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May 26, 2018 · 18m · top-founders

1036 How He Took SMB Churn From 12% Monthly to 4% In Social Media Marketing Space

Emeric Ernoult · 10m spoken Nathan Latka · 6m 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, host Nathan Latka interviews AgoraPulse co-founder Emeric Ernoult about bootstrapping the SaaS platform to $5 million in ARR. Ernoult details how the company reduced monthly churn from 12% to under 4%, structured early angel buyouts, and scaled a remote global team.

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 38.1% of the talking time here. How this is scored →

Nathan as informed peer 4.3 Guest teaching 3.0 Guest disagreement 1.8 Nathan pushing back 2.3
05100:0010:000:49–4:41 · Nathan as informed peer 6/10 AgoraPulse Overview and Core SaaS Metrics Nathan quickly runs through the SaaS unit economics and asks specific questions regarding cap table cleanups during transitions. Emeric cooperates smoothly, detailing their buyout of early angel investors.4:42–6:56 · Nathan as informed peer 4/10 Founder Philosophy, Co-Founder Longevity, and Global Remote Team Nathan and Emeric discuss lifestyle versus venture-backed scale, co-founder dynamics over 17 years, and managing a 40-person remote global team in a friendly, conversational tone.6:57–10:00 · Nathan as informed peer 6/10 Reducing SMB Churn from 12% to Under 4% Nathan challenges the realism of low SMB churn by bringing up Constant Contact's poor exit multiple. Emeric schools Nathan on the structural reality of SMB SaaS churn, explaining why logo churn on low-tier legacy cohorts is deprioritized over core MRR cohorts.10:02–15:06 · Nathan as informed peer 6/10 Sponsor Message: HostGator Website Hosting After the sponsor read, Nathan pushes for a blended CAC number, but Emeric rejects the premise, explaining that calculating CAC on purely organic inbound without a controllable paid acquisition lever is meaningless.15:06–17:17 · Nathan as informed peer 4/10 The Famous Five Rapid-Fire Questions Nathan runs through the Famous Five rapid-fire questions, prompting Emeric to share insights on valuation offers and his business philosophy of never turning down a life-changing check.17:20–18:07 · Nathan as informed peer 0/10 Episode Summary and Key Metrics Recap Nathan delivers a solo outro monologue recapping the core SaaS metrics, ARR growth, churn reduction, and key takeaways from the episode.0:49–4:41 · Guest teaching 2/10 AgoraPulse Overview and Core SaaS Metrics Nathan quickly runs through the SaaS unit economics and asks specific questions regarding cap table cleanups during transitions. Emeric cooperates smoothly, detailing their buyout of early angel investors.4:42–6:56 · Guest teaching 2/10 Founder Philosophy, Co-Founder Longevity, and Global Remote Team Nathan and Emeric discuss lifestyle versus venture-backed scale, co-founder dynamics over 17 years, and managing a 40-person remote global team in a friendly, conversational tone.6:57–10:00 · Guest teaching 5/10 Reducing SMB Churn from 12% to Under 4% Nathan challenges the realism of low SMB churn by bringing up Constant Contact's poor exit multiple. Emeric schools Nathan on the structural reality of SMB SaaS churn, explaining why logo churn on low-tier legacy cohorts is deprioritized over core MRR cohorts.10:02–15:06 · Guest teaching 6/10 Sponsor Message: HostGator Website Hosting After the sponsor read, Nathan pushes for a blended CAC number, but Emeric rejects the premise, explaining that calculating CAC on purely organic inbound without a controllable paid acquisition lever is meaningless.15:06–17:17 · Guest teaching 3/10 The Famous Five Rapid-Fire Questions Nathan runs through the Famous Five rapid-fire questions, prompting Emeric to share insights on valuation offers and his business philosophy of never turning down a life-changing check.17:20–18:07 · Guest teaching 0/10 Episode Summary and Key Metrics Recap Nathan delivers a solo outro monologue recapping the core SaaS metrics, ARR growth, churn reduction, and key takeaways from the episode.0:49–4:41 · Guest disagreement 1/10 AgoraPulse Overview and Core SaaS Metrics Nathan quickly runs through the SaaS unit economics and asks specific questions regarding cap table cleanups during transitions. Emeric cooperates smoothly, detailing their buyout of early angel investors.4:42–6:56 · Guest disagreement 1/10 Founder Philosophy, Co-Founder Longevity, and Global Remote Team Nathan and Emeric discuss lifestyle versus venture-backed scale, co-founder dynamics over 17 years, and managing a 40-person remote global team in a friendly, conversational tone.6:57–10:00 · Guest disagreement 3/10 Reducing SMB Churn from 12% to Under 4% Nathan challenges the realism of low SMB churn by bringing up Constant Contact's poor exit multiple. Emeric schools Nathan on the structural reality of SMB SaaS churn, explaining why logo churn on low-tier legacy cohorts is deprioritized over core MRR cohorts.10:02–15:06 · Guest disagreement 4/10 Sponsor Message: HostGator Website Hosting After the sponsor read, Nathan pushes for a blended CAC number, but Emeric rejects the premise, explaining that calculating CAC on purely organic inbound without a controllable paid acquisition lever is meaningless.15:06–17:17 · Guest disagreement 2/10 The Famous Five Rapid-Fire Questions Nathan runs through the Famous Five rapid-fire questions, prompting Emeric to share insights on valuation offers and his business philosophy of never turning down a life-changing check.17:20–18:07 · Guest disagreement 0/10 Episode Summary and Key Metrics Recap Nathan delivers a solo outro monologue recapping the core SaaS metrics, ARR growth, churn reduction, and key takeaways from the episode.0:49–4:41 · Nathan pushing back 2/10 AgoraPulse Overview and Core SaaS Metrics Nathan quickly runs through the SaaS unit economics and asks specific questions regarding cap table cleanups during transitions. Emeric cooperates smoothly, detailing their buyout of early angel investors.4:42–6:56 · Nathan pushing back 1/10 Founder Philosophy, Co-Founder Longevity, and Global Remote Team Nathan and Emeric discuss lifestyle versus venture-backed scale, co-founder dynamics over 17 years, and managing a 40-person remote global team in a friendly, conversational tone.6:57–10:00 · Nathan pushing back 4/10 Reducing SMB Churn from 12% to Under 4% Nathan challenges the realism of low SMB churn by bringing up Constant Contact's poor exit multiple. Emeric schools Nathan on the structural reality of SMB SaaS churn, explaining why logo churn on low-tier legacy cohorts is deprioritized over core MRR cohorts.10:02–15:06 · Nathan pushing back 5/10 Sponsor Message: HostGator Website Hosting After the sponsor read, Nathan pushes for a blended CAC number, but Emeric rejects the premise, explaining that calculating CAC on purely organic inbound without a controllable paid acquisition lever is meaningless.15:06–17:17 · Nathan pushing back 2/10 The Famous Five Rapid-Fire Questions Nathan runs through the Famous Five rapid-fire questions, prompting Emeric to share insights on valuation offers and his business philosophy of never turning down a life-changing check.17:20–18:07 · Nathan pushing back 0/10 Episode Summary and Key Metrics Recap Nathan delivers a solo outro monologue recapping the core SaaS metrics, ARR growth, churn reduction, and key takeaways from the episode.

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

0:00 · Nathan 60.7% · guest 39.3%0:00 · Nathan 60.7% · guest 39.3%3:00 · Nathan 22.7% · guest 77.3%3:00 · Nathan 22.7% · guest 77.3%6:00 · Nathan 35.1% · guest 64.9%6:00 · Nathan 35.1% · guest 64.9%9:00 · Nathan 48.2% · guest 51.8%9:00 · Nathan 48.2% · guest 51.8%12:00 · Nathan 11.7% · guest 88.3%12:00 · Nathan 11.7% · guest 88.3%15:00 · Nathan 49% · guest 51%15:00 · Nathan 49% · guest 51%18:00 · Nathan 90% · guest 10%18:00 · Nathan 90% · guest 10%
Sharpest disagreement ▶ 11:20 Rejecting the CAC calculation premise

Emeric forcefully dismisses Nathan's request for customer acquisition cost metrics, calling it 'hocus pocus magic' since their growth is entirely organic.

 Hardest push from Nathan ▶ 8:17 Nathan pushes back on Constant Contact comparison

Nathan counters Emeric's praise of Constant Contact's churn by pointing out their massive churn volume and poor private equity exit valuation multiple.

 Biggest teaching moment ▶ 7:37 Explaining SMB vs enterprise churn dynamics

Emeric educates Nathan on why zero or negative churn is virtually impossible in self-serve SMB SaaS compared to enterprise contract models.

 Nathan holds their own ▶ 12:13 Nathan presses on content marketing scalability

Nathan directly challenges Emeric's organic strategy by questioning why he does not simply hire more content creators if content marketing is truly their core growth driver.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
AgoraPulse Overview and Core SaaS Metrics 6212 Nathan quickly runs through the SaaS unit economics and asks specific questions regarding cap table cleanups during transitions. Emeric cooperates smoothly, detailing their buyout of early angel investors.
Founder Philosophy, Co-Founder Longevity, and Global Remote Team 4211 Nathan and Emeric discuss lifestyle versus venture-backed scale, co-founder dynamics over 17 years, and managing a 40-person remote global team in a friendly, conversational tone.
Reducing SMB Churn from 12% to Under 4% 6534 Nathan challenges the realism of low SMB churn by bringing up Constant Contact's poor exit multiple. Emeric schools Nathan on the structural reality of SMB SaaS churn, explaining why logo churn on low-tier legacy cohorts is deprioritized over core MRR cohorts.
Sponsor Message: HostGator Website Hosting 6645 After the sponsor read, Nathan pushes for a blended CAC number, but Emeric rejects the premise, explaining that calculating CAC on purely organic inbound without a controllable paid acquisition lever is meaningless.
The Famous Five Rapid-Fire Questions 4322 Nathan runs through the Famous Five rapid-fire questions, prompting Emeric to share insights on valuation offers and his business philosophy of never turning down a life-changing check.
Episode Summary and Key Metrics Recap 0000 Nathan delivers a solo outro monologue recapping the core SaaS metrics, ARR growth, churn reduction, and key takeaways from the episode.

Statements from this episode (10)

Assertion Not checkable as stated
AgoraPulse ARPU is $145 to $150 per month
“And it's monthly subscription our pews around hundred and 45, 50 dollars.”
Emeric Ernoult May 26, 2018 ▶ 1:51
Assertion Not checkable as stated
AgoraPulse surpassed 3,000 paying clients in 2017
“And yeah, we have we've passed 3000 clients before the end of the year.”
Emeric Ernoult May 26, 2018 ▶ 2:05
Disclosure
AgoraPulse bought out early $50,000 angel investor for close to $200,000
“Some of them were like, you know, 4030, 40,000. Probably the highest was 50,000, and you know, the 50,000, we bought them out as a close to 200,000, so like it was a good multiple for them.”
Emeric Ernoult May 26, 2018 ▶ 4:30
Insight
Negative churn is impossible for self-serve SMB SaaS
“I don't know anybody in the SMB space who has no churn or negative churn. Negative churn is always, is for higher paid customers.”
Emeric Ernoult May 26, 2018 ▶ 7:49
Assertion Partly supported
Constant Contact achieved 2.5% monthly churn before $1.4B exit
“The best churn rate I've ever heard was constant contact at 2.5. That's the best I've ever heard. And remember, they sold for 1.4 billion and they have 600,000 customers.”
Emeric Ernoult May 26, 2018 ▶ 8:05
Assertion Not checkable as stated
AgoraPulse reduced monthly net revenue churn sequentially from 12% to 3-4%
“So we were at 12. We reduced it to eight the following year. We reduced it to six the following year. We're now between three and four”
Emeric Ernoult May 26, 2018 ▶ 8:50
Disclosure
AgoraPulse aims for under 2% monthly net revenue churn in 2018
“My personal goal is to get to Two or below two by the end of this year. So by the end of 2000 18.”
Emeric Ernoult May 26, 2018 ▶ 8:57
Assertion Not checkable as stated
AgoraPulse reached a $2.5 million ARR run rate in 2016
“We were about 2.5.”
Emeric Ernoult May 26, 2018 ▶ 11:03
Disclosure
AgoraPulse spends $2,000 to $2,500 per Social Media Lab blog post
“Every blog post is costing us around 2000 dollars, 2000 dollars to 2500 dollars per post. Just to give you an idea, I'm not on our regular blog post that the one we've been having for five years an average blog post cost us between 202 150, so it's like 10 tim…”
Emeric Ernoult May 26, 2018 ▶ 13:28
Insight
Founders should never turn down a substantial acquisition offer
“One thing I learned in my life is never say no to a good check. I, when I was a business lawyer, I had clients of mine who said no to huge checks because, you know, one guy was proposed nine hundred and fifty million, and he said, no, I'll sell to a four billi…”
Emeric Ernoult May 26, 2018 ▶ 16:07
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