415: Customer.io: 18 Months to $10K MRR, 10 Years to $70M ARR - with Colin Nederkoorn

Summary

Podcast Summary: The SaaS Podcast - Episode 415: Customer.io: 18 Months to $10K MRR, 10 Years to $70M ARR - with Colin Nederkoorn

Introduction

In Episode 415 of The SaaS Podcast, host Omar Khan engages in an insightful conversation with Colin Nederkoorn, the co-founder and CEO of Customer.io. Launched in 2012, Customer.io is a platform designed to help businesses send personalized messages to their customers based on their behaviors and actions. Over the span of 10 years, Customer.io has grown from generating $10K in Monthly Recurring Revenue (MRR) within its first 18 months to an impressive $70M in Annual Recurring Revenue (ARR), serving over 7,000 companies globally.

Early Challenges and Initial Vision

Colin and his co-founder John embarked on their entrepreneurial journey while still employed at a startup. Their initial goal was modest: secure five paying customers at $10 per month each before quitting their jobs. Despite their enthusiasm, they faced significant hurdles, including limited technical expertise and minimal knowledge of email marketing. The first version of Customer.io was rudimentary, requiring manual setup for each customer's campaign. This "Wizard of Oz MVP" approach 00:30 involved Colin personally writing custom queries to manage campaigns, highlighting the early complexities of their product.

Colin Nederkoorn [04:30]: "Every second counts."

The concept of urgency, inspired by the TV show The Bear, became a guiding principle for Colin, emphasizing the importance of meaningful work over merely filling time.

Pivotal Moments and Realizations

A critical turning point came during a meeting with Ramit Sethi, a renowned personal finance expert. Ramit challenged Colin and John on their use of the launch email list, revealing that they hadn't engaged with their potential customers post sign-up 35:20. This candid feedback was a wake-up call, prompting Colin to delve into conversion copywriting and focus on educating their audience. By providing valuable insights and building credibility in the email marketing space, Customer.io began to gain traction.

Growth Strategies: Content Marketing and Education

Customer.io's growth was heavily driven by content marketing and education. Colin emphasized the importance of not just selling a product but also educating customers on how to achieve their goals using the platform. This approach helped them establish authority and trust within the email marketing community.

Additionally, Colin shared a strategic insight on growth:

Colin Nederkoorn 11:43: "If you can sustain a percentage growth rate over a long enough time horizon, you get really big and it starts to happen very quickly."

By maintaining high growth rates consistently, Customer.io was able to scale exponentially from its early stages to a multimillion-dollar business.

Product Development and Market Fit

Customer.io addresses the problem of information overload by enabling companies to send targeted and relevant messages using first-party data. The platform integrates with various data sources such as Salesforce and data warehouses, allowing businesses to build comprehensive customer profiles and personalized journeys.

Colin discussed the importance of product-market fit and the lessons learned during the initial phase:

Colin Nederkoorn 32:09: "It's absolutely important to launch when you're still embarrassed by your product."

This philosophy underscored the value of getting a functional product to market quickly, even if it wasn't perfect, to begin validating the business idea and gathering customer feedback.

Funding and Scaling

After 18 months of steady growth to $10K MRR, Customer.io's revenue continued to climb, reaching $70M ARR with a team of 250 people across 30 countries. The company successfully raised over $30 million in funding, debunking initial assumptions and showcasing the effectiveness of their growth strategies.

Colin Nederkoorn 20:53: "They wanted something that would save people a ton of money or make people more money. And I thought it would be great that we can do both."

This dual focus on saving and generating revenue for their clients was pivotal in driving Customer.io’s success.

Key Lessons and Advice

Throughout the podcast, Colin shares several valuable lessons for aspiring SaaS entrepreneurs:

1. Start with What You Want: Define the characteristics of the business you aspire to build, focusing on what you enjoy and the problems you want to solve.

2. Engage Early with Customers: Building an authentic relationship with potential customers by offering value before the official launch can significantly enhance retention and trust.

3. Perseverance is Crucial: Sustaining long-term growth through consistent efforts and resilience is essential for scaling a business.

4. Educate Your Audience: Providing educational content helps in building credibility and authority, which are critical for organic growth.

Lightning Round Highlights

In the concluding lightning round, Colin shared quick insights into his personal and professional life:

• Best Business Advice: From Chris Savage of Wistia, "Do you need more time or more money?" This helped Colin prioritize extending their runway over immediate fundraising 47:59.

• Recommended Book: Turn the Ship Around by L. David Marquet, emphasizing leadership and empowerment within a team 49:12.

• Attribute of a Successful Founder: Perseverance 49:41.

• Favorite Productivity Tool: A simple piece of paper for jotting down tasks during high-stress periods 49:53.

• Passion Outside Work: A deep love for food and the culinary arts, inspired by living in Portland, Oregon 51:04.

Conclusion

Episode 415 of The SaaS Podcast offers a comprehensive look into Colin Nederkoorn's entrepreneurial journey with Customer.io. From overcoming early challenges and pivoting based on customer feedback to leveraging content marketing and maintaining relentless growth, Colin's story is a testament to the power of perseverance, adaptability, and customer-centric strategies in building a successful SaaS business. Listeners are left with actionable insights and inspiration to apply to their own entrepreneurial endeavors.

Notable Quotes

• Colin Nederkoorn 04:30: "Every second counts."

• Colin Nederkoorn 11:43: "If you can sustain a percentage growth rate over a long enough time horizon, you get really big and it starts to happen very quickly."

• Colin Nederkoorn 32:09: "It's absolutely important to launch when you're still embarrassed by your product."

• Colin Nederkoorn 47:59: "Do you need more time or more money?"

Resources Mentioned

• Customer.io: https://customer.io
• Turn the Ship Around by L. David Marquet
• The Bear (TV Show)

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This summary is intended to provide a comprehensive overview of the podcast episode for those who haven't listened. For the full experience, including nuanced discussions and detailed insights, listening to the episode is highly recommended.

Transcript

[Omar Khan]

Welcome to another episode of the SaaS podcast. I'm your host Omar Khan and this is a show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business. In this episode, I took to Colin Netacorn, the co founder and CEO of Customer IO, a platform that helps businesses send personalized messages to their customers based on their behaviors and actions. In 2012, Colin and his co founder John, while working at a startup, decided to build their own product. Their goal was simple get five customers paying $10 a month before they would quit their jobs. With limited technical expertise and little knowledge of email marketing, they faced significant challenges from the start. Their first version was pretty basic and required manual setup for each customer's campaign and the early days were tough. Growth was painfully slow and they struggled to gain traction to make ends meet. Colin and John lived off savings and credit cards for years, constantly worrying about their finances. Finding product market fit was another major hurdle. They struggled with positioning and messaging, making it difficult to attract and retain customers. But they persevered, focusing on educating potential customers through content while continuously improving their product. A pivotal moment came during a meeting with Ramit Sethi, a personal finance expert and media personality. When Sethi asked what they were doing with their launch email list, they embarrassingly admitted they weren't doing anything. But this realization hit hard. Spurred by this wake up call, Colin immersed himself in learning conversion copywriting and began sharing valuable insights with their growing email list. By focusing on educating their audience, they built credibility in the email marketing space even before officially launching Customer IO. Despite their efforts, it took about 18 months to reach 10k in monthly recurring revenue, which is a significant milestone for the struggling founders. But this was just the beginning of their remarkable growth story. Today, Customer IO serves over 7,000 companies, generates 70 million in annual recurring revenue, and has a team of 250 people across 30 countries and they've raised just over 30 million in funding to date. In this episode you'll learn how Colin and John validated their idea and acquired the first customers using only a bare bones product. Why content marketing and education played a pivotal role in overcoming early growth challenges how focusing on organic growth strategies shaped the company's long term marketing approach. We talk about what key decisions fueled the founders transition from a six figure to a multimillion dollar SaaS business, and why perseverance through financial struggles and slow growth periods became crucial to their eventual success. So I hope you enjoy this episode is brought to you by Attio the Next Generation of CRM. Now imagine a world where your CRM is powerful, easily configured and deeply intuitive. Well, Atio makes that a reality. You can set it up in less than a minute and in seconds of syncing your email and calendar, you'll see all your relationships in one place, all enriched with valuable data. You can also build zapier style automations, get powerful reports and seamlessly handle any go to market motion. From PLG to sales led, Attio is designed for the next era of companies like yours. So it's time to say goodbye to inflexible one size fits all CRMs and join industry leaders like 11 Labs, replicate modal and more. To scale your startup to the next level, you can try Atio for free. Atio.com that's Attio.com Are you building a software product? Then you probably know how challenging it is to find competent engineers. You don't have to micromanage. And then you have all those worries. Will this app work correctly? Can it handle millions of users without crashing? Can I trust these developers when I don't know what they're doing? That's where Axle Hub comes in. With 10 years of software experience, they do things differently. You'll work directly with Phil, their CEO and technical leader. No middlemen, no managing multiple developers. Phil guides the entire process and personally oversees your product. Think of him as your technical co founder minus the equity stake. He brings his expert team to build your app right from day one. Ready to make quality software without the headaches, visit axlehub.com that's a x e l h u b com all right, Colin, welcome to the show.

[Colin Netacorn]

Great to be here.

[Omar Khan]

Do you have a favorite quote? Something that inspires or motivates you that you can share with us?

[Colin Netacorn]

Yeah. So recently I've been really enjoying the. There's a TV show called the Bear and I just, I love food. I'll probably mention food again at some point during our conversation today, but there's this episode where cousin, his cousin Richie is apprenticing at this very high end restaurant. And in the restaurant, in the prep area in the kitchen, there's a sign on the wall and it's underneath a clock and it says every second counts. And that idea or that concept features really prominently in that episode. And I just have that visual of the clock and the sign etched into my brain now. And I think about it a lot and I love the double meaning of that quote and that sign on the wall.

[Omar Khan]

You mean the urgency in the kitchen and then just sort of, just generally with Life.

[Colin Netacorn]

Yeah, absolutely.

[Omar Khan]

It's like you seem a pretty chill guy. I don't think you don't come across as like, let's go, go, go kind of a person.

[Colin Netacorn]

Yeah, I mean it's. I think for me it's about doing things that are worthwhile in the end, not filling every minute of the day. That's the meaning that I take from it.

[Omar Khan]

Yeah, yeah, yeah, I like that. Cool. You know, I've heard of that show for so long and I've never watched it. And then earlier today I looked at one of the trailers and I just thought to myself, why have I not watched this show before? So it's something I'm going to start this week. So looking forward to that.

[Colin Netacorn]

There's this real journey that they go through from season one to season two and I think you find yourself really cheering for all of the characters there and there's something to admire and some struggle that they're all going through and it makes it a really, I don't know, it's a life enriching show is probably the way that I would describe it.

[Omar Khan]

That's a high bar. Good. I'm looking forward to it even more now. So let's Talk about Customer IO. Tell us, what does the product do, who's it for and what's the main problem you're helping to solve?

[Colin Netacorn]

So the problem that we're looking to solve is that people are bombarded with emails and notifications every day and most of those go ignored. And so if you're a company who's trying to reach your customers, we help you cut through that noise by leveraging the first party data that you have to send more targeted and relevant messages. And so today we've been around for 12 years and today there are over 7,000 companies who use Customer IO. And a typical customer of ours is a mid market company that has a digital experience. So an example might be a web and mobile based elearning platform or a mobile banking app or a B2B SaaS product on the web. And the companies that use us typically have dedicated folks on the marketing team in roles like Lifecycle or growth marketing. And so I guess what's different about us or what's special about us is we've taken this technology which traditionally is extremely complex. Traditionally it exists in multiple systems that a business might use and it's reserved for the largest enterprises and we've made it accessible to many more companies through the platform that we built. And so with customer IO our clients can connect to their data sources they build personalized customer journeys and then they use our templates and creation tools to maintain their brand consistency all in one place. They're doing things like sending reminder emails to improve student outcomes in elearning. They're using push notifications to nudge users to link their bank accounts or complete account setup in banking, or they're showing in app notifications to onboard new users into software applications.

[Omar Khan]

So this is a lot more complicated than emails triggered based on which web page or they visited or kind of which part of the app they used. Can you, you sort of touched on that. Can you just give the listeners a sense of like, the complexity, like what are the types of data sources that you're hooking into?

[Colin Netacorn]

Yeah, I mean, we, today we can hook into Salesforce, we can hook into a data warehouse. We can. Or our customers can instrument their application directly via our SDK or via, you know, the web as well via JavaScript. So we're aggregating information from all of these different places that our customers are storing data about their customers. We're building that unique profile that gives you this full picture of every way someone's interacted with your business. And that lifecycle marketer is setting up these rules for when, when those people get messages. And so it is, it is really sophisticated. I think one of the, when we started, the thing that we, the problem we took on, which I think we only did because we were so naive, was trying to send messages when people don't do something. Because to be confident that, you know, someone didn't do something, you need 100% certainty over everything they did. Otherwise you look like a fool. Right. When you're sending, when you're saying, hey, it looks like you didn't complete your account sign up, but someone did, then that looks really bad. And so it was really important to architect the system in a way that didn't drop data. It didn't sort of approximate things and say, oh, these people probably did this stuff. No, we have to know with certainty, otherwise the whole promise doesn't work. And yeah, so it's complex.

[Omar Khan]

Give us a sense of the size of the business. Where are you in terms of revenue, number of customers, size of team?

[Colin Netacorn]

Yeah, so I mentioned we're 7,000 plus companies who are using US 70 million ARR and 250 people on the team in over 30 countries.

[Omar Khan]

And have you raised like, I think you raised about 10 million, is that right? At least that's the Crunchbase number that I saw.

[Colin Netacorn]

Yeah, Crunchbase is a little wrong. And I tend not to correct them. I think the. I don't know the exact number off the top of my head, but it's in the mid-30s. We did like around in 2022 with Spectrum Equity and that was a larger round for us where we added some cash to the balance sheet to help us grow.

[Omar Khan]

Got it. I was blown away when I realized you were doing 70 million in ARR. I mean I knew you were an eight figure business, but I thought, I was thinking, oh, maybe, you know, 20 million. That was kind of my guess, but wow, I was way off.

[Colin Netacorn]

Yeah, I mean, I think if you're starting out today, if you're pretty early in the journey, I think the only thing you need to solve for is to have your business continue to grow at a certain percentage. And if you can maintain the percentage growth rate over a long enough time horizon, you get really big and it starts to happen very quickly. Once you're compounding 50% year over year, 80% year over year, and you're starting from 20 million, let's say, or 10 million, those numbers get really big really quickly. But it seems like who cares when you're at 100k adding 80% year over year or 150% year over year, no big deal. But if you can sustain that, it gets massive really quick.

[Omar Khan]

I love that. That's a great way to think about that. Let's talk about where the idea for Customer IO came from. And what I think is really interesting about your story is that earlier you told me that if we'd stuck with the original idea, you and I wouldn't be having this conversation today. So let's start there. Like what was that idea and how did you come up with it?

[Colin Netacorn]

So my co founder and I were working at a startup together. He was head of engineering, I was head of product. And we were excited to go and try something on our own and started exploring a few ideas together. And when we decided, yeah, let's go and try and make a go of this, one of the first things we did was made some wireframes and started talking to people about our idea. And we knew we were interested in doing something around data. We felt like we had the technical skills to go and build a system and that would create and doing a hard thing in data would create a little bit of a moat around the business. That was hard. It was harder for someone else to replicate that. But our initial idea was to build a more sophisticated analytics product. So Google Analytics was on the market, it was free at this point and I think it was either in their terms or in their, in the way the product worked. You couldn't see like unique sessions and you didn't know who was using the website and what they were doing. And so our idea was if someone logs into a website, we would show you their unique activity within the website and you would log in and you would get this sort of digital CRM for like a modern company where the way you're interacting with your customers is through a web product. And when we started showing people screens of that, they weren't interested. They told us, hey, I've got 10 products that show me what people are doing on my website. What I really need is something that will help me influence their behavior. You know, when, when people sign up and they don't end up converting, I don't and they leave. I don't have a way to get them back. And if you can help me like get people over the hump, that's money for my business. And when we heard that feedback a few times, we, we realized, hey, this, this business was a bad idea. But if we tweak it a little bit, we can still lean on our skills. We just need to figure out how to like do, how to build a rules engine on top of this data that's coming in.

[Omar Khan]

How many prospective customers did you talk to at the time when you took these wireframes and, and started showing it to people? There's always a question for founders in the early stages, like should I be talking to 10 people? 50, 100? Like how do I know when I've got to a point where I've really validated this idea?

[Colin Netacorn]

Yeah, I mean, I think I don't completely remember exactly how many people we talked to. We tried to put ourselves in situations where we could be efficient about it. And one of the places I remember going was there was a nighttime co working meetup called like New York Night Owls. And we went to that and I remember like showing it to multiple people who happened to also be working on their side hustle or trying to get something going and just getting their feedback on the wireframes. So I think it would have been probably 10 to 15 people who we pitched this original idea, maybe showed them wireframes and then talked to them about it before we realized that there was enough signal to modify the idea.

[Omar Khan]

One of the things I often see founders struggle with is they either take a, actually the easier path probably is they take a market first approach where they might say we're going to build a product for procurement. People in X companies, and we're going to go and talk to 50 or 100 of these procurement people and figure out what problem exists that we can solve, and then we're going to build a product for that. Right, that's example one. But more often, what happens is founders sort of start with sort of an idea, sort of a problem, and they kind of say, well, okay, they start building a solution, and then they're in this place where they're looking for, trying to figure out which market to serve, who's their icp? Do they actually have this problem? And you're kind of. You got a. You got the. Sort of. The chicken and egg. And I've got a problem. And I don't really have a clear problem. I don't have a really clear market. How do I figure that stuff out? When you guys were starting out, did you have a general idea of the type of customer or the market that you were going to sell to, and were those the people that you were talking to, or was it like, let's go get feedback from anybody? It doesn't really matter who they are right now, as long as we're getting anybody who will kind of pay attention to us.

[Colin Netacorn]

Yeah, I mean, I think the.

[Omar Khan]

What.

[Colin Netacorn]

What we did, and I wish I could dig this up, I don't know where this is, but we came up with characteristics of the business that we wanted to build. One of them was. And, you know, I think there's like the B2B versus B2C thing. Where do you want to try to build the next Twitter or some kind of social app? Or do you want to build something where you're selling to businesses? And I think for us, some of the decision points were we wanted to build something for our peers. And if you remember, I'm head of product, I'm working in tech already. My co founder is an engineer. We wanted to build something for our peers. So that narrowed it down. We wanted it to be. There's frameworks to think about, like, are you a painkiller or a vitamin? You know, and stuff like that. Like, we. I wanted. It was important to us that the business was close to revenue. And maybe we backed into this after the fact when we heard that feedback that nobody wanted to buy our analytics product. But I think we realized before fully committing that we wanted to be close to revenue either. And either we had to be really compelling in that we would save people a ton of money or we would make people more money. And I thought it would be. And I think that's the painkiller vitamin thing. And I thought it would be great that we can do both. Our product could be used to do either of those things, but ideally it's about conversion and getting more people to pay you, more people from free to paid in a product. So that's what we focused on. It had to be. What else? Oh, I think we initially were really inspired by mailchimp. So we wanted it to be self service, not enterprise. We didn't want to build a sales organization and we changed that over time. But at least at first it was all about self service, so we needed to get good at that. I forget some of the. There's probably a couple other other criteria, but I think that's really helpful if folks are just starting out. Think about what your strengths are and what your desires are. If you succeed and you build a business that you hate, is that success? And so for us it was defining like if we're, if we're dramatically successful and we want to do this for a long time, what are the characteristics of the business that we would want to be running? Oh, I think another one was it had to be technically interesting. Technically challenging enough that it would keep our interest for a while. So not a simple crud SaaS app like crud being create, read, update, delete. So we had some criteria like that and then we evaluated ideas against that criteria.

[Omar Khan]

I love that. I think that's such a great way to think about it. You're laying out what you care about, what's important to you, what you think would make sense for a business that you want to be involved with for not just one year, but five years or 10 years, or in your case, 12 years. And I know it's. And it's kind of worked out because I know that you're still excited to get up every day and work on this business most days. Right. And it occurred to me when you were talking about this that sometimes it's not that easy to come up with this list, but it's easy to come up with a list of things you don't want to do. I don't want to do this, I don't want to do that. Well, maybe that's what you start with and then just turn them into positives. It's like, I don't want to work with these type of people. I want to work with these type of people instead. But either way, I think it's great to have a list like this because it gives you something to evaluate this sort of journey that you're on because you're going to see lots of potential opportunities and it's going to be so easy to follow some short term opportunity. And if you can just go say, oh, wait a minute, it doesn't kind of match this list that we put together, it at least lets you question whether that's the right way to go.

[Colin Netacorn]

And I 100% agree that starting with what you don't want is an easier way to get going and then turning it into, well, that means that we should build this type of business.

[Omar Khan]

Yeah, so you heard loud and clear, hey, the analytics thing is not an interesting enough opportunity. How did the sort of, the next idea, how did you come up with that? And then, you know, what kind of validation did you do before you started building the product?

[Colin Netacorn]

So what was interesting at this time was there weren't solutions like ours that existed in the market, but there were. We were starting to see people talking about the pain point that they were having. There was a blog post by this guy, Paul Stamateau, who, and I think the blog post is titled User Retention as a Service. And he was building pikplum at the time and wished it was a photo sharing app, I think. And he wished that something existed that would help him with automating messages to his users in order to retain them and help them be successful in the product. And so we saw that as really strong validation that we were on the right track. And we started to see conversations on Twitter as well where people were saying similar things. And I think that, that, that through having conversations or reaching out with those folks, that's how we started to gain confidence in, in what we were building or at least the need we would serve. And then as we started to build out the product, we, we aggregated the demand that we were aware of and then started talking to those folks to make sure what we were building was going to, was going to meet the needs that they had.

[Omar Khan]

Let's talk about, and I think we should clarify that you and your co founder John, were doing this while you were still working. And then you set yourself a goal of getting a certain number of paying customers before you would go all in with this business. What was that goal?

[Colin Netacorn]

So maybe to back up a little, we decided together that we were working full time at this company and we would see each other every day. So we were talking about these ideas during lunch and then when we realized, hey, I think we have something here, it happened to be right around the end of the year. So we went away for holidays and then came back and we were Both thinking, do we want to go all in on this and take the leap? And so when we came back, we decided yes, we would do that. We told our boss that we were going to be leaving. And so this was like first few days of January and we said that we were going to stay until April 1st. So we had this four month period essentially to get everything in order to leave and then help transition out because we were pretty critical to the organization. Like it was a small company. We were both in senior roles within our disciplines and didn't want to leave with short notice. But it worked out well for us because it gave us time to prepare. And the task we set ourselves out, or we set out for ourselves was to have five paying customers by April 1, by the time that we were full time and we put up, we started talking to people and what we were asking for from them was like put down a credit card and pay us $10 a month. And when I think we started collecting these signups in March, so the product was sort of functional, but barely. And what people were really signing up for was the promise that this thing would solve their problem in the future. And in the meantime we could kind of help them with a sliver of the problem. And what was amazing is I was actually looking back at this and one of those first five customers is still our customer today. And it's wild. It's totally wild.

[Omar Khan]

To me that's some nice retention.

[Colin Netacorn]

Yeah. The person who committed is no longer at that company and probably the two people after them are probably no longer there. They moved on to other things. But we're still doing a good enough job for them and we're a critical part of their product that it's amazing that they're still with us.

[Omar Khan]

So basically your goal was if we can get to $50 a month or $50 MRR, we're going to go do this thing.

[Colin Netacorn]

Sounds too low and it absolutely was too low from a. How do we replace our income from our, from our full time job with our startup revenue? And it took way longer than we expected to get from 50 to anything meaningful to pay our salaries. But I think again, this is where being totally naive and just taking the plunge was the right move, even though it was totally foolish.

[Omar Khan]

Tell me about that first version of the product. Because you're charging $10 a month, presumably that's because you just want some money, some validation, but you also feel like the product is still sort of a half baked thing. You know, it's we, we have this vision. There's all this stuff that we could be doing, but right now it doesn't do that much. So what did it actually do? The initial version?

[Colin Netacorn]

Yeah. So someone would log into the product and they would click a button that says create a new campaign. They would type into a box to explain what they wanted the campaign to do. And then my co founder would write a MapReduce query which he would sort of look at what data they were sending us because they had done the into the data integration at this point, so they had installed our JavaScript and were sending us data. And then my co founder would look at the data flowing in to figure out could he write a query that would actually do what they wanted to happen. And then I think we could, I don't know even know if we had delays and a sequence of messages at this point. It might have just been one message you could send and then you could. I think we had a simple WYSIWYG editor where you could bold text and stuff like that. But it was very basic at the time. And essentially if the MapReduce query found people who met the conditions, we could trigger a message and you could see sent messages to your customers. So it was functional. But the hard part was really we talked about him being like the wizard behind the curtain to make it actually do the hard stuff.

[Omar Khan]

Yeah. I think they actually call that a Wizard of Oz MVP now. Right. This idea that maybe you coined it and you didn't even know that on you back then. Right. So he was writing custom queries for every time somebody created a campaign and said I want to be able to do this. And if that query didn't exist, he would go and figure out how to write it.

[Colin Netacorn]

Yeah. So Google Invented this thing MapReduce, which sort of is helpful for finding needles in a haystack. And if you remember, one of the things that we were, one of our promises was we could tell you who didn't do something. And so in order to do that, we had to look through the entire history of the data that the customer had sent to us to verify that that particular user didn't do something in order to trigger the message. And he had like a little admin interface where he would type out the queries and then I think, I'm sure he had a way to test it hopefully. And yeah, but we were gating who could sign up for the product. So it wasn't like anyone could sign up on their own. I was talking to every single sign up at this point and setting expectations.

[Omar Khan]

Yeah. And it would have been very easy to not launch until you had all this figured out in the back end. Right. And I think there's a really important lesson here in terms of what you guys did that, you know, we often hear the stuff about being embarrassed about the product and all those things, but really what you did here was you sort of combined some code, some human element, and said, okay, if we can put this together in a manageable way, what's the soonest we can get something out of the door and start testing if people will pay for it? And that's a much more valuable thing to do than spending six months writing more code to find that you couldn't even get five people to sign up.

[Colin Netacorn]

Yes, it's absolutely important to launch when you're still embarrassed by your product. I think the thing that we really focused on was what's the value that customers are trying to get from us? And can we deliver that value to customers without necessarily building the nice ui? Like, what's the way that they can get that? And that enabled us to take shortcuts in some areas of the product. Because the thing we wanted to prove was this stuff actually worked and it helped companies convert more people or retain more people. It actually moved the needle on their business. So I believe we had a sense of a conversion. And one of the promises here, traditional email marketing products at the time, they couldn't tell you if your messages actually did anything in a product. So, you know, you'd be sending these messages and they tell you opens and clicks. Well, we came in and said, look, we're. You're instrumenting your product in order to send these messages. We can tell you if they convert. Like, you don't need to do anything funny. We have all the data. If you want to move this number, we can tell you if it moved. And so that was. That was a big. I think, like, when we could complete the loop, we took the shortest path to demonstrating the value and then later came back to make it so that customers could actually configure their own campaigns. And we had to build our segmentation builder and all of that stuff, but we did it later.

[Omar Khan]

How did you find those first five paying customers, by the way?

[Colin Netacorn]

I was looking back at the list and there were definitely a couple who we knew beforehand who sort of took. Took a bet on us. There's one person I've never met or talked to since then. I think, like, they're. They're in the. We were in New York at the time, and this. There was a. There was a company in the New York, you know, tech ecosystem. They're no longer around, but somehow they found. Found out about us and they, they took a bet. And then, um, yeah, another, another person I've, like, known. I didn't even realize I, I'd known this person for a long time, and I didn't realize they were one of the first five customers. But it's, it was just, I think it was a moment where clearly there was this latent demand for a product like this. And so there was a lot of interest when we said we were working on it, that people, people sort of signed up for, for our list and for updates. And we picked a few people to test the product early with us.

[Omar Khan]

Let's talk about that launch page you created, because you had a page up where you were telling people about your upcoming launch and you were collecting email addresses and then just tell us that story of you meeting Ramit.

[Colin Netacorn]

Yeah, so we had this launch page up and I, I was in, in the background, I'm trying to figure out, okay, we're collecting email addresses, we're getting a little bit of attention. How do we make sure, like, what else do we need to be doing? How do we make this, this thing successful? And a friend of mine introduced me to Ramit Sethi, who's a master marketer. He's incredible. And he runs I will teach you to be rich. I think he has like, Netflix shows now and all this stuff. And so Ramit kindly met us for coffee and, you know, asked us to describe what we're doing and how we. And asked about this, this list that we were building and what we were doing with all these email addresses. And I looked at him, I said, nothing right now. Like, we're going to email them when this launches in six months. And I don't know exactly what he said, but what I took from it was, you guys are idiots.

[Omar Khan]

A polite way of being told that.

[Colin Netacorn]

Yeah, I'm sure he was like, totally polite. And what he said to us was, look, you have all these people who say they're interested in this problem. Find a way to provide value to them before you launch. Otherwise they're not going to remember who you are. You're going to send this one email which says you probably changed your name three times between now and launch. And so they're going to get this weird email from this company they don't recognize that says, hey, we launched. Come sign up and pay us money now. And they're not going to care about you then. And so find a way Find something that they care about and talk to them about it between now and then and build excitement and interest ahead of your launch. And then you're going to have a much, a much better outcome if you do that. And so I scratched my head. I went away from that. I felt sad, probably. And then I scratched my head a little bit and realized that this, I didn't come from an email background. And so the thing that I had no idea how to do was probably something that a lot of our audience was learning as well, which was like conversion copywriting. You're sending these messages in order to get people over some hump, get them back to your product, get them to convert from free to paid, what should those messages say? And that was like this, like, light bulb moment where I realized if I went deep and learned everything I could from all these great copywriters, and then I applied those lessons to email, if they weren't email copywriters, or I learned from email copywriters, I could teach these lessons to our audience while we're building the product, and then we can later sell, you know, we can teach them how to write these messages and then sell them the tool to send the messages. And that was such an amazing piece of advice that we got, which I think tremendously helped us get off the ground.

[Omar Khan]

I think that's a really good example, and I think you were very fortunate to get that feedback then. One of the things that I've often had founders talk about is I'm not an expert in this market. What could I possibly write about or teach my target customers? And number one, what you did was you found a problem, a need, and said, okay, I'm going to focus on helping them with this. Because their goal wasn't to be able to send emails. Their goal was to be able to change some kind of behavior or persuade people to do something, as you said. So that's really the kind of the core of what they wanted to do. And then, you know, kind of just, I'll kind of give credit to a couple of, like, online sort of digital writers that I follow, like Dickie Bush and Nicholas Cole. And one of the things I learned from these guys was you can either be an expert, somebody who's gone out and done something, and then you're sharing that experience of this is how I do something, or, you know, did something or whatever, or you can be a curator where you're just saying either you're sharing resources or you're saying, look, I'm not the expert, but I'm Learning and I'm sharing what I'm learning with you. And if you position it that way, it's easier to do that because you don't feel like a fraud or I'm not an expert because you're not pretending to be one. You're just there and saying, I learned something useful and I'm sharing this with you because it might help you too. And it sounds like that's exactly what you were doing.

[Colin Netacorn]

Yeah. And I think that's, that's a really, really good nuanced take on it. I think I felt really uncomfortable to go and say, hey, you should listen to me, I know everything. When I really felt like I didn't. But I was sharing the lessons that I learned along the way. And I think the key thing for people who are nervous about starting that is you don't need to be an expert, but I think it's important to be honest about that. You're not an expert and you just need to be smarter than the people you're sharing and digesting this information for. Right. Or more knowledgeable about it. And most people are not going to spend an hour to go deep on a topic, but if you spend an hour, two hours on something and then synthesize it into a 30 second tweet. Right. Like people really value the curation and the digestion of information.

[Omar Khan]

Definitely. I think I follow a lot of people who are exactly in that position where they're not pretending to be experts, they're just sharing what they're learning on the journey. But it's super helpful, you know, and just to be able to follow that and some for somebody to just give it to you in a digestible way. Let's talk about another growth strategy that helped you, which was finding people online. You know, we often say, you know, figure out where your customers hang out and go, go there. And often it's, it's communities or it could be Reddit or, you know, Facebook groups or something like that. Where did you find some of these people and how did you kind of get on the radar or get their attention?

[Colin Netacorn]

So I mentioned that we were fortunate in that there were people talking about this problem online. And I ended up setting up alerts for terms like user retention or lifecycle emails. And one of the most amazing superpowers you can have is saying that you're not selling someone something and even going a step further saying, I can't sell you anything, I have nothing to sell you. And so I would reach out to people and say, hey, my co founder and I are working on this problem that you're talking about. I would love to understand what an amazing solution would look like to you. I can't sell you anything right now. I have nothing to sell you. Would you be willing to talk to me? And the difference between I'm trying to sell you something, would you be willing to talk to me? And I have nothing to sell you. Would you be willing to talk to me? Is tremendous. Like, you will get a much higher success rate of people responding when you have nothing to sell them. And then you make a good impression. They're on your list. They want to know when you've solved their problem. And then. So you then have this other opportunity to reach out when you in the future have something to sell them. But you have this tiny window of when you start working where you can actually say that and be honest about it. And it's amazing how disarming it is for folks.

[Omar Khan]

I love that. I've often said to founders in that situation, be clear that you're not selling anything right now because, you know, maybe you don't have a product. But I love the way you put it, which was, I can sell you anything even if I wanted to. Right. And I think it's like a lot of us, you know, if you get an email like that, you want to help people in that situation. Right. It's just like people are sort of showing a bit of vulnerability and it's like, you know, I should. I should do something.

[Colin Netacorn]

But. But it's not even. I mean, I get a lot of emails like, I'm a student, so. And so. And I'm doing. I'm compiling this data on SAS or what, whatever. I don't respond to those because I don't have, like, they're not. So, you know, they're not in a position. I don't have time to respond to all of those. But, like, I think the. My point is it's like so aligned, right? Someone's said they have a problem, you're coming along and you're saying, I can't. I'm not going to, like, be sneaky and try to sell you something, but I care about the fact that you have this problem. I want to hear you, I want to hear about it. I want to know what you have to say. I want to know the pain you're feeling, because I'm going to work on solving that pain. But I don't have anything right now.

[Omar Khan]

Yeah, yeah, that's a great way to put it. Okay. In terms of growth, the other thing you tried to do was ads spending money on them. That didn't work out too well, which I think sometimes it's just found as maybe in a position where they don't really know the nuances of, you know, how to. How to run paid ads. But for you, I think it was. It was a bigger problem than that, right?

[Colin Netacorn]

Yeah, I mean, I think so. I definitely hadn't. Hadn't run a ton of paid ads before. Got a little bit of coaching from people who were more experienced than me. But what I ran into in our space, and every space is going to be different. In our particular space, the prospective buyers of our product, like, we didn't have a vocabulary yet. And the words that we were using, like segmentation or triggered messages or even like, you know, email marketing is such a broad category that the. It was inefficient spent for us to buy ads for any of those, you know, any of those terms because the people were not or didn't know what to search for at this point in time. I think the market is more defined and we have an ad program now that's pretty effective. But in the very early days, all of our spend ended up attracting really people who are not the right buyer for our product at that time. So we ended up. We ended up turning it off.

[Omar Khan]

Did you spend a lot of money?

[Colin Netacorn]

It's probably a lot of money at the time. I would say it's in, you know, in. In the thousands a month, but not, you know, not in the hundreds. Yeah, not in the hundreds of thousands a year at that point.

[Omar Khan]

It's interesting. It's just I really come across someone who says, you know, ads. I got ads working in, in those early days, but I'm sure there's something there.

[Colin Netacorn]

Yeah, I mean, I think if you're selling a product that's on Instagram and you have these paid Instagram ads, and I think for us, the thing was there was this education step, and what we didn't figure out until later is that you get that initial interest and you've got to educate the person before they're ready to buy. Otherwise they don't know what they're buying, they don't know what product they're signing up to try. And they're sort of. If they make it into the trial, they're confused. Whereas I think, yeah, there's so many things that I buy on Instagram where I'm like, that looks amazing. This ad is like, awesome. I want to buy that thing and I go do it. Our product is not one of those.

[Omar Khan]

Yeah, yeah. Okay. I would love to keep talking, but we're going to wrap up, so let's move on to our lightning round. I've got seven quick fire questions for you. Just try to answer them as quickly as you can.

[Colin Netacorn]

Okay.

[Omar Khan]

What's one of the best pieces of business advice you've received?

[Colin Netacorn]

Yeah, so this is. This is from Chris Savage, the CEO of Wistia. When we were really early on, there was this. I was really frustrated because we were running out of money and was stressing about fundraising. And so he. He posed the question to me, do you need more time or do you need more money? And as I thought about it like, the answer was time. I didn't actually need money. I needed the. I needed to extend our Runway so that my co founder and I could figure out the business and figure out the product and get. Get further along. And so I think in the earliest stages, your job as a. As a founder is to figure out, like, do you actually need money or do you need more time? Because there's creative ways to solve for the time thing, but the money thing, if you raise too much money, you actually shorten the amount of time you have to figure it out.

[Omar Khan]

Chris is actually one of my OGs. He was a guest on episode 15 almost 10 years ago when I had no audience, and he still agreed to come on and be a guest. So I'll always be grateful to him and those other people. What book would you recommend to our audience and why?

[Colin Netacorn]

So there's a book, Turn the Ship around by El David Marquette. It's a really great read, but we have taken the idea, unless I hear differently, which is talked about in that book, and it's a great way to empower folks in your company to bias toward action. So something's going to happen unless I hear differently.

[Omar Khan]

What's one attribute or characteristic in your mind of a successful founder?

[Colin Netacorn]

Perseverance. You got to be able to survive long enough. If you can survive, you can probably build a good business.

[Omar Khan]

What's your favorite personal productivity tool or habit?

[Colin Netacorn]

Piece of paper. I've tried all the productivity software, all of the promises it makes, but I find that when I'm super stressed and I declare bankruptcy on what's on my to do list, I just take a piece of paper and I scribble it all down, and then I get to check it off, and I feel that sense of accomplishment.

[Omar Khan]

I'm so digital, but there's something so magical about paper. I'll never stop doing that. Yeah, totally. With you what's a new or crazy business idea you'd love to pursue if you had the time?

[Colin Netacorn]

So we probably don't have enough time to get deep into talking about it, but I love like all of, I would love to solve all of these systems that people have in their homes and make them like one unified thing rather than all of these disparate systems that all kind of fight against each other and don't really work together.

[Omar Khan]

What's an interesting or fun fact about you that most people don't know?

[Colin Netacorn]

When I was in my late 20s, I rode my bicycle from San Francisco to Boston.

[Omar Khan]

Wow. How long did that take?

[Colin Netacorn]

It's like 57 days of writing. It's a long way.

[Omar Khan]

Yeah. And finally, what's one of your most important passions outside of your work?

[Colin Netacorn]

Yes, we started with food. Let's maybe end with food. So I love food and I just appreciate how much goes into making food good. And so I live in Portland, Oregon and we've got some incredible food options to eat out and I love learning to cook dishes at home as well.

[Omar Khan]

Awesome. Colin, thank you so much for joining me. It's been a pleasure. It was nice to pick your brain and sort of unpack some of those early days and how you went from basically an idea to another idea to a seven figure business. And then, you know, there's a whole story that we haven't uncovered yet in terms of what happened beyond that. But I appreciate you making the time to join me. If people want to check out Customer IO, they can go to customer. And if folks want to get in touch with you, what's the best way for them to do that?

[Colin Netacorn]

I'm Alpha Colin on X which that never feels right to say it or you can just email me. Colin, customer IO.

[Omar Khan]

Awesome. Thank you so much. I appreciate the time. I wish you and the team the best of success.

[Colin Netacorn]

Thanks so much, Omer.

[Omar Khan]

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