Growing Lumen5 to 700,000 Users Without a Marketing Team With Michael Cheng

Growing Lumen5 to 700,000 Users Without a Marketing Team With Michael Cheng

Key stats on Lumen5 

  • Over 700,000 users.
  • 3 million videos created by users
  • 450K unique visitors on site

Key Takeaways on Lumen5

  • Video production is a complex process
  • Come up with a solution that addresses customer’s pain points
  • Video marketing has evolved in the last few years
  • Freemium model helps you grow your user base in a short time
  • Watermark on videos creates a viral network effect
  • Price needs to be segmented across different customer profiles
  • Involve everyone to interact with the customers
  • Think from the perspective if one user leads to additional user
  • Content marketing does not bring ideal customers to your website
  • Going multilingual can help you tap non-English speaking markets
  • Efficacy of freemium model depends on the viral effect
  • Focus on delivering value to your customers

Transcription

Hammad:

Hey, Mike, thank you for coming on the show. So founder of Lumen5, a great company. I've used the product myself. So I'm a big fan. 

I know you guys have seven over over 700,000 users. In 2020, you did two to 3 million videos. Your users created them and you're getting about 450,000 unique visitors on the site.

So yeah, very, very impressive numbers but before we talk about why you built Lumen5 and how you got it to become a big brand and such a big company. 

I would love to know who you are and where you started. How did you get to Lumen5 and then we'll take it from there. 

Mike:

Yeah, for sure. Thank you for the opportunity to chat. Always happy to talk about this story. It certainly hasn't been easy. 

You know, it's been a couple of years. We started the journey probably around January of 2017. So it's a bit of an anniversary to be back in January again. 

For me personally, I've always been a digital media guy. So, you know, I love everything from 3d modeling to video production and digital media, not necessarily programming.

And so you know, I was really into building websites, building mobile apps, simple stuff. And so video production, video creation, content creation was always something that I was interested in even just from a film perspective. And I went to school for digital media and there were film production courses.

And as you can imagine in school, the film projects, but not that great, but it sparked interest in me and ended up above all I think it helped me develop respect for how difficult it is, making videos are complicated. 

And you think of making an image, which is a single instance in time, then you think about creating a video, which is across time and space and with layers and pacing. 

It's quite a complex process. 

So fast forward quite a few years after school. 

Hammad:

Mike, sorry. Apologies. I'm cutting you. So when you were doing all the video production at that time, first of all, what year was that? 

And technology now is great, but what kind of difficulties were you facing in terms of video production compared to how easy it is now. 

Mike:

Yeah, this was probably closer to 2010. So the video production space, actually, especially for the business and consumer side, hasn't really seen a ton of innovation. 

You know, you get the aftereffects, you get the premier pro on the industry level.

There's a lot of innovation when it comes to Marvel films and Avengers, and then there's a lot of video production and special effects innovation in that space. 

But for really the entire decade, the average person, or the average business had no need to create videos. 

And so the skill of after effects or premiere pro doesn't really have applications into marketing until I would say closer to, you could say 2014, 2015, a couple of major trends started happening. 

Mobile phones became more powerful than ever before. For the first time you can actually watch video on the go, which was just not something that was possible before. 

Another major trend was just mobile data. And if you recall back in the day when 3G or even 2G was a thing, nobody can afford to watch a video on mobile.

It would just be too expensive, but nowadays you've got these large gigabytes size mobile plans. You've got phones that can load videos instantaneously. 

And what that resulted in was consumers now can watch videos and want to watch videos. And as, as you all know, businesses follow where consumers go and the demand for video created a need for businesses to create video content.

What happens is, owners of businesses or management will go to the marketing team and say, okay, we're going to create videos. And now you've suddenly got marketing teams, communications teams were not trained in video production whatsoever. And that's kind of how I initially came upon the idea to create Lumen5.

And having gone through school and learned how complicated video creation is. I saw the opportunity to simplify it. 

What if we create a much simpler solution than what you have in the film industry, like after effects and premiere. What about something like PowerPoint? How do we make the PowerPoint of video?

Hammad:

And that became the originating idea for Lumen5. So I know, I'm jumping all over the place. 

So Mike I think you guys are probably one of the first ones or the first one to create those kinds of videos, very powerful videos, where you have the PowerPoint style videos and all the content is just kind of created for you.

How did you come up with that? That's a really unique concept. And how did you get that to that point? 

Mike:

Oh, not at all. And I do consider us a first mover in this space. 

So, I mean, it's hard to claim whether we were the first, cause I think there were a couple of people, a couple of teams around the world that were thinking about a similar thing around the same time.

So in 2017, we were certainly one of the only solutions in that space to launch and then shortly after a few followed. 

So it's hard to know whether, you know, they copied very quickly or they were thinking about it ahead of time. We don't have to go into the details there. So for the first year the video was quite simple.

You look at Lumen5 today, there's lots of themes and templates and colors and customizations, and the videos look really great. 

Transitions feel really good. In 2017, it really was a bit of a glorified slideshow. You know, the transitions were harsh. Rendering times were slow. 

A lot of the media files were very limited to creative commons and what's available for free on the web.

And so it was a very simple version of a video creator, but at the time, because there was nothing else and that was the most compelling thing that the market had seen. 

And so, we really started off building an animated slideshow, building philosophy of how to turn something as complicated as video into PowerPoint.

So we drew a lot of inspiration from the slide based PowerPoint design, and then over time as new things emerged, like Instagram stories, LinkedIn stories, different formats and aspect ratios.

We built, we adapted the system and then overall expanded the feature capacity. 

Now you can use it for all sorts of different use cases for making ads, for putting it on LinkedIn, Instagram, and all sorts of different places.

So the complexity did build upon itself over the past three years, four years. 

Hammad:

Wow, because I remember when I first saw Lumen5. Straight away, I saw the final result. I understood it. 

Because I've seen similar videos on CNN and BBC and said, okay finally, someone's come up with this but how are they being made?

Because those kinds of videos are very common and I've been seeing them for probably seven, eight years or probably even longer. What were they using before to create? 

Mike:

Yeah, that's right. So what we like to do is we look at what people create by hand. So you'll have a company like a media corporation, like CNN will have a video production team.

They'll have a specialized team that uses specialized software, like Aftereffects to produce certain types of videos. 

And what we watch for is what are these specialized video teams doing? And then we look into how hard it is to do? How long does it take them on average to create a video?

That especially if you hire an agency or a contractor, it's going to take you a couple of weeks, sometimes a month. 

And what we try to build technology solutions for is how do we take what people want to do and are already doing, taking weeks doing, but cutting that time down to under five minutes.

And so the average completion time on our platform now is around six minutes. We're getting really close to the five minute Mark. 

And, that's how we innovate over time as well. So to this day, I still look at what people do by hand, how long is it going to take them? 

How do I then create technology solutions so that other people who are not trained in video editing can create the same style of videos.

And so, after the Lumen5 launch a lot of those videos that you've seen on CNN and economists and so forth solely became replaced because after we build the solution, we contact the economist and we say, Hey, you know, those videos you've been using you, you obviously have a demand for them and obviously takes you a long time.

It's very expensive here. Check out this technology solution. So many of the videos are powered by Lumen5 today. The Economist, Forbes, they're all part of our list of customers. 

Hammad:

Okay. That's actually really interesting. So let's go back. So you talked about, you figured out what people were using, what people were doing already. 

And, you know, things that were taking weeks to try to figure out if we're going to do that for them and make it easy. 

So let's now talk about the time when you actually started working on the solution and when you started talking to the customers.

So let's talk about that. How many potential customers did you speak with as you were building the product? Let's talk about that whole duration. 

Mike:

Yeah. There's a pretty fun story there. If you're into launch stories, this is definitely a good one. In the very early days with the prototype, with a very early version of Lumen5 that wasn't ready for public use.

I actually created a profile on Fiverr. And on Fiverr, I was offering to create videos for $5, which was a very competitive offer. 

I was the only provider in my category who was able to create video for $5. Other people can't do it. 

They, it's just, the time doesn't really make sense. And so I was out competing people from overseas, even people with different things because I had a technology solution to my advantage, and I built a fairly strong profile on Fiverr, added client referrals.

There was search traffic coming through Fiverr. And I was able to deliver on these projects quite easily using the technology that we're building. 

And so, in a way I was talking to customers, they didn't know that I was building Lumen5 or I was part of Lumen5 in any shape or form, as far as they were concerned, I was a video producer, delivering a service.

But naturally, as a service provider, I am learning when they're asking for requests and revisions, can you do this? Can you tweak that? I want the music to be here. 

I want to replace this. And over time that became iterations of the product. And then one day when we felt ready to flip the switch I simply denied future projects.

And I said, Hey, you can do this for free, save your $5. Here's what I built. And in the first eight months or so Lumen5 was completely freemium. 

Oh, it still is a freemium. So we had a free plan at the time, all the features were free. And so instead of doing video for $5, I simply said, Hey, go do it yourself for free.

Hammad:

That's really interesting. That's really interesting. Okay. Mike I have a question. So I've been trying to do some readings and research for a very long time, but my whole day just flies by. 

And then I'm thinking if I'm going to do something like what you did, where I have to actually do, I have to promote my Fiverr profile.

I have to get the customers in and have to actually talk to them and I have to deliver the product to them. That's a lot of work. 

So how did you even manage that? So talk about you were doing that and you were managing your dev team and then obviously you were probably doing marketing as well. 

And then you were probably managing all the finances and everything.

So, how did you do that? 

Mike:

The good news is that the finances are very simple when you're generating $5. And so I have two co-founders and that certainly made a big difference for me. 

Both of my co-founders are technical co-founders, so they were full-time building the product and I was just managing the customer side.

And there was no finance. It's $5, you know, pay taxes under a certain volume of revenue in the first year and so forth. So I focused really on the customer segment. 

Hammad:

Sorry, Mike. I was actually talking about as a startup, doesn't matter how much money you have. It's never going to be enough.

So you have to really watch out where you are spending and you have to just make sure that you, I realize until quite recently that you have to make sure that where you're spending the money. 

So that's another thing I'll have to do pretty much every other day. 

Mike:

So, yeah, and to clarify, we didn't actually hire anyone until we reached 10,000 users. So it was just myself and my two co-founders who were working for free.

And that's why the money wasn't as big of a consideration that they were building full-time and they were great engineers and were able to build a solution while I was just playing the role of product manager and guiding on what we should build. 

And so you know, about six months into post-launch and, and all of that when we hit 10,000 users and made our first engineering hire.

Hammad:

Oh, wow. That's really good. So let's talk about the first day of development. I'm guessing you can't really pinpoint the first day of the development path. 

Well, I'm trying to say how long before you guys were ready for Beta? 

Mike:

It's certainly is difficult to pinpoint cause at the time we're toying around with different ideas, but I would say it was approximately a four to five month period, starting from when we came up with the idea, starting to write just very draft code mock-ups and playing around with different things, even just poking around PowerPoint, understanding how they work, breaking down the UX patterns and so forth.

So it was about a four or five month period before the platform was usable. I would say usable because I was the only user for a period of time delivering the service on Fiverr. 

And then it wasn't until around March of 2017 where we actually welcomed user sign-ups. 

Hammad:

Okay. So let's talk about Beta.

How did you launch the product? Did you have a user base already or you just put out there, Product Hunt or something and then went from there? 

Mike:

Yeah. Yeah, it was fairly grassroots. So product hunt was one of the places. Think product hunt itself, wasn't really the main driver and it was a lot of grunt work.

It was day in, day out, I was creating videos really just preemptively for people and then tweeting the video at them. So I would make a video for your business. 

For example, I would tweet a video of your business for you. And I would just do that all day. I would do that on Twitter. I'll do that on LinkedIn.

I would do that on Reddit. And really just saying, Hey, I made a video for your business. I think you should put it up somewhere and you know, all yours feel free. 

And if you want to make it more, here's how you do it. And that's how we drove traffic at the beginning. 

It was a lot of manually creating videos, sending it to people and then just telling them how they can do that for themselves.

Hammad:

That's really interesting. What kind of traction do you reckon you got from it in terms of users signing up and getting feedback from those people? 

Mike:

That's a lot of work for the first month in January, we got 470 users. So 470 people, a combination, it's hard to track now whether how many of them came from product hunt or Reddit, but it was a combination of product hunt, Reddit, Twitter, LinkedIn, direct emails, and that generated the first 400 users.

And then that grew to 800 in February and 1,380 in March. I have a few numbers here. 

And then so by June was when we hit the 10,000 user Mark. 

Hammad:

Oh, well, that's right. So you basically got 10,000 users straight after six months after beta. 

Mike:

Yeah, that's right. That's right. And there is a viral component in Lumen5, which is noteworthy.

There is a watermark on the video that you create. 

And so when people create videos and they post it on their timelines, wherever Twitter or Facebook and so forth, that watermark becomes the marketing engine. 

So the more people create videos, the more people come to be exposed to the Lumen5 brand.

And so there's a bit of a network viral effect happening there. 

Hammad:

So Mike, so you, you got 10,000 users in six months. And when was a product ready for prime time where you can start charging people for it? 

Mike:

I mean, if you ask me, I still am not sure if it's ready for prime time, but we started charging around August.

So about eight months after the launch of the initial testing or beta version. We didn't, we never really had an official beta. It was just an iteration. 

So eight months in was when we put in a price tag and at the time the concept was very simple. Everything is free, but if you pay, we remove the watermark.

So that was it and so a lot of businesses, as you can imagine, did that because they don't, they care about their brand identity. 

They don't want to have the Lumen5 watermark. And I think the first plan was something like 20 bucks a month. 

And so with a quick credit card subscription, they've already been creating videos for a few months, removing the watermark was a no brainer for them.

Hammad:

So Mike, you know, so let's talk about I'm guessing that's August, 2017, right? when you started charging people. At that time, how many users had signed up?

Mike:

At that time, we had around 26,000 users. 

Hammad:

So you went from 10,000 to 26,000 within two months.

Mike:

Yeah, that's right. So that's why the viral network effect was really important. 

The manual labor that I put in in the first half of the year was what creates the base for the virality. 

And then once you have that base, the virality kind of takes over and that's what happened. 

Hammad:

And were you doing any kind of content marketing apart from obviously the content marketing, wherever you were publishing videos, were you doing any of the blog posts, any kind of stuff?

Mike:

We didn't actually start traditional marketing until probably January, 2019. 

So, you know, two years ago was when we started investing into content and to ads and a lot of the marketing stack is still quite new to us. 

We relied very heavily on the viral growth of the product for a very long time.

Hammad:

Right. Okay. So when you first put the price tag up, how did that go down? 

Did you, was it like, did you just start charging people that, okay, we're going to start charging you now, or was it like a whole launch event, which you did.

Mike:

It wasn't. We've never really been big fans of big launches.

It's always subtle. It's always iterative. And what we did was simply as I mentioned before, there's a watermark in the logo. 

When you're about to publish your video, it simply says. Yeah, remove the logo. You click the button and then it shows you the price 20 bucks a month. 

And that was it. And then every time people publish the video, they get to see that prompt that they're on the free account and they have the choice at that time to keep our logo in which case great.

Every video they create becomes exposure and marketing for us, or they can choose to pay in which case great that's revenue for the company. 

Hammad:

Okay. So what kind of growth did you see from the time you started charging people? 

Mike:

In those early periods, I think the first month, there was something like $3000 in monthly recurring revenue and so a good handful of customers for $3,000 and 20 bucks a month, there was a good handful from the 25,000 users who did decide to pay us. 

And then from there we saw quite significant growth over the following few years, I would say as not only did our technology solution improve, but also the demand for video just grew.

There were a lot of businesses that are looking to create video today that never thought about video five years ago. 

And so I think a lot of our growth, as much as I think we've done a good job capturing the opportunity. 

And we're also very fortunate to be in a market that's rapidly growing that the demand is growing.

Hammad:

Right. So let's talk about when you first started charging now. 

What's changed in terms of, obviously the product must have grown tremendously, in terms of your pricing. 

Did that change how the pricing model, how did that change over time? 

Mike:

Sure. So before it was a single price, 20 bucks a month to remove the logo.

Now we have different pricing tiers. We've got features that are targeted for individual users who have no need to collaborate with people. 

We've got a higher price tier that's designed for teams who are not only looking to just create video content, but also collaborate permissions and management and editing and admin permission and so forth.

We have enterprise deals now as we work with fortune 500 companies who have different requirements, everything as simple as security for the account information, all the way through to the ability for them to repurpose videos from one location to a different office around the world.

So price has become much more segmented across the many different customer profiles we now serve. 

Hammad:

Right. So here's a question for you. So In the early days you were talking to, you were in Fiverr, you were talking to your potential customers, you were putting out videos to the potential customers. 

So you were doing all the grunt work and now you've grown quite a lot.

So I'm guessing you are super busy as well. So how do you make sure that you still talk to your potential customers and still make sure that you know what's happening on the ground? 

What, you know, what the pain points are. How do you, how do you manage that now?

Mike:

It's certainly not easy. I think as most founders of growing companies start to start to see it, I spend a lot more of my time with the larger customers. 

So, you know, if a company like Salesforce comes through, I'll be there and listen to the feedback. What are their problems? How do we solve their problems?

We have support shifts around the company. So everyone takes turns, answering tickets, understanding the use cases, troubleshooting for our customers. 

And that's not limited to just me. It's a member of the engineering team. Marketing team would be involved, the design team especially will be involved in that process.

I think it's, you know, turning that question around a little bit is as important as it is for me to listen to the customers. 

What I think is even more important is to make sure that the entire company, everyone that's working on the product has a chance to interact with the customer and understand what we're actually trying to do.

Because I think it's one thing for a leader to say, here's what we're building this quarter. And it's another thing for the team to truly understand what problems we're trying to solve. 

And so for me, it's much more important to build the ecosystem so that everyone talks to customers, not just myself.

Hammad:

Right. Okay. So, you have a support team, you do that yourself, but what about the developers? 

How do you make sure that they know what's happening on the ground? 

Mike:

They are part of the support, they're part of the support rotation. 

Hammad:

Oh, okay. That's good. That's interesting. So how do you manage that? So that's really good.

Do you have set days during a month where they have to work in support?

Mike:

Yeah, it's usually not, I mean, it's not a lot of time. The troubleshooting oftentimes they're actually quite technical, so it's not actually that detach. 

A lot of times people do come to support with technical inquiries of maybe rendering issues or things not showing up.

So in many cases, an engineering team member is actually more able to assist than someone who's not an engineer. So we have a combination of two things. 

There are the support shifts where for a dedicated chunk of time an engineer or someone from any team would answer questions and troubleshoot and also user calls.

So we have an option for users to book a call with a member of the Lumen5 team to provide feedback, or just generally try to understand the product a little better. 

And there's a rotation schedule there as well. 

Hammad:

So when you say user call, is that part of your automation or you actually there's an option somewhere on the product where they can book a call.

Mike:

There, it's more of an automation. So what we detect is if the user reaches a certain level of activity, we consider them to be active or a power user. 

We would prompt them to say, Hey, if you're interested in chatting with a member of our team, whether it's general feedback or feature requests, book a time, and then it puts it into a rotation schedule.

So usually our power users are very very happy to talk to us because they want their feature requests to be prioritized. 

And so feature requests conversations are oftentimes the beginning of understanding your customer. 

The request comes from a place of need for a problem that they want solved. 

And that's how we ensure that every member of the team talks to.

Hammad:

Great.

So, you know, I'm actually talking about the growth, the viral growth, and I'm thinking someone's listening to this and the thing viral growth sounds really good. 

Was that about design or it just happened. Would you have, could you replicate it again now, if you were to restart this thing or something that has a viral component, would you do the same thing?

Mike:

Yeah. I mean, so, it's partially by design, but things never go according to plan. So, just because I wanted something viral, it doesn't mean it's actually going to happen. 

But it is something that I care very much about. And every product that I've built in touch is can one user lead to an additional user.

And if the answer is greater than one, then your viral coefficient means that it'll just keep blowing up until it reaches some sort of plateau. 

So, there was an intention there for us to think from the very beginning of a product can one user lead to an additional user. And if so through what channel is that going to happen?

And the famous Hotmail example, or actually, sorry, iPhone example sent from my iPhone in the email signature was their way of ensuring that every time you send an email to someone, they become exposed to the iPhone brand. 

And so we drew a lot of inspiration from that concept to say, if somebody sends you a video, how can we say it was created using Lumen5?

And so that's what the watermark became. 

Hammad:

Okay, great. Great. Well, that's really interesting. 

So let's talk about your content marketing, other content marketing, your blog posts and everything. You said you only started in 2019. 

First of all, why did you start in 2019? Why not before or after 2019. Was a particular time, was there a particular reason you started in 2019 and what's happened terms of that?

Mike:

Yeah, I think so as I mentioned before, we relied really heavily on the viral growth of the products and that was going really well, but our ambitions also grew too. 

If we're doubling or tripling every year, that's great. But how do we then double that? How do we triple that? 

And so that became the conversation where, how do we actually put fuel to the fire?

How do we invest in marketing, to cause we know there's a viral component. 

So we know that if we throw fuel to the fire, it'll grow even quicker. And that's when we started investing in building out a marketing team, content is just a single piece of it. 

We also invest in email automation products, advertising, lead aggregators, and now we have a bit more of a traditional marketing stack. 

And so what you can expect as you would expect is that the traffic has gone up a lot. It has its own challenges, especially with content marketing. 

We started to see a surge in traffic, but maybe it's not for the right keywords.

Maybe it's not for the right customer profile. And so it's not as, in my opinion, it's not as simple as virality where it draws people that are the right fits. 

They're watching the video, they volunteer, they come to explore the brand with content. 

Our experiments range all the way from different keywords that are not necessarily directly tied to video creation.

So you get a lot of traffic and maybe even a lot of sign-ups, but it doesn't always mean that it brings ideal customer profiles. 

And that's something that we continue to tweak to this. 

Hammad:

Yeah. So you talked about, you know, you were trying to figure out how you could grow the company to 5X, 10X, whatever.

So before we got on the call, I was actually looking at your traffic stats. 

That got me thinking Lumen5 is such a great product. It's such a simple product to use, obviously it's a very complex product, but for users, for me, it's very easy to use. 

So why not go multi-lingual? Why not go global?

And then I start looking at traffic stats for some of the keywords you got, you guys are ranking for. 

And I just translated them on Google and then I put them back in Ahrefs and there's a huge ton of traffic where literally there's no competition. 

So have you guys thought about going multilingual and growing there?

Because if it feels like it's a wide open market, no competition. And it's there for the taking.

Mike:

Yeah. Yeah. So, two answers to that question. Number one is we do currently serve multinational customers. 

So the product itself is not multi-lingual. But I believe the last time I checked only less than 40% of our customers are from North America.

So it's a significant portion from Europe and Asia and so forth. And so the customers from different languages are already coming. 

And one thing that we'd benefit from Lumen5 is that it is not language heavy. 

Yeah, you can go through the whole user experience without speaking a single word of English.

It's a visual user experience. And to our advantage, a lot of people have written about Lumen5 in all sorts of different languages. 

So if you go search for Lumen5 in Spanish or in Chinese, or in Korean, you're going to find articles written by our users and they've done the content marketing for us.

So the answer is kind of two-folds is as much as we didn't invest in content marketing until recent years, we benefited from content marketing, it was just user generated content. 

So, we already have a lot of lead sources in a lot of these different places, but yeah, right in that, and this year is actually when we're gonna start to invest in multilingual marketing again to put fuel to the fire with the international growth.

And with that is going to come different challenges as well. We have heard that customers are less satisfied with US dollars being the benchmark for pricing. 

So we're going to have to experiment with not just localization of linguistics, but also with pricing and local currencies as well. 

Hammad:

Yeah. Places like Brazil, where English is not very widely spoken, it's a huge market.

And then of course you might have lots of customers from Brazil, but those are the people that, you know, speaking English already. 

But having been there myself, a couple of times, I know English is not spoken at all. So for sure, there's probably a lot of demand for it. 

So I think that would be a good move this year for you guys.

So a few last questions, Mike. So what kind of conversion rates are you getting? 

So, you're getting a lot of users sign up, but I was really big on freemium products back in 2014, and then it kind of shifted away from it that look, it doesn't work. 

It just adds a lot of overhead, you know, support overhead, but then I'm shifting back to freemium again.

So it's very interesting. You guys are still freemium and that's how you can meet your users, but what kind of conversion rates are you getting in terms of users signing up and how many people, how many of those convert into customers and that kind of stuff. 

Mike:

Yeah, I think it's, you know, on the topic of whether or not freemium is a good business model, in my opinion, it depends entirely on the virality.

If you have viral growth, freemium is great because a free user actually brings additional free users. And so it's not just a cost center, right? 

Because they're also a marketing benefit. If you don't have virality in your product and free users become an absolute cost center, you don't actually benefit from the free users.

And so I would caveat that for anyone listening, who's interested in that virality is, one of the only reasons why I continue to operate a freemium model, because I know there is a positive return, even when I don't charge the money, the users themselves, their effort, and creating the video and sharing that video, they are an extension of the marketing team. 

As far as conversion rates go, I don't have the numbers off the top of my head. 

But what I can say is the conversion rates vary drastically depending on the customer profile. 

So enterprise is something that we've delved into over the past year and a half or so.

The conversion rates on the fortune 500 side are completely night and day. 

The numbers are nowhere the same as you would, someone from Brazil who signs up, who is kind of an individual digital marketer. 

So one thing that I've learned to do especially in the past year and a half is to try to stop myself from looking at average figures.

So you've got average revenue per user, or even revenue churn or user churn. 

Average starts to make less sense when you have a larger customer base with lots of different segmentations. 

Now I'm looking at churn or conversion rates for enterprise, mid-market, for small business and then for individuals and they all have different numbers.

What I did find for a product like ours, where it's applicable across the board, doesn't matter what industry you're in, what a small business or enterprise, the average figure was very misleading for me. 

So if the conversion rate is say, 1%. Okay, great. And well, what's the average lifetime value.

Is it a thousand or is it a million? And that's how wide the range is when you're talking about individuals and enterprise. So that's where we're at now. 

And in 2021, segmentation is something we're going to take a lot more seriously. We're starting to set up separate dashboards. Here's the SaaS metrics for enterprise.

Here's the SaaS metrics for mid-market, for small business and almost treating them as different business units. 

And we would invest in sales and marketing accordingly. 

Hammad:

Great. Great. Great. So, Mike, one last question. You almost made it sound like it was a very perfect ride all the way from starting out to this point.

Someone who might have listened to this and they're just starting up and you're in that place.

What would you do differently? What would be your journey at that point now? 

Mike:

Yeah. So, to start off, not at all easy, you know, extremely difficult and a ton of bugs and technical issues.

If you tried Lumen5 in the first four months, I don't know if you would ever come back. You know, sometimes you try to publish a video. 

It just never shows up, or we'll send you the video like two days later. So there were certainly a lot of technical challenges. 

There continues to be a lot of technical challenges.

One of the more difficult things that we've had to tackle is cloning is a real thing. 

And when we first saw success and traffic started to pick up we went from zero competitors to something like 12, you know, some of them literally just copy and pasted our website and didn't even change my name.

You know, my name was still on the about page. That's how direct of a copy it was. 

And so, you know, one thing that the kind of advice I would give to anyone starting out is when you start to see the traction don't be put off by people who are going to copy you, take it as a compliment.

It means you're onto something. And I, over time have learned that it doesn't matter how many people try to copy. 

What's most important for founders, product builders and entrepreneurs is just to focus on the customer. It just, you're never going to win by copying someone else. 

How you are going to win this just by focusing on helping your customers deliver value.

And I think any entrepreneur who sees traction is going to experience the same thing I did, going from zero competitors to 12 to 24 to 50, to hundreds of competitors. 

If you're doing really well, people are going to copy you. 

And then just be calm, being unfazed by it. 

And don't be distracted by competition because at the end of the day, it's helping the customers that's what matters. 

Hammad:

Yeah. That, you know, I've got something else to add to that. I know you guys have clones, I've seen them around, but Lumen5 is such a big brand. 

If I was to go back and start using a similar product, I would not use it because I would just come back to Lumen5 such a big brand.

I've seen that around so much. So I think that that plays a big, big role as well. Yeah. There's going to be a copycat because you have such a big brand. 

If you build such a big brand and people love you, you are always going to go back to that solution. So you don't really have to worry about that. So last question.

What's the future for Lumen5 the next couple of years? 

Mike:

Well, the next couple of years, I think there's so much more to video and video itself is changing so rapidly. 

So when we first started Instagram stories didn't exist and now it's literally the biggest thing. I think it was last year, it was only last year in 2020 that LinkedIn started supporting video. 

So just think about how crazy this thing is. So as LinkedIn supports video, I think Google just launched Google stories. 

Even Spotify has Spotify stories. A lot of our work over the next few years, I'm expecting that the internet social networks are going to innovate significantly on what they support in terms of videos, allowing for different types of video that perhaps interactions of videos with Instagram stories.

We're starting to see that you're not just watching a video, you're swiping, you're participating in polls. So over the next few years, we're going to be experimenting with the creation tools. 

How do you create interactive content for these different platforms as they start to support it? 

So I think in three to four years from now what you're going to see is video becoming interactive.

It's not just a video that you create for people. It's a branching where they choose option a, it's almost like a choose your own adventure. 

The video would adapt depending on the viewer and whatever cookies they have, websites they've visited. 

And that's what I think the future has in store for video marketing.

Hammad:

Great, Mike, thank you very much. Again, Lumen5, love the brand, and thank you for coming on the show and good luck for the future. 

Mike:

Thank you for having me. It was great chatting with you.

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