StarZero All shows Try the podcast clipper →

Jan 16, 2018 · 20m · top-founders

906 SaaS: Interactive Video Company Passes $1.2m ARR After Unique Way of Handling Churn

Erica Trautman · 10m spoken Nathan Latka · 7m spoken
0:00 / 0:00

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

Erica Trautman, founder and CEO of Rapt Media, joins Nathan Latka to discuss scaling her enterprise interactive video SaaS platform past $1.2 million in ARR through disciplined customer cohort analysis, 85% gross margins, and reseller partnerships.

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 40.6% of the talking time here. How this is scored →

Nathan as informed peer 6.7 Guest teaching 2.3 Guest disagreement 1.3 Nathan pushing back 3.0
05100:0010:0020:001:14–4:17 · Nathan as informed peer 6/10 Rapt Media Platform Overview and Technology Architecture Latka explores Rapt Media's value proposition and tests his understanding of the user interaction flow and underlying tech stack. Erica clarifies the architecture, explaining their proprietary interactive engine on top of HTML5.4:17–7:01 · Nathan as informed peer 7/10 SaaS Pricing Model, Contract Expansion, and Team Structure Latka analyzes the pricing levers and immediately deduces that an average sales price of $20,000 allows for high-touch enterprise sales reps. He presses on the specific driver of expansion revenue and sales headcount breakdown.7:02–10:15 · Nathan as informed peer 7/10 Customer Cohort Analysis and Reseller Distribution Strategy Erica explains their 2015 cohort analysis where half the customers churned and half retained. Latka probes for exact customer numbers and challenges how a reseller distribution strategy obscures tracking and compresses margins.10:18–14:01 · Nathan as informed peer 8/10 Sponsor Break: SignEasy Document Signing Latka questions whether video infrastructure costs erode gross margins below the 85-90% SaaS standard and catches Erica's distinction of a priced round to ask about venture debt. He then brackets her monthly recurring revenue between $110k and $250k.14:01–17:45 · Nathan as informed peer 7/10 Customer Retention, Organic Acquisition, and CAC Payback Latka helps Erica correct a verbal slip where she said 4% retention instead of 4% churn, and explores CAC payback dynamics. Erica clarifies that paid advertising spend is literally zero and all growth is organic.17:45–20:00 · Nathan as informed peer 5/10 The Famous Five Rapid-Fire Questions Latka conducts the Famous Five rapid-fire sequence and wraps up the interview with a concise summary of Rapt Media's financial metrics and business model.1:14–4:17 · Guest teaching 3/10 Rapt Media Platform Overview and Technology Architecture Latka explores Rapt Media's value proposition and tests his understanding of the user interaction flow and underlying tech stack. Erica clarifies the architecture, explaining their proprietary interactive engine on top of HTML5.4:17–7:01 · Guest teaching 2/10 SaaS Pricing Model, Contract Expansion, and Team Structure Latka analyzes the pricing levers and immediately deduces that an average sales price of $20,000 allows for high-touch enterprise sales reps. He presses on the specific driver of expansion revenue and sales headcount breakdown.7:02–10:15 · Guest teaching 3/10 Customer Cohort Analysis and Reseller Distribution Strategy Erica explains their 2015 cohort analysis where half the customers churned and half retained. Latka probes for exact customer numbers and challenges how a reseller distribution strategy obscures tracking and compresses margins.10:18–14:01 · Guest teaching 2/10 Sponsor Break: SignEasy Document Signing Latka questions whether video infrastructure costs erode gross margins below the 85-90% SaaS standard and catches Erica's distinction of a priced round to ask about venture debt. He then brackets her monthly recurring revenue between $110k and $250k.14:01–17:45 · Guest teaching 3/10 Customer Retention, Organic Acquisition, and CAC Payback Latka helps Erica correct a verbal slip where she said 4% retention instead of 4% churn, and explores CAC payback dynamics. Erica clarifies that paid advertising spend is literally zero and all growth is organic.17:45–20:00 · Guest teaching 1/10 The Famous Five Rapid-Fire Questions Latka conducts the Famous Five rapid-fire sequence and wraps up the interview with a concise summary of Rapt Media's financial metrics and business model.1:14–4:17 · Guest disagreement 1/10 Rapt Media Platform Overview and Technology Architecture Latka explores Rapt Media's value proposition and tests his understanding of the user interaction flow and underlying tech stack. Erica clarifies the architecture, explaining their proprietary interactive engine on top of HTML5.4:17–7:01 · Guest disagreement 1/10 SaaS Pricing Model, Contract Expansion, and Team Structure Latka analyzes the pricing levers and immediately deduces that an average sales price of $20,000 allows for high-touch enterprise sales reps. He presses on the specific driver of expansion revenue and sales headcount breakdown.7:02–10:15 · Guest disagreement 2/10 Customer Cohort Analysis and Reseller Distribution Strategy Erica explains their 2015 cohort analysis where half the customers churned and half retained. Latka probes for exact customer numbers and challenges how a reseller distribution strategy obscures tracking and compresses margins.10:18–14:01 · Guest disagreement 1/10 Sponsor Break: SignEasy Document Signing Latka questions whether video infrastructure costs erode gross margins below the 85-90% SaaS standard and catches Erica's distinction of a priced round to ask about venture debt. He then brackets her monthly recurring revenue between $110k and $250k.14:01–17:45 · Guest disagreement 2/10 Customer Retention, Organic Acquisition, and CAC Payback Latka helps Erica correct a verbal slip where she said 4% retention instead of 4% churn, and explores CAC payback dynamics. Erica clarifies that paid advertising spend is literally zero and all growth is organic.17:45–20:00 · Guest disagreement 1/10 The Famous Five Rapid-Fire Questions Latka conducts the Famous Five rapid-fire sequence and wraps up the interview with a concise summary of Rapt Media's financial metrics and business model.1:14–4:17 · Nathan pushing back 1/10 Rapt Media Platform Overview and Technology Architecture Latka explores Rapt Media's value proposition and tests his understanding of the user interaction flow and underlying tech stack. Erica clarifies the architecture, explaining their proprietary interactive engine on top of HTML5.4:17–7:01 · Nathan pushing back 3/10 SaaS Pricing Model, Contract Expansion, and Team Structure Latka analyzes the pricing levers and immediately deduces that an average sales price of $20,000 allows for high-touch enterprise sales reps. He presses on the specific driver of expansion revenue and sales headcount breakdown.7:02–10:15 · Nathan pushing back 4/10 Customer Cohort Analysis and Reseller Distribution Strategy Erica explains their 2015 cohort analysis where half the customers churned and half retained. Latka probes for exact customer numbers and challenges how a reseller distribution strategy obscures tracking and compresses margins.10:18–14:01 · Nathan pushing back 5/10 Sponsor Break: SignEasy Document Signing Latka questions whether video infrastructure costs erode gross margins below the 85-90% SaaS standard and catches Erica's distinction of a priced round to ask about venture debt. He then brackets her monthly recurring revenue between $110k and $250k.14:01–17:45 · Nathan pushing back 4/10 Customer Retention, Organic Acquisition, and CAC Payback Latka helps Erica correct a verbal slip where she said 4% retention instead of 4% churn, and explores CAC payback dynamics. Erica clarifies that paid advertising spend is literally zero and all growth is organic.17:45–20:00 · Nathan pushing back 1/10 The Famous Five Rapid-Fire Questions Latka conducts the Famous Five rapid-fire sequence and wraps up the interview with a concise summary of Rapt Media's financial metrics and business model.

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

0:00 · Nathan 51.6% · guest 48.4%0:00 · Nathan 51.6% · guest 48.4%3:00 · Nathan 21.9% · guest 78.1%3:00 · Nathan 21.9% · guest 78.1%6:00 · Nathan 23.6% · guest 76.4%6:00 · Nathan 23.6% · guest 76.4%9:00 · Nathan 49% · guest 51%9:00 · Nathan 49% · guest 51%12:00 · Nathan 50.7% · guest 49.3%12:00 · Nathan 50.7% · guest 49.3%15:00 · Nathan 32.5% · guest 67.5%15:00 · Nathan 32.5% · guest 67.5%18:00 · Nathan 62.8% · guest 37.2%18:00 · Nathan 62.8% · guest 37.2%
Sharpest disagreement ▶ 17:00 Guest firmly rejects the paid acquisition premise

Erica pushes back against Latka's repeated assumption about paid ad spend, emphasizing that they are spending literally zero dollars on paid channels.

 Hardest push from Nathan ▶ 13:22 Host pins down MRR brackets

Latka actively brackets Erica's MRR between $110k and $250k after she hesitates to share a specific revenue number.

 Biggest teaching moment ▶ 9:00 Guest explains unit economics of reseller distribution

Erica educates Latka on why reseller channels maintain strong software serving margins despite delayed revenue reporting and lower upfront ticket sizes.

 Nathan holds their own ▶ 10:45 Host challenges margin profile against video bandwidth costs

Latka demonstrates deep SaaS domain knowledge by challenging how an interactive video platform can sustain 85-90% gross margins given high video bandwidth and server hosting costs.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Rapt Media Platform Overview and Technology Architecture 6311 Latka explores Rapt Media's value proposition and tests his understanding of the user interaction flow and underlying tech stack. Erica clarifies the architecture, explaining their proprietary interactive engine on top of HTML5.
SaaS Pricing Model, Contract Expansion, and Team Structure 7213 Latka analyzes the pricing levers and immediately deduces that an average sales price of $20,000 allows for high-touch enterprise sales reps. He presses on the specific driver of expansion revenue and sales headcount breakdown.
Customer Cohort Analysis and Reseller Distribution Strategy 7324 Erica explains their 2015 cohort analysis where half the customers churned and half retained. Latka probes for exact customer numbers and challenges how a reseller distribution strategy obscures tracking and compresses margins.
Sponsor Break: SignEasy Document Signing 8215 Latka questions whether video infrastructure costs erode gross margins below the 85-90% SaaS standard and catches Erica's distinction of a priced round to ask about venture debt. He then brackets her monthly recurring revenue between $110k and $250k.
Customer Retention, Organic Acquisition, and CAC Payback 7324 Latka helps Erica correct a verbal slip where she said 4% retention instead of 4% churn, and explores CAC payback dynamics. Erica clarifies that paid advertising spend is literally zero and all growth is organic.
The Famous Five Rapid-Fire Questions 5111 Latka conducts the Famous Five rapid-fire sequence and wraps up the interview with a concise summary of Rapt Media's financial metrics and business model.

Statements from this episode (14)

Insight
Trautman: Interaction Data Proves Video ROI Better Than Play Metrics
“Cause the other thing that happens when you interact with content is there's this massive data exhaust and that data exhaust can tell you a whole lot more about where your viewers are and whether or not you're actually generating an ROI with your video Then wi…”
Erica Trautman Jan 16, 2018 ▶ 2:24
Insight
Trautman: Rapt Media avoids feature throttling to maximize customer value
“So we don't like to throttle price based on features. We think that our customers derive the most value by having access to all the features.”
Erica Trautman Jan 16, 2018 ▶ 4:45
Assertion Not checkable as stated
Trautman: Rapt Media average selling price is approximately $20,000 annually
“Yeah, about 20,000 dollars a year is ASP.”
Erica Trautman Jan 16, 2018 ▶ 5:34
Assertion Not checkable as stated
Trautman: Rapt Media employs fewer than 20 people
“We're under 20.”
Erica Trautman Jan 16, 2018 ▶ 6:25
Assertion Not checkable as stated
Trautman: Rapt Media retained 94-95% of its 2015 core customer cohort
“Of that customer base that we identified in 2015. We've retained 94, 95% of it.”
Erica Trautman Jan 16, 2018 ▶ 7:57
Assertion Not checkable as stated
Trautman: Rapt Media's reseller renewal rates match its direct customer retention
“We have enough partners that are in place now where we're seeing the renewal rates that we saw with our direct customers holding true for the resellers.”
Erica Trautman Jan 16, 2018 ▶ 9:42
Assertion Not checkable as stated
Trautman: Rapt Media maintains 85% gross margins on video serving
“We're still in the 85% range.”
Erica Trautman Jan 16, 2018 ▶ 11:14
Disclosure
Trautman: Rapt Media has raised about $12 million in capital
“So yeah, we've raised money. We've raised about twelve million.”
Erica Trautman Jan 16, 2018 ▶ 11:58
Disclosure
Trautman: Rapt Media raised $2.5M-$3M in its 2016 priced round
“Last round was last priced round was in 2016 and it was, it wasn't that big. It was about 3,000,002 and a half million, something like that.”
Erica Trautman Jan 16, 2018 ▶ 12:07
Prediction Not checkable as stated
Trautman Expects Rapt Media to Achieve Negative Net Churn in 2018
“So I think this year our net, I think that we will have negative net churn this year, especially as the Q four renewals come in. But exactly what that looks like, I'm not totally sure yet.”
Erica Trautman Jan 16, 2018 ▶ 13:12
Assertion Not checkable as stated
Trautman: Rapt Media Sees Roughly 4% Annual Logo Churn
“Maybe four percent per year are churning. Most of those are expanding. So the ones that stay are expanding. So we're retaining those customers.”
Erica Trautman Jan 16, 2018 ▶ 14:21
Insight
Trautman: Reseller Deals Fail Unless Partners Care as Much as Vendors
“When we go into a reseller arrangement, it's really important for, they don't work at all unless the reseller cares about it almost as much as we do.”
Erica Trautman Jan 16, 2018 ▶ 15:45
Assertion Not checkable as stated
Trautman: Rapt Media Spends Zero Dollars on Paid Advertising
“We're doing none right now. Literally zero. It's all organic. At this point we are not doing paid advertising.”
Erica Trautman Jan 16, 2018 ▶ 17:00
Assertion Not checkable as stated
Trautman: Rapt Media Typically Achieves CAC Payback Under One Year
“Well, yeah, we like to get payback in under a year and that typically happens for us.”
Erica Trautman Jan 16, 2018 ▶ 17:16
Made with StarZero

Turn any episode into a week of clips.

This entire site, over 2,600 episodes transcribed, diarized, checked and made playable, runs on the StarZero media pipeline. Drop in your own episode and the podcast clipper finds the moments worth sharing, cuts them, captions them, and reframes them for every feed.

Try the podcast clipper Learn more