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Apr 8, 2018 · 16m · top-founders

988 Livechat on Website Wars

Hamid Shojaee · 8m spoken Nathan Latka · 5m spoken
0:00 / 0:00

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In this episode of The Top Entrepreneurs Podcast, host Nathan Latka interviews PureChat CEO Hamid Shojaee about growing his live chat and web analytics SaaS company to $1.3 million in ARR. Shojaee details PureChat's freemium customer acquisition strategy, unit economics, valuation history, and the vital entrepreneurial importance of maintaining singular product focus.

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 37.2% of the talking time here. How this is scored →

Nathan as informed peer 5.8 Guest teaching 2.5 Guest disagreement 1.8 Nathan pushing back 3.3
05100:0010:000:49–6:45 · Nathan as informed peer 6/10 Hamid Shojaee's Background and Past Ventures Nathan quickly breaks down the SaaS metrics, doing live math to deduce that while current plans are $99/month, the historical cohort yields an average revenue per user of around $26/month across 4,000 customers. Hamid explains the transition from legacy per-operator pricing to the new flat model.6:48–10:15 · Nathan as informed peer 5/10 HostGator Website Hosting and Exclusive Sponsorship Offer After an ad read, Nathan challenges the freemium strategy by pointing out increased support and infrastructure burdens. Hamid counters by clarifying that hosting and support costs are trivial compared to personnel expenses and necessary to establish standard market distribution.10:15–12:34 · Nathan as informed peer 7/10 Unit Economics: Churn, LTV, and Customer Acquisition Cost Nathan pushes Hamid to focus strictly on paid retention when Hamid pivots to free user engagement, immediately computing customer lifetime duration and LTV from a 3.8% monthly churn figure. Hamid confirms the target CAC of $600 to $700 matches a one-third LTV payback framework.12:35–15:52 · Nathan as informed peer 5/10 Strategic Vision, Exit Philosophy, and Valuation Hamid firmly rejects Nathan's hypothetical $3 million buyout offer, pointing out that their previous round was priced at a $5.5 million pre-money valuation. The segment concludes smoothly with the standard Famous Five lightning round.0:49–6:45 · Guest teaching 2/10 Hamid Shojaee's Background and Past Ventures Nathan quickly breaks down the SaaS metrics, doing live math to deduce that while current plans are $99/month, the historical cohort yields an average revenue per user of around $26/month across 4,000 customers. Hamid explains the transition from legacy per-operator pricing to the new flat model.6:48–10:15 · Guest teaching 3/10 HostGator Website Hosting and Exclusive Sponsorship Offer After an ad read, Nathan challenges the freemium strategy by pointing out increased support and infrastructure burdens. Hamid counters by clarifying that hosting and support costs are trivial compared to personnel expenses and necessary to establish standard market distribution.10:15–12:34 · Guest teaching 1/10 Unit Economics: Churn, LTV, and Customer Acquisition Cost Nathan pushes Hamid to focus strictly on paid retention when Hamid pivots to free user engagement, immediately computing customer lifetime duration and LTV from a 3.8% monthly churn figure. Hamid confirms the target CAC of $600 to $700 matches a one-third LTV payback framework.12:35–15:52 · Guest teaching 4/10 Strategic Vision, Exit Philosophy, and Valuation Hamid firmly rejects Nathan's hypothetical $3 million buyout offer, pointing out that their previous round was priced at a $5.5 million pre-money valuation. The segment concludes smoothly with the standard Famous Five lightning round.0:49–6:45 · Guest disagreement 1/10 Hamid Shojaee's Background and Past Ventures Nathan quickly breaks down the SaaS metrics, doing live math to deduce that while current plans are $99/month, the historical cohort yields an average revenue per user of around $26/month across 4,000 customers. Hamid explains the transition from legacy per-operator pricing to the new flat model.6:48–10:15 · Guest disagreement 2/10 HostGator Website Hosting and Exclusive Sponsorship Offer After an ad read, Nathan challenges the freemium strategy by pointing out increased support and infrastructure burdens. Hamid counters by clarifying that hosting and support costs are trivial compared to personnel expenses and necessary to establish standard market distribution.10:15–12:34 · Guest disagreement 1/10 Unit Economics: Churn, LTV, and Customer Acquisition Cost Nathan pushes Hamid to focus strictly on paid retention when Hamid pivots to free user engagement, immediately computing customer lifetime duration and LTV from a 3.8% monthly churn figure. Hamid confirms the target CAC of $600 to $700 matches a one-third LTV payback framework.12:35–15:52 · Guest disagreement 3/10 Strategic Vision, Exit Philosophy, and Valuation Hamid firmly rejects Nathan's hypothetical $3 million buyout offer, pointing out that their previous round was priced at a $5.5 million pre-money valuation. The segment concludes smoothly with the standard Famous Five lightning round.0:49–6:45 · Nathan pushing back 2/10 Hamid Shojaee's Background and Past Ventures Nathan quickly breaks down the SaaS metrics, doing live math to deduce that while current plans are $99/month, the historical cohort yields an average revenue per user of around $26/month across 4,000 customers. Hamid explains the transition from legacy per-operator pricing to the new flat model.6:48–10:15 · Nathan pushing back 4/10 HostGator Website Hosting and Exclusive Sponsorship Offer After an ad read, Nathan challenges the freemium strategy by pointing out increased support and infrastructure burdens. Hamid counters by clarifying that hosting and support costs are trivial compared to personnel expenses and necessary to establish standard market distribution.10:15–12:34 · Nathan pushing back 4/10 Unit Economics: Churn, LTV, and Customer Acquisition Cost Nathan pushes Hamid to focus strictly on paid retention when Hamid pivots to free user engagement, immediately computing customer lifetime duration and LTV from a 3.8% monthly churn figure. Hamid confirms the target CAC of $600 to $700 matches a one-third LTV payback framework.12:35–15:52 · Nathan pushing back 3/10 Strategic Vision, Exit Philosophy, and Valuation Hamid firmly rejects Nathan's hypothetical $3 million buyout offer, pointing out that their previous round was priced at a $5.5 million pre-money valuation. The segment concludes smoothly with the standard Famous Five lightning round.

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

0:00 · Nathan 49.1% · guest 50.9%0:00 · Nathan 49.1% · guest 50.9%3:00 · Nathan 29.4% · guest 70.6%3:00 · Nathan 29.4% · guest 70.6%6:00 · Nathan 47.7% · guest 52.3%6:00 · Nathan 47.7% · guest 52.3%9:00 · Nathan 19% · guest 81%9:00 · Nathan 19% · guest 81%12:00 · Nathan 34% · guest 66%12:00 · Nathan 34% · guest 66%15:00 · Nathan 48.8% · guest 51.2%15:00 · Nathan 48.8% · guest 51.2%
Sharpest disagreement ▶ 13:24 Firm refusal of low multiple acquisition

Hamid categorically dismisses Nathan's premise that they would consider selling for a 2x-3x ARR multiple of $3 million, highlighting that they already raised at a much higher valuation.

 Hardest push from Nathan ▶ 10:37 Redirecting away from free metric deflections

Nathan cuts in to steer the conversation away from sticky free signups and demands strict focus on the paid cohort churn numbers.

 Biggest teaching moment ▶ 13:30 Correcting valuation and round structure

Hamid educates Nathan on the company's capitalization history, correcting his assumption that the $1.5M was a convertible note by clarifying it was a priced round at a $5.5M pre-money valuation.

 Nathan holds their own ▶ 11:04 Instant SaaS LTV derivation

Nathan demonstrates mastery of SaaS financial modeling by immediately inverting the 3.8% monthly churn rate into a 26-month lifespan and estimating a $2,600 lifetime value.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Hamid Shojaee's Background and Past Ventures 6212 Nathan quickly breaks down the SaaS metrics, doing live math to deduce that while current plans are $99/month, the historical cohort yields an average revenue per user of around $26/month across 4,000 customers. Hamid explains the transition from legacy per-operator pricing to the new flat model.
HostGator Website Hosting and Exclusive Sponsorship Offer 5324 After an ad read, Nathan challenges the freemium strategy by pointing out increased support and infrastructure burdens. Hamid counters by clarifying that hosting and support costs are trivial compared to personnel expenses and necessary to establish standard market distribution.
Unit Economics: Churn, LTV, and Customer Acquisition Cost 7114 Nathan pushes Hamid to focus strictly on paid retention when Hamid pivots to free user engagement, immediately computing customer lifetime duration and LTV from a 3.8% monthly churn figure. Hamid confirms the target CAC of $600 to $700 matches a one-third LTV payback framework.
Strategic Vision, Exit Philosophy, and Valuation 5433 Hamid firmly rejects Nathan's hypothetical $3 million buyout offer, pointing out that their previous round was priced at a $5.5 million pre-money valuation. The segment concludes smoothly with the standard Famous Five lightning round.

Statements from this episode (11)

Assertion Not checkable as stated
Shojaee: PureChat, Axosoft, and GitKraken are multimillion-dollar SaaS businesses
“It used to be part of Axosoft, but we broke it up into its own company called PureChat. But yeah, each one is a multi-million dollar SaaS SaaS company, essentially.”
Hamid Shojaee Apr 8, 2018 ▶ 1:29
Assertion Supported
Shojaee: PureChat raised $1.5M angel round in Arizona
“No we did an angel round for about one and a half million locally in Arizona.”
Hamid Shojaee Apr 8, 2018 ▶ 4:03
Assertion Not checkable as stated
Shojaee: PureChat reached breakeven with $1.3M in ARR
“And we basically for all practical purposes, we're at breakeven point right now. And we're about 1.3 million in revenues right now.”
Hamid Shojaee Apr 8, 2018 ▶ 4:39
Assertion Not checkable as stated
Shojaee: PureChat has over 4,000 paying customers
“So we actually have over 4000 paying customers right now.”
Hamid Shojaee Apr 8, 2018 ▶ 5:31
Assertion Not checkable as stated
PureChat doubled user growth after shifting to a mostly free model
“So we went to this sort of mostly free live chat model about three months ago and we've doubled the rate of growth as a result of that.”
Hamid Shojaee Apr 8, 2018 ▶ 7:59
Assertion Not checkable as stated
Shojaee: PureChat is growing revenue about 70% year over year
“We are up about 70% year over year.”
Hamid Shojaee Apr 8, 2018 ▶ 8:27
Assertion Not checkable as stated
PureChat reports 3.8% to 4% monthly churn on paid accounts
“We have about 3.8, just around four percent attrition rate. So a monthly.”
Hamid Shojaee Apr 8, 2018 ▶ 10:45
Assertion Not checkable as stated
PureChat customer LTV is slightly over $2,000
“That's about like 2000 dollars, a little over 2000 dollars is what where we're at like right now.”
Hamid Shojaee Apr 8, 2018 ▶ 11:20
Disclosure
PureChat spends $600 to $700 to acquire a $99/month customer
“We're willing to spend as much as a third of the lifetime value. So about, you know, six, 700 dollars on average to acquire a paying customer at the 99 dollar per month rate.”
Hamid Shojaee Apr 8, 2018 ▶ 11:37
Disclosure
Shojaee rejects hypothetical $3M acquisition offer for PureChat
“No, no, absolutely not. We raised at a higher valuation than that.”
Hamid Shojaee Apr 8, 2018 ▶ 13:26
Assertion Not publicly verifiable
PureChat raised funding at a $5.5M pre-money valuation
“We did a five and a half free.”
Hamid Shojaee Apr 8, 2018 ▶ 13:40
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