The Exchanges

Q So now you're doing hip lead fast forward. Now, what does hip lead do and what's your revenue model? How do you make money?

A Yeah. So hip lead, we help companies scale their outbound sales and we make money basically by working with sales and marketing teams, um, to do a lot of the things that, that are repetitive in their sales process, lead generation, um, some sales ops functions, um, and then actually help them on a consulting basis to run Um, their outbound, outbound email campaigns and outbound sales. Uh, and we charge companies between, um, you know, between two and, and 4000 dollars a month on average. I think our biggest client, um, is around 20,000 dollars a month. Um, yeah. And we basically, uh, help them to scale their outbound sales. Um, we're usually working with their demand gen team or with their sales office team.

AI assessment note: “we charge companies between, um, you know, between two and, and 4000 dollars a month”

Q think you said already a month in sales, and over two, almost two years ago, you were doing one 10 just on Hipplead. Well, today you're doing one 50 combined. If I take You know, 30 off of one 50, it's one 20, so it's basically, I mean, it's basically flat, and if it's a service, it's low margin. Again, why not sell it off and double down on Sona?

A Yeah, it's a possibility. Um, we, you know, we built Sona, basically, because we had a lot of insights into how, you know, we worked with over, I think, now, 250, almost 300 different companies that are all SaaS companies, B to B SaaS companies, and so, Uh, Hibbleed's given us insight into, into, you know, real problems, um, that other people simply don't understand. Um, very easily. We've worked with so many companies, and we've seen the gamut of, of behaviors that what it's allowed us to do is, is build a, build a really great product that, that very, I think very few people would have approached, um, having not had the experience. And so, we still think Hipplead's a valuable company, um, at minimum, just to keep us in the loop of, of what everyone's doing. And, and that, that, that's a major leg up, uh, on other folks. So, um, but yeah, we might, we might sell Hipplead in the future. It, it just depends on how things go. Uh, But, uh, but yeah, Sona was really only, um, only its beta started in beta about two months ago, so that's been, that growth is all in two months.

AI assessment note: “we still think Hipplead's a valuable company, um, at minimum, just to keep us”

Q Now you, uh, I'm going off. I'm trying to remember email threads. Did you decide to use debt or not?

A A while back. Yes. So we use letter capital. Um, yeah, we were, we haven't, uh, our loan was, uh, 150 K in actual loan and we had a 50% interest paid over, over three years. So we paid 225, uh, K 70, 70,000, you know, in, uh, in, in, in fees and whatnot. Uh, so it was, uh, it was, but I, it was a good experience. We enjoyed it. And, um, And, uh, and in general, I, we haven't done it yet, but there's, we're, um, there's a lot of people, um, I'm not sure when this is going to air, but there's, um, a lot of resources around COVID, small business association resources that, um, that a lot of companies, you know, are a good way to, to, to get really cheap debt.

AI assessment note: “A while back. Yes. So we use letter capital.”

Q us like what happened. Seriously. People don't talk about how to shut down a business. Like there was a moment where you realized, shit, this is not going to work. Like, how do I shut this down while I still save face? Like where my ego doesn't take a big hit and where everyone doesn't think I'm a total loser. How'd you shut it down? Like in an efficient way?

A Well, you know, you know, at the time, you know, I was lucky enough to have another co-founder, um, that was sort of want to keep it going. Um, so, so basically, uh, the backstory is basically, um, you know, we were doing a couple thousand dollars a month in revenue, um, Um, we were a couple months out of YC. Um, and, uh, the company itself was basically trying to do Google voice for business, compete with grasshopper, um, as a telephony startup that was built on Twilio. And, uh, we got some good traction, um, mainly among Canadians, interestingly enough, because there wasn't Google voice didn't work in Canada. Um, and we did. And so we got a lot of traction. Um, but at the end of the day, uh, it wasn't something that, um, You know, where we saw a nice large win, um, on the horizon, we kind of did a lot of math and did a lot of, uh, understanding of what the market looked like. And we did the calculations. We understood, Hey, you know what, now is the time to pull the plug. Um, so I decided to take off and, and, uh, start a new venture and my co-founder at the time kept it going.

AI assessment note: “I decided to take off and, and, uh, start a new venture”

Q Tell us how you amicably wound that down. Like, did I assume you gave him equity? Did it just have a cliff? So you just executed the cliff and got the equity back in the company or what?

A Yeah, exactly. So, um, yeah, it was, uh, you know, I, I was, I've always had, you know, majority ownership of the company. Um, and, and, and so, uh, you know, he was, you know, co-founder for about a year and a half. Um, and so, you know, basically when he was done, we would, you know, we made sure I started a few companies now and I always make sure that my legal docs are, are everything's shored up in the very beginning. Um, so, you know, everything was clear between us the entire time. And then when he decided to part ways, he, He kept his, uh, his ownership of it and the stuff he, he didn't invest the company purchased back.

AI assessment note: “He kept his, uh, his ownership of it and the stuff he, he didn't”

Q Makes good sense. Take us back to that first year in business. Do you remember what your revenue was that first year?

A Uh, I, it wasn't a lot. Um, it was, it was trying to think probably Like 200,000 dollars the first year. Um, so it was, we had employees already from, from day one. Um, so Hipplead was started basically as a consultancy initially, and it started because I had, I had been running a marketing at a, at a, at a, you know, after I, I, after Telfi, I left Telfi, I joined my friend's company and, um, and, uh, it was called buyer's best friend and, uh, it was a B to B startup, uh, in the food space. B to B food company. And we scaled that company up to a pretty large amount of revenue, um, without spending any, any money on, on marketing. And we did it pretty much without out sales, without out emailing, um, you know, web crawling and whatnot. And, uh, so I was there for, I was there for about 18 months and I left and a lot of my other, other buddies who were, you know, founders said, Hey, can you do the same thing that you guys did at BBF for us? And so, um, I was playing around with a few different startup ideas. One was a consumer, um, Uh, idea, and my friend, you know, I turned around and I said, sure, I'll help you, I'll help you, I'll help you, and they were paying me, you know, each one were paying me a couple thousand dollars a month, and then all of a sudden I did that.

AI assessment note: “probably Like 200,000 dollars the first year.”

Q look at that and go, okay, if it's 30 grand a month, it's three 60, you know, somewhere around three 60 a year, call it 400 a year. I mean, they would offer you, you know, one or one and a half, depending on what churn is, just give you a quick 500 grand cash infusion, which you could use to grow these other things. Would you take that deal?

A I have to look at, I'd have to look at the fundamentals. Um, I, I right now, probably not. Uh, although it depends, you know, depends on strategic, um, you know, hip leads, hip leads, it does a lot of great things for us. Um, and, and so, you know, for that, that kind of revenue probably, probably wouldn't necessarily be worth it. Um, but, uh, but it really just depends, you know, on our position and everything else. Yeah. I, I really like hip lead just Continuing to run it, um, is because it just, it gives us a great amount of insight into what a lot of different companies are doing and their problems, and that's, that's hard to, that's really hard. Well, you can't put price on it. It's very expensive.

AI assessment note: “right now, probably not. Uh, although it depends”

Q How do you manage all that though? I mean, then you're dealing with a bunch of different code and you have to deal with bug tracking on seven different, you know, code basis. Doesn't that drive your dev team crazy?

A Well, we, we actually, we, so we, you know, we, we started out, you know, being a consultancy, we, we, we basically built, um, a backend that, that can support a lot of this different functionality. Um, so one of the things that, that we're, that we're, that we've been successful, we've done is we've kind of turned a lot of our infrastructure into API. So, um, we can take parts. So what the core is, is an API and we can build little modules, kind of like building blocks on top of that and pull them in and pull them out. So kind of like, um, like a set of Lego blocks or like an erector set, right? You've got one piece that grabs data from, say, their, their CRM, our client's Salesforce, and then it filters it. And then it's, then it has logic that then would go and say, okay, well, based on what's in here, um, what's the business logic? And then it would pass it into another system. All those are these individual parts. Um, so yeah.

AI assessment note: “we've kind of turned a lot of our infrastructure into API”

Q to take there and make Connor, I'll ping you after this episode and figure out how to get you this information for your site too. But yeah, guys also check out the link is, uh, COVID.gopersonas.com. Uh, we'll put it up on the blog as well as you guys can check that out. Um, Connor, talk to me about your customers. Are you seeing a churn spike because of this?

A Um, yeah, I mean, so customers that are, so, you know, we work with a lot of different companies, almost all of our customers are SAS businesses. Um, and they're, they, they, they span the gamut from recruiting to companies that are doing photography, um, to doing, you know, pure, pure play SAS, um, you know, remote worker, um, you know, sort of software. And obviously the ones that are, that are the tightest are ones that are doing things that are related to offices and, um, things are related to, um, to physical events. So some of our customers that are, that are kind of the tightest, what we've been doing for our existing customers, we've been offering them free resources on our own services during this time and massive discounts, um, just, just to, you know, make sure that they, they, you know, can get, can get through this. Um, and, uh, you know, and so we're, we're, we're, we're trying to, to keep everyone from churning by, by doing whatever we can, um, on a case by case basis. So if a customer is, you know, really You know, need resources and we can tell and we talk to them, then we'll, we'll roll out some extensions and resources for them.

AI assessment note: “we're trying to, to keep everyone from churning by, by doing whatever we can”

Q And are you seeing meaningful expansion revenue, especially from that self-serve at maybe a grand a month up to your enterprise level at five, six, seven, eight grand a month?

A Uh, yeah, we have, um, we have, and I don't have all the numbers in front of me, but, um, But the 15% includes some expansion churn, but we treat the two, we treat the enterprise and, and, and the app as almost two separate businesses. Um, so we haven't easily tracked them in between, but, um, but yeah, there, there is a good amount of, of, um, of, cause what we do is we have a monthly plan, um, and, and, uh, starting off at right now it's two 50 and, and during COVID we give it for free, um, for three months, uh, for companies that need it. Um, and then we, what we'll do is we'll upsell people onto a one year plan with a, with a discount. Um, and so, and so if you factor those two things in, it, it does, uh, it does have probably 10% or more, um, kind of, uh, you know, um, negative, negative churn or upsell.

AI assessment note: “it does have probably 10% or more, um, kind of, uh, you know, negative churn”

Q Of course, man. Thanks for coming on. Hey, tell us real quick, uh, because you're not doing Telfi now, and that was in Y Combinator winter, 20 11. What happened to it?

A Well, you know, like a lot of, you know, early stage startups, you know, you got to think of them like, uh, you know, they're sort of like they're, I think with Paul Graham, he used to always talk about, um, startups as, as, uh, you know, a little baby turtles, there would be a thousand of them on the beach. And then, you know, only, only, uh, 200 of them would actually make it to the surf and only, uh, a hundred or 50 of them would actually make it to be adult turtles. So, uh, you know, we, we did a lot of fun things and learned a lot, but, you know, didn't make it past its infancy.

AI assessment note: “didn't make it past its infancy.”

Q What's the minimum do you think? Is that, is that public?

A Um, I, you know, I would probably, I. It depends. So what they do is they negotiate a, all revenue based financing companies have, um, basically negotiate a, a total interest rate that needs to be paid back. And then what, what varies is the interest rate is fixed. Um, and so it's not a, it's not monthly. It's, it's a total interest rate on the loan amount. And then it doesn't matter, um, what speed you pay them back. You still owe the amount of money. What they do is they look at your revenue and they look at your revenue, your bank account, and they basically have an agreement where they will auto deduct a specific amount based on revenue from that month. So, um, so yeah.

AI assessment note: “It depends. So what they do is they negotiate a, all revenue based financing”