Should You Call People Customers If They Aren’t Paying You?

Paul Walsh

In Episode #731, Nathan interviews Paul Walsh. He’s the founder and CEO of MetaCert, the world’s most-established security company in team collaboration and messaging services. He’s a holder of a full patent for inept URL security. His first company generated $2.2M in Year 1 and he’s also the owner of a Michelin Star Indian restaurant.

Famous Five:

Time Stamped Show Notes:

  • 01:11 – Nathan introduces Paul to the show
  • 02:03 – Team collaboration and messaging services is only a few years old from a vertical perspective
  • 02:34 – MetaCert’s security is focused on the premise that people are using like apps
  • 02:51 – MetaCert’s security is put right into the service and is very specific in their niche
  • 03:10 – In only takes seconds to install MetaCert
    • 03:20 – Before you open a website, MetaCert checks if it is safe
    • 03:31 – MetaCert has a database of classified URLs
    • 03:34 – If the website is safe, nothing will happen
    • 03:55 – If the website isn’t safe, you’ll receive a notification before the site loads
  • 04:19 – MetaCert has their own security protocols to make sure that their database isn’t compromised
  • 04:31 – MetaCert is probably the only small business that has its own threat intelligence system
  • 04:56 – MetaCert has the biggest database of classified URLs
  • 05:12 – Some of their customers are IBM and UCLA
  • 05:25 – Paul believes that even if a user isn’t a paying one, he should be called a customer
    • 05:35 – “We treat them with the same dignity”
  • 06:04 – MetaCert has a good product market fit
  • 06:15 – Most of MetaCert’s customers have started to pay
  • 06:31 – MetaCert has a great dashboard that has an interface with every link and file shared with the company
  • 07:11 – Less than 5% of the users are paying
  • 07:20 – MetaCert turned down the payment system
  • 07:52 – MetaCert had supported themselves through funding with a total of $2.4M
    • 08:17 – Paul has thought about what series A investors look for
    • 08:34 – It’s difficult for a SaaS B2B business to decide on the conversion metric
    • 09:04 – MetaCert has been monitoring data
    • 09:36 – MetaCert is installed in every channel for every customer—which is a privacy risk, but customers still do it
    • 10:08 – A big company won’t just install a free product
    • 10:15 – Paul has talked with their customers and ask their feedback on MetaCert
  • 10:59 – Every customer that installed MetaCert has looked into the pricing
    • 11:17 – There’s an expectation of paying after the 7-day trial
  • 11:28 – MetaCert is a SaaS model
  • 11:30 – Pricing starts at $1.50 per user per month
    • 12:11 – The average customer is a company with 350 users
    • 12:25 – $500-600 per month is the average starting point per company
  • 12:38 – Around 1200 customers have installed MetaCert through Slack and Hipchat
    • 12:44 – With zero inbound and outbound marketing
    • 13:00 – Most traffic comes from Slack and Hipchat
    • 13:14 – MetaCert didn’t negotiate with Slack and Hipchat
    • 13:21 – Hipchat has blogged about MetaCert
  • 14:43 – There’s a lot of people who don’t care about security, but there are those who still do
  • 15:04 – Most IT people are more concerned about insider threats than external hacks
  • 15:50 – Paul turned on their revenue for a number of reasons
  • 16:30 – Moving from customers to users
  • 16:57 – Building the platform took Paul a significant amount of years with continued tweaking
  • 17:10 – Paul’s reason why he didn’t turn on the revenue initially
  • 17:46 – Paul has built a great relationship with their customers
  • 17:51 – A lot of security companies are using MetaCert
  • 18:09 – Nathan wants to understand how Paul can build a big business out of MetaCert
  • 19:08 – Paul believes that before charging their customers, there should be a product fit which Nathan disagrees
  • 21:15 – Paul defines product fit
  • 22:50 – The market opportunity
  • 23:18 – MetaCert has become the most-established in the space
  • 23:39 – MetaCert has all the right tools in place
  • 24:43 – “You just don’t jump to revenue”
  • 25:00 – Nathan has seen some of the most successful B2B SaaS business that had prepay, then get validation for the business
  • 26:14 – Paul, on the other hand, believes that it’s rare for a customer to agree to prepay without trying a product
  • 28:12 – The Famous Five

3 Key Points:

  1. The definition of users and customers won’t always be the same for each company.
  2. Knowing your product fit before charging customers will help your customers see the value of your product right away.
  3. Being secure online has becoming a necessity to many because there are more inside threats.

Resources Mentioned:

  • The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
  • GetLatka – Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
  • Klipfolio – Track your business performance across all departments for FREE
  • Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
  • Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
  • Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
  • Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
  • Show Notes provided by Mallard Creatives