13min chapter

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Scaling the freemium model with Alex Zaccaria from Linktree

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CHAPTER

The Impact of Pandemic and Sustainable Growth

The chapter explores how the agency was affected by the pandemic and the role of international investors in their growth. It discusses the importance of experienced advisors, the shift towards sustainable growth, and the challenges of building a sales team. The chapter concludes by highlighting the need for revenue generation without heavy sales teams and the importance of sustainable and efficient businesses.

00:00
Speaker 2
The agency got flattened because it's all music and all the festivals stopped. But, yeah, Eretry definitely got a bit of a tailwind. Yeah. And then in terms of bringing on international investors and probably mostly US investors, how has that helped you? Have you found that they are able to, I don't know, help you with customers or are they just there with bigger checks?
Speaker 1
Yeah. I mean, it's the biggest thing for us. We'll be strapped to more cash flow positives before we raise. We didn't really actually need to raise. For me, it was that kind of thing of, like, actually still being a little bit sheltered in Australia, not really that many other consumer scale startups. Obviously, there's a canvas, huge scale, and they can kind of almost be considered consumer, but really, there'd be a bit of a pro-seamer. Afterpay is kind of a huge amount of others. Obviously, Atlassian's a wonderful company, but a bit of a, it's very different styles. And so we kind of went looking to just get extra people around the table that have been there and have seen it. So it was really about building out our board and having access to more advisors that had seen it and access to more founders that we could learn
Speaker 2
from. And then a lot of your growth, as you said, happened during the pandemic. We're not there anymore. We're not really there anymore. How has that shaped your leadership style? What does it like to rule this company?
Speaker 1
I mean, it's a huge privilege. I mean, it's been, you know, during that, the early days, it was kind of like being able to do that zero to one, which absolutely loved being able to grow and figure out, you know, how to farm product market fit, which we were very, again, fortunate, found product market fit almost immediately. And then that kind of growth at all costs scale period during 2020, 2022, during the pandemic was hard, but it was a different type of heart. It was like just finding the most effective way to be able to scale as sustainably as possible, but be able to make sure we're still hiring the right people, hiring the right people, building the team for success and knowing ultimately kind of put in the pieces in place to know the scale we're getting to. I think business is like being the third phase of the economy's change is change our strategy a little bit. Ultimately, we're still growing really, really well, but we want to be in a position where we're able to grow sustainably. We want to make sure that we're like raising so long. Really the strategy we want to be completely sustainable, get to cashflow positivity on the core business and be able to go scale all the other revenue lines we know we can from there. And so it's a bit of a strategy change and that's been really interesting year this year, kind of actually just getting back to our bridge to our roots, really. It's kind of muscles we built really early on on how to grow really sustainably higher environment, our revenue to do all those kinds of things outside of having capital where you're investing heavily ahead of the curve. It's kind of like moving back into that really sustainable mindset, which is like a big shift. Yeah.
Speaker 2
Well, I mean, that's again, that's something that I feel like Australians start up kind of do really well because they come to investors usually with a product that's already in market, generating revenue and not just an idea. So I think that capital efficiency is something that I've seen a lot in my reporting in Australia. Yeah, I wonder if you can speak a little bit more about that.
Speaker 1
Yeah, I think it's definitely a, I mean, there's a mentality to speak to it. I think it's also just like you can't just go build a sales team in Australia and we have them sell to the US like time zones are a bit annoying, sell to Europe. So you're generally like, find the guys from Atlassian, Scott and Mike speak to this a little bit around how the early days they really went for a SaaS model because they couldn't have an enterprise sales model being in Australia, picking up calls before I am. We found the same thing. We had to build our support team in line with the US and go down to SaaS model. I think you kind of like find ways to be able to build the revenue without needing heavy sales teams and those kinds of things and you're therefore way more efficient and you find ways to get money earlier and be able to grow your team sustainably. And I think that's awesome. Like my advice is always to do a bootstrap as long as you possibly can. If it's one of put you in a better position later, but from a valuation perspective, but also it's just to build that muscle and build down the standard of how to really run a business effectively and sustainably more so than just like how to spend cash. Have you noticed or have you felt any pressure from your investors? Like if they give you a
Speaker 2
really big round, I think that in the past there has been this kind of pressure to spend the money, right? And to make sure that it doesn't make it look like you're actually doing something with it. And so people will probably overspend, they over hire. How do you navigate that?
Speaker 1
I think it comes down to investors. Like our investors are in super high quality. Again, really, really fortunate to have really amazing people around the table. Yes, there was absolutely during that period where super low interest rates VCs had a heap of LP money that VC was the best place they could put in because interest was making them nothing. And so they were wanting to deploy as much capital as possible. And so it was a general feeling in the ecosystem also and specifically about my investors of just like, hey, you can spend more, scale more, grow and then you'll be able to take more money. And that ultimately was an interesting period. Let's call it like a modest sustainable period. But our investors are actually like, hey, you need to make sure we're worried about culture. If we scale too quickly, we're worried about being able to maintain operations and processes and efficiency. Like, yes, we should use the capital to solve problems quicker than we otherwise would be able to and be able to take on more markets quicker than we would be able to. But how do we do that sustainably? And it's not just about spending the money as quickly as possible just so I can give you more. But I think now we're in just a much healthier ecosystem where founders are encouraged to build very sustainable businesses, growth, efficient growth and profitable growth is what's rewarded more. And I think that's just better economically all around. Builds better founders builds better resilience. And also like the expectations, I think like I sometimes speak to founders that are like, oh, you know, would be nice to raise during that period. And I was like, no, I think you should be fortunate to raise in this period because the expectations are entirely different. Here's your amount of money. We know you need to grow sustainably, go through the right things compared to how we've raised this much money. And therefore we expect you to grow X percentage quicker and
Speaker 2
therefore you're like, you're going really fast and you're kind of making maybe not such sustainable decisions. Yeah. So like, not only are you maybe, you know, your business model is more worthy of funding, but also you don't have these insane expectations. Yeah. You just have time to be more intentional about your decisions. I think it's the biggest piece. Yeah. Like, you know, you look at funding trends over the last few years and there was a big boost in 2021, 2022 in Australia and then it drops in 2023. The investors I've spoken to say that's actually a good thing. Yeah,
Speaker 1
I think it's great. I think it was obviously that initial shock, like, you know, like it was hard for a bunch of startups that were in the SBB thing that happened as well around the same time, like not great timing. But I think now that everyone's out on the other side of it, obviously like very tough time for a lot of people employees as well with the requirement for layoffs and those kinds of things across the market. So super tough, everyone involved. But I think on the other side of it, you've got a bunch of businesses that are in a much clean position to be able to like go and actually reach their goals and reach their vision. So what about your goals and your vision? What are you thinking are the next steps for Linktree? Any other products that you want to add? Different revenue streams, new markets? Yes. Ultimately, like I said earlier, we see our time and the billions of C-Rinci to be this completely ubiquitous, centralized way to be able to express your whole self. And we've got a number of steps to get there, which we're really excited about. It's a bit of an idea of like empowerment and democratization of your digital presence, where anyone should be able to express themselves really simply. A bunch of ways to get there. But like I said earlier as well, big focus for next year's commerce, further empowerment and enablement of creators, brands, businesses to be able to drive commerce through and tree. We really see through that, creators are the storefront of the future, right? Like I don't see any world where brands aren't seeing creators being the main distribution channel for their products. Well beyond paying for shelf space in Walmart, for example, that creators actually through the authenticity, the reach of their audiences, these really powerful distribution channels. And so we're really looking to power that.
Speaker 2
Do you imagine a world in which you're using kind of different form factors to, you know, I'm thinking augmented reality, virtual reality. I'm thinking, yeah, a lot of the promises that have been made from specifically augmented reality companies. There was one years ago that pitched me, and I cannot remember the name of them, but it was basically like if you came up to someone and you held up your phone, you would just see like a chain of their social media presence surrounding them and you could interact with it. You'd be like, oh, well, that's their Spotify. I can see what they listen to. And that's their Twitter. I can see what they were sorry, their ex. And I can, I can, I can interact with that. And then you just kind of, yeah, almost this slightly creepy version of, you know, just being able to look at what surrounds them. I don't know if
Speaker 1
you've, you've dabbled or thought about anything interesting like that. We haven't seen that one, but yeah, I think for us right now, the surface is you're expressing your identity through either the content you're linking to, the content you've created could be content you you're recommending. So you're linking your page, but also through like your creative expression, like the colors, the background, the image of fonts, how you want to showcase yourself. And it's right now, it's like, was really hyper focused on conversion link trailers. You know, when we started, it was solving this real core problem as you'd be able to link out and creators wanted you to be able to get your audience, wanted to be able to get their audience to wherever you need to get them to as quickly as possible. So it's just hyper focused on conversion. And actually as we've evolved, it's become a lot more about expression, a lot more about a visual expression, actually wanting the click to happen on the page, wanting the experience to happen in the link tree, rather than just sending them off all the time. And so definitely evolving it a lot more at the moment to be much more centered in this idea of rather than being kind of the train station and sending them out, we're actually the destination and we can do a lot more fun stuff like that to enable creators to be able to showcase the things they care about, but ultimately still be able to get them to whatever that conversion needs to be. Right. So if they need to get them from Instagram to TikTok, how do we make that happen as quickly as possible? And how do we showcase that orbit around them? But if we need to help them get a conversion on a product, how do we take as many steps away from that as possible? When you say like personalizing the page, like have you, I don't know,
Speaker 2
you mentioned Canva earlier, like are you working with any companies to help you or is this done in house to help you offer creators and people who are using your platform a way to just make cool art as the landing page? Yeah,
Speaker 1
like right now they can do, you know, they can change fonts and backgrounds and colors. They can change the fonts, the backgrounds, the colors, the button styles, that kind of thing, videos on the background, avatars, etc. We also integrate with Canva so you can do a bunch of that stuff in Canva and put it in tealing tree. But we're definitely looking to expand on that a lot more this year from an AI perspective, gen AI to be able to generate and help recommend the way you'll be sure you should look to a whole bunch of it for you, which is going to be really exciting as well. This is giving me early MySpace days vibes. Yeah, it's actually been really funny watching that kind of full circle moment as a whole bunch of linkers that are kind of like, can I just, the things they want to do with my MySpace desk? But the Gen Z, Gen Z link is asking for it. Like,
Speaker 2
I don't think you've seen this yet. I think Gen Z would love MySpace. I actually think they would. Yeah.
Speaker 1
And we're doing a lot of like, you know, you can recommend other friends, which is very MySpace topic, but in a way, cool way. Yeah. So there's a whole bunch of that that I think is super exciting in terms of, again, that idea of visual expression through the lens right now of like how do we hit and power this commerce aspect and what brands are really pushing for as well, brands are trying to find these new avenues, especially after their whole Apple cookie ban, performances and work in as well. And brands are really looking for ways to be able to reach an audience and that idea of reaching an audience through a creator is really powerful. Would you have like a B2B pillar then for this or? Let's B2B pillar, but ultimately it's brands and they're brand, they're products to be able to be sold by creators. And so there's definitely an element where we need to be working with brands. Yeah.
Speaker 2
What is on your link tree?
Speaker 1
My link tree, because I don't create. So it's actually one of those tough ones for me. I'm kind of- You had a free account? Yeah. I'm just on the free version. No, I'm like, it's actually a bit of a- generally if you want to see things with beta testing, you can look on my link tree. There's a whole bunch of crazy things going on there. But it's generally recommendations like things that I'm curating, things that I'm listening to, books that I've read, podcasts that I like, which is kind of like really the vision that where I wanted to go in terms of individuals, not just creators actually showcasing the things I care about. Like if I have a friend that is in Melbourne and loves food, I'm going to trust their restaurant recommendations and I'll go to their link tree to look at their restaurant lists and those kind of things. I think there's this idea of curation as creation that we have to waste it right there in a position of beta to facilitate, which is the big kind of next.
Speaker 2
Excellent. Well, thank you so much for walking me through your business, your plans, your past, your future. And it's been really cool connecting. Yeah, I really appreciate the time. Cool. Should I do thisico? Okay.
Speaker 3
You know, first let me use a couple of details. You know what's the single colour I've already created. Can I help? I'm just kidding. Right. Yeah. I know. It's a neutral colour, but I'll do this. Let me go on take it back. But easy to be done. Blgun it back. Right. According to what happened earlier, when you whatually it's going to break it just like it will release. I will it never break. And you'll be celebrating without it. Maybe I'll lose it in mind. Well, what? What's going on? Bigattering! Alright. That's everything. I'm creators.
Speaker 1
Bo Zhao Ndiagnits. That's wonderful. And I'm going to take this to Friday.

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