The SaaS Podcast
Lessons on Marketing a SaaS App with Zero Marketing Budget – with Erik Christiansen 
Lessons on Marketing a SaaS App with Zero Marketing Budget
Erik Christiansen is the co-founder and CEO of Justuno, a SaaS conversion optimization platform which helps businesses to build their email list, drive more sales and reduce shopping cart abandonment.
The company was founded in 2010, has been self-funded since launch and is profitable. Justuno is based in San Francisco and Austin, Texas.
Prior to launching Justuno, Erik worked at SierraSnowboard.com where he managed the growth of sales from $0 at launch to $24 million.
In 2010, Erik and his co-founder Travis built a widget to make it easier for e-commerce businesses to use coupons on their sites. It was a simple widget that took less than a month to build. And they were able to get some e-commerce sites to be early adopters.
But it wasn't all smooth sailing from there. The co-founders were actually working on 3 companies at the same time. They didn't know which business idea would work, so they were trying to hedge their bets.
We'll talk about how Erik and Travis had their aha' moment, which led to them finally going all in' with Justuno. And you'll learn how they've built a profitable SaaS business doing over 2 million dollars a year. And you'll learn how they went about marketing a SaaS app with a zero marketing budget.
[00:00] What is that?
[00:05] It's the stairs?
[00:10] OK, no, nobody walks on the stairs during this interview.
[00:17] Oh man, no.
[00:28] 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 story, strategies and insights to help you build, launch, and grow your sas business. On this episode, I talk with Erik Christiansen, the Co-founder and CEO of Justuno. Justuno is a SaaS conversion optimization platform which helps businesses to build their email list, drive more sales, and reduce shopping cart abandonment. The company was founded in 2010, has been self-funded and is profitable just to know is based in San Francisco and Austin, Texas. Prior to launching, Justuno, Erik worked at SierraSnowboard.com where he managed the growth of sales from zero at launch to over $24,000,000 in 2010. Erik and his co-founder, Travis, built a widget to make it easier for e-commerce businesses to use coupons on their site.
01:30 It was a simple widget that took less than a month to build and they were able to get some ecommerce sites to be early adapters, but it wasn't all smooth sailing from there. The co-founders were actually working on three companies at the same time. They didn't know which business would work, so they were trying to hedge their bets, will talk about how Erik and Travis where they had their Aha moment, which lead them to finally going all in with Justuno and you'll learn how they've built a profitable saas business doing over $2,000,000 a year with a zero marketing budget. Before we get started, I want to tell you about a free resource that you can download. It's called the SaaS Tool Kit, and it will teach you about the 21 essential tools that every business needs. If you'd like to get a copy head over to thesaaspodcast.com. Also, if you need help building, launching and growing your saas business, then you should check out SaaS Club Plus it's our premium membership and community designed to help you get the insights and motivation and support you need to succeed. You can head over to SaaSclub.co to learn more and join the wait list if you're interested. OK, let's go with the interview. Erik, welcome to the show.
[02:46] Oh, great. Thanks for having me.
[02:47] Let's start with a tough question. What gets you out of bed to work on your business every day? Do you have a favorite quote that inspires or motivates you?
[02:56] When I saw that question, I thought back to the one. I actually put them on my highschool yearbook and I don't know if it's fully politically correct these days. It's the an old saying one which is “There are no great men only great challenges ordinary men must face” and it's kinda like, you know, anyone can achieve whatever they set their minds to. It's just you just gotta work towards it. Do you know who that quote is from now? I don't. Should I? No. No, I don't think it matters. I say back '55 explorer ship and uh, in high school.
[03:35] All right, so let's start by talking a little bit more about, Justuno I gave the audience a little bit of an overview, but in your own words, tell us what does the product do and what problem are you trying to solve for who?
[03:49] In simple terms, what we do is we allow online retailers, publishers, B to B businesses, really invest in their onsite visitors to maximize the opportunity for conversions. Traditionally in marketing and sales are so much focus is actually percentage has been thrown out that for every $92 spent to drive traffic, $1 spent to convert that traffic. With that said, there's been this disconnect of the funnel. And finally, you know, after five years we're really seeing the market come around to understand the importance of focusing on the, on-site visitor and the, the missed opportunity. And once we understand the importance of capturing an email address, the importance of reinforcing your offsite marketing message on-site and the conversion funnel all the way through or card management, etcetera. Um, that's really where we're focusing and um, once you do focus in a, you see the instant ROI and people, we see that their eyes open.
[04:51] OK. I want to talk about how you got started and where the idea for Justuno came from. But before that, I want to go back to when you had graduated from college. Now on your LinkedIn profile, I read you were a traveler for four years and then you've got a list of like, I don't know, like 50 countries. So what were you doing in this four years man?
[05:23] I was during my twenties as everyone? So I encourage everyone like man, when you're twenties just go. Before the mortgage for your kids go, go experience life because it's really where you learn the most. Well, I was really fortunate in a college. I had the opportunity to study abroad with a program called Semester at Sea, which really was my first influence with travel. Anyone, anyone who was in college and young. I did two internships and my study abroad is where I really did my learning and uh, that inspired me to continue through post-college too to keep traveling. And I was really fortunate, I also, my first trip on semester at sea, I applied for student aid but I didn't receive it and so I didn't think I could go, so I had to devise the plan. I had figured out how much money I needed to make and I ended up starting to do web design as in '98 to pay for the trip and then I was coming up short and I got close and I set up a website that would allow the students to upload photos to a website and I'd have to upload them from each country.
[06:28] This is like before Facebook, MySpace, Friendster is probably around, I don't know. And turns out that semester at sea wasn't happy as using [email protected] So long story short is I. After I did the first trip, I was so impressed and loved the program. I donated the domain to them with the understanding that I would receive a, a job on the ship whenever I wanted to go again. So 2003 I was in Denver and I miss the ocean. So I called them up and hopped on the ship a few months later, sail around the world, came back and then a painted houses for a while, lived in Tahoe, Hawaii. I was doing some freelance work. And then, uh, I uh, my brother for a year, which was really important to actually sold yellow page ads because I was sick of technology and want to learn sales. And my brother called me who live in Hawaii and landed on a Thursday, said, hey, I'm going to a wedding in Costa Rica, let's drive one of my work the next day because we just finished the whole book campaign and asked for a month off.
[07:32] They're like, no, but go ahead. And um, we hopped in the car Friday and drove all the way down to Panama. I was just kinda the modus through the 20s. So he's started doing Sierra snowboard in kind of mid-twenties. A lot happened in my early twenties, which I encourage everyone to do.
[07:32] We're you a founder at Sierra Snowboard.
[07:32] Not In the traditional sense.
[07:53] You joined when it was like right at the start, right?
[07:56] Yeah, actually when it was on my road trip down in Costa Rica, I got an email from a friend that said have a warehouse, 20,000 extra square feet of warehouse and set up the retail store front and he said, I need a website. So went up there the first year and we were using counterpoint software and did a million in sales with myself skating around the store in the warehouse, picking up the inventory and govern people here and there.
[08:23] After that first year. Then we, when we did like 3,000,000 and then we did, you know, we just kept doubling, tripling, and kept growing the team. And by the end we're in like 100,000 square-foot facility. Travis, my co-founder just, you know, was building all the backend stuff, is all our own proprietary software. In the end we did, we did our first million dollar sale and then ship 3,500 packages in the same day.
[08:51] And then that business grew to $24,000,000 plus in sales in revenue. And uh, and then I think it was sold in 2010?
[09:04] 2010 was a crazy year. That business sold and same time it was incredible business, so fun, learn so much and the online experience actually offsite and do snowboard, meet ups, take 100, 200 people and meet up at mountains and snowboard and that's when I didn't really talk to you about this during that time when that finished, had a pretty bad snowboard accident, the terrain park and ended up breaking my neck and back in 2010.
[09:32] I kind of had to start all over in a sense of both business and personal and in that time that's when on Travis I founded Justuno.
[09:44] How did you come up with the idea for Justuno.
[09:48] Five, 10, 15 years ago? Maybe we'll just say 2010. You could not mention the word coupon to an online retailer and an online retailer. Maybe like someone's on my website. Why would I give them a coupon? Why would I do anything to help them check out there on my website? They're going to check out. What we recognized, because we were really dynamic and focused, is that people were searching for coupon codes. We did it and that's about the time RetailMeNot was, was able to grow very big and what we recognize is people that left Sierra snowboard and Googled Sierra Snowboard coupon codes. When they came back, they had a sales conversion rate of between eight and 11 percent, meaning they had purchase intent.
[10:30] So what we did is we ranked up for those terms. OK, so you've got that insight and so how did you decide that that was a business opportunity?
[10:42] How we decide that there's a business. We first we saw that, we saw that it worked, like there was a need, so we started doing it on our own site. We saw the increase in conversions as a whole at the time we were looking around and I'm always looking to see what the market's doing. Always studying every different type of website industry and it was a big photo printing site, Shutterfly. They were the only ones that I found that we're actually presenting codes on their site. They have this beautiful design site. Orange was their color visual and up in the upper right hand corner they had this red, 12 point font, used code, whatever. It was a total afterthought.
[11:21] It made no sense. You tell a developer got in there and put it in. So kind of back to the question is like, is there an opportunity? I saw people were doing it, we were doing it ourself, but it was really cumbersome because in order to one as a digital marketer, we would be changing or coupons daily. In order to change it. We'd have to go through development and then they'd have to do it, they'd have to Q&A it and then they didn't have to push it live. So the process to go through a development slowed us down as well. And most websites in any digital marketer can speak to the CTO that has their website on lockdown and holds them back from being successful. CTOs generally, you know, they, you know the technical team, they want to make sure that whatever's on the site isn't going to slow the site down.
[12:13] Is it going to harm conversions and everything, but they're not marketers, they're not. They're not looking at conversions traditionally, so without going too far off on the answer to the question when we were doing at Sierra is we're a discounter straight out and people knew we had the best prices, which helps us with our marketing because Google base at the time, I think that's what they called it. We'd send up our product feeds manually mind you, and then what we recognize is that since people were leaving to search for coupon codes, we want to be there at the first point of contact. So the first thing we did is we in our community forums and we were big into SEO. We had a post that was always updated with our current coupon codes and that post we ranked up in the search engines above RetailMeNot so anytime anyone Googled here snowboard, they would then find our forum posts, which would then go to a forum post and we update it, telling them what the current hundred percent active coupon codes were.
[13:11] Which is another problem because on all the coupon sites there's no guarantee those coupons are going to work. So we knew that was working, so then the next step was going to have David put the banners on our site with the act of codes, but that would be an act of Congress to do it took forever. But we knew that it worked because back then Google would allow you to track the exact keywords. So we knew, and I can send you the graphic, I took a screenshot of it, we knew that, you know, our average conversion rate I think was 1.28 across site-wide. And when we saw that these users have the coupon code at the eight to 11 percent conversion rate, that was the Aha moment. We knew it worked. We had the process but we needed to make it easier.
[13:52] So we spent several months brainstorming building and that's when I was in bed recovering. And when I was finally able to walk and be out and about, I went to visit my brother and Maui and spent some time finalizing the whole concept and came back and we built it and launched it on November of 2010, December 2010. And when we launched it, it was a pure freemium model. It's always fun to use archive.org to go back and look at our first sites. But back then when we launched it, we're a little tab on the side and it was simply here's our current coupons and that's it. Simple product.
[14:39] So it was just a website which gave you a list to coupons?
[14:42] No, it was, it was, uh, a widget. It was a pop up. It allowed the user to enter in what their current coupons were. It was a platform that allowed a digital marketer to log in, create a little button on the side of the website that says coupon. And when someone just like you have live chat or whatever, when someone would click it, it would show the whatever copy the digital marketer input into, into the popup.
[15:14] Travis just built it.
[15:17] We used ADVS to call to reference it and it was all homebrew. Hundred percent built. Like Travis started busting it out. I couldn't believe it. It's like, you'd have to get the embed code. This is 2010, so you know, giving it was only seven years ago, whatever it still was new technology and I like the fact that you could just put it in bed coding to site and it would then read into this dashboard rebuilt in real time because I blew, blew my mind when I'm like, this is insane. But when we started to talk to people, they're like, why would I give people coupons? No Way. It needs something more out of this. So that we got into the game. That's when we realized OK, and social was really big at the time. So then we built it in that you'd have to Facebook like, or tweet in order to get the coupon or capturing email address.
[16:06] OK. So how long did it take Travis to build that? Cause it sounds like a pretty simple tool.
[16:15] Travis is kind of a madman so he goes three times quicker than your average bear. But you know, I'd like to say maybe a month before we really had something we could look at. Can keep in mind when we're building three other two other companies at the same time too.
[16:32] Yeah, of course. As you do. Right. And so what did you do to get the word out about this or you? Just. Because I guess it was freemium. So it wasn't really.
[16:42] Definitely the first thing we reached out to any contacts we had in the retail business and I think we've got a couple of people on board from that. Then the second thing, I can't remember exact details, but I can tell you what was our first big win in our first big win was when big commerce added us to their app store. BigCommerce is a ecommerce platform. They were early into the, into the game, um, there's still one of the leading e-commerce problems out there. They were experimenting, but with a, an app store, meaning their retailers could go to their app store and look for tools that would help them be successful. And I was working, working with them and it was, it's to this day, it's the fastest app store we've ever gotten into. It was literally within the same day of building the relationship with them. We went live almost and instantly we got like 10 signups in one day and Travis like, Oh my God, we got 10 signups and that was our Aha moment and the second Aha moment that was when in after like two years we're running different companies and trying to hedge our bets. Which one would take us to the promised land. We took just you know, out of freemium I believe in 2013 because we were completely free tool, you know, app and I emailed or called our best performing customers. I said, hey, we're preparing to come out of Beta. I believe I've worded just like this. I want to know if we've earned your business. And the response was awesome. It was like, yes, I owe you, I love your product. It's helping us. I will definitely pay you.
[18:35] How much did you start charging for it?
[18:38] I think it was $75 for that customer among, because they were bigger one. We've changed our pricing models so many times, but maybe they're paying 19. It was under a hundred. I'll tell you that much.
[18:52] OK, and then kind of currently what does somebody thought that it was a slider on your website, so up to 5,000 visitors, you don't pay anything. Then it scales up to 19 a month and then all the way to the end, 6 to 99 a month, 699 a month, and then there's a custom beyond that. That's quite a range.
[19:16] Yeah, and we also have professional services now that starts at an additional 499 a month and goes up from there. That's been phenomenal for not just our customers but for us because we are able to push the limits of our platform. We use just, you know, on our own site as well, but with our customers that we manage their accounts, they're always helping us and we're helping them push the limits of what we can do, which makes it even more fun for us, but the pricing that is pretend everyday with that and you could get a PhD in pricing.
[19:54] I'll just tell you where we are today. Today we're at a model that is in response to everything that I hate about all the tools we use because you know, we use, we pay for like 30 different platforms ourselves and salesforce is the number one that I despise and because anytime you need to do something like, oh, that's on the next plan, I feel what you want to do, you can't do with the plan you're on, we need to upgrade you to the next one. And with ours we say, look, so you pay us, you have access to everything and we base it solely on their traffic and it's a simple model that all of our agency partners can understand. That's also the big factor of why we do it. And then the last component is we've had people have been with us from day one and we've watched them grow their businesses, which is fantastic and so we offer the small smb that's starting today has the exact same access to the exact same features that the biggest retailers in the world are using.
[21:01] And so it's a level playing field in terms of tool sets. It's just a matter how. How proactive do you want to be with your website visitors? That's why you see that our freemium model goes up to 5,000 visitors, which I will say we actually, you know, for other saas companies, we actually got rid of our freemium model for many years. Um, we shied away from it and we got rid of our $9 a month plan because the $9 a month plans, they'll put you out of business. Everyone thinks that, I launched this product and I'm only going to charge 9 bucks and I'll get 100,000 people on. It will make so much money. The truth is it is extremely hard to make a living off of a product that is under $10 and those customers have the highest touch and the highest churn rate. So food for thought and that we're going,
[21:56] Yeah, I liked the simplicity of it, that, you know, everybody gets everything and it's a nice clean freemium model. And if somebody's under 5,000 monthly visitors, you know, they don't pay anything, they can get up and running with this. They can start to see the value of it. And when they get to be on 5,000 visitors, it kind of becomes a bit of a no brainer to pay for it, right?
[22:20] Yeah. We can kind of factor. If you're generating more than 5,000 visitors, you're probably selling some product because it's so easy to start a store now with like Shopify 30 minutes you can be up and selling. It's crazy. You know, so you have a lot of these mom and pops that are selling and you know, traditionally it's really hard to open a retail store. It's just, it's so cheap and easy now. It's crazy. You never know what's going to be the next big hit.
[22:52] All right. So in terms of revenue, where are you guys right now?
[22:57] We always, we set goals and we set two goals. Goal number one is a double every year and that we've achieved. And that's some of the advice you ever received outside of Justuno. And the second for us, you know, setting milestones and realistic milestones that we as a company can hit. And our first big one was 100,000 early on, like we were. We couldn't believe you're broke a hundred thousand and then our next milestone
[22:57] That was $100,000 ARR
[23:31] Um, yeah, sales. The next one was 100,000 in a month. We were working on that one for a long time, which when you hit that hits our other milestone of the million mark so that we hit our million. We were, we really felt like it was a big accomplishment for us. And so now our next milestone we're working towards is 10,000,000 and what I've found is that every year what we're looking at to hit our goals, our focus and our strategies shift a little and as I understand numbers and I understand managing the business, understanding churn every year is a new learning.
[24:13] So right now you guys are doing more than $2,000,000 a year.
[24:18] That's awesome. So this is the part of the conversation I've really been looking forward to having. And so let me just lay it out for people who are listening. So you guys start Justuno in 2010 you're self funded. You had basically a zero marketing budget and you're already generating several million dollars a year in revenue and talking about a goal of $10,000,000. How does that happen?
[24:50] I mean, when it's all said and done, I'll write a book and try to remember.
[24:59] So let's talk about some of those growth strategies and what you did to get the word out and get more customers.
[25:08] I know content marketing was like a big play for you guys. Tell me a little bit about that. What were you doing?
[25:14] What I did is I kinda carried a lot of, a lot from what I learned at sea or snowboard where we also didn't have a marketing budget and we had to be super creative and resourceful and stretch every dollar, every dime, whatever, whatever the phrase is out. And um, at Sierra I learned that it's all about acquiring the cost to acquire a customer and where is that customer and how do you get them to come back to make that second purchase as well, because eighty percent of customers only shop once from retailers. So part of it is a culture within the company that we respect the dollar and we respect our customers in the process. And what we've done is we've built a sustainable business, which here in San Francisco is extremely rare, you know, there's so much money being thrown around and people like to throw money to solve problems, which in a sense doesn't create a sustainable long-term business.
[26:11] So we looked at a few areas we looked at. I knew I wanted to invest in content, which is one reason one of the biggest investments we made early on was in Hubspot into their platform because they themselves believed heavily in content marketing. So content is number one in what content does for you as well is it, it helps you with SEO. So SEO is, you know, in Seirra Snowboard, we ranked top three for whether it'd be snowboard, buy snowboard, cheap snowboards, Burton snowboards, whatever the new model of Burton Snowboard was out. We bought all the domains, build all these feeder sites. So SEO to me is what you start on day one and you have to identify and study and figure out what turns you shouldn't be going after that. You really have to have an intimate understanding of your business to understand what to go after. So you SEO, your content. Travis and I when we started get Facebook likes was the best phrase to have and we ranked up to the top three for that. So that helped us. That's back when and then it was hilarious because he just go buy Facebook likes as well.
[27:21] It's why you're seeing the resurgence of email marketing, you know? So right now if you Google email pop-ups were number one, I think we're number two as well. So as we look at it, we didn't have a budget to buy adwords and the truth is Adwords generally is hard to work with a B to B, B to C. It's, you can make it work. B to C is a little more difficult. The other is the relationships. Adam from an Active Campaigns at the office today, here we just, before this podcast, we're catching up. They, they were 9 people when I knew him thought four or five years ago. They're, they're up to 20 or 30 that's another great success story of Jason. It's a self-funded company. You, they're up to 200 people now, but I should get them on the show. That'd been using Active Campaign for the last couple of years now, great product.
[28:14] Yeah, Adam, Adam is here. So then that's where I get into the relationships and you know, it's rare just like, yeah, it's pretty interesting because Adam has been there for five years plus whatever. Same with our employees. We have long-term employees here because you know, the culture is recreate, but so often I know people are they're third company now within our industry to companies have changed but the relationships haven't. And so I personally made a big investment in all our relationships and you know, you talk about how do you maintain those. There's different ways, but how do we grow, how do we get to where we are today is we didn't get to where we are by going and spending 10, 15, 20, $30,000 on a booth at the trade shows. The way we did it is I would fly there by myself, so like I received in Chicago. I would fly to Chicago.
[29:04] I fortunately have a good friend that lives there, so I'd stay at his place so it was free to stay there. I would get an expo pass if not for free. You can buy it. Travis ran a retail store, so I just get it for like 79 bucks there. I would walk the floor and I would spend my entire time shaking hands and facetime with all of our partners, all the app stores, and I focused all my time on, on getting into every single app store I possibly could and that's how we grew our company.
[29:40] How will you out what apps store to get into or you just didn't care as long as you're getting into an app store. Everyone.
[29:51] So back then I didn't care, right. And that's the learning curves of the shotgun approach. Well, 2017 in January. We sat down and go, OK, shotgun approach is killing us. We don't have the resources to service our, you know, I, I don't know what 200 plus different, you know, ESPs, ecommerce or you know, data, you name them partners, we can't service them and we're, we're doing this service to everyone by doing this. So we actually honed down and I finally understood, I had my own Aha moment of Oh, that's why they had tiers of partnerships. You know, it's like that's why they don't, they actually plan out podcast or webinars and everything is that we recognize that present day is that our partners, while we have so many, it's the 80-20 rule, which actually for us is actually a 90-10 in terms of where our revenue is coming from, where our focus.
[30:45] And so we broke our partnerships up now and do only two tiers with the tear uno or top tier one and everyone else and only our top tier ones. And we base it off three criteria of engagement. Are they engaging with us? Are we doing co-branded marketing materials, guest blogs, webinars, etcetera, a retraining their account management team, and then the second is current customers we have with us. That's an easy identifier and then the third is opportunity for do we want to invest for the long-term opportunity with them, but early on, I mean the market was different from five years ago, two and four years ago in the sense that there was such a monopoly in the e-commerce space, you know, Shopify and BigCommerce really started dominate with the SMB mid market is really kind of simplified down a little, but you could kind of rate leads from different partners to. But overall it leads the lead and we will take a lead from anywhere at any partner.
[31:48] So SEO, you started pretty early on and you guys were creating a bunch of content who is creating that? Who was writing these posts and whatever else you are creating in terms of content.
[32:00] So originally it was me experimented using some outsourced blog writing, but I found that in order to get a decent blog I had. I still had it architect the framework, what they're going to talk about in the end. We still weren't getting them written, so it was me early on and then um, did I hire any contractors and they have. And then I finally in 2014 was fortunate to find Grant Thomas who's a great writer and is now running our marketing department. He really took the ball and ran with it.
[32:42] And how were you figuring out what to write about? You talked earlier about, OK, I've got, you know, there these e-commerce businesses and you are having a hard time trying to persuade them to. They don't even see the value in having coupons and so you've got to kind of, one is you've got to overcome that and get them to understand what the value is and then you've got to get them to believe in your product and pay for it and then go and integrate it. So in terms of the content, how were you, how are you positioning that? What, what was the, the kind of the high-level strategy to attract these people?
[33:29] It might be better to hurt a strategy. Remember, if we could look at some of our own blogs. I, you know, I'll tell you, I had a background in SEO, I knew, so we were talking to them, get, get Facebook likes, talked about and everything on inbound links were like get Facebook likes. That was our entire focus. So we were. A lot of our content was around our entire SEO strategy. I don't know if he didn't. I think we were trying to do case studies back then does show there's nothing like a case study to show value.
[33:57] OK, so would it be fair to say it wasn't like there was. You kind of sat down and said, OK, here is our content strategy for the next year and this is the type of stuff we're going to create and whatever. It was more like organic in terms of what you thought would get people's attention and keywords that you thought would be worthwhile going after and then you were just doing what you had been doing at Sierra snowboard, which was OK, we've identified these keywords. Let's just figure out how, how to optimize for them.
[34:28] I think it's pretty safe to say that's probably what we're doing
[34:34] And then the, the app store integration is. Well that sounds like that was a big part of your kind of customer acquisition plan.
[34:48] Which has changed, you know, the market's changed. There's so many apps out there now. If I were to start a new company today, probably half of what we did won't work just because the market's evolved
[34:58] And you've got to point where you have over. Like I think I read somewhere on your website that you have over 55,000 websites that use Justuno.
[35:08] Yeah. At one time or another had have used us.
[35:12] Did most of that come through what you were doing with SEO and these apps or integrations?
[35:18] I would say have you do is come in and analyze those 55,000.
[35:24] That was really fun.
[35:40] OK. Bulk coming from app stores, maybe 20% from is it just gut, right? 20% maybe from SEO, you know, 60% warehouse stores. Minimal from paid.
[35:43] Tell me about a strategy that you tried that didn't help you grow or get customers.
[35:49] Seems like anytime we try to pay for something and it just never works,
[35:49] That's a good good guide.
[35:54] Yeah. We did this one video campaign where we paid. We created some content and they. They held the leads that watched the video hostage in a sense where they claim they're going to be these incredible leads and we ended up paying like $5,000 for like 100 bucks a lead and they materialize the nothing because I had a second company that tried to sell me on it too and I said, look, you're claiming these are the greatest leads. If you stand by that I will pay you that after they convert because it's one thing to hand off a lead. It's a whole another thing to convert that lead to a sale and we as an operation weren't built to even processes those leads because we had so many inbound ones from other channels and they didn't have the sales team available to close what we would today consider just a marketing qualified lead on a sales qualified lead being, you know, sales-qualified. Somebody is interested in ready versus they just maybe watch something and so I would say be wary of anyone that comes to you and says, we can deliver you x number of leads that are in your segment and you know we're going to charge you $100 a lead, but we have no onus to their ability to convert. If you can negotiate that contract to, to you pay them. Once they convert and maybe base it off percentages of that sale, then you'll know they're interested in your best interest.
[37:26] And that's what I pitched back to the second company. Go look, I'm not going to pay you up front, but I will pay you xx, and X. and they're like, no, we can't do that. Because they knew their leads were shit. You also tried a affiliate marketing, right? The discussion or an affiliate for me personally is that, you know, like I said, our best partners are ones that have the best interests of their customers and aligned when we work with our partners. It's a real partnership in a sense that we're helping train our partner, we're helping that customer be successful just as hard as they're working to make that customer successful. And that's the entire conversation. Every time we meet every everything, the entire relationship and our best partnerships both ways in. Even when they I'm offered, I'm like, I don't want a single dollar from you.
[38:17] I want to make the customer successful so we can extend the lifetime value of that customer because we'll all make more money if the customer is successful. If someone opens the conversation with what's your commission program? Do you use? To me that's a red flag, right?
[38:35] Because they're motivated more by the commission then thinking about value or, or kind of a long-term partnership with you guys. OK. So tell me a little bit about why you guys didn't think because you've been in business for seven years and you haven't gone out and try to get funding. How are you funding the business in the early days?
[39:00] So in a few different areas there Travis and I didn't take a paycheck for four years. I was living in San Francisco and didn't take a single paycheck. Wow. And that kind of goes into you kind of like reference, a book that we can look at.
[39:19] In college one of our professors, he recommended. I read millionaire next door and I've kind of always live by it, but it really reinforced a lot of the, my beliefs and I kind of pass that down through the company as well, is that we live out our means, we don't overspend. And that allowed me to save money while I was doing Sierra snowboard to. I saved up money to be able to invest in myself and that, you know, when I was trying to figure out what path to go, you know, should I start a company, what should I do? I, I talked with some personal family friends and one of the best advice I received was Dale Hutchinson said, Erik, invest in yourself. That's going to be the best investment you can make long-term. And I was like, OK, that's what I'm going to do. And so, you know, for four years I lived off savings, did my best, lived below my means.
[40:15] I pass up opportunities like maybe joining other companies. Not that I was offered, but I was at rocket space to share or space in San Francisco. One of the very first ones was actually the first tenant there with Duncan and Uber was 10 people there and I should've just gone to work for them. They were so annoying to sit next to it. We were so thankful that when they moved out the past pathway ways through. But as we started to grow and our first sales, what we did is as soon as we were making like 3000 a month, we hired our first salesperson and then we're making 6,000. We were able to pay the initial for the actual very first salesperson and then we just kept. Every time we make more money, we reinvest it over those four years and then we actually took a very small kind of angel seed from a family friend under 100,000 just to kind of help spur sales and then we continue to grow. Just double down invest. Travis and I started to take us very small salary to at least stop, stop the bleeding, and then September 2015, the my personal account was travis was drained. Line of credits were tapped out. I had 20,000 credit card debt and we were against the ropes, so that weekend I got married.
[41:47] So Saturday I got married and my company was bankrupt. I was bankrupt and I had 20,000 in debt and I had to run payroll on Tuesday. So actual savior for us was a lighter capital based out of your town and Seattle, you know, you asked did we try to raise money? Where did funds come from for several months prior to this point? When I knew we were about to bleed out, I began looking into fundraising and I had my own feelings about people that try to give you advice that I've never started a company, but I only have an MBA. I haven't been feeling that regard, but I sucked it up and I actually, you know, took like 30 meetings or something and you know, to get emails back that say at the end of the day I don't see being a billion dollar company. It's like I'm not trying to be a billion dollar company, you know, they're like, we built, we've done everything that you're supposed to do with the business.
[42:50] I have a sound business were like borderline, you know, like we were growing, doubling. We just needed to get to that next level. And so people didn't see that 10x at that point. And so I am before, you know, I was bleeding out. I was running out of time so I was the secondary option be to get me, which was lighter capital. We ended up signing the documents on the Monday after my wedding. I ran payroll, receives the money on a Wednesday and they pulled payroll on Thursday from the bank. My team got paid on Friday. Some debt financing. Yeah. So it was purely, there is lighter capital sits between VCs and the banks. The banks, you have to do a personal guarantee for VCs, take their cut. The percentage of their company sits in the middle one notch above a loan shark.
[43:44] There's no personal guarantee, but there's really high interest. What I can tell you today is that we would not be where we are today even at without them. And so while it was high interest, they worked out great for us and also the bank wouldn't loan us because we have no assets. They don't view your saas revenue as an asset. So it'd be hard to get a loan from a bank and then the VCs up top because we already had revenue, didn't see us becoming this gigantic thing. And so we were really in this really weird middle area. And uh, that's where Lightning Capital came in. And if I look back at it today, but I really should have done is gone to SBA, they will actually secure back alone for businesses. So I think, you know, fast forward, I probably would've tried to look at SBA because we had the revenue with the business.
[44:36] We can support it and we've supported, made every loan payment. That's probably what I would've done. Whatever.
[44:42] But it worked out in the end.
[44:44] Worked out in the end. We're a debt-free company.
[44:48] Yeah. Debt-Free, profitable. And if you continue to the growth that you guys have been getting in terms of doubling every year, that $10,000,000 milestone isn't really that far away. That's awesome man. I love that. I love them.
[45:05] All right, let's get on with the lightening round. I'm going to ask you seven questions. Just try to answer those quickly as you can. All right, you ready?
[45:13] What's the best piece of business advice that you've ever received?
[45:17] We'll invest in yourself. One was great. The other one more practical. His friend's Dad, successful retail business, one of the first big box. And he said, at the end of the day, all that matters is what's in your tail and that's what I try to focus on is sales and avoid all the noise that comes with being in this industry.
[45:40] Or what book would you recommend to our audience and why?
[45:44] Probably to the the first one I mentioned, millionaire next door, just without irony, kind of explained it. But if I can throw a second one in the predictable revenue model ones are pretty interesting, but you know, I'm a stick with my millionaire next door. What's one attribute or characteristic in your mind of a successful entrepreneur? You've got to be resilient. Just got keep on going. It'd be like cockroaches doesn't die. We've seen so many companies come and go. And because we're so scrappy, meet us. He said it's probably what's, uh, your favorite personal productivity tool or habit to do us. I still just make my to do lists from staring at one right now on paper. I use the little notepad on a Mac and it works for
[46:39] What's in your crazy business idea you'd love to pursue if you had the extra time?
[46:43] Want to go build wood tables. Built tables. Yeah. I love working with words. I would argue to get away from technology
[46:56] Oh man. And uh, what's an interesting little fun fact about you that most people don't know?
[47:01] Uh, I once lived with 34 mini bikes in the basement of my house in a Fort Mason, assuming Cisco signup a deal that went wrong and I had to live with 34 mini bikes that I just thought I'd say that that's the one my buddies like the big spot.
[47:22] And finally, what's one of your most important passions that study work?
[47:27] Surfing is my go to. I can do anything. I can search. My newest one is fishing, but I'd say surf
[47:39] And wooden tables. Ah, Erik, I'm really glad we got a chance to chat and kind of you shared your story with us. I got to say you are like, I don't know if this is, it's meant as a compliment. You're like an onion man. It's like we started this conversation and I knew there was an interesting story there, but the more we talk it's like these layers keep coming off and it's like there's all these new things I discover along the way. It was like we could've kept talking for like another couple of hours.
[48:13] I appreciate that. And I, I love talking about this stuff. We've been so busy and heads down, I, I rarely have time to kind of reflect back on what we've done in a totally appreciate it anytime I'm around.
48:26 No, it's been great to have you here. Now if, uh, people want to find out more about Justuno, they can go to Justuno.com, and I'll include a link in the show notes to that and if people want to get in touch with you, what's the best way for them to do that?
[48:47] All right, sweet. Thanks man. I know you're a, you've got a, you're on a mission, you've got to go and do something for your wife. So, uh, my dog just 20 . So piece of advice is get dog insurance.
49:05 Alright, well I hope it wasn't too bad and uh, your dogs in good shape. Thanks man. It's been a pleasure. I wish you all the best. Cheers. Take care. All right, thanks for listening. I really hope you enjoyed the interview. You can get to the show notes by going to theSaaspodcast.com where you'll find a summary of this episode and a link to all the resources we discussed. If you enjoy the episode, then head over to itunes and remember to subscribe to the podcast and if you're in a good mood, consider leaving a rating and review to show your support. If you're not already in I itunes, just go to theSaaspodcast.com and click the itunes button. Thanks for listening. Until next time,
[49:55] Take care. Yeah.
The Show Notes
- Semester at Sea
- Active Campaign
- Lighter Capital
- SBA – Small Business Administration
- Grant Thomas on Twitter
- Travis Logan on LinkedIn
- Erik on Twitter
- Omer on Twitter