Omer (00:11.360)
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 talked to Kyle Raki, the co founder and CEO of Proposify, a SaaS product that helps you create proposals, collaborate with your team, and streamline your sales process so you can close deals faster.
The company was founded in 2014 and is based in Halifax, Nova Scotia.
Carr and his co founder Kevin came up with the idea for proposify when they were running a design agency, but they didn't do anything with that idea for several years.
Eventually they decided that they wanted to get out of the agency business and went back to their idea.
They built a prototype and got a lot of positive feedback, but when they launched, the results were disappointing.
They got to around $800 a month in monthly recurring revenue and flatlined there for almost a year and a half.
Today their business generates over four and a half million dollars in annual recurring revenue.
We talk about what kept them going when they were only making $800 mrr.
And we deep dive into specific things that they did that led to their hockey stick growth.
It's a great interview with a ton of valuable insights and lessons, so I hope you enjoy it.
Kyle, welcome to the show.
Kyle Racki (01:45.910)
Thanks for having me.
Omer (01:47.270)
So I'm going to start with my icebreaker question.
What gets you out of bed?
It's like, do you have a favorite quote that inspires or motivates you?
Or just tell us in your own words what gets you to work on your business every day.
Kyle Racki (01:59.190)
Thankfully, I don't need a lot of motivation to work on the business because I think like a lot of founders, I'm naturally motivated to want to work on the business some days more than others.
And sometimes I go through periods where I'm not feeling inspired, but for the most part, I'm pretty driven.
Now, I do actually find listening to Gary Vaynerchuk while I'm at the gym in the mornings, what I try to do before I leave for the office is hit the gym, listen to some Gary Vee, and I find he gets me really pumped up and kind of thinking about different content strategies and stuff like that.
Omer (02:31.780)
Yeah, he's definitely one of those guys that seems to be full of energy all the time.
Kyle Racki (02:38.480)
Totally.
I wish I had his energy and his bravado.
Omer (02:42.080)
Yeah.
All right, so let's talk about proposify.
Can you just tell the audience what does the product do?
Kyle Racki (02:50.320)
If you're a company that sends out business proposals in order to win new client projects, to close deals, to close contracts, that sort of thing, it's software that automates and streamlines that process.
So a lot of companies, mainly agencies, was where we started.
And of course there's a lot of other industries that send proposals.
Very time consuming, very expensive task that a lot of companies have to do.
And there's a lot of needless complication around it.
So it's essentially proposify, streamlines that process and makes it simpler and faster.
And then on the client facing end, we make it simpler for clients to accept your proposals and basically sign on the dotted line.
So that's at a high level what we're all about.
Omer (03:32.500)
And who is your target customer?
Do you have a specific type of business or a size of business that you're focused on?
Kyle Racki (03:39.380)
When we started out we were very laser focused on small agencies, digital agencies, marketing agencies, that kind of thing.
And we've started to broaden a little bit out as we've grown.
We've actually found that customers on the higher tier of pricing that we offer tend to actually not be agencies or a lot of them are larger consultancies.
And there's a lot of like HR management and solar panel installation and industries from all over.
So what we're kind of finding more is that if we look at the two tiers of customers, we go after small businesses, it's usually the CEOs or the principals or whoever it is actually running that business that sends out most of the proposals themselves.
They would be the target customer.
And then on the higher end tier of customers, slightly larger businesses, kind of in the 50 to 100 plus employees, those tend to be more like VP operations, sales managers, sales directors that we go after who are actually the buyers.
Omer (04:37.210)
How did you come up with the idea for this business?
Kyle Racki (04:40.170)
The idea is actually pretty old now.
I was a freelancer, a freelance designer working out of my basement in 2007.
And you know, I had had this idea for a little while of, I think Basecamp had come out only a couple of years before that.
And I was just kind of having fun playing around with some SaaS ideas.
I had actually had to design proposals at the agencies that I worked at in the past, which was really time consuming.
We were using InDesign and I was getting emailed Word documents to kind of lay out.
And I thought it was a really inefficient process.
So I thought it'd be fun if there was like proposal software.
And, and that was 11 years ago at this point.
So it was always an idea that I had that nobody was really quite doing.
And then as the agency that I ran, Headspace, as that progressed, we were always kind of tinkering around with SaaS ideas.
And it wasn't for a long time until we whipped out the old proposal app idea and started to try to actually make a go of it.
And here we are today.
Omer (05:41.730)
So the idea came from basically experiencing the pain yourself and I guess scratching your own itch here.
And from what I understand, you started building the product while you were still running the agency.
So how long were you doing that for?
And was it really at that point a tool that you were thinking of using for your own business?
Or from the onset, did you guys really think about this being a business in its own right?
Kyle Racki (06:10.430)
Before I had the agency, it was just an idea on paper that I had felt a bit of the pain working at other ones.
But as we started our own agency, and when I say we, I mean Kevin and I were business partners who worked on the agency and then eventually sold it and started Proposify.
And we've been doing that ever since.
So we're talking about five years from say 2009 till 2014 was when we ran the agency and we were both feeling the pain of proposals.
So we were kind of scratching our own itch thinking about building this.
But it was really, we were trying to build a SaaS product because we didn't like running an agency and we were actually pretty bad at it.
We made a lot of mistakes with the agency.
So we had wanted for a long time running the agency to get into some kind of recurring revenue model from a product, get out of the service business.
And we had tried a number of different products, probably about three or four different SaaS product ideas kind of built like an MVP, got it into some customers hands and ultimately decided they weren't very good ideas or it wasn't a very good market.
And then the fourth idea, we were like, hey, what about that old proposal tool, Kyle, that you had thought of years ago?
And we thought, okay, well let's try this out.
And as we sort of got into kind of that prototype MVP stage, got it into some people's hands or talked about it to other agency owners and they all, as Kevin likes to say, it's like they thought we invented ice cream.
And they were like, wow, proposals are a huge pain.
I'd pay you whatever you want for you to make that problem go away.
So that was sort of the customer validation that we got that said, okay, maybe this is worth pouring a little bit more energy and money into.
Omer (07:50.930)
Okay, I want to kind of talk more about that.
But before we get into that, just something you kind of hit on about running the agency.
And you said that, you know, we made a ton of mistakes along the way.
From my experience, a lot of those mistakes turn out to be incredibly valuable lessons that then kind of help you later on in terms of improving the business or running a new business.
So maybe can you share a couple of those mistakes with us and maybe what lessons you learned from that?
Kyle Racki (08:16.870)
I think you almost need to ruin a business and destroy it, run it into the ground before you can build a successful one.
I mean, there's outliers out there of people who are just brilliant from day one and they just have a.
It's in their DNA that they can do it.
But I think for a lot of entrepreneurs, it's usually not until their second or maybe third, sometimes even more, the third or fourth go around that they actually figure it out and learn how to make a successful business.
So for me, headspace was my training wheels and I got a lot of really good experience doing a service business and getting clients and growing the team and all that kind of stuff.
But there was a lot of mistakes that I made.
One of them was that when we started, we didn't have a specialty.
We did web design, which was kind of a specialty back then when a lot of agencies were just doing websites as kind of an afterthought, along with PR campaigns and whatever else they did.
But it wasn't enough of a unique differentiator.
And as the market grew for web design agencies in our locale and all around the world, there was more competition.
Wix and Squarespace and these type of like, do it yourself website builders came out that of course really crushed the small market for websites.
And so we just found it very difficult to get clients because we couldn't really get many clients outside of our local area.
If you're in LA or New York or some other larger market, you're not going to hire a web design agency from Halifax, Nova Scotia, unless they're the best hotel and booking websites in the world and you happen to run a hotel, Right.
So I always use the example of a company up the street that did this really well.
They're called verb.
They're still around, they're still crushing it.
And they and I were kind of going head to head with tourism websites back in the day, but they decided to stick to their specialty and just go after travel and tourism.
And it shows.
They're.
All their work is outside of the local area.
They have huge customers like MasterCard and Royal Caribbean and all these larger clients.
And it's because they picked a niche and we didn't.
And so I really concentrated on not making that mistake with proposify and really going narrow and deep.
Omer (10:35.130)
I'm wondering whether the lesson you learned there about being very focused influenced or changed the way you thought about proposify.
Like, for example, when you had the initial idea, was it maybe broader than what it turned out to be.
The reason I say this because a lot of times I see people come up with an idea and it's kind of tempting to throw the kitchen sink at it, right.
In terms of, okay, we're going to do all of these things and that's the way people are going to love this and get the attention.
You know, we're going to get attention, but a lot of the times it's like saying, well, you know, what if we strip out 90% of that and there's this 10% and we do that really, really well, that's how we're going to get noticed.
Did something similar happen with you guys as you went through the thought process?
Kyle Racki (11:21.860)
Yeah, I mean, we were really big fans of basecamp and 37signals and kind of their approach to building product.
So we had all read Rework the book by Jason Freed and dhh, who run Basecamp, and they' proponents of everything we're talking about here.
Scratching your own itch, saying no to features, really trying to go that sort of narrow and deep and as simple as possible.
So we had done SaaS products internally and built and designed SaaS products for customers at Headspace.
So I had kind of seen a lot of that in my experience running it.
So as we were building proposify, it was kind of natural.
I didn't have to really think about it.
It was just obvious to me that, okay, we're.
We're solving the pain of proposals.
We're not going to try to attack every industry under the sun.
We're going to go after the one we know really well, which is small agencies.
And every piece of content we create, every feature we add is just going to be to help those guys and we're not going to try to make it a CRM that also does invoicing, that also does your taxes.
Like, we're going to just go very specific to one horizontal or one problem that we're solving for one specific market.
So that was kind of a natural evolution of what we were doing.
Omer (12:38.180)
Okay, awesome.
That's a great lesson.
Was there any other mistake that turned out to be a valuable lesson from running the agency that helped you kind of get it right with proposify?
Kyle Racki (12:49.300)
I think one of them that a lot of agencies fall under this trap, it's sort of intrinsic to a lot of service agencies, is not employing value based pricing.
So when we were running headspace, like a lot of small agencies, you bill by the hour or you try to scope out a project and figure out how much time it will take you and then you bill for that, which then it's very easy to lose money and you don't get that recurring revenue.
So it strains your cash flow.
And with Proposify, I mean the SaaS model is kind of worked out already in terms of monthly or annual billing.
So that the recurring revenue just because of the business model makes it a much more stable business that you can really predict every month kind of where you're going to be at.
But even just value based pricing, we hear about that a lot.
But again, using the web design agency as an example is if you're buying a website from somebody, you as the customer don't care how long it takes them.
That's not how you place value on the website of oh, okay, well, something that takes you two hours is not as valuable as something that takes you six months.
But that's how every agency basically prices their services.
So instead, you know, what we should have done and what I always advise a lot of agency owners to do is figure out how that client values your service and then price 10% or so based on the value.
So for example, if your website's going to make them a million dollars in a year, well, maybe you should charge them $100,000 if you can demonstrate improve that value.
So that's kind of how we've been pricing proposify is in the early days we just kind of went with the standard that a lot of SaaS companies use, which is $10 a user a month, $20 a user a month.
And then I read an article, I think it was the Price Intelligently blog Patrick Campbell that talked about value based pricing and really sort of a light bulb went off, which is that a customer doesn't get more value out of proposify just because they've invited another user into it.
Sometimes people just want to invite a user to proofread what they've done or maybe help lay it out, but it's not worth Doubling the price for them.
And so when we started talking to customers, we realized that people who only wrote one or two proposals a month or maybe once every three months didn't place the same value.
They didn't feel the pain as much as customers who write 50 proposals a month.
And so just employing that one value metric in our pricing has helped us considerably increase our, our arpa, or average revenue per account.
Omer (15:16.740)
And so right now the pricing is.
It's either $25 a month, $75 a month, or you have a plan for bigger businesses and that's about it.
It's not based on number of users or anything.
Kyle Racki (15:30.180)
Exactly.
Yeah.
And you know what we're finding now, and we're just sort of in the middle of learning this, is that everything that I just said is completely contradictory when you get into enterprise pricing.
So on smaller businesses, they don't care about how many users they have, but bigger enterprises do.
And so we're sort of trying to figure out, you know, we're running some pricing experiments, we're talking to customers and just trying to figure out what those pricing tiers should look like.
But we do know on the small plans that the number of proposals they write on a monthly basis impacts how they value the product in addition to certain features.
So a single user doesn't care about roles and permissions.
A bigger company that maybe has three sales teams and 20 people on each team, they care a lot about locking down proposal templates and content and pricing so that, you know, they can choose who messes with what in their, in their company.
Omer (16:21.909)
Yeah.
So I like your plans.
They're called tall, grande and venti.
I guess somebody spends a lot of time drinking coffee over there.
Is that you?
Kyle Racki (16:32.130)
Yeah.
I mean, early on when it was just a couple of us and we were, I was doing a lot of the marketing and the design work for the business.
And I was a big fan of the movie Glengarry Glen Ross, which maybe some people have heard of, with a lot of famous actors, Al Pacino and Alec Baldwin.
And Alec Baldwin actually was nominated for an Academy award for a 10 minute scene where he basically blasts all the salespeople and gives them this really, really mean pep talk.
And one of the first things he does is tells Jack Lemmon, the character played by Jack Lemmon, to put that coffee down because coffee's for closers only.
So the whole coffee's for closers mentality is, you know, what we've used as our tagline and used in a lot of marketing things.
And we sort of are using coffee as kind of a metaphor for closing a deal.
Omer (17:20.200)
Yeah.
That's awesome.
All right, so you built this prototype or mvp.
You started talking to some people that you knew.
You were getting a lot of positive feedback.
How did it sort of turn out once you put this product live and started asking people to pay for, was
Kyle Racki (17:37.050)
what I likened to a fart in a windstorm.
As a saying, I don't know if people have heard of that one, but basically just nothing.
There was a few people on our beta list.
We launched the MVP in 2013 and it was really disappointing.
You know, we thought that it was going to make some kind of an impact or we were going to get some.
We had this crazy idea in our head that we're just going to launch the product and make money and then the next month we'll make more money and it's just going to be this gradual thing.
Eventually our recurring revenue is going to overtake what we're making from client work at the agency.
And the reality was that the product sucked.
We didn't have the features people needed.
It was buggy, it was ugly, it just didn't work.
So it was really a long process.
From around the time we launched the MVP till around when we started hitting the so called product market fit.
That was about 17 months.
And so a lot of stuff was happening during that time.
We were trying to sell off the agency, we were trying to keep money in the door from client work.
I was working with Jonathan, who's now our cto, on just getting the product right and listening to customer feedback.
So it was a really long haul and hopefully that's encouraging for anybody who's, who's struggling with hitting product market fit.
The occasions where a SaaS company is able to just launch and then instantly hit product market fit or within a couple of months is very rare.
It's usually a long, long process.
Omer (19:03.370)
Yeah, I don't think that's an uncommon thing where you get a MVP out there or a prototype and you talk to people and they're very excited about it.
And that kind of builds you up, right?
You're like, wow, we're getting all this great feedback and this is going to be.
Once we launch, people are just going to be kind of clamoring to sign up and everything's going to be great.
And it's almost like an anti climax when the reality kind of hits and it doesn't quite work out like that.
What were some of the things that you did in those 17 months that helped you to find product Market fit.
Like, how did you go about figuring that out?
Kyle Racki (19:41.900)
It was a very regular process of me talking to the customers, asking them what they like, what they don't like, reading the emails, doing the phone calls, and trying to kind of put it all in one place so that we can see patterns emerging.
And then every week I would sit down with Jonathan, who was doing the coding work and had to implement the designs.
And we were just brainstorming with a whiteboard and talking about, okay, how can we make this easier?
Or are we thinking about this the wrong way?
Or customers are thinking about it totally differently.
That was just an ongoing process and some of it was just user experience and flow and design, and they couldn't understand how something worked because of the way it was laid out.
So there was some of that stuff and then some of it was missing features.
Like, at the time, it just didn't do very much.
It was kind of like a worse version of Microsoft Word, which wasn't what we were going for.
And the problem really came down to we had a very skilled developer, but there was only one of them.
And if you want to get templates out the door and online signatures and metrics and all these features that we now have, if you look at our website, these are core value proposition feature benefits, but they just didn't exist because we had one developer trying to build them.
But once we were able to sell off the agency, raise a little bit of money to have another developer join the team, it was really just a matter of time until we were able to get the features that customers wanted that we hadn't envisioned that they wanted.
And that's when we started to notice a real uptick in terms of churn getting lowered and more conversion to paid and just more volume of people paying for the product.
Omer (21:24.210)
So you were kind of like continuing to iterate and spend a lot of time kind of improving this product.
But if you weren't getting a lot of interest from the market about the product, what was it that kept you going and kept you kind of continuing to invest your time and money into building and improving this product?
Kyle Racki (21:44.850)
See, we didn't have a market problem.
We had a product problem.
When people talk about product market fit, it's usually one of two things.
And sometimes what happens with a lot of SaaS, companies or startups is that they pivot to another market.
They go, oh, we, you know, there's a company upstairs from us, Dash Hudson, that are kind of at our level in terms of revenue and employee size.
And they were a mobile E commerce store for men, like helping men dress better, not doing anything at all, like, in terms of revenue or traction or product market fit.
But they were using Instagram to market themselves.
They built a whole bunch of dashboards and analytics around Instagram and then decided, oh, actually, why don't we just sell our Instagram analytics to larger companies?
And that's what they do to them.
That's what Dash Hudson does now.
So they're crushing it.
That was a huge pivot for us.
It wasn't like we were in the wrong market or we weren't solving a big pain.
It's just that the product sucked.
It took actually more discipline for us to not pivot and try to go in a different direction, try to resell our shitty product to somebody else.
It took more discipline to just swallow our pride and go, okay, people are signing up to this product.
They are taking the free trial, we're driving traffic.
And they just either don't upgrade to a paid account or they don't stick around very long.
And just comes down to the product isn't good enough yet.
Omer (23:07.880)
And presumably you knew that because you had firsthand experience of the market and the pain, and you knew that there was a better way that would help people like companies such as yourselves.
Kyle Racki (23:22.520)
I mean, that the personal experience.
But I think your own personal experience can sometimes get in the way too, and it can force founders to be a little stubborn about, no, this is the way I want it.
And they're not listening to the market and what the market's telling them.
In our case, yeah, we had the personal experience, but we also had the market telling us, if you looked at the analytics and the data, we were driving quite a bit of traffic from people.
Google searching proposal software or how to write proposals or proposal tools.
There was some search for it.
They were finding our website.
A high percentage of them were signing up to free trials.
I think something like 10% at the time of our traffic, which was maybe say 100 visitors a day, 10 signups a day.
I mean, these were people who obviously saw the value proposition and wanted the pain solved for them.
And then as I was talking to them or as they had support issues, because sometimes people don't realize how early stage a company is.
They assume there's, you know, 2,000 customer support reps behind the scenes when it's just one, you know, one or two founders and they're talking to us and they're just going like, oh, my God, like, I wanted this to work, but it just.
It sucks.
Like, you know, Pasting from Word is buggy and the formatting doesn't work and you know, everything's breaking and I can't figure it out.
Like they were telling us we didn't have to do any mind reading as far as what was wrong with the product they were telling us.
Omer (24:42.490)
And how are you getting that feedback?
Like, I've seen a lot of people who will sign up for products, but getting kind of feedback out of them can be quite painful.
Like they just often tend to go dark.
But it sounds like you were getting a lot of good feedback, feedback coming back from people.
Was there anything special that you were doing to try and elicit that feedback?
Kyle Racki (25:05.940)
Not really.
And I think that is in itself is a testimony to the fact that we were on the right track, we were trying to solve a big pain.
Because if somebody signs up to a product and wants it to work and it doesn't and they reach out to support to say this sucks, or maybe they hit reply to an automatic email that gets sent out from me or, or from, you know, proposify after they sign up for a free trial.
People hit reply and say, oh, this is broken.
This doesn't work.
The very fact that somebody's taking time out of their day to tell you your product sucks, here's why, means that they care.
And sometimes we want to protect our pride and we're, we're afraid of negative feedback and we're, we, we don't want our baby being told it's ugly.
But the fact that somebody does that means that they want it to work, they want the problem solved.
That gives you indication that you're, you're onto something.
Omer (25:57.330)
Yeah, that's a really good point.
Okay, so you continue to iterate on the product it gets every week, every month, it's getting better and better.
And then you said it took you about 17 months to sort of get to product market fit.
And so what did you see then in terms of you said, you know, about 10% of people were signing up for a free trial.
What about conversion from free trial to customers?
How did that change over that period?
Kyle Racki (26:27.610)
I think way back then when there was a lower volume of people signing up to trials, the conversion to trial, once we started hitting product market fit, that was one thing that we noticed was going up considerably.
I think we were at somewhere around 15 to 20% of people who started a free trial would convert to a paid account.
What really kind of told us the story in terms of data was the MRR and the growth of that because we had hovered around just under $1,000 in MRR for that 17 month period.
Like it didn't really go up very much at all, maybe by 10, $20 a month, but something very, very small amount of money once we got a couple extra developers on board through raising a small seed round, really double down on just improving the product, fixing bugs, making things flow better.
Added a couple core features, which for us was signatures, online signatures.
And also an improvement to how templates work.
See, a big problem with proposify was that if you already had a proposal that you use for things like let's say you had it in Word or Google Docs, the pain involved in trying to copy and paste that all into our software, there was that friction.
Like once you got your proposal template set up, it was pretty easy to use, but just getting people onboarded in the product was very difficult.
The solution to that was, why don't we come up with 20amazing, well designed proposal templates for specific services like Web Design or AdWords or SEO or Shopify customization.
All these really specific proposal templates, we just actually created the content, designed them, put them in the system so that when somebody started a new trial, all they had to do was say, pick your template, customize it, change your colors, you're ready to go.
That one change took us from being $800 in MRR approximately for 17 months to $1,500 the next month, to $3,500 the month after that, to like $8,000 the month after that.
So that's when we started to really hit the hockey stick, which was around October 2014.
Omer (28:39.140)
That's awesome.
And all of that was coming from just focusing on listening to the feedback that you were getting and just continuing to improve the product.
Kyle Racki (28:48.030)
And listening to feedback doesn't always mean just building what people tell you to build.
It's really about listening to their problems and trying to solve them.
So if they're like, I don't have the time to get all my content in here, or I want to get into this, but I just don't have the time to get started, there wasn't an easy solution for that.
But eventually when we hit on, okay, we just need a lot of great proposal templates and make it easy to pick one and customize that one change overcame what people's objection was to the software, which then made it very easy to start using and easy to upgrade to a paid account.
Omer (29:22.300)
So let's talk about marketing.
What were you doing to drive traffic to your site and kind of get noticed in the marketplace?
Kyle Racki (29:30.140)
I was always a big believer in inbound marketing and content marketing and, you know, had blogged for a long time and done guest blogging.
So that was kind of the first, especially when we didn't have money was the easiest way to get a little bit of traffic to your website is to draw people there through content and through SEO and that sort of thing.
So I had done some guest blogging.
We blogged for the company just in terms of blog posts on how to write proposals and how to close more deals at the agency level, which is actually, we were drawing on our agency experience and saying, what are all the lessons that we learned and what are all the mistakes we made running an agency and blogged about that.
Phase one growth strategy was just putting out content on a regular basis that was really quality content, really solved people's pain or answered questions for them.
And that kind of got us a certain level of traffic to the website.
It wasn't like it was blew up and it was the biggest blog on the planet.
But it does get you, especially over time, a certain amount of just steady, predictable traffic.
And if you can convert a certain percentage of that to a free trial, then it was really easy for us to test every month and just say, let's make this change to the product and see what the market responds to.
Because we already had just a good stream of customers entering the funnel.
And so that was really part one.
We didn't do a lot of paid media until even a couple years after hitting product market fit.
So it really was a combination between word of mouth and driving traffic to the site through content, but also through SEO.
So, like one of the early wins was just creating competitor comparison pages on the website.
So anybody who is using a competitor in the market or using document sales software or signature software, just saying alternative to, in the case of what we did was bidsketch.
So we would take a competitor's name and say, let's compare proposify with bidsketch.
And then anybody who was searching that, who was a customer of that competitor would find our page because there was no competition for it.
And that's how we would get them.
So we were doing a lot of kind of sneaky little stuff like that.
But a lot of people are doing that now.
Omer (31:43.800)
So that's got you.
You said part one and it kind of got you sort of initial steady traffic.
But content marketing is an area that you've continued to invest in and that's been the driver behind your growth.
Right.
Kyle Racki (31:57.640)
It's always difficult to measure if content really is the driver behind growth.
We know 100% that search is the driver behind our growth.
So we pay a lot of attention to our SEO and our organic reach for search, whether it's somebody searching a topic that we've written a blog post on, or whether they're searching for proposalfy itself or for proposal software or one of our proposal templates.
So there's a lot of search for web design proposal template and all the other ones that we mentioned.
So we've continued to invest in that overall search strategy content, making up a portion of that, but a lot of it also being things that are a little further down the funnel where somebody's actively searching for proposal solution that has been the biggest driver in growth and continues to be.
Got it.
Omer (32:45.290)
And what does the sales funnel look like when somebody, let's say they come through organic search, they arrive at proposify, they sign up for a free trial, which I think is a 14 day trial currently.
What happens through that process and what do you do to try and convert more people into customers?
Kyle Racki (33:11.530)
That's an area of the funnel that we continue to put almost more resources into that than we do on upfront acquisition or free trials because we've got a pretty good engine of traffic and signups.
But historically the conversion from free trial to paid has been a lot lower.
And I mean some of it's just due to the volume.
I mean we get sometimes two or 300 new trials a day.
So being able to convert those to paid accounts and retain them long term is much more of a priority and much more of a focus for us as a company now than it is even just driving traffic.
So things that we're doing with that, we put a lot of work into our onboarding.
We probably change up our onboarding every two to three months.
The head of product, Ricky and I will look at it or other people will look at it and we'll actually watch people using it, or we'll try to find holes and say like, is it really getting people to the value of the product quick enough?
So product onboarding is something that I think every SaaS company, once they get product market fit and they've got a nice level of momentum behind the business.
Onboarding should be a quarterly initiative at least.
And between that, onboarding is including the email drip sequence, customer support, sales to a certain degree, if people have questions or want to jump on a call to kind of go through things, your knowledge base, videos that walk through, how to use different features of the product.
I mean there's so much there, we could jump on.
You know, one of the biggest wins for us in the last year was actually using paid media for converting trials to paid.
So instead of what maybe a lot of people think of with advertising as just awareness or driving traffic is we would retarget people who started a free trial and talk to them about downloading our free mobile app.
And we found that people who downloaded the free iOS app were more likely to convert to a paid account.
So doing a lot of retargeting with paid media has also had an impact on our conversion to paid.
Omer (35:10.190)
That's really interesting.
Why weren't you just doing that through email?
Like, you could tell them about the iOS app by just emailing them.
Why were you doing paid ads retargeting, and why do you think that was more effective?
Kyle Racki (35:21.470)
I mean, I think people get inundated with email.
It's not to say email isn't effective, but it's not effective for everybody.
And not every customer is looking at their, you know, what is obviously a canned templated email in their inbox.
And sometimes we send too many emails and people would unsubscribe or they'd write us back and curse us out for it.
So, you know, I think you've got to switch up your tactics a little bit and try to look at where's the attention?
Some people, they're not.
Their attention isn't on their inbox, but their attention is on Facebook.
And they're more likely to click on an ad if it's something they've already signed up for.
And you're saying, like, hey, person who just signed up for a free proposal for trial, did you know you can Download our free iOS app and track your proposals on the go?
So you've got to experiment with a lot of different channels.
Omer (36:06.260)
Yeah, that's a great insight.
I haven't heard that one before.
So where are you guys in terms of revenue right now?
Kyle Racki (36:13.620)
We're getting close to about four and a half million in annual recurring revenue.
Omer (36:19.380)
That's awesome.
When were you doing the $800 a month MRR that was back in, what, 20.
Kyle Racki (36:26.628)
2014.
Omer (36:28.990)
Wow.
So the persistence is paying off.
Kyle Racki (36:33.070)
Yeah, yeah.
I mean, last year was quite a spike in terms of revenue.
We had done pretty well from about the end of 2014 on.
It was pretty consistent.
But last year, you know, we had hired a lot more people, put a lot more into different growth channels.
Actually, you know, we were kind of surprised that we did so well last year because we didn't put out a lot of Product improvements, and people were starting to kind of notice that we were, in their minds anyway, abandoning the product.
In actual fact, we were working on Proposify 2, so we were basically rebuilding the whole thing from the ground up to be much better.
That was a very long.
If you want to talk, I wouldn't say mistake, but definitely a lot of lessons learned is just around when you need to rebuild your product and still support an existing product with a limited dev team.
You know, we made a few missteps there, but I think ultimately we're super proud of Proposal five.
Two.
And we're actually, depending on when this episode launches, we'll have already launched proposal 5 2.
The blog post goes out next Tuesday.
Omer (37:32.370)
Oh, that's awesome.
So, yeah, I mean, that, I think, is a challenge that I think a lot of people deal with, because quite often you kind of start with the mvp, it evolves into the product.
You kind of iterate and keep improving.
But the reality is, over time, you realize that if I was able to do this from scratch, I wouldn't build a product like that.
I would do this very differently.
Right.
But it's very hard to do that when you're starting out.
And so when you're in a position where you only already have, you know, a business up and running or a plane in the sky, and you're trying to then say, okay, let me build something else, it's a pretty challenging situation to be in.
Any kind of takeaways.
I mean, if somebody's dealing with that right now, any advice that you can give them in terms of how to
Kyle Racki (38:20.940)
tackle that, you know, some of the mistakes that we had made were, and it's almost hard to avoid them, is because when you're just trying to get customers, you're going to make certain decisions, especially from a technical standpoint, because you're just not anticipating a huge volume of people using it.
And it's usually not until you've got volume and scale that you start realizing all the shortcuts you took or the fact that you didn't host on Amazon or any sort of really scalable tech infrastructure because you were just trying to get up and running with something simple that worked.
So it's not to say that you need to think about scaling from the beginning.
I think certainly you should host on AWS right off the bat because the process of switching over to an environment like that, when you're on, say, just a simple hosting environment, it's almost better to just kind of start off that way instead of trying to move something that's got a lot of customers onto a whole different hosting platform like aws.
So I would recommend doing that.
I mean, in terms of the product itself, it does make sense to just use a simple tech stack that your developer knows really well.
Don't try to use anything too crazy and, you know, unproven, but, you know, as you go, you're just going to naturally need to rebuild your product.
And I think for us, we just underestimated how long it would take.
It was really about a year and a half and we had enough people that we could have some people work on a few features for the existing product and maybe a few bug fixes, but it just wasn't iterating and improving as quickly as it had in the past.
So it's best if you can sort of split your development team in two.
If you have enough people that one works on building the new version of it, it takes however long it takes.
The other team is just working on improving the existing product and eventually you kind of merge them together and, and try to go from there.
But it's never an easy process.
Omer (40:11.320)
Oh, totally.
I mean, we could have a separate conversation just about how to do that.
Right.
It's a totally complicated issue.
Awesome.
Okay, let's.
Let's get onto the lightning round.
I'm going to ask you seven questions.
Just try to answer them as quickly as you can.
Ready?
Kyle Racki (40:26.040)
Sure.
Omer (40:26.920)
What's the best piece of business advice that you've ever received?
Kyle Racki (40:31.060)
A VC once told me that we should basically shit or get off the pot with our agency.
He said every agency in town wants to build a SaaS product.
So if you're going to be serious about it, you should just get rid of your agency and focus 100%.
I think that was probably really good business advice.
It wasn't easy to take, but ultimately glad I took it.
Omer (40:52.100)
What book would you recommend to our audience and why?
Kyle Racki (40:56.030)
One of my favorite books, when we were just trying to get product market fit, especially in the early stages, is called Lean analytics by Alistair Kroll and Ben Joskovitz.
Ben actually joined our board a couple of years later, so we were happy about that.
But it's a great book as far as knowing.
Like, what metrics should you be looking at at what stage of your SaaS business?
Omer (41:16.190)
What's one attribute or characteristic in your mind of a successful entrepreneur?
Kyle Racki (41:20.910)
I'd say tenacity.
The ability to take a punch and keep going.
Omer (41:25.960)
What's your favorite personal productivity tool or habit?
Kyle Racki (41:30.040)
A tool that I really have been enjoying from a product management perspective because I think that's there's a lot of untapped potential there as far as SaaS products go.
And there's not a lot of great solutions on the market.
But there is a really good one called product Board that we use to track customer feedback and prioritize features.
So people should check o productboard if they're interested in that.
Omer (41:49.480)
Okay, what's a new or crazy business idea you'd love to pursue if you had the extra time?
Kyle Racki (41:55.220)
I kind of oscillate here and there between different ideas, but it's kind of crazy that I'd want to start an E commerce company because I think it's such a competitive space and the margins are so low and Amazon's trying to kill you at every turn.
But I think it would just be really fun to have some sort of E commerce fashion website or something like that I think would be kind of fun.
Omer (42:17.220)
Yeah.
What's an interesting or fun fact about you that most people don't know?
Kyle Racki (42:22.610)
I don't know if it's a fun fact, but not everybody knows that I was raised in a cult and escaped in my twenties.
Omer (42:30.930)
Are you serious?
Kyle Racki (42:32.210)
Yeah.
Omer (42:32.770)
Wow.
I can't stop there.
You got to tell me more.
Kyle Racki (42:38.210)
I mean, we could do a whole episode about that, but yeah, actually on the Groove blog I was interviewed about that and I talked about it a little bit more so people could check that out.
But essentially I'm writing a book about it right now about that and kind of combining that with growing proposal fi and sort of the business lessons.
Surrounded by the personal chaos that was going on in my life when I was figuring out that I was under mind control and that, you know, my.
My family and friends all shunned me after I left.
But, you know, that was that.
You could write a whole book about that.
Omer (43:08.060)
Wow.
I'll dig up that the Groove interview and we can add a link in the show notes if people want to check that out.
And finally, what is one of your most important passions outside of your work?
Kyle Racki (43:20.980)
I like playing music.
I learned guitar when I was around 12 years old and one day dreamed of playing in a rock band, which never came to fruition.
But I've been playing open mics and, you know, campfire kind of thing.
Worked a little bit on writing an album for a period of time, but yeah, I love playing different musical instruments and jamming with people and singing.
Omer (43:41.140)
Awesome.
Carl, it's been a pleasure.
Thanks for taking the time to chat.
It's been great to hear the story of proposify and some of the lessons that you learned along the way.
And I think it'll also be inspiring for a lot of people who maybe are in that situation right now where they've shipped a product and maybe are kind of in a similar place where they're around thousand dollars mrr and things aren't happening.
And sort of maybe hearing the story will.
Will inspire them to keep at it and figure out what they need to do to start driving growth.
And if people want to check out Proposify, they can go to proposify.com and if people want to get in touch with you, what's the best way for them to do that?
Kyle Racki (44:23.219)
Yeah, I mean, I'm on all the different social networks and right on medium and all that kind of stuff.
Kyle Rackey, you can search me and if you just want to send me an email if you have any particular question or challenge that you're dealing with in your SaaS company, happy to help from there if you email kyleroposify.com awesome.
Omer (44:42.320)
Karl, thanks again.
It's been a pleasure and I wish you and the team at Proposify all the best.
Kyle Racki (44:46.960)
Thanks, Omer.
My pleasure.
Omer (44:48.480)
Cheers.
Kyle Racki (44:48.920)
Had a lot of fun.
