Shawn Finder, Founder at Autoklose join Hammad Akbar in this episode of Launch Legends Podcast.
Hammad:
Hey Shawn, thank you for being on the show. So, Autoklose great product. I know you've got 5,500 users. You just hit your $1 million Mark in annual recurring revenue.
And you told me you had one of the best months in June where you had a hundred percent growth or 200% growth or something like that. So before that, just tell me who you are and what's your background and why did you start Autoklose?
Shawn:
Perfect. Well, I'll go back way back to the day and thanks for having me on the show. So the first company I started about six years ago, what's called Exchange Leads. But even before that, I used to play competitive tennis.
So I come from a very competitive background playing sports as a youth and then brought that into the entrepreneurial world in about 2015.
First company Exchange Leads was a data company and very similar to the old jigsaw, which was acquired by Salesforce.
We thought the model was great. We kind of built that and then. What happened? We got to a point where we were sitting in the boardroom and we were researching a lot of the stuff our clients were saying, like, you know, you guys have great data.
Hammad:
Shawn, how did you come up with the idea for Exchange Leads? Were you working?
Shawn:
No. So actually I got a role as a VP of sales for a computer software company. Right on the first day, I was given the sales team and I was given data and I gave the team, you know, we're using Salesforce, call them, email them.
And what we realized was the data was very poor quality and it was like, we just spent thousands of dollars and the quality of this data is just so poor. So ding to me is why not build a company that provides high quality data, maybe less volume but high quality. And that's how I came up with the idea and found my business partner literally left the second week on the job of my VP of sales role.
And we built it for a year to get the Exchange Leads.
Hammad:
Right. Okay. Okay. Let's talk further. What did you do with the Exchange Leads?
Shawn:
So Exchange Leads was the data company. As I said, it was similar to the old jigsaw and we started building it up, but we hit a plateau where we felt like we needed to do something else.
So what happened was instead of paying taxes to the Canadian government, I decided to research and development and build another product.
And our platform was to have the database from Exchange Leads inside a sales engagement tool where not only can you email your own data, but now you can search and filter through our database to pick and choose who you want to prospect for.
So we basically combined both tools under one umbrella and called it Autoklose.
Hammad:
Right. So when you say that you are going to put in your own data as well, like for example, your from Exchange Leads, what regions did that cover US and Canada or all of them?
Shawn:
So, great question. So Exchange Leads back in the day covered both Canada and the US but as you probably know, in Europe, there's GDPR and in Canada, there's something called castle.
So what we actually are, we still sell custom data in those other places. But the software will only provide you as data because of the laws in Europe and Canada currently.
Hammad:
So let me ask you this. Before we started the interview, you told me that you launched on AppSumo and I'm jumping a little bit.
We'll come back to that. AppSumo customers are from all over the world. And when you sold it, did they not pester you? We can't get data for, I don't know Sweden, or we can't get data in Romania. How did you go around that?
Shawn:
That's a great question. So the software, you have two options. You could upload your own data and use your own data in the software.
Or you can have the upgrade service, which is our database for the US only. So many of the people that actually signed up via AppSumo, three years ago, uploaded their own contacts, integrated their CRM with the platform, and then used their own contacts because we just weren't able to provide worldwide data and global data.
Hammad:
Great. So let's go back. So when you first launched, I read somewhere, you had a big list of prospects who were ready to buy. First of all, were those from exchanges or you built on some other way?
Shawn:
We actually did something. And one of the things I'd recommend to all entrepreneurs and SaaS founders to do, we started our launch six months before our launch date.
And what we did was very simple. We started building a landing page to collect emails. But when we collected those emails, we would actually send those clients, those prospects, weekly updates on how close we are to launch. So what happened was we would ask them, you know, which feature would you like, B or C?
And what happened was because we collected all these emails and asked them to be very interactive with us throughout the process. When launched, they actually happened, all of our prospects almost felt like they built the product with us because they were there for the entire journey over those six months.
So when we actually launched our product, we did like a soft launch. We said, okay, we're only taking a hundred clients and we would tell people, okay, we're at 92. So there's only eight spots left.
And what happened was we really, we got our first, I think it was like two, 300 clients in 48 hours in a boardroom by simply, you know, having a lot of hype towards that launch date six months before but, and that's something I would recommend for anyone starting a SaaS platform.
Hammad:
What was your email list? How big was it at the launch?
Shawn:
We were getting emails all the time we were hiring. I had virtual assistants that were on LinkedIn, reaching out to people. And this is before, you know, everyone was sending InMails out, which is now like LinkedIn is different than it was three years ago.
Back in the day, you'd send an InMail, everyone would reply and be interested. Now it's a little bit different, but we were using our own tool. We were using LinkedIn.
We were joining Facebook groups. We're doing LinkedIn groups. We were huge a few years ago and literally asking anybody to send their email.
And then we would do videos every week on product updates on where we are, you know, it would be like, building a condominium and going floor by floor. That's what we were providing people throughout the process.
Hammad:
That's great. And how were you reaching out to them? Why just email or did you have a Facebook group as well?
Shawn:
We used our own tool. I mean, email automation, we had sales engagement. We would just put them in and let them run and send them every weekly update through that.
We also used MailChimp. We love MailChimp. MailChimp is our marketing tool of choice. So we use MailChimp and that was where we'd send our weekly newsletters out.
But we would do a combination of LinkedIn, social selling, our tool and the marketing tool.
Hammad:
Great. And how big was the list for launch?
Shawn:
I think we had over 1800 emails, which we converted about 27 to 33% of them.
Hammad:
I believe that's, that's extremely high. And you said you got 200 to 300 clients straight away.
What was your launch sequence? Like were you hyping them up just a little bit before the locates coming or you just emailed to them. Okay. We've launched and we are selling it to a hundred people.
Shawn:
We hyped it up. We also did AppSumo as we mentioned, which also gives you that SEO backlinks and gives you in that very niche community. There's a lot of word of mouth and stuff.
Hammad:
Oh, sorry. Sorry. I think I got you wrong. When you first launched and you got your 200 or 300 clients instantly from the list, what did you do then?
Shawn:
Oh, so when we got the people from the list, we put them through a sequence and the sequence would be the weekly update on where we are today, what we're currently building, what our development's team working on, who we're hiring.
The whole, as I said, the whole process was to make people feel like they weren't buying our product, but they were actually part of our product. And, we're building it for them. And by making it feel like it was more of a one-on-one, it really helped when we got to the launch date and we had that list to just send out an email saying, Hey, we have 24 hours.
We're taking as many people. If you've wanted to be part of that exclusive list to be part of our launch, you know, sign up here. And then we reached out one by one. We call those people, we did an onboarding, a demo, et cetera, for all those people at the beginning.
Hammad:
Great. And how much revenue did you make straight away from launch?
Shawn:
I think from launch, it was, it was anywhere between $30 000 to $50,000 in the first few months of launch, we broke even right away. We broke even within the first three months, all our investment, we broke even.
Hammad:
Wow. Wow. So you got your first launch, you know, a set of customers. And then what did you do after that?
Shawn:
Well, so after that, I realized that we couldn't continue with just two of us as account managers in a boardroom making, doing all the demos. We started, you know, trying to build a team because I think one of the biggest mistakes SaaS founders do is they wear many hats. And so do I, but at some point, if you want to scale to that next level, you need more people.
So we started looking at hiring more salespeople, hiring more sales development representatives SDRs, hiring a marketing team, you know, because content was still King. So the way we really scaled was focusing on what was working, but also how can we get to the next level? And that was, you know, trying to get the SDRs now to come in.
Each of them have a quote of 16 demos. They have to get the account executives a month and start growing that way. But one thing I would say Hammad, you know, we did go out to Europe. As a bootstrap company, I want to be able to afford three, four full-time SDRs here in Toronto.
So it really helped by outsourcing that out to Europe where it was a little bit cheaper at the beginning of the process.
Hammad:
How many SDRs did you hire in the beginning?
Shawn:
We had one and then, you know, we had a good month than another one, another good month. As our revenue continued to increase, we continued to hire more talent, to build our team but not to say that we didn't, you know, one of my biggest flaws was not hiring more earlier on like two years ago when we had the money as well. So we hired a little bit slow. I wish I hired a little bit quicker, but we did hire, you know, as we, as we hit that next level, we hired another salesperson.
We hired another marketing person. I was involved in sales from the first year and a half. So I was doing a lot of demos as well.
Hammad:
So let's go back to hiring SDRs. Typically what I've seen is that when you hire a sales development representative there's a hit and miss, sometimes they're really great and they meet all the targets, but most of the time they don't.
So there's a whole period of trial and error before you have your ideal team, did you not get that?
Shawn:
Oh, we had that and I have some funny stories. So originally I looked locally here in Toronto and I got a funny story. If we actually hired somebody, as he was a sales development representative and account executive with 20 years experience.
And I hired him for two months and I just wasn't getting results. I asked my team, like just check. And we actually looked in his email. He had not sent an email in two months, so I was paying him for two months. He actually did nothing. He was doing nothing, just nothing.
He was telling me he had all this pipeline and everything. So we went through about a handful. I had another, another guy I hired who was on Dragon's den, which is our, like our shark tank. He actually got a deal. He was an entrepreneur, came into sales. Didn't sell for me either. So I had a really tough time before I went to Europe from hiring a salesman.
You know, even today, it's still tough to find good sales people, because the problem with hiring people is you can hire them. You spend so much money training them over three months, and then the person across the street offers them $10,000 more a year and they leave you. So we had a tough time. We went through and spent thousands of dollars hiring people that did not stay with the business.
Hammad:
What about your process for outreach in the beginning? Was it as refined as it is now? I'm sure not, but would you have any process at all? That's the first question.
Shawn:
A lot of people talk about processes. Early on in a startup it's, you know, you're thrown into the ocean, you got to sink or swim. So we had no processes.
Hammad:
What about SDRs? I mean, I can't see how a sales development representative is gonna function without set SDR processes and KPIs. Did you have that for them in the beginning when they were not working out?
Shawn:
At the beginning, I tried to hire seasoned vets, you know, thinking that, you know, if they worked, I always looked to see, did they work in a bank?
I always liked people that work at a bank. Because the banks train them really well. They train them on the phone, they turn to email. So originally I just hired people that I thought had a good resume. They've worked somewhere. They've done cold calling, email outreach, et cetera.
But now we have processes. So now it's, you know, now I would say for our SDRs, we hired late last year. We hired two more sales development representatives. We went through 86 resumes in Europe for interviews. We do practice runs with them, but early on. We didn't have any process in place. Now, the process we have now is it's a full training.
They get trained on the call. They get trained on our CRM. They get trained on everything, but early on it's, it's almost impossible. We just didn't have the time to actually train our SDRs.
Hammad:
How does it look like now for your sales team? So for example, you hire a sales development representative.
So let me just clarify why I'm asking because a lot of people and a lot of SaaS companies I have spoken to don't go down this route where they had sales team to do that and then book demos and all that stuff, they do the whole content marketing or paid ads, and then generate leads whereas, it's very interesting how you did it, you know?
The old school way of sales. So how does your outreach process look like now for SDRs?
Shawn:
Yeah, so right now for an SDR, we have a handful of SDRs and their job is literally to get account executives, 16 demos a month. Now why that's important and why we chose that is we hired an Account executive now, an account executive that was commission-based, early on.
A guy that's commission-based has to have a full calendar full of demos for him to make money. So if we don't have sales development representatives that were providing him demos, he wasn't making money. Now, early on I didn't have enough money to pay somebody that was competing with Salesforce, a hundred thousand dollars to do Sales.
So we hired the SDRs strictly to fill the calendars of our account executives, which is what the role is now. 16 demos a month, each person. You have 16, 16, 16, it's 48. We have a few account executives each one gets 48. They get their own. We have some marketing stuff. Now why didn't we choose marketing?
Like you said, we actually still spend $0 in paid ads. We haven’t done any paid ads since inception. We've done retargeting sometimes, but again, I could spend thousands of dollars on paid ads to get my account executives some demos, but we needed people to actually do demos.
And that was the big thing you could do paid ads and get someone to sign up for a free trial. But when I'm trying to sell a $5,000 package with data, I need an account executive that actually is doing a demo. Cause nobody's going to click on an ad and pay out in $75,000 over email. so that's the reason why we chose that route now.
Paid ads are great if I want to get free trials, et cetera. but it's never been a successful route for us. Maybe we haven't had the people in place to do it properly, but it hasn't worked for us yet. Even retargeting. We spend thousands of dollars a month on it and we didn't get a return on our investment.
Hammad:
Let's talk about your sales again. What's your ticket size?
Shawn:
So it ranges a subscription, starts at $49.99 a month for Autoklose that's for the engagement tool. If you want access to the database, it could be anywhere between three to $5,000, because it depends on how many seats you're using.
So obviously the subscription, you know, turns the lights on but the actual data is what pays the employees.
Hammad:
Right. Got it. And then what's the conversion rate from demo to a sale.
Shawn:
So early on, I would say we had almost a 30% conversion rate. We were because our platform is built so well that when people see it, it's like that wow factor. But we do about, we have about a 30% close on our demos. So every 10 demos we're closing off three of them.
Hammad:
Right. What would the stuff SDRs do to demos? I'm just trying to figure out the demos.
Shawn:
I couldn't get you the numbers, but I know the sales development representatives, they're working full time and they usually get about 16 a month. So I'm sure they're emailing, calling, LinkedIn, doing all that stuff, but they're getting 16. Now, we also pre-qualified demos. We don't want a guy coming on a demo that doesn't have budget and is already under a one-year contract with our competitors.
So we do have demos that they bring and it's like, okay, in our first two minutes, like, you know, you're currently using outreach.io and you're signed up till 2021. Well, reach out to us too much before your contracts go up because our features might be different. Our pricing might be different.
Hammad:
Great. Great. Great. So let's go back. So have you been refining this sales process all along, when you, from the point where you've first hired your Sales development representative to the point now where that's been the main growth channel for you?
Shawn:
Yeah. So strategically, what we did was January of this year, we hired team leads in every department.
So I used to be involved in everything. And I was involved in the sales, the marketing and absolutely everything. And then it was actually my marketing person who said, Shawn, you're going to have a heart attack if you don't start delegating some stuff out.
And it's like my baby, you know, so what I did was I had a team leading sales, a team leading marketing. The team lead, leading sales, he's more of a demand gen guy who manages the entire sales process.
I only come in, if there's a negotiation with a bigger client or a huge demo with a whale that I need to come in and do, but the processes are all there. Everything's done through Slack, sales and marketing are aligned, SDRs, know their role. They fault the account executives, everything's put into CRM, so that's a full process.
And even when we hire SDRs, now they have to go through the zoom recorded processes of all the different things that the sales people have to do.
Hammad:
Great. So Shawn, you still did an AppSumo launch. So why did you do that?
Shawn:
So that was right at the beginning. That was, at the beginning, where to be honest, I didn't even know what AppSumo was.
All I heard was we can get you 3000 clients and we're going to get you, you know, this much revenue. Well, you know, we just launched three weeks ago. Why not? Don't get me wrong. It wasn't that it was bad. It had its pros and its cons. The pros are, I'll start with the cons.
Actually the cons are that you now have 3000 people that are only looking for the cheapest discount and they're going to drive your support nuts. I mean, we had five support members. I even went to support as a founder because we had support getting tickets and they come in trying to tell you how you should build your product, what you should prioritize.
Why did you do this? And it was like dealing with investors that didn't invest. Well, they guess they didn't invest. They invested 50 bucks. So it was something looking back at the revenue, we didn't need the revenue at the time. A lot of people do it because they need the revenue.
We didn't need the revenue because we were just, you know, pivoting our first business to this, which is our first business that was already successful. The pros are you get to learn about every bug and flaw in your business. So every bug in your software, they told us about, they also showed us what our prospects want, so we can actually prioritize in the future.
And still to this day, we still have some of our AppSumo users, but the AppSumo guys, they're all looking for, you know, what's the next free thing, which is great. But, now that we're far along and we still, to this day, three years later, people say I bought a code from AppSumo three years ago and I never used it.
Well, you didn't use it three years ago. We're a lot different platform now than we were.
Hammad:
But you said you got all sorts of bugs from the product. How stable was the platform at that point?
Shawn:
Well, no matter what, whenever you build the product, you're always going to have bugs because you can go through it.
We now have the QA person, but they were finding, you know, bugs that we would never look up. You know, they found different things that we can change. They found, you know, you have a capital letter on one word and then the next word is not capitalized and it doesn't flow within your business. It was just, they were finding the most specific things, which is good.
Because, you know, we want to perfect our development. We want to perfect our product but it really took us toll on our support, having 3000 users and one day, you know, one thing that looks at is your servers, you know, were you built for 3000 users to sign up? And, it's like building an app and having a million downloads on Apple. Are you built for what you got, you can't really test it until it actually happens.
Hammad:
Isn't that a really good thing that you got really stress tested very quickly in the early stages of the product.
Shawn:
100%. That's one of the pros for sure. We've got stress tested right from the beginning. which is good. We didn't have any downtime, any issues. Cause we were told to expect that.
Test everything before the AppSumo launch.
Hammad:
Did they help you with the product roadmap at all? You said that they were a different kind of customer where they were just looking for the cheapest bargain possible, but did they help you with that product roadmap at all? Or they were just good for stress testing.
Shawn:
The biggest problem that I didn't realize was everyone that was an AppSumo thinks and looks very small. So there could be one man shows that could be an entrepreneur that could be a one man business, two men business where our vision as a company was to build an SMB product.
So one of the flaws that we had was now that we have all these users on board, we're getting feedback from people that are one to two men operations, where we really want to try and sell to 5 to 50 men operations. So the features and stuff that they wanted early on with stuff that would be good for them, but that might not be good for a small business.
And the problem was online reviews were from very small businesses. So we had one man entrepreneurs or, you know, solo pre-orders that were reviewing our business. But that's not really the target market. We were looking for longterm. So we had to then slowly and it took about a year and a half to slowly get to the point where we can get those bigger companies to trust us because they would look online and everything would be around.
I'm a one man show using Autoklose, and I love it, but that's not where we want it to be. So it took about a year and a half to get that brand and that brand awareness about SMB, which is another con. But as I said, you know, you live and learn. Would I do it again?
I don't think so.
Hammad:
Really? Yeah. I don't think I would do it again. What would you do differently? That's a funny one. You've probably the only person saying that. Well it depends if you use the capital, I would do it. Yeah.
If I needed the capital, but you know, I don't think I would go through depending on the product, but if I was building an SMB product, I would not do AppSumo because it did really hurt our pricing. It hurt our brand for the first year because we had to slowly get to that next level whereas if I just launched it as a SMB product, it might've been a little bit slower, but I could have closed a $5,000 deal. That might be the same as getting 50 $50 deals kind of thing.
So I think, you know, you have to be strategic. I think it's great for people that are trying to see if there's a market fit or I don't know if I was reaching out to smaller companies. I would do it. If I was looking for SMBs, I would not do it.
Hammad:
Great. So the revenue, how much did the product make and how much did you actually take home from the AppSumo? I think the AppSumo, I think we took home about $45,000 and I think we got, like you said, I think we got. I don't even remember. It was maybe 30%.
Yeah, I think it was 30%. So we ended up taking home $45,000 of that, you know, but you take that, you have support, you have to hire tons of support for three months. But listen, it was a great experience but I feel like where we were as a company, and what we were looking to do, it hurt us a little bit in the short term.
Hammad:
Great.
Let's talk about hiring a sales team Vs. doing your online content marketing, inbound lead gen that stuff. My first question is, what if someone's running a company, a SaaS company, and they're thinking about hiring a sales team versus running paid ads, content marketing to generate the leads, what's a minimum ticket size, average cart value, average customer value they need to actually justify a sales team.
Shawn:
So I would say you have to be doing between $4,000 to $5,000. And the reason why is, when I hired our account executive, who is commissioned still is our first one. He is still with us and was commission-based. I could not pay him commission off of $50 a deal. He just wouldn't work for me.
So I needed to have that $5,000. And I gave him a lot more commission upfront when we started. Cause, you know, we launched together but you need to be able to make, you know, especially here in Toronto and, I know you're in the UK, here in Toronto, you know, people make a lot of money in sales.
You can make six figures in sales. So if you don't have a product, they can potentially make six figures in sales, you're not going to get some good. So I would say you need to be selling something that is at least $5,000. So even if you're giving them 10, 15, 20%, 25% on that sale, they can sell three a month for a month at that price.
And they're happy and you're happy.
Hammad:
Right, right, right. So Shawn, one last question. If you were to start everything again, what would you do differently? And this question is very specifically for a person who's just starting out and thinking, okay, what should I do? So putting yourself in that position and think, okay, what would you do differently now?
Shawn:
So I'll tell you the first mistake I made with Exchange Leads and what I would do differently. I didn't do it in the second business. Early on, as a founder, I focused so much on making revenue. I would, a client would come on and pay me. And that's all I focused on. Keep bringing the clients in and then build your product.
So make money, put the money towards your product. The biggest mistake I made was, I would tell people right now, build your product and let your clients come to your product instead of doing the other way. So now what I do is clients, no clients. I continue to invest in development of my product, because if I continue to invest in the product and the development.
I'll build a big enough pride that people hear about it and they'll see it and they'll come to me. So I'm not going to chase them. They now come to me through word of mouth and referrals. That was the biggest mistake that was made with Exchange Leads. And I did not make it with Autoklose, but I think if I, early on with Exchange Leads we had focused way more on the product. We would have been more successful.
Hammad:
I think if you break down, build a product that also means getting the leads, getting the people to sign up for early bird. Giving them updates, getting feedback from them to build a product. So you don't really end up building something completely different to what they need.
So I think that's your definition of selling a product where you did the same thing where you started building a list six months prior to launching the product. And you really worked with them, gave them updates and really got the feedback to make sure that you built it right.
Shawn:
And also I'll give you an example, what we did, we built the dashboard. And what I said was we had 25 things that we thought could be on the dashboard. We actually sent it to all of our clients and we said, vote for your top three. And then we actually took the vote of the 25 things they want on the dashboard and we put the first 11 on our dashboard.
So we still to this day go with that. And we have our clients still build our product. We take all their feedback, put it in a Trello board and we take the Trello board and we prioritize our clients.
Hammad:
Great, great, great, Sean. Thank you very much. That was great. And thank you again for coming on the show and I hope I see you again.
Good luck.
Shawn:
Thanks for having me. That was a lot of fun. Thank you.