Jeremy Weisz 21:22
So then what would you have built sooner?
Mikael Dia 21:30
I don’t know if so now if I look at our core customers, they are much more performance-driven marketers. Our market has caught up to the product vision to some degree. So, today I feel very fortunate that we focused on the analytics front, because we’ve got an incredible product. However, in the early days, I think that if I would have kept going down the path of sales enablement tool, like a tool that forget the analytics and the measuring aspect of things, but more so, what could I do to help you? On the planning side, on the measuring, sorry, on the sales side forecasting, basically being able to put together proposals, that kind of stuff that’s more centered around the sales component as opposed to the retention component. I think we would have had a stickier product in the early days. I also think that it would have kept speaking to that customer whose biggest challenge is customer acquisition, less so the challenge of customer retention, showing numbers, proving my worth to my clients, type of thing.
Jeremy Weisz 22:53
Mikael, talk about, we’ll talk about churn for a second. I joke around my SaaS friends, I’m gonna give him a t-shirt that says, “got churn?” the question mark. Just have him wear it. But the churn, what are some of the things that you did along the way to make it stickier? Like you said, I have a really good episode with Gavin Zuchlinski, who started Acuity Scheduling, who then he ended up selling it, but he, like, knew the churn point like, over time, he figured out, like these churn points and just kind of chipped away slowly at the pieces that he knew would create a stickiness and have them stay on longer. So I’m curious, from your journey, what are some of those things you learn from a churn perspective, and then what you embedded into the product to make it stickier and overcome those churn points?
Mikael Dia 23:52
Yeah, so I think the biggest thing that we found was on the analytics side, if I separate out the mapping side and the analytics side, because they’re really kind of two separate products with the same user interface, in a sense, and two separate avatars, two separate kind of ideal customer profiles for them. So let’s focus on the analyst.
Jeremy Weisz 24:17
Like some people are more heavy users on the mapping side. And some people are more heavy users on the analytics. Obviously, you need the mapping to do the analytics, but there’s some people are you saying, like they basically just love the mapping features and they’ll just kind of geek out and use those.
Mikael Dia 24:32
Correct, we have some people who literally all have never turned on analytics once, and will only use the mapping because they’re using it as a sales tool. They’re using it as a way to present a strategy, right? It’s a strategy mapping tool, while there’s others who use Funnelytics strictly on the analytics side, because it’s an easy way to get answers to questions, because I can just drag and drop and connect two things together, and I get an. Answer, but they’ll very rarely use it from a strategic standpoint. They’ll do it as an analysis tool, almost like, let me just a simpler Google Analytics, because it’s a canvas. So very, very different buyer personas. And I think that that’s something that I needed to figure out, is like, who is the user and what are they really using it for? In my mind, it was always a cycle. You plan, then you measure, then you optimize, right? That’s how I ran my agency.
So I built a tool that allowed me to do all three of those things in one user interface. But what I’ve realized is a lot of people only care about the planning, a lot of people only care about the measuring, and other people only care about the kind of analysis, optimization aspect of things. So that was a big thing. We needed to get super, super, super clear on who are we building this for, and who do we care? Is going to be sticky, right? So in the early days, we were selling Funnelytics for kind of $99 a month, and the net churn overall was like 8% month over month, right? So people were sticking for about a year, give or take. So lifetime value about 1200 bucks. And when we really broke it down, though, we had people who wanted it only for the analytics. $99 a month was actually really cheap for them, and it was a bargain.
And then we had people who wanted it only for the mapping, and 99 bucks a month was actually pretty expensive because now they’re comparing it to like an $8 a month diagramming tool or something along those lines. So that was the first thing. Then the second thing level was, why are you or who are you using it for? So now we took our ICP and broke it up into, okay, we’ve got these two kind of core components. But then there’s, then we broke it up and saw, okay, well, there’s actually people who do it for clients, and then there’s people who actually do it for their own business, right? And that now created a separation and another prong on that kind of ICP identification, so the people who were doing it for clients had a very, very different use case, even on the analytics, than on the people who are doing it in house.
For example, the people who are doing it for clients, they cared a little bit more about reporting. They care a little bit more about just how do I present this easily and quickly, versus the ones who are doing it in house, cared more about, how do I get the answer to this question so I know what to optimize, so a slightly different job to be done, in a sense, and we dove deep into that as a company. So ICPs was a really key component to understanding churn. The second component was deciding what are the bottlenecks for the ICP that we want to go after. So what we started realizing is, okay, well, the mapping guys, well, churn is there, and we could create something that’s a little stickier, but ultimately it’s not really in line with the vision of the company. It is called Funnelytics. After all, it is a meant to be an analytics tool. We would probably have to reduce the price point versus on the analytics front, if we find the right performance marketers actually, we could charge $500 a month. We could charge $1,000 a month, because now we’re competing with other true performance and analytics product. However, as we started breaking that down, we started realizing, okay, well, these are the two biggest barriers for them.
Number one, how do I set up tracking and number two, how do I make sure that the data is accurate, right? Those are basically the two biggest bottlenecks that we found on that front. So how do we start to reduce churn? Well, in the short term, as we were starting to move upmarket, and we started focused on the analytics front, as my team was building these features that, integrations, that kind of stuff. To make it easier to integrate the platform, we used a lot of kind of account management and customer success to have different touch points. Help them get onboarded properly, help them with the client set up, train them in the right way so it became less of a product-led approach, a little bit more of a kind of success-led approach, right? So, that’s kind of how we started.
Jeremy Weisz 29:51
Does more of, like a kind of, like a white glove type of situation. It’s not like, hey, sign up. Good luck. It’s like, oh, sign up, and we’ll have specialists to help actually get you through setting it up, and get you through the biggest obstacles.
Mikael Dia 30:06
You got it right. And that really is, is how we started chipping away at churn, is we started understanding who are the customers. And then the biggest thing throughout all of this, and kind of what I’m trying to get to with this kind of thought process of segmenting all these customers and creating these, these micro-segments. We really, really had to get clear on, who are we building this product for? Because most people try to solve churn by focusing on the customers that churn, we started realizing that in order for us to solve churn, which, by the way, we still haven’t solved, churn is never zero. But the reality is, the more we focus on the customers who are using the product and actually are sticking and the more we make it even stickier and better and easier for them, the easier it is for us to go and find more of those people. I have a good example, one of my former COO, who’s still a very good friend, went on to do his own kind of thing.
We were chatting the other day, and he’s like, Mikael, I use Funnelytics every single day, all the time, but you got to realize something, I’m a huge marketing nerd. And by the way, you’re also a huge marketing nerd, you built a tool for marketing nerds that you’re trying to sell to everyone, right? But if you keep thinking about how do I get more marketing nerds, then now the churn problem goes away, because you’re really only looking at churn in this little sphere of marketing nerds, right? Who love data, who love to kind of dive into the nitty gritty numbers and that kind of stuff. And now the churn is actually close to zero because they actually love the tool. So we got to start thinking about, where is our ideal customer segment, and that’s really where product market fit comes in now, do you have a proper go-to-market motion? Do you have a proper way to go and acquire more of those marketing nerds, in a sense, and ignore everybody else, right? And that’s kind of the thought process around.
Jeremy Weisz 30:41
I appreciate you walking through that. That makes sense, because you could have gone the route of, okay, we could separate this product. It’s 20, $30 a month if you just want the mapping tool, and it’s going to be X amount for the analytics tool, but you really didn’t want to attract and compete in that, and that wasn’t an ideal customer for you, right? And so it seems like you went the other route and go, well, that’s not really who we’re focused in on. You really zeroed in on who’s ideal. And then, obviously built the tool and the features for that, which is interesting, because you could have taken low-hanging fruit, I guess, and be like, hey, like, we have a bunch of these mapping tools. We can have a separate price for it, but then you would attract a totally different type of people.
Mikael Dia 33:22
I think that’s the key, right? Is you end up attracting a very and we did. We tried selling the mapping tool, and we tried, kind of going down that path of separating Funnelytics map versus Funnelytics performance. And we called it different kind of things, but what we realized is people didn’t jump right. It didn’t bridge the gap. Even though it’s the same user interface, we kind of thought, okay, well, if it’s the same user interface, if we have really clever upsells and things in the app, some people will go and jump to the other side, but because it’s such a different job to be done because it’s such a different mindset, and it’s actually a different person, they never did. So now it’s just like, well, let’s we’re just marketing two completely separate products under the same brand, which creates confusion. Now people come to us and they’re like, oh, you’re I thought you were a mapping tool. And it’s like, or, oh, I didn’t know you did analytics or, and it’s like, the message to the market becomes very, very confusing.
Jeremy Weisz 34:29
At what point do you decide, okay, I’m going to raise money for this. Because obviously you did a great job bootstrapping. You sold a lot in that phase. At what point you said, okay, I need to raise money.
Mikael Dia 34:44
I think I made a mistake as to when I raised money for Funnelytics. To be honest, I’ll tell you the reason why I raised money. We had a very, very strong, obviously we did a couple million dollars in the span of 18 months, and I ended up, it was my five year wedding anniversary with my wife, and we decided to go to St Lucia for our five year wedding anniversary. I had just actually published this little book here, so this would have been 2019 around like, I don’t know, summer of 2019, somewhere around there. And I brought one book with me, and that book was called, I don’t know if I have it here, sometimes I want to throw away this book because it gives me nightmares. It was called Blitzscaling by Reid Hoffman, who is the founder of LinkedIn, and a prominent VC in Silicon Valley, right?
And in that book, it basically says, if you have a unique idea where it’s a kind of winner-takes-all type of market where, basically, a Facebook, for example, where people will only use one particular solution to solve this problem. If you do not blitzscale, somebody who has more money and is bigger is going to take your idea and eat you alive. And to blitzscale, you need to go raise a whole lot of money, and you need to scale. And for some reason this, like, as I was reading this, I’m like, here we are. I wrote this book. It’s bootstrapped. We have a really nice little community here. We’re showing some traction, obviously on the revenue side, but not necessarily on the kind of scalability SaaS side, but at least in general, we’re showing some pretty good traction. I’m starting to get paranoid of, like, man, I have a pretty unique idea. It is a winner-take-all in this analytics space, and these engineers are really expensive, so maybe I need to go and race.
So that’s, ultimately, was the tipping point of me saying, yeah, I’m going to go and raise because up until then, I had spoken to a couple VCs because they were interested in what we were doing, but I wasn’t convinced yet. And that was basically the day where I was like, I told my wife, was like, “I think I need to raise money. I think we need to raise money and take Funnelytics to the next level.”
Jeremy Weisz 37:22
Had you stopped doing the agency work at that point like you only focused on Funnelytics?
Mikael Dia 37:27
I finished my agency work. I had started winding down all of my clients around 2018 I still probably had a handful of clients in 2019 while I was still doing that, I had a team, but I wasn’t focused on it. I wasn’t growing it. I wasn’t trying to kind of take the agency anywhere. It was kind of slowly winding down. And my personal income was coming from Funnelytics.
Jeremy Weisz 37:55
Raising money can be a full-time job, right? What’s a lesson? And by the way, I want to point out, people can check out My business partner, John Corcoran, has a podcast, Smart Business Revolution. So he had the co-author of Blitzscaling on people can check that out. Chris, he did every Hoffman. Chris the co-author is a great episode talking about what you’re what you’re demonstrating in the book. So check that episode out. So what’s a lesson you learned from raising money? Because that’s a serious undertaking.
Mikael Dia 38:34
Yeah. I mean, raising money is no different than selling a product. You’re just selling a product to a different buyer, which that buyer is an investor, and the product is the company, right? And ultimately, that is what you’re in the business of. So you are doing a pitch just like you would do a sales pitch, and you’re doing follow-ups just like you would do follow-ups to sell your software. And it’s just a matter of understanding, what does this buyer want? Well, this buyer wants something a company that has the potential to scale significantly and get them a massive return. So part of your job is to create a pitch that shows them that, right? Obviously, you have to back it up with the numbers and all that stuff, and they’re always going to have objections, etc, but that’s how I approached fundraising. I just approached as I’m selling something to somebody, and that’s just the persona, and that’s just the product.
Now, I think one of the things that I think was a an interesting process is, I think truthfully, I’ve reflected on this a lot. Subconsciously, I don’t think I never really wanted to raise and even though, on the surface, I did, and I told myself, I would. So I didn’t really go down the road of like, let’s call it Canva, for example, Melanie Perkins, who’s raised a lot and has grown Canva to billions of dollars, and she famously, kind of said that she’s had hundreds of pitches and hundreds of no’s and all that stuff like for me, it wasn’t that for me. I had one chat with one VC prior to going on vacation. This was when I was still in kind of lifetime mode. They weren’t interested in the lifetime, but they were super impressed with how much money I was able to generate from a marketing standpoint. So they were super impressed by me as a founder. I just hadn’t proven to them the recurring revenue side. So after I went away on that vacation, now I kind of came back with the mindset of, okay, I need to raise who’s my lowest hanging fruit? Just like a customer, who’s your lowest-hanging fruit to close these guys?
Well, this is their biggest objection, so let me go and solve that right now. So I went and switched from lifetime to yearly and started doing monthly plans. And of course, all of the momentum just carried on, and we now started stacking monthly recurring revenue. And of course, I went back to them and said, hey guys, you guys were excited by me. Here’s me solving the one thing that you needed me to solve. So let’s sign a deal, right? And sure enough, they’re like, hey, they signed a deal. And I went and took that momentum to find a couple other VCs to stack on, and kept going right? So I didn’t get a whole lot of no’s. I didn’t have to line up a whole lot of pitches. I didn’t go through that process, which I think maybe if I did, it would have changed probably some of my mindset around like, do I really want to do this and raise money, or do I want to keep bootstrapping and enjoying kind of how I’m building this business my way? Because once you have VCs, it changes how you approach your business, subconsciously, it’s changed how I approach my business. So, yeah.
Jeremy Weisz 42:24
Mikael, I love how you think so rationally through and make it so simple. It’s not easy, but it’s like, I just need to solve their objection, and then that’s it, right? The so you know, when you raise money, obviously they want you to run as fast as possible. What do you decide to do with the money, you hiring? Like, what do you actually then? You know, when you’re out of the gates, you get the money. What are you running towards? How do you use it?
Mikael Dia 42:53
So I use the money. I knew that, like the way we built Funnelytics, 1.0 was not scalable from an analytics standpoint, and we knew that in order for me to kind of scale, it was about the analytics, not about the mapping tool. Certainly, the VCs didn’t invest in a mapping tool. That’s not defensible. It’s too easy to replicate. They invested in kind of the analytics aspect of things. And I knew that that’s where I wanted to go, but I also knew that the way we had built Funnelytics 1.0 was not scalable. So I use the money to build Funnelytics 2.0 and that was kind of my first round. My first round was hiring an engineering team rebuilding Funnelytics from the ground up to be more of a analytics first platform, while still maintaining kind of the visual canvas element of things and slowly starting to prove out that we can go up market.
So building our kind of sales team and showing that, hey, we can sell this tool, even though it’s still on 1.0 if we have some account management and a little bit more of a handheld approach, a white glove approach, we can start, instead of charging $99 a month, we can start charging $500 a month, maybe $1,000 a month, and seeing where that kind of fit. So that’s what we use the money for. But then I hit a massive roadblock on the engineering. My Lead Engineer, like my three lead engineers left the company, and because we went from again, bootstrapped, having a lot of fun, to now quarterly meetings, what’s our churn numbers? Basically it changed the mindset. So those three lead engineers ended up leaving it basically for about eight months, we were kind of in this like engineering dead zone, hired a bunch of agencies to help, spent a whole lot of money.
Nothing really moved. And it was actually pretty terrible, until I found my VP of Engineering, and then we kind of rebuilt. But at that stage, this is around end of 2021, by that point, Funnelytics was out of cash, like I basically used most of that money. So how do I raise more? Well, you go back to your lowest hanging fruit, which is your existing VCs, and you go and say, hey, here’s what I’ve been able to achieve with the money you’ve given me. Here’s what I need in order for me to take this to the next level, I need to launch Funnelytics 2.0 I need to do this, this and this. So you guys want to double down yes or no, right? And sure enough, they doubled down, right. So we launched Funnelytics 2.0 and then we started really kind of ramping up, ramping up our sales, ramping up that process. And we hit another big roadblock. We like, basically, by the end of 2022-2023 we were burning too much money. We weren’t scaling fast enough to hit our Series A but I raised two rounds, so I diluted myself quite a bit in the process, so we weren’t kind like we’d raise kind of this post seed round but we weren’t at the metrics really needed to hit a proper series, a specifically when we’re looking at our Funnelytics 2.0 product, where the value of these customers is higher. In general, our total MRR was pretty up there, but for that core segment, it wasn’t, and our 1.0 MRR was kind of going down, our 2.0 MRR was going up.
So we kind of got to a stage where we had to make some decisions, and I had to lay off a lot of people and kind of go back to almost a Profit First bootstrap mentality. So the win is, I got a really incredible product built out of raising the money. But the con is that, yeah, I wasn’t able to kind of hit that VC scale in order to kind of keep going down that trajectory. So now at this stage, it’s fun, because we get to go back to that bootstrap scaling profitably type of mindset with a really good product behind us, not one that crashes once you install it on a Ryder Cup.
Jeremy Weisz 43:15
It’s really just hard to sustain that type of growth in general. It reminds me, Mikael, have you ever seen Silicon Valley, the scene at the bar where the guy is just talking to the other person of like, all the things you need to do once you start raising money. I don’t know if you’ve seen that scene before. Yeah, that runs through my head. It’s spot on. I know we have a couple minutes. Well, thanks for sharing your mindset and your journey. This has been really valuable. I have one last question, and I just want to point people to check out funnellytics.io to learn more. I want to talk about Funnel Daddy.
Mikael Dia 48:16
Yeah, Dunnel Daddy. I forgot that I told you about Funnel Daddy. Yeah. So Funnel Daddy’s one of our clients and users of Funnelytics. He calls himself Funnel Daddy. It’s hilarious, because he actually wears a crown and like, you know he’s, he’s, a character. He’s a really, really good guy, but he’s kind of the essential, like person that I think about when I look at Funnelytics, because forget the name funnels and all that stuff. But really, he’s in the business of helping other businesses, usually, in his case, coaches, consultants, to really launch a strategy that’s going to help them acquire customers. And he’s adopted this mindset of, I’m going to map out the strategy for them, then I’m going to go and actually launch it. I’m going to measure the results.
And with our tool, he’s been able to close like, $50,000 funnel builds and then put people on $10,000 per month retainers. Because, again, it’s about being able to communicate to your client what is going to help them get the results that they care about. And more importantly, how can you show them that the efforts and the stuff that you’re putting in is actually driving those results, and if it’s not, what are you going to do to fix it? And that’s ultimately why we built this tool and what Funnelytics is all about. So Funnel Daddy. Shout out to him.
Jeremy Weisz 49:51
Mikael, I want to be the first one to thank you. Everyone check out funnelytics.io. Check out more episodes of the podcast, and we’ll see everyone next time you.
Mikael Dia 49:59
Thank you.
Jeremy Weisz 50:00
Thanks.
