S2E39 – Joran Hofman – Building a global B2B SaaS

Key Timecodes

• (01:00) – Joran Hofman’s background story

• (03:06) – His business model at Reditus

• (05:26) – How he is growing that company

• (06:37) – How big his team is.

• (07:12) – How he brings partners to his SaaS ecosystem

• (09:32) – Strategy of attracting subscribers to the SaaS platform

• (09:53) – The platform plans and structure

• (11:10) – Marketing tips using Linkedin

• (13:05) – His strategies and “win win win” customer relationship

• (14:21) – His processes

• (16:24) – Organic marketing vs  paid  advertising

• (17:12) – The importance of good customer onboarding support

• (20:07) – What are the pros of a SaaS business?

• (21:25) – The advantages of not selling any physical thing

• (23:29) – The advantages of the affiliate business model

• (24:17) – What are the cons of a Saas business?

• (25:15) – The bootstrapping strategy

• (29:14) – What investors look for in a SaaS company

• (31:35) – The numbers and strategies

• (35:07) – The worst business or investment advice he ever received

• (36:13) – The best business investment advice he ever received

• (37:44) – Get in touch with Joran Hofman

Transcription

[00:00:03.430] – Intro

Payback Time is a podcast about building businesses wealth and financial freedom. We try to uncover the challenges our guests faced, the mistakes they made, and the steps they took to achieve their goals. The overall objective is to provide you with a roadmap that leads to your own success. Sean Tepper is your host. Are you ready? It’s payback time.

[00:00:32.790] – Sean

As investors, we need to look past.

[00:00:34.730] – Sean

The numbers and look at the business. Those that know me know that I love the SaaS business model because it’s highly scalable.

[00:00:41.160] – Sean

In this episode, my next guest talks.

[00:00:43.110] – Sean

About his background, why I created a.

[00:00:45.160] – Sean

SaaS business, the pros and cons of.

[00:00:47.120] – Sean

SAS, and what to look for when investing in a Sass.

[00:00:50.800] – Sean

And for those entrepreneurs out there, he.

[00:00:52.870] – Sean

Also provides some actionable growth hacking techniques on how to quickly grow your business. Please welcome Joran Hofman.

[00:01:00.790] – Sean

You’re on. Welcome to the show.

[00:01:02.340] – Sean

Thank you for having me, Sean.

[00:01:03.690] – Sean

Good to have you here. So we’re going to be talking about a SaaS business, specifically your SAS. But first things first, let’s learn about your background. So why don’t you tell the audience a little bit about yourself?

[00:01:13.430] – Joran

Yeah, you’re an offmon based in Utah, in the Netherlands, 35 years old. I went to college where I did commercial economics. Was kind of ready to sports, sports marketing. I learned that my English wasn’t that good when I was in year three. So I decided to go all in and did my internship in Australia. Did it for six months, and my next internship was in America. So I kind of got that international background already. From there, when I came back to nurse, I joined a really traditional company. Started in sales, doing cold calls, like 60 to 80 calls per day, you know the drill. And then basically just targeting revenue at the end of the month when I kind of got what I wanted there. At one point when I became an account manager, I thought, Is this it? So I was pounding to get there for a year and a half. When I got there, I was like, well, this is no fun anymore. That’s when I got into the startup world. I went to a startup in Amsterdam, which was really bootstrapped low on cash. So I think after six months already, it was really hard to pay everybody and to maintain the business.

[00:02:19.090] – Joran

So I kind of became a freelancer where I did a lot of sales jobs for startups. And when I was doing that, I was just applying, I guess, to other freelance jobs. And then suddenly I had three interviews via Zoom and before I knew it, I was in Finland. So I joined a company called De Peter, worked there for around four and a half years, same thread trajectory. Started in sales and left the company as head of CS. And CS stands for Customer Success. So basically making sure that the customers are successful and get value out of the product. That a team of 25 people there. And during that time, I started my own startup, which is called ReadyTech. And I think we’re going to talk about it more later. But I did the technical launch during when I was still working at the Theater smart.

[00:03:07.810] – Sean

So, yeah, we’re going to talk about Redditors. And what we’re going to do is because a lot of the audience, especially Tykr, they don’t know already. They know I really love SaaS businesses. I’m a tech guy. That’s where I spent most of my career is in tech. So I really like the scalability of SAS. We’re going to talk about how you’re building a SAS, the pros and cons and what the audience can look for when they’re looking at SaaS businesses. We’re going to help connect the dots a little bit. So first things first, you building your business. Why did you build Redditors? What need or what problems did you see in the market?

[00:03:44.050] – Joran

I love south and we’re going to talk about that later, but I guess I’m a SaaS affiliate. We’re going to talk about that maybe later as well. Which basically means I refer to companies and I would earn a commission if somebody gets a paid subscription via me. I’m always looking at around 85 companies. So I built my own website. It has around 25,000 organic visitors per month, so it grew really nicely. But what I figured out is all the programs I’m using to actually see how am I doing, they weren’t working as they should. Either I have to log into all the separate portals or one tool, which allowed me to manage multiple programs, didn’t really track things as it should. So at one point I got so frustrated that I just decided to build my own tool. So I wanted to build a passive income by just becoming a freedom of market. And now I’m bootstrapping my own company, which is a lot more work than I imagined when I was trying to build a passive income for myself.

[00:04:41.860] – Sean

Sure, that makes total sense. So you saw a Clunky process with other platforms. And I can attest to this because I’ve used other affiliate programs to the audience out there. Tykr uses Redditors, so we work with Europe and his platform. For those of you who do use our affiliate program. That is actually Euron. That’s his tech stack and it allows us I love how easy it is to sign up from the user standpoint and then from the admin side. We can track everybody who’s an affiliate. See what kind of clicks they’re getting. See what kind of revenue they’re generating. And then make sure we pay them on time. Your platform solves those problems. So I can agree. I’ve seen some clunky models in the past.

[00:05:25.300] – Joran

Yes, thank you.

[00:05:27.110] – Sean

Now you did mention that you’re probably putting in a little more time than you anticipated. And that’s okay because the SaaS business I kind of refer to it as it’s this giant boulder. You’re trying to get the momentum of this thing moving in those first few roles, it just takes so much effort. But then you get this momentum and that’s where SAS, it’s like that flywheel effect I think was mentioned in the book. Good to great Jim Collins and you get that momentum. So you’re still in this phase where you’re really pushing this thing. You’ve got customers joining but let’s dive in. How are you growing this company?

[00:06:03.580] – Joran

Yeah, so I’m doing it bootstrap, which basically means is I did not get any external funding so I’m basically putting my own money in and I can kind of same as investing, right? As if you do it with your own money you don’t have a big bucket. So it takes a really long time to actually start building profit. And that’s what I’m basically doing with my own business. As in I’m not taking extra funding so I can’t make these big jumps quickly. But I’m doing it slow and steady and if people like investing then it is going to compound it over time. And that’s basically what we’re also doing at ranges.

[00:06:37.580] – Sean

Got you. And how big is your team?

[00:06:39.240] – Joran

We’re now with three full time and a kind of three plus which are on and off when we need them.

[00:06:44.690] – Sean

Basically the three full time people, including yourself. What are the roles?

[00:06:48.810] – Joran

Yeah, so I mean I do mostly the sales and marketing and we have a growth hacker who basically tries whatever he can to grow the platform. So it could be recruiting affiliates, could be generating cash lines, it could be basically anything. And then we have a developer who develops a product and for me I’m kind of the product manager and the sales guy, marketing guy. So then whatever needed on the business.

[00:07:12.760] – Sean

Side, really a few hats.

[00:07:14.130] – Joran

Okay.

[00:07:14.490] – Sean

And how are you getting in front of other SAS businesses? Because that’s really like Tykr a great customer. You’re a SAS but you also work really well with SaaS businesses. How are you bringing them into your ecosystem?

[00:07:27.030] – Joran

Yeah, I mean I like the long term ways of growing. For example for business that is SEO where if you do a query, you find an article, you find the tool and then that would be on top. So that’s basically our long term goal is to go that route. So we’re publishing content I think like one block per day. We’re also doing things on the distribution side so it’s not just publishing content but it’s also making sure that content does something so it actually gets shared, et cetera. And we are going to try different route where we are going to do cold outreach. So basically cold emails and then you’re going to talk about volumes we recommend for example, which we’re doing, we’re sending out 2000 emails per day. So we send out probably 10,000 at the end of the week next week again, and we’re going to do the same with SAS really soon, where we’re also going to try to recruit them by gold outreach. But that’s not my long term plan. My long term plan is what you call product that growth. So the product kind of has to grow itself. So if somebody’s listing their habitat and they sign up, everything should happen without talking to me.

[00:08:33.230] – Joran

So they should be able to set everything up, go to a pay package. They should know exactly what the next step is and how to get value out of our product. Like, that’s our most ideal goal. But as a wizard founder, you can’t have that right away. You need to find struggles first before you can build a product like that, right?

[00:08:50.950] – Sean

Yeah. That very much falls in line with Tykr, which is considered a B to C SAS, we call it a low touch SAS, where we’re not actually selling the customer, the site should do the selling for us, and that way we can really focus on marketing. And I really like networking and getting out there, talking to people so nobody has to be on the phone, like, hey, you should join Tykr. Sounds like your model is very similar. You want people to find you. And we’re going to talk about LinkedIn. There’s some hot tips here our audience can extract from this episode. Because you’re a specialist with LinkedIn marketing, but really you want people coming to your tool, checking it out, reading a little bit of information, trying it on their own, and then committing with a credit card because you got a trial period. Is that correct? Is it like 14 days, 30 days?

[00:09:38.430] – Joran

No. We actually have a premium model, which means that we have a free version of our app, which, I mean, conversion wise, it’s a lot better for us where people can just log in or sign up and don’t have to leave the credit card details. So that’s the model where we’re taking.

[00:09:53.480] – Sean

Got it. And then you do have like, a premium plan as well.

[00:09:56.500] – Joran

Yeah. So as soon as somebody really gets value, and value for us, basically means they’re generating money. So, for example, our pricing plan starts at $39 per month. And if somebody starts in the free plan to start generating money and they get $1,000 in revenue per month, then they have to upgrade to a paid package, which is $39 per month. So there’s going to be no issue for them to actually start doing that because they already generated so much more money before.

[00:10:23.070] – Sean

That very much in line with what I’ve seen across the board with SAS businesses. Usually if you can fall below $50 US. Dollars, that is. I know you’re in euros, which I know the currencies are pretty close today, but that’s that low touch category. As soon as you go from my experience, I see SAS going north of $50 even closer to $100. That’s where it’s a little higher touch to get people into the platform, but where you need a sales team. But no, that’s really good to know about your pricing structure, the low friction, that’s something for the audience to pay attention to as you like businesses that are really low friction to get into from the consumer. That means you can move large volume of people into a platform with very little salespeople or effort from the team, including your team. I like to circle back to you to comment on blog posting which relates to LinkedIn. You’ve got over 10,000 followers on your LinkedIn and you’re posting like every day. And it’s really and I’ll let you speak more about this, but I found a lot of hot tips and like marketing that you’re putting out, it’s not like every post is hey, come try our tool.

[00:11:34.090] – Sean

You get a little annoying, but you got some really good ideas there. So can you share some tips with the audience on maybe growing their LinkedIn?

[00:11:41.120] – Joran

Yes, I think it’s going to be with every social media. I think consistency is key, right? Like if you’re going to post ten times over the next three weeks, for example, and then you’re going to say, well, this didn’t work out. So I’ve been doing this for quite a long time and I committed with myself to try to post everyday beginning of this year, which really increased things as well. Back in the day, I did use some automation to do the things for me. Why would it invite contact, for example, automatically to grow my network. So there are some automation tools you can use, but personally I do not use them anymore. But in the end it’s consistency and sharing value because indeed you do not want to hear me keep talking about versus because you will get sick of it no matter how much you like our product. So you want to get tips, you want to get ideas, you want to be inspired. And most of my posts don’t get more than 1015 or sometimes 30 likes, but they’re really valuable for people and that’s what I’m trying to do. I went niche, as in my content is now really focused towards SaaS and B to B SaaS, which is my industry.

[00:12:47.180] – Joran

So when I’m on the soccer field, my friends always say, I always keep seeing your face on LinkedIn, can you just stop posting? I said, well stop following me then because you’re not my target group. You kind of have to make a decision, right, which route you want to take, who’s your target audience, and then basically create your content towards them, right?

[00:13:05.300] – Sean

To dive a little further into the ideal customer of your own. And Reddit is assessed business like Tykr our customers, that like promoting Tykr and sharing it with their friends and family. They really like the fact that it’s reoccurring revenue for them, not just us, but when they bring in, we’ll just say it’s John Doe. John Doe is paying his credit card every month. Not only are we getting paid, but that affiliates, they’re getting paid every month. And that’s why you’re on talking about here, you really like the SAS target because it’s not only valuable for the SaaS business, but their customers as well. So it’s another layer deep. It makes it a really scalable model.

[00:13:46.880] – Joran

Yeah, I mean, in my opinion, it’s a really win win model where you feel it wins. When they give you paid clients, you determine with them how long should they get commission and which percentage should they get. So that’s an agreement you made with them. And the more money they make for you, the more happy you are going to be. The more happy they are going to be in the end, the more happy we are going to be, the more money you make, the more you’re going to pay us. But there’s always, of course that factor in there that you’re going to earn 50 times more than you’re actually paying us. I really like to believe that we created a win win situation here.

[00:14:22.270] – Sean

Absolutely. Now, still talking about the content, some of our listeners can or maybe thinking like, oh wow, like a blog post today. How are you? First of all, generating the content? Like, is it creative mindset? And then do you have a bank saved, like a Word doc or several word docs with all these different saved and you keep editing them over time, what’s your process?

[00:14:48.920] – Joran

Yeah, I mean, my process is outsourcing. That’s the magic keyword here. I can’t do everything myself. For me, putting a blog life already takes me quite a bit of time. Can you imagine me writing them? Like, I wouldn’t be able to do that because that would just hurt the sales side. So I outsource a lot. And with platforms like fiverr or upwork, you can just outsource everything. So for the other side I have I do the exact same thing, a blog a week, and I even outsource the keyword research. So what should be the blog about? What should be the headline, what should be the middle point? And then I have somebody do that was really good in that, and I basically give his document to the writers. And then the writers would basically write the articles, the guy research before that. So I’m kind of just putting orders out. Okay, I want to produce 90 blocks in the next 90 days. Can you give me a list of good blog posts we could write? And then I would pass along to writers who are going to write it for me. So that’s my process outsourcing as much as I can.

[00:15:51.860] – Joran

But I always keep quality control when I put it live. So I always make sure that I’m not going to just put things live.

[00:15:57.270] – Sean

Which doesn’t make any sense, which you’re the quality control barrier, right?

[00:16:02.980] – Joran

Yeah, for both of them from my side and for redditors. I know, of course, the business, and I know what they’re writing about, so it’s really easy for me to check. So if you ever start in freedom marketing, where you have to start a business, if you outsource things, you have to be kind of the expert, right, where you can just check if it actually makes sense if you’re going to outsource all of the things.

[00:16:23.900] – Sean

Got it. Now that’s really good to know. Outsourcing is a great takeaway here to take time off your plate. You’re doing a lot of great organic marketing. Are you doing any kind of paid advertising at the moment?

[00:16:38.550] – Joran

We do not, and that’s, I guess, the challenge with being bootstrapped. It’s really easy to spend a lot of money doing ads, and so far I decided not to do them yet, but I might be doing them once I think I’m ready for product led growth, because at the moment, it just takes too much manual time for me still to really help people going. But if we figure that part out, then ads could really be a revenue driver. I don’t think we’re ready for that yet. It might be just earning too much money and creating a lot of work for me where I kind of want to have it automated first.

[00:17:11.670] – Sean

Got it. So are you saying you’re at a position where you’re still kind of you have to hand hold some customers?

[00:17:18.190] – Joran

Yeah, because we require some technical installation, and often the people who sign up are either the founders or the business people, and they’re not actually the developer. So they do need to require a drafting script on the website and one line of code in their code page, which can be strategy for if you’re not a technical founder or if you’re not technical. So this is why we’re creating help and articles and anything we can create a logical flow, etcetera. Just to make sure that they know exactly what is the next step when I joined where it is. So they shouldn’t have to think about that. They kind of really should see it based on the structure and everything we do.

[00:17:55.960] – Sean

Got you. Yes. That’s another hot takeaway in. SAS is a really clear cut, streamlined onboarding, and we do try to do our best with that, with Tykr. Like, for example, when you join, there’s a quick few screens that asks, where are you from? What kind of stocks are you interested in? And then you create your first watch list in under a minute, and then you get emails sent to you over the course of 20 days, like new value add, like, when should you buy when you sell, stuff like that. So stuff like that I found to be really helpful. We also have some videos on our YouTube channel. Are you creating any videos that might level up your onboarding too.

[00:18:35.240] – Joran

Yeah, we mostly have them in the help center where I write everything out. But if somebody needs all practice, they could also watch your video and they basically see me doing it. And they follow the exact same steps. But it’s purely, I guess, like, guidance on how to do something, basically. So we do have them yet.

[00:18:54.870] – Sean

Got it.

[00:18:55.760] – Sean

Let’s take a quick commercial break.

[00:19:01.150] – Sean

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[00:19:03.830] – Sean

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[00:20:07.970] – Sean

So just to take a step back now we’re looking at SAS overall, what are some of the pros and cons of a SaaS business?

[00:20:16.730] – Joran

The biggest pros, of course, it’s monthly recurring revenue. And that’s the measure almost every size company looks at, or they look at annual recurring revenue. So any subscription is either almost always going to be either monthly or annual. So that’s why those metrics are going to be important. And like for the investment industry, you want to have the compounding effect, right? And you have it in south as well. So if you’re able to maintain your clients so if we are able to keep you happy and we are able to add more clients on top of that, it’s going to be like a really good quote for us. And if we’re even able to upgrade you to a higher package because we generate a lot of money for you, we actually get more money from you and we’re able to get more clients in, which is going to accumulate like really fast. And that’s what I like about the SAS product, because you can really scale, as in you create a product. And we made it international from day one. So when you look at our app is being used almost all over the world already, even though we haven’t been around that long already.

[00:21:19.870] – Joran

So there’s really no limitations as in where we can get our clients or affiliates from.

[00:21:25.160] – Sean

Yes, agreed. And especially with your model is you could have customers all over the world because SAS could be, especially today, post COVID or when COVID was at its worst. You could say people are going remote all around the world, so you can really start assassin anywhere just to compare. And this is good for the audience to know. If you were to get to 10,000 customers, if you had an agency or service business, it would be a lot of liability, meaning payroll, a lot of people coming onto your business. Then I look at a business like Ecommerce. A lot of people like creating a shopify site or squarespace. You have a lot of inventory, a lot of costs against your good sold. And with a SAS, you don’t have those things. You can keep scaling. You don’t have to add as many people in the business, and then you don’t have to sell a physical thing. You’re not selling a widget or a t shirt, right?

[00:22:21.650] – Joran

You don’t have to ship anything. You don’t have to worry about people shipping it back, things like that. I mean, they might offer a refund if they really don’t like the product, but that’s all. And you don’t need like, a big warehouse. Of course you need to make a database, et cetera. But that’s a lot cheaper than actually having a physical location or shipping physical products or anything like that. The only thing I want to add here is what I found really interesting. And of course now I’m building a platform, but was the Freedom parking site of sauce? Because then you don’t actually have to have anything, right? I mean, you have to have a site where you have to have a network, but you can basically recommend somebody else’s product, so you didn’t even have to build anything. And you can earn recurring revenue stream just by referring somebody else to somebody else’s product. And that’s what I found really interesting, because you can just find the top programs you like, and then you can start referring those, and you can earn extra money just by putting your network into place right now.

[00:23:20.940] – Sean

I completely agree. I’ve always been a big fan of the affiliate model, and I come from a place where I’ve worked for a lot of large public companies. They don’t really call them affiliates at that level. They call them channel partners. And they’ll partner with, like, for example, a good company that I’ve worked for is Kohl’s. Kohl’s is known for manufacturing showers and sinks and toilets, faucets and whatnot. And their channel partners are like Costco or Home Depot or smaller in the Midwest. Those may be familiar with like, Minnards or something like that, but those are the companies that partner with, and they move the volume, and they take a cut, of course, of every product sold, but that creates a scale, and at the SAS level, you can go even faster. You create those same level partnerships with people who have a big audience. You share the revenue with them. And my gosh, the flywheel can spin really fast. Let’s flip that equation to cons. What are some of the negatives here of fast business?

[00:24:25.010] – Joran

There’s a lot of competition because it’s easy to launch, it is easy also to have the competition pretty quickly. And if you do it like us, it is going to be slow and steady. So it is taking a long time to actually hit those milestones you want to hit. So I would definitely say that. And there’s a lot of companies within SAS who take capital from venture capitalist and they will definitely take some equity. They will have an opinion. So they always want you to grow faster. So sell companies can grow fast and if you take money from outside, then they will push you to grow fast. Like that’s for sure, because they always want their money timestamp or not even more.

[00:25:09.640] – Sean

They want their ROI, their payback day, exactly. Times a large multiple. You’re right. And there is an advantage with bootstrapping. You can move at your own speed, you still want to move fast, but you can make those strategic moves that, you know, work best because you’re probably closest to the customer. Unfortunately, there are horror stories. This is a good comment for the entrepreneurs listening, is if you bring on the wrong VC or even angel investor that’s not completely aligned with the vision, they’re going to be putting the pressure on you to increase revenue and you got to be pushing back, which creates a little contention, saying, hey, we want to do exactly what the customer wants. We shouldn’t be so focused on taking it to $10 million tomorrow because it’s not going to happen.

[00:25:53.390] – Joran

Exactly. Like if you look at our example, our pricing started really low. So I think the first thing which will happen if we will take out the investment in, is that they say you’re on your price too low, you need to increase it. We could do it, but then in the end, we want to bring value first and then grow with the client, which is, I mean, it’s not on typical, but it doesn’t like how we structure it really based on the value. What they’re getting out of it is not always that common.

[00:26:19.920] – Sean

Sure. Right. Another quick pro on the pros and cons is the acquisition multiple. If you were to sell a business, now, that’s something, obviously you’re a SAS guy for service businesses out there, the multiple used to be onex revenue, but we could just phrase it as revenue to keep it simple. It’s close. It’s not exactly the same number, but it would be like one X, two X, maybe three X. And nowadays it’s usually one X for a service business because nobody wants to buy a job like, hey, I’m buying your agency. But to make money, I have to now work in it. Whereas a SaaS business, I’ve seen multiple ten X revenue or more because it’s this residual revenue and this is what makes it also a great business. Model to invest in. If you’re a stock investor, you’re looking for assessment, there’s that sustainable reoccurring revenue, there that residual revenue.

[00:27:14.240] – Joran

Exactly. It’s definitely, in my opinion, a good place to invest in. You just have to make sure that you find the right ones. Of course.

[00:27:22.790] – Sean

Or there are any publicly traded SaaS businesses that really inspired you?

[00:27:28.790] – Joran

It’s a good question because I’m not too much into stocks because I’m putting all my money into my side. I’m not sure if they but they’re definitely I mean, I think Slack might be publicly traded. Right. For example, they’re like a really good example might have been a product like Pro, as in anybody can sign up and you can go through the entire flow and they really have a good marketing. I think HubSpot, for example, is property traded maybe as well.

[00:27:55.730] – Sean

What’s the name of it?

[00:27:56.780] – Joran

HubSpot or CRM. HubSpot.

[00:27:59.120] – Sean

I think it’s private.

[00:28:00.570] – Joran

Okay.

[00:28:03.230] – Sean

Yeah, slack is too. But still you’re in the right ballpark. Because they’re well established SAS businesses.

[00:28:09.420] – Joran

Exactly. And if they’re probably traded, then I would definitely go for something like that where there was a big brand and they kind of are like the top leader within their industry.

[00:28:19.880] – Sean

Right.

[00:28:20.140] – Joran

So of course you can always go wrong nowadays, but it’s almost a safe bet. And if you would split it, then it’s definitely like a safe bet to gamble within tops.

[00:28:31.410] – Sean

Yes. Since you were talking HubSpot competitor somewhat competitor would be MailChimp. MailChimp was acquired by intuit into it is publicly traded stock actually company I’m looking at to start buying myself. But yeah, that’s a great example. You’ll see these publicly traded companies, they’ll buy a Sass because it complements other products they already have in their ecosystem. So that’s something that could happen to a company like Redditus.

[00:29:01.190] – Joran

Yeah, because if somebody already does something for clients and they think this is going to be a good addition for them and they can just buy us and implement them in their own system, which happens a lot right now if.

[00:29:14.800] – Sean

Somebody’S looking to invest in a SaaS business. Is there one big thing? I know you mentioned monthly reoccurring revenue. You also mentioned competition. What is one, two, or maybe three things they should really look at when looking for assassins?

[00:29:31.330] – Joran

Yeah, I don’t know how deep you can go and look into the numbers, but for example, a really common metric is to look at LTV cap ratio, which means lifetime value versus customer acquisition cost, which allows you to quickly identify if that company profitable or not. So a lot of companies of course have funding and they can actually invest more into acquired companies than they can actually get out of that, which is another good idea. But often they say is you need to get at least three times the revenue out of a client that you invest into acquired in the first place. And then customer acquisition cost basically contains like the market cost of sales cost, everything related to acquired customer. And then lifetime value is just a prediction on how long do you think that buying would remain with you. Of course, you’re not going to wait three to six months to figure out if they’re still with you, but you kind of use the data which you already have on average to figure out, okay, this is the average life cycle, somebody stays with us. And then if they pay this amount of money for current revenue, we do time that.

[00:30:36.920] – Joran

And that’s the easy calculation of life and value like this. More complicated versions, but that would be an easy one.

[00:30:42.750] – Sean

So in other words, just to summarize, you want the lifetime value to be three times more than the costs going into acquiring a customer?

[00:30:51.730] – Joran

At least. Yeah, this is like a healthy way of looking at it. And there are other ways. I used to be head of customer success. Right. To get value. So churn is another metric you want to look at, which basically means is the clients leaving the company. So what is the churn rate? And you always put it into a certain percentage and if the company is really good, they actually have a negative turn, which means they are able to upsell their clients expansion day expansion revenue. Yeah, they expand more than what they actually lose. So they’re not filling up a leaking bucket as you would call it. So they’re basically topping up already with their expansion of their clients. Which is really good if you have.

[00:31:35.740] – Sean

That right on that. And for the audience, these type of numbers you probably won’t see on the well, you won’t see them on the income statement or the cash flow statement. But the earnings reports, if you like drilling into reading earnings reports or watching YouTube video earnings reports, you can drill into what Yron is talking about here. That’s really good stuff there to dive into the math, those individual numbers. Yeah.

[00:32:01.820] – Joran

And you can go to somebody’s website or go to a company’s website, you can quickly see if they have multiple products. Right. So they sometimes have a land and expand model where they just hooks up the company in by selling them one product. And as soon as they have one product, they try to sell all the other products they have as well. So just because they have landing pages, all different products. So you can quickly determine if they actually are able to get to the next negative churn just by looking at the products they have on their website.

[00:32:34.790] – Sean

Brilliant comment there. That’s where I was going, which is the expansion revenue. There are certain SaaS business out there, they only have one pricing plan, which that’s fine, but you like to see different pricing plans or different products going back to Intuit, they’ve got QuickBooks tax management platform. But now to all those small businesses, guess what? They now own MailChimp they can introduce MailChimp to do email marketing, and there are other tools they have in their weapons you could see in their arsenal that they can use. And in this case, there’s lots of opportunity for upselling or cross selling, which creates that expansion revenue, which you’re talking about. So, yeah, that’s something for the audience to look at. Like, if you’re investing in the business, look at their different products, what can they sell to their customers?

[00:33:20.580] – Joran

Exactly, and how many products do they have?

[00:33:23.070] – Sean

Right, yeah, that’s good. Well, before we transition to the Rapid Fire Round, is there a question that I did not ask you, but should I ask?

[00:33:32.870] – Joran

I don’t think so, because this is more, of course, for people who are investing, I think definitely look at software products because they are going to have the future. Right. But I think that’s the only thing I would want to add to this. I don’t think there’s any question left here.

[00:33:48.090] – Sean

Cool. And we’ll have you promote your products a little more here at the end. But let’s dive into the rapid fire round. This is the part of the episode where we get to find out who you are on really is. If you can try to answer each question in 15 seconds or less. Are you ready?

[00:34:02.300] – Joran

Yeah.

[00:34:02.950] – Sean

All right, what is your favorite podcast?

[00:34:05.210] – Joran

I want to say this one. Of course, I don’t really listen to podcast that much, to be honest. Yeah, okay.

[00:34:10.900] – Sean

All right. What about a recent book you read and would recommend?

[00:34:16.610] – Joran

I always listen to the audio versions of books, and I just ordered the book of what’s the guy’s name? The guy from lemlist, and I think that’s going to be really good. He’s talking about all different things about sauce, where he grew a business from $1,000 to 100 million. So that’s definitely going to be I haven’t even read it yet, but I think it’s going to be my favorite book.

[00:34:37.320] – Sean

That’s awesome. Real quick, what is the name of that one again?

[00:34:41.630] – Joran

He built lemlist. I can give you gummy. He’s French. It’s really hard to pronounce his name. Okay. I wouldn’t even be able to spell it. I can send you it so we can put it in the link somewhere.

[00:34:54.390] – Sean

Yeah, that’d be great. All right, next question here. Favorite movie?

[00:34:58.860] – Joran

I would say godfather, I guess.

[00:35:00.850] – Sean

Godfather. I mean, we’re talking early 70s here. Wow. Classic. All right. And two business related questions here. First one is, what is the worst business or investing advice you ever received?

[00:35:16.130] – Joran

Put all my money on one stock. I think it was a big gamble. It was the first time I actually invested in stocks like it was supposed to be the big next thing, back in the day, I think I invested five, maybe seven €5000 into it, which was for me at that time, a lot of money. Was, still is. And I kind of lost everything because the plan didn’t really work out as it should. So I think those stocks even are now from the stock market at all.

[00:35:46.740] – Sean

Oh, they’re delisted.

[00:35:48.020] – Joran

Yeah.

[00:35:49.850] – Sean

Okay. Probably a weaker business. I’m curious, was it a penny stock? Was it like, less than $5?

[00:35:56.630] – Joran

Yeah, it was. I think it was like a dollar 50 or something, and it has came above five, but then it went down again and we bought it at the dip, but then we didn’t know it went dipping further again.

[00:36:12.530] – Sean

Ouch. Yeah. Let’s flip that equation. What is the best business or investment advice you ever received?

[00:36:20.690] – Joran

Patience. Patience and consistency, I guess. I mean, if you really want to have success, then you have to wait for it, and you need to make sacrifices as well. So if you want to live a good life later, you will need to make sacrifices today. So you can’t have both. Right. You can’t go to dinner every night this week and have a million dollars in your bank account in five years. I mean, maybe some people can, but.

[00:36:47.590] – Sean

To build it, right, it’s not instant gratification, that’s for sure.

[00:36:51.950] – Joran

Exactly. So you have to have a long press if you want to get the long term results.

[00:36:57.470] – Sean

Yes. The next question here is a time machine question. If you could go back in time to give your younger self advice, what age would you visit and what would you say?

[00:37:05.820] – Joran

I would definitely say to myself that I need to experiment faster with building my own business. I think I started my first website when I was 30. Looking back at it now, I should have done it way sooner. There are so many potentials where you can quickly grow business, or you can invest in stocks, like with an Apple pick away, you can quickly find out which stocks you need to invest in. I should have done that sooner, but I was, I guess, enjoying life too much without worrying about future. But if I just invested €100 per month, for example, it could accumulate, it could compound it. So I should have done that.

[00:37:43.200] – Sean

Yeah. Good advice. All right, if there’s any entrepreneurs out there that want to grow their business using affiliates, I highly recommend Redditors. So where can they reach you?

[00:37:53.470] – Joran

Yeah, so they can find us at www.readitis.com or they can search for my name, Yarn Hoffman on LinkedIn. And basically, indeed, we help BDB SaaS companies to grow. But again, you can also not build a SaaS company and just start referring companies like Tykr, like Meditation, or any other SaaS company who joined our platform. Cool.

[00:38:14.920] – Sean

Well, thank you so much for your time. This is great.

[00:38:17.180] – Joran

Thank you, Sean. Thank you for having me.

[00:38:19.120] – Sean

All right, I just want to say thanks for checking out this podcast. I know your time is valuable, and there’s a lot of other podcasts out there you could be listening to. So thanks for taking the time to listen to my guest story. If you did enjoy this podcast episode, could you head over to itunes and leave a five star review? That would be much appreciated. Thank you. And last but not least on this podcast, some episodes we do talk about stocks. And please keep in mind, this podcast is for entertainment purposes only.

[00:38:52.850] – Sean

So if you did hear any buy.

[00:38:54.540] – Sean

Or sell recommendations, please don’t make those.

[00:38:57.360] – Sean

Decisions based solely on what you hear.

[00:39:00.710] – Sean

Alright, thanks a lot. See ya.