680: How to Start SaaS Company with Very little Savings, with Reply.io CEO Oleg Campbell

Oleg Campbell. He was born in Ukraine and starting working as a programmer at the age of 19. He moved to Canada when he was 22 and founded his first startup at 24 successfully. Then at 27, he founded Reply.io and he's currently living between Ukraine and San Francisco building this company.

Famous Five:

• Favorite Book? – Losing My Virginity
• What CEO do you follow? – Jason Lemkin
• Favorite online tool? — Chart Model
• How many hours of sleep do you get?— 6-8
• If you could let your 20-year old self, know one thing, what would it be? – "Be more fearless"

Time Stamped Show Notes:

• 00:45 – Nathan introduces Oleg to the show
• 01:28 – Oleg is a programmer and read Kawasaki's, Rich Dad Poor Dad, and Tim Ferriss', 4-Hour Work Week, which influenced him to build a software for himself
  • 01:58 – Oleg found out that his first business was a lifestyle business when they failed to grow it
  • 02:02 – The technology was built on top of QR code
  • 02:22 – The highest revenue the company reached was $150K annually
• 02:32 – Oleg put the business in autopilot, took the money and invested in a new venture
• 02:28 – Oleg has never saved any money, but just invested it into businesses
• 03:21 – Oleg founded his first startup while he was working full-time
• 03:37 – With Reply, Oleg invested what he took from his salary from his previous startup
  • 03:45 – Initial investment was around $30K
• 03:55 – Oleg hired 2 developers to build the product and Oleg started working on marketing and sales
• 04:08 – The developers are in Ukraine and it cost Oleg only $2000 per month
• 04:46 – Oleg found the developers through online job postings
  • 04:58 – There are websites in Ukraine where developers hang out
• 05:18 – Reply focuses on replacing routine sales tasks with AI and automation
  • 05:25 – Reply now automates sending emails, follow-ups and initiating phone calls
  • 05:44 – The development team is building more features to automate more sales tasks
• 05:53 – Reply is a SaaS business
  • 05:57 – Plans start from $25 to $120 per user
  • 06:03 – Average pay per user is $90 per month

• 06:14 – Reply was launched in 2015
• 06:18 – Current team size is 34
  • 06:28 – There's a sales team in Canada and the development and marketing teams are in Ukraine
  • 06:50 – There are 15 developers
  • 07:20 – Reply spends an average of $4K for developers
• 08:04 – Reply has 1000 customers right now
• 08:15 – Average MRR
• 08:21 – Reply just hit $100K in monthly revenue
• 08:42 – Reply raised capital a year ago with a small $400K seed round
  • 08:54 – One of the investors reached out to Reply and to raise a round
  • 09:13 – It was on a convertible note
  • 09:17 – It was in March 2016
  • 09:24 – Reply is now close to closing a big round of funding
• 09:34 – Oleg decided to find out when it would be a good time to raise money
  • 09:42 – Oleg reached out to some investors and used his software called Outreach
  • 10:03 – In 3 weeks, Oleg met 15 investors
  • 10:11 – Oleg then found out that they were still early for a round A
• 10:32 – The sample email Oleg sent to the investors
• 11:26 – Reply has been profitable for the last 4 months
• 11:38 – Oleg has been operating at right around zero
• 12:08 – Most of Reply's money is spent on headcount and they're just starting with advertising
  • 12:18 – They are now spending on AdWords
• 12:43 – Churn is, in terms of numbers, would be close to 5% and in terms of revenue sharing, it would be closer to 3%
• 13:12 – Reply's customers are adding more seats
• 13:39 – CAC would be around $200 but will still varies and organic is definitely lower
• 14:03 – LTV is if you just take all our customers, it would be close to $100
  • 14:19 – But in terms of bigger accounts, it will be much lower to a few grand at least
• 14:36 – Reply launched in Product Hunt some of their free products as lead generation tools
  • 14:59 – They have a great number of fans in Product Hunt
• 15:09 – Reply also creates content and promotes it
  • 15:16 – Reply recently interviewed a lot of sales experts and they created articles
• 15:43 – After the launch in Product Hunt, Reply had 10K visitors and 600 signups
  • 16:02 – In terms of LTV, it will be close to 60K which is added from the Product Hunt launch
• 16:25 – Oleg won't sell the company for a million
• 16:32 – Oleg's valuation is around $20-30M
• 16:47 – Oleg has a co-founder and the split is around 60/40
• 17:27 – Reply provides equity to employees who have been with them for a year
• 19:12 – The Famous Five

3 Key Points:

1. If you want to put your money to use, you can continue to invest in different businesses.
2. Outsourcing developers from other countries is more cost-efficient.
3. Be more realistic and be fearless.

Resources Mentioned:

• The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
• Hotjar – Gives Nathan a recording of what is happening on a website or where are people clicking and scrolling on the website
• Organifi – The juice was Nathan's life saver during his trip in Southeast Asia
• Klipfolio – Track your business performance across all departments for FREE
• Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
• Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
• Audible– Nathan uses Audible when he's driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
• Freshbooks – Nathan doesn't waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOW

Show Notes provided by Mallard Creatives