MegaMaker - Should I keep doing this?

​

Howdy!
​

I was curious to know: is it worth doing sales demos for our business?

Ever since we started Transistor, we've had interest from larger, enterprise companies. (Especially for our private podcasting feature).

But they don't want to look at our pricing, and just sign up with a credit card. Inevitably, they'll want to book a call. 😱

Even when we try to address their questions over live chat, show them demo videos, and send them our FAQs, many of these companies really want to book a Zoom call with me.

So, for the past few years, I've been doing these demo calls with qualified leads. It's been an experiment!

twitter profile avatar
Michele Hansen
Twitter Logo
@mjwhansen
July 23rd 2021
0
Retweets
4
Likes

πŸ€” Is it worth it to do those calls? Let's do the math.

I just went through my calendar and counted every demo call I've done since Jan 1st. So far this year, I've done demo calls for 26 companies.

We really tried to pre-qualify these folks beforehand. These aren't small SMBs; most them were big brands you would recognize.

Of those 26 demos, 50% became customers.

First, some background. Transistor.fm provides podcast hosting and analytics. In the podcasting industry, most customers are prosumer or SMB. Our most popular plan is $19/month.

So back to the sales calls.

Since January:

  • I did 26 personal demos for larger enterprises.
  • Those calls took me ~1 hour each, so my time investment was 26 hours.
  • 50% became customers.
  • The biggest account was $1,990 / year. On average, each of these new customers pay $730 / year.

Overall, those 26 sales increased ARR by ~$10,000. Is that worth it? If doubled-down could we make more money from enterprise customers?

Is our business a good fit for enterprise customers?

Every market is different.

For example, if you look at ConvertKit's numbers (which are public), most of their customers sign up on their $29 plan:

ConvertKit's plans: most are $29
​

​Their ARPU (average revenue per user) is also relatively low: $65.

My guess is Convertkit's market is similar to Transistor's: individual creators, small brands, agencies, and communications professionals.

From what I can tell, ConvertKit doesn't sign enterprise sales contracts. They've built their business on small, self-serve contracts. And it's working: they have 37,000 customers!

My guess is that MailChimp, Squarespace, and Carrd are similar: the shape of the market is heavily weighted towards smaller, self-serve accounts.

Even Atlasssian, a company that did $1.6 billion in revenue in 2020, doesn't do custom contracts.

In some categories, serving enterprise customers makes sense! This seems especially true for SaaS that do per-seat billing. For example, it was revealed that 40% of Slack's revenue came from contracts worth $100k+/year.

But an enterprise-sales process clearly doesn't work for every market. There needs to be enough demand, at high prices, to necessitate all that additional work you do to get those customers.

There's another important factor to consider: what kind of business do you want to build?

With Transistor, Jon and I wanted to build a business that was:

πŸ‘©β€πŸ’» Small: less than 5 people.

πŸ˜‡ Calm: low stress, minimal complexity

πŸ“ˆ Profitable: maintain our current margins, without having to commit to more stress.

Building a business that serves enterprise customers looks a lot different than the company we have now. It would require more staff, more process, more compliance, more legal, more stress, and more meetings. We don't want that!

twitter profile avatar
Alban Brooke
Twitter Logo
@AlbanBrooke
July 23rd 2021
0
Retweets
4
Likes
twitter profile avatar
Davis Baer
Twitter Logo
@mynameis_davis
July 23rd 2021
0
Retweets
2
Likes

So what are we going to do?

I think I'm going to stop doing demos for bigger enterprise companies.

Why?

Supporting enterprise customers would require us to massively change our company (hire more folks) and our product (build iOS / Android apps, add SSO). It would make everything more complex and, frankly, less fun.

There are other competitors pursuing enterprise podcasting: I've heard uStudio and Storyboard can charge up to $250k/year. But I'm not convinced that the overall demand is big enough to justify the enterprise sales process. (And again, I don't want to build that kind of company).

One thing I will keep doing: doing calls with individual creators and podcasters who are creating good work, and fit our customer profile. πŸ‘

This isn't to say that doing demo calls is a bad decision for other self-serve SaaS. It really depends on the shape of your market, and what kind of company you want to build. It might make sense for you; it just doesn't make sense for us. ✌️

Cheers,
Justin Jackson
Co-founder, Transistor.fm​
​@mijustin​

PS: this newsletter was based off this Twitter thread.

​

Want more discussions like this? Join ⚑ MegaMaker ⚑
(a private community for bootstrappers)

Older messages

Three things from Justin

Saturday, July 17, 2021

​ Howdy! ​ My 2013 essay, This is Web Page, has been top of Reddit for the past day. It's wonderful to see that, eight years later, it still resonates! (Welcome new subscribers! 👋) Today, I wanted

I've been meaning to write you

Tuesday, June 29, 2021

​ (@mijustin here) ​ Hey! I normally try to send these on Saturdays, but I've been meaning to write you this update for weeks, so I thought I'd just sit down and get it done. Two personal

What makes a new product idea succeed?

Saturday, May 29, 2021

​ (@mijustin here) ​ Hi friends, Anytime you see a founder (or a product) who's really killing it remember: There are tons of layers (under the surface) that contributed to their success. Here are

How to find customers for a new product

Saturday, May 22, 2021

​ (@mijustin here) ​ Hi friends, The product you decide to build will really determine how hard it is to find customers. I think we need to stop trying to find customers for our products and start

It's a hard time

Saturday, May 15, 2021

​ (@mijustin here) ​ Hi friends, It's a hard time in the world right now. Many of us have been locked down for extended periods of time. Anxiety caused by the pandemic is pressing down. Drama on

You Might Also Like

The Supreme Court considers jawboning

Tuesday, March 19, 2024

Plus: the TikTok ban slows down Platformer Platformer The Supreme Court considers jawboning By Casey Newton • 18 Mar 2024 View in browser View in browser Conservative demonstrators protest outside the

The Vector Computer Company

Monday, March 18, 2024

Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here.​ ​The Vector Computer Company​ If you were to watch three videos

🦄 Matching contractors with minority businesses

Monday, March 18, 2024

Tough Leaf provides a marketplace for construction firms to find qualified minority and disadvantaged subcontractors. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

From the early days of Apple to Canva’s chief evangelist

Monday, March 18, 2024

Meet Guy Kawasaki + other ecomm trailblazers in our free summit – Have you saved your free spot in the Start Your E-commerce Business Summit yet? From picking the right product to launching a memorable

Silicon Valley Funding News - Week of March 18, 2024. Together AI Raised $106M

Monday, March 18, 2024

View this email in your browser Happy Monday! I am excited to be speaking at the Fortune Innovation Forum 2024 Hong Kong in two weeks on the topic of "Cryptocurrencies at a Crossroad." Emily

📂 Product Hunt should be the last step of your launch, not the first

Monday, March 18, 2024

​ ​ ​ ​ Today's newsletter is proudly supported by Videodeck 🎉 One of the most common questions I've gotten in the last year is: "How do we get started with video marketing?" So I

Sowing tech hub seeds

Monday, March 18, 2024

The teenage AI founders, Europe's leading startup hubs and how to develop VC talent. View in browser Sponsor Card - Flagship (43) Good morning there, There's a close link in the startup world

Initiator Creator - Issue 138

Sunday, March 17, 2024

Initiator Creator - Issue #138 ​By Saurabh Y. // 17 March 2024 Presented by DesignThingy​ This Week's Notes: Phase II Starts Here This week's issue came 22 weeks after the last issue, a lot of

#171 | The Materials Revolution, Tech & Interest Rates, & more

Sunday, March 17, 2024

March 11–17th | The latest from Collaborative Fund, NextView, Equal, Precursor, Battery, and others ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏

How this ecomm maven turned $24 into 4 multi-million-dollar brands

Sunday, March 17, 2024

Learn FREE in the Start Your Ecommerce Business Summit Hi , The BRAND NEW Start Your E-commerce Business Summit is almost here, and we can't wait! (You can still save your free spot. Join us here.)