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May 26, 2019 · 23m · top-founders

1401 UserTesting CEO "We're at $65m in ARR Now, Hoping to Break $80m by EOY" across 3000 paying customers

Andy MacMillan · 13m spoken Nathan Latka · 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

UserTesting CEO Andy MacMillan joins Nathan Latka to discuss the company's growth to over $65 million in ARR, its transition from transactional pay-as-you-go testing to an enterprise SaaS model, and key metrics including retention, customer acquisition costs, and departmental expansion.

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 39.1% of the talking time here. How this is scored →

Nathan as informed peer 5.1 Guest teaching 1.8 Guest disagreement 0.6 Nathan pushing back 1.6
05100:0010:0020:000:00–2:04 · Nathan as informed peer 0/10 Nathan Latka's Book Promotion and Reviews Solo host intro reading book reviews and providing a summary of UserTesting's high-level metrics.2:05–4:32 · Nathan as informed peer 4/10 The Top Entrepreneurs Podcast Show Intro Standard show introduction where Nathan introduces Andy MacMillan's background and asks for an overview of UserTesting's product offering.4:33–8:30 · Nathan as informed peer 6/10 Human Empathy Versus Big Data and Customer Pricing Nathan inquires about pricing structure and differentiation against automated click-tracking tools, leading Andy to explain seat-based versus consumption models.8:32–11:58 · Nathan as informed peer 6/10 Team Headcount Distribution and Capital Raised Nathan drills down on team breakdown, venture funding, and contrasts UserTesting's enterprise model with Andy's former SMB focus at Act-On.11:59–15:47 · Nathan as informed peer 5/10 Enterprise Account Expansion and Expanding Use Cases Nathan interrupts to clarify whether growth is coming from new accounts or expanding seat licenses, leading Andy to detail emerging use cases across departments.15:49–18:08 · Nathan as informed peer 7/10 Net Retention Dynamics and Prioritizing Gross Revenue Retention Andy highlights his personal philosophy on SaaS metrics, asserting that incentivizing post-sales teams on gross retention is superior to chasing net expansion.18:08–20:12 · Nathan as informed peer 7/10 Unit Economics, Payback Periods, and 2018 Growth Targets Nathan tests Andy's willingness to spend up to $1.70 per dollar of ARR acquired and validates the payback math against expansion and retention numbers.20:13–22:34 · Nathan as informed peer 6/10 Customer Breakdown and ARR Milestones Nathan clarifies a discrepancy in customer count between the press release's 35,000 figure and the 3,000 core enterprise subscription customers.0:00–2:04 · Guest teaching 0/10 Nathan Latka's Book Promotion and Reviews Solo host intro reading book reviews and providing a summary of UserTesting's high-level metrics.2:05–4:32 · Guest teaching 1/10 The Top Entrepreneurs Podcast Show Intro Standard show introduction where Nathan introduces Andy MacMillan's background and asks for an overview of UserTesting's product offering.4:33–8:30 · Guest teaching 3/10 Human Empathy Versus Big Data and Customer Pricing Nathan inquires about pricing structure and differentiation against automated click-tracking tools, leading Andy to explain seat-based versus consumption models.8:32–11:58 · Guest teaching 1/10 Team Headcount Distribution and Capital Raised Nathan drills down on team breakdown, venture funding, and contrasts UserTesting's enterprise model with Andy's former SMB focus at Act-On.11:59–15:47 · Guest teaching 2/10 Enterprise Account Expansion and Expanding Use Cases Nathan interrupts to clarify whether growth is coming from new accounts or expanding seat licenses, leading Andy to detail emerging use cases across departments.15:49–18:08 · Guest teaching 3/10 Net Retention Dynamics and Prioritizing Gross Revenue Retention Andy highlights his personal philosophy on SaaS metrics, asserting that incentivizing post-sales teams on gross retention is superior to chasing net expansion.18:08–20:12 · Guest teaching 2/10 Unit Economics, Payback Periods, and 2018 Growth Targets Nathan tests Andy's willingness to spend up to $1.70 per dollar of ARR acquired and validates the payback math against expansion and retention numbers.20:13–22:34 · Guest teaching 2/10 Customer Breakdown and ARR Milestones Nathan clarifies a discrepancy in customer count between the press release's 35,000 figure and the 3,000 core enterprise subscription customers.0:00–2:04 · Guest disagreement 0/10 Nathan Latka's Book Promotion and Reviews Solo host intro reading book reviews and providing a summary of UserTesting's high-level metrics.2:05–4:32 · Guest disagreement 0/10 The Top Entrepreneurs Podcast Show Intro Standard show introduction where Nathan introduces Andy MacMillan's background and asks for an overview of UserTesting's product offering.4:33–8:30 · Guest disagreement 1/10 Human Empathy Versus Big Data and Customer Pricing Nathan inquires about pricing structure and differentiation against automated click-tracking tools, leading Andy to explain seat-based versus consumption models.8:32–11:58 · Guest disagreement 0/10 Team Headcount Distribution and Capital Raised Nathan drills down on team breakdown, venture funding, and contrasts UserTesting's enterprise model with Andy's former SMB focus at Act-On.11:59–15:47 · Guest disagreement 0/10 Enterprise Account Expansion and Expanding Use Cases Nathan interrupts to clarify whether growth is coming from new accounts or expanding seat licenses, leading Andy to detail emerging use cases across departments.15:49–18:08 · Guest disagreement 2/10 Net Retention Dynamics and Prioritizing Gross Revenue Retention Andy highlights his personal philosophy on SaaS metrics, asserting that incentivizing post-sales teams on gross retention is superior to chasing net expansion.18:08–20:12 · Guest disagreement 1/10 Unit Economics, Payback Periods, and 2018 Growth Targets Nathan tests Andy's willingness to spend up to $1.70 per dollar of ARR acquired and validates the payback math against expansion and retention numbers.20:13–22:34 · Guest disagreement 1/10 Customer Breakdown and ARR Milestones Nathan clarifies a discrepancy in customer count between the press release's 35,000 figure and the 3,000 core enterprise subscription customers.0:00–2:04 · Nathan pushing back 0/10 Nathan Latka's Book Promotion and Reviews Solo host intro reading book reviews and providing a summary of UserTesting's high-level metrics.2:05–4:32 · Nathan pushing back 0/10 The Top Entrepreneurs Podcast Show Intro Standard show introduction where Nathan introduces Andy MacMillan's background and asks for an overview of UserTesting's product offering.4:33–8:30 · Nathan pushing back 2/10 Human Empathy Versus Big Data and Customer Pricing Nathan inquires about pricing structure and differentiation against automated click-tracking tools, leading Andy to explain seat-based versus consumption models.8:32–11:58 · Nathan pushing back 2/10 Team Headcount Distribution and Capital Raised Nathan drills down on team breakdown, venture funding, and contrasts UserTesting's enterprise model with Andy's former SMB focus at Act-On.11:59–15:47 · Nathan pushing back 2/10 Enterprise Account Expansion and Expanding Use Cases Nathan interrupts to clarify whether growth is coming from new accounts or expanding seat licenses, leading Andy to detail emerging use cases across departments.15:49–18:08 · Nathan pushing back 2/10 Net Retention Dynamics and Prioritizing Gross Revenue Retention Andy highlights his personal philosophy on SaaS metrics, asserting that incentivizing post-sales teams on gross retention is superior to chasing net expansion.18:08–20:12 · Nathan pushing back 2/10 Unit Economics, Payback Periods, and 2018 Growth Targets Nathan tests Andy's willingness to spend up to $1.70 per dollar of ARR acquired and validates the payback math against expansion and retention numbers.20:13–22:34 · Nathan pushing back 3/10 Customer Breakdown and ARR Milestones Nathan clarifies a discrepancy in customer count between the press release's 35,000 figure and the 3,000 core enterprise subscription customers.

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

0:00 · Nathan 97.2% · guest 2.8%0:00 · Nathan 97.2% · guest 2.8%3:00 · Nathan 30% · guest 70%3:00 · Nathan 30% · guest 70%6:00 · Nathan 31.5% · guest 68.5%6:00 · Nathan 31.5% · guest 68.5%9:00 · Nathan 27.9% · guest 72.1%9:00 · Nathan 27.9% · guest 72.1%12:00 · Nathan 6.5% · guest 93.5%12:00 · Nathan 6.5% · guest 93.5%15:00 · Nathan 18.9% · guest 81.1%15:00 · Nathan 18.9% · guest 81.1%18:00 · Nathan 40.2% · guest 59.8%18:00 · Nathan 40.2% · guest 59.8%21:00 · Nathan 64.7% · guest 35.3%21:00 · Nathan 64.7% · guest 35.3%
Sharpest disagreement ▶ 16:05 Reframing net retention focus as suboptimal

Andy firmly challenges common SaaS thinking by insisting that teams should not be incentivized around net retention, advocating strictly for gross retention.

 Hardest push from Nathan ▶ 20:17 Challenging customer count discrepancy

Nathan directly presses Andy on press releases reporting 35,000 customers when Andy previously cited only 3,000.

 Biggest teaching moment ▶ 7:26 Explaining the seat versus consumption model dynamic

Andy corrects the premise that UserTesting charges purely per test video, clarifying that seat licenses naturally regulate platform consumption because human insights require review time.

 Nathan holds their own ▶ 18:55 Host calculates expansion rate from gross and net retention

Nathan quickly computes the underlying math, pointing out that an 84% gross retention alongside a 115% net retention represents roughly 35-36% account expansion.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Nathan Latka's Book Promotion and Reviews 0000 Solo host intro reading book reviews and providing a summary of UserTesting's high-level metrics.
The Top Entrepreneurs Podcast Show Intro 4100 Standard show introduction where Nathan introduces Andy MacMillan's background and asks for an overview of UserTesting's product offering.
Human Empathy Versus Big Data and Customer Pricing 6312 Nathan inquires about pricing structure and differentiation against automated click-tracking tools, leading Andy to explain seat-based versus consumption models.
Team Headcount Distribution and Capital Raised 6102 Nathan drills down on team breakdown, venture funding, and contrasts UserTesting's enterprise model with Andy's former SMB focus at Act-On.
Enterprise Account Expansion and Expanding Use Cases 5202 Nathan interrupts to clarify whether growth is coming from new accounts or expanding seat licenses, leading Andy to detail emerging use cases across departments.
Net Retention Dynamics and Prioritizing Gross Revenue Retention 7322 Andy highlights his personal philosophy on SaaS metrics, asserting that incentivizing post-sales teams on gross retention is superior to chasing net expansion.
Unit Economics, Payback Periods, and 2018 Growth Targets 7212 Nathan tests Andy's willingness to spend up to $1.70 per dollar of ARR acquired and validates the payback math against expansion and retention numbers.
Customer Breakdown and ARR Milestones 6213 Nathan clarifies a discrepancy in customer count between the press release's 35,000 figure and the 3,000 core enterprise subscription customers.

Statements from this episode (15)

Assertion Not checkable as stated
UserTesting delivers target audience video feedback in about two hours
“So most of the time in about two hours, You get a video back of your audience actually using your product and giving you real feedback on what it feels like to engage with your product or your service.”
Andy MacMillan May 26, 2019 ▶ 3:59
Disclosure
Large enterprise customers spend $50K to hundreds of thousands annually
“A large company is typically spending anywhere from 50 to a couple hundred K on an annual basis to have their UX research team and their designers on our platform.”
Andy MacMillan May 26, 2019 ▶ 5:40
Insight
Human review time naturally caps unlimited SaaS video consumption models
“So for a lot of our customers, they actually have an unlimited consumption model. What they're paying for are seats, people who can get the insights, and because they actually have to invest the time to consume the insights, That actually helps protect us from…”
Andy MacMillan May 26, 2019 ▶ 7:45
Assertion Not checkable as stated
Andy MacMillan: UserTesting employs about 250 people
“We're about 250 people today.”
Andy MacMillan May 26, 2019 ▶ 8:32
Assertion Not checkable as stated
Half of UserTesting's 250 employees work in sales, marketing, or onboarding
“About a 120.”
Andy MacMillan May 26, 2019 ▶ 8:58
Assertion Supported
Andy MacMillan: UserTesting has raised about $74 million in total funding
“I think we're at about 74 right now. It depends. If you look at crunch base, some of it was secondary, so it's always a little tough to map that in. But that's about what we've raised.”
Andy MacMillan May 26, 2019 ▶ 9:32
Assertion Not checkable as stated
UserTesting expanded a Fortune 50 customer from one to 28 departments
“In my first quarter, we had a large, you know, fortune, 50 company where, you know, we started off in one department, and we were in the process of doing a ULA with them to go across 28 departments that's just grown organically.”
Andy MacMillan May 26, 2019 ▶ 13:09
Assertion Not checkable as stated
MacMillan: A customer's execs do monthly 30-minute UserTesting calls with users
“One of my customers has an executive team that every month, every executive for 30 minutes has a call on our platform of virtual discussion with an end user of their product.”
Andy MacMillan May 26, 2019 ▶ 15:07
Assertion Not checkable as stated
UserTesting's net revenue retention fluctuates between 115% and 117%
“Yeah, we go up and down between about a 115 and a 117.”
Andy MacMillan May 26, 2019 ▶ 16:02
Insight
SaaS companies should focus on gross revenue retention over net retention
“So we're a company that believes net retention is really important to a SaaS company, but I'm a CEO that believes the focus of a SaaS company should be gross retention, not net, and that that's an even more upside.”
Andy MacMillan May 26, 2019 ▶ 16:39
Assertion Not checkable as stated
UserTesting's gross revenue retention rate is approximately 84%
“Yeah, we're at about 84% gross retention.”
Andy MacMillan May 26, 2019 ▶ 17:10
Insight
SaaS customer success teams should not be incentivized on net retention
“One of my big areas of CEOs to think about the fact that you don't want to incent your post sales team on net retention. Let your sales team go sell the upsell. They're the sellers. You want a post sales team that gets up every day and just because my job is t…”
Andy MacMillan May 26, 2019 ▶ 17:38
Disclosure
UserTesting will spend $1.50 to $1.70 in CAC per new ARR dollar
“I'm willing to spend a dollar 50 to a dollar 70, but all that's based on this idea of having really high gross retention.”
Andy MacMillan May 26, 2019 ▶ 18:20
Disclosure
UserTesting has 3,000 subscription customers and 35,000 total pay-as-you-go accounts
“It's 35,000 if you think of the long tail of the SMB space and the Page of Go customers, it's about 3000 in the subscription business. Which again, drives the bulk of our revenue.”
Andy MacMillan May 26, 2019 ▶ 20:24
Disclosure
UserTesting is generating between $60 million and $70 million in ARR
“Yeah, we're between 60 and seventy million in ARR.”
Andy MacMillan May 26, 2019 ▶ 21:31
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