00:00:00 Adam Robinson: You're going to get whatever the goalpost is that you set up. That's just a reality. So it's like trying to like achieve the right balance of giving these people incentive to do things that create the business outcomes you're looking for without over-complicating it and getting them to optimize for, you know, five different things to like try to get paid or whatever is, you know, it's an art, not a science.

00:00:35 Andrew Michael: This is Churn.FM, the podcast for subscription economy pros. Each week, we hear how the world's fastest growing companies are tackling churn and using retention to fuel their growth.

00:00:48 VO: How do you build a habit forming product? We crossed over that magic threshold to negative churn. You need to invest in customer success. It always comes down to retention and engagement. Completely bootstrapped, profitable and growing.

00:01:01 Andrew Michael: Strategies, tactics and ideas brought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode. Hey, Adam, welcome to the show.

00:01:14 Adam Robinson: Thanks, Andrew. Thanks for having me on.

00:01:16 Andrew Michael: It's great to have you. I feel like I almost already know you. I mentioned to you this earlier, I was watching the billion dollar challenge on YouTube. Obviously you say most of it's on LinkedIn, but if you haven't watched it for the listeners, I definitely encourage you to check it out. Super, super interesting channel and that Adam's put together. We'll talk about that in a bit.

00:01:34 Andrew Michael: But for the listeners, Adam is the CEO and co-founder of Retention.com helping e-commerce brands rapidly grow abandonment revenues. Adam and his team scaled Retention.com from zero to 20 million in ARR within three and a half years with zero funding and are building in public with their sites set on unicorn status. Prior to Retention.com, Adam was the founder of Robly Email Marketing that he bootstrapped to an eight figure exit. And he's also an investor and advisor to several startups.

00:02:00 Andrew Michael: So my first question for you Adam is what's your current ARR at Retention.com today?

00:02:06 Adam Robinson: Baremetrics would have you believe it was, it's 20.76 million ARR.

00:02:13 Andrew Michael: 20.76.

00:02:15 Adam Robinson: I'm happy to bring it up so we can talk about all of these metrics.

00:02:18 Andrew Michael: Amazing. One of the things for the listeners is Adam is like extreme transparency. I think when it comes to building the business, everything is laid out. And actually recently he put out a post where they had set really aggressive growth targets and had to revise those numbers as well. So I'm keen, maybe we can start there then, Adam, like, what was that like? I, obviously you on this incredible run, growth looked amazing. You are a really, really small team up until some point, and then you hadn't this explosive growth period. So what's the last like six months been like for you?

00:02:52 Adam Robinson: So here's what happened. I was running a super, super lean bootstrapped startup. And one of my co-founders, Diana Ross, which is actually her name, she used to work for this guy named Ross Paquette, who had this company called Maropost. And he got his business to like 30 million top line, 20 million bottom line, bootstrapped, and he was the only equity holder. And it was just kind of like stuck there for 10 years, but like for 10 years, he made $20 million and he's been doing some stuff since he's like buying companies now and trying to make it like a platform or whatever.

00:03:27 Adam Robinson: But I hadn't seen very many people approach SaaS that way. And I thought that that was appealing because you know, if you're making money, you almost can't lose. If you're making that much money, you definitely can't lose, you know? So I thought that this business had the characteristics to get there. It was high churn, but I thought based upon the churn, it would just kind of peter out at 25 or 30 million. And we could get there keeping it super lean. That was my idea.

00:04:03 Adam Robinson: Then, you know, to be determined on how smart this was, by the way, I shared, I rented a desk from this startup called Jasper.AI. Before they were Jasper.AI, they were called Proof and they were stuck at, you know, two and a half million ARR and they were nobody. And, you know, they raised 2 million bucks from Y Combinator. They burnt through it all trying to create this product. The next thing that they tried was Jasper AI and it went from zero to 50 million ARR in 12 months.

00:04:33 Adam Robinson: So this kind of internal transformation happened where before I watched these, and they raised $200 million at a $1.5 billion valuation right at the end of the crazy period last year. And you know, these guys took a lot of money off the table. Like it wasn't all primary. So until that happened, I didn't, you know, I thought a really high goal for me was like this thing that Diana's boss had achieved, which is magnificent.

00:05:01 Adam Robinson: But then, you know, looking at what these guys had done, and then looking at what I was working on and realizing there was this ideal customer profile that was emerging as seemingly amazing. I mean, these big Shopify stores never churned. They always sent their friends. They bought quickly. They paid us a ton. They always wanted more. They never complained. It's just, and we thought there was a lot of them.

00:05:28 Adam Robinson: So it's like, well, if we just only sell to them, stop selling to everybody else and build a real company around this, we can probably rack up a lot of revenue pretty quickly. And meanwhile, Klaviyo just IPO'd like they're 90% Shopify and they've 550 million ARR, right? So like it's this universe I thought was big, right? And you know, all of that made me, instead of taking a bunch of money out, want to just plow it all back in and see if we can do this. So we thought we needed to hire a bunch of sales and marketing people, figure out how to sell an annual deal, you know, figure out how to sort of go after it.

00:06:11 Adam Robinson: The big thing with these big Shopify guys is the way that they buy is kind of in the real world. Like they don't really engage with outbound sales. Like the way that they buy is if they're at like a dinner with 15 people with you know, a couple of your customers and sort of an influencer that they know, somebody that they look up to that brought them. And then, you know, they'll get on a demo and they'll try it, right? Like that's a motion that for this specific audience of very large Shopify stores, that just works.

00:06:42 Adam Robinson: So anyway, we built that and we went way too fast and something that happened was, that we did not realize was happening, was five months in, we realized we were overselling everybody on the way in, which is bad for a lot of reasons. Number one, we were selling to an audience that was too small to make our tech work, which we didn't realize. So we were doing this deal, which was 60 day opt out on a 12 month contract. So if you bring a bunch of people in who you promise a lot more than you're giving them and they're paying for a lot more than you're giving them, when the 60 day opt out period comes, they are either pissed off in leaving, or they're shrinking what they're paying you by like 80%.

00:07:33 Adam Robinson: But before that happened on the way in, you're thinking, wow, like, I'm going to triple our revenue this year. Like this is unbelievable. Right. And then, you know, there was this kind of macro softwares of service slow down that occurred starting in April that I think almost everybody felt at the same time and that happened at the same time that we realized this horrible thing had been happening that we had, sort of the pain we had inflicted on ourselves for five months since November. And it was just, it was this period of like, there is this crashing wave above us that like, no matter what we do, it's hard to build pipeline and close people and get out of it.

00:08:12 Adam Robinson: I mean, we kept growing through the whole period. I think we grew like 20% in Q2 and Q3 combined, maybe 25% or 30%. But like you know, I thought it was going to be 10% per month, right? Like the way it was looking early on and man, credit to the team. Like I was basically like, the only way I see this writing itself, it's like, this is so bad for so many reasons, right? Like it's bad for the brand. It's bad for the customer. It's bad for the predictability of our revenue. We're overstating our pipeline. Everything is bad.

00:08:49 Adam Robinson: It actually, if we can reverse this, and I was like, I just don't know, like, how do you get salespeople who are getting paid commission to sell smaller deals? Like, how do you even do that? Right. But like, you know, we had 15 salespeople, our VP sales resigned. I wanted to only have four to start with. I wanted to have, like this model where instead of dealing with people higher in the funnel, you're really only talking to people when they're ready to buy. And you have a very small number of salespeople that are overwhelmed with demand. It's just two philosophically different ways of running sales orgs. That's what I always wanted.

00:09:25 Adam Robinson: What ended up happening because of a variety of reasons is, we over hired and it wasn't that anymore. And we got these four AEs and one BDR and we're able to create an incentive for them to undersell instead of overselling. So at the 60 day point, well, it's now 90 days, but the 90 day point, people are upgrading instead of downgrading. And our roll rate passed that 60 day opt out period. It started at 85%. The roll rate plus the contraction got bad enough to where it was 70. Like now it's above 90 again. It's amazing. It's 90 on a user basis and it's over a hundred on a revenue basis.

00:10:07 Adam Robinson: So like the revenue that we have in trial right now in this paid trial is so solid compared to what it was six months ago. I can show you, so Baremetrics, they just look at it all as churn. All of our legacy revenue and people canceling their paid trials and people who are in contract and pissed off and just say, you screwed me, I'm out of here, whatever. It's all the same for them. It's just like, it's gone down from 10% per month to like four as a result of all these changes. Yeah. It's kind of like, I don't want to call it all churn because it's not all churn. It's like a pay trial is very different than someone, you know, canceling who has, like, agreed to an annual deal, but in a way it all feels the same. You know?

00:10:54 Andrew Michael: Yeah, absolutely. I think this is something we've discussed on the show before as well with sales and alignment in terms of their focus and their targets and where they're at. And it can definitely be very devastating for the business. Cause as you said, like if you give them a goal to, based on the quota and based on the number of deals they're closing, they're just going to try, close bigger and bigger deals. And sometimes that ends up meaning that they're selling bad for customers.

00:11:16 Andrew Michael: And I think we've discussed in the past world’s daily FD from close, if I remember correctly, where they… basically, they aligned their targets not only to the close of the sale, but then, also to the renewal. And they got their second bump to make sure that the customers renewed at the end of it. But I can see from your perspective, how that could definitely have been very frightening.

00:11:36 Adam Robinson: Yeah, that's a really smart thing. I mean, we didn't, I don't think we had to do… it's just so much easier when you're dealing with four people than when you're dealing with 15. If it's four people, they're rock stars, they're bought in, they're, like totally aligned, they'll just do it. They'll do what's best for the business. And, you know, I think you can, there's this other problem where, you know, increasing comp plan complexity will just lead to increased gaming of the system. You know?

00:12:04 Adam Robinson: So like you're going to get whatever the goalpost is that you set up. That's just a reality. So it's like trying to, like, achieve the right balance of giving these people incentive to do things that create the business outcomes you're looking for without over-complicating it and getting them to optimize for, you know, five different things to like try to get paid or whatever is, you know, it's an art, not a science, right? Like–

00:12:33 Andrew Michael: For sure. You mentioned as well that you adjusted the way that people work. So obviously now you had 15 salespeople, you reduced it down to four. You wanted to have, large number of leads coming through. What sort of model do you operate on? Is it inbound? Are you operating on a PLG allowing people to try before they buy? Or I see on the site, obviously is, there's just a ghetto demo. So into your other.

00:12:55 Adam Robinson:  Yeah. So right now with this universe that we're targeting, it's still like the top, you know, 0.5% of Shopify stores. We're doing a lot of in real life activity to drum up interest from them. The affiliate motion is incredibly effective for us. Doing events with people who know these brands and figuring out how to get them to these events and then just getting to know them. And eventually they sort of moved down the funnel and Book a demo. Is that inbound? I don't know. Maybe. Right. Like we don't have a large in, I mean, we tried BDRs, right? It just did not work for us at all with this group at this ACP.

00:13:44 Adam Robinson: So like we have these. It's like we're getting indirect lead flow from partners that just hit the site in Book a demo. We're… at some point we're going to create a free Shopify app where people can get like a crippled version of the product, like, you know, what 25% of it, anybody can use it for free. I'm not. So the reason we're not doing that now is we're creating a B2B product for SaaS companies. So like everybody listening to this, right?

00:14:16 Adam Robinson: Like we can, for, this is unbelievable. For 40% of your US visitors, we can give you a LinkedIn URL, a full business profile and the page view history of anyone who's on your site. So you can turn around and just hand it to you, to one of your sales team. And they'll know if someone hit the demo page and didn't book a demo. How valuable is that? Right? Like they'll know who's on the pricing page. Unbelievable. So anyway–

00:14:43 Andrew Michael: I don't know when I was going through the product, I was thinking, this could be amazing as well for myself. Like I have the podcast, we have quite a lot of visitors to the site every month. I do get a report from Clearbits, but I don't really know who these people actually are. At the end of, then I was like, I wonder if it would work. So I think it definitely like a B2B product for SaaS is–

00:14:59 Adam Robinson: This is the problem I'm solving.

00:15:01 Andrew Michael: Amazing.

00:15:01 Adam Robinson: Yeah. This is the problem I'm solving. Clearbit, 6Sense, Qualified. All these guys are doing is taking the IP address of the visitor and they're going to an IP address to, company name database.

00:15:16 Andrew Michael: Yeah.

00:15:16 Adam Robinson: The less expensive services are not even guessing at who the exact person is. The more expensive services are using in AI or whatever to just look at who your ideal customer profile would be in picking the probable people at that company who might be on your site. We're doing an exact match and we're going to be a lot cheaper. So I know how valuable it is for us because we've started using it the last week. Our salespeople just can't believe that this person from Nordstrom who, we need to go up market now, who like is the exact title that we would want to sell to, but we would have never guessed that, you know, it's some obscure thing related to like CRM and e-commerce or something like that. It's like a title I've never seen before.

00:16:06 Andrew Michael: Yeah.

00:16:07 Adam Robinson: How valuable is that? You know.

00:16:09 Andrew Michael: Incredibly–

00:16:10 Adam Robinson: Very valuable. Yeah.

00:16:13 Andrew Michael: Cause I've seen as well, you've got some amazing companies as customers. So like Warby Parker, Jolie, Dr. Squatch, like there's some incredible brands that you've onboarded. And I think that obviously has a lot of room for growth in that space already. So keen to hear as well, a little bit about how this new approach is working for you now. So you mentioned a lot of in-person events, actually saw on YouTube channel. It's one thing that you personally hate. If I got that right, so you visited those events for sales, but–

00:16:41 Adam Robinson: So something really interesting with respect to the sales model for all of this and the marketing that we were doing has sort of happened in the last six weeks. Let's call it, before six weeks ago, we weren't even sure we were going to make a B2B product. And then we kept getting, sort of signal back from people that they would want it. You know, it's like, if you could pay $500 a month to know who's on your website and get LinkedIn profiles, would you want it? And it was like, yes, yes, yes, yes, yes, yes. And then I have been doing a lot of content on LinkedIn. And the goal had been to generate direct to consumer leads, which is hard on LinkedIn, because they're not, the founders are not really on LinkedIn.

00:17:23 Adam Robinson: They're on Twitter, but, like Twitter's not set up to generate leads in the same way that you can with LinkedIn, because it just… the game, you don't play the game in the same way. But I got this great LinkedIn coach and he helps a lot of other B2B CEOs with this motion and the motion is they write content, they get inbound connection requests, they go through and pick out the ideal customer profiles, start a dialogue with them, like a robot, like, hey, what caught your attention? And then that person will get served my content for the next six weeks or whatever. By then, I'm a celebrity to that person. And then they go back in and they say, hey, by the way, do you know what I do?

00:18:09 Adam Robinson: And at that point, they're just like, oh my God, like, tell me, right? Demo booked, like whatever. So there's the D2C marketing motion, which is this in real life. You know, this is the way we're going to get large Shopify stores and mid-market e-commerce brands to engage with us. And we're trying to create a media brand around it that creates FOMO for these cool events that we're doing and tries to make it seem like we're everywhere. ‘Cause in this weird way, that's a competitive advantage. It's, like, makes us seem much bigger than we are. And it's a differentiator between, you know, new entrance into the market that are trying to do this.

00:18:46 Andrew Michael: Yeah.

00:18:47 Adam Robinson: On the B2B side, if you go to Retention.com, if you go to Adam Retention on LinkedIn or Retention Adam, excuse me, it's my handle, Adam Robinson, like I'll make a post and it'll get like 3000 likes if I write about sales. And it's because salespeople live on LinkedIn, they do their entire job there. And I'm writing about this part of sales that I think is very timely. I think a lot of people are struggling with their outbound sales effort. I know because I'm one of them. You know what I mean? And I can say it from this position of, look, I'm not nobody. Like I bootstrapped a 20 million ARR startup in the last three years. I definitely know what I'm talking about in some regard.

00:19:31 Adam Robinson: Like this outbound thing was not working for me, but what is working is automating a lot of it in these using signal to sort of do that, right, and distinguishing this critical point that, you know, five years ago in SDR could actually probably create demand by trying to build a relationship with somebody. Today, that's just not how people buy, right? Like demand is being created on this podcast. No way for me to measure it, right? But like somebody's listening to this, that is now going to go into Retention.com and like the initial seed was planted there. And like, my argument is personalized outreach is getting completely drowned out by spamming basically.

00:20:15 Adam Robinson: Like no matter what you're saying, it's getting drowned in 15 other messages. The response to that is even more spamming with AI tools and automation and anything else you need to be doing it. So, but, it's almost like a banner ad, right? It's just like staying top of mind with your prospects so that after they do their research and they're ready, they will come book a demo and then you can put them on with your AE, right?

00:20:36 Andrew Michael: Yeah.

00:20:37 Adam Robinson: And the weird thing is that these BDR teams get scaled because you can measure that demo booked. But what I'm saying, which is resonating so much with people, is that BDR is just getting in the way of something that was going to happen anyway. Does that make sense? Like–

00:20:54 Andrew Michael: Yeah.

00:20:54 Adam Robinson: If you had one person who is a master at spraying, and then you had one that was just responding to everything that came back, that would be the same as 25 people trying to personalize outreach. It would create the exact same amount of demos and you would be running a profitable company. You know?

00:21:10 Andrew Michael: Yeah.

00:21:11 Adam Robinson: So anyway, that, so all this is to say is like the two marketing plans are totally different. And I'm kind of, you know, going down both roads at the same time.

00:21:22 Andrew Michael: It's interesting. As you say, like the D2C, you would not think like normally obviously direct to consumer. In this case, you're really going, you're selling B2B at the end of it because you're selling to these big organizations, but they're serving and they're selling direct to consumer, their businesses. And where you're reaching them as totally different channels, but in the actuality, they're both businesses. Super, super interesting from that perspective. What is a commonality that you see between the two?

00:21:52 Adam Robinson: They definitely both understand the problem very clearly. You know, it's like, I can tell you who's on your side.

00:22:02 Andrew Michael: Yeah.

00:22:03 Adam Robinson: You know, do you want that information? Obviously the answer is yes for almost everyone that we're talking to, right? Like, maybe like Nike or whatever is like, we're GDPR worldwide. We're not going to take the privacy risk. We're not going to take the brand risk. We don't want to email people who didn't opt into our site.

00:22:19 Andrew Michael: Yeah.

00:22:20 Adam Robinson: Everybody that we're speaking to salespeople on, B2B side or marketers in these like growth, starving Shopify stores, they're like, I want that email address. So that is the same in terms of how we're going to work these channels. I mentioned that the affiliate channel, I think I mentioned this, the affiliate channel is really effective for us on the Shopify side. The affiliate channel is what brings the audience to these small events in real life, right?

00:22:52 Adam Robinson: We'll have a person bring 10 brands into a table and we'll pay that person for that. Right? Either a rip on the deals we close or like, you know, $2,000 to get people there, one or the other, I think that there is an equally large opportunity on the B2B side to like, pay people, you know, it's some commission that sounds, monster. It's like, I'll pay you 20% of all the money that I make just for an introduction to anybody.

00:23:18 Andrew Michael: Yeah.

00:23:19 Adam Robinson: And I think what ends up happening is that's very exciting and it gets people, you have to have, good product always. I believe that in the world today, the most important thing is, you have product market fit and your business would grow on its own, whether or not you did anything else. Then you can do some stuff to accelerate it. Right.

00:23:38 Andrew Michael: For sure.

00:23:38 Adam Robinson: This is one of the things I've used, the accelerants. You can talk to people about, affiliate and then if five people tell one company about something, they may book a demo directly on your site and not give any of them credit at the very most, one of them is going to get credit. The last one. Right. So like, I just think that this channel of affiliate is so under… We underpay for it and people think about it in the wrong way. It's like, I want to have the best affiliate offer that is on the tip of every, that is on the, everybody's mind who even comes close to the market that I'm looking at because I view that I'm underpaying for that word of mouth, you know?

00:24:23 Andrew Michael: Yeah. The one thing I've always thought about, like from affiliate perspective and B2B space is the conflict of interests. I think from the specs, like the referrals that you're making and your company and how you deal with that as well. Like it's one of the things that sort of stalled me from trying it in the past in different areas. I'm kind of thinking, how you think about it.

00:24:41 Adam Robinson: I mean, that is just a reality of, you know, how it works in my–

00:24:49 Andrew Michael: In your business.

00:24:50 Adam Robinson: It's, so what I will say is the best affiliates by far also have on the, let's talk about the Shopify side. They also have brands. And they use the product for their brands before they start making interest. So they may be getting paid, but they can literally show somebody in a dashboard.

00:25:12 Andrew Michael: How it's like?

00:25:12 Adam Robinson: The ROI of this thing. Yeah. It's hard if you don't have that type of credibility to make recommendations.

00:25:21 Andrew Michael: You mentioned as well that the commonality is they both clearly understand the problem. Has it always been that way as well? Cause I think the reason I'm asking you is that when I think… When I first visited Retention.com was probably, maybe more than six months ago, I struggled a bit to understand what the product was or what it did. And then, like fast forward to today, like I went on, I was like, yeah, I know exactly what you do.

00:25:41 Adam Robinson: There's a difference. Yeah. There's a difference between, I think our product marketing has always been terrible and there's kind of a reason for that, like what we do on the Shopify side, the core product is like, quite controversial.

00:26:00 Andrew Michael: Yeah.

00:26:00 Adam Robinson: We're giving people emails that have not opted in to the website. And over the last, you know, 18 months, I've gone through different levels of wanting to obfuscate that part of it. You know, to, like not be, totally clear on that.

00:26:21 Andrew Michael: It almost feels like that's reading it.

00:26:23 Adam Robinson: Of vendors and you know, like integration partners we have, like I didn't want to give them like a page they could go to and be like, we need to cease and desist these guys. So the product marketing was not good at all. It still is not something that I like. But if I get someone, you know, if we get someone speaking to us, they understand in three seconds why they would want this. It's like, dude, we can give you email addresses of, you know, system wide, 18% of your anonymous traffic, you know. And it's, on the sales side, it's way higher because on the B2B side, it's way higher because we're not having to throw out bad emails because emailing is not what we're optimizing for. We're optimizing for LinkedIn profiles.

00:27:08 Adam Robinson: So it's like, we can just capture a lot more. So yeah, there's a whole other product marketing struggle that I've had. It's only going to get worse because it's like, well, now our homepage has to speak to you and these big Shopify guys. Right? Like, what do you say above the fold then? You know.

00:27:28 Andrew Michael: Exactly.

00:27:29 Adam Robinson: And then how do you sort of take each person on the, their, the correct journey? Right. Like, I don't know. I don't know.

00:27:36 Andrew Michael: Like, I'm trying to think of the right way to phrase it, but like, how much does it worry you, the product itself? And obviously you mentioned you have some really big partners that at any moment they could basically just say cease and desist and–

00:27:49 Adam Robinson: Yeah. So.

00:27:52 Andrew Michael: Like if you did a SWOT analysis.

00:27:54 Adam Robinson: Yeah.

00:27:55 Andrew Michael: And the threats column, I think they'll just be one like giants.

00:27:58 Adam Robinson: Yeah. So probably the biggest concern is a situation with Klaviyo, which, we basically tagged all of the data that we ever sent them and they kind of, like officially said nothing, if that makes sense.

00:28:19 Andrew Michael: Yeah.

00:28:20 Adam Robinson: Like it was a statement like, you know, we're going to let our customers choose which tech they use and make it their responsibility to like comply with, you know, our terms of service or whatever.

00:28:31 Andrew Michael: Yeah.

00:28:31 Adam Robinson: Like non-decision, right? But like that's something that's, you know what I mean? It's like, they spent a lot of time looking at it and that's what, so it's like, that's very likely not going to change anytime soon. Right.

00:28:46 Andrew Michael: I think also the bigger you get, the more powerful partners you have, the more ROI you're returning for them, it becomes more difficult to basically say, Hey, like all of a sudden now this magic pill you had is going away.

00:28:58 Adam Robinson: Well, I think that that's a possibility. I'm not sure how much they care, but like they just IPO'd like, I don't think they're trying to, like go after.

00:29:07 Andrew Michael: No.

00:29:07 Adam Robinson: Vendors in their ecosystem who are like providing values to the brand and good faith, right? Like it's not, I just don't think that that's their mission. And the other thing that I'll say about that is one of the reasons that I am most excited about this B2B thing is I actually think it's a way bigger business than the Shopify side. And like right now it's like, well, Klaviyo doesn't like one of our two core products. It's just a fact, right? Like they don't like it. They tolerate it, right? Once it's like, well, D2C is only 40% of our revenues and Klaviyo doesn't like half of it and they're only 50% of who we're selling to. It's like, the, it will get to the point where you could be like, okay, well that part of it, even if you valued it at zero and turned it off, it's not the story.

00:29:53 Andrew Michael: Yeah.

00:29:53 Adam Robinson: You know? So it's like you're in business. There's always risks. The whole game that you play is minimizing them as much as possible. This is one that, you know, a year ago, I had just like much less clarity on the now in a strange way, even though the outcome was like a decision to not make a decision or whatever. It's like, at least we went through that. Like I know they know exactly, like I have a call tomorrow with a guy over there where I'm explaining exactly what we're doing, like someone who's in solutions integration and like can, like it's so they institutionally know exactly what's going on, right? So like the more people that I'm talking to over there, the less I'm worried about that risk.

00:30:34 Andrew Michael: That risk.

00:30:35 Adam Robinson: I'm not sure that's going to make it better.

00:30:36 Andrew Michael: And then diversifying as well, customer segments.

00:30:39 Adam Robinson: Yeah, totally. Totally.

00:30:40 Andrew Michael: It makes a lot of sense to move to B2B as well in this case. And nice. The one thing I noticed as well watching the series today that I really loved was this idea of like the coach that you have Santosh and I'm keen to hear a little bit about–

00:30:53 Adam Robinson: Yeah, his duties, our full-time COO now.

00:30:56 Andrew Michael: Oh, well.

00:30:57 Adam Robinson: Yeah.

00:30:58 Andrew Michael: And I was like, what was the reasoning in the beginning? Or like, not reasoning, obviously the reason's obvious, but like, how did you manage to land him in the beginning to get him to start working with you? And maybe you'll just let the audience know a little bit about Santosh and–

00:31:11 Adam Robinson: Okay. So Santosh, look up this guy, type in Santosh Sharan, S-A-N-T-O-S-H S-H-A-R-A-N. And then type in like ZoomInfo or Apollo.io or something. So this guy has, he's like this little Indian man who has basically been a part of almost all of the mega data companies out there. He joined ZoomInfo when they were stuck at 8 million ARR. He left four years later when they were selling the company to a private equity firm who then sold it to the current sort of platforms and they were at 100 million ARR. He joined Apollo.io, which most B2B people know, when they were stuck at 6 million ARR for years, their investors convinced him to join. He left 18 months later after he closed a Sequoia-led $100 million at $960 million valuation.

00:32:12 Adam Robinson: So obviously he created this prolific and he was co-COO there. At ZoomInfo, he was VP product growth and strategy. So this guy, and he's worked with 20 data companies, like in some capacity, he's an advisory gong, like he's just, he's a real dude and B2B he's as real as they come. And he was helping a company out basically, you know, trying to get him in shape to sell because this guy wanted to sell it. And then the market crapped out and like, long story short, last year at this time, he's like, I have another year committed to this guy, but I'll spend three hours a day with you and if it seems compelling after a year, I'll work full time. If not, then not.

00:32:56 Adam Robinson: And you know, he thought it was compelling after a year and I was seeking some type of an advisor because, you know, I had a six person company. It was, you know, I don't know how to scale. Right. And like all this guy has done has been building the machines top to bottom that have gotten people from single digit ARR to nine figure ARR. Right. Like, who doesn't want, you know, and he's in data and he's just this, like, very sort of like, he's like a very much, like an advisor to me, like this, like kind of, like, he's like a bit of, like a guru or a wizard, you know, on like, my own personal hero's journey. Like he showed up and is like guiding me along this path.

00:33:42 Andrew Michael: Yeah.

00:33:42 Adam Robinson: And he's great. And I mean, look, he's been pushing me to do this B2B stuff the whole time. We hadn't been ready yet until very recently, but like he's the best B2B data guy there is, right? Like for him to be at the helm of the B2B side of this is going to be, like you just couldn't find somebody better than that. So yeah, I feel very lucky. We have a team that is real. I mean, I think that's part of why I have credibility. Like you look at the people that are working on this and you're like, wow, like your CTO is like a… all American Stanford swimmer and comp sci major. And like, you have the best B2B data guy who's your COO and like, you know, whatever.

00:34:25 Adam Robinson: So yeah, it's really exciting. This year was not without heartache, you know, because a lot of stuff we talked about earlier, but you know, we're bootstrapped, profitable. We generated 300 grand cash last month. Like we're in this position where I think this B2B product is going to be, like if I think about what was going for our product that I'm selling right now, get emails versus what's going for this B2B SaaS product, like this has so much more going for it, we learned so many lessons in the last four years building this last company.

00:34:57 Adam Robinson: I've already got this lead gen machine working on LinkedIn before we even have a product. Like they booked three demos a day of just people responding to my crazy posts or whatever. So I'm excited about it. And back to churn. Goal number one is I have this, I do a customer profile hypothesis, which is, you know, above 2500 uniques, above three salespeople. SaaS there's a Book a demo link on the homepage, if they meet that criteria, I think that this product is going to be unbelievable for them because we're going to start at 500 bucks and we'll be able to give them hundreds of leads every month. Right.

00:35:40 Andrew Michael: Yeah.

00:35:41 Adam Robinson: So unlike last time where churn it was like, I actually last time week by week, I tracked our MRR growth and our churn rate. And it was like 20% per month, the whole first year, 15% per month. It was insane. And we still ended the year at a couple hundred, like 100, we ended the year, the first 12 months, like a, but I think we ended it at like 2 million ARR, even with that churn. So I'm like, man, if I can figure out how to get this to like 1% or 2% churn out of the gates, like that too would have been seven, right? Like it just would have been so much higher.

00:36:20 Andrew Michael: Yeah. And there's no reason it really shouldn't be for product like this.

00:36:23 Adam Robinson: With, if the ideal customer profile hypothesis is correct, right. That's the big thing.

00:36:29 Andrew Michael: For sure. And I think it's because you, what I love about both these products is you tied so close to revenue and it's so easy then to show the ROI for the product. And then I think when it comes, when you think about churn and retention is like, are you delivering value? Like if you're not, they're going to churn. If you are, they're going to stick around. And like you said, figuring out who the ICP is, making sure you're selling into them and then it's almost like a no brainer and expansion from there on and out. So.

00:36:54 Adam Robinson: And I want to make an interesting statement that was one of the reasons that I was, one of the reasons I was pushing back on the B2B product was I think that I was thinking about value in the wrong way, actually. So with our product for Shopify stores, the main product is we're giving people emails and they start emailing these consumer emails, right? And then the sales cycle in D2C is very short. People will start buying almost immediately. They'll buy more over time, right? But like, you'll send an email out to somebody and like, if we gave them a hundred emails, like, two people will buy, right? Like it's just very fast.

00:37:31 Adam Robinson: And I was like on the B2B side, A, it's a crappy product if they're emailing consumer emails and B, like by the time they collect a dollar, in most cases, what are these sales cycles? Three months, six months, maybe even more sometimes. So we're giving someone a consumer email. You have to email them enough to even book a demo which, TBD, and then they have to go through the entire sales cycle after that, which is just an enormous time to value. And I'm a time to wow SaaS guy when I'm thinking about products, right? So the thing that I had wrong was there's actually tremendous value in this B2B product of just handing a salesperson a sheet of LinkedIn URLs and page view history of people that were on their website, regardless of whether those people buy anytime soon.

00:38:23 Adam Robinson: Like it is super valuable just to know that information. Like I told you about that Nordstrom person. So part of the sales pitch is just like, dude, like you need to know who's on your Book a demo page and didn't book the demo. Like regardless of whether you get them or not, you need to know that information. Like you need to know who's looking at your pricing page. Right? Like how many deals do you have to close in the next six months to make this $500 worth it? The question, you know, it's like 0.5 deals, right? Like almost zero.

00:38:50 Andrew Michael: Almost zero.

00:38:51 Adam Robinson: And it's just better than the list of leads that they're looking at from Apollo, that's their tech, you know, looking at different tech or whatever. Anyway, that was, like, a really interesting, sometimes value is not money. Right.

00:39:04 Andrew Michael: Yeah.

00:39:05 Adam Robinson: This happens to be close to the revenue, but things can be very valuable that are not actually money. I mean that, the Hotjar cases.

00:39:12 Andrew Michael: Exactly. Saves you time, proves experience.

00:39:15 Adam Robinson: Yeah.

00:39:16 Andrew Michael: It's not the direct relation. Yeah, absolutely. I see we’re running up on time, what's one thing that you know today about churn and retention that you wish you knew when you got started with your career?

00:39:26 Adam Robinson: Oh my God. I didn't even know that it existed when I started my first SaaS company. I had no idea that this was the most important thing that I should care about in my life until like six months to a year into launching that first product. I then stupidly, as we were experiencing this weird period in Q1, Q2, I let our exec team tell me that these churn dynamics were not important. Pipeline was important at this phase. Not the case. I literally like, as it was happening, I was like, guys, like, I am terrified by this six, it's not really churned, but by this like 60 day cancellation and contraction, this is in my opinion, our biggest problem. If we solve that, we don't have to add any, as much pipeline. And they're like, no pipeline, it's pipeline, pipeline.

00:40:18 Adam Robinson: So yeah, I also, one of my goals before I started this company was to have a four digit per month SaaS subscription price. Because I thought that if you were like one, two, three thousand per month or whatever on average, you could have incredible sales velocity. People would pay on their credit card. There's not this bullshit with, like collection, but you can still rack up some serious ARR. It's just so much easier than if you're selling something for $99.

00:40:52 Adam Robinson: Another aspiration for this next business is I want real net revenue expansion. Like, I don't know how to get it, but like, I want something where everyone is paying us 20% more next year than this year. Somehow it's tricky with this core product because it's based on people's traffic, you know, like kind of the amount of leads they're getting.

00:41:15 Andrew Michael: Yeah.

00:41:16 Adam Robinson: Maybe the answer for me is I just have to launch a new product every year. And that's how I get it. I don't know.

00:41:23 Andrew Michael: I don't think so. I think like, there's a natural evolution as these companies grow. They come to you, they purchase the product, they sell more leads. They spend that money into marketing. Their company grows. As their company grows, so does the revenue for you grow. I think there's like a natural monetization path there as well, in terms of the product.

00:41:40 Adam Robinson: Yeah. Maybe we'll get a little better, yeah. Maybe we'll get a little better with, like right now, I'm just trying to make it like penetration pricing, like 500 bucks is way too cheap, but I, the perfect scenario for me is if 5,000 people are on it paying way, way not enough money.

00:41:58 Andrew Michael: Yeah.

00:41:58 Adam Robinson: Cause then you start to hone in on well, who's the best for who would pay us 5,000. Right. Like surely some of these people would.

00:42:05 Andrew Michael: It's exactly the… similar to Hotjar. I think in the early days, like 89 price points. Yeah.

00:42:11 Adam Robinson: Yeah.

00:42:12 Andrew Michael: We had this $89 price points where we stuck for a long time. And then what ended up happening was like we had enormous businesses, just paying 89 per month. And we hadn't really figured out the monetization path, but then as soon as we did, there was like a huge step change for the business, like, 30% increase in ASP immediately and just started to like growing insanely fast.

00:42:34 Adam Robinson: What was it though? What was the, like you said, we figured it out. Like what did you figure out?

00:42:39 Andrew Michael: Yeah, we obviously, we did, like a lot of pricing and packaging research and tried to understand like, what is the value metric we should be charging on? Originally, we just had, like you said, like a single plan. 500 was, 89 was the price point at Hotjar. And no real, like differentiation in terms of, like how you could expand within your accounts. But then what we ended up finding from the research was that people were more willing to pay depending on the volume of traffic that they had, it was like, as simple as that at the end of the day. And then moving to a model where you could then based on the site's traffic, they would expand with you over time and grow with you from there. And obviously the original starting prices, well became a little higher.

00:43:17 Adam Robinson: Yep.

00:43:18 Andrew Michael: And yeah.

00:43:18 Adam Robinson: Cool, man.

00:43:19 Andrew Michael: Interesting times. Sounds like you've got something amazing in front of you. You've got a great team put together now on. I'm definitely excited to see this where this B2B product goes. So I love to keep up to speed. Definitely see you on LinkedIn for the listeners. Like everything we've chatted about today will be in the show notes. Before we wrap up Adam, is there any sort of final thoughts you want to leave them with?

00:43:39 Adam Robinson: I mean, if you're listening to this podcast, you're already concerned about the most important thing. Fix your churn. You know?

00:43:48 Andrew Michael: Nice. And if you've made it this far, thank you. We've retained you right till the end of the episode. And yeah, just shout out on LinkedIn if you hear this. Adam, it's been a pleasure hosting you today. I wish you best of luck going forward.

00:44:00 Adam Robinson: Thanks, Andrew. Thanks for having me on.

00:44:02 Andrew Michael: Cheers. And that's a wrap for the show today with me, Andrew Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business. To keep up to date with Churn.fm and be notified about new episodes, blog posts and more, subscribe to our mailing list by visiting Churn.fm. Also don't forget to subscribe to our show on iTunes, Google Play or wherever you listen to your podcasts. If you have any feedback, good or bad, I would love to hear from you and you can provide your blunt, direct feedback by sending it to Andrew@churn.fm. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review, as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.

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