this free dashboard that tells them how much money they’re making, where the money is coming from, what the trends are over time, right? Then if they want, they can use your Retain program to save customers who are about to churn, who are about to cancel or whose credit cards cancel out. And you guys handle the email. You write the emails yourselves, right?
Patrick: Yeah. We actually leverage kind of the millions of credit cards we’re sitting on to make sure the emails are good. We do all the A/B testing, optimization, stuff like that. It’s kind of a set it and forget it product. So, Michael and you, you get our daily or weekly update.
Andrew: Yeah. What I get is an email from Patrick Campbell that says, “You recovered $619 last week,” which I love. And then I get another email the following week from Patrick Campbell, “You recovered $120 last week.” I love it. And I know I don’t have to pay anything unless you guys recover money for me.
All right. And we just lost Patrick’s connection. So, I will close us out by saying thank you to HostGator for sponsoring. If you need a website hosted, go to HostGator.com/Mixergy. Thank you too to Bench. If you just want to see a really well-designed landing page or if you need great bookkeepers to keep track of how much revenue you’re bringing in, what your expenses are and make sure it’s all organized, go check out Bench.co/Mixergy.
Thank you all for being a part of Mixergy. Bye, everyone.
