Banzai: Pivoting from a Near Collapse to 8-Figure ARR SaaS
Joe Davy is the co-founder and CEO of Banzai, a SaaS company providing data-driven tools for businesses to run webinars and virtual events.
In 2013, Joe bootstrapped a small startup from his basement, determined to solve a problem that had irritated him for years.
In his past jobs, Joe often had a tough time getting the sales folks to help with one-off requests. Because things like following up with event leads didn't help salespeople hit their quotas.
Joe realized he wasn't alone. Lots of marketers also faced the same roadblocks.
So he and his co-founder built a barebones solution to help solve that problem. But, they still faced a key challenge: finding a specific use case for their solution. The early days were all about testing ideas and discovering what customers would actually pay for.
After tons of cold calls and emails, they found traction with a concept people seemed to care most about, i.e., getting more folks to show up at events. That's when Banzai came to life.
Over the next few years, they used outbound sales as the primary growth channel to hit seven figures in ARR and raise a Series A round. Things were looking good for the founders.
But a couple of months later, the pandemic struck. Just like that, over 90% of their business vanished. They had been all-in on field marketing, a segment that was hit hard and never fully recovered after the pandemic.
Faced with tough decisions and a murky future, Joe had to act fast. Were they going to wait it out, hoping the market would bounce back? Contemplate a major pivot, and to what exactly? Or, worst-case scenario, shut down the business?
Fast-forward to today and Banzai is an 8-figure SaaS company that's about to go public.
In this episode, you'll learn:
- How the founders pulled off a massive pivot that enabled them to transform a crisis into an opportunity after losing 90% of their business overnight.
- Why Joe counterintuitively focused initially on low-value customers instead of high-value ones, and why that turned out to be the right decision.
- The key metric Joe focused on every month that led to doubling their growth and new ways to acquire customers.
- How Joe leveraged overlooked partnerships to acquire customers more cost-effectively and tap into an underutilized growth channel.
- How the founders used the Jobs-to-Be-Done framework to deeply understand customer needs and drive product development.
I hope you enjoy it!
TranscriptClick to view transcript
This is a machine-generated transcript.[00:00:00] Omer: All right, Joe. Welcome to the show. Hey, thanks, Omer. Do you have a favorite quote, something that inspires or motivates you that you can share with us? [00:00:07] Joe: The one that's been motivating me lately is a quote from Warren Buffett. The chains of habit are too light to be felt until they're too heavy to be broken.
And this has been, that's been really important for me because I've been trying to build good habits over the last few months. I don't know about anybody else, but yeah, I've been working from home a lot lately. It's been a big change for me the last couple of years. And it's like easy to get lazy and it's easy to not go to the gym and it's easy to like eat bad food.
And so I, I've been using that to remind myself. To get up and go to the gym every day and, you know, go on a walk and, you know, even little stuff like you know, like spend 15 minutes talking to my wife every day, you know, like little habits can be, it'd be easy to ignore. So I like that one. Yeah.[00:00:51] Omer: Love it.
That's important. Okay. So tell us about Banzai. What does the, the business do? Who, who are you building these [00:01:00] products for and what are the main problems you're, you're trying to solve?[00:01:04] Joe: Sure. I mean, Banzai is a SaaS company. We marketing technology products for companies of all sizes, but for really any company that wants to grow faster.
And we have a range of products but the most popular product we have is called Demio. It's a webinar product, number one webinar product out there for. B2B marketing. We have probably, you know, about a million plus users per year on that product. So it's it's, it's been a fantastic product for us.
And basically our vision as a company, you know, right now we have customers that range in size all the way from small businesses to the Fortune 500 but our vision as a company is to basically add value to every. Customer interaction or customer relationship that a marketer has. And so we want to do that across three different themes that we're focused on engagement, targeting, and data and analytics.
So we're building and buying companies that are focused on those three themes and or products that are focused on those three themes. But all of which are basically designed and built for marketers who want to make their companies grow faster.[00:02:21] Omer: And then the vision for the product, is it to bring all of these acquisitions together into one integrated product or are you going to sell them as separate? [00:02:31] Joe: No, no, no, because, because I think that's like I think that's like I've seen so many companies make this mistake of trying to take two perfectly good products and mash them together into this Frankenstein thing and it never works, you know, it never works the way they think it's going to. Our, our view is.
You know, we want products that work really well on their own. We want to own the best product in every category that we have in our priority list. So across those three themes, there's a lot, you know, you can slice those, those themes, and you can even probably slice the slices. But within each of those, you know, we, within each of those slices, we want to have, you know, the number one product, either, you know, either what we think is.
The biggest, fastest growing product in that space, or we want to have what we think is. The highest-rated product in that space. Because we want to, you know, if we have the highest-rated product, at least we know that we can grow into the biggest over time. So that's the, that's the strategy.[00:03:30] Omer: Awesome.
And can you give us a sense of the size of the business? Where are you in terms of revenue, size of team, number of customers, any other data that you can[00:03:37] Joe: share? Yeah, sure. We just filed to go public. So, you know, I would direct any listeners to go look at our public filings, but we have about 3,500 customers.
We have people in 16 different time zones. We have customers in 54 different countries. So we are, you know and we're on a, you know, great kind of growth trajectory over the next, you know, few years. So I would say, you know there's a company that just went public this week, you know, Klaviyo which is really exciting there in our space.
They're not a competitor to ours, but they're another marketing technology company. So we're, we're not as big as them but we're, but you know, we're fast growing you know, fast-growing company in the space. And[00:04:19] Omer: then what's the plan? Like, are you going to be listed on NASDAQ? Yeah, [00:04:21] Joe: we'll be listed on the NASDAQ.
And really our, our plan is to just, you know, A, continue growing organically B, to make strategic acquisitions. And then, you know, C, to… Find new ways for those products that we bring into our into our fold to support our, our existing customer base. So that's really for us. The main focus is just what do our customers need?
What do they care about? What problems are they trying to solve? And how can we help them solve those additional kinds of tangential problems? So[00:04:54] Omer: I think it's interesting where you've got the businesses so far, and then I will definitely talk about what, you know, becoming a public company means and what the future and the opportunity.
Now, it looks like for maybe the next five or 10 years, but what I think is super interesting about your story is that this whole business started as a bootstrapped startup, not too far down the road from me here. And you bootstrapped the business for what, the first three or four years?[00:05:25] Joe: Yeah, we bootstrapped the business for the first four years, just about.
And that, yeah, this is, I mean, a really funny story, but, you know, before this before starting Banzai, I was a senior executive company called Avalara, which ultimately became one of the top 25 largest SaaS companies in the world. And last year it went public in 2018. Vista bought it for 9 billion last year.
So awesome business. But as part of building that business, we raised, you know, over 400 million in capital and in the private market. So we, you know, we raised and consumed a lot of capital to build that company. [00:06:00] And I think it gave me a real appreciation for how important the relationship is between, you know, the founder and the investors and like.
I've talked to a lot of founders who, who also see it this way, but like some founders don't see it this way. Some investors or some, some like lawyers, like we've had lawyers, our lawyers have said, Oh, you know, who cares? They're, they're, they're big boys, whatever. My view is that relationship is kind of like a sacred one that if you take somebody's money, you should really like work your ass off to get.
Them, their money back, like to protect that money. And because it's like trust to me. And I think reputation is the most important thing. And so, and I, I learned that lesson the hard way earlier in my career, you know? And and so for me, I, I think we always felt like before we raised any money from anybody else, we wanted to feel really confident in what we were doing.
That we had a good business that we had, you know, that we had product market fit. with a customer segment that we at [00:07:00] least felt confident that we could scale it up. And, you know, we never wanted to raise more money than we felt like we could pay people back if we had to sell the business. If that makes sense.[00:07:08] Omer: Yeah. Yeah. Totally. So what was the, what was the initial idea for the product and, and where did that [00:07:15] Joe: come from? Well, early on, we just had this struggle at Avalara where, you know, we were constantly trying to coordinate across teams. And one of the teams, you know, I ran several different businesses there, enterprise and our very small business segments for our, our document compliance documents business which at the time was called CertCapture.
And for our returns business, which at the time was called TrustFile. And so you basically, you know, trying to coordinate an organization like that, we just constantly running into challenges. Especially around how do we coordinate with our sales resources? You know, Hey, we need to get a bunch of people invited to this event.
Hey, we need to call down this lead list and, you know, see who will, you know, who, who wants to take this ebook or see who will take a meeting with us. Or, Hey, we're getting 50 inbound leads a day. We need somebody to call and follow up on them and, you know, make sure that they get a quote if they need it, you know, so simple stuff, like not a whole complicated enterprise sales process.
But like, how do I get this one simple job executed? And the problem in a big company is if you go to the sales team and you say, Hey, I, I, you know, I need you guys to go, you know, make these 5, 000 phone calls. They're going to say, okay, great. I'm happy to help, but what's in it for me? Like this doesn't give me quota relief.
I have my own job to do. And so maybe if you like twist their arm enough, they'll like do you a favor and do your one-off. But there is basically no dedicated pool of resources to do that in a company. And even like today, if you have an SDR team or something, you know, you would think, Oh, just go to the SDRs.
Well, they have their own job to do too, which is, you know, prospecting. And so, you know, nobody wants to take the time to do the thing that you need to get done. And so you have very limited, you know, options and not a lot of flexibility. And so what we thought was, Hey, these are like simple type jobs.
They're not jobs that need. A real depth of product knowledge or a real depth of company knowledge. Then they're repeatable type tasks. So if we can create a template. We can train people to do this. Maybe we can even use AI. Maybe we can even use automation. You know, maybe we can even, you know, eliminate the human entirely from the process.
Can we build like a mechanical Turk to do these simple types of sales activities? That was the early, early thesis. And we just knew how hard it was. And we knew how we pulled our hair out for years trying to make this work at Avalara. And we knew the company's willing to spend money on it. So I said, okay, let's try it.
I think within that world, again, like there's a lot of thin ways that you can slice that problem. So we didn't know exactly what people were going to buy. So the first few years or the, I should say like the first 12 months. We were just on the phone constantly with customers trying to see what problems they had that they were actually willing to spend money to solve.
So, okay, you're getting a bunch of inbound leads. How about you, you know, we set up an API, you funnel them to us. We'll call them, we'll qualify them. And we'll hand the hot ones over to you, you know, is that interesting or okay. You know, you need a bunch of people to come to your event. How about we call them and invite them to the event and get them to, you know, get them to RSVP.
So it was, it was those kinds of conversations. And I think where we initially, I think where we were really smart, there were some, there were plenty of areas where we were dumb about this, but the area that we were really smart was we just came into this with an open mind. And we said, like, we're gonna come up with five ideas.
And we're going to test them. Actually, the idea that worked wasn't even on our list. When we made that list, the initial list of ideas, the idea that worked was people that wanted to do events in field marketing. So, you know, I'm doing a roadshow. I'm going to 10 cities. I want to get VPs of IT to come to a, you know, come to an event.
Where they're going to like get a dinner, hear from a speaker from some big company that's going to talk about something interesting. They're going to get to do a round table conversation, or it's going to be a networking event, or it's going to be a product launch, or it's going to be some fun, you know, some fun activity or whatever.
There's tons of these types of things that were happening pre COVID and companies were investing a lot in this and because it worked really, really well. I mean, it had a super high ROI, but it was also really complex, created a lot of anxiety. For the founders or for the, the managers who were running these programs.
And so we knew that if we could relieve that anxiety that they had budgets, you know, they had money to spend. And so, you know, we validated this early on. Our first customer was a company called Bracket Computing, which is a little startup that was eventually acquired by VMware and what was amazing about that, like.
I think their first event, they wanted like 50 people there and we got like 80 people to register. So we were like, wow, you know, we are really good at this. So they called us up and they said, Hey, we got another one. Let's do this again. And it turned into the foundation of their marketing strategy. And ultimately, you know, ultimately they were they, they hosted an event.
Where, you know, this was a couple of years later when we had built this into a more sophisticated system. But, you know, somebody registered through our system from VMware to attend the event, came to their event, said, wow, this was a really interesting business, maybe VMware should buy this and came back and acquired the whole company.
And so, you know, we were really there with them from like the early days through Pivots, through. The company getting acquired. And I think that was like a fundamental part of their success.[00:12:40] Omer: So in the first 12 months, was the, was there like a core product that you were selling or was this more like a service and you were kind of building stuff on the fly as you were selling it?
I'm trying to understand what you were doing. We were[00:12:57] Joe: very much in the like rapid prototyping phase. So we were like, let's build it on spreadsheets first and then let's turn it into some code. And then let's turn it in more into code over time. So like my background, I'm a software engineer. All the founders have had experience with building software.
So, so we were, you know, we, we kind of took this approach of before we write any code, let's figure out what people will pay us for. And, and so that's what we did. And then we were like, okay, well, this is the thing that seems like we could probably scale. So let's build a little bit of code around this. Yeah, I, I built the, you know, first version of the product once we kind of knew the direction we were going.
I, I sat down, I hadn't, I, you know, I'd been working as a corporate executive for the last, you know, five years before that. So I hadn't been doing a lot of code writing, but I sat down learned to build Python web apps in Django. And we built the first version of the product in 30 days in Python Django.
And that became like the foundation of how we launched the company. And we really like launched formally in early 2017. Very[00:13:59] Omer: cool. I like Django, but I like Flask even more. I think [00:14:04] Joe: it's, well, now, now knowing about it, I would say, I think it depends on what you need to do. Yeah, yeah, [00:14:09] Omer: absolutely. Okay. So a bunch of rapid prototyping, talking to lots of customers, exploring different problems that they're having.
How long did it take to? Get those first 10 customers and how did you find[00:14:26] Joe: them? It took us about a year to get the first 10 customers. Mostly it was Just word of mouth kind of referral type of things, you know when you're small You don't have any money to spend kind of have to rely on that and it it snowballs slowly Because you got to prove value for the first customer before they'll tell their friends about you Once we went over bracket computing, you know, then they, then they told two or three friends about us and they told two or three friends we hired.
So it, it took us a while to sign the first 10 customers. Like, yeah, probably about probably took us a year. We, we signed the next hundred customers in the second year. So it grew really fast from there. Because then we had a formula, we knew what the sore tooth was. And basically, you know, we built, we built an outbound.
Engine, and we had a really specific customer profile and a really specific niche, and, you know, we just hammered that niche. I mean, if you were a field marketing manager in the United States in the year, you know, 2016 through 2020, you almost certainly got, you know, an email from us, you know, asking if you were worried about butts and seats at your next event.
And we can help you get those butts in seats. And when we just had this really clear messaging and, you know, what's so funny about this was this was a real lesson that came out of this. Eventually, as we got bigger, we started to hire more what I would call just like professional marketers or whatever, you know, it, it wasn't just us.
Amateurs trying to figure it out. And well, you know, we hired a VP of marketing and we hired a marketing manager, content person, whatever. And all these people that we hired, they were like, Oh, this is terrible. You can't say butts in seats. It doesn't sound professional. Enterprises will never buy from us.
If we say butts in seats we need to say something else. And they would write these emails and they'd write these, you know, emails with five bullet points about why this is the best product you've ever, you know, you've never heard of, and you should buy this and. And it got nowhere. I mean, they got nowhere.
The highest performing message we ever had for that product was, you know, do you need more butts in seats for your events? That was it. I mean, it was the simplest thing. And it was, yeah, we got a couple of people that emailed us and were like, that's crass. You can't say that. For every person that emailed us and was irritated that we, you know, put the word butt in an email, we got a hundred customers.
So it was absolutely worth it. And, you know, we had everything, every other thing that we ever tried, every other piece of messaging we ever tested, never performed as well as butts and seats. So I think the lesson was, you know, sometimes you just have to go with the simple stuff. Like, we didn't need a complicated idea and like…
We didn't need five bullet points to convince a customer why they should buy this product. We just needed one very strong, like, emotionally resonant thing that cut through the noise for them. And I think for our, for our customers, at least for marketers that are used to getting pitches all the time, I think they responded a lot better to our kind of no bullsh approach.
Just cutting through the noise and saying like, hey, if you have this problem, here's what we can do for you. Like, we could explain the whole business and the whole, the whole product in two sentences. Yeah, it was super simple.[00:17:47] Omer: Yeah. I think sometimes the best marketing email is the one that doesn't look like it was written by a marketer, right.
In terms of just make it[00:17:57] Joe: real. Totally. I mean, we, you know, we had this, we had this joke of like, if you find yourself putting bullet points in your cold email. Just stop what you're doing right there because you've already screwed up. You know, you need to rewind and, and you need to think about what are you really trying to communicate?
Cause people aren't going to read your bullet points. Now, earlier[00:18:17] Omer: we were talking about how some of the, the early customs you found were, you know, through your network, warm intros and things like that. And you said, the real test for us was to try and figure out if strangers would make time for us. So it sounds like when you got to that messaging with those emails, you clearly had identified a problem and were able to articulate it like super concisely and get people to respond.
But when you first started reaching out to strangers, What was that experience like? Did you, did you have that messaging figured out at the start? And, and were people paying attention or ignoring you? Well,[00:19:03] Joe: people were ignoring us. Yeah. I mean, it's, it's, it's easy. It's, you know, people have to do nothing, you know, just by just simply through inaction.
People can ignore you, right? So they have to take an action. And, and what's worse is with a cold email or cold call or something, they know. That by taking an action, they're probably committing themselves to further action, which means now I have to, yeah, if I pick up the phone and talk to you, well, now I'm going to have to actually take a meeting with you.
And then I might actually have to buy this thing, and then I might actually have to implement this thing. And that's going to be a huge, and then if I have to buy it, then I'm going to have to get approval from my boss, and I'm going to have to talk to finance about the budget, and, you know, this is going to be a huge, you know, I've got to talk to my procurement department, and have to, they're going to send me a form contract, and I have to deal with that.
It's like this huge cascade of s t that happens anytime you try to buy something in a, you know, in a mid sized plus company, right? And so… So it is very [00:20:00] hard to motivate somebody to the point that they think this, all of this stuff is worth it for me, let alone spending the money, just the effort and the time is worth it for me when I'm already busy, you know, there is nobody out there, at least nobody in the marketing world that I've met so far, who is not really, really busy all the time.
So if you don't have. A very clear value proposition. And you don't really understand their sore tooth, you know, the thing that's going to get them off the couch to go to the dentist, like nobody wants to go to the dentist for fun. So the only reason you're going to go to the dentist is, you know, if you have a pain that's worth it.
And so you got to think about your product strategy that way and your messaging strategy that way. That was the biggest lesson we learned in those early days was like, if you know, you might have the best product in the world, but if you don't understand. What the sore tooth is that you're, you know, fixing for your customers.
You're never going to motivate them. You know, customers are basically, you know, at least in the B2B world are basically, you know, and in, in, in the world in general, like people are only motivated to take action by either pain or pleasure. And in the B2B world, they're only motivated by pain, just period.
There is no such thing as pleasure when you're a B2B marketer. It is just pain and making the pain smaller. That's it. And so if you don't understand what that pain is you're gonna have a very hard time. And the other thing is, you have to really make your pain, you know, you have to articulate it in a way that's different.
Because… It's way too easy. And this is what happens when you get a bunch of like, this can happen. This is a risk. You know, this is like happens with IT security industry all the time. Not trying, not picking on them, but it's just, it's a common thing. Go look at an IT security company's website and what are they going to talk about?
They're going to talk about, Oh, your network is insecure. We're going to, we're going to make this more secure. We're going to prevent hackers from getting in. We're going to, you know, increase your, you know, you know, reduce your risk or whatever. It's like the exact same things. So that's a
CIO, I hear that pitch 50 times a day. Like, tell me what's unique and special and different about this that I should care about it, you know, and that needs to be a problem that really matters to them. So I think it's more of a universal lesson, but you can't, you just can't sound like everybody else. You have to find a way to make yourself stand out and it has to be in a way that resonates.[00:22:28] Omer: Yeah. Great. Great insight there. So we talked about the first 12 months. How long did it take you to hit the first million in ARR? [00:22:36] Joe: That's a great question. It wasn't in the first 12 months. I think it was. Probably very shortly into the next 12 months. So I think, you know, first, first year we did maybe 300, 000, something like that.
A little shy of 300, 000. Second year we did over, we did about a million. Third year we did a little over 2 million and, you know, fourth year, you know, we were on track to do probably five ish million and then of course COVID hit and that was, that was a big event for us. Yeah.[00:23:14] Omer: Yeah. So let's talk about that.
Just one quick question before we, go on to that. So getting to that first million, was that primarily just through outbound sending things like the butts on seats emails? Yes. That's cool.[00:23:31] Joe: The whole way up to that was all outbound. Yeah. Yeah, that was, that was the only strategy we ever ran for that [00:23:37] Omer: product.
Okay. So yeah, let's, let's go on to 2020, 2020. And so you've got to the point where you've been bootstrapping the business for about four years. You are looking to raise money. And we haven't experienced the start of COVID yet. So tell us what was going on[00:23:57] Joe: then. Yeah, well, we, we went out to raise a Series A, you know, we decided it's finally time.
We feel confident. And the business was growing fast enough that we felt like we wanted to be able to invest more in it. So, you know, we wanted to build out more of the product. There were other ideas that we had of how we could expand to offer our customers a little more value. And and you know, we, this outbound motion was working really well.
We wanted more money to put into that. So so yeah, in early, in early 2020, we raised a series A round. With DNX Ventures Vulcan, Alco, which is a local Seattle firm. Vulcan's another local Seattle firm. DNX, a Bay Area based firm. They're part of the Draper group. And so, yeah, we, and, and, and it was awesome.
Mitch Kitamura led the round. He was our, he's on our board and Mitch was like early investor, like first check into LiveRamp. Early investor in Fortinet, like super, super smart guys, like had multiple, you know, IPO success type companies. So, so it was awesome to be able to, to work with a guy like that.
And and they, they brought a lot to the table, but yeah, like in, in early 2020, we raised this round closed on it. And this is like, you know, one of the lessons in, and like, sometimes things are just luck and sometimes luck works for you. And sometimes it works against you. I mean, in this case, it really worked for us because if we'd waited two months to try to close that round, we never would have been successful because, you know, as soon as we closed the round, basically our very first board meeting.
I remember sitting down at the table with you know, the three or four other guys in the room and saying, Hey you know, we had two big customers that just announced they were going to cancel their events. You know, Facebook and Adobe said they're canceling events this week because of this virus that, you know, we're hearing about and it's probably not a big deal.
It's probably won't go anywhere, but we're just keeping an eye on it. And, you know, of course, like my board. I'll think that I'm very paranoid and like, Oh, don't worry about this. This isn't, this isn't going to be a thing. Like, don't waste your time thinking about this. But you know, within two weeks, you know, the whole country went into lockdown and that was like last week of February that that board meeting occurred.
I think March 16th, the whole state went into a lockdown. So it was, you know, obviously it was an existential kind of became very quickly became an existential kind of thing for our business.[00:26:22] Omer: So you're going after field marketing as a, as a, you know, as your, as your target market. And when we look at what happened with, with the pandemic, obviously there were a lot of.
Startups or SaaS companies that benefited a lot from the pandemic. You know, they don't necessarily want to talk about it that much. Some do, but yeah, there was a, it was a period of boom. It was good times, right? There were others that, that maybe saw a slump and then eventually things came back.
With you and the market that you were going after, not only did that hurt you in the short term. As you went on to tell me earlier, that market has never really come back[00:27:12] Joe: and recovered. That's really true. And it's, and it's, and it's one of the few markets. I mean, I think there were basically, I would, I would categorize like three types of things that happened in, in markets during COVID.
So there were companies that saw a temporary boost. They saw demand pull forward. So this, an example of this would be, you know, if you, if you sell toilet paper or baked beans. Or virtual you know, meeting software like Zoom, you know, you saw a lot of demand pull forward. And then after COVID ended, you probably saw some of that demand dissipate, right?
There were other companies that took, you know that didn't get crushed, but they took a slowdown. So this would be like airlines, you know, airlines continued operating but they didn't have the same. You know, or like restaurants, like restaurant industry, a lot of restaurants continued operating, but maybe they had to do takeout only, or maybe they had to do delivery only or something, you know?
So it, it messed up their business model, but it didn't, you know, kill them. Then there were businesses that just completely had to shut down. So this is like cruises conferences, and field marketing. So if you worked in the events industry, if you worked in like, if you had a catering business if you had like a videography business, You know, you were really, really in trouble during this time period because you had, you know, no cashflow coming in.
And for us, like we had contracted revenue, but we couldn't sell any new customers because, you know, every CMO in the world said like, we're not going to make any field marketing investments. Until we know what's going to happen. And so everybody said, okay, we're gonna take a 90-day pause. Like that was the thing that in March, 2020, everybody thought it was going to be like, this is going to be over in 90 days.
So, you know, we'll just wait it out. So a lot of them kept teams on for the first 90 days or even six months as the pandemic dragged on, the industry started to just dissipate. So the people that were, that had been in field marketing for 20 years, they got rehomed into other jobs. So they got moved into digital marketing or they got moved into other roles in the company.
And so now the, you know, the cruise lines still had their cruise ships out there. Like they were still going to do cruises after COVID, you know, the conference centers were still, you know, out there. They're still built. They were going to do conferences after COVID, but for field marketing, you know, a lot of the professionals that actually make this industry happen had to find other jobs, you know, they just couldn't wait around forever.
And so, because of the prolonged nature of the shutdowns that went on for. Years and years and, you know, and in many cases still like we have not returned to normal in office environments, you know, I think the, the field marketing industry is completely, it got completely taken apart and today we're seeing, you know, that industry is like maybe 10 percent of what it was in 2019.
So it's, it's completely different industry. And frankly, I think it's one of the big opportunities in marketing right now, because nobody's doing it. It worked, it worked really well in 2019 when everybody was trying to do it. The ROI was huge. That's why companies put so much money into it. So, you know, we continue to think that it's a great opportunity, but it's really hard for companies to operationalize it because it requires people and complexity that, you know, digital things like webinars just don't.
And by the way, we love webinars too. We think that's also a great strategy, but you know, they're, they're different levels of complexity. They're different levels of investment. And so, yeah, a lot of CMOs have not made a decision to bring that investment back. It's just got redlined out of the budget and, you know, rebuilding a whole strategy is really, really hard.
Especially when you're in a big company. When that momentum goes away, you know, it's tough to bring it back. So, so[00:30:51] Omer: you, you had been doing pretty well in terms of growth up to that point. You've raised money and then suddenly this hits you. Many companies were in that sort of that wait and see kind of, you know, phase where they were like, you know, hopefully this is going to come back, right?
Maybe next week, maybe the week after, maybe whatever. At what point did it hit you that this. wasn't coming back and that you needed to do something dramatically different to what you'd been planning to do with this money. Yeah,[00:31:28] Joe: our executive team started talking about it like almost immediately because I think for us, the position was a little bit different.
I got on a call with a bunch of CEOs like a week or two weeks into COVID and everybody was talking about what they were going to do. And half the room was like, we're going to lay off our people, or maybe we already have laid off people and we're going to go into hibernation mode and we're going to wait this thing out, we're going to see what happens and then we're not going to burn, you know, we're going to cut our burn to like nothing and, you know, hopefully we'll still be here.
When this ends, and then we'll come back and then we'll try to do what we want to do. And for us, it was really like an option of, we don't know whether this is going to come back or, you know, we, we kind of said like, we could make a bet that it does come back. And in that case, we would probably try to keep our organization together as much as possible.
But what happens if we're wrong? You know, if we're wrong, this is a bet the company type of decision. So, you know, we, we kind of said, we kind of have to do one of two things. We can either shut down the business and try to wait it out. Or we can keep the business running and pray that this is you know, this is over in 30 days.
And it was very hard to imagine at that time, cause we'd never been through anything like that in, in the history of the world, that there would be a global pandemic that would drag on for years. So everybody had this in their mind that it was like. You know, these lockdowns are only going to last a couple of weeks.
They're only going to last a month. They're only going to last 90 days. They're only going to let, yeah, but it'll be over by summer. Well, it'll be, it'll be over by fall. Well, it'll be over by Christmas. Well, it'll be over by next summer. Well, it'd be over by next Christmas. And you know, in, in reality, like we sat down and basically just said, what are we going to do here?
Are we going to shut the business down or are we going to pray? And we came up with the third idea, which was we can, we can pivot. And so we, we said, what, what would that look like? And so we knew customers were going to shift these, these activities to virtual, we went and talked to a lot of our customers and said, what are you going to do if you're not doing field marketing, what are you going to do?
And they said, well, we'll probably, you know, we'll, we're going to replace conferences with virtual events like Hoppin or whatever, and we're going to replace field marketing with webinars. And so we said, okay. So we went out and over the next year we bought a virtual event company and we bought a webinar company.
And those were phenomenal investments for us because ultimately they gave us a platform to pivot our business, to focus on, you know, the future and not, you know, and not getting hung up on this. And like in retrospect the way that it played out, if we had stuck around and committed to that, you know if we committed to either of those first two plans, we would have died because.
Even if we had gone into hibernation, the market never came back from it. The field marketing market never came back from it. So I, I think it was the luckiest thing we ever did was to decide to make that pivot and the way that we did it I think gave us a huge advantage over everybody else because there were a lot of companies that came into 25 or 50 million in venture capital.
And, you know, all of those companies now have either blown up, like you've seen recently with Hopin or Run the World, they're gone or they've pivoted to Webinar and now they're trying to compete with us. You know, we got lucky because we were able to find an amazing entrepreneur, David Abrams, who I know you've had on the show before.
And Wyatt, his co-founder, and we were able to work out a deal with them to buy their business, Demio, which was a phenomenal product. That we just thought was like, these guys had done an amazing job building it. It would take us years to replicate this. And we were able to buy it. And and that's where it was really handy to have some of that VC money that we had just raised.
You know, so that's why I talk about luck, but you know, it ended up, ended up being a great outcome because of, you know, largely because of those guys and their willingness to work with us and. I think it was good for everyone.[00:35:35] Omer: Yeah. I think, you know, I remember talking to David about Demio. I think they'd been in business for a few years back then.
And it was clear that they were really taking a fresh approach to a pretty industry that had been pretty stale for, for a while. And it's, it's it's always nice to see, you know, things come full circle that actually did work out and, you know, it became part of the Banzai.[00:36:04] Joe: I mean, what you have to keep in mind about that industry was ON24 got started, which is the, you know, the kind of incumbent, you know, big incumbent in the space, got started in 1998.
So it means that when they were first building that, Jeff Bezos was still like shipping books from his table. The world has changed a lot since then. Just the nature of the internet has changed a lot since then. People aren't using dial up anymore. They're doing, you know, they're. You know, wifi is, you know, everywhere.
Five G is everywhere. The technology's changed. Browsers have changed. Every single thing has changed. But a lot of people are still using these old stodgy experiences that they're getting from like Gottowebinar or on 24, and they're providing these 20 year old type customer experiences that aren't very engaging.
That, you know, aren't very interactive and, you know, basically people just don't like them very much, you know, as a result that, you know, they don't really maximize the business value you get out of them. So, you know, we've seen customers that move from GoToWebinar to Dimeo, and all of a sudden they're getting three times the number of leads out of every webinar that they do, because, you know, they're, they're just much more engaging, people are actually watching them.
We're actually clicking on them. People can raise their hand and say, yes, follow up with me. So we just have so much more in terms of interactivity and engagement that we can do that those other guys can't.[00:37:25] Omer: Let's talk a little bit about content marketing. I know that's another growth channel that's worked well for you in terms of customer acquisition, but also target using content marketing to target marketers who are probably already using dozens of tools and there's a long line of hundreds of other.
marketing tools out there that are trying to get their attention and probably nearly all of them are doing content marketing to something in some shape or form. What did you do? What approach did you take that helped you? get those people's attention? Like what was your butts-on-seat approach to content[00:38:09] Joe: marketing?
Well, first of all, like content marketing isn't a single thing. So it's not just SEO or whatever. The, the, the number one insight that I could give to anybody who's new and still figuring this out is your marketing strategy has to align to your ACV or your average value of a customer. And so if you're selling a product for 50, 000.
You can do all kinds of things, you know, for that customer to get their attention because, you know, it's worth it. I mean, you can put up a billboard right across the street from their office because it's worth it. When you sign them up, they'll pay, it'll pay for that. When you got a product like Demio, when we acquired it, I think the entry level price of the product was in the most popular package was like 49 bucks a month.
And so this isn't a really high ACV product, needs a lot of customers and needs to be done at scale. So something like Outbound just isn't going to work if, you know, to sign up a 49 a month customer. You can't do it cheaply enough, so you have to have a different approach. I think our, you know, realization here was same thing.
Like we have to get people's attention. You have to be different. Everybody is doing SEO. So if you go look for any established category, if you go Google it, you're going to find, you know, 10 different companies that show up on that list. The thing that we did that was really smart was we partnered with a lot of people.
That had existing blogs or audiences. And we said, and really, really, I mean, really, I give it so much credit to David and Wyatt for coming up with this idea, because I think they're the ones that really like pioneered it. But we went out and said, okay, you know, they're going to be people that are financially incented to get their stuff up to the top and to talk about this, people that are, you know, doing blogs, you know, blogging about marketing, people that are, you know, doing video content about marketing.
So let's go partner with those people. And those partnerships made a huge difference for us because now if you Google best webinar software, we come up number one on every list that's out there just about because we've got great relationships with all those folks. They use our tools, all of that. You know, we also went out, signed up.
We, we knew that the marketing automation tools were going to be kind of central. So a lot of the big marketing automation companies. That you might think of without saying any names, but the ones that you might think that you might know are also our customers. So they're using our tools. And so we were able to go out and give a lot of discounts to them to say, Hey, why don't you use our tool?
You can use it maybe a little bit cheaper. And now everybody who's coming through their webinars is getting, you know, a Demio experience. And then, you know, learns about Demeo that way. So there really was just like a total aspect of, you know making the, of, of leveraging those partnerships to get content in front of the right people in a really cost-effective way.
Because we just knew we couldn't afford, you know at, at Avalara, you know, we would ship an iPad to somebody that was preloaded with content. You know, if we tried to do that here, you know, it would take them 10 years to have a payback period. So, you know, we're like, we can't do that. So we have to, we have to change our approach.[00:41:23] Omer: So when you were partnering with these creators, were you, were you paying them or were you just giving them the software for free or a discounted rate? Like what, what, what were the [00:41:33] Joe: economics? Yeah, it totally depends. Like sometimes we would say, hey, you know, we'll, we'll, we'll give you a discount.
Sometimes we would just say, hey, they're already a fan of ours. They're already using us. Like, how can we, how can we partner with them more? Other times we would give them an affiliate type of deal. So the affiliate was big for us. But it was just consistently trying to drive people back to just consistently trying to drive people back to our content on our site.
That was the, that was the theme, right? And I think what we, what we learned over and over again is like, our customers are our best sales reps. It was kind of the same thing that we learned early on with our reach product, like just growing through word of mouth when, when customers have success with the product.
People are going to find out about it and they're going to be happy and you're going to grow that way. And those are the customers that are the easiest to sell, they're the customers that stick around the longest. So you know, so that was a big thing for us in our content was just creating and telling those customer stories.
Like, you know, this customer signed up, they saw a 15 percent increase in attendance on average. Wouldn't you like to have a 15 percent increase in attendance? Like we don't have to say it. Look at them. They're going to say it for us. So we let our customers, you know, we basically did like customer content, a lot of that case study type content.
And we distributed that with, you know, yeah, online. But also through webinars. Like we do tons of webinars with our customers where we bring them on and we let them talk about their experience using us and, you know, if you have customers that really love your product, they'll be willing to do that because.[00:43:00]
You know, they you know, because, because they want to help you out.[00:43:03] Omer: Yeah, I love that. Most, most SaaS companies, founders are always thinking about customer acquisition, new customers, you know, new channels, whatever. One of the other ways that you've been able to grow Banzai… was focusing more, a lot more on expansion and your existing customer base.
So, you know, when we talk about it, it seems like a pretty obvious thing to do, but, you know, maybe it's not top of the list when people are thinking about grow, grow, grow. Tell us a little bit about what you did there and why you, you would prioritize that as, as being, you know, an important part of an overall growth strategy.
I'm thinking about, you know, we're talking to like early-stage founders who probably aren't thinking about expansion right now. They just, you know, it's probably the, yeah, not, not the, the thing that they're really focused on. But is that something that happens is it's, you know, when you're at multiple seven-figure ARR type business, you start to be doing that or is that something that you, you did fairly early on?[00:44:12] Joe: Well, we did it very early on. I think companies should do it from day one. The reason for that is retention is the single most important thing in any business, just period. Right. And the reason for that is, you know, your retention defines how big you can get as a business. So if you take, you know, if you take basically.
Let's say you can retain 80 percent of your customers per year, right? Take the amount of revenue that you're bringing in, your new revenue, your bookings every year, divide it by one minus your, you know, 80%, you know, that's the largest your business will ever grow. That's like the cap. It'll, it'll be this glass ceiling.
And if you don't understand that principle as an entrepreneur. Then what will happen is your business will grow really, really fast in the first year or two, and then it will start to slow down, and then it will flatten out, and then you will be really, really frustrated and you'll, you, you won't be able to figure out why you can't grow past that.
So you'll try changing your marketing person. You'll fire your sales guy. You'll, you know, Trey, you'll do, you'll every six months you'll fire your whole team. You'll think these people are idiots. They're, they're not getting it done. They can't grow me to $6 million in revenue. Okay. Why not? Because you have a fundamental problem, right?
Which is you're not, you know, you're not growing your customer base. So a good business, the customer base has to grow every year. It just has to. And that's like, you know, as a, as a, cause you know, I'm, I'm a founder, obviously, but I'm also an investor and I, you know, in my role here now at Banzai, I mean, I'm a capital allocator.
I'm looking at companies to buy as well. And that's the number one thing that we look at because our belief is if a company has great retention, then there's almost always a great product behind that. So you can probably find a distribution channel that will work if you have great retention. But if your retention is screwed up, then you've got a product problem.
And it's just much harder to solve product problems than it is to solve distribution problems, you know? So yeah, our, our take has been like constantly investing. And if you look at the things that we build. Ship. Like we just shipped a new feature called Showcase, you know, about a month ago. If you look at the stuff that we ship, it is all focused on that.
It is like 100% focused on customer retention and expansion. 'cause we know that like we're gonna just, every month we're gonna sign up more customers on our own right. And so we wanna retain those customers longer. So we actually don't necessarily care so much. About like the bookings that we sell on day one, we care about the ACV, but we care about the lifetime value more.
And we will make trade-offs like our number one metric as a company is not our growth rate. Our number one metric as a company is our net retention rate. Because we know that if we keep the net retention rate high, that growth will just happen automatically. You know, if, if you can get your net retention up to 110%.
You're going to grow 10 percent every year, whether you sell anything or not, you know, whereas if your net retention is 80%, then, you know, you got to spend the first three months of your year, just. Just to stay flat and, and maybe more than that, you know. Yeah,[00:47:39] Omer: super, super important metric. And when you make that the number one metric that you, that you care the most about, I think it also changes the behavior of everyone in the organization as well, [00:47:52] Joe: right?
Absolutely. Yeah, it completely changes the incentives, right? Because like every organization I was at before, like, I would say like Avalara, also, we had this, the same culture, which was… Customer, you know, customer, customer, customer, customer Andrea Anderson ran our, our CAM group, their customer account management, customer marketing.
And I mean, she just hit, she just consistently hit the numbers. The woman that, that runs it for us, Rachel Stanley, I mean, she just consistently hits these numbers. That is the most important discipline you have to have as a company. If you can't set and consistently deliver on retention and expansion goals, like, you know, we, we, we have you know, a, a number that works out to essentially a net number in bookings.
And that translates into a percentage. But if you don't have discipline around hitting those numbers, I mean, you're, you can do all you want in sales. But you will always be paddling against the current. So, you know, it is just so much easier to, you know, I don't know if you've ever floated, I don't know if you ever floated a river, like, you know, you take a, take a keg of beer and you get in an inner tube and you just float down the river.[00:49:00] That is a lot more fun and a lot more relaxing than trying to get in a canoe and paddle upstream. You know, one of those is like a fun day out and the other is, you know, horrible, horrible exercise. And You know, I, I think I'm just a believer in making things simple and easy. Like if you solve that problem, the rest of your life gets a lot simpler. [00:49:20] Omer: We're going to have to wrap up in a minute. We're going to the lightning round. I think just before we do that, I have one more question. The, near the end of last year, you announced You were, the company was going public. You also announced that you were acquiring a company called Hi Ross and this was like valued at like a hundred, hundred million, 110 million dollar acquisition.
What happened there?[00:49:47] Joe: Well, I'll just say like without going into any of the, you know, details, you know, things that I, I, I can't talk about, but I'll, I'll just say, you know, going public is a very complicated process. If you ever have somebody that you really hate, encourage them to take a company public.
I think you know, the, the, the regulatory regime, the public accounting regime, all this stuff that has happened, you know, over the last 20 years in the U S. Has made it really hard and really unattractive for entrepreneurs to take companies public. And it's one of the biggest problems that we have in our capital markets in this country right now is this huge overcorrection that occurred in the wake of the dot com crash and, you know, investors survived the dot com crash just fine, like public investors.
They're okay. You know, they recovered. Yeah. Some companies didn't survive it. But the investors did just fine. But what didn't survive it was the public's ability to access and invest in companies that are still in a growth phase all of that value creation. You look at companies like Apple. Cisco, you know, all the, you know, Oracle, all these Microsoft, all these huge companies grew more after going public than they did before.
The majority of their value has been created in the public markets, you know, that's not happening today. There are, you know, a thousand plus, I think the last time I saw something like 1200 plus unicorn companies in the US today. So this means companies that are at a scale to be public companies.
But aren't going public and why aren't they going public? In some cases they're going public, but they're, they're not going public because they just can't do it. It's too hard. In some cases it's because it's so unattractive because of all these regulatory issues and the costs and compliance and, you know, and, and I think that the current environment is just not conducive to it.
And I guess the summary is with Hyros that, you know, along the way that just events transpired that. It meant that it was going to be impossible for Hyros to, you know, to be a public company at this time. And, you know, so, so ultimately we couldn't buy them for that reason. And so we ended up having to, we ended up having to walk away from that deal.
That was a tough, that was a tough deal to walk away from. Cause you know, we really, you know, we, you know, those guys, we, we, we, we like them as people. But, and obviously we really wanted the deal, you know, and we were willing to pay a lot of money for it, but. You know, there just wasn't going to be a way to get it done with the current kind of current kind of SEC requirements and public accounting requirements.[00:52:20] Omer: It's just a fascinating story with how you've built this business. And, you know, if we kind of go back, we're talking about going public, you know, walking away from these types of acquisitions and it all started not that long ago. with a bootstrapped, you know, a couple of guys trying to build some software, right?
So it's I'm guessing you never imagined that you'd be here or maybe you did.[00:52:48] Joe: Well, I certainly think we you know, I certainly think we aspired, aspired to it at some level, but one of the hardest things about building any company is imagining how great a business can become over time because things compound.
And compounding doesn't really make sense to the human brain, which is very linear. So it, it is hard to think about how much things can change in just a few years. I mean, three and a half years ago, we were sitting in a conference room talking about what to do, you know, because our business was on fire around us because of COVID.
You know, now we're obviously in a very different situation. So. Yeah, I think, I think it's I think, I think there's a, a big lesson in there somewhere for entrepreneurs, which is, you know, probably. Just the importance of resilience.[00:53:37] Omer: Totally. Yeah. All right, look, we should wrap up. So let's get into the lightning round.
I've got seven quickfire questions for you. Just try and answer them as quickly as you can. Hit me. All right. What's one of the best pieces of business advice you've received?[00:53:49] Joe: Let's see. Best piece of business advice I've received probably is, is Super Mario Mindset. Or I, you know, I call it sometimes the sore tooth mindset, but either what is the superpower or what is the pain that you solve for customers?
Get really clear about, you know, if you're Super Mario Brothers. You know, what is the mushroom that you sell that gives Mario the superpower to get big or shoot fireballs or whatever? What's your version of that? What are your customers what kind of fireballs do your customers get to shoot when they buy your product and what pain does that solve for them?[00:54:21] Omer: Love it. What book would you recommend to our audience and why? [00:54:24] Joe: Competing Against Luck by Clayton Christensen. It's about a framework called the Jobs to be Done Framework. I think that framework is the most clear way to collect your thoughts around the problems that you're solving for your customers.
It's, I think it's the best framework out there in terms of just the statistical success of the companies that have implemented it in their product development efforts are radically better than companies that don't implement this framework. So I think if you're a founder, this is one of the best things you can do for yourself is read this book, understand what jobs to be done is.
And understand, you know, how understand what jobs you're doing for your customers.[00:54:58] Omer: What's one attributable characteristic in your mind of a successful [00:55:01] Joe: founder? Resilience. If you don't stick in the game, you can't win. What's your [00:55:06] Omer: favorite personal productivity tool or habit? [00:55:09] Joe: These days it's chat GPT plus Zapier.
I've, I've wired up so many things that use. You know, in Zapier that use ChatGPT to automate boring stuff for me. I hate taking notes. So I wired up a a Slack bot using Zapier and ChatGPT that I can just tell it what I want it to do, and it'll go add something to Notion for me or, you know, write it down somewhere.
So that's, that's huge.[00:55:33] Omer: I love it. What's a new or crazy business idea you'd love to pursue if you had the time? [00:55:37] Joe: I think hydroponic farming is going to be a huge thing. I think, you know, we're facing a lot of different crises around. Water consumption around climate change around essentially urban food deserts.
And I think that there's going to be a shift in the next few years too. And there's some really interesting companies working in this space to urban farming. That that's, you know, low water that's highly controlled that's low pesticide and that's, you know, the yields are so much better.
So I, I think it's a, I think it's a big opportunity.[00:56:10] Omer: What's an interesting or fun fact about you that most people don't know? [00:56:13] Joe: I'm in the process of I, I love to learn languages. I always thought I was terrible at it, but I discovered a kind of series of books that have been really awesome. So I've been learning to speak a few different languages.
Right now I'm still, I'm learning German because one of my good friends who's our CTO here, And my wife and I love going over to visit Germany. We love, he lives around Heidelberg, which is an awesome city. So I've been practicing languages. I practice every day. It's a, it's a fun hobby.[00:56:46] Omer: And finally, what's one of your most important passions outside of your work? [00:56:49] Joe: My night job is working on Seattle Symphony. So I have I'm the vice chairman of the Seattle Symphony. I lead up a community engagement [00:57:00] committee, which we work with kids. We work with people in prisons. We work with you know, native peoples or underrepresented people to get them you know, to partner with them so they can experience classical music.
And so that we can, in some cases, take their musical traditions and bring them to our audience. So we operate right out of Ben Ur Ia Hall in downtown. Seattle, which is one of the most beautiful venues in the world. I think you have one of the best symphonies in the world. We were one of the only. Two symphonies in the world that kept performing during COVID, you know, performed regular regular scheduled during COVID.
And we, you know, last year we had over 4, 000 kids that we were able to bring into Benaroya Hall as part of our. community engagement program so they can have access to live classical music. I used to play violin. I got into it when I was a kid, so I just know the importance of music and you know, and how much it can change people's lives and impact people's lives.
And yeah, I love, I love being able to. Help kids and other people get access to that.[00:57:59] Omer: How do you find the time? Oh, I don't sleep. Yeah. All right, cool. So Joe, thank you so much for joining me. It's been, it's been an absolute pleasure talking with you and sharing the story of Banzai. If people want to.
Find out more about Banzai and Demio and all the other acquisitions that you've either done or will be doing. They can go to Banzai, that's B-A-N-Z-A-I[dot]I-O. And if folks want to get in touch with you, what's the best way for them to do[00:58:28] Joe: that? Follow me on Twitter @jpdavey, J-P-D-A-V-Y [00:58:31] Omer: Thank you so much. Wish you and the team the best of success. Cheers.
“Competing Against Luck: The Story of Innovation and Customer Choice” by Clayton M. Christensen