How to Build a SaaS Reseller Program That Scales

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.
On this episode, I talk with Luke Swanick, the co founder of Growsumo, a marketplace that connects B2B SaaS companies with resellers.
The Growsumo platform provides its customers with the tools they need to build and scale reseller programs, and it enables the resellers to earn revenue from selling those products.
Grosumo is a YC backed startup, but the founders had to apply three times before they were finally accepted into yc.
So that alone is a great lesson in being persistent.
One of the biggest challenges for building a marketplace is that you've got a chicken and egg situation.
You don't have buyers and you don't have sellers when you start.
And it can be hard to get the flywheel spinning and build a marketplace that actually works.
So we talk about how they built that marketplace and how they landed customers like Evernote, and we explore some of the tough lessons the founders have learned along the way, such as what happens when your product is not ready for a big customer, or how you can lose customers when you try to build a scalable product too soon.
I hope you enjoyed the interview.
Luke, welcome to the show.

Luke Swanek (01:36.650)
Thanks Omar.
I appreciate you having me.

Omer (01:38.890)
Let's start by getting inside your head a little bit.
I kind of like to ask the icebreaker question, is there a favorite quote that you have that you can share with us?
That may be just something that inspires you or motivates you?

Luke Swanek (01:51.840)
I'm not much of a quote guy, but I was having a conversation with someone on my team actually.
This is probably a couple of months ago now, and I have a pair of cats at home.
They're both Himalayans and he happens to have a Himalayan as well.
But our cats are although they're Himalayans, they're different breeds of Himalayan.
And when we were talking about the similarities and differences, I asked him with regards to their fur specifically, which of the cats has the better fur.
And what he said that kind of stuck with me was it's not a matter of better or worse, they're just different.
And for whatever reason, that's one of those things that's like kind of lingered in the back of my head a little bit.
But I really like that.
I think it's just a clean, simple way to think about a lot of things and it's Kind of been sticky for me.

Omer (02:37.730)
You have a very wise friend, you know.

Luke Swanek (02:40.770)
Couldn't agree more.

Omer (02:42.610)
You know, I've had a lot of quotes, but I'm never going to forget that one.
I love the simplicity.
Awesome.
All right, so let's talk a little bit about Growsumo.
I kind of gave an overview of the business in the intro, but tell us in your own words.
What is the product?
What does it do?

Luke Swanek (03:01.980)
What we do is we make it easy for companies to reach really hard to reach customers by developing partnerships.
And so really what a partner is, is anyone that exists outside of your organization that can sell or promote for you.
So these are people like customer ambassadors, resellers, affiliates, social influencers, or even SalesPeople or other SaaS organizations that might have a customer base that would resemble yours.
So typically, working with these partners is really hard, particularly scaling them.
And we make it really easy for companies to work with these strategic partners in super automated, super scalable, super cost efficient ways.

Omer (03:40.050)
So you focus on B2B SaaS companies, but you also work with e commerce businesses.

Luke Swanek (03:47.570)
Yeah, so what's interesting with this kind of partner relationship is really what it boils down to is you want these partners to A, be successful and B, ultimately send you leads and new business.
So that's consistent regardless of the type of business that you have.
It's basically just boiled down to how do you generate referrals from partners effectively.
So every business needs that.
But our core focus is on primarily B2B and B2B SaaS.
But we do work with E Comm.
We do work with B2C.
We work with consumer and mobile app companies as well, but those typically come to us exclusively through inbound.
The companies that we're actively going out and trying to engage on a deeper level are the B2B SaaS businesses.

Omer (04:30.100)
Okay, so one of your customers is Evernote.
Tell me a little bit about how that works.
So they get set up in Growsumo as a product in the marketplace, and then they can point all their resellers to, say, go to Growsumo and sign up there if you're interested in reselling Evernote.

Luke Swanek (04:56.030)
Yeah.
So Evernote will have prospective resellers and partners find better their program through our marketplace.
But the way that Evernote uses us is really beautiful.
So we power what they call their community program.
And more or less the way that it works is anyone can join Evernote's community program.
Evernote will recruit members from their community by sending email campaigns, let's say, or email invitations is a better way of thinking about it to their customer base.
They also present and promote the community program on their website.
And so when someone joins Evernote's community program, they have direct access to Evernote's global community team.
They have access to unique assets and unique rewards and unique challenges even that they can take and ultimately earn a cash commission for referring new business to Evernote.
Now, when you join, you become an Evernote community member.
But if you successfully refer enough business, you become an Evernote Community expert, which gives you a greater reward, structure and access to information and assets available exclusively to Evernote Community experts.
And once you're a community expert, you have the ability to take an additional course to become an Evernote Certified Expert, or an Evernote Certified Consultant, I should say.
When that happens, you actually have your business promoted on Evernote's blog and you're seen as a thought leader and a productivity expert in your space.
And Evernote reaches out to you to speak at global productivity events on Evernote's behalf.
So it's a really beautiful, robust program.
And we power the entirety of that program in terms of tracking, attribution and community development.
So when people think of these partnerships, they oftentimes think of sales as a core guider.
But Evernote has really built a community around these partnerships and we drive theirs in that way.

Omer (06:43.320)
That's a really great example because I had no idea that you guys were doing that much.
As you said, when you think of a reseller program, you start to think of, okay, is that kind of like an, an affiliate thing that basically somebody can go and sign up, they get a link that they can go and use on their site, you know, that kind of simplistic model.
But you guys are doing way more than that.

Luke Swanek (07:01.910)
So that's super interesting.
One of the most tempting things for us early on was to build in the affiliate direction, because the revenue path is more clear.
Right?
Like affiliates have these pre established relationships or ways of directing traffic and ultimately earning these referral rewards.
But we don't think that that is the best way to develop a long term partnership and engagement.
It's a little bit too transactional.
Really what we focus on is how do you build real relationships with these people and build your community and all of those intangible aspects as well.
So for us in supporting and building Evernote, who is one of our, I would say actually our first enterprise account that we ever worked with, we were really, really lucky that they were running such a community centric program, because in a lot of ways it dictated what our product has become, which is how do you automate relationships at scale, Whereas with an affiliate, it's really just link tracking and about the handing over of cash.
Building real partnerships requires real relationships.
And Evernote was a great company for us to build for because it forced us to build in that direction.

Omer (08:02.730)
Okay, I want to talk about how you guys got started, but before we do that, I want to talk about the startup that you were working on before Grow.
Sumo growsumo is the second startup that you've worked on.
So tell me about that first business.

Luke Swanek (08:19.140)
What happened when I graduated was I just started a normal job.
I was working at a university.
And we saw an opportunity to really help nonprofits actually work with their donors and work internally a lot more effectively.
So we started to build out what I would call like task management, Slack esque solutions for nonprofits.
And then we saw how challenging it was really to work and sell in the nonprofit space, and we sort of opened it up from there.
And essentially what we started doing was building Slack at the same time as Slack.
And so that is an exceedingly bad idea.
And Slack absolutely ate our launch.
But to differentiate, what we wanted to do was not build a simple onboarding SaaS app, but we thought that we could sell up market to larger institutions like universities, like hospitals, like major nonprofits that we already had some of these relationships in.
But in order to penetrate this upper market area, we needed to work with people that had closer relationships than we did.
So we reached out to some consultants that existed within our network and had them really sell for us and make the inroads for us.
And so we started to develop these strategic partnerships with these resellers and realized that managing the resellers was an incredible burden just on our business.
But the potential was such that it could drive the entirety of our business.
So sat down with one of my co founders, Bren Jones, at a coffee shop and we talked about what we were building here.
We were building enterprise software for really fun or non fun, I should say enterprise clients.
And it wasn't really going in a direction that we wanted, but we saw an opportunity to work with resellers a lot more effectively and thought we could build really what we consider to be an antidote instead of a Band Aid or Tylenol, because we could drive sales in a really efficient way.
And that was sort of how the idea came to be.

Omer (10:11.610)
Would you say you guys pivoted?

Luke Swanek (10:14.170)
Yeah, I would say it was more than a pivot.
I would say it was even throwing out our first company.
We didn't salvage or save any of the code in order to test the idea for Grossumo, we knew right away that we wanted to build a two sided marketplace.
One side would be resellers and one side would be the companies.
To test that theory, what we did was in about 24 hours, we spun up this landing page that just had a list of companies that people could resell for.
And the premise was if we could get some company logos there and people managing these partner reseller channels at all of these companies to just simply receive an email from anyone's email address that was interested in reselling their product, we could prove that there was an opportunity here.
So what we did was we compiled the list of about 250 partner program or reseller program or channel program managers at some good looking companies and we just cold called them with the first dozen or 25 calls.
People really weren't interested because they looked at our landing page and they saw that there was no companies there and no one wanted to be the first.
So I remember we, we added Dropbox's logo and Zenefits, his logo, and a handful of other smaller companies.
And then when we started calling people, they're like, holy shit, is Dropbox using?
Sure, why not?
So they started to upload their logo and the partner manager would have their email address available.
And we started to send some partner leads over to these people that were coming to our marketplace organically looking for reselling opportunities.
So we knew that there was something there.
And shortly after we had some brief proof points on it, we applied to YC4 was our third time and we got in on round three.

Omer (11:48.070)
So Dropbox wasn't using you, right, because you didn't have a, a product at the time?

Luke Swanek (11:53.600)
Yes, certainly not.
We just needed to put some credible logos on the landing page so that people felt comfortable putting their business information there as well.

Omer (12:03.040)
That was the one thing that was holding people back.
How did you figure that out?
Were people telling you when they looked at the landing page, look, it's, there's nothing there and I don't want to be the first one.
And is that why you kind of decided to make that change?

Luke Swanek (12:16.720)
Yeah, basically.
Honestly, it was probably in the span of a day.
So it took a day to spin up this quick landing page and then a day to start hammering the cold calls.
And the people that we were talking to, they just didn't want to be the first.
They wanted to know if any leads were being driven yet.
And we told them it was an early experiment, but we would be Driving traffic there from a variety of different sources.
I think that we went out and we promoted this page to Reddit threads and different communities that were about partners and small business consultants.
So we did do some work and put some energy in driving traffic there.
But primarily these people were signing up to promote Dropbox benefits, hootsuite, stuff like that.
But there was some residual for the smaller companies, too.
They just didn't want to be the first.
Exactly as you said.

Omer (12:59.110)
Okay, so you've got some signs of life there that people are interested and you're onto a potential problem that's worth solving.
What did you do next?
How did you go about building the first version of the product, and what did that look like?

Luke Swanek (13:15.280)
We initially believed that this would be a really hard sales tool.
This would be about lead management and lead submission and handing leads back and forth.
We didn't really know what direction it would go in overall.
We just knew that we wanted people to sell for other companies and identify them.
So, as is the case with most marketplaces, you need to sort of pick the side that you want to start on.
And so we started by going after companies.
So we just started reaching out to a number of companies and saying, you know, hey, how do you run your job right now?
You manage this partner channel.
Tell me how you work with partners, or you manage this reseller program.
How do you work with resellers today?
And a lot of people were just running it through email and Google Sheets, and that was how we actually ran it with our first company.
So it made a lot of sense.
And we knew that we needed to bring in some information to just really catalog and sort these leads and then eventually mature the product out to track what would happen with the leads as they went through the funnel.
But within the first couple of weeks, when we submitted our application to YC and eventually got in, we were accepted.
And we had really no functioning customers at the time, certainly nobody paying us.
But all that we were doing every day was calling the companies that already had these reseller and partner managers in place and just trying to understand what their job was, what the inefficiencies were, what their pain points were, and, you know, what kept them up at night in terms of was it tracking or was it engagement or was it finding these partners and all of that kind of stuff, and how can we solve for those most effectively?

Omer (14:46.020)
And were most of these people happy to talk to you?

Luke Swanek (14:49.620)
Yeah, yeah, they were, actually.
So I think a lot of early stage founders are hesitant to get on the phone with people that would be their optimal customers.
But a lot of people just struggle at doing their jobs right.
Like managing relationships with hundreds and at times thousands of people is incredibly, incredibly challenging.
Doing that by email and Google Sheets is 10x harder than that.
So what we were doing for them was we were just calling them and saying, tell me about your problems and I'm going to work to solve it and every week I'm going to tell you how I'm advancing and solving this for you.
So they were really excited about that.
For them, it wasn't an opportunity to purchase something new because we weren't really selling to them.
It wasn't an opportunity to even advance in their career because they knew that the product was so young.
But it was an opportunity to know that you could have a voice in having build something that would make your life easier.
So they were actually quite receptive.
There are always a handful of people that are going to give you much more than everyone else will.
And eventually you reach a point where you are not building for your early customers anymore.
You're building for a mature, more mature customer set.
But the people that helped us early on were really, really receptive and gave really good feedback on how to build.

Omer (16:02.240)
And how long did it take you to build the first version of the product?

Luke Swanek (16:06.880)
It's hard to say.
I don't really think of it as versions.
We introduced a variety of new features as we went, but it might have even taken a year for it to be at a point where someone could really do their job with our solution.
Building enterprise software is really hard.
Building enterprise software where there's not, you know, already a product in place that you can mirror is probably even harder.
And we didn't really have that other complementary solution that already existed in the marketplace yet that we could look at.
So for us, I would say it probably took a year to get all of the link tracking really tight, the lead management really crest and to push out a lot of the.
The bloatware that was built.
Like we had overemphasized chat, for example.
And now that's a lot more about email marketing automation than it is open chat forums.
So I would say it took a year for it to really get to a place where we were really proud of what existed and it was functional and people were becoming more efficient because they were using our tool.

Omer (17:07.030)
How long did it take you to get your first customer?
Like, did you have to wait a year before you could sign somebody up and they started paying?

Luke Swanek (17:15.879)
It was well before that, Mark.
And the reason why it was now well before, might be three to six months before, but we started by doing a lot of managed services.
And so people that we were talking to didn't know how to manage these partner channels or these reseller channels.
And we basically said, like, look, we do.
We're speaking to, you know, 50, a couple hundred people that have the same problems that you do.
And we understand the complexity of this role, but we also understand how you can become more efficient and how you can find these partners and different strategies for doing that.
So we were doing a lot of managed services to help people run their programs, but also to build our product by dog fooding it.
And so we were generating revenue before our product was ready to go.
But it was very expensive revenue because it was very time consuming.
But it was a really powerful way for.
For us to learn about, you know, what we were really building and better understand what the pain points were at a higher level.
When the product was fully mature, we ended up really firing or losing a lot of those early customers because we cut the managed services component out completely as it migrated to, you know, what ultimately becomes customer success.

Omer (18:27.220)
Got it.
Okay, so let's kind of talk about how you went about growing the business and acquiring customers.
What were some of the most successful strategies that you used to start to grow and get more customers?

Luke Swanek (18:45.990)
What ended up happening is once the product started working, so every customer that we would close, they would launch their partner program by inviting their customers.
And typically they would start by getting their feet wet and just sort of invite, you know, let's say 100 or 250 of their best customers who would then come on, really enjoy what the program offered, start promoting and selling for them, and then they'd sort of open the floodgates and invite the rest of their customer base.
Now, what was really exciting for us was a lot of our early customers were B2B SaaS.
And of course, their customers are also B2B SaaS businesses.
And so we had developed sort of this flywheel where every new customer that we closed and brought on, when they would launch their program and invite the entirety of their customer base, they would also bring on other B2B businesses, prospective leads and customers for us as well.
So we happen to have one of those models that it's got some good inherent virality in it, or the flywheels can spin and we can benefit from growth.
And so in the early days, it was a grind to sell the customers, but we could always see the compounding effect of bringing on quality B2B businesses because they would bring on other quality B2B businesses as well.

Omer (20:03.110)
Okay, so in the early days, you were doing a lot of cold calling, trying to get on people's radar, doing some managed services to, to help them solve their problems, even when your product wasn't ready to do that.
And then once you started to get some initial customers, this, you said this sort of, this inherent virality started to kick off because in order to make their program work, they have to go and tell resellers and all of these people about it.
And so the word gets out and you're finding more customers just from your existing ones.
One thing I kind of wondered about was, especially dealing with like B2B SaaS companies, did you get any pushback?
Were people saying, were the companies trying to build this themselves in house?

Luke Swanek (20:55.739)
There was definitely some pushback in the early days with the belief that, you know, I don't want my customers to become your customers.
Like, I, it doesn't matter if there's a mutual benefit.
I don't want to benefit you if I'm paying for it.
Which to me was always a bit of a funny way of thinking.
But we heard it a lot.
And we also did have this marketplace that was available early on as well.
And people were saying, look, I don't want to bring on my partners and resellers that I've recruited to join the marketplace and go out and join other programs.
Now, over time, what we've actually learned is if you bring a reseller on in your program and they join another program within the marketplace, which we, we don't promote that they do, but some of them do, that reseller becomes more valuable for you because they don't join a competitive solution.
They join a solution that integrates with yours or is a nice compliment to sell alongside yours, so they can actually sell more products more often, and that includes selling your product more regularly.
So it's a really good thing if your resellers join more programs than one.
But it was an early hesitation and we didn't really have proof points that could counter that.
But really what we ended up doing was we just built a SaaS solution that was so good at partner and reseller management and at doing the core fundamental things effectively that it was really hard to, you know, you couldn't emulate the product in house.
You could use a bitly referral link and stuff like that, but you couldn't actually pay people in a compliant way.
So that's a real hurdle.
And you couldn't really track and attribute the leads and, and share that information with your partners.
Only you internally would have it.
So these are really big obstacles to success.
And so ultimately people warmed up to it.
But it did take some time and the product had to mature for us to kind of overcome those earlier objections.

Omer (22:44.280)
And you do something interesting with email marketing automation, which I'd never certainly come across.
Can you tell us more about that?

Luke Swanek (22:55.470)
We have a bunch of developers and engineers on the team, of course, including on our marketing and sales team.
And we've actually built a tool so that when people visit our website, we can grab the IP and get a sense of who they are.
So we actually use Clearbit for that.
But once we understand the IP or the company name, sorry, we'll grab their domain as well and we'll run the company name against LinkedIn.
And what we do when we go to LinkedIn is we'll pull the top 40 results that come up from that company and then from there we'll clean those 40, you know, LinkedIn employees and show them in priority order based upon their job title.
So if you are a VP Marketing or a Head of Community or customer success champion, and that exists in your LinkedIn job title, we will pull your information and then run a combination of your first name and last name against an email checker that we have in house to correctly identify what your email address is.
If you don't have a catch all from there, that email address will automatically go into an outbound email sequence that we have, basically letting them know, hey, someone from your company was checking out Grossumo.
Super cool.
We did a quick look at your business and we think it might be you.
If it was.
We've created an account for you that you can claim here and we send them a custom claim your account link that they can simply click on and it'll go to their own customized link with their first name, last name and email pre populated in a form as well as their company logo at the top, which we also pull from Clearbit.
All that they have to do is input their password and then they'll go through the account create process.
So we're really, really effective in terms of turning our organic inbound traffic into part of our outbound funnel where people will then come in and gather and create their accounts.
And as long as we can present the product to them, because it's a fantastically strong product, we're happy from there.

Omer (24:52.530)
So firstly, I think that's really smart, really smart use of technology and of kind of maximizing any opportunity there might be when Somebody comes to your website to check out Growsumo.
But did people find it kind of a bit creepy?
I mean, because I remember, like, you know, the days when, like, ad retargeting kind of started to take off and you'd go to, I don't know, we've been talking about Evernote.
So let's just pretend you went to evernote.com and then suddenly you're surfing around the web and you start seeing Evernote ads everywhere, right?
So people used to find that a bit weird, but to kind of go to growthsumo.com and suddenly get an email that day saying, hey, I know you were checking this out.
How did people react to that?

Luke Swanek (25:36.060)
Some people would come from a larger company and we would send an email, and there's no hope in hell that the VP Marketing at, you know, Large Company X happens to be checking us out.
So they would get an email and say, this certainly wasn't me.
I don't think that that applies.
So we got a couple of those and those happen.
But much more often we would get emails from people saying, yeah, like, holy cow, man, I was checking your website out.
This is super cool.
What's the tech behind this claim?
Your account link, how did you set this up?
How is my company logo there?
So we went really out of our way to make sure that these claim your account pages that are fully customized are a really, really powerful experience because this is the first introduction to our software, and it is sort of part of our onboarding flow in that sense.
And for sure, some people looked at it and said, like, this is wild and this is weird, but for the people that were checking us out, that we were able to correctly identify, it was a really, really cool experience.
And so we've had a lot of positive, actually, feedback come from it.
Overall, awesome.

Omer (26:41.170)
Now, I know you guys put a lot of effort into customer success, and really everything that you guys do as a team, what you do in terms of building the product, is really kind of geared around, okay, how do we drive customer success?
And that work has paid off in terms of some of the customers you've been able to land and the sort of the referrals and all of these good things that are happening.
But I also know that it wasn't always like that and that you had maybe you had had some challenges along the way before you guys really decided to put that much effort into customer success.
So I want to kind of spend a little bit of time talking about that.
Like, what were some of those failures in the early days that, you know, while you were kind of busy trying to build this company, you guys really weren't thinking that much about customer success and kind of what were some of the lessons you learned from that?

Luke Swanek (27:47.340)
So we are a marketplace, but we're also a SaaS app.
You know, we're a SaaS enabled marketplace, really is what we are.
And one of the challenges with that is we are priced kind of in two ways.
So we charge a small monthly fee, which is really just setting up to support the cost of each account.
But we also charge a fee when people pay out their partners and their resellers through the platform.
And so we're more successful when the companies that use us are more successful.
That's always been a core premise that we had in mind, is we want to be a performance based business because then it's that much easier for companies to use us.
So because of the nature of that model and that pricing model, success has always been central.
But the reality is, is even when a company as big and as beautiful as Evernote uses us, it takes time for their resellers and their partners and their community experts to ramp and they themselves to get a large commission.
And so in the early days, the big struggle that we had was, you know, we need to price in some way competitively to generate MRI to survive short term, but we also need to price and think of how we're building the business so that we can build the type of business that we want, which is very much so a performance based business where anyone can begin working with us.
So we battled with that for a very long time.
When we were working with companies in the early days, we didn't have that monthly fee.
We only had the performance based commission.
And, and you know, it was a grind for us to just eat and afford and live off of our credit cards.
So we knew that we needed to bring revenue into play, especially once we had a product that was really worth selling and worth buying.
But at the same time, we were hesitant to be really aggressive on that because it wasn't the kind of company that we wanted to build.
So that was probably the biggest challenge that I can think of in terms of balancing success versus not is how do you think of your success as a company short term so that you can survive as a business and as a company to provide success to your customers long term, how much do you need to take to put yourself in a position to maximize what you can give?
And that was really, really tough for us to balance and we got it wrong.
A lot of the time as well.

Omer (29:59.440)
So today, the revenue that you generate from this sort of service fee is kind of like your monthly recurring revenue and that's kind of a portion of the overall revenue.
And that kind of gives you a little bit more predictability and it kind of pays the bills and all of those good things.
And then you've got the commission driven stuff, which is based on, okay, if we make our customer successful and we drive more sales from that for them, then we're going to see additional revenue coming in through that.

Luke Swanek (30:32.990)
You're exactly right.
Yeah.
And before we had that monthly fee, we tried to give it away for free, but we had a lot of companies using us that were just too young.
Right.
So we are really a growth engine.
You shouldn't use a tool and you shouldn't develop partnerships until you have a product that works.
But we had a lot of companies that were excited to use us because we seem to be a free growth tool and we just couldn't provide any value to them.
So that monthly fee was also introduced as a qualifier.
But ultimately now the way that it's priced is so that we can service all of these accounts effectively.

Omer (31:05.930)
And also in the early days, from what I understand, you had to do a lot of deep integrations with or for customers and that you had a bunch of challenges along the way there.
Can you tell me about, like, the types of integrations that you had to do and why that was so hard?

Luke Swanek (31:24.570)
We still have deeper integration, so we'll integrate with the company's payment gateway, so stripe or curly Braintree, whatever it might be, so that they can actually effectively track revenue and sales that occur.
So this is still vital to our processes.
But in the early days, building those integrations correctly, having the appropriate documentation, accurate documentation, and having a really simple onboarding process was also challenging because we sell to marketers and then marketers would bring engineers in and that would add, you know, a little layer of complexity.
And so that I think is just one of those things that comes over time when the sandpaper smooths things out.
But a challenge that we had as well was people don't just use Stripe and they don't just use Recurly.
There are lots of different solutions that they use for billing or for their signup tracking and attribution.
And we had to develop integrations for all of those.
Right.
When we first closed our first mobile app, we didn't have a way to integrate with it.
And so what we would have to do is build this whole new integration.
But that would take a Developer away from building the product.
And so it was always really challenging balancing that and seeing a really beautiful company with a beautiful app and thinking, okay, maybe we do the integration for free, but can we get them to charge for it to at least cover the costs?
And it was a unique problem that I don't think any of us really expected to, to have.
We probably have a couple dozen integrations that exist today, but we never thought that it would dig in that quickly because we just sort of assumed everyone would integrate the same way.
So that was a fun little hurdle to overcome in terms of balancing time and growth and covering costs and developing them out.

Omer (33:05.690)
And in the early days, from what I remember, you were also losing customers or some customers because you guys were kind of more focused on, on growth than success.
Can you tell us a little bit about what happened there?

Luke Swanek (33:20.220)
When we started to flip these integrations on and we started to onboard some new companies, there's one company in particular that stands out in my mind.
So we had this good product.
We were in yc, just graduated YC around that time.
We were really excited because we had a lot of attention because just being in YC garners attention.
But the product was still really young and so we had closed some really good looking accounts and we were just excited to go and get more.
And what ended up happening was three, four, five months down the road these really good looking accounts would just churn away because we hadn't invested in customer success or we hadn't integrated their account appropriately or we hadn't gone out of the way, out of our way to communicate with our partners and resellers and ensure that they had all the tools that they needed.
We just thought that we had it figured out and we could go and scale it up in a big way so that, that for us was a huge wake up call.
We probably could have saved six months if we had made that first series C company fully successful and almost built for them exclusively.
But we didn't.
And we learned the hard way short term revenue and growth gains isn't really going to get you where you need to be.
Because the way that you develop and the way that we think about it today is you make your customers successful, you use them as proof points and you grow up from there.
We just tried to replicate the sales process early on instead of the success process.

Omer (34:42.090)
So instead of trying to make each customer's integration as successful as possible, in the early days you guys were kind of driven by growth.
Okay, how can we go and get with.
We've signed this customer up.
Great.
How do we get the next one and the next one and so on.
And also, you kind of were building the product to be able to scale when maybe it wasn't or the business wasn't ready to do that.
And you're saying that you would have been better off not scaling so quickly and actually just saying, let's kind of build in much more of these custom solutions for each of these customers and make sure that whatever experience they have is going to be a success, even if that means it's going to take us a longer time to get where we want to go in terms of number of customers or revenue, whatever.

Luke Swanek (35:34.160)
Yeah, that's exactly right.
You know, we were asking ourselves, how can we make 10,000 partners here successful before really knowing how we could make 10 of them successful?
And so just sort of checking that and bringing that back down to earth and then uncovering that and obsessing on a handful instead of a city is really what kind of triggered that kick.
So you're exactly right with how you said that.

Omer (35:56.470)
It kind of makes sense when you say that.
Okay, let's kind of figure out how we can make each customer successful.
I guess the danger in terms of trying to build a product that's very specific to one customer is that potentially you're doing a lot of work that you'll never be able to use for anybody else.
And it can be as kind of a slippery slope to go down.
When we sort of started this conversation and you talked about Evernote and you kind of described this sort of program or this experience that you put together for them, my instant reaction was like, wow, it's like that on its own.
Sounds like a standalone product.
And so if you're doing that for Evernote, like, doesn't that mean that every customer is getting this unique experience, which means you guys are almost having to build, still build a custom experience for everybody.
So how did you sort of get around that problem?
And is the Evernote example really as custom and unique as it sounded?

Luke Swanek (37:02.120)
So that's a really good question.
And that's always a really big challenge.
So there are a couple of different product requests that come in.
Right.
So at the core of it, what we do is we help a partner track their leads that they send to the company.
And the tracking and attribution needs to be robust, the payouts needs to be crisp, the information on how they communicate needs to be really solid.
So, fundamentally, these partnerships are all, when you boil them down, really that simple.
Now, Evernote has some custom requests in the early days, that will only impact Evernote.
And when we set up our kind of product roadmapping, we would identify, okay, these will only benefit the Evernote account.
These are the projects that will benefit everyone.
How do we bring these in?
In priority order.
But really what we did do was default to the high impact items that would benefit Evernote, that could also benefit the other companies that were using growsumo.
We really started to build for enterprise and to build for Evernote once we had closed that Evernote account.
But balancing it is challenging.
You want to ensure that you work on projects that really help everyone.
And the rollout on product requests that were exclusive to the Evernote account, what we did was we had set it up so that we could process it administratively on our side, but we didn't put a front end to it.
So it wasn't available to any other companies because that would have taken more dev resources than would have been required given the fact that we were just building it for one account.
And then eventually over time, as we scaled the product and we had more developers come on, we turn those administrative features that only we could see into front facing features, and the app comes that much more powerful and that much more enterprise grade when those are released as well.
So it's just developing the right priority order and like being laser focused on success for your key accounts, but also understanding how the requirements of those key accounts can have broad stroke implications on all of the other companies that you're servicing.

Omer (39:05.500)
Okay, cool.
So you guys went through YC and you mentioned that you got through the third time.
Why do you think you didn't get through the first or second time?

Luke Swanek (39:18.460)
So we were basically building a task management solution, which I don't think is.
I think it's a really hard business to be successful in.
And we were also building it more or less specifically for nonprofits, which is an extremely challenging space.
So I think a super competitive product space in a super competitive, super challenging business space is not the recipe for a successful company.
And I think that they identified that pretty quickly, but it was actually a positive for YC that we had applied three times and we had changed our business on the third one to get in.
What they said to us, and then here's another conversational quote that really stuck is they don't like investing in unicorns.
They like investing in cockroaches.
And they just saw our founding team as a team that wouldn't die.

Omer (40:07.140)
So basically they called you cockroaches.

Luke Swanek (40:10.500)
Yeah.
And I loved it.

Omer (40:13.380)
Love it.
All right.
Now, how big is the team by the way?

Luke Swanek (40:18.900)
So we are at 13 right now and we've actually just closed our office space to move in on January 1st in a new location and we plan on taking it up to closer to 30:45 by the end of next year.

Omer (40:31.140)
Wow.
Okay.
So for the last two years or so it's been a pretty lean team.
Can you give us some numbers to kind of help people listening kind of get a sense of like the size of the business?

Luke Swanek (40:47.060)
Yeah, sure.
So we work with companies big and small.
We have in terms of paid SaaS customers, we have 125 companies a little bit over that that are paying us today.
And it's anywhere from $300 a month to, you know, we've got a handful of $10,000 accounts there as well.
So it's interesting.
It's a really dispersed mix of early stage startups that have product market fit, that just want to invest in growth to working with some really big beautiful companies like Intuit and Evernote and Samsung are all customers of ours.
It's a really cool spot to be in, but we're in the position now where we're really happy with how capital efficient we've been.
We have an incredibly strong team and we've really scaled it in terms of developed solution processes as opposed to people processes or labor intensive processes.
But now the reality for us is in order to support the size of accounts that we're starting to work with, we need to scale the team up and the office space up as well.

Omer (41:47.520)
So you guys raised a seed round of about 120,000 back in 2015.
What have you done beyond that to kind of keep funding the business?
Is the business starting to fund itself?
Are you guys profitable?
Where are you at?

Luke Swanek (42:04.880)
So we're not profitable right now.
We raised a little bit of venture funding when we graduated yc.
To be honest, we might have been too young to have raised the, the financing but when you go through a program like yc, we were still in a really good spot in, in terms of where we were, but we were still really young.
So we knew that the cash that we had raised would last a year, year and a half if we were capital efficient and didn't go out and overspend and over hire before.
We had really figured out product market fit and brought some predictability into our sales and our success processes.
But we, we did raise some financing when we graduated and that's taken us to where we are today.
We'll probably do another large race sometime next year.
To sort of finance the opportunity with our enterprise accounts.

Omer (42:51.080)
But things are clearly going well.
I mean you guys are going to probably next year in terms of team size, like triple the number of people you have on the team.
So things are definitely headed in the right direction.
One thing I kind of wondered about was if you could kind of go back to 2015 in the early days, maybe the first year of the business and kind of give yourself advice, what would you tell yourself to do differently?

Luke Swanek (43:15.730)
I think that we would have that company that we talked about before, we would have made them more successful.
That larger one, we would have been laser focused on that right from the get go because the product really wasn't ready to support a company like that.
But they were open to working with us and getting it there.
And I don't think that we gave that enough attention.
I also think that know in the early days you challenge your own potential a lot, right?
I shouldn't say challenge.
You question it or at least I did.
So I spoke with a lot of people that were really smart and they had worked at larger organizations like publicly traded companies, and I'd assumed that they knew what they were talking about with building out these financial models and projections and all that kind of stuff.
And it just, just doesn't help, right?
So the people that you can really learn from would be other founders that have found success and experienced your stage.
So I would have listened to those conversations a lot more closely because it's just a different kind of conversation.
And then beyond that, there are many, many, many things that we did wrong, but those are the ones that stood out or stick out.
Right now for me is not focusing on customer success early enough and taking advice from a lot of people, but not really listening to the people that have breathed the same air.
As an early stage founder, what does

Omer (44:33.380)
customer success mean for you guys now?
Like how do you define it?
How do you know when a new customer is successful?

Luke Swanek (44:42.420)
For us, there's a couple of steps.
A lot of these people a don't know how to run these partner programs.
So our sales process isn't even us really selling to people, it's just consulting them on this is how you work with partners or resellers or affiliates or other SaaS, integrated solutions to promote and grow your business and sort of opening them up to the options and then helping them pick what is most befitting for the company's current KPIs or their role within the organization or maybe even just where the company is.
Our success process starts with the very first call that we have when we advance with companies, we want to ensure that they successfully integrate really quickly.
So we work really hard on the integrations and we look at that timeline and how quickly can we get companies through and set up and get their programs live.
And then when their programs are live, we have a success team that helps them launch their customer base with the right email assets and campaigns and help them build their voice in effectively, because we are enabling them to communicate with their customers and partners in a really automated way.
But because it's so automated and happens at scale, you want to make sure that it's done really effectively.
So all of those across the board are things that we think about a lot.
And we're only successful, we only generate revenue, our performance fee, if the companies do.
So we care about success a lot, even as a function of revenue.
So we look at the total sales volume or the GMV that goes through the programs on our site often.
And that's a really good measure of our company success.
On the enterprise tier, there's so much complexity that goes in for a company like Evernote or a company like Intuit in developing large partners partnerships and working with partners and ambassadors and stuff like that.
So we're talking to them multiple times a week.
And we really don't have a way of measuring success with those organizations right now.
But what we do know is qualitatively, we're building really, really good relationships with them.
And ultimately our goal is for everyone that we work with to get promoted.
We've seen a couple of those, but we haven't seen that at the enterprise tier quite yet.
But when that starts happening, that's when we're really going to know and we're really going to have some nice big smiles in here.

Omer (46:54.590)
Yeah, I mean, one of the things that I just love is you hear the term customer success sort of thrown around quite a lot.
But what I love about your story is that you guys have kind of gone through learning the hard way what it costs you if you don't focus on customer success.
And those lessons ultimately have been incredibly valuable in making sure that how you think about the business, the product, and dealing with each customer is very different to what it perhaps was when you started in the early days.
And then also the way that you've kind of structured the business, you've really tied your success to the success of your customers.
So you guys are not just talking about customer success, you're kind of walking the talk.
So I think that's really interesting and it really Means that you guys are.
I'm using a lot of cliches, but it's like you guys are putting your money where your mouth is.
Right?
So I love that.
Okay, it's time for our lightning round.
I'm going to ask you a series of questions.
Just try to answer them as quickly as you can.
You ready?

Luke Swanek (48:03.460)
Sure.

Omer (48:04.580)
What's the best piece of business advice that you've ever received?

Luke Swanek (48:09.870)
I think that you need to be open to failing to really find success.

Omer (48:16.030)
What book would you recommend to our audience and why?

Luke Swanek (48:20.830)
I'm really big on biographies, so I would say not necessarily the biography of a business person, but Mandela's biography is fantastic.
Anthony Kiedis from the Red Hot Chili Peppers.
I'm reading his right now.
Is really, really good.
I just get a lot out of, you know, learning all of the different ways that super unique people can become exceptional.

Omer (48:42.760)
How do you decide which biography to read?
Is it just based on, like somebody that you're interested in or is there something else that you sort of look for?
Because, yeah, I mean, I, I asked because, you know, the.
I think it was last night actually.
I was looking through online at some biographies and there's like a lot of them out there.
And I was like, you know, I want to kind of read about some of these people, but it's not that easy to decide, like, which book should I read.

Luke Swanek (49:09.990)
Yeah, a lot of the times it'll come through recommendations in the network or you'll read a short little story on someone and think like, wow, this person's incredibly fascinating.
That's probably the best way to feed it in.
Oh, what's the recommendation?
Right now there's a doctor that went to Haiti.
I'll have to send you a follow up note on it, but that's an incredible biography too.
But just sort of come across it in stories the way you would.

Omer (49:32.880)
Okay, sweet.
Yeah, no, yeah, send me that and I'll include that in the show notes.
But I think it's a great insight just in terms of, you know, don't just focus on business people because there's a lot of really interesting people out there that you can learn from and maybe there are lessons that you can apply in your business life by learning those stories.
Anyway, let's get back to the lightning round.
What's one attribute or characteristic in your mind of a successful entrepreneur?

Luke Swanek (49:58.270)
Yeah, I, I would say humble.
I think that there are many, many, many entrepreneurs that are not.
And I think that inherently you need some kind of an ego to really throw yourself out there.
But I think it's an appreciation that you are only a small portion in everything that's built.
I think humble by far and away is what I look for in terms of people that I would follow.

Omer (50:21.390)
What's your favorite personal productivity tool or habit?

Luke Swanek (50:26.910)
I would say going for radical simplicity.
So trying to cut a lot of other productivity tools and just sort of simplifying your life and keeping things easy and doing a small number of things really well is probably the way I would say that someone can become more productive.

Omer (50:45.950)
What's a new or crazy business idea you'd love to pursue if you had the extra time?

Luke Swanek (50:51.720)
So my sister and a handful of my friends just got married recently and they all really wanted cash, but they had a gift registry.
I think it would be really cool if someone said, I want, you know, to buy a car.
But instead of outright asking people for money for the car, someone could buy the car door or the car window or the car trunk or tires.
Really all that they're doing is giving you money, but they feel like they're purchasing something of purpose there.
So I think that that would be neat for, you know, wedding registries, but would also be a cool kind of solution for NPOs and helping people.
Sort of the same way you can buy a goat and what you're doing is donating money.
It's the same kind of model.

Omer (51:30.570)
So kind of like a GoFundMe for weddings or charities.

Luke Swanek (51:35.290)
Yeah, very much so.
But you feel like you're getting something very specific in return as well.
The car tires.

Omer (51:41.690)
Yeah.
Yeah.
It's interesting.
Okay, what's an interesting or fun fact about you that most people don't know?

Luke Swanek (51:50.180)
So I have those two Himalayan cats that I talked about before.
My brother in law recently saw a life size statue of a Himalayan cat made out of porcelain.
So I have one of those perched up in my house right now, which is.
Which is pretty interesting and pretty new.

Omer (52:09.710)
So you kind of have your cats, think maybe there are three of them in the house.

Luke Swanek (52:14.830)
It's the most outrageous thing in the world.

Omer (52:18.110)
Okay.
And finally, what is one of your most important passions outside of your work?

Luke Swanek (52:24.110)
Right now?
I'm loving Christmas.
I'm one of those people that starts Christmas on November 1st.
And so that's a little bit annoying for everyone else that I work with.
But I like Christmas big time and been chatting with my family a lot, maybe around Christmas time stuff.
So they would be top of mind there.
Awesome.

Omer (52:42.760)
Luke, thanks for joining me, man.
It's been good to chat and kind of, you know, hear the story of Grows Sumo.
I loved hearing about the growth strategies and some of those really interesting things that you're doing there to find customers and grow the business and it was really also really helpful to talk about some of the things that haven't worked for you guys and what were some of the lessons you learned from that and hopefully there's going to be someone listening to this who's also going to be able to get a similar insight and maybe do something differently in their business that helps them maybe get to their goal faster.
If people want to check out Growsumo they can go to growsumo.com and if people want to get in touch with you, what's the best way for them to do that?

Luke Swanek (53:29.330)
Growsumo.com is probably the best route.
Or just flip an email to Luke L u K e at grossumo.
Com awesome.

Omer (53:36.610)
Thanks man.
I wish you and the team all the best and Merry Christmas.

Luke Swanek (53:41.330)
Thanks Omer.
I appreciate it.
Cheers.

Omer (53:43.250)
Cheers.