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Welcome to the Eighth 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 has really revolutionized the ease with which a SaaS company can start an affiliate or referral program.
Let's meet Cioaca Virgil, Founder of First Promoter.
We will discuss the product in detail and upcoming plans with Virgil.
Hello Virgil, Welcome to Founder's Session.
Can you explain briefly what is FirstPromoter and what is the problem it solves as a SaaS product for a business?
Sure! FirstPromoter helps SaaS companies to quickly launch, track, and manage their affiliate marketing program.
Building and maintaining an in-house affiliate tracking and management system that’s also reliable requires lots of resources that many companies can’t afford, that’s why a 3rd party tool like FirstPromoter that can be integrated quickly saves a considerable amount of time and money.
Tell us a bit about yourself and your background when it comes to tech and SaaS?
I was passionate about technology from a young age which led me to learning programming just before starting high school. At university, I graduated from the faculty of Mathematics and Computer Science which gave me a strong technical background on software development.
In the last few years, I built quite a few projects, launched a few of them, but neither took off until FirstPromoter. My last projects were SaaS as well so I learned a lot from all these failures, both from a technical and business perspective.
What was the primary motivation behind building FirstPromoter? When was the first line of code written?
Before working on FirstPromoter I built a few tools on the affiliate marketing space, initially for myself. At that time I explored affiliate marketing as an affiliate and I found the need to automate some processes related to ads optimization and A/B testing.
Even before launching those tools, some of the beta users that tried them asked to become affiliates. That’s when I saw there’s a gap in the market because I couldn’t find any tool to help me set up an affiliate program fast and work well with subscriptions. All of them required complex integrations and couldn’t handle cancellations, upgrades, downgrades, or refunds automatically.
Long story short, the affiliate tools failed but gave me the idea of FirstPromoter. I wrote the first line of code in 2015, I took a break from it for a year then in 2016 I launched the first private beta version.
What are the primary channels you have promoted & marketed FirstPromoter until now? Are there any plans to expand the growth channels?
In the early days, I simply visited SaaS companies’ websites and directly asked them on live-chat if they want to launch an affiliate program or if they were happy with the current solution – maybe we can call it direct sales? I’ve done this for a while until word of mouth took off.
Companies were happy with FirstPromoter and started to recommend it. This is the most important channel for us and it’s quite powerful because the product drives the growth.
In the next few months, with the first marketing hire, we’re going to focus much more on marketing and we’ll explore more channels, but currently, we’re satisfied with the amount of growth we get from word of mouth.
Btw, we’re just starting with affiliate marketing ourselves, we waited to reach a stage where we know we can get the most of it.
What is your vision for FirstPromoter as a SaaS product?
In B2B SaaS affiliate marketing is all about relationships, it’s very different than the traditional affiliate marketing we all know about. I rarely see a great affiliate program where a company doesn’t have a strong relationship with its affiliates.
It’s quite close with the partner channel but without the overhead and has a much higher reach. Because of this, FirstPromoter's focus in the next years will be to strengthen the relationships between affiliates and companies, increasing the efficiency of the program and making the affiliate channel more profitable for both companies and affiliates.
I see so many SaaS companies currently using FirstPromoter for their affiliate program.
However, how difficult was it to get the first 10 to 20 customers? What convinced them to try the product?
It was quite difficult. FirstPromoter was the first tool completely focused on small SaaS companies and at that time, this segment was very reluctant about affiliate marketing.
This channel had (and probably still has in some places) a bad stigma attached to it from the old days when stories of some affiliate networks not paying affiliates and affiliates trying shady strategies to get the commission were very popular.
Luckily some startups were open to giving this channel a try and I found a few founders asking questions about affiliate marketing on forums, Facebook groups, or Reddit. I contacted them and offered a few months for free to try FirstPromoter.
I think the fact that we’re built for SaaS and some specific features that we have compared to traditional tools, convinced them to go with us.
How many SaaS companies in total are using FirstPromoter now and is it possible to give an average range of current MRR?
I can say that we have between 500 and 1000 SaaS customers.
In your view, what are some of the advantages that SaaS companies get by using a third-party tracking tool like FirstPromoter for their affiliate program rather than coding a simple tracking solution themselves and integrate it within the application?
Although it might take some development hours initially, wouldn’t it give more control?
It’s all about the resources required to develop and maintain the tool. It’s true that it’s not hard to build a basic tracking system, but then you’ll encounter the following issues:
- in the near future, you might need a feature that’s basic in 3rd party tracking tools and you need to allocate again developers to add it
- bugs happen all the time, especially when the tool is not tested thoroughly and they need to get fixed
- some browsers might introduce changes that break the tracking implementation and you find about it too late because your focus is your core product, not the affiliate tracking module
- most likely the affiliate dashboard will be very basic, affiliates will ask you for more options and you need to make the decision again to separate a developer from the product and thoroughly assign it to the affiliate program
So it’s not only the initial work, but you’ll find along the way that you may need this and that and you don’t have it. You either build it, fix it, or try to live without it. If this happens on the public affiliate side, it will affect your credibility and trust.
If affiliates think the company doesn’t put enough effort into the affiliate part, they might push the competitor’s product more because they think their sales will get tracked properly.
Another reason (maybe the biggest one) is that many companies don’t want to allocate resources until they are sure affiliate marketing works for them so it’s much cheaper to simply start with a 3rd party tool and if it makes sense, to build their own.
All the plans in FirstPromoter come with zero transaction fees with the pricing axis being the revenue generated from affiliates.
Wouldn’t it be better for you to have an additional base plan with no subscription price, but a transaction fee of 5 to 10%, as it might bring in more companies to try out an affiliate program as it will be a completely no-risk option?
There are 2 main reasons for that: support resources and predictability. The initial support cost related to integration and setup is very high.
Many companies don’t put affiliate marketing as a priority, they’re more like “let’s try this for a while” so the chances for us to no recoup the initial support cost is high because they gave up easily. There’s also the type of users you attract with this option, it’s very close to offering a “freemium” plan in that regard.
The predictability is something both us and customers like, you know that you pay a fixed fee for at least the next few months.
There are quite a few options for SaaS companies to set up an affiliate program, even among the ones designed exclusively for SaaS. Rewardful, LinkMink, PartnerStack, etc. How would you define the need for a Founder to choose FirstPromoter over others?
It’s true that quite a few tools appeared in the last few years. FirstPromoter was the first affiliate tracking tool built exclusively for SaaS companies. Before that most tools were focused on e-commerce or they were part of a network that took substantial fees to pay the affiliates.
Even with the new competitors that appeared lately, we’ll always be 1-2 years ahead in terms of features and we have the most experience with SaaS companies. I think my personal experience on both sides of the table also gives an advantage on the long-term strategy and direction of the product which is highly important because migration to other tools is pretty hard.
Some of the affiliate tracking tools like PartnerStack and Refersion have a marketplace that has a list of all the SaaS products running its affiliate program on their platform.
It helps both the affiliates to have a look at the products they can promote and for companies, it gives their product more exposure among the best affiliates. Is there any plan for such a public marketplace?
We have quite a few customers switching from those platforms to FirstPromoter and one of the main reasons for the switch is that they expected the added networks will help them find affiliates easily. It sounds great on the sales pitch, but the actual effectiveness of those networks in B2B, especially SaaS is not that great.
Most affiliates that sign up from those networks don’t build a close relationship with the product, most of them are not even users and to promote it well you need a deep understanding of the market and how the tool works.
Another reason why these networks don’t work well is because, the best affiliates rarely look themselves for products to promote, they usually have many companies contacting them with personalized deals or they promote tools they already use, so there’s little incentive for them to go hunting for products to promote on a network.
We have planned a different type of network, focused on partnerships, but I can’t tell much about it at this point.
Bootstrapped or raised capital? Any plans in the pipeline to raise funds?
Bootstrapped with no plans to raise any funds.
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?
I think integrations between different SaaS companies and even app marketplaces like Shopify or Intercom have will get huge in the next few years.
With the number of SaaS companies increasing substantially each year, seamlessly integrating one tool with another will play a big role in customer satisfaction and costs, especially when a simple integration can replace a feature that would have taken weeks or months of development time.
Your favorite SaaS tool apart from yours and why?
Clickup is my favorite SaaS tool. They are at core a project management tool but they do a lot of other stuff right so you can replace other tools like Trello, Slack, Google Docs, and Loom.
I love their design and how fast they release updates every Friday. They are also a FirstPromoter customer, but that’s just a bonus 🙂
Your favorite European SaaS company whose marketing strategies you would be happy to implement at FirstPromoter for growth?
To be honest, I haven’t paid too much attention to the European SaaS market in particular.
I don’t have a specific company from Europe in my mind at the moment, but I like how Groove leveraged content marketing, how Shopify and Slack use their app marketplace to increase user retention or Coda with their templates gallery that allows users to share re-usable templates.
What is the team size currently both on-site and remote, and are there any plans to expand the team in the near future?
We’re fully remote, me, 2 other developers, and just hired a technical support lead. Currently looking for a marketing lead. 2021 should be the year where we’ll double in size.
Favorite programming language and reasons for it?
Ruby, backed by Rails. Even though it’s not as hot as it was 15 years ago, it’s still one of the most productive language and framework for startups.
AWS or Azure or GCP? Which you used for FirstPromoter and which would you choose if you are starting a SaaS company today and why?
Actually, none of the three. We’re using Linode and Digital Ocean, they were super reliable and very few downtime issue. I’ll probably still go with the same platforms for a new startup.
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?
Perseverance is crucial for success. I had many failures and setbacks before FirstPromoter and for some reason, I didn’t give up. Probably because since I was a kid being a tech entrepreneur was kind of a dream and I knew that if I gave up and went for the 9 to 5 job, I wouldn’t be able to reach that goal.
I’m browsing from time to time Indie Hackers forum and I see lots of people building a product, launching it and if they don’t get the desired number of visits or signups (most of the time the number is not relevant at all) they shut it down and that’s it. Not only that many give up too early, but very few of them give another try with a different product.
On each try you learn new things, after a while you’ll start spotting patterns, you’ll be able to compare the results and have a better idea on what decisions to make. Giving up after the first, second or third failure it’s the biggest mistake to avoid 🙂
That's super-inspiring advice, Virgil. Thanks for joining me on a really insightful and interesting chat. Looking forward to the further evolution of FirstPromoter as a product and company.
Thanks a lot for having me on, Yusuff. Really enjoyed the conversation.