Welcome to the 12th episode of Founder's session, where I have a chat with the founders of SaaS companies on their journey building the product & company.
This session's guest is the Founder of a product that is really making strides in the sales engagement and cold outreah space.
Let's meet Sujan Patel, Founder of Mailshake.
We will discuss the product in detail and upcoming plans with Sujan.
Hi Sujan, Thanks so much for joining us for a chat. Much appreciated and excited to hear your story on building Mailshake.
Can you explain briefly what is Mailshake and what is the problem it solves as a SaaS product for a business?
Sure. Mailshake is a sales enablement and email outreach platform that allows you to set up email sequences or a series of follow-up emails, based on time and many other factors.
It can be used by inside sales teams to connect with prospects, for link building, for doing PR outreach, and so many scenarios where a cold email series with follow-ups is very effective.
Additional to emails, Mailshake lets you even make phone calls right within the dashboard. Currently, we have about 30,000 users and have been around since 2015.
Tell us a bit about yourself and your background when it comes to tech and SaaS?
I've been around in the digital marketing space for about 15 to 16 years. My background is in SEO as a marketing person and built an SEO agency called Single grain, working with so many different types of customers.
I was in the Bay Area and worked with many companies that you would consider popular & famous companies now like Airbnb, Expedia, LinkedIn, Dropbox, and so on.
Through that process, I fell in love with the SaaS business model vs the likes of e-commerce, courses, training, services, etc.
So, during that time, probably from 2009 to 2013, I started around 5 different SaaS projects, along with a lot of other ideas, most of which failed.
I wanted to get things right in SaaS, so I sold the agency business in 2013-14, took a job at a SaaS company that was one of my clients at the time, and moved to Minnesota.
That SaaS company is small enough where I would be working with the CEO and a small group of people. That allowed me to be super hands-on in the SaaS world.
I knew a lot about marketing when it comes to SaaS, as I did that a lot even during the agency days, and even prior in-house. But what I didn't know about is the product support, sales process, and all the other things outside of marketing.
And so I thought I'd be at that company for five years. However, pretty much within six months, I was bored out of my mind living in Minnesota, which is a very cold area.
It was January and I pretty much had nothing to do. So, I cold emailed my now, Co-Founder, and started with Mailshake. I eventually left the full-time job and started working on Mailshake along with doing consulting again, which I swore I'd never do after I sold my business.
Along this way, I found that starting a SaaS company is very difficult, but growing one is something I knew a lot about.
So, my partner and I started buying SaaS companies. As of now, we have more than seven companies in our portfolio, including Mailshake, Voila Norbert, Narrow.io, etc.
Yeah, to sum it up, over the past 7 years I have lived & breathed SaaS, and probably over the last 15 years, I've been associated with SaaS, one way or another.
What was the primary motivation behind building Mailshake? When was the first line of code written and were there any co-founders when you started?
It might sound like a cliche, but starting Mailshake was actually to solve my own problem. Mailshake originally started off as a product called Contentmarketer.io. It did a lot of things, but only was specifically targeting content marketers, link builders, etc.
And what we found through a lot of testing with the product, and getting in the hands of about 170 customers, is that the tool is most valuable for salespeople.
It took us about a year or so to figure that out. Obviously, calling your product ContentMarketer doesn't make any sense if you're targeting salespeople, it's probably the worst name a product can have that targets, salespeople.
So, we rebranded, we built a kind of version 2.0 from the hundreds of new customers that gave us initial feedback.
We launched originally in 2015 and rebranded & relaunched at the end of 2016. So, pretty much wasted two years trying to get to know the right target audience for the tool.
My goal is to build a 100 million dollar business. We're still early in that process but growing rapidly.
I started the company with two other folks. Colin Mathews had built a similar tool to Contentmarketer.io at the time, called Lukewarm Emailer, so we got together to work on the project.
I wanted a tool to do outreach in a more automated fashion, nothing out there that was available was good enough, so I was like, let's begin, let's dig in and see what happens. I didn't do much research on how big the business was, so I got lucky there.
When we pivoted, we realized how lucky we were to go after the sales market at the right time.
What is your vision for Mailshake and what are the expansion plans in the next 2 to 3 years?
So, Mailshake’s goal is to be a simple yet powerful sales engagement platform. Now that's a lot of buzzwords put together, but simple and powerful are in our ethos, and even now, it stands true.
We are one of the easiest platforms or software to use related to email outreach and creating cadence.
We did this from day one, right when we came up with the idea to build Mailshake.
When we talked to many of the competitor’s customers, the main feedback was that there are a lot of email outreach platforms out there, but they're all hard to use and need a lot of training to start using.
So we just did the exact opposite, we made it simple. We slimmed down and reduced a lot of the features. When I say powerful, it means, what you do and also what our software can allow you to do.
It's simple, so we don't do every little thing, we kind of hide things intentionally in the UX and, but you can do a lot if you want to.
But not everybody needs such features. Our vision for this is to continue building, making sales people's lives easier by building simple yet powerful software so we'll continue to expand and the email, phone and will add more channels of communication like SMS, maybe direct mail and other kinds of channels where people can really be the one-stop-shop for salespeople, so that's the real goal in the next two years.
We've got a lot of stuff coming out in the new product launch, at the end of the year, what we call Mailshake 2.0, with a lot more polish & hundreds of minor improvements based on the years and years of feedback that we've gotten.
What are the primary channels you have promoted & marketed Mailshake until now? Are there any plans to expand to new channels?
There are 3 important channels for our growth,
- Word of mouth,
- Content and SEO.
- Not doing things that don't work for us.
Now, I'll come back to the not doing things part later because that's not really a channel but it is a very powerful thing to do.
We launched at a ridiculously low price. Initially on a lifetime deal and then at $9 a month. Now our lowest price plan is $59 a month per user and $99 a month per user for the complete sales engagement platform.
But essentially, when we launched we removed price as much as we could, from the friction point. We have to make some money to cover the server costs and such, so we charged $9 a month.
The lifetime deal generated about 4000 users. They gave us a lot of feedback, which we made most of & implemented most of it or, had the reason not to.
But more importantly, it helped kickstart, our word of mouth. People told other people and it’s a chain. We intentionally made the things simple, I would say really our product is the marketing, so that's kind of how word of mouth was generated.
We were just the cheapest player in the space when we started. We still want to be cost-effective, but we've added so much to the product that we believe we can charge much more as per the market rate.
When it comes to content and SEO, it was slow and steady. We launched at the end of 2016 and we didn't do any real marketing until early 2018, but we created content from early 2015 and built an email list from it, previously from Contentmarketer.io, so people knew our journey.
We didn't do any marketing besides creating blog posts every week. I'll be honest, from 2015 to 2018, I personally wrote most of the blog posts and they were kind of crummy and I just did it when I had spare time.
Consistency is the key in content & building an emailing list which currently, I think is more than 50,000 and continues to grow at a few thousand every month.
In 2018, we hired a full-time marketing person, named Mark. We are still focused on those two channels, building valuable content, educating with videos, a lot of interviews getting experts to share their knowledge instead of us.
And, nothing else, why nothing else because we're limited by budget, we're limited by our time. We know SEO and content long term is how you build a brand.
If we invest all of our energy into the product, given that it's already generated so much growth, it will continue to generate more and more word of mouth and we see that to be true in our numbers.
We know we can't afford PPC and instead of doing an affiliate program, we did the math like if among the X amount of users, 1% or 2% brought new customers, which we already had for free.
So, there are all these kinds of things that we chose not to do based on either they weren't big enough ideas, or we simply couldn't compete in that space.
Even now when we do remarketing campaigns, we know our core customers are salespeople and we only do remarketing to a sales team of our target size. This allows us to be very effective with our spending and in our efforts, without kind of going too broad.
We'll probably stick to these two channels and continue to invest in the product for the foreseeable future.
Who would you define as an ideal target customer for Mailshake? Solopreneurs, SMB’s, mid-market firms, or enterprise sales teams?
An ideal customer profile would be sales teams with 10 to 20 salespeople. That's the audience for who we're building the software at the moment.
However, we have another core segment of our customer base that consists of Marketers, PR personnel, and even HR folks.
The Marketing and PR customers use Mailshake for outreach to build links, trying to get their content promoted. On the HR front, we have many customers using the tool for recruiting purposes.
Although the core customer base is sales teams, we didn't stop working on the other part where it can fit and solve the problems for a marketing or an HR person.
They could still use the software, but they just don't get features like Dialer which makes sense as it is not required in their workflow.
Can you give a range of the number of paying customers that use Mailshake currently and a range of the current MRR?
30,000 users currently, that's pretty much all I can share right now.
You can kind of do the math from there, but I can't share exact revenue numbers or any other financial information at this time.
These are quite turbulent times for SaaS companies with the economy struggling to sustain growth levels. Has there been any huge negative impact on churn due to the current circumstances? If so, how have you managed it?
I'd say yes, we have pretty much suffered quite a bit, the same way as most other SaaS companies.
Yeah, surely more churn, but although demand has surprisingly gone up as well.
The new customer growth is partly because sales and marketing are kinds of functions, yes, you can decrease, but you kind of still need.
Also, we're a lower-priced & more budget-friendly software compared to our competitors like Outreach and SalesLoft. So, we've seen people come down from that route as we're probably half or 60% of the price depending on what they pay with the competitors.
As soon as COVID started to happen, we had to adjust our sales pitch or how we sell the product. We didn't really adjust the marketing strategy, maybe we kind of created some short-term content like how to sell and how to kind of send emails right during this time.
We adjusted our customer success efforts to make sure that we addressed the kind of selling during COVID, what happens when somebody asks for a refund, what happens when XYZ happens.
We did a sort of relief program where we will allow people to hibernate or pause their subscription for an extended period of time depending on their situation.
We reached out to everyone who canceled and made sure they were okay and letting them know that we are running such programs.
It was pretty chaotic for a month when COVID hit in the US last year, mid-March to mid-April, lots of lots of changes.
A lot of it is because the process changed and all the things we did business as usual suddenly became unusual. So, we had to come up with new processes.
The second month or two were really easy and straightforward. Because we had processes in place and we had the means to adjust the flow, be more nimble & dynamic.
Cold emails and sales engagement is a fiercely competitive market with so many highly funded players across every segment. Likes of Outreach and Salesloft in the enterprise space and Autoklose, Reply.io, Woodpecker, Lemlist, etc. in other markets.
Additionally, many CRM’s are currently building cold emailing within their tool. Salesflare did it recently. How do you see the market pan out over the next few years? Is there enough demand and customer counts for so many players in this space?
Yeah, the space is really competitive with around 72 players currently, apart from some I don't know about and some still yet to launch.
I agree that it is highly funded as well. I don't know if there'll be market consolidation, but I think the non-funded ones focused on email outreach & cold email might go flat with churn being very high during COVID days and even prior to that.
We are not too worried about CRM’s adding cold emailing features, HubSpot has it, Salesflare I'm sure has done a wonderful job but when you are a CRM and try to be all-in-one, the usability goes down. If you try to do too many things you end up doing a lot of things in a mediocre way.
We are doubling down on building a sales engagement platform competing with the likes of SalesLoft and Outreach, going after the SMB & Mid-market space.
Is there room for all the players, probably yes. Well, if there isn't, none of us would be around now.
We are profitable with a goal to build a 100 million dollar enterprise business. We have been carving out our route, in our way. We win business and lose business to some of our competitors all the time, as there is no one size fits all.
But I can tell you there are plenty of potential customers in the SMB to Mid-market sales teams. Although there are plenty of companies in this space, it's sad how many companies right now don't do any email outreach, or they don't do any automated follow-ups.
For example, a good friend of mine works in a 70 person sales team. They sell beakers and other lab equipment to hospitals.
They don't do any automated follow-ups, once they have a call with somebody they have to manually remember to follow up, and then another follow-up manually.
This is just one example, there surely is plenty of room in the space to go after them for at least a dozen or so players. The other part of this is, there's a lot of companies who are targeting a different ICP than us.
Not everybody is going after the sales engagement platform. I'm sure they will, over time learn that that's where the money is at so eventually they might all go there. But, our strong base of being around for five years already with a lot of word of mouth is hard to beat.
We're continuing to move upmarket and build more functionality while sticking to our ethos. I think ultimately having a more usable and budget-conscious product will definitely help.
I find Mailshake’s pricing model so interesting. Perhaps, it is one of the very few cold emailing tools without a free trial. Demo > Signup > Payment, which is a classic Enterprise funnel. Has it always been like this and how you decided on this pricing model?
Yeah, we have tried to beat this model a lot of times, but this model works the best for us. We don't have a free trial and this allows us to do a lot with a little because we don't have to support free trial customers.
Early on we tested for different types of models we can do for a SaaS business, and what converted the best is having a paid upfront model with a 30-day money-back guarantee.
What happens in a typical funnel is, you would have a lot of demos and you'd have a lot of free trials and, maybe 10 to 15% of them you can get to convert, which would be an amazing number by the way.
Let's say you have a visitor to the trial conversion of 10%, and then your trial to the paid conversion of 10%. So if you get 1000 visitors, you would get 100 free trials and then 10% of them would convert so 10 new customers.
Well, I can tell you, of all the models and all the closed food testing we've done, we can't beat our current conversion rate, along with the added benefit of not having to support all those customers.
We will always revisit this, but for the time being, we're going to stick to this model.
Another important metric, perhaps more important than conversion rate is the actual activity rate. So if you put $59, you burst out your credit card and you get an onboarding call or you talk to a salesperson & learn how to use the software, you are very motivated to actually use the software.
Now, with a free trial model, you get that benefit of knowing more people, more word of mouth but we've already got there. We have already onboarded a slew of people early on in our product.
So, we have a user base that just continues that word of mouth and hence we have the best of both worlds.
All the things we found through our testing are more friction through pricing or requiring a phone call, which makes for a better customer experience and increases, not just the usage of the product, meaning people use and leverage Mailshake, but also the customer’s success rate.
For a period of time, we've forced everyone to have an onboarding call with a salesperson. Even if it slows down the process a little bit, what it does is it makes the user more knowledgeable of what to do.
It makes sure that they know the two or three things that are very critical for them to be successful in their outreach efforts.
Self-service without knowing your limits or getting everything all at once makes for a confusing experience. I'm a firm believer in Steve Jobs’ methodology that the customer knows the problems and your job as an entrepreneur or a business owner is to then figure out what is the best route forward, based on things you hear from customers.
With the addition of a dialer to Mailshake, the product has the potential to being a complete CRM with pipeline management and a few more features added. Is it something that is in the plans?
This is something we're considering at all times. But as I said earlier, being mediocre in the software space is the worst thing you can do. There are too many mediocre companies out there.
If you look at the CRM space, there are something like 200 plus players. How can we compete in 2020 with 200 CRM’s that all have some amount of customers from a few dozen to a few hundred thousand, how do we compete with the likes of Pipedrive, Salesforce, etc. if we just have a mediocre product.
We do things that are valuable for our ICP, we want to be a platform that helps solve people's problems. So, we'll probably continue to add more CRM-like features, but will we become a CRM?, I think we'll definitely be exploring that route, but just not certain if we pull the trigger.
We're a small team and most of the money we make in revenue goes back into fueling the growth & fueling the product.
We'll continue to invest but we also want to make sure of the best usage of our time and decide whether we should spend on building a CRM or should we spend time building a new channel for communication like SMS, etc.
Bootstrapped or raised capital? Any plans in the pipeline to raise?
Completely bootstrapped with no plans to raise any funding. We really can't figure out what we would do if we raised, you know, 1,000,005. million $10. million.
I don't know what I would do with it. I pretty much do everything I'm doing now, maybe a little faster. Maybe a lot faster but like there's a lot faster. Get us further, I think the bottleneck we have is not necessarily solved by capital, I think it's really just solved by time. And like executing what we've got. And what we've got on our plates.
The other part of this is we don't plan on, we raised money, we'd have to aim to be a billion-dollar company and, or big big big big and, frankly, we dilute our shares and ultimately to get to that big big big number like let's just say, if I raise money, I'd have to get to a billion or hundreds of millions.
Whereas, if I even get to 50 million or 100 million in revenue, without funding, I would take home more as a partner or employees who are equity holders as well. So, we would make more without the money. And we don't need the money so I don't see a clear reason to do so.
What is the major shift in the SaaS industry in your perspective in the past 5 years and how you see it evolve over the next decade?
There are quite a lot of shifts in the SaaS space in recent years. Big players like you Microsoft, Adobe have got into the SaaS game. They've always been here but they're really doubling down on it in recent times.
I think software, in general, is becoming more and more mainstream. Tech has continued to lead public markets.
It's actually easier than ever to start a SaaS company. You don't even need to code, you can use something like WebFlow or InstaPage or whatever to build a website.
You can hire talent from the likes of Upwork, spend about $50,000 and get a product built out. So, it's easier than ever before to start, but it's really really hard to grow past that initial stage to say, $15 to $20 million in revenue.
I think building exceptional products is going to be key. The success rate is getting lower and lower if success is defined by public exits or exit acquisitions.
Your favorite SaaS tool apart from yours and why?
SaaS tool, perhaps G Suite. Yeah, it's not a sexy answer, but they do a lot and they keep getting better. They keep charging more as well, which is good to see Google invest in the SaaS side of things.
That’s one tool I use every single day of my life, whether I like it or not.
How effective cold emailing still is as a channel of sales to fill the top of the funnel? What are some of the best practices in your view for a successful cold email campaign with maximum open & reply rates?
Yeah, cold email is still very very effective to drive sales and revenue.
I don’t think it is always just for the top of the funnel, but with the right strategy, it can drive leads, demos, and conversions.
Regarding best practices, first and foremost, focus on your copy. Make the focal point of the copy to be the user’s problem, a pain point, make it about them not about you.
Don't start your email with “Hi, my name is”, don't even talk about yourself until you've demonstrated the value because they already know who you are from your email signature which can be easily scanned by the human eye without having to think about it.
Going with an omnichannel approach or using social touches as well along with SMS, phone calls mixed in with emails certainly helps. Adding the two more channels can pretty much three X your success rate.
With all the distractions we have in our lives, we can easily miss an email but it’s hard to miss all the forms of communication.
Doing this, being valuable, and not being spammy is the key to making everything work. Focus on adding a lot of value to the user, focus on solving their problems. Don't try to push the sale. Push value as much as you can.
If you're emailing the CEO of a company, understand that giving 30 minutes away of time isn't very cheap, so maybe that's not the first thing you say,
Reduce friction wherever possible. There's no perfect answer here. I've seen things that are counterintuitive work, but ultimately if you focus on value, you will succeed.
Your favorite SaaS company whose marketing strategies you would be happy to implement at Mailshake for growth?
Don’t really have a single favorite. I like to study them all and try to take a few good things from everyone.
However, if I had to choose one, I'd say probably HubSpot. They have consistently provided value for years and decades through content, lots of good micro tools & apps, etc.
Although they still have the freemium model, they continue to expand their product line so you'll keep a close eye on what they do.
What is the team size currently both on-site and remote?
20 people and we're all remote. The majority of the team is in the US and the remaining spread across different parts of North America.
AWS or Azure or GCP? Which you used for Mailshake and which would you choose if you are starting a SaaS company today and why?
We are using AWS. Why do we choose that? Well, I went with my technical Co-Founders’ recommendation and it has paid off.
Amazon has a really startup-friendly product which certainly helps.
Some words of advice for any aspiring entrepreneurs especially in the SaaS? In your experience, what are a few things to do and a few mistakes to avoid at all costs?
Take action, go and do stuff, focus on action versus planning. Anything you plan is just not going to work out the way you think it's gonna work out.
Plan for 10 to 20 years in your company and choose a big enough addressable market. I made that mistake many many times, even some of our current businesses in our venture portfolio, have too small of a market to make any difference.
There is no magical answer, you're going to make mistakes but just do the math so you don't end up not knowing the outcome.
That's a perfect wrap-up with amazing advice, Sujan. Thanks so much for joining me for a chat. Looking forward to how you further grow Mailshake.
Thanks so much for having me, Yusuff.