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Aug 14, 2019 · 22m · top-founders

1481 Don't lie to yourself. "Free Users" are not "Customers"

Nathan Latka · 10m spoken Christian Schmidt · 8m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of The Top Entrepreneurs Podcast, host Nathan Latka interviews Clever Reach CEO Christian Schmidt to dissect the email marketing company's bootstrapped growth, freemium business model, and SaaS unit economics. They explore the company's 25 percent annual growth rate, capital efficiency without venture funding, and the operational distinction between free users and paying customers.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 52.9% of the talking time here. How this is scored →

Nathan as informed peer 4.5 Guest teaching 0.5 Guest disagreement 2.3 Nathan pushing back 4.1
05100:0010:0020:000:00–2:05 · Nathan as informed peer 0/10 Nathan Latka's Book Promotion and Amazon Review Solo intro and book promotional read by Nathan Latka with teaser audio clips from the interview.2:05–5:04 · Nathan as informed peer 5/10 Guest Introduction and Clever Reach Office Culture Nathan presses Christian for a specific average revenue per user figure after Christian provides vague and conflicting ranges across different tiers.5:05–7:33 · Nathan as informed peer 4/10 Clever Reach Origins, Leadership Equity, and Distributed Team Nathan clarifies Christian's equity incentive and presses through evasive answers to get an exact headcount of full-time employees.7:34–10:45 · Nathan as informed peer 8/10 The Free Users Versus Paying Customers Debate Nathan calculates revenue based on Christian's 200,000 figure to expose that free users are being counted as paying customers, directly challenging Christian's terminology.10:45–15:55 · Nathan as informed peer 8/10 Service Resource Allocation and Paid Support Tiering Nathan dismantles Christian's assertion that free users and enterprise accounts receive the exact same service, eventually getting Christian to admit they charge for phone and priority support.15:55–19:46 · Nathan as informed peer 8/10 Bootstrapping Strategy and Financial Independence Nathan explains fundamental SaaS concepts like bootstrapping, churn rate, and CAC when Christian reveals he does not know standard terminology.19:46–21:48 · Nathan as informed peer 3/10 The Famous Five Rapid-Fire Questions Nathan walks through the standard rapid-fire questions, learning about Christian's reading habits and personal family life.21:48–22:30 · Nathan as informed peer 0/10 Episode Conclusion and Clever Reach Metric Summary Nathan provides an outro summary of the key metrics and economics covered during the interview.0:00–2:05 · Guest teaching 0/10 Nathan Latka's Book Promotion and Amazon Review Solo intro and book promotional read by Nathan Latka with teaser audio clips from the interview.2:05–5:04 · Guest teaching 1/10 Guest Introduction and Clever Reach Office Culture Nathan presses Christian for a specific average revenue per user figure after Christian provides vague and conflicting ranges across different tiers.5:05–7:33 · Guest teaching 1/10 Clever Reach Origins, Leadership Equity, and Distributed Team Nathan clarifies Christian's equity incentive and presses through evasive answers to get an exact headcount of full-time employees.7:34–10:45 · Guest teaching 1/10 The Free Users Versus Paying Customers Debate Nathan calculates revenue based on Christian's 200,000 figure to expose that free users are being counted as paying customers, directly challenging Christian's terminology.10:45–15:55 · Guest teaching 1/10 Service Resource Allocation and Paid Support Tiering Nathan dismantles Christian's assertion that free users and enterprise accounts receive the exact same service, eventually getting Christian to admit they charge for phone and priority support.15:55–19:46 · Guest teaching 0/10 Bootstrapping Strategy and Financial Independence Nathan explains fundamental SaaS concepts like bootstrapping, churn rate, and CAC when Christian reveals he does not know standard terminology.19:46–21:48 · Guest teaching 0/10 The Famous Five Rapid-Fire Questions Nathan walks through the standard rapid-fire questions, learning about Christian's reading habits and personal family life.21:48–22:30 · Guest teaching 0/10 Episode Conclusion and Clever Reach Metric Summary Nathan provides an outro summary of the key metrics and economics covered during the interview.0:00–2:05 · Guest disagreement 0/10 Nathan Latka's Book Promotion and Amazon Review Solo intro and book promotional read by Nathan Latka with teaser audio clips from the interview.2:05–5:04 · Guest disagreement 2/10 Guest Introduction and Clever Reach Office Culture Nathan presses Christian for a specific average revenue per user figure after Christian provides vague and conflicting ranges across different tiers.5:05–7:33 · Guest disagreement 2/10 Clever Reach Origins, Leadership Equity, and Distributed Team Nathan clarifies Christian's equity incentive and presses through evasive answers to get an exact headcount of full-time employees.7:34–10:45 · Guest disagreement 6/10 The Free Users Versus Paying Customers Debate Nathan calculates revenue based on Christian's 200,000 figure to expose that free users are being counted as paying customers, directly challenging Christian's terminology.10:45–15:55 · Guest disagreement 5/10 Service Resource Allocation and Paid Support Tiering Nathan dismantles Christian's assertion that free users and enterprise accounts receive the exact same service, eventually getting Christian to admit they charge for phone and priority support.15:55–19:46 · Guest disagreement 2/10 Bootstrapping Strategy and Financial Independence Nathan explains fundamental SaaS concepts like bootstrapping, churn rate, and CAC when Christian reveals he does not know standard terminology.19:46–21:48 · Guest disagreement 1/10 The Famous Five Rapid-Fire Questions Nathan walks through the standard rapid-fire questions, learning about Christian's reading habits and personal family life.21:48–22:30 · Guest disagreement 0/10 Episode Conclusion and Clever Reach Metric Summary Nathan provides an outro summary of the key metrics and economics covered during the interview.0:00–2:05 · Nathan pushing back 0/10 Nathan Latka's Book Promotion and Amazon Review Solo intro and book promotional read by Nathan Latka with teaser audio clips from the interview.2:05–5:04 · Nathan pushing back 4/10 Guest Introduction and Clever Reach Office Culture Nathan presses Christian for a specific average revenue per user figure after Christian provides vague and conflicting ranges across different tiers.5:05–7:33 · Nathan pushing back 4/10 Clever Reach Origins, Leadership Equity, and Distributed Team Nathan clarifies Christian's equity incentive and presses through evasive answers to get an exact headcount of full-time employees.7:34–10:45 · Nathan pushing back 8/10 The Free Users Versus Paying Customers Debate Nathan calculates revenue based on Christian's 200,000 figure to expose that free users are being counted as paying customers, directly challenging Christian's terminology.10:45–15:55 · Nathan pushing back 8/10 Service Resource Allocation and Paid Support Tiering Nathan dismantles Christian's assertion that free users and enterprise accounts receive the exact same service, eventually getting Christian to admit they charge for phone and priority support.15:55–19:46 · Nathan pushing back 7/10 Bootstrapping Strategy and Financial Independence Nathan explains fundamental SaaS concepts like bootstrapping, churn rate, and CAC when Christian reveals he does not know standard terminology.19:46–21:48 · Nathan pushing back 2/10 The Famous Five Rapid-Fire Questions Nathan walks through the standard rapid-fire questions, learning about Christian's reading habits and personal family life.21:48–22:30 · Nathan pushing back 0/10 Episode Conclusion and Clever Reach Metric Summary Nathan provides an outro summary of the key metrics and economics covered during the interview.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 84% · guest 16%0:00 · Nathan 84% · guest 16%3:00 · Nathan 34.7% · guest 65.3%3:00 · Nathan 34.7% · guest 65.3%6:00 · Nathan 47.5% · guest 52.5%6:00 · Nathan 47.5% · guest 52.5%9:00 · Nathan 38.3% · guest 61.7%9:00 · Nathan 38.3% · guest 61.7%12:00 · Nathan 45.2% · guest 54.8%12:00 · Nathan 45.2% · guest 54.8%15:00 · Nathan 54.2% · guest 45.8%15:00 · Nathan 54.2% · guest 45.8%18:00 · Nathan 55.9% · guest 44.1%18:00 · Nathan 55.9% · guest 44.1%21:00 · Nathan 72.9% · guest 27.1%21:00 · Nathan 72.9% · guest 27.1%
Sharpest disagreement ▶ 8:49 Christian defends defining free users as customers

Christian pushes back against Nathan's challenge, arguing that non-paying users under contract are still legitimate customers entitled to the same treatment.

 Hardest push from Nathan ▶ 8:25 Nathan rejects $100M revenue implication

Nathan calculates that 200,000 customers at the stated ARPU implies $100M monthly revenue and directly confronts the guest for inflating numbers with free users.

 Biggest teaching moment ▶ 9:27 Christian outlines Clever Reach free tier rules

Christian educates Nathan on Clever Reach's distinct regional free allowances between the US and European markets.

 Nathan holds their own ▶ 15:32 Nathan exposes the paid support model

Nathan uses Christian's own admission of premium phone support to disprove the claim that free and enterprise users receive identical treatment.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Nathan Latka's Book Promotion and Amazon Review 0000 Solo intro and book promotional read by Nathan Latka with teaser audio clips from the interview.
Guest Introduction and Clever Reach Office Culture 5124 Nathan presses Christian for a specific average revenue per user figure after Christian provides vague and conflicting ranges across different tiers.
Clever Reach Origins, Leadership Equity, and Distributed Team 4124 Nathan clarifies Christian's equity incentive and presses through evasive answers to get an exact headcount of full-time employees.
The Free Users Versus Paying Customers Debate 8168 Nathan calculates revenue based on Christian's 200,000 figure to expose that free users are being counted as paying customers, directly challenging Christian's terminology.
Service Resource Allocation and Paid Support Tiering 8158 Nathan dismantles Christian's assertion that free users and enterprise accounts receive the exact same service, eventually getting Christian to admit they charge for phone and priority support.
Bootstrapping Strategy and Financial Independence 8027 Nathan explains fundamental SaaS concepts like bootstrapping, churn rate, and CAC when Christian reveals he does not know standard terminology.
The Famous Five Rapid-Fire Questions 3012 Nathan walks through the standard rapid-fire questions, learning about Christian's reading habits and personal family life.
Episode Conclusion and Clever Reach Metric Summary 0000 Nathan provides an outro summary of the key metrics and economics covered during the interview.

Statements from this episode (10)

Disclosure
Schmidt: Clever Reach plans expansion into Messenger, chatbots, and Alexa
“And then in future we do have other channels and emails like Facebook messenger chatbots like Alexa and so on.”
Christian Schmidt Aug 14, 2019 ▶ 3:34
Assertion Not checkable as stated
Schmidt: Clever Reach average customer spends $500 to $2,000 monthly
“Between 502,000 dollars.”
Christian Schmidt Aug 14, 2019 ▶ 4:52
Assertion Not checkable as stated
Clever Reach has between 30 and 50 full-time and outsourced workers
“Well, we are around between 50, 30 people depending on how you count our employees because we work together with teams on an outsourced basis and we employ directly.”
Christian Schmidt Aug 14, 2019 ▶ 6:50
Assertion Not checkable as stated
Clever Reach has 200,000 customers and adds 3,000 to 5,000 monthly
“Well, we now have over 200,000 customers, and I would say within the last years, we grow, we round about three to 5000 new customers each month.”
Christian Schmidt Aug 14, 2019 ▶ 7:48
Opinion
Schmidt: Users with service contracts qualify as customers even without paying
“The customers where you do have a relationship to and a contract and you do a service.”
Christian Schmidt Aug 14, 2019 ▶ 8:55
Disclosure
Clever Reach refuses custom enterprise pricing, strictly using standard plans
“The same, like we do not have people to make special deals. We do not make any special deals with an enterprise. We do have price plans. And everybody has the same price plan and can book and decide for a plan.”
Christian Schmidt Aug 14, 2019 ▶ 12:23
Disclosure
Schmidt: Clever Reach provides free email support but charges for phone support
“We have a free email support, and we have a phone line where you need to pay for to call us and to speak to somebody. And if you have booked the primary support, you get treated faster than who has not booked this special support.”
Christian Schmidt Aug 14, 2019 ▶ 14:39
Disclosure
Schmidt: Clever Reach operates fully bootstrapped without venture capital
“We have owners, and we do not need money from venture capitals. We pay everything out of our, of the money we earn.”
Christian Schmidt Aug 14, 2019 ▶ 16:20
Assertion Not checkable as stated
Schmidt: Clever Reach grows revenue around 25% year-over-year
“Well, at the moment, our growth is around about 25% year by year.”
Christian Schmidt Aug 14, 2019 ▶ 18:07
Disclosure
Schmidt: Clever Reach targets a 12-month CAC payback period
“Well, we usually say that we are willing to pay One year average sales of one customer to invest into a new customer.”
Christian Schmidt Aug 14, 2019 ▶ 19:20
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