https://www.listennotes.com/e/5db046f156744b9f9565ec118ffc79a8

Don't just think that the goal of business is to raise investment capital because it's not. Investment capital increases the chance of failure. It doesn't reduce the chance of failure. What increases the chance of success is customers, contracts, revenue, and good product. I was a web designer. I had 30 clients. They all needed a way to email their website visitors. Investment capital focus on getting customers and revenue, and the money will come if you really need it.

Welcome back to another episode of Unfuck My Startup. Today's guest is the founder of Eye Contact, a company near and dear to me because I operated as a late entrant into, and so did Pete, into the email marketing space. Ryan was the first entrant, or maybe second, into that space, pioneered a lot about SaaS and ended up selling that business for 169 million in 2012. Now he spends his time helping other entrepreneurs grow to nine-figure exits Nine figure exits, guys. I say bootstrapping 10 million ARR is a promised land, nine figure exits, that's really the promised land, let's be honest. Through his community called SaaS Rise, today's guest, so excited to have you here, Ryan Alice. Ryan, welcome to the show.

Thanks, Adam. Happy to be here today.

Well, here is how we run the show. It's a few different segments. The first show we call the pitch slap. We bring somebody from the audience up to pitch everyone else in the audience, and we ask them questions, we give them two minutes, and we try to book them demos. I think we booked 27 demos last week for somebody. It was a really interesting product. So, Pete, who you got coming up for the pitch lab? Yeah, so today we have Steve Moreau.

Coming up to pitch his company, Rapid Start. So, yeah, Ryan, this section, this is like half Shark Tank, half QVC. if you want to call it that. And then we have another audience section later in the show, halfway through called Unfucked My Startup. We'll let you drop some of your knowledge in here and we'll get somebody who kind of relates to some things you've been working on. But we're going to pull up Steve here. Folks, audience, audience, I'm talking to you. If you would like to be a part of the pitch slap segment next week or the weeks beyond, email producer@rb2b.com. if you submitted in the past, go ahead and submit again. We got a ton of entrance every week.

And as a reminder, the rules of the pitch lap are we're gonna run a poll after Steve is done. If over 66% by Steve gets a swag box, over 33%, he gets a t-shirt under 33, we send him home with a smile, and then we try to book him demos. So let's get that timer ready.

Great. My name is Steve Mordue. We built a simple to use CRM application on the Microsoft stack specifically, originally competing with Microsoft's internal solutions dynamics for large companies, making the pivot now to try and go after HubSpot, which is the favorite of all the startups, but any of those startups, any of those folks that are actually on the Microsoft ecosystem, and I know a lot of them are using other stuff out there, but if they're on the Microsoft system, we've got a very logical alternative for them. It is first 10 users are free. After that, they're only 15 bucks. So it's a low cost solution. Our business model really is services helping those customers take that solution further if they want. They can certainly do it themselves, they can work with us. We've built a simple CRM that does sales and customer service. We've also built project management and field service apps. in the same vein and not really looking to book demos because it's free. I don't have time to be doing demos of a free app, but we do have a test drive on the site they can go download themselves. Really just looking for people to buy it. We've got 170,000 users today, which sounds like a lot, but it really should be a million. So eager to see if we can figure out how to get it there. I will exceed the rest of my time.

Can you just recap? So what is it again for the, I'm not a Microsoft person, so I have no idea. What is the solution again?

I don't know, but you're familiar with HubSpot, so.

Yeah, yeah. What is it for HubSpot? How about that?

It's a competitive to HubSpot. I don't know if you can see the screen, but essentially it's a CRM solution, tracking accounts, contacts, opportunities, prospects, and cases. Built on Microsoft, so it integrates natively with Outlook, with Microsoft Teams, with SharePoint. If you're a Microsoft shop, these things are all important to you. If you're not, you couldn't care less. So that's essentially what we've built. It's been around for a while, but it's been getting traction the last couple of years, and we really want to go after HubSpot.

Got it. And then why would somebody switch from HubSpot? Give us the quick.

Primarily HubSpot has a free solution as well, but very quickly you outgrow that and move into some pretty expensive upgrades to keep it going. Our solution doesn't have that. It just stays the same low price. Just scale as big as you want, many people as you want, many processes you want. Salesforce's free CRM is LeadGen. It's basically their upsell machine. Our upsell machine is our app and our upsell is our services to help you if you need help.

Got it.

Again, 170,000 users, we don't help most of them. Most of them are self-service doing stuff themselves or working with other partners. We can't prevent them from doing that. But that's it.

All right. And then Jim is asking, what is the cost?

So the cost of the app, the first 10 users are nothing forever. After that, they're $15 each.

Okay.

Cool.

Steve, thanks for coming up. And let's launch that poll too. And Steve, if you want to drop into the chat where people can find out more, grab, you know, sign up for free, whatever it is they do, feel free to drop that into the chat. But Steve, thanks for coming on.

And Steve, I think if we did a percentage of people who use Microsoft apps survey, it would track this. Would you buy this pretty well? Pretty much everybody in our audience, I think, is in the Gmail and sort of whatever world.

Awesome.

Thanks, Steve.

Thank you, Steve. And audience, if you would like to come up next week to pitch producer@rbb.com, I dropped the link again. But we're 11 minutes after the hour. Let's get into it with our fantastic guest, Ryan Alice. So Ryan, you started this as your first business eye contact. You were a freshman in college, a freshman at UNC, is that right?

That's right. I was 18 years old, first year at UNC Chapel Hill.

So literally the starting a company in your dorm room early 2000s like this started to come about in the Zuckerberg era. I'm just curious to start, what motivated an 18 year old freshman in college to start eye contact?

I think it was product need. I was a web designer. I had 30 clients. They all needed a way to email their website visitors. And back then, it was very difficult to do click tracking, HTML email bounce handling, and maintain a list. You had to literally do it on your desktop. and you could only send maybe two or 3000 emails before the whole system would blow up. So we made InteliContact, which later became called EyeContact, and we built that company for 10 years.

That's incredible. Now, I hope I'm not walking into an obvious answer here, but the internet's changed a lot since '02. If you were a freshman in college today, how would you approach starting a business? I'm sure the product you would work on will be different. the approach to how you're building? Is there something that sticks out for how folks are building today that differs wildly from 23 years ago?

Well, I'm just excited for the 18-year-olds of today. They have ChatGPT and all these AI tools. I didn't have that. My son's three years old. He's going to grow up with self-driving cars, personalized genomics, and AI that builds beautiful things. And so I'm very optimistic for the future. and if I were 18 today, I'd dive deep into the world of building software with AI and build some epic things.

Can I ask you something? This is something I think about a lot. It feels like anything that I do that works gets copied way faster than it used to. Does that, and then if you sort of sit and think about that for a while, it's like, okay, you know, like, let's use Jason Lemkin as an example. His business is like this SaaS-ter, it's like one of the three live events in SaaS that people would go to to advertise. That's like, and he built that with a personal brand over a long period of time. But like, if I use my same personal brand to improve RV2B into something that I actually like, which is not the case right now, It seems like 30 other people are going to very quickly use these tools to push the exact same thing. And they may even copy my personal brand playbook to some extent, which has happened. So how do you feel about that underlying fundamental dynamic of building software versus being an entrepreneur in other spaces? I just thought it was interesting. You're like, I would build software still. you know, like, I mean, I was.

On lovable two nights ago, and I built an app in two hours, and it was a very simple app, but I can. I'm not a coder. I'm a designer slash CEO slash, you know, B2B consultant. So. But I can build apps now, and it's awesome what we can build. And of course, people are going to copy what we're doing because the world is moving at a faster Pace. Knowledge is getting disseminated, opportunity is getting disseminated, and anyone, whether you're 16 or 46 can build things very quickly now, which I'm excited about.

And does that, does that skew how you would look at the opportunity set? If you're your three-year-old son and they were 18, like, would you try, see how I'm approaching is like, okay, what are things that people can't copy quite as easily? The marketing, personal brand, like that stuff, it's kind of hard for somebody else to be me. But then it's like, what are the other things that they can't copy? Are you even thinking about that or are you just like, I don't even care. I'm just going to try to keep giving value to people as quickly as possible. This is just the new world we're living in.

Yeah, I mean, I'm trying to build communities and communities value our function of the people in them. And so there's the network effect similar to how Facebook grew so quickly in the early 2000s. in our B2B communities, if you have 500 great SaaS CEOs and founders in it, which we now have at SaaStrise, then other hundreds of other SaaS CEOs and founders are going to come join that community. So I feel like it's brand, it's personal content creation, and then it's who else is in your community that drives differentiation right now.

Totally.

Which.

But this is what I'm asking you. It's like, you're, I get that about community. Why aren't you building it? You know, if, if you were excited about your kids building SAS, why are you building a community and not a SAS? I'm really just hammering this because I'm so curious, because like, I'm, I'm conflicted about it.

Yeah. You know, I'm not trying to be a CEO. I've been an 80 hour a week SAS CEO, venture backed, had a nine figure exit. I'm, I'm trying to be a dad right now and work 20 Many hours a week building a community. So what I'm trying to solve for is what is the way that I can make a few million dollars a year working as little as I can while doing something I enjoy. That's the Venn diagram I'm trying to figure out. Whereas in my 20s, I was like, how do I work as much as possible to build a nine figure exit company within 10 years? It's a totally different outcome and target.

Yeah, I hear that. Do you think that AI has made based on what you see and who's in this community, do you think that this very quickly building AI has changed the ability for people to create? What do you think the outlook for lifestyle businesses is in SaaS? Do you think like that has gotten more compelling or less? Because like there is an alternative to just working 80 hours a week.

Absolutely. I think if you're trying to earn a million bucks a year, you're building a bootstrap SaaS company and you're trying to get to three, four, five million in ARR, I think it's easier than ever to do that. And I think it's faster than ever now. The thing is, is there's more competition. And so you really have to be good at marketing, good at product development, good at UI/UX, good at sales, et cetera. But if you can get good at those things and easier than ever to build a company from zero to 5 million in ARR.

Yeah. And I feel like it's just harder to get to these, you know, it's easier to stall out at higher levels of ARR in a way that you never would have before. Like Limkin used to have, or somebody used to say this, it's like zero to one impossible, one to 10 improbable, 10 to 100 inevitable, which like, that's just not the case anymore. you know, like you can get to 11 million ARR and it's not inevitable that you're getting to a hundred. Like you may not get to 12.

And that's why if you're going to build an 11 million ARR company, you got to do it with the right capital stack because you do not want to be venture backed and have 11 million and be stuck there.

Totally. So, which probably brings us to this next question we wanted to ask you. Why'd you bootstrap for three years and then go raise VC?

I was 18. Nobody was giving an 18 year old, millions of dollars after the dot com crash of 2000, 2001, if you can bring yourself back to that day. And so nobody would give me money until we had a million in revenue. And thank God, because had we gotten revenue, had we gotten equity, we would have blown it all and screwed up our expense structure. You're way better off as a SaaS company bootstrapping to a million in ARR, that 83,000 in MRR. And then once you're there, that might take you two years, three years, but once you're there, then you can figure out if there's enough demand to truly make it a venture backable business.

What was that signal for you where you're like, now's the time to raise money? You did that three years into the business, is that right?

Yeah. We started in 2002. We had 1.3 million in ARR by 2005. In today's money, that's maybe 2 million in ARR. And then someone asked me a really important question in 2005 at lunch. Another CEO asked me, Ryan, how much is it cost to get a new customer, which are CAC? And I said, $500. And he says, how much a customer is worth to you? And I said, all right, he helped me figure out how to do the math of LTV and ARPA and shoring. And I said, all right, it's $2,000 LTV for a $500 CAC. Like, all right, four to one LTV to CAC ratio. It's not great, but it's good enough. Like, can we ramp that up? And so we just went out and we raised a bunch of venture capital before mostly anybody else. And we were number two after constant.

Contact and just ramped up as quickly as we could.

That'S incredible.

What were some differences you noticed? So bootstrap phase, I mean, really college student ramping up into a million plus AOR business, which is awesome already. For a lot of people, that's the dream. You go from that to, you know, where you're really the captain of your own ship. Now you're at the VC stage. There's a lot of people at the table. Must be, first of all, kind of intimidating. I don't want to speak for you, but, like, as a college student to have these Venture capitalists kind of breathing down your neck. Can you take us through kind of.

The difference in that experience? Well, we were in North Carolina, which is very different than Silicon Valley. Um, I always laugh that I've built, three companies, two succeeded and one failed. Um, the, the two successful ones were in North Carolina and Texas, and the failure was in Silicon Valley. And so in North Carolina, there's a focus on normal business logic, that revenues need to be higher than expenses every single month. And only when you have profitable unit economics, which you raise any equity capital, it would be crazy to do anything other than that. So that's what we did in Raleigh in 2005. We got a local company, it was a North Carolina based Raleigh venture firm to give us $500,000. And my rule of thumb is never, ever, unless you're a freaking rocket ship company, raise more than one times your ARR in outside equity capital. So we had 1.3 million in annual recurring revenue. We raised $500,000 in a convertible note. And that allowed us to scale up to get to four or five million. And then a following year, we raised 5 million in venture capital when we had 5 million in ARR. We just kept that. We later raised 40 million in venture capital and we had 40 million in ARR. And so we kept that one-to-one ratio and that minimized dilution and allowed us to not get our cap table upside down?

Oh, what a great topic. And I've never heard it said this way before. I feel like you almost crazy.

That's like a hot take.

Yeah, you almost never hear of people doing that. And I think it's hard, like it's hard for founders to not think that raising more money is less dilutive, you know, it's like because you get a higher valuation or whatever. That is fantastic. The thing that I wanted to ask you though is like, let's say I'm a founder, I'm listening to this. Let's say I got to a million or 2 million or 3 million ARR. How do I know if I have a rocket ship business or not? How do I know if I should bootstrap like Adam says to do or actually go out and get venture?

Start with revenue-based financing. Prove out the unit economics. And if your customer acquisition continues to grow up, go up by 150% a year, well then keep raising more debt. And then after you get to 2-3 million, and if you're still growing at 150% a year, that's when you raise venture. The problem happens when you get to 3 million and then you go raise that series A, you go raise 10 million on a 30 million pre, and then you're only able to go from three to six. Well then you're screwed. then you're basically your liquidation preferences are going to eat up all of the value and you're never going to get anything out of it. And so you can't let that happen. 90% of venture capital backed firms never get anything in terms of money to the founders. The investors usually get their money back and the founders get nothing. And so it's not better to raise more money. It's better to only raise more money if you're still growing at 150% year over year on top line revenue and your unit economics stay positive after expansion.

And this is the second Nathan Latka throw promo I'm going to give in a week. I gave one on LinkedIn too. Founder Path, you can get ARR financed debt, which is what you were referencing, correct? Something like that.

That's right.

For early financing. I made a whole post on it last week about three founders Sorry, four founders had hit 3 million ARR and they wanted to do 10 million at like 70 or 80 to immediately go hire 30 salespeople, which that's just not, it's like you're smiling, it's like, I know exactly what's going to happen. It's like the founder's doing all the selling now. You haven't flushed out a sales machine yet and then you go raise the money and then race into it and it never works. go raise 500k, hire a three-man pod, figure out how to hire, train and retain people on some predictable sort of, you know, I don't even know what you call that unit economics.

Yep.

Get five more million AR and then go raise your, you know, eight, 10 million or whatever.

That's right.

This is great.

I think I shared that scene on Silicon, that scene from Silicon Valley a couple weeks ago on LinkedIn where they're sitting at the bar and, oh, Ryan, if you've ever watched that show, I'd imagine you, you have and Richard's talking the guy down from like, hey, why'd you need to raise $50 million? You know, that whole thing. And it's. It's as belligerently pragmatic in the best way possible. And it's kind of hilarious that you were able to find that sort of pragmatic approach in north carolina. But when you go to the. The hub of it all, it's just the wheels are off the bus. It's just fantasy land. And I think that's. That's really funny. Somebody had dropped in here before we get to our next segment. I want to see if you agree with this, Ryan. Andy H says, if you have a real rocket ship business, VC will find you.

Yeah, that's exactly right. I mean, everybody knows that people can use Crunchbase and PitchBook to find the number of employees you have, everyone's tracking number of employees you have on LinkedIn. The second that you show traction in terms of the number of people that work for you on LinkedIn or any market presence at all, you're going to start getting three to five venture capitalists per week reaching out to you. usually associates, they're doing their own outbound strategy. And so, yeah, don't worry about trying to find investment capital, focus on getting customers and revenue, and the money will come if you really need it.

And my question was more about, that's gonna happen, but how do you know what the right thing for you to do is? And you answered it, by the way, because those same people who are reacting to these market indicators, are going to try to give you way too much money. And it's so exciting because they're like, if you sign this piece of paper, you're going to be worth 20 million, whatever it is, right? You're worth the third of this 30 million pre or whatever it is. And that's a very exciting thing to most founders who have been living in their parents' basement and struggling to make ends meet for a while.

So in the second half, we're going to dive into SaaS Rise. That's the company and community Ryan's working on to help other entrepreneurs get to this nine-figure exit. I'm pumped to dive into that. Ryan also released this. We were talking about it right before the show. In 2014, Ryan released a Lessons From My 20 Doc. Correct me if I'm wrong, it's like 1100 slides long and it's just easy reading from a flow perspective. You can kind of scroll through it. Amazing lessons from somebody who, I mean, you know, I don't mean to talk you up too much, but kind of lived a whole life in his 20s, which is really incredible. So, We're gonna share the link to that. We're gonna dive into that. Before we do that, we're getting to Ryan. This is the namesake segment of the show is called Unfucked My Startup. So what we're gonna do, we're gonna bring somebody up. They're going to tell us why their startup is, you know, more or less fucked. I would love to hear from somebody who is currently trying to raise a little bit of venture or just some fundraising in that early round. So please raise your hand. We'll get some hand raising going. Something that relates to the conversation that Ryan's having and is his expertise. These seem to be a, it seems to make for a better segment. So hand raises, I don't see any going up right now, which is for 366 people. Advice from the studio.

Sometimes we have to say, audience, we're talking to you.

I forget everything. Audience.

Yeah.

Audience.

Is this thing on?

There we go.

Audience, if you would like your startup unfucked by the best in the biz, raise your hands. We'll do about five minutes.

Oh, the hand went down.

Two minutes of you explaining your business, three minutes of panel. So folks, we did a couple of things in here to just beef up the value that is in there. We have We have a checklist. It's the unfuck my startup 10 step checklist. You'll see the link was just posted. I'll post it again. And what we've also done, this is sort of beta new. We have an Adam founder brain bot. So we loaded, I don't know, 11,000.

A million. It's a million words I put in there.

We uploaded a million words. And some video. You can talk to basically Adam, you can chat with them, go through the checklist, use that bot as your thought partner. It's all in the page, the autoresponder page that you get. And it's what we talk about in our RBDB insiders community. I know a bunch of you hopped in for the free LinkedIn course the other week, but hop into the newsletter, mess around with that, and we will chat about it next week. And we have our man, Idris. Idris, how you doing?

What's up, Idris?

Hi there. Thank you very much. I'm a little nervous, so allow me to, you know, take a deep breath along the way.

Just don't get in an accident while you're driving, bro.

No, no, no. It's midair, midnight, so at the empty roads. Yeah, I'm pretty fine. So, yeah, we are building this. My name is Idris, and, you know, I'm based in Pakistan and I run an agency, but we are moving into a product based kind of move now and we're building an e-commerce agent for our historically, our agency was primarily building websites like on platforms like Magento, Shopify, you know, like all these e-commerce platforms. And now we are working on, you know, trying to get ourselves into AI and building an e-commerce agent for the back end side of things like, you know, fulfillment and Integrations and pretty much ignored areas in, in, you know, like a big market where a lot of the millions of website and Shopify and many more on many on Magento, BigCommerce, these kind of platforms. And so we are kind of at a stage where we come across, I try to pitch this idea to some advisors and some other people and they kind of also talk about investments and all these things. So my point is that I was asked recently that if we give you funding, what are you going to spend it on? so what specific problem are you going to solve with my money? And in general, you know, you would think about, of course, you have money and you would actually just want to spend it on good things, you know, hire more people and do these kind of things. But I didn't have a very clear answer to that. So does that mean that, you know, is there a problem with my idea or is it basically too early to talk about these things? So I tell just people if they like the idea and they want to give me money and I don't have answer to their question. So am I going wrong somewhere or is it natural? So how do we handle this kind of situation?

Great, should I take that? Take that, guys.

Take it, Ryan.

All right, great.

That's the reason you're here.

First of all, congrats on building a company. It's challenging to build a company for sure and you're in the middle of it and good work on doing it. So to your question, you should, Definitely not raise outside capital until you know where you're going to put that capital. And it's really important to build the engine before you put the fuel in the car. And so, you've got a company, it sounds like you're converting from e-commerce websites to e-commerce software in some way. Don't just think that the goal of business is to raise investment capital because it's not. Investment capital increases the chance of failure. It doesn't reduce the chance of failure. What increases the chance of success is customers, contracts, revenue and good product. And so once you have your company to say $500,000 a year in revenue, a million dollars a year in revenue or higher, well then you'll probably know, Hey, if I had an extra couple hundred thousand dollars, how would I use that money to grow faster? And once you know your unit economics, the value of a customer and how much it costs to get a customer, once you know your LTV and your CAC, Well, then you can do a simple math and you can say, Hey, for every dollar I spend on marketing, am I getting at least five to $6 back in lifetime revenue? And if you are, well, then the answer is very simple to investors. Then you say, Hey, I'm going to invest it in engineers and sales and marketing, which are pretty much the only two things that are worthwhile to invest to venture capital in engineers and sales and marketing. And if you can prove that there's demand for your product and you can prove that you can get five or $6 back for every $1 you put in, well then you're going to have a lot of people wanting to fund you.

Got it.

Makes sense. So it's really about if I understand correctly, it's basically not the problem or anything. It's just that equation that needs to make sense before we talk about anything else. And then, you know, any answer, a good answer will be acceptable as long as it makes that kind of equation where $1 goes in and comes like $10 come out or something like that.

That's right. That's exactly right.

Okay, I'm plotting my next LinkedIn post in the comments here, guys. Dialogue between Ryan, Alice and Adriana. These dialogue posts are really working for what it's worth. That was a great one. That was an all-star piece of advice.

And I think the piece too, we've heard this from quite a few guests. And I know, Adam, you've talked about this. your funding should really be towards, yeah, I mean, as Ryan said, either coding or selling the code that you just wrote up. I think that's it. And don't take great leaps and do the mental gymnastics to be like, well, technically, if I spend 10K on this podcast for, you know, just all that very direct selling, I mean, that's it. Yeah.

And my two cents on is like, somebody who's much more experienced than me said to me one time, he's like, these days, I think the only thing that you should raise venture for is to step on the gas in sales and marketing because raising venture to build product is just so risky that you will almost certainly blow yourself up if what your plan is is to go out and raise money to then build a bunch of product that you have not sold yet. Try to do that on a sho, it's like get to there on a shoestring budget. And then once you have this semblance of a sales machine that you can then just go find parts to bolt on with money. That's when you go do it, you know, which I'm sure that is what we had somebody in the comments say he bootstrapped 8 million and just raised 45. I mean, Ryan probably still wouldn't have done that, but like Michael Hopkins, congratulations, Michael bootstrapping 8 million is not easy. And, you know, we maybe wouldn't raise 45, but like that's the time to do it. you know, correct me if I'm wrong.

But I think Michael Hopkins is a very interesting story from what I have gained over his comments for many episodes. So, Michael, shoot me an email. We may have our first audience member as a guest. Yeah, that'll be awesome.

We want to talk to you about this.

Yeah, absolutely. Well, once again, Idris, thanks so much for coming up. We appreciate you. Thanks for, I know you're driving around, so thanks for joining. We appreciate you. Thanks for getting back to listen.

So.

There'S this interview with Peter Thiel that always sticks out in my mind. Somebody was like, how did you know, why was it such a dead simple decision to fund Facebook? He was like, they just needed computers. They needed computers and people to code on the computers. And that was like, they weren't telling me this whole other kind of growth story aside from just very pragmatic function. So I thought that was, it kind of goes along with Ryan's advice there, but all right, Ryan, let's get into SaaS Rise. This is what you're working on now. You're working with a ton of different startups and entrepreneurs, helping them get to that eight, nine figure exit, that dream state. So you see a lot of startups, everyone's trying to acquire customers. Obviously, that's really what the whole thing's about. Is there a specific thing, a specific function or trend that is working right now? whether it's people leveraging AI for certain business functions or is there something that's basically working for those community members to SaaS Rise and a commonality amongst them?

Absolutely. So I run two communities. I run SaaS Rise, which is for SaaS CEOs and founders with at least a million dollars in annual revenue. And then I run a community called Growth Rise, which is for B2B marketing and sales leaders of any revenue size. And so, we've got 550 members in SAS Rise. We just launched Growth Rise. We have about 150 members. And what's working for us to acquire our 700 members is, the following three things. Uh, number one is we, our average customer pays us about $750 a month. The membership starts at 197 a month. but then we have other programs that we offer that get the average revenue per account to be $750 a month. So our ACV, we don't do annual contracts, but our annual revenue is about $8,000 to $9,000 per client. So that's just purely in the mid-market. And what's working for us in the mid-market is ABM lead list building, AI personalized outbound, combined with matched audience ads and retargeting ads to the same people who are on the ABM lead list that we're also doing outbound to via email and LinkedIn. So I could talk about that topic for a long time and happy to go into any detail, but those are the things that are working for us. We also do a whole bunch of thought leader ads on LinkedIn, which is where you put organic content posts like Adam does all the time, and then you boost them to your matched audience that is on your ABM list. And so if you're going after the mid-market or enterprise market, your ACB is at least $2,000-$3,000 a year and up. And you can build a target list of the people who is in your target market and then show those people ads via matched audience ads and then do outbound via email and LinkedIn tools like Instantly, Hey Reach, Amplify Market, et cetera, and then do weekly content to the warm people on your list. That's what we do and it works extremely well. We've gone from zero to 4 million in ARR in 18 months, completely bootstrapped.

That's amazing.

People love tools. ABM ads, is the tool there just LinkedIn and you feed the same list into it?

No, it's much more nuanced than that. I'll speak to it. So step one, you got to build a list of your target market. We call that your account-based marketing list. And we do that using tools like Apollo Instantly List Kit, Seamless, LinkedIn Sales Navigator. There's 20 other tools. Once we build a comprehensive list of everybody in our target market, which for us is SaaS CEOs and founders with five to 1,000 employees, then we upload that CSV file of those people to Meta, to LinkedIn, to Google, and to AdRoll, those four places. And then we show matched audience ads to the people that match those ABM leads. And those same people are also added to outbound sequences that reach out via email and LinkedIn. And so the same people that are on our ABM list are getting our outbound messaging on email, outbound messaging on LinkedIn, and seeing our ads everywhere. It makes our brand omnipresent. And then the last six months, we've been AI personalizing the outbound emails. using clay.com and then using either the ChatGPT or Claude APIs so that we don't spend all the Clay credits. And then we're opening the message with a personalized AI written opener written by ChatGPT or Claude. We have a PS line at the end written by ChatGPT or Claude Sonnet. And then we have a subject line that's entirely AI driven based on the person's LinkedIn profile and the person's website. And so that's been working very, very well for us. We're seeing, we focus on clicks instead of replies since we have a $197 offer with a two-week free trial. We're not, you know, we're sort of low friction offer. And our goal is to drive applications via cold email. And that's been working very well for us. And we're getting, you know, somewhere between 10 and 30% click rates on our campaigns by using AI personalization.

10 and 30% click rates.

That'S right. Our average click rate for non AI personalized email is 2%. Our average click rate for AI personalized email is about 14%.

And then what variables? What kind of personalization is this? See, this is what everybody wants to know. By the way, I think we're gonna give you, yeah, you're gonna get the retention award because nobody is dropping off of this thing now. We're like 20 off of the peak attendees. and it's gone up since the last time I checked. It's like people heard that you were talking about outreach and they came back.

We do sell this as a playbook, Craig Green says. So we teach this within our community. So come join us in SAS Rise or Growth Rise. We talk about it every week on our masterminds, which happen every Tuesday and Wednesday. We also have a 16-week done with you course that you can get in as a community member, and then we do it in a done-for-you service. So this is what we do all day long. So I can give all the free knowledge of how to do it. I write on our blog for free exactly video after video after video of how to do exactly what I'm talking about and happy to give any nuance details here.

And in, yeah, go ahead, Pete.

I was just going to ask, when you're saying ABM and sort of personalization and, you know, kind of doing these more personalized campaigns, what is, when you're talking about list generation, like, what is that total, I know it grows over time, like, How many people are you targeting roughly? Because I know a lot of folks in here will start a business, export 100,000 contacts, and just start absolutely hammering them. What kind of number do you look at for, at least when you started targeting people for SaaS Rise?

Yeah. We have found that there's almost exactly 400,000 SaaS CEOs and founders globally. There's about 80,000 in the United States. There's about 400,000 globally. It's a very large target market. And so we, a year and a half ago when we started SAS Rise in September 2003, came up with a strategy of let's just build a list of all 400,000. And so that's what we did. And so we went on LinkedIn Sales Navigator, we went on Apollo, we went on Liskit, we went on Instantly, Wiza, Uplead, and Seamless and 20 others. and we just spent $22,000, I know because I kept the records of exactly what was needed to get all 400,000 people. And we bought essentially and built over the course of two or three months a list of all 400,000 people in our target addressable market. Once we had that list, we started uploading that list to the ad networks and showing matched audience ads, not just on LinkedIn, but Meta, Google and AdRoll as well. And we set up instantly and we started outreach to about 50,000 new prospects per month. So it takes us about eight months. Every eight months, we're able to get through the entire 400,000 TAM with a new sequence. And so we've now been through, we've now invited everybody in our TAM at least twice. And so out of 400,000 people we've reached out to, About 6,000 have applied, and we've had about 600 paying members. And so about 1.5% of our TAM has now applied. And we bootstrapped a business from zero to 4 million using that strategy.

And have you seen any decay as you went back through the list again, or was the sequence so different that it didn't even matter? Did the list fatigue at all?

Does that make sense?

You have to re-verify the contacts if.

You haven't reached out in eight months. But other than re-verifying the contacts, which was just to cost a few hundred dollars, you're fine. You honor the unsubscribe list, of course, you don't re-email the people that actually applied. But everyone else, you just re-email. And that's the essence of mid-market enterprise ABM, is you create your targets and then you keep getting in touch with them via ads and outbound until they convert.

And where does this flow to? So like once you get people to apply, is the, you know, they get reviewed and then accepted and they join if they want, do they go through some sort of like sales and onboarding process, kind of a one-to-one process? What does sort of the later funnel look like?

Yeah, so I'm getting a lot of great questions in the webinar chat and people are asking, you know, where do I find this blog? So just go to sasrise.com/blog. You can get our blog on AI personalization and all the videos and how we do it right there. To your question, Pete, what we do is we believe that marketing is in charge of lead generation and sales is in charge of closing leads. And so the way we separate our business, we have six employees.

We have.

Three people that work in marketing, two people that work in sales, and one other person. And what the marketing team does is cold outreach ads. and warm outreach. That's all the marketing team does. And we generate about 300 new applications per month to join the community. Of those 300 applications that join the community each month, about half are qualified. So 150 qualified applications per month and about 75 show up, actually sign up. 50 to 75 new customers a month are signing up now. And that's, and that's, we have an SDR team, a sales team in South Africa. which is a great place to get salespeople. We use a firm called Roo Crew, R-O-O-Roo Crew, to get great salespeople from South Africa. And those, we have two guys, Nick and Lee, and they just follow up with the warm leads, follow up with the people that apply and work to get them to convert over time.

Dropping in both, I dropped in both the SAS Rise blog link and then also the Roo Crew for folks interested.

So, I know I'm trying to do the math on this because I know other people are. So, it's 100, you do this beautiful low ticket offer into the Ascension. So, I think Ascension number one, you said, was a 16-week done with you, and then the big ones, the done for you.

That's right.

Does that actually work for people that done for you? I mean, I mean, sorry, just sort of like, and then are you fulfilling that in-house or is that like you're kicking that out to some agency or something like that?

Well, it's all fulfilled in-house. We have, every four months we run our B2B SaaS growth program. It's 16 weeks long. We charge $5,000 a month for four months. And currently we have 37 companies in that current cohort, the next cohort starts a month from today on May 22nd. So come join it. We'd love to have you in it for those watching. The more affordable way to do that is just join the community. So Ascension plan is free newsletter, $197 a month subscription, $5,000 a month done with you, you know, live two hours a week on Zoom plus Slack support. And then the last one is $30,000 a month for done for you where soup to nuts, our team, people that personally trained are implementing the ABF, the AI outbound and the, and ads for you. And we know we only have capacity for five clients at any given time like that, but we're building up more team members and more capacity over time.

So it's sort of like hybrid community agency, would you say that, at least from the way I'm here?

Exactly. It's a, you know, and I think any great software business can be powered by a great community. And so I found that the number one, I thought I was building a community. I thought I literally set out to build YPO, digital YPO basically, and start doing it by vertical and starting with SAS as our first vertical. And we are going to build many more verticals beyond what we have right now, many more types of communities. But what I realized along the way is that our LTV is way higher and our ARPA is way higher when we have upsells to our existing community members because you have the trust.

Mm-.

And so we're essentially building a done for you agency plus a done with you, you know, teaching program on top of the community. And that way we're able to get instead of $200 a month per customer on average $800 a month per customer on average.

It's amazing. Do you remember when I came and saw you at Harvard Business School like 15 years ago?

I remember seeing you in Austin at SaaS Open a year and a half ago, or actually a year ago, but I don't remember you coming to see me at HBS.

Yeah, well, I came to see you. I had a little email newsletter app at the time, and I was like, please, will you just tell me what you would do? My brother and I came and sat with you in this big empty room, and you told us your experience at Eye Contact and your strategy for how you would attack MailChimp. This was like 2015. This was crazy 10 years ago. And I remember you saying it's like, You had this whatever it was, your average subscription price was like $37. And then you had $800 a month. It was literally just a dedicated support rep with everything else exactly the same. I mean, that was what I remember hearing. And this is sort of like, I think it's a similar sort of pattern. It's like there's this entry level thing and then you have this other thing, which is A different value point for a different buyer who wants that. And then this other thing is much higher. Very interesting. Yeah, that's awesome, man.

I want to quickly just find, I'll post the link on my LinkedIn because we just have about seven minutes left. But Ryan had wrote this great, I don't want to call it a manifesto because that sounds too, you know, whatever. But he wrote this great piece of content called Lessons from My 20s. like I said, I'll drop the link on LinkedIn. There's even, like, a picture in here. I'll just share it as I was scrolling through earlier today. Can I show? So, guys, this is what it looks like. But this slide, I mean, you just got me. So you've talked through different things. You talk through purpose, life. Here's you, Obama, who I believe is Mark Benioff there, just sitting here in a very, uh, engaged conversation. Um, so I'll share the link to this, but I had something very specifically to ask you. something I came across. So specifically the goals and purpose sections, I just think they're so foundational into like, you know, how humans kind of view and approach the world. So there was this specific slide and it says, quote, Most people never create their life purpose. Instead, they get sucked into the dreaded vortex of passionless mediocrity. So to kind of end it, how do people find purpose? What are the important variables for people to look for as they're going on this really tough Yeah, I really like.

The intersection, looking at the intersection of what you love to do, what you can be paid for, what the world needs, those three questions. And so what you love, what you can be paid for and what the world needs, you can even really simplify it to like what you love and what you can be paid for that, that's really, that intersection is sort of the answer. And so I always like to segment purpose as to like pre-parenting and then post-parenting, I think pre- pre-kids, like you've got a lot of leeway before having children in the amount of time you have and how wide you can explore. And so I highly encourage people that either don't have kids or pre-children to like really, really do the work on finding something you're good at that you love to do that people will pay for. And for 10 years, I built a community for entrepreneurs and social entrepreneurs where we did workshops on how to find your purpose. called hive.org. And that's what we taught. We taught people how to find that intersection. For me right now, now I'm post kids, now I got one and a half kids. I got my second son on the way in September. And I am really focused on right now building B2B communities where we can speed up the spread of knowledge to help businesses grow and exit successfully. And it's a much more practical purpose than the purpose I had. 10 years ago. My purpose 20 years ago was build the world's easiest email marketing tool. My purpose 10 years ago is to build a community of purpose driven entrepreneurs. And now I'm 40. And my purpose is to speed up the acceleration of knowledge dissemination among B2B companies by building B2B communities and to build the next Vistage, the next YPO, the next EO, but to do it by vertical and to do it digital first. So that's what we're doing with SAS Rise and GrowthRise. We're about to launch VentureRise, which will be for venture capital back company. So that's my purpose today. I'm planning on working the next 10 years on building what we call Rize Worldwide, the company that runs all these communities. And my goal is very simple. It's to get to 100 million in ARR. The moment we get to 100 million ARR, we will sell the company to some private equity firm that will hopefully operationalize it and make sure it goes on forever. But until then, you know, this is what we're building.

Hey, you and me both, brother, 100 million ARR.

That'S right. I haven't been there. My biggest success was 50 million in ARR. So if I get to, if I get this company 100 million AR in the next 10 years, I'm going to retire, sit on the beach and, you.

Know, raise my two teenage boys. You're going to be lastly. Is that what you thought? Is that what you thought when you sold eye contact that that would be that?

Or did you know there was something next? Oh, no. I, I always, I was 27 when I sold eye contact. I went to HBS for business school after I sold eye contact and then moved to San Francisco. to build more software companies. I did a B2C startup that failed miserably, connect.com, and now I'm just back to focusing on B2B companies where I can acquire customers with mathematical formulas.

Heck yeah, that's fantastic. Ryan, I know you said you had a jump at the top of the hour, so we won't hold you up. Tons of kind comments here in the chat. Someone said Fernando said 40 doesn't look older than 25. take that. You can run with that all day. So, Ryan, yeah.

Congrats on baby two. I'm. I have a two and a half year old and a six month old, so I'm. I'm right in it with you. Unfortunately, I've not been wise enough to try to create a 20 hour a week work week, but I'm also not as rich as you are, so what are you gonna do?

You'll be there. You'll be there, my friend.

Yeah, yeah, yeah. I'm still grinding. not 80 hours a week, though. I picked the bootstrapper out. So 8 30 to 5 every day, no weekends.

That's my, that's my, that's my gig. Yeah, it's good. I do 11, 11 to 4 Monday through Thursday.

But I'm very effective and efficient. Yeah, I bet. All right, well, Fernando's got a 34 year old. He's ahead of us. Indeed.

Cool.

Thank you for attending another episode of unfuck my startup. Ryan, you're an awesome guest. You had some huge, huge nuggets for everybody. I know I learned a ton.

Thank you for joining us.

If you wanna get higher response rates, you gotta get in the inbox first. Guess what? I always tell people this. If my abuelita, you know, messages me or emails me, I'm gonna open that email. I don't give a shit what the subject line is.

Right?

Most people that you talk to about cold email today will say cold email sucks, it doesn't work. And I go, really? The subject line is the most important part of the email? No, it's not. It's actually getting the email in the inbox. The second most important part of the email.