[04:30] So for folks who don’t know who you are, let’s start with where are you, and who are you, and what is your company? What does your company do?
- I’m right now in Moscow. I’m the CEO of JivoChat. It’s a business messenger tool that helps you to communicate with customers and inside your team. You can connect all possible channels to the messenger—so your phone, your email, your live chat widget on your sites, your Facebook account, and all other possible ways of communicating with your customers—and optimize the ways you handle your sales, support processes to really help to increase conversions. A lot of our customers are e-commerces, and we help them to talk to their clients.
[05:21] Okay. So, in a nutshell, the problem that you’re solving for your customers is a way for them to communicate with your customers, regardless of what channel they’re reaching out to you.
- Yes. Nowadays, a new channel appears every half a year. So all the big guys are opening their APIs—Facebook, Instagram, WhatsApp, Apple Business Chat. And customers expect to see your company everywhere they are, and that’s also different country-by-country. So they talk to their friends on messengers, they expect businesses to acquire messengers as well. And we help to handle all that.
[06:13] And when did you start the company?
- It was January 2012. Eight years.
[06:19] What size, at eight years old, what size are you today? Either revenue or a number of customers, employees—whatever way you want to answer that.
- We have 130 people on our team.
- Yep. 37,000 paid customers, about 280,000 users. 280,000 websites use our live chat widget, for example. Last year, we made about $7 million and, hopefully, growing.
[06:54] Okay, so you’ve already been quite successful, and yet you still have lofty goals ahead of you. So what I’d like to do for my audience in the remainder of this interview is we’re going to talk a lot about kind of how you got to where you are so that they can be taking notes like mad and hopefully implementing the things that you’re sharing in their own business. So did you raise any money by the way, or did you bootstrap it?
- No. I’ve bootstrapped, and that’s something… I had a predisposition towards investors from the beginning. I had an experience with my previous company, I started with an investor, and I didn’t really like how it turned out. I didn’t like the feeling of somebody keeping control of things. And I didn’t like the idea of raising, of needing to raise more money from him to dilute my share even further. So when we led the company with my partner, we tried to do everything to keep investors away.
[07:55] Okay, and you succeeded in that, so it’s just you and your partner?
- Yes, now it’s just me and my partner.
[08:02] Okay. All right. So let’s talk, early on, when the product had just really come out of alpha or beta, whatever you’d like to call it, and you were ready for your very, very early customers you needed to get. You know, probably a couple hundred people using the platform so that you could get feedback. How did you get those early adopters?
- I think I started with opening my phonebook and calling friends who had e-commerce businesses, and I was giving them an offer to use our software for free. And I was hoping to get additional word out that now we can use JivoChat to talk with customers on websites. Then, we went through all possible guerilla marketing techniques. We spammed forums where web developers were discussing their coding stuff, we went to conferences and were approaching partners there, we went to marketing agencies and offered them affiliate revenue share. Well, we did anything that we could do without spending, investing money in marketing, because, well, quite frankly, we didn’t have any money. We didn’t have money to run Google ads, to rent an office, and try to be cash positive as soon as possible.
[09:30] So if you had it to do again and you had some money, would you still invest your time early on in activities that really didn’t scale very well and were highly labor-intensive? Or, if you had some money, do you think, “Oh, heck, I’m just going to run some ads on Facebook,” or “I’m going to do some cold email outreach,” or some other type of method that does scale a little bit or a lot better than what you were doing early on?
- Well, time’s are changing. And I don’t think that things that worked eight years ago will work now in the same situation. Because back then, I remember that even the Google ads were quite cheap in Russia. Now, they [are], I don’t know, three or five times more expensive—clicks are more expensive. I think [it’s the] same as [what is] going on in all markets because as time goes on, competition only gets more tight. So, I’m not sure.
Maybe the window of opportunity is still open, and you can still guerilla marketing your growth in the beginning. But my feeling is that that window is closing. Because, for example, the area where we are, now competitors provide much better products at a much cheaper price than back when we started. And that definitely means that you might have properties for growth hacks that we just don’t.
[11:06] So it’s a bit of a loaded question for me because, you may or may not recall, I also own a SaaS business called Flowster. We didn’t do necessarily any guerilla marketing tactics because I had an audience already, and I had, you know, a way to put eyeballs on it. And in the first year, it really kind of lived off of the Bright Ideas brand. And so we attracted, I don’t know, 500 to 600 paid users and several thousand, almost 4,000 free users. But now we’re getting to the point where we want to make it stand on its own legs, and so things I’m considering are scaled cold email outreach and, of course, ads on Facebook and ads on Google. You’ve sort of been through it, but you did it years ago. To get my next, say, thousand plus paid users, would you be doing something other than what I just described?
- Well, in my business, probably the best decision that we ever made is running with the freemium version of the product and getting the eyeballs by hour, by day, which I’ll link—the three users posted their website—and all other advertising investments were sort of supporting that growth. So even if we saw a negative ROI on some campaigns, if we paid more for Google clicks then we waited revenue, we thought that it would be okay because then all those revenues will be multiplied by this power, by traffic—traffic that comes from those customers.
And for example, when we started in local markets—we were quite successful in countries like Brazil, in Turkey, in Spanish-speaking places in America—at first, we had to invest money in paid advertising to get an initial user base. But then, eventually, in about a year or a year and a half, we are getting growth from that initial user base. Actually, that was word of mouth. And right now, we’re close to being number one live chat video in Brazil, for example, and that’s mostly because of organic traffic.
I guess I can say that we probably could do a better job at things like content marketing, like social media, maybe building communities. And the reason why we’re still growing and have revenue is because we have a very, very effective freemium model working for us. So, I can’t say regarding your product what’s the data there, because at JivoChat, we’re more focused on getting as many free users as possible and then showing them the value of our premium version to convert part of them.
[14:15] Okay. So, if I’ve heard you correctly, the fact that you’ve got a large installed base, you’ve got a little button on there that says powered by JivoChat—that’s driving the bulk of the traffic to your website, correct?
- Yes. I think I made the calculations for 2019, and it was something like 30% of paid users that we got from 2019 came from paid advertising channels, and 70% are organic.
[14:45] Okay, so I’m looking at your homepage now. The top half is green—“Stand out with perfect customer service!” How many iterations… The current version of the homepage—unless you’re running split testing, maybe I’m seeing just one of a number of versions that you have?
- I think there are no tests.
[15:07] Okay, so how long with the current version of the homepage?
- Well, I think we redesigned things once every couple of years. But the page that you’re looking at right now is not the primary generator of our signups. When you click Powered by Jivochat link, you’ll probably get another page, and that’s where most of our signups are coming from. But, yeah, we did do a couple of changes, and we’re in the process of a big, big change right now. We’re sort of piloting our positioning.
So JivoChat will be a bit more than about communications; we will help our customers to facilitate sales and support processes by a CRM system integrated in our messenger. So you will be able to do follow-ups, set reminders, monitor funnel statuses of the customers looking at the CRM reports, assigning leads to your sales or support team. Because what we noticed is, a lot of our customers do not have [the] right tools for that, they are already too big to use Excel or email inbox for that, but not too big yet to implement a proper CRM solution. That’s why we are making products for that niche.
[16:52] Okay, so if I was to click the Powered by JivoChat link, what page would that take me to, and is that easy for us to get to? Because I want to ask you some questions.
- Well, I think since you already entered the main page, probably you will not notice a difference. It’s only for people who see live chat on other sites and come to us by clicking the “Powered by…” link. But I can tell you about the front page as you see it.
[17:29] Where I’m going with my line of questioning is, I want to help my audience to be able to have an over-the-shoulder look at kind of what your primary call-to-action is that’s converting well, then I want to talk about what the funnel looks like. So if you can answer the question, without me looking at the page, that’s fine. So if someone clicks that link, they’re going to see this page. What does the call-to-action look like on that page?
- It’s just a sign up button. So if you click the Powered by JivoChat link, it probably means that you already know what you’re looking for. You want the same chat widget for your own site. And we try to get your sign up right away without distracting you with more details. So, the basic idea is that on the front page, you just need to understand what kind of a solution JivoChat is, and you need to start trying it out as soon as possible.
[18:35] And so, when someone, if they enter their email address into your homepage, they’re going to get a freemium version of it, or they’re going to get a limited-time trial? What happens?
- It’s a time trial followed by a limited time-free version. So you have two weeks to try out the premium version, and then you get switched to the free version.
[18:56] Okay. Now, in a company with the number of employees that you have, I’m guessing you probably did not write the welcome series in the emails. But do you know off the top of your head kind of what that funnel looks like and what some of the messaging is?
- Well, the funny thing [is] that I’m still writing some of the emails. You can call me paranoid, but I cannot delegate some things in my company, and writing messages is one of those things. I still write most of the interface messages on the buttons, on the home screens. Just today, I was rewriting some of the interfaces, new features. I don’t know why… I don’t like what other guys are doing here, and I always found that about every letter on those messages. So, I don’t know. Maybe it’s…
[19:51] I think that you can make a case for doing that. It’s a very high-value activity that does not require an immense amount of repeatable labor; therefore, the ROI on your time is very, very high. That’s a pretty good reason to be doing it.
- I need to write that down.
[20:10] You can just watch it again, just play this portion for your staff.
- You just made me feel better about myself, thank you.
[20:20] No problem. Okay, so…
- Yes, I can tell you about our email funnel, how it works. So after the signup, you get three or four letters telling about different features that we want to get you using. So, during the 14 days trial, our first goal is to get you using the product. So we remind you if you don’t install the code on your site. We remind you if you don’t download and install the app on your computer, if you don’t have that app on your phone. We try to get you to that a-ha moment, same as most of SaaS businesses. And on the 14th day, we get usually a peak of payments. Well, that’s predictable. And I believe if you have activity on your account, and you installed the widgets, you downloaded the app, you have some chats with customers, probably five or seven days before expiration of the trial period, you will get a call or a message from our sales team.
[21:36] I wanted to make sure that we talk about this because I remember particularly when you and I did the pre-interview, I was blown away by when you sent me that graph that showed your growth rate before you created the sales team and then what happened to it after. So let’s dive deep into that because I think that’s an area where we could give a lot of value to the audience.
[21:58] So you didn’t use to have an inside sales team?
- Yes. For the first couple of years, we didn’t have a sales team.
[22:04] Yeah. You were growing at, we’ll call it—for people who are watching this on YouTube—you know, you were growing at a certain slope, which was decent, but wasn’t incredible. And then, you decided to put an inside sales team in place, and it had a profound impact on your growth rate. So let’s unpack all of that.
- Yes, that’s true. So it was August 2013, I think, or ‘14…13. Yeah, we were working with the trigger emails and the interface banners that were promoting the value of paid version. And then I was under the impression that we cannot afford a sales team, because our product is so cheap—the license is only $19—and we have a majority of free users. I was thinking that we will not be able to cover the cost of an inside sales team.
But then I decided to run an experiment. So we got a team of six people, I think, at the beginning, who were calling only prospective accounts. So we were sorting them by some metrics, like number of visitors on their sites, number of chats, number of agent accounts that they had with our system. And, yes, what we noticed is that the speed of growth of paid accounts has doubled since then.
[23:36] Don’t lose your train of thought—but you said you called them. Were you getting the phone number in the often?
- Yes, we ask people to leave their phone number during the sign-up process, but only about half of them actually give their phone number. We didn’t make it a mandatory question. So for the rest of the customers, our sales guys, they just go to the websites of our customers and get phone numbers from there. So they have a technique of reaching customers, not a beginner.
[24:10] Because you’re gonna look at the domain name. Yeah. Okay, straightforward. Okay, so this experiment—you’d never built an inside sales team before—so you have this idea, “Hey, I want to try this.” So, you’re obviously dealing with probably somewhat limited resources at that point in time. So it’s not like you want to go below, you know, a hundred or $200,000.
[24:36] Because that would have been a big deal. So how did you do it? How did you solve this problem in a way that the level of risk was something you could stomach with a budget you could afford?
- Well, I hired the guy who had experience building those teams. Actually, I didn’t hire him, because I couldn’t afford him at the time. I just asked him to build it for me as a project. So, he came for four or five months. And our agreement was that he will get a bonus based as a percentage of an increased growth that the sales team will provide. So, we extrapolated the line of growth that I showed you on the graph. So if we continue growing linearly the revenue over the four months will be the following. And he will get, I don’t remember the exact number, but let’s say 20% of our profit over that number. And, yes, it worked out so that decreased the risk for me.
[25:49] So let me get into some details on that. So did you have to pay him… You must have had to pay him some kind of upfront fee or retainer or whatever during the four or five months? I don’t imagine he did it all on a performance basis.
- Yes, but it was not substantial because the guy was more or less sure about the outcome. So, he agreed to, I think it was about 30% fixed, 70% bonus at the end.
[26:14] Okay, and you make a good point. I mean, if he’s done this before and he’s seen the results before, he knows what’s coming his way in terms of a payday. How long did you agree to pay him the performance aspect of it after his project was done?
- There was no such period. So he received a bonus for those four or five months that we agreed upon.
[26:41] Okay. So you engaged, you signed a contract, you say, “Okay, you know, we start. Today’s day one.” He had to then go out and recruit and train, you know, I think you said a half a dozen inside sales people. They were not employees at this point in time. He had to go and find them.
- No, no. I hired them as employees of the company.
[27:00] Yeah, but they were new. It’s not like they were in some other role.
- Yes. They were new people.
[27:06] So how long did it take him to get these six people sort of, relatively speaking, up to speed so they were producing some measurable results. Did that all happen within the first 30 days?
- Well, actually, yes. I was surprised that it didn’t take quite a long time. The thing is that, at first, that guy started working in the sales process himself. He figured out the tactics, you know, that the guys need to use, and then he just taught them tactics. He gave them exact scripts, how do they reach guys that make decisions, how do they present the product to them, how do they solve problems that the guys might have, how do they give them the proof of value of our product. So he more or less showed them an example, a model [on] how to work. And that’s probably why it took not so long before the guys started.
[28:14] Okay. So maybe he did the role for a couple of weeks and long enough for an experienced person.
[28:20] “Alright. I’ve got this figured out. I know what scripts and processes I need.” [He] created some documentation, started to train everybody else, and then so for the next, you know, the second month, third month, fourth month, he is basically managing the process. The reps are doing all the calls, you’re getting results, you’re happy. He’s getting performance compensation, he’s happy. And did you end up hiring him full-time afterwards? Or did you, when the contract was done, did he say “Thanks very much. See you later?”
- No, actually, I did. Another thing that retrospectively probably [was] not the right move, I suggested him to start a new business together.
[29:03] To start a business with him?
[29:05] Different from JivoChat?
- Yes. Because I thought that he’s ambitious or too high to work in the team that he just created. You know, that he wanted more. And I suggested him to find a business idea that was around JivoChat, a business, a SaaS tool that can be sold to customers who use JivoChat, but to create it as a separate business. It didn’t turn out quite well, so we made some couple of hundred paid customers at the tool that he created. He made a tool for recovering abandoned carts at the e-commerce websites. But it was a valuable experience anyway; so you don’t have to do investments.
[30:05] I was gonna say, so he served his role very, very well in the initial project. The secondary project wasn’t a success, but that was neither here nor there in the grand scheme of things because now you’ve got an inside sales team. Who manages the inside sales team now? Did you end up promoting one of the people on the team to be the manager? Did you hire somebody else? Or how does that work?
- Well, back then, yes, that’s how it went. So I promoted one of the managers on the team to be the team leader of the sales team. Now I have two team leaders. I have separate teams for new sales and for recurring sales with different compensation models. Historically, initially, we had one separate team, then we splitted them into two teams, then we went back to having one team, but now we’re back to having two separate teams. Because, in the end, it turned out to be hard to combine compensations for new sales and recurring sales.
[31:09] You have customers all around the world. So I’m guessing you also have your sales team dispersed around the world because countries, languages, cultures, and so forth.
[31:21] Let’s talk about the sales team for new customers. I’m interested in what their compensation structure looks like. So what can you tell me about that?
- Ah, that’s a good question. That’s quite a tricky formula. So the basic of the formula are three coefficients. You know, we call them K1, K2, and K3. So, one of them is the conversion rate from leads that were assigned to a manager. So conversion by the number of assigned leads converted to paid users. So you get 200 leads per month, you convert 30 of them, it’s a 15% conversion rate. So, next one is the conversion rate in dollars. How much money do you make on one lead assigned to you? So, for example, if you get 200 leads per month, and you make, I don’t know, 100k dollars out of those 200 leads, that’s your revenue per lead. And, second one is the conversion rate by the number of agent licenses. So, at JivoChat, we sell software number of seats for the agents that you want to use for supporting your customers. And third conversion is, what is the average number of seats that you sell to the customer?
[33:02] Is that different than conversion rate by paid number of agent licenses?
- The first conversion is not by number of agents licenses but the number of licenses, number of customers converted to pay.
[33:17] Okay, so I want to make sure I understood that, because I got four here. So clearly I’ve misunderstood something. You said the first performance that they were measured against was leads converted to sales.
[33:29] 200 leads, how many sales did you make? The second one was how many dollars per lead did you generate?
[33:38] And the third one, is it simply average number of seats sold to…?
- And for each of those coefficients, we have a scale. So, if you make, for example, 80% conversion and also 20% conversion on number of leads, or you get, I don’t remember what’s the amount, like $20 per assigned lead, then your salary is relatively high. So each coefficient translates to a number, to a bonus number like 1, 2, or 3. And then we add them up and multiply by base bonus. So, for example, in case you get all bonuses correctly, your salary is very high—so it’s twice what’s the average of the market. If the conversions drop, then the salary drops very fast.
So there are steep steps from one. For example, if you get 20% conversion, you have a very high salary. If you got 19.5, it drops. It drops dramatically, like 50% or 30%. So, that was the idea that we came to, that linear dependence between sales performance and the bonus is wrong probably for the teams. You need to get to introduce steep steps when calculating bonuses.
[35:37] Okay, so if I was to summarize that, and I want to clarify one thing. You’ve mentioned the word salary, but it’s not actually salary. It’s total compensation.
[35:48] Is there a fixed base salary involved here? Or is their compensation only dependent upon their performance?
- Alright, well, that’s the tricky part. There is a fixed item in the formula, but also, there is a minimum salary that they will get even if the formula gives less amount.
[36:11] Okay. So what you’ve essentially accomplished with this comp plan is your superstars make a lot of money, and everybody else pretty much just starves out of your organization.
- Well, I would say that everyone starves. The guys like the bottom 20%, they starve, yes. And that was eggy.
[36:37] Yeah. You can get rid of them.
- If you don’t perform, then you get an uncomfortable salary. So we don’t have to get rid of you, you will leave yourself. But, yes, the top guys who performed very good, they get twice what they can get on the market.
[36:54] Okay, makes perfect sense. Alright, let’s talk a little bit about, just looking at the questions we went through in the pre-interview, talking about your company culture. So you’re a remote organization. So that means the employees are not hanging out in the lunchroom; they’re not gathering around the water cooler. And I guess these days we’re recording this April 2nd in the middle of COVID-19, and a lot of organizations have just become remote organizations against their will.
[37:21] If so, what have you done to create a culture that works to allow your organization to thrive, which is obviously done with the fact that everyone’s just spread out, probably working out of their houses spread around the world?
- Yeah, that’s a good question. To be honest, I would really love to know the answer myself. What did we do right? Why did this work out? I don’t have a clear answer for that. Probably, initially, we had just the idea that we don’t have to be in the same room to be effective. So we just did what we had to do. We hired guys and gave them interesting jobs and didn’t stay in their ways to do what they’re doing. Probably, what we did, we put a lot of trust. The guys that we hired, because to be honest, in the beginning, it was scary. To hire a guy, to pay him salary, to sign a contract with him while not seeing him at all and not knowing him. So, yeah, that was a huge leap of faith in the beginning. But then we just got comfortable with that, and it turns out to be mutual. So when the guys saw that we trust them, they begin to trust us and to see that being part of our company is something they enjoy.
So, actually, what [the] guys told me is that I was hiring everyone myself at the beginning. So when I sent emails like, “Hey, my name is Tim from JivoChat. Please join our company. We don’t have an office, so you have to work from home.” They were suspicious because eight years ago, remote work wasn’t something that was common. Right now, most of the guys that we hire, they come to us looking for remote job specifically. So it changed. Guys love the fact that they can go to Bali for the winter, for example. Some of our programmers do that. So, yes, I think we didn’t do something special to make it work. We just organized processes for the guys so they have everything they need. But, of course, there were a couple of rules that we had to introduce. For example, we don’t allow calls without video. You have to be looking at the camera while you’re talking to colleagues, even if those are one-on-one calls. You have to lock the door in the room where you’re working, or you have to rent a separate flat or an office where you’re from, and sometimes we pay for those offices for our guys.
[40:18] And that’s reduced, like, kids coming in and distractions.
- Yes, of course, it’s just impossible to work. And it’s funny that a lot of guys don’t understand that—the guys working in the kitchen, the living rooms, with the cats, dogs, and children. That’s wrong. So when we introduced that basic hygiene of working remotely, I don’t remember that things were complicated in any case. Of course, there are some processes that are quite hard to organize when working remotely. For example, sharing experience. Because when you work in the office, you talk with water coolers. You see that the other guys are better than you at something, and you try to learn from them. When you’re working from your own office, you’re the smartest guy in the room, so you don’t even know how do you need to grow and develop. But that’s totally solvable. We just need to introduce special meetings or events for our guys to share experience.
For example, just today, we were giving out bonuses for the past quarter. It’s called the Tech Bonus Program. So programmers get gifts and prizes for giving interesting presentations for the team about technology that they learned, or a problem that they solved, or something interesting to the technical team, and the best presentation gets the bonus.
[42:04] Yeah, actually, that came across my radar screen, something’s very similar. Yesterday, the company talking about having a scholarship fund, and how when employees bring some type of innovation to the company that benefits the company in the long term—they’ve created an automation, or they’ve created a more clever way of doing something, or efficient, or whatever it is—then they get an award out of scholarship fund so that they share the benefit of the company.
- That’s cool. That’s a cool idea.
[42:36] So do you use something like Hubstaff, for example, which is a way of randomly taking screenshots of your employees’ work so that you can sort of see whether they’re being productive or not? Or how do you manage or measure productivity, especially for new employees who you don’t really have that relationship with yet?
- Well, no, we don’t use any remote screen control tools. I think it’s not very productive because they are easy to trick. And if the guys want to, I don’t know, watch Netflix or sit in the kitchen and not working all day long, he will do that, no matter if he’s in the office, if he is at home, so you won’t stop them. The only thing that is reliable in measuring effectiveness is measuring the result. So you just ask guys to show what they’ve done. And actually, when you’re working remotely, it’s even easier to judge the result. Because when the guys are working in the office, they can always feel to the fact that, “Here I am, I’m working from 9 to 6.” When he’s working remotely, he can’t say that. I don’t know where he was the whole day. The only thing he can show me is the result—it’s either there, or it’s not. So I don’t see any problems here, and I don’t see how taking screenshots helps.
[44:10] Yeah, actually, that’s a good point. I think you’re right. If you’ve hired the right person, then you really shouldn’t have to worry about it. Alright. Final question. We talked about compensation. We didn’t really talk about your recruiting strategy for attracting these folks. Are you saying now that you’re at a point where they’re just all kind of reaching out to you because your company in certain spheres has this reputation? But, you know, how do you attract people?
- Well, I would like them to reach out to us because we’re on the radar, but I’m afraid we’re not there yet. So we have to hunt for heads, and actually, the competition for programmer heads is becoming more and more tight. So, nowadays guys right out of college, they asked for insane salaries. Yeah, actually working remotely is one of our wildcards. So that’s, for us, that’s a way to compete with the big tech companies who hunt the best programmers. We say that if you go to JivoChat, you can go to Bali at winter, and actually, that’s working for us.
[45:35] Oh, yeah. For some people, that’s huge for them.
- Yeah. And also working remotely gives us opportunity to hire from any city, in any country. And that’s very important because if we lock ourselves in a certain city or even area, we have like hundred times less choice in potential employees.
[46:01] So because you hire people from all around the globe, in each and every country, there’s going to be different websites, which are popular for posting your job ads on. And you’ve gone and had local people figure out which of those sites you should be using for whatever country you’re trying to hunt from. Where do you post jobs?
- Well, yes. But there’s LinkedIn, and there’s Upwork. So those are our two main sources of candidates.
[46:31] So on LinkedIn, do you post jobs on LinkedIn, or do you literally go and recruit on LinkedIn and find people who are already employed or that’s part of a group?
- Most of the time, we recruit guys directly on LinkedIn. Well, basically, same prep work. I don’t think that posting a job and looking for, waiting for resumes to come is a good strategy for us anywhere. From what I understand, it used to work before, but now, the best guys are hunted even before they started applying for vacations.