Omer (00:10.000)
Welcome to another episode of the SaaS Podcast.
I'm your host, Omer Khan and this is the show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business.
In this episode, I talk to Michael Cooney, the co founder of what Converts.
A product that lets you track phone calls, web forms and web chats back to specific marketing campaigns so you know exactly where your best leads are coming from.
When Michael was running a digital marketing agency, it was a real pain to track and report where leads were coming from.
He partnered with a former employee to launch a new startup with a simple idea to track any form on any website just by adding some tracking code.
He showed the product to some of his agency clients who loved it.
And it didn't take long to sign up their first five customers for about $30 a month.
For the next 18 months, the two co founders still had to work their day jobs and find time in the evenings and weekends for their new startup.
During that time, they were able to keep growing and finding new customers and it looked like they'd be able to work full time on their SaaS business soon.
But their honeymoon period ended abruptly when new well funded competitors entered the market and spent a ton of money on marketing.
Michael's bootstrap startup just couldn't compete with those companies.
They had to find another way to compete, differentiate and grow their business.
Today, what converts has about 1,000 customers and is doing over $2 million in annual recurring revenue.
The company is still bootstrapped and has grown 40% in the last two years.
In this interview, we talk about how they've built their SaaS business, how they're competing with companies that have raised tens of millions of dollars in funding, and why they believe they can bootstrap their way to $10 million a year.
So I hope you enjoy it.
Michael, welcome to the show.
Guest (02:13.500)
Thank you, Omara.
Nice to be here.
Thank you for having me.
Omer (02:16.300)
My pleasure.
So do you have a favorite quote?
Something that inspires or motivates you or just gets you out of bed every day?
Guest (02:22.140)
Yeah.
There was a book I read early on in my Entrepreneurial Journey by James Dyson, the guy that created the Dyson vacuum cleaner.
And he made a statement in there, says, it only took me 12 years to become an overnight success.
And that's resonated many times in my journey being a business owner.
Omer (02:41.400)
Yeah, and we're going to talk about that and it'll become very clear to everybody why that quote is important for You.
Let's start by talking about what Converts.
What does the product do, who is it for, and what's the main problem you're helping to solve?
Guest (02:57.480)
So what?
Converts was born out of a digital marketing agency.
And the main problem to solving is, when I was working as an agency, we'd run a campaign.
We generate leads for the customer, and we'd go into the meeting with the customer and say, hey, this new campaign generated 60 leads.
Isn't that great?
And they would say, well, I don't know.
And we'd be like, okay, so, yeah, I know there were phone calls because we were tracking calls, and I know there were forms, but that went into the customer CRM and I can't see.
So I'd be left stuck like, well, okay, let me dig into it and get back to you.
So that was a problem that came up time and time again.
So what Converts tracks all your leads for you, stores all your leads in one place, allows you to see them, manage them, and qualify them, and then easily report them.
So when you go to a meeting now and you say to your customer, hey, this campaign generated 60 leads.
And they say, were any of them any good?
You have multiple ways you can actually go look at the leads, or you can just look at the report where they were qualified.
It just makes it so easy.
Two seconds, and your customer's got the answer.
Omer (04:04.790)
Great.
And can you give us a sense of the size of the business?
Where are you in terms of number of customers, revenue?
Guest (04:12.230)
So we actually service or our software is used on close to 20,000 websites, but we have a little over a thousand direct customers.
So what happens there is we'll have a digital marketing agency use us, and one agency might have 500 customers and another agency might have 10.
So we have over 1,000 direct customers, but we service close to 20,000 websites.
And revenue, we're at 2.2 million ARR@ the moment.
Omer (04:44.980)
And the business is bootstrapped, correct?
Guest (04:48.900)
Yeah.
Omer (04:49.940)
Love it.
All right, so let's start by talking about where did the idea for what Converts come from?
Guest (04:57.940)
So my career actually started with me being an electrical engineer in South Africa building gold mines.
So nothing to do with marketing, but as an engineer, I needed to source suppliers all the time.
And when the Internet first became available, I thought, this is incredible.
It's going to make my job easier to source suppliers.
But then the suppliers weren't there yet.
So that's how I got into digital marketing and I jumped all in.
And from there, I created a directory to make it easier for Engineers to find these suppliers, and then those suppliers would pay me to be on the directory.
So to justify the expenditure, we had to, you know, show them leads.
And tracking leads was always a problem.
Whether it was forms, whether they clicked to a website, whether they made a phone call, it was a problem.
We then evolved into a digital marketing agency and the problem continued.
Tracking leads from a website, who handled the phone call, etcetera, to ultimately, which I mentioned earlier, you know, finally, I've had so many meetings where we do these campaigns and we can't show our value in terms of what we've done done.
So that's what led to the journey of creating what converts.
Omer (06:07.600)
Awesome.
So you had been running a digital marketing agency for a while, and at what point did you and your co founder Jeremy decide we need to, number one, we need a product like this, and secondly, we're going to effectively kill our agency business and transition over to a product business.
Guest (06:39.010)
So that's really interesting because when you're running a business, what happens is you see so many opportunities as you run a business and you quickly learn that if you chase every opportunity, you get nowhere.
So you have to focus.
And I was really focused on the agency and prior, probably about four or five years before we created what converts, we realized, you know, that we need this call checking, problem solved.
And this was before it was commonplace.
But at that time I was folks on the agency and it was like, you know what?
Yeah, I'm not, I don't want to get into it, you know, let's not do it.
But what actually happened is Jeremy was actually working for the digital marketing agency, and he'd been working with us for seven years somewhere around there.
And he left for a nice big corporate job.
And when he left, I said to him, hey, I've come from the corporate world, back from my engineering days.
And I said I didn't like it.
So I said, if you go, then you find you don't like it, come talk to me.
But I said, you know what they're offering you.
And you know, there was a big package that I couldn't match.
I said, you got to go, but stay in touch.
So about eight months later, he came back to me and he said, yeah, Michael, this corporate stuff isn't working out for me.
I'm not enjoying it.
And he came up with some ideas, which was effectively to produce a WIX competitor because he was a developer.
And I looked at it and I was like, gee, there's so many big competitors in the space already and there's also WordPress and all that.
And I'm like, yes, that's not something I'd get behind.
So he went away and he came back two months later and he says, okay, do you have any ideas?
Because I don't want to come work for you, but I want to work with you.
And that's when I had an idea for a product catalog.
Because we were having a lot of success with building product catalogs.
And we looked at that and what we found is that it had such a long sales cycle.
If we needed to build a product catalog for a company, they had to get all their product data, so we had to wait for them.
And there was just so many hurdles to making that work.
So it would have been a great business.
But the sales cycle, we didn't want it.
And then we're starting to call tracking.
And I was still having a problem.
So I said to Jeremy, I said, hey, if you can figure out how to track any form on any website just by adding a tracking code to a website, I think we've got a business.
He went away and he came back the next week and he says, I've got it working.
It wasn't actually call checking that got us started.
It was the form checking component, which a lot of people are surprised about.
Then I thought we would just integrate with existing call tracking providers, but Jeremy says, no, I looked into how this is done and we can do both.
So I was like, awesome.
And I'm so thankful he did that because call tracking is a huge part of why we successful today.
So that's how it came about with Jeremy, the whole thing.
He says, I don't want to work for you, I want to work with you.
And that's how it started.
Omer (09:34.940)
And how much time did you guys spend building that first version of the product?
Guest (09:40.400)
So it was probably in August of 2014 that he.
We had that meeting.
And then once he got it working, we met in a golf course in September and we spoke about it and we says, how, how do we want to do this?
And he says, look, I don't want to do sales and marketing stuff, so if you do that, I'll do all the development.
And I said, cool.
And then we said, should we just go 50 50?
And he says, yeah, let's do 50 50.
And he says, I. I'll continue doing contract work to support me while we build this.
I'll continue with my agency.
So yeah, that's.
We decided on the golf course.
We went ahead with this.
So that was September 2014.
By March 2015, we launched commercially, officially.
Omer (10:23.230)
What did you do to validate the idea?
I mean, I know this was a pain for you running the agency, so in many ways you were scratching your own itch.
But how did you figure out if other companies or customers would be interested in this and whether they'd be willing to pay?
Guest (10:47.330)
So our first customers were one of my clients from back in the day.
And we put a few clients on there and we got it working.
And I just looked at it from the point of view.
I put my agency hat on.
I'm now in agency mode using the what converts product.
And it was really valuable.
That was just like, hey, I go to this meeting, I show these guys, and they were like, okay, that's incredible.
And it was a bit rougher in those days, but still, then that was really valuable.
And then from there we're just like, okay, let's put it on more of my clients.
So the probably the first five were my clients.
And then from there we said, okay, let's get on the Google Analytics directory.
We did try a landing page, which I mentioned about prove the business value of your marketing, and that flopped.
It was just too big a concept to communicate quickly.
But when we saw the call tracking, we then went and added on the Google Analytics directory.
It's a Google Analytics partners page.
So we partnered with Google Analytics to send phone calls into Google Analytics and we started getting ratings on there.
And from there we started getting some customers.
So that was the first trickle.
And then we also put in a very small amount on Google Ads in the early days.
Omer (12:04.770)
One of the interesting things about what converts and you going out to validate this idea is that from your experience, what your potential customers wanted and what they needed were two different things.
Most of them were telling you that they wanted call tracking, but you had different ideas.
Guest (12:33.100)
Well, what happens is, and what you'll find is when you build a SaaS company, everyone will tell you, you got to talk to your customers, which is true.
You got to talk to your customers and you got to find out what they want.
But so product positioning is really difficult.
I found it very challenging because what our product is and what we want to do and the full value offering that we offer, it's not easy to position in terms of what people want.
So we go and talk to people, what do you want?
And every person we've interviewed and asked, what do you want?
They tell us call tracking.
But I know from my experience that they don't want call tracking.
It's like saying, I'm Going to the hardware to buy a hole.
Now you go into the hardware, you get a drill and the drill will give you a hole.
But that's a bad analogy.
But so we get the idea.
Yeah.
So what happens is when you talk to your customers, they tell you on call tracking.
So then if you do going based on that, all you do is create a better call checking product.
But I know from my agency days what you actually want is you want to prove the value of your marketing.
You want to track the leads properly, you want to report them better, you want to get more insights into your marketing to improve your marketing campaigns.
And call tracking is just a very small part of that.
The only reason call tracking is what they're looking for is it's the one thing where you need a third party software to track it.
So you could essentially track your forms through Google Analytics.
But the problem with that is those are blind conversions where with what converts we got the full marketing data.
You know who the person is, you know what they wanted and you got everything tied together.
Whereas so people aren't really looking for form tracking because they, they think they've got enough through Google Analytics.
So getting back to it, I've been saying with positioning, like if I ask my customers what they want, they'd want a foster horse, you know, going back to Henry Ford days.
But just knowing running the agency, knowing the full scope of what you really want, knowing what clients want, I know that they want more than call tracking, but they're not searching that.
And when I speak to a lot of people and we show them our product, they say, wow, I didn't know you could do that.
So they don't even know to search for that in the first place.
And that's a big problem we have.
We sort of have to come alongside people that are currently doing something the one way and say you're doing it this way.
How about do this way?
Like you're currently using Google Analytics for your reporting.
What about doing it this way?
Yeah, positioning is difficult.
Omer (15:04.640)
Yeah, I agree.
We could do a whole topic on that.
Guest (15:07.400)
Right.
Omer (15:09.280)
You mentioned earlier about, you know, being able to track leads through forms, through web forms.
And I think initially even when I was was researching and I think people might who are listening to this might be thinking, well yeah, you can do that with Google Analytics or any type of analytics software.
Can you just explain how what converts is different?
What else are you doing on top of the tracking a form that makes it a much more of a valuable tool for somebody versus using Google Analytics alone?
Guest (15:48.490)
Okay, so the key differentiator here is identifying what is a lead and what is their conversion action.
So a conversion action is saying somebody came to your website and they filled in a form.
That's a conversion action.
So what you know, in general, you know that 30 people perform that conversion action.
And those people may have come from Google Ads.
So that's good data to have.
You can even get down to keyword level, like for call tracking.
30 people search for call tracking and then convert it into a form signup.
That's a conversion action.
But when you look at that conversion action, you're looking at those 30 conversions and you say to yourself, well, were they good?
Were they bad?
Were they ugly?
You don't know.
Analytics can't tell you that.
It's just a number.
So if you go to the what convert side, we track leads.
So a lead is, who is the person on an individual basis, what did they want specifically for that request, and where did they come from?
All their marketing data.
So you know, the who, the what, and the where they came from.
So with our reporting, if you're looking at it, at it, and you'll see Google Ads delivered, you know, 30 leads, and then you ask a question, well, I wonder if they're any good.
You just one click, and we will show you each individual lead that came, you know, from the Google Ads campaign.
And then you can filter it whichever way.
You can listen to call recordings, you can see the transcription.
There's a whole lot you can do.
So you can.
You can qualify the lead, you can add a quote value, you can sum up the value, and you can see the value of that marketing channel very easily.
Omer (17:28.630)
Got it.
Great.
Well, thanks for that.
I think that that's helpful to make that distinction.
And tell me a little bit about how does that all work?
Like, what data sources are you kind of hooking up to be able to get all that information together in kind of one place?
Guest (17:45.270)
Yeah.
So what converts?
We have a tracking code.
So if you install Google Analytics, they give you a tracking code or a tracking script that you put on every page of your website.
It's the exact same process.
But the tracking script is something we've developed.
And what it does is when a user comes to your website, it tracks where that user came from.
So if they came from Google Ads, that information is passed into a cookie into our script, and that's stored as marketing data.
It also tracks where they came from.
And then we use that same script to automatically swap out telephone numbers so that we will show a Unique telephone number for the time that that user's on there.
So we can tie that telephone number to the marketing data.
So when somebody makes a phone call, we tie the two together.
For form tracking, you have to identify the forms you want to track with us, but it's basically giving us the form ID or the form name.
It's done very easily.
But basically, again, with our tracking script, we capture the marketing data stored in the cookie and then we.
When a form is submitted, we get the contents of that whole form.
We combine that with our marketing data, and we store it as a lead in our platform.
Omer (18:55.290)
Got it?
Okay.
So you've got this idea that you and Jeremy have come up with.
You've built out your first version of the product.
You've realized that there's an opportunity beyond just call tracking and that this product can do more.
But it wasn't a straight transition to a product business.
It took a couple of years for you to move from the agency into a SaaS product business.
What.
What was sort of going on there and how did you guys.
What was your game plan in terms of this is what we're going to do and how we're going to sort of go full time into this?
Guest (19:39.060)
Yeah, that's the.
I think that's the side that most people don't get to see about running a SaaS company that's successful is that it takes a lot of time.
There's a lot of doubt.
There's.
When you're starting out, you've got a thousand questions that you don't know the answer to.
And there's a lot of people online, whether it's Twitter or YouTube, telling you how to do things.
And then later you find out that, yeah, what they told us wasn't really true.
But at the end of the day, you got to find the product.
You got to believe that it's producing value.
You got to understand the value of the product.
And one of the questions that helped me frame it in my decision making is, I think it was Mark Cuban that said it.
He says, you got to look at your product and see what was true 100 years ago and what will be true 100 years from now.
And that framework helped me make decisions.
Like, when you look at call tracking, we're not hitching ourselves to call tracking because we just think in 100 years, call tracking is just going to be part of a platform.
It's not going to be the thing it is now.
But when you look at leads, 100 years ago, people were advertising to generate leads.
Or opportunities to make sales.
And in a hundred years from now, people are still going to be advertising and generating opportunities to make sales.
So that sort of framework helps us make those decisions.
So in that, that framework helped me know what product we building and where we're going.
Because you can go in so many directions and your customers are telling you you need this.
And the amount of customers that have told us like dude, if you implement this, your company's going to explode.
It's just going to grow like crazy.
That's not true.
So you got to, and you get those requests all the time.
So you got to have a framework to decide, okay, what do you develop, what direction do you go to.
The other thing that was a challenge, we bootstrapped.
So it's a slow burn.
It's the gentle grind to increase the revenue.
So early on what Jeremy and I did, we mapped out revenue steps.
So at certain revenues, when would we start paying ourselves?
So for the first 12 months we paid ourselves nothing.
So Jeremy contracted you know like web development contract work and developed what converts.
He is working two jobs.
I was running the agency and then doing my what convert stuff at night or during the day.
So we, we were both effectively working long hours and it was for a good 18 months before Jeremy went full time into what converts.
And we love it now when you know, we talk to people and they said wow, you're so lucky.
And we like eh, you didn't see all the early days.
Omer (22:23.640)
Yeah, I mean it can be scary.
You've got a services business, it's generating revenue and you're basically saying, well I'm going to go and do something else and I'm going to put it, putting in less energy into this business.
I'm going to be attracting fewer customers and kind of I'm making the bet that this new thing is going to be even better than what I'm doing right now.
And for you, and we talked about this earlier, you know, you had kids going to college so you know, great time to, you know, jump in and do something like this.
Guest (23:00.930)
Yeah, I mean I remember I was like, okay, I've got to pay $30,000 a year for my kids college starting a business.
So I've got to keep the agency going.
But it's, you know, you don't want to reduce the service because to me the enjoyment I get or the, the reward, it's very rewarding to me.
When you run a campaign and you have success, to me I just love that reward.
It really motivates me.
So when you're running an agency and things start going on the decline.
It's not a great feeling because you're turning people away or you not as involved.
But I got it to a stage where I had a small core team because the team also reduced as well.
So it's not a great feeling when something you've spent so many years building is now reducing and it's by design, but it's still, it still doesn't feel good.
And then at the same time knowing you've got to keep going with it at a certain level while starting something new that's consuming all your time and is a lot more exciting.
So, yeah, I personally struggled with that quite a bit.
Yeah.
And always have.
But I think it was great that I was.
And that's what I say to people.
I have people that I know that like to do everything themselves and their whole business is them and that's great.
But I just think starting a team is also one of the hardest things to do.
Getting a team going and sometimes when you employ somebody, it doesn't work out.
And our early support people, it was only our third support person before it stuck.
The previous two didn't work out.
And it's such a time suck and you just feel that you could do it quicker, easier, but the benefit at the end of it, once you get through that, having a team is just such a blessing.
That's amazing.
Omer (24:49.800)
Yeah.
Yeah.
It's not an easy thing to do.
So you finally made the transition into the product business.
The Google Partner directory was the first way beyond your existing clients from the agency that you were able to find customers from.
You also had some success with PPC and Google Ads, at least for a while.
Guest (25:20.360)
Yeah.
So 2016 and 2017, it was still earlier days.
And our competitors, most of them were bootstrapped at that stage.
And I remember looking at our Google Ads, there were 11 competitors and we were getting some good leads, we're getting great conversions and some of those people are still with us today from those campaigns.
But then as more funding came in, as our competitors got bigger and they had a five year head start on us as well, they just jacked up the cost per click to the stage where they were bidding $100 per click on the keyword term for call tracking.
And we were like, how do you compete with that?
Our plans are $30 a month.
How do I pay a hundred dollars a click?
And just, you know, they got funding, they wanted market share, they just, you know, they wanted to squeeze people out.
So we realized we needed to go find a. Yeah.
Omer (26:16.060)
If they were paying $100 a click, what, what do you think?
Like just ballpark what, what was their customer acquisition cost?
Guest (26:22.020)
At that, I think demand wasn't all there, so I'm probably thinking 20 to 30,000.
In those days was their monthly budget.
Omer (26:31.260)
No, I mean in terms of like how much were they paying to acquire one customer?
Guest (26:35.210)
Probably like 600 to $1,000.
Omer (26:39.370)
And price point wise, their products were similar.
Guest (26:43.210)
The lowest thing was $30.
So the secret to call tracking is if you get a big customer that uses a lot and they use a lot of phone calls and numbers, you can have customers that are spending 10 grand a month, but you don't know that upfront.
So what happens is, and that's one of the big lessons I've learned in.
I could go into a whole story, but recurring revenue is one of the superpowers of SaaS.
It just allows you to just continue to build on your success.
So even though they're paying $600 per customer, some of those are going to turn into big customers.
But the ones that come, they just accumulate.
So you're just building, you continue stacking up on top of previous customers that you've acquired.
So it does make sense, you know, in the long run.
Omer (27:33.970)
How long did Google Ads work for you before the world dried up?
Guest (27:39.730)
Probably a good year.
Omer (27:41.170)
About a year.
Guest (27:42.210)
Yeah, it worked.
Yeah, for a year.
And we still use them today.
They still bring us a decent amount of leads, but it's not as good as those early days.
Omer (27:52.290)
So when that started to happen and you can see the leads declining, you can see the cost per click going up and this becoming a much harder channel to acquire customers, at least at a reasonable acquisition cost.
What did you guys do?
Did you have other channels that were working?
How much of an issue was this for you?
Guest (28:15.750)
It was an issue, but we had really good word of mouth that sent us really high value customers.
So we'd work with one marketing agency and they made that one.
They had 500 customers, you know, under their plan with us and then they would spread the word to other agencies.
So those agencies would come to us, they would say, look, we were with a competitor.
We moved to what converts and it's been great.
We recommend what converts, so we got a lot of those.
So that's really been great.
Google Organic because you know, as we'd been around a year, two years, three years, you know, we got more people coming in for from Google Organic as well.
We also the review websites.
Now I've got a Love hate relationship with review websites because when you start with them, you know, I remember Capterra, we were the 1 and 2, so our competitor and us were the first ones in there.
We started paying, it was a dollar a click and we're in second position, but now I think we're paying $6 a click and we're in ninth position.
So what happens with those sites is you're funding them to compete with you and then as they become successful, your results get diluted and basically a lot of their traffic comes from Google Organic or Google ppc.
So they become direct competitors to you.
So yeah, that's my love hate with them is the they ultimately end up competing with you.
Yeah.
Omer (29:45.830)
And you as a marketer know that this kind of happens with most, nearly all marketing channels.
Right.
That if you can get in early enough, that's where a lot of the opportunities are.
Acquisition cost is low.
You know, kind of like what AdWords was like 10 years ago or Facebook was like four or five years ago.
And then as more and more people come in, start figuring out how to use that channel, it kind of becomes less and less interesting.
And then it's about figuring out, okay, what's, what's the next thing, or just figuring out, okay, if I'm going to stick around, what, what are some more creative ways that I can make the acquisition cost, you know, work for, for my business so I can acquire customers in some sort of profitable way.
Guest (30:27.550)
Exactly, yeah.
And I will say, looking back at it, the growth rate has continually increased.
As you get more customers, more get added.
So it's not.
So as you earn more, you can put more to like Google Ads or to other channels.
So it's just a steady, consistent growth.
So you spend more, you get more.
So now we're getting more customers per month now than we were a year ago, than the year before that.
So.
But it's, it's.
We haven't hit the, the hockey stick growth that some people hit.
We've just been this gradual, you know, the last two years we've grown at 40%.
And now we're at a stage now where we expanding our team, we want to hit a target of 10 million in three years.
So we're putting in infrastructure and adding team members to ramp that up.
Omer (31:14.180)
Yeah.
You told me earlier that when you guys were starting out, you and Jeremy were like, hey, if we can hit 2 million, ARR, we're going to be all set.
Life's going to be good.
We won't have to worry about anything.
And now I think you're realizing that this is just like the first chapter in the story.
Guest (31:33.010)
In many ways, it's been amazing because, yeah, when Jeremy and I started, we're not one of these people that just want the biggest bank account out there.
Jeremy, he's a workhorse.
He loves working and doing his work.
He gets rewarded at that.
But he also likes playing golf.
So it's like, we'd work hard, we'd play hard, but how hard is golf?
No, golf is hard.
But we thought to get to 2 million getting that kind of revenue, we're living a great life and we are, but we had too many.
And we, like, you know what, we're only just starting.
And then if we look at our competitors, like we've got competitors who are doing 60 million a year, some are doing 40 million, so the market's there.
And then you look at someone like HubSpot that's doing a billion a year, you know, in the marketing automation space.
So we're looking now and we're seeing 10 million in three years is doable.
And then I just feel that when we get to 10 minutes, it's going to be like, there's no reason to stop.
We just think that the product that we're building, we haven't even tapped into the full potential yet.
And it's funny how your perspective changes over time.
It's fascinating.
Omer (32:41.140)
We talked about the business being bootstrapped and you from the start didn't want to raise money and bring on investors.
And I want to kind of figure out, like, what was your thinking there?
A lot of founders sort of assume, hey, if we want to be a company, we have to raise money.
It's just something that you have to sort of check off and be able to do.
And recently in a couple of interviews ago, I spoke to a founder who the company is doing over 50 million ARR now.
He gave away about 25% of the company in the early days for about 5 million.
Didn't really need the money, but sort of felt like he had to be doing that.
Now he regrets it because big chunk of the company has gone.
So tell me a little bit about your thinking there, why you didn't want to go down that road.
And I think this is helpful for a lot of people who maybe just be thinking, yeah, I need to do that.
But do they really.
Is it.
Is it really the right decision for them and their business and where they want to get to?
You know, how did you guys think about this?
Guest (34:02.990)
Yeah, I think to me, I've Always followed, you know, the entrepreneurial people and path.
And I love stories like SaaS, founders and people that build things.
I paid a lot of attention to things.
But there's a company, moz.com, you've probably heard of them.
You know, SEOmoz and Rand Fishkin wrote a book, Lost and Founder.
And I'm not saying it's the best business book out there, but it's what makes it so valuable is how transparent Rand Fishkin is about his journey and what he built and how he built it and basically took it.
In a nutshell, he built this awesome business that's doing really well, but he's been kicked out as a CEO.
He's got shares that are locked up.
You know, essentially I know how you value the company now, but he's got shares that are worth close to 100 million that he can't touch because growth rate stopped growing at a certain rate because competitors came in.
And I also think if you take investment, you increase your risk, you know, exponentially.
So when you take investment, you either got to be so sure you're going to hit a growth rate because that investment is based on growth rate you're going to hit.
So if you have any hiccup, you can lose your company very quickly.
If you get the money and you burn through it because you have to make it work.
You may have just been a year or two early because sometimes, you know, we, we start down a path and because we're very careful with the money we're spending, we don't have the money to make these big mistakes that you can't recover from.
So that's why I like the organic thing.
The other thing for me is we really like a product.
We like control of our products.
You know, they're having the autonomy of building something you want.
And we just see where our competitors who have got funding now all of a sudden, they have to impose these big pricing increases.
They have to impose additional things that aren't beneficial to their customers, but they have to do to hit growth rates for the investors.
So it's just a whole lot of risk is added on.
So if you don't have to do it, I just think you can be autonomous.
You can do what you want to do, build what you think is genuinely going to help your users, instead of building something that's going to hit this growth rate that's going to allow you to keep your company in a sense.
And I know that's a very dramatic way, but that lost and founder book, there's a key example of what happens when you get funding.
And the crazy thing is he had an opportunity to sell moz.com to HubSpot at one point and he would have maybe taken it.
But the investors were like, no, we want a bigger multiple.
We don't want to sell because they were currently on a good growth rate.
But then Semrush came in, HRI refs came in, which are competitors and their growth rates, instead of doing this, just sort of plateaued.
And because they plateaued, they couldn't get any more funding because the valuation decreased.
So anyway, long answer, but it's just, I think you've got to be so sure it's going to be work.
And I think if I did have to take investment, I would have to have proven that if I apply money to this strategy that I'm going to get solid growth.
If I can't prove that, then it's, it's too risky for me.
Omer (37:26.860)
Yeah, that's, that's very, very useful perspective on that.
And I'd encourage everyone who's kind of in the early stage thinking about, you know, they, they must have funding to maybe take another look at that and think through whether that's still going to be the right decision in five or 10 years time when they're further down with the business.
You talked earlier about positioning and the challenges of that and the importance of getting it right.
And you've obviously been doing a good job with the product where you're getting more word of mouth referrals coming through, but you're now in a place where you've got competitors that are heavily funded.
I think some of the numbers that you shared with me earlier were like between, they've raised between 30 million to over 100 million.
How do you compete in a market like that with these heavily funded competitors?
How do you differentiate yourself and stand out?
Guest (38:30.500)
I think first off, you have to have a really good product.
So funding can do two things.
They can put funding into development and just create a better product quicker than you can, or they can put funding into sales and marketing, which gets a lot of growth.
A lot of the funded companies, we find they put a lot of effort into the sales and marketing.
The product development is okay.
So here's okay.
So this is how we're able to compete.
I suppose our product is better and I can, and I know I'm biased, but of course it's, it genuinely is better if you're a marketer wanting to track all your leads and report on them.
Our product from the Bottom up from the foundation has been built to achieve that function.
Our competitors are more direct competitors in the call tracking space.
And then they try to bolt on form tracking, which has its problems.
And they so far down the line they've got so many customers before them, they've got some technical debt.
So there's a lot of funded companies where we get into their product because we have somebody coming over from them and they say, please log in and help us figure this out.
And to me it's almost unusable.
And These guys have $100 million to create this product.
So we've just got a really good product.
And I think it's because we care, we know the problem we want to solve, we very clear in who this is for and how we're building it.
And I think some of those companies, what happens is they build a big team.
And what we found as well is if you've got one person doing a great job and you think, let's add a second one, you'll get double the throughput.
That's not the case.
And I remember in the early days of Apple something that absolutely floored me.
It's one of the lessons I learned early on when Apple, I think it was Apple II came out.
They had a very small team that built Apple II and they sold a million of those Apple ii.
Then when Apple III came about, their team went from, I think it was a core team of under 10 or 20 to 4,000 employees and they couldn't deliver Apple 3.
Apple II continued outselling Apple 3.
And how is that?
And it comes down to, as you add team members, unless you have communication and unless everyone is flying in the same direction, it can actually create more confusion, less clarity and your product is not as good.
So with what converts, I mean, I am in my head and what we communicate and our viewpoint is so crystal clear.
And even with team members, I find that I have to always bring them in line because it's like herding cats sometimes.
And we've got a small team.
Can you imagine having a team 10 times its size and trying to keep them flying in the same direction?
So with Jeremy just being an awesome developer and our viewpoint being very aligned and we've never veered from that and we've built it from the ground up and that focus hasn't changed.
Um, it's just allowed us to provide a product that's so much better than the competitors, even though they have so many, so much more resources.
Omer (41:44.630)
You know, I think a lot of people can look at your Your story and say, you know, you had a services business, and a lot of people who run a services business that I talk to want to get into a product business.
Right?
That's.
That's the.
That's the path they want to take.
And really figuring out how to do that is a huge challenge for many people.
You were able to make that transition, and over the last six years, you've bootstrapped a business.
You're doing over 2 million.
ARR.
You've now set your sights on 10 million in the next few years.
And I know you mentioned that people say, oh, you're really lucky.
You kind of got this all figured out.
But earlier you told me it's been a continuous struggle and always sort of doubting yourself and not knowing whether you're doing the right thing.
Can you talk a little bit about that and maybe give an example?
Because I think it's something that so many people struggle with, but we don't always talk about.
And it's easy to talk about it when you're trying to find your first customer, but with the perspective of hindsight in terms of where you are, what have you learned from that?
Guest (42:58.800)
That's a big question.
That's a big one.
And it's real.
Because when you're starting, you listen to these podcasts and the story usually goes, yeah, we bootstrap.
We went like that.
Yeah, now we're doing 10 million.
And it was awesome.
What marketing did you.
We did a bit of Google Ads.
It was good.
And they didn't tell you, you know, the doubts of the early days.
And, you know, I remember running the agency.
So before the agency, I had a directory for engineering companies to connect buyers and suppliers, and it worked very well.
And it actually started in South Africa.
But Google came around where everybody was just, go, Google it.
You know, so the directory business started to suffer, and from there, we had to re.
What do they call it?
We had to pivot, you know, so it was a pivot to a digital marketing agency.
And then with a digital marketing agency, it's.
There's so many digital marketing agencies, you know, so you're always trying to, you know, find the way or the best way to do it.
And there's all these questions and doubts you have.
And then you listen to these podcasts and these successful people, like, I suppose I'm coming on saying, hey, man, we did this and we got 2 million now.
But I used to listen to those and think, okay, I'm going to try that.
And I'd listen to the interviews And I try new things and it wouldn't work.
And even with what converts, like they'll say, you know what, your pricing strategy, this is a big one.
Pricing strategy.
You just need to try a pricing strategy, then go away and then come back and try it again.
Or you got to do AB testing and they tell you, I changed my blue button to a green button and I had a 30% conversion.
It turns out it's complete BS.
Okay, when you're doing a B testing, unless you can get a thousand visitors as a sample, you know in a short amount of time, you're wasting your time pretty much.
And no color of button is going to change your conversion rate.
But people tell you that all the time and it's like you got to filter out the crap.
Pricing as well.
They said, okay, well what we did is we were like charging $25 a month and we put our pricing up to $50 and we found we had an increase of 30%.
Yeah, no, unless you converting a thousand customers a month doing those quick little pricing changes, it doesn't work like that.
You know, it takes time.
So many times like we'd run a new campaign like, hey, we got a new messaging, we want to a B test it.
And it's like, okay, we gotta wait for a thousand conversions, that's gonna take months.
And so it doesn't just work like that.
And you, you find out there's a lot of pseudo experts out there.
And so it's just, I think just knowing in yourself, like if you're a user what you would like.
I mean, for instance, one thing that's always a question is should we do cold emailing, like bulk emailing?
And Jeremy and I, we hate receiving cold emails.
So we've never run a cold email campaign.
Still to this day, we've never done it.
But it is a strategy that people say work.
And I look at it and even though we know it works for some people, we just can't get behind it.
But reaching out to very targeted people, we think there might be room for that.
You know, like, hey, if we can reach to people and offer some value, we may do something like that.
So it's even decisions like that, like, okay, we want to get to 10 million, how do we do that?
We can't use Google Ads, Google Organic, we're dealing with these well funded competitors to do that.
So how do you make that work?
So there's a number of strategies that I don't want to reveal to our competitors, but we have to try.
But it's very much just, you know, think it through, don't go by what people are saying on social media.
Just, you know, try and verify what people are saying and try and understand it in context.
If somebody's getting a million page views a month, it's very different from your website that may be getting a thousand page views a month.
You can't apply the same logic.
Omer (47:04.180)
I think that there's always this tendency to look at somebody's story and what they've done.
Number one, I think you're absolutely right.
You need to take that with a pinch of salt.
And that's one of the things that I try to do here, is to get below the surface and try to find out what really went on, what worked, what didn't, what was the struggle.
Because one, that's how we really learn and secondly, that's what makes an interesting story.
But beyond that, I think even if people looked at everything you've done, they can't replicate that.
I mean, there's no point in going to the Google Partner directory now and then trying to run Google AdWords and then going down that path.
It's more about what are the principles?
What were some of the different approaches that you took?
What are those things that we can extract out?
And you sort of mentioned this earlier in terms of like timeless, you know, that even in 100 years time people are going to be generating leads and so on.
And I think it's the same here is what are some of those principles and ideas that you can figure out how to apply to your own situation, your own product, your own market?
And it's not about, you know, coloring in by the numbers, but about understanding.
If I've got this toolkit of different things that I can try and different approaches I can take, then at least I'm armed with some useful stuff that I can go and figure out if I can make it work in my market.
And you know, and don't waste a lot of time trying to change the blue button to a red button and all that stuff.
Guest (48:34.850)
Oh yeah, and, and that's.
That specific challenge is real.
I mean, I've, that's something I've dealt with and, and to tell you, so I'm sitting now 2 million and we've set the goal for, you know, 10 million over the next few years.
So you, you look up and you try and figure out how am I going to get there?
And a lot of people, you'll see that there is advice is saying what got you to 2 million won't take you to 10 million.
And I've always been this entrepreneurial, scrappy, survivor mentality.
So a few months back I had to like, say, okay, I have to adapt.
I gotta change my mindset before where it's like, man, I'm an engineer.
Engineers love problem solving.
So it's like, okay, we're not getting up in the Google organic results for something, let's learn about it and do it ourselves.
Now my approach is we've got revenue, we got income.
Let me go and find the best out there and employ them to do the job that they focus on and do best.
Because I realize that ideas are plentiful.
And, you know, ideas are like, everyone has one and they usually stink.
So an idea is valuable, but unless you can execute it, it's not worth it.
And what I've found with myself is I might get 10 ideas in a day, but if I follow those ideas, I'll get nothing done.
So now it's like, I've got this idea like video.
Doing video ads or doing more video work is a great idea.
Doing more webinars is great.
So now there's a framework that is a good idea.
Let me put it out there.
Once I've achieved this, then I can do that.
Or video ads, that's a great idea.
Who can I find who will do it?
So it's advanced change from, it's no longer me doing it, it's now I'm creating the team that can do it.
And it's a huge mental shift.
And it's now going from, well, yeah, I can get a blog post done for $300 to while I'm employing an agency now that's going to cost five figures a month kind of thing.
That's a hard pill to swallow.
But if you don't adapt, you know, the worse than I'd rather, I'd rather try things and fail.
And you're going to fail at a lot of things, but fail quickly.
You know, with the new sales team we're adding on, we've never had a sales team.
We're adding that on.
So I went and got a sales consultant who's already worked at this level and he's, you know, helped coach me to those to get that going.
So it's those kind of things.
And.
But that mental change has.
It's been pretty hard for me.
And from always being a doer to now saying you can't do it all, you have to build a team.
And teams are, you know, teams have their challenges, but teams have awesome rewards as well.
Omer (51:26.170)
Yeah, I Agree.
All right, it's time to wrap up.
Let's get on to the lightning round.
I've got seven quickfire questions for you.
All right.
What's the best piece of business advice you've ever received?
Guest (51:38.380)
I think it's one where look back 100 years and then look forward 100 years.
I think that really helps.
That's one of the best pieces of advice.
Omer (51:48.300)
What book would you recommend to our audience and why?
Guest (51:50.940)
Feels like I've already said these, but the Lost and founder I loved.
Good to great.
That's good as well.
But I just think the Lostin founder for the transparency and just seeing the real journey with full transparency is invaluable.
Omer (52:05.400)
What's one attribute or characteristic in your mind of a successful founder?
Guest (52:09.880)
Just grit, persistence, taking the long view.
Nothing too sexy.
Omer (52:17.000)
What's your favorite personal productivity tool or habit?
Guest (52:20.280)
Oh, man.
This one is loom video doing screen share videos quickly.
It saved me so many hours in meetings.
I can't tell you.
I love that product.
Omer (52:33.100)
What's a new or crazy business idea you'd love to pursue if you had the extra time?
Guest (52:37.420)
I don't.
I don't have a good one because I'm just focused on doing what I'm doing and I'm loving it.
But if it was one of my hobbies, maybe doing something there, but then it's like not a hobby, so I don't really have a good answer there.
Omer (52:49.580)
What's an interesting or fun fact about you that most people don't know?
Guest (52:52.700)
People usually know everything about me.
I just tell everybody everything.
Yeah.
Other than, you know, when people meet me, I don't drive a fancy car.
I don't wear fancy clothes.
I'm pretty.
I think if you meet me, I'll come across pretty humble.
So people are surprised when they see that I've owned several companies in three different continents and doing what they're doing with what converts.
So maybe that's surprising to some people.
I don't know.
Omer (53:20.750)
And finally, what's one of your most important passions outside of your work?
Guest (53:25.320)
At the moment, my passion is running marathons.
I've done the New York.
I've done Boston.
No, I haven't done Boston.
I've done Chicago.
I've done Berlin.
So I'm getting Boston and London done next.
Nice.
Omer (53:38.160)
Well, good luck with that.
Guest (53:40.520)
Thank you.
Omer (53:41.320)
All right, great.
Well, thank you, Michael, for joining me.
And thank you for being so open and transparent about your journey and the lessons that you've learned along the way.
And like we said, don't just, you know, try to copy what, what you've done here, but, but figure out what are the principles or the patterns that, that, you know, we can learn from what you've done and some of the mistakes that, that people can avoid that maybe you made.
If people want to find out more about what converts they can go to whatconverts.com and if people want to get in touch with you, what's the best way for them to do that?
Guest (54:17.180)
Probably my email just.
Michaelhatconverts.com awesome.
Omer (54:23.130)
Thanks again.
And I wish you and the team all the best of success.
Guest (54:27.210)
Oh, thank you.
And thank you for having me on.
I've enjoyed talking about this.
Omer (54:31.050)
My pleasure.
Cheers.
Guest (54:32.410)
Cheers, then.
Bye.
