SaaS: Hootsuite On It’s 16m Paying Customers, $100m+ ARR and Social Media Marketing

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Ryan Holmes founded Hootsuite in 2008 and has helped it grow into the world’s most widely used social relationship platform, with nearly 15 million users, including more than 800 of the Fortune 1000 companies.

Recognized as an authority on digital transformation, entrepreneurship, and social media, Holmes started his first business in high school. He now applies his experience and expertise to support the startup community and socially conscious ventures.

Holmes first business:

Started first company in grade 10, paintball company on his parents extra property. Made $6000 in one day top line paintball sales in his best day when he was 17 years old.

How does Hootsuite make money?

16,000,000 users use us to connect with their customers on social media. We are a pure SaaS business focused on SMB and 800 of Fortune 1000 use us.

Launched in 2008, why then?

Ryan had an agency after the paintball company in his post-highschool years.

Restaurant company after that which he sold after a few years.

In 2000 launched digital services agency called Invoke. They did services work and built product that scratched his own itch. They grew this agency to $2m in revenue and 30 employees.

In 2008, customers began asking for social media help. They started to scale up this part of the agency and got so big they had to invent their own software to scale their social media services.

Put out a prototype, MVP that took 2 months to build and had immediate traction via word of mouth. First year revenue was $0 in 2008. Today, in 2017 they do well north of $100m in ARR.

How do you decide went shut down low margin agency work and go all in on Software?

in 2008 agency was $2m revenue and 30 employees. That year at beginning only 3 people on Hootsuite. By end of year 7 people were dedicated to Hootsuite. 7 people on 21 person agency team working on $0 revenue product.

Began looking for funding to feed this new healthy basis. First round was $1.6m on a $5 pre money valuation. To date they’ve raised north of $200m.

Why its so smart to launch an agency before SaaS (Minute 10:21)

If you go focus on services and helping lots of clients, someone is going to bring you a billion dollar idea.

Cash Management

A big chunk of their funding was to cash out early investors. Ryan was always focused on building a cash flow positive business, not to play in the consumer space with little opportunity for monetization.

Unit Economics

All of our leads are generated through freemium signups. We get 30,000 signups a day. Very powerful flywheel. We think about our users on a continuum not a hard cohort of self serve vs. enterprise.

We know every time a customer activates a new API integration from our marketplace of 200+ partners, they become way more sticky. Our self serve lifetime value is in the “high hundreds”.

16m paid customers. On average an account gets set up on 2 social accounts, so 32m connected social media profiles.