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Aug 25, 2016 · 28m · top-founders

EP 397: ProsperWorks SaaS 40k Paying Customers, Announces New Funding Adding to $10M Already

John Lee · 14m spoken Nathan Latka · 10m 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,' host Nathan Latka interviews ProsperWorks co-founder and CEO John Lee, who shares how he transitioned from ad-tech and gaming exits to building a Google-integrated CRM serving over 40,000 customers with negative net churn and elite SaaS unit economics.

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 41.6% of the talking time here. How this is scored →

Nathan as informed peer 4.8 Guest teaching 4.0 Guest disagreement 1.5 Nathan pushing back 2.8
05100:0010:0020:002:12–6:35 · Nathan as informed peer 5/10 Bootstrapping and Scaling Bazaar Advertising Solutions Nathan clarifies John's career history and digs into the exact revenue and exit mechanics of Bazaar Advertising. John refuses to give the exact sale price citing confidentiality, prompting Nathan to ask for typical valuation EBITDA multiples.6:35–10:56 · Nathan as informed peer 4/10 Optimization in Gaming: DNA Games and Zynga Exit John breaks down how DNA Games applied mathematical optimization and cohort analysis to Facebook gaming. Nathan pushes on the realities of the exit, asking if it was a down round or if investors actually made money.10:58–13:27 · Nathan as informed peer 3/10 The Origins of ProsperWorks and Google Integration John details his pivot to CRM with ProsperWorks, citing industry research on why almost half of CRM implementations fail due to manual data entry and how their Google integration fixes this.13:28–17:35 · Nathan as informed peer 7/10 ProsperWorks Growth Metrics and Unit Economics Nathan probes into ProsperWorks' funding and unit economics, actively referencing Crunchbase data and translating John's LTV:CAC ratio benchmarks for the audience.17:36–23:12 · Nathan as informed peer 7/10 Team Expansion, Pricing Strategy, and Negative Churn Nathan calculates estimated MRR using customer tiers and ARPU averages, then pushes John to clarify gross versus net negative churn metrics.23:13–26:37 · Nathan as informed peer 3/10 Mid-Show Sponsor Promotions and Live Event Announcement After mid-roll sponsor reads, Nathan conducts the Famous Five rapid fire round, playfully calling John out when he names his own product as his favorite tool.2:12–6:35 · Guest teaching 4/10 Bootstrapping and Scaling Bazaar Advertising Solutions Nathan clarifies John's career history and digs into the exact revenue and exit mechanics of Bazaar Advertising. John refuses to give the exact sale price citing confidentiality, prompting Nathan to ask for typical valuation EBITDA multiples.6:35–10:56 · Guest teaching 5/10 Optimization in Gaming: DNA Games and Zynga Exit John breaks down how DNA Games applied mathematical optimization and cohort analysis to Facebook gaming. Nathan pushes on the realities of the exit, asking if it was a down round or if investors actually made money.10:58–13:27 · Guest teaching 6/10 The Origins of ProsperWorks and Google Integration John details his pivot to CRM with ProsperWorks, citing industry research on why almost half of CRM implementations fail due to manual data entry and how their Google integration fixes this.13:28–17:35 · Guest teaching 4/10 ProsperWorks Growth Metrics and Unit Economics Nathan probes into ProsperWorks' funding and unit economics, actively referencing Crunchbase data and translating John's LTV:CAC ratio benchmarks for the audience.17:36–23:12 · Guest teaching 4/10 Team Expansion, Pricing Strategy, and Negative Churn Nathan calculates estimated MRR using customer tiers and ARPU averages, then pushes John to clarify gross versus net negative churn metrics.23:13–26:37 · Guest teaching 1/10 Mid-Show Sponsor Promotions and Live Event Announcement After mid-roll sponsor reads, Nathan conducts the Famous Five rapid fire round, playfully calling John out when he names his own product as his favorite tool.2:12–6:35 · Guest disagreement 2/10 Bootstrapping and Scaling Bazaar Advertising Solutions Nathan clarifies John's career history and digs into the exact revenue and exit mechanics of Bazaar Advertising. John refuses to give the exact sale price citing confidentiality, prompting Nathan to ask for typical valuation EBITDA multiples.6:35–10:56 · Guest disagreement 1/10 Optimization in Gaming: DNA Games and Zynga Exit John breaks down how DNA Games applied mathematical optimization and cohort analysis to Facebook gaming. Nathan pushes on the realities of the exit, asking if it was a down round or if investors actually made money.10:58–13:27 · Guest disagreement 1/10 The Origins of ProsperWorks and Google Integration John details his pivot to CRM with ProsperWorks, citing industry research on why almost half of CRM implementations fail due to manual data entry and how their Google integration fixes this.13:28–17:35 · Guest disagreement 2/10 ProsperWorks Growth Metrics and Unit Economics Nathan probes into ProsperWorks' funding and unit economics, actively referencing Crunchbase data and translating John's LTV:CAC ratio benchmarks for the audience.17:36–23:12 · Guest disagreement 2/10 Team Expansion, Pricing Strategy, and Negative Churn Nathan calculates estimated MRR using customer tiers and ARPU averages, then pushes John to clarify gross versus net negative churn metrics.23:13–26:37 · Guest disagreement 1/10 Mid-Show Sponsor Promotions and Live Event Announcement After mid-roll sponsor reads, Nathan conducts the Famous Five rapid fire round, playfully calling John out when he names his own product as his favorite tool.2:12–6:35 · Nathan pushing back 3/10 Bootstrapping and Scaling Bazaar Advertising Solutions Nathan clarifies John's career history and digs into the exact revenue and exit mechanics of Bazaar Advertising. John refuses to give the exact sale price citing confidentiality, prompting Nathan to ask for typical valuation EBITDA multiples.6:35–10:56 · Nathan pushing back 3/10 Optimization in Gaming: DNA Games and Zynga Exit John breaks down how DNA Games applied mathematical optimization and cohort analysis to Facebook gaming. Nathan pushes on the realities of the exit, asking if it was a down round or if investors actually made money.10:58–13:27 · Nathan pushing back 1/10 The Origins of ProsperWorks and Google Integration John details his pivot to CRM with ProsperWorks, citing industry research on why almost half of CRM implementations fail due to manual data entry and how their Google integration fixes this.13:28–17:35 · Nathan pushing back 4/10 ProsperWorks Growth Metrics and Unit Economics Nathan probes into ProsperWorks' funding and unit economics, actively referencing Crunchbase data and translating John's LTV:CAC ratio benchmarks for the audience.17:36–23:12 · Nathan pushing back 4/10 Team Expansion, Pricing Strategy, and Negative Churn Nathan calculates estimated MRR using customer tiers and ARPU averages, then pushes John to clarify gross versus net negative churn metrics.23:13–26:37 · Nathan pushing back 2/10 Mid-Show Sponsor Promotions and Live Event Announcement After mid-roll sponsor reads, Nathan conducts the Famous Five rapid fire round, playfully calling John out when he names his own product as his favorite tool.

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

0:00 · Nathan 80.7% · guest 19.3%0:00 · Nathan 80.7% · guest 19.3%3:00 · Nathan 13.9% · guest 86.1%3:00 · Nathan 13.9% · guest 86.1%6:00 · Nathan 8.9% · guest 91.1%6:00 · Nathan 8.9% · guest 91.1%9:00 · Nathan 15.8% · guest 84.2%9:00 · Nathan 15.8% · guest 84.2%12:00 · Nathan 33.1% · guest 66.9%12:00 · Nathan 33.1% · guest 66.9%15:00 · Nathan 27.4% · guest 72.6%15:00 · Nathan 27.4% · guest 72.6%18:00 · Nathan 30.5% · guest 69.5%18:00 · Nathan 30.5% · guest 69.5%21:00 · Nathan 57.9% · guest 42.1%21:00 · Nathan 57.9% · guest 42.1%24:00 · Nathan 83.1% · guest 16.9%24:00 · Nathan 83.1% · guest 16.9%27:00 · Nathan 100% · guest 0%27:00 · Nathan 100% · guest 0%
Sharpest disagreement ▶ 5:35 Refusing to disclose exit price

John firmly declines to share the acquisition value of Bazaar Advertising despite Nathan pressing him that it happened over a decade ago.

 Hardest push from Nathan ▶ 13:40 Challenging vague funding statements

When John vaguely claims they raised tens of millions, Nathan immediately counters with Crunchbase figures citing ten million across two rounds.

 Biggest teaching moment ▶ 12:45 Analyzing CRM failure points

John explains Forrester data showing 47% of CRM deployments fail from bad data and outlines how automated API data ingestion eliminates manual entry.

 Nathan holds their own ▶ 16:30 Explaining SaaS LTV to CAC ratios

Nathan steps in to directly translate John's 6:1 LTV:CAC metric for the audience and compares it against startups that dangerously subsidize customer acquisition for market share.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Bootstrapping and Scaling Bazaar Advertising Solutions 5423 Nathan clarifies John's career history and digs into the exact revenue and exit mechanics of Bazaar Advertising. John refuses to give the exact sale price citing confidentiality, prompting Nathan to ask for typical valuation EBITDA multiples.
Optimization in Gaming: DNA Games and Zynga Exit 4513 John breaks down how DNA Games applied mathematical optimization and cohort analysis to Facebook gaming. Nathan pushes on the realities of the exit, asking if it was a down round or if investors actually made money.
The Origins of ProsperWorks and Google Integration 3611 John details his pivot to CRM with ProsperWorks, citing industry research on why almost half of CRM implementations fail due to manual data entry and how their Google integration fixes this.
ProsperWorks Growth Metrics and Unit Economics 7424 Nathan probes into ProsperWorks' funding and unit economics, actively referencing Crunchbase data and translating John's LTV:CAC ratio benchmarks for the audience.
Team Expansion, Pricing Strategy, and Negative Churn 7424 Nathan calculates estimated MRR using customer tiers and ARPU averages, then pushes John to clarify gross versus net negative churn metrics.
Mid-Show Sponsor Promotions and Live Event Announcement 3112 After mid-roll sponsor reads, Nathan conducts the Famous Five rapid fire round, playfully calling John out when he names his own product as his favorite tool.

Statements from this episode (12)

Assertion Not checkable as stated
John Lee built a $47M advertising business in two years without VC
“And we built a forty seven million dollar business basically in two years. We didn't raise any venture financing, so it was all personally funded out of credit cards and loans and all that kind of good stuff.”
John Lee Aug 25, 2016 ▶ 4:52
Insight
Lee: Ad arbitrage businesses are valued on EBITDA multiples, not revenue
“I think that it's valued primarily today on EBITDA, so operating income, because at the end of the day, you're paying for media, you're generating revenue, the product that you're ultimately building is profitability, right? You're building, that's the product…”
John Lee Aug 25, 2016 ▶ 5:58
Assertion Not checkable as stated
Lee: Ad arbitrage businesses trade at 8x to 15x annual EBITDA
“Anywhere between eight to 15, depending on the growth rate.”
John Lee Aug 25, 2016 ▶ 6:23
Assertion Contradicted
Zynga's ChefVille was the world's largest game by daily players in 2012
“And we built a game called chef bill. That was the largest game in the world by daily active players in 2012 and was the most successful game launch for the company that year.”
John Lee Aug 25, 2016 ▶ 10:20
Assertion Not checkable as stated
Lee: DNA Games investors made a profit in Zynga acquisition
“No, investors definitely made money on the deal. I mean, I think they probably wanted to make more money on the deal.”
John Lee Aug 25, 2016 ▶ 10:43
Assertion Supported
Lee: Forrester Finds 47% of CRM Implementations Fail
“And the biggest problem is that 47%, according to Forrester, of CRM implementations ultimately lead to failure.”
John Lee Aug 25, 2016 ▶ 12:40
Assertion Not checkable as stated
ProsperWorks served over 40,000 paying customers as of 2016
“We serve over 40,000 customers.”
John Lee Aug 25, 2016 ▶ 14:35
Assertion Not checkable as stated
Lee: ProsperWorks maintains an LTV to CAC ratio above 5:1
“It's definitely north. It's definitely north of five.”
John Lee Aug 25, 2016 ▶ 15:37
Insight
Lee: SaaS LTV-to-CAC converges to 3x-4x as companies scale
“What you find as companies mature is that you get diminishing marginal returns, which means that, you know, as you add more customers or your rate of new customer growth increases then the cost to acquire also increases as well. So we see convergence. Of LTV t…”
John Lee Aug 25, 2016 ▶ 17:47
Insight
Lee: SaaS companies should expand sales teams while magic number exceeds 0.8
“You make sure your magic number is, you know, above 0.8. And if your magic number is above 0.8, then, you know, you keep expanding.”
John Lee Aug 25, 2016 ▶ 18:34
Assertion Not checkable as stated
Over 80% of ProsperWorks customers paid $49 per user monthly
“Our average customer typically signs up for the professional edition, which is a 49 dollar per user per month on an annual basis. About 80% or more of our customers are on that edition.”
John Lee Aug 25, 2016 ▶ 19:30
Assertion Not checkable as stated
Lee: ProsperWorks operates at negative net revenue churn
“Yeah, so on a net, I can't comment on our gross, but our net churn is actually negative.”
John Lee Aug 25, 2016 ▶ 21:37
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