Hi Daniel. Thanks so much for joining me today on the SaaS breakthrough podcast. How you doing today?
Great. How are you, David?
I'm doing well. Yes, Friday before labor day. So a good time to do a recording and an exciting, exciting weekend ahead of me. What you, what do you have going on this weekend?
I'm doing some job searching right now, but I'm also setting up my my round table groups so that I have a side project, which is, which evolved from a mastermind group I had for myself and trying to build that out as something bigger.
Yeah, that makes sense. That sounds awesome. I think there's a lot of use for that right now in the marketing space. You know, you are the former CMO at Wave.video and you know, you're going to have a lot of experience and listen, I know from the personal side you've been working for several years on understanding the what, how and why for successful marketers and in doing what they do. And you become a marketing leader yourself. You know, you're a speaker, you have your own podcast, you have your own blog under the CMOConfessions moniker. And you're the author of two great books, which we'll talk about later on. So you have a wealth of knowledge, things that we can kind of talk about today, along with, you know, some of the lessons probably learned at Wave.video when you were the CMO over there, which wasn't too long ago. But you know, what I want to start off by talking about is videos and video is a medium, a channel that's been talked about for forever. It's such an important part of marketing these days. How do you see video, especially taking in, you know, what you learned at Wave.video, the current marketing landscape and going beyond how does video play a part in this, in this new landscape?
Right. So video, what we're seeing today is video replacing images in every single kind of medium you're looking at, right? Everything from case studies through just social posts. It's on moving, on move from text to images, and now moving from images to video and the implications of this are vast and wide, right? So the video is more challenging to make. It requires different skills, and it requires a shift in manpower and structure of departments, et cetera. So we're, we're still in a very much inside a transition mode here, where video is performing better, right? The customers are requiring demanding video, but we as marketers, don't quite know how to do it yet. There's no real equivalent for content marketing in the video in terms of our education and our processes, even though it should be already there.
One of the questions, you know, that I, that I think about is you know, in that education process for marketers. Where are people still need the most education, is it in the storytelling ability? Is it in like the editing to make it, you know, a sexy video that people want to watch? Is it in just understanding the medium? I mean, I think most marketers know they should be doing video. Even I know that but I think in a lot of ways, I get stuck thinking about how am I going to make this stand out? How am I going to make not another you know, floating head video here? Like, what are the things that most people are looking at as far as an educational resource, they need to really build good videos?
Yeah. If you're thinking, how does my video stand out? You're already above the 75 percentile mark, right? Most marketers are stuck in what should even make videos about. How do I get myself on video or my team on video? How do I produce videos? It's just that they're just really dealing with the very basics. What, at Wave.video the most common questions we saw were not about how do I get the video promoted or things of that sort. It was about how I don't want to have my face on camera, what do I do? Right? What should I make videos about? They need ideas and so on. And when you think about it, it's really, shouldn't be that difficult because if you're posting, for example, on social media every day, post about the exact same thing, but in video, right?
So why is that so difficult? It's because we weren't trained to do it. So that's all, it's really the same topic. So if you had a, you know, an image with a quote on it, why don't make it a video with a quote, you could read it, or you could just put it in text on a moving background. Like either way it works. They're both video mediums, but somehow it's very hard for us to wrap ourselves around this concept. That it's just the same thing in a different medium. People have this imagination where it's like, it needs to be more than it needs to be. No, it just needs to be a video. That's it.
It kind of goes into the next question that I was going to ask was like, for SaaS marketer, who's getting ready to launch video marketing ideas and concepts, you know, what would be top do's and don'ts to get someone started. And I think to what you just said, maybe the first step is just do and don't complicate it?
Right. So number one is don't complicate it. Don't over think it. The, everybody focuses about quality. And what if I don't have the equipment, don't have the right quantity. I'm afraid it won't look professional. It doesn't need to. And there's two sides to this. One is unless you're a big brand, your customers actually don't want you to be too polished in your video. They want it to be real. They want to meet you, right? They want to meet the team behind the product and behind the company. That's true also for a bigger brand, but a bigger brand also needs to maintain a certain level of professionalism or a certain image, right? The brand people of a company will want want a system out of this, but for smaller businesses, and particularly when they are talking about a human based brand, right. A personal brand. They want to meet you.
And so it's all about putting yourself out there, putting your people out there, finding ways to do that. Now, if, if you're camera shy, take a, take an image and put, you know, write something on top of it, take an image of the people. Take an image from inside, take a photo of the people inside your company, put text on it, take a photo of yourself somewhere, or a quick video of yourself. If you have a quote, read it out loud, you know, these kinds of stuff. And and you can also take bits and pieces of your webinars, bits and pieces of speaking up opportunities you had and so on. So repurposing is a big piece of it. There's a lot of video content that is floating out there that you just haven't used a lot. So those are a big trove, treasure trove of videos that you can reuse in different ways. And and then again, just taking the, taking the authentic moments. So if your camera is a bit shaky, if the lighting isn't great, don't sweat it, you will improve as you move forward. And if you look at the big influencers, the big video names out there today, and you scroll down to the very beginning of their feed, you would probably see some stuff that are surprisingly simple, right? And as they grew and got a bigger audience, they improved slowly, slowly. And that's the way, just sort of failure way through it. It's fine.
That's such a big lesson there, which is just be okay that is not going to be perfect the first time. I think a lot of us have this habit, not just in marketing, but like in life where we judge where we are versus where someone else is like a comparative mindset. And we just don't think like, Hey, my first video has to look like that. And to your point, you know, this person may have been doing this for four years. So yeah, it looks like that. But if you went back four years, to your point, like it could be a very raw video. And I think people want to see the real people. Like there's such a big movement to, to remove this facade of like that corporate brand. You want to know you're working with people. You want to know who those people are and that they're similar to me and they also make mistakes and they're human and they're fun. So that's a really good point. I think that's the biggest one. Maybe just that mental shift, right?
Mental shift. And, and, and this is very common for SaaS, young SaaS companies to make this mistake. They look at successful companies and they look at what they do today and they try to copy that. But what brought them to where they are today is not the same things they're doing now. Right?
Yeah. No, I think that's, that's brilliant point. And it's that you can't, outmarket someone in a market by doing the same things that they're doing now, because that's not how they got there.
Exactly. So if you had a time machine, you'd look back and they'd probably be doing the kind of stuff that you're doing today, but the market has evolved, has changed a bit. You have to account for that. So that's also true in video, right? You can't compare yourself to the top echelon out there, but also you don't have to complicate things at all, and remember, they want to, they want to, your audience wants to, they want get a glimpse into something they wouldn't see. So here's the, always the thing to remember. Why me, why now? Right? Why would they want to watch me? And why would they want to watch it now? So if you have nothing particular to contribute, they wouldn't watch it anywhere, anyway. Right. And if you're say at a show or at a comp trade show at a conference, you run into somebody interesting, or there's something happening right now, it's kind of newsy, right? They don't care if it's the camera isn't great. They care that it's now because I have to watch it now because it'll be over soon. Right? So why me, why now is, what's more important than how good of a lighting, how good of a camera I have, right? What's the quality of my lighting. That's the questions you have to ask. If you have good answers to these questions, don't sweat anything else, it's fine.
I would say one more. And this is just coming from our own like perspective. We had a show before the Demio product was built out. My cofounder and I had a show called Inside Demio and we answered those questions that you just said, why us, why now? We made it a very fun show. Like the building of an early SaaS company. It was, we had someone come film us doing our daily activity. We were like, you know, selfie videos. It was very raw. And then we like sat down every week and talked about lessons. But the one additional thing that we miss was like, what is the outcome for this initiative? Like, what are we ultimately trying to get from this? So you could, you know, also make the mistake of just like doing those great videos, but not really aligning to where you want to to go, or you're not measuring kind of the metrics or the outcomes. Do you have like any strategies or ideas, for people using video or looking to kind of push those push those metrics, make sure they're staying on pace with the goals and the reasons why they're doing video in the first place?
Absolutely. You hit the nail right on the head. So every kind of activity we do, fits into some sort of funnel, right? The reason why we do videos is to move people along the customer journey or longer funnel, move them to the next step. So how does video fit into that? And you see, so many of these shows now, particularly marketers are doing this, right. They're just doing these talk shows and you're like, why exactly am I doing it? As you're not even aware of yourself as a viewer, like other than the fact that I'm watching this thing and getting some information, you're not aware of why are they doing it right? And one of the models of funnels you're seeing happening today, a very popular now and effective. And we talk about this in our round table group, The personal grandmasters, it starts with social media.
So you have maybe a guest on some shows, or you're doing some ads, maybe video ads, right. Pushing people into a group. And in the group, you know, doing some kind of training or some kind of a challenge, some kind of video-based activity where you're giving them education. So you're moving them from awareness into education, but that education is really educating them about why and how they could use your solution better. Right? How would it affect our lives? So we're looking at a funnel where video is part of that. It's almost like a thinly veiled sales pitch, if you will, right. Focus on the metric, what is the next stage of the funnel? You can have a whole entire funnel made purely out of videos. And you're seeing a lot of this today. And if you look at some of the younger generation, they never visited websites, they're buying in Instagram, right? How did they get to that shopping mode and Instagram, they saw a few videos. Each of them led them toward some kind of action. So they build trust and build a brand reputation. Build some kind of education awareness, and eventually it lead them to action, to buy.
I love that. And I think of also like you just made me think of webinars so much, right? Like that's what we do. And kind of that exact same mechanism is happening with a webinar. You're, you're bringing someone in, you're using video to tell a story and move them down the funnel and all those great things. But you're talking about utilizing this video in, you know, free areas do the same thing. So you mentioned before repurposing a video, and I think it's such a powerful mechanism because it allows you to take, you know, one webinar, one speaking gig, whatever, and make hundreds of pieces that you can put out there. But to your point about the funnel, is there specific strategies that you should think about when you're purposing content to make sure you're leading them down the right path, like to the next step and not just throwing out content for content sake?
Yes. And this is true also for social media in general, right? Or for any kind of repurposing. If you have a newsletter say, what's the purpose of that newsletter? It's simply to have a large reading audience? No. It's to bring people to your webinar or bring them to your site to buy or move them from not readers to product interest. It's the same thing with your purposing content. The, you have some kind of anchor piece of content, maybe a webinar, maybe a training, something that's relevant, that's relevant to your audience. Right. And you want to get the word out about it. So you take clips of that. This is what we preached out on Wave.video. You take clips of that content and you put some contraction on it to come to our main training. Or this is what you missed in the last training. Look how great it was, sign up for the next one next week. Right? So that's how you do it. You kind of pick highlights and put it out there. And then with a call-to-action, come to the main feature event, move down the funnel with us, right? That's the purpose of repurposing is moving them into the next step with smaller bits of content. It's not just getting more brand awareness.
And I think that is the key thing there. That's such a, a stoop point is that you're doing it with intention. Like, yes, you are repurposing this information, but you're doing it to move them to the next stage of the funnel, which means now you're strategically thinking about which pieces you're taking. You're strategically thinking about your messaging, how that video is laid out in the entire funnel process, which is really important. And I think like video, podcasts are similar, like for this podcast, similarly, part of our funnel, right? Part of our marketing mechanism to get in front of ICPs all that kind of good stuff. And you have your own podcast B2U Business to User where you explore different aspects of how online businesses sell to engage with and grow their user base. One thing that we're always thinking about is how do we grow our podcast? How do we get this out there? How do we repurpose this content? You know, what channels or initiatives have you been using to, to really grow your podcast and get in front of the right prospects with it?
So podcasts is just another channel. It's not it's it just like we have Pinterest or LinkedIn, right? We also have a podcast. So the question from, for anybody who has a podcast, where does that fit in my funnel? And then how can I grow that audience in order to move them down the funnel? So podcast oftentimes fits somewhere in the middle of the funnel. Not at the very beginning. It's very, very difficult to get podcasts, to grow your podcast organically at the top of the funnel, podcasts are great when you have an audience and you're telling them, Hey, go, come subscribe to my podcast and spend a good chunk of time with me where I will influence you over maybe half an hour to an hour. And you will get to hear all about how smart I am and all about my service every single week until you decide, until you ready to buy.
That's what you're saying without saying it. For that purpose, podcasts are fantastic, they're phenomenal. If you want to use the podcast at the top of the funnel, it's really difficult to grow ann audience. Most people find podcasts through word of mouth or through newsletters and some kind of promotion somewhere. Where do people listen to podcasts? On the podcasting platform, right? You should get an Apple podcasts. Nowadays, a bit, a little bit in Spotify. You know, there are a couple of other platforms that are kind of growing a bit. So what's the best place to promote it? On the same channel, meet them where they are. So going on podcasts, just like I'm doing today, talk about your own podcast like I mentioned, the Business To User podcast, right? So somebody is right now listening to podcast and they're like, maybe that's interesting. Daniel sounds kind of smart.
Maybe somebody that I would be interested in listening to. Look it up, check out that, you know, you're right here in the app right now, check out the Business To User and subscribe and see if you like it. So that's, that's the best way to grow it. If you, I would recommend podcasts really strongly, for those who want to have a strong influence on the audience they have. Podcasts are, think of it this way. If you have a marketing podcast, for example, and you have a thousand listeners that is considered a launch and successful podcast, right? And we SaaS marketers, oftentimes we think in very, very large numbers, we think about, you know, hundreds of thousands of visitors a month to our website. So you compare a thousand listeners, 200,000 and you're like, why should I spend all this effort in this one medium. And the answer is because you have a very, very strong influence on that small segment. For example, if you go to most trade shows, you would find out that a lot of the people who bought the tickets, they were subscribers to the podcast and that's how they really grew to love and connect with that brand. So this podcast is a great way to build your super fans, your very loyal buyers. And that's and that's really where the strength is not into huge numbers.
That's really, really well said. And I think, you know, we've kind of recognized that too. We built this for top of funnel in a lot of ways, but also bottom of the funnel in a lot of ways too. And I think when we first went into it, we were expecting those bigger numbers. And then when we looked at it deeper, we're like, we're not just marketers, we're SaaS marketers, we're a SaaS marketing team. So like that is such a small part of the market. But to your point, having the listeners there is building that audience. And I think that the key thing that I'm taking away from this is you need to be very strategic when you're utilizing these channels. What am I utilizing this channel for? Where is it fitting in my funnel? What is the ultimate outcome? And that's fantastic. You know, recently we had on Gregory Elfrink from Empire Flippers.
We were talking about buying and selling SaaS companies and, you know, they work to, to flip companies. And, you know, we talked about building moats within your SaaS business, specifically with brand or technology. And I think on a recent episode of your own podcast, you talked about building a moat to protect a startup from competition, going into these more red oceans, similar to where we're at. How would you kind of look at these different types of moats? How would you say that? And why would you say that SaaS companies need to build one or more than one moving forward now in this kind of competitive age of SaaS?
This is a key issue today, which didn't exist. Maybe three, five years ago. It used to be difficult to build software or SaaS software. It became almost a commodity. The challenge now in building software is not the actual development. It's figuring out what's the right solution. It's getting the right design, the exact right combination of features. That's what takes the most time. Once you have the clarity of exactly what you need to do, it's actually not that difficult to build it. And that's exactly what you see happen. You spend a year figuring something out, tweaking features, going back and forth, iterating, iterating, and then you become successful. Other startups pop up out of nowhere, copy what you did in three months, and put it out there and maybe improve on it a bit, right? It'll take you another year to develop something new and a new competitive advantage.
And then they come again and copy them in three months. So it's a big, it's a big issue nowadays, because everything is easy to copy. And that just a new reality. So whenever you considering, what features should I develop? How should I move forward here? You have to really ask yourself, okay, what prevents others from copying it? One possibility is complex technology, right? It'll take what it will, can they just copy it then in three months or if it's purely front end or mostly in the front end, yeah, it's easy to copy. If there are lots of integrations or, you know, AI algorithms that are not based on say something you pick up from Amazon or some open source, then that's also good. Other things are very, very attuned understanding of your target audience. If you have really good insight into what makes them tick and what makes them like you, and like a very specific say design, that's also hard to copy. Somebody who's not from your industry might not quite get it right.
They might look at what you did and think, Oh, I see, I see what they did. They will copy the features, but they won't copy it exactly in the right way. And they won't quite figure out why it doesn't work with. So that, that can help too. It's not quite as strong a moat, but it is a moat. So all of these things are moats and you have to ask yourself really really carefully whenever you're planning something out, how quickly would it take them to copy it? Can I develop something new within that timeframe? So it would put my my competition in the dust. Look at what Apple does. They don't really develop anything quite new. They have new technologies in the background, but then a few moats that protect them. One, all of these, essentially, right? The unique understanding of their audience, they have the really, really focused on the little design details. Two they reduce complexity into simplicity.
Somebody else wants to develop a phone nowadays, there's thousands of components in there, each one of them, thousands of patents, it reduces the barrier of entry. That's not easy. So all of these things work in their favor, even though when you think about it, it's just a phone. Not exactly, right. So yeah, moats are super, super important. And I think all of us in startup suffer, we we've suffered from this problem recently. It just, it just very difficult to defend yourself nowadays. And you see this with investors too, right? Investors would also shy away from companies that don't have very strong moats.
What do you think about a moat that's built on a brand? And now you mentioned design user interface, understanding your audience and the technology moats, but branded moats. What does that, what does that mean to you when you hear that word? Like my moat is my brand and how does someone go out and effectively try to build a brand moat?
A Brand Moat is good for those who have very deep pockets. So you think about brand marketers, companies like Coca Cola and Geico, right. Warner Buffet is is famous for investing in such companies where the power of the brand is very powerful and people simply want the brand because it's the brand, right? But that takes massive advertising spending or very, very unique and disruptive marketing. You can think of Dollard Shave Club as, as one of those, right at the time. It's not easy to do, it's risky, but you can develop a a sort of a unique group of people who, who love your product. And that's definitely something we worked on at Wave.video, we had a very strong community. We were very personal with them. We gave them a lot of information about what we're working on. We listened to them carefully.
We wanted to make sure that they know that we're up there and partners and we're there for them. And we want them to know that we're with them on their journey, just the same way as they are with us in our journey. And for that group, it worked beautifully, right? To go beyond a small group, you need big budget. You need to be able to be there everywhere. Right? I'll give you an example. Trade shows. You go to trade shows and if you go talk to the vendors at a different booth and ask them how much money are you spending on this booth and how much revenue are you making from it, right? Is it, what's the ROI on this? 95% of them will say, we have no clue and you ask them, so why did you come here? And they'll say, well, our competitors are here. So we kind of felt we had to be here. That's good for brand marketers. This approach is, you know, this idea of I have to be everywhere. They have to see me. They have to meet me everywhere. Or else don't forget about me and go to the competition. For most of us SaaS startups that we just don't have the budget for that, frankly,
I'm going to go and pull out a little bit of the extra bit there that I, that I heard that I love. And you said, we went deep on our community, on our language and like our connection with, with that subsection of the audience. I think of Drift when I hear that. I think of Basecamp when I hear that, right, where you have or to your point, Apple, Apple is a huge brand now, but when it first came out, it was exactly that, it was going up against behemoth Microsoft and it found who is our subsection, let's talk to them, let's build for them. And maybe this just goes back to your understanding of like who your target audience is. But when you can understand that, and you can like have the language for them that aligns with them, the design, the features, the functions, you know, to me, I look at that as, as a brand moat to your point, maybe it's not, maybe that's more about you know, alignment mode, but that is something that like a big company, like Coca Cola could never pivot and be just for one unique person anymore. They're just too big.
Oh, absolutely. Yeah. So, so for sure. Right. So to cater to a specific niche and really get them right, and get the brand catered to them, the messaging, everything else that is the moat against the large competitors who have to be a catch all for everybody, right? Adobe is known for Adobe marketing, Adobe Creative Cloud. It's kind of a catch all for any creative out there. And if you have a subsection of creator or if creative (inaudible) needs something a bit different, you can cater to them and Adobe won't ever look in your direction. They're just too big, right. And if you grow big enough, and then they would acquire you or what have you. So definitely that can be a moat if you're overly specialized, it becomes challenging to cross the chasm from there to be a wider and wider appeal. And that's when you need bigger and bigger bucks. Right. But in the early days I would absolutely try to build that brand to your niche market, to your beach head market sometimes we call it right, the early adopters that really want to fall in love with you and, and really make sure that they have everything, every reason to be personal, be communicative and try to be try to be a leader for them that they can follow.
Yeah, no, I love that because you could do that. You can build your community, you can say, and build unique things and showcase that leadership that will come from knowing that marketplace. Now you said the word personalized a couple of times, and I know a few years ago you wrote a book called Personalize This, the role of personalization in the customer life cycle. How do you see personalization evolving, especially here in 2020?
Yeah. That's a, that's a huge topic because it became very political and very, very complex with all the new regulation. So we're seeing, I mean, it's such a big question. I'm not even sure how to start answering it.
It makes sense with the GDPR and all that kind of stuff as well.
I think personalization is now become, come to, when I wrote the book, we were all talking about personalization as a new technology that we were all interested in. Right. And it was kind of new. So we're looking at moving from things like, hi Daniel in the email, that's it right. To sending me emails about topics that I was interested in. At this point I think customers are taking that for granted. It's like, don't just send everybody the same email, send me what I've subscribed for only, right. If I'm a, if I'm a digital agency and I signed up for Wave.video, I don't want to get emails related to solo entrepreneurs. I want to get emails related to agencies. Right. And I think that's a, that's become quite a standard for, from the consumer end that we have to meet up.
The question about, for us as marketers, do we have a customer profile that we're building? Do we ask our customers Who are you? What do, what do I need to know about you that will help me cater my services to you? My messaging to you, my ads to you? Please give me that information so I can do better. There's also personalization, even in pricing and so on. So here's something which is, okay, how much can you afford to pay for this? One of the beauties of SaaS is that the product, the cost of goods is, is negligible for most of us SaaS companies, right? The cost is in the, in the design development, everything else. But once the product is ready and if signed up the cost of running, it is actually quite low.
Lucky them, not for us.
But but that means, that means a huge operating profit margin. So what that allows us to do is personalize the price. If there's somebody out there that wants to pay me $10 a month and they can still remain profitable and there's somebody out there that can pay a hundred thousand dollars a month, it's pretty much the same technology. The same cost, but they can pay different prices and you can look at Salesforce. They have a gazillion of different price points and different plans. Do you actually cost them a different amount of money? No. Right? Do you cost the sales process a different amount of money? Yes. They would invest more in the sales process the more you can pay and get more money out of you. And this is something we overlook often as marketers is let's personalize the process. Let's personalize the buying process.
Let's personalize the price points as much as we can to you. So there is segmentation and there's personalization. Segmentation means I'm just going to say anybody from Brazil, for example, I'm going to load a price for them. Right. Personalization is, I've seen that the algorithm, called the lead scoring system, right? Saw that you visited the pricing page three times in three days and haven't purchased yet. You know, you're considering buying and you haven't moved. I will, I will give you a coupon code and lower your price. Right? That's personalization. It's one-on-one. It's based on you and your behavior. It's based on who you are and what I know about you, I'm gonna, I'm going to customize my approach to you
When you look back over the past, maybe 12 months and you kind of building stuff like this out, maybe at, you know, Wave.video. Were there, were there any hard lessons you learned or maybe specifically related to personalization things that you just, you thought would work well in personalization that didn't, or just maybe an experiment itself that didn't work out the way you wanted it to?
Yeah, I think, we had, I mean, it's not exactly about personalization, but this is something I noticed in every startup I've worked or consulted with. Every SaaS company this is pretty much same issue I've seen over and over again. It is extremely difficult to deal with the fix. It's extremely difficult to fix the churn issues after you've launched your product and, and founders and leadership are always pushed towards growth rather than customer lifetime value. So what happens is if your churn is less than ideal, right? So if your churn is less than let's say in the double digits, it's going to catch up with your, with your growth within two years, maybe, maybe less right, 18, 16 months, two years, and you'll see your your growth flatten. Fixing that takes a very long time and effort. It's not easy. And it's very, and it's depressing because you have to go from any iterations and figuring out customer interviews and trying to understand and change positioning and all of these things take time and the pressure is on to show high growth right away.
And so you look for these hacks that are like, Oh, I'll go and lower my price. I will do special offers on AppSumo or what have you, and, and show a boost in revenue and Yaya here we're growing, growing again, right? No, you're not growing. You're just giving away your product for free. And we saw, I've seen our competition do this, and that had a big effect on us. They were literally giving up their product for free or $5 a month. We were like, there's no sense in that whatsoever, but they were growing and we were growing much slower, but who who's in (inaudible), who's going to win. So always remember this in business, the company with the highest profit margin will always win in the long run, right? So you're pushing towards growth, when you should really, really, really be thinking about your profit margin, how do I build a company that gives me the highest profit margin out there, and there's only two ways to do it, either you find a way to reduce your costs in a ways your competitors can't and SaaS, that's extremely difficult because we all rely on the same infrastructure or you find a way to increase the lifetime value and retention. Right?
If find it, find the right product-market-fit that will give you a very high retention rate and justify high price points. And if you have, if you have high profit margin, it means you have more cash to spend on marketing. So maybe somebody raised a ton of money and is outspending you today, but their money is going to run out and they're going to find it out of these low paying customers. So not good customers, that they are, that their churn rate is actually higher, that their lifetime value was too low. And when you're selling your product for $5 a month, what is the lifetime value of that? A hundred bucks, $50? What are you, how much are you going to get from that? How can you grow a real business on those customers and in the back of those customers, unless you have, you know, a hundred million customers, it's not going to really work because somebody else with higher profit margins is going to spend more and it will snowball ,they'll do better and better and better. So really focus on lifetime value, focus on retention, focus on profit margins, revenue growth. This, I cannot stress enough how critical that is for your startup.
I just want to say thank you. That was really amazing. Really, really well said, and very smart. And, you know, this was a belief system that we had. We usually call it like the gross low approach, like slow growth approach, where it's just like, you're looking at metrics early on. You're not forcing growth early. I think we all kind of chase that growth. But to your point, those like lagging metrics are the key ones. And I think the other thing that you didn't mention with profit margin is profit margin also gives you security. And that is something that is like so hard to do. Even if you're funded, you're not secure because a lot of times, most companies are running in a burn, right? Running negative red every month, where if you can be profitable, you can put cash reserves away. You could have a whole year of no revenue. COVID hits. You're insulated because you've been profitable. You have cash, you can make pivots, you can make hard decisions. It's just a really smart way to run your business. And I think that's so many good points that you just said. So thank you again for that. That was, that was amazing.
Yeah. And another thing to consider around that is if you go to investors and ask and show them growth and say, Hey, look, I'm growing. Can you give me more money? They're going to give you more money in order to grow more. They're never going to give you more money in order to develop your product or develop your technology behind it better. They'll say, Oh, these guys are growing good, have some more money, get more salespeople, do some more marketing. Show me the same level of growth or higher because I'm giving you more money now. And you're going to say okay, you gave me money for growth, but I'm going to use it to develop our product, which you thought I had. It's never going to fly, right? So now the stress is going to be even higher. You're going to look for more desperate things to do, to trying to meet those those requirements.
And it'll never end. So we all think, Oh, well, we just need to get to the next the next round of funding. And then we'd have a little more money to spend on fixing all of these issues that we've, that we see in our product. No, you'll never be there. You'll never have that money because that's not where you're going to be raising money for. It's tougher to raise money for product, right? To say, to go to investors and say, Hey, I (inaudible) right? It's much, it's much tougher. Investors want to see something that alreadyworks, that is already growing, but it's a catch 22.
It makes total sense. And it's such a good point. It's like they, they want to invest in marketing dollars. And if you haven't fixed the problem by the time you need that investmen, you're in a really bad place. And otherwise it's just a cyclical thing. That's going to keep happening. You're gonna have to keep pushing. And what, what what would that causes is a lot of internal pressure on growth for growth's sake. So you kind of lose your, maybe your culture, your values about customers first, and, you know, your sales team is pushing quota over quality and alignment. And so it kind of throws up all these internal things in your business too.
Exactly. And you'll see sort of boom and busts where your, you know, desperation is kind of driving. Oh, we've got to cut back half the company today, and then, Oh, we're going to hire a lot of people quickly. Is there a rockstar out there that can take us to the next level? Right? That's I mean these are all signs of this kind of problem behind this, in the basic business model and just desperate desperation trying to, desperation motivating decision-making that's not a good place to be in.
Yeah. Wow. Well, this was a, this was a very good conversation. This was great advice for anyone listening. I think it was just so smart, but for the sake of time, Daniel, what I want to do now is I want to flip over to our five lightning round questions. Just five quick questions that you can answer with the first best thought that comes to mind. You ready to get started?
I can give it my first thought. I don't know if it would be the best, let's do it.
Oh, it'll be good. I know it'll be good. Based on your past answers, these are gonna be great. All right. What advice would you give for early stage SaaS companies starting marketing today?
Invest in a team. Talent is the number one thing that you have, don't go for the cheapest talent you have, and think everything else will workout and (inaudible) spending a lot of money on resources, but a little money on talent. Spend most of your money on talent, less money in everything else.
Very good advice. What skill do you think is vital for marketing teams to improve and build on today?
Agility. Ability to learn and multi multitask. So things are changing so quickly. You want people that can quickly learn a new technology, a new channel, a new marketing technique, and ditch it quickly when the time comes.
Flexibility and the ability to just let go of things. Yeah, that's great. What about a best educational resource you'd recommend for learning about marketing?
Wow. That's so broad. (Inaudible) the internet that's pretty much everything on YouTube out there today. So I would say YouTube, you can, you can find what you need in YouTube.
Yeah. There's a ton on YouTube, any specific people you follow on YouTube?
You know, I'm not into brand names so much, frankly. I look for the information, less so for the people. I'm not much of a kind of a groupie for any of these marketing celebrities, frankly, most of those who spend the time on stage, are not spending their time doing, and I don't don't want to learn from them. I want to learn from people who do.
Very true. Podcasts like this are good for that then.
What about a favorite tool you can't live without?
I'm going to surprise you here. I'm going to say Notion notion is, Oh, I love Notion. I think it's a phenomenal collaboration tool. It's great. It's a combination of Wiki, Wiki, a project management system, everything else. And everybody can, you can just dump all information in there and collaborate between the team and even guests. And I just love it. It's it has become part of the way I I run the show.
Yeah. And I, I also you know, read an interview, ask me anything, with the CMO of Notion. And they're extremely smart with that, with that branding ability, the moat they're building, they're really a great brand. Follow that up with brand business or a team that you admire today?
You stumped me here because I just, I'm very (inaudible) right? I'm not good at recalling names off the top of my head like this. So team you know, I'm going to say Satya Nadella from Microsoft.
I think what the reason for that is, is he replace (inaudible) I'm on top of the world CEO who drove the company into the ground. And by just being a decent, nice listener who empowered his team members. He made sure he had very smart people around him and was able to listen to them and let them do their best. He has taken the company to be one of the best companies in the world today and a beloved brand. And I think that speaks volumes to the fact that a good CEO is a good listene, very clear minded and realistic person. And doesn't have to be one of these big ditactor slash on about me kind of guru types, a great manager would lead the company in the right way.
I definitely agree. I mean, so much as leadership there and leadership is listening. Leadership is at least for me, I always look at leadership as you lead from behind, right? Your people are first and everything else comes after for yourself. So I love that. You know, Daniel's some great answers here today. A lot of lessons learned, I do want to say thank you so much for coming on for sharing this knowledge for being open and transparent. It was a really wonderful conversation.
I appreciate it. It was wonderful talking to you and learn from having these challenging questions.
Yeah. That's the best way to learn, right having these challenging questions and really kind of digging into them. But Daniel, thank you again, have a wonderful day and we'll talk to you soon.
Thank you so much, David.
Thank you so much for tuning into episode number 120 (...)