Startup pivot

How Slidebean shifted from targeting millions of users into being a profitable startup

Tl;dr: How Slidebean made a startup pivot to becoming profitable. Moving to premium pricing and discovering their customer base. How they work on maintaining culture. 

Slidebean graduated 500 Startups with a grand vision of millions of users. They raised a convertible note and set off on their path to conquer the world as all Silicon Valley startups do. Adoption was a rude awakening and Caya, the founder, had to make a decision. On the one hand, he could keep working on the path to the vision he sold investors initially, on the other he could pivot to becoming a profitable company.

This fork in the road is a challenge all CEOs of startups may have to take one day. On the one hand, you feel you have to live up to the hype, on the other, you have to be realistic. Is building a profitable company really so bad? There are a lot of people’s jobs relying on your decision.

I’ve known Caya for a while and love talking to smart founders. I organized an interview to talk about his frank experience in making the pivot to becoming profitable. In it he openly shares his learnings, his metrics, and all. Here’s a summary of our conversation if you want to skip the video.

In the early days, Slidebean was all about scale. Get customers, who care who they are. Just get them in the funnel. Only that’s myopic. It’s not how you build a SaaS company. You have to focus. But it took some time to learn.

Slidebean started out charging $5 per month. The conversion rate from trial to paid with their bargain basement-priced product was 1%. It would cost $20/30 per paying user meaning it would take 6 months to cover the CAC under that pricing. A payback period under 12 months is normally great, but not always.

Caya had pressure from investors to turn the product into a premium product, to the point it was almost more expensive than PowerPoint. Caya laughs about those times.

But what price should they set?

Setting their pricing was less than scientific. They tested the product from $79 per month, all the way down to $96 per year. Where they ended up was only offering annual contracts with no monthly offering. Caya’s logic is that if you have the pressure of a monthly product, customers will try to extract value and churn out at the end of their period without understanding the value to them. He figured clients need to stick and the best way was to get them into annual contracts. These are also great for cash flow management. Their ideal customers are the ones that want to make regular presentations, only he had to find them now.

Slidebean initially started by marketing very broadly to find their ideal customer persona. They identified other startup companies were their ideal target market. To date, over 20,000 startup pitch decks have been built on Slidebean so far.

They learned that trying to cater to everyone was a terrible idea. Marketing was just too hard as generic keywords did not work for them. They figured out their clients were startups and then doubled down on them.

Slidebean started with a focus on a niche of startups. Now that they want to expand, the focus now is on building reach to more types of startups. This is an example of developing a clear customer persona and then adding more ones.

Their next focus is on marketing agencies. Caya realized they had built content that they found interesting. These clients appreciate quality but don’t have the time to build presentations constantly which fits the value Slidesbean’s product adds. Currently, 20% are marketing consultants.

Now returning to the troubles Slidebean faced, the hardest realization was that if they don’t start charging more money now they will simply go out of business. Caya initially bet on getting millions of users with the raise they did and pivoted in time to change to being focused and profitable. In the meantime, they had other competitors at the same time who did not make the startup pivot and are now in the dead pool.

In pivoting, there weren’t actually large changes to the team. The largest change was their focus on changing their experiments for marketing as they focused on a specific customer avatar.

Caya is a huge fan of testing things and seeing what works. Of course, not everything did. They spent $20k in a month on sponsoring podcasts which didn’t work at all! Caya’s logic is that they sell a very visual product and podcasting is audio-based so they can’t imagine the product. Podcasting sponsorship didn’t convert to purchase so was promptly taken round the back of the shed and shot.

What did work was Google Ads, specifically by targeting people looking for pitch decks. Acquiring people with the keyword wasn’t cheap. They would acquire people for around $100, but with their new annual pricing, they would be able to profitably be able to make it back.

As they tested more Adwords, they understood the keywords that worked and those that didn’t and sought to convert that SEM into SEO, initially focusing on the word pitch deck. To rank, they spent $100k in a year. Yes, they spent $100k getting backlinks and making content to rank for that word.

What they discovered is that if they drove words to their articles, readers didn’t bounce and went on to read other articles. As a result, Google would rank their site better. After a few months, they noticed that their rankings improved. SEO has now become its largest engine of growth with 350k organic hits per month.

How to go forward with their strategy isn’t entirely clear. The word pitch deck worked for them well as there are 30k per month in the USA, but it is less in other countries. They haven’t figured out what the term is that people use in other countries.

A focus on their product wasn’t their focus at the start. It was in fact marketing. Most of their investment went into growth to understand their customers. They didn’t scale the product team at all, with only 2/3 product people as they moved from $1k MRR to $50k MRR. It was only when they passed $50k MRR that they added more to the team. They currently have 5 FTE developers on the team.

The largest product change they have made is applying AI to slide design. It took them 6 months to build with total focus. They halted all other activities such as bug fixes to build this new engine to. It was a risky strategic decision that they took.

Building products is expensive so Caya has looked at the best way to build products at a lower cost. Dev teams in the USA are so expensive you simply have to go remote. Caya is not a big fan of remote work but has seen it work. He believes there is an intangible value of having people in the same office to collaborate. They have most of their team in Costa Rica where they can hire people for a fraction of the cost as well as having the ability to interact more. They have 20 people in the office in Costa Rica, but Caya tries to be close to his market spending once a month in New York.

The startup pivot wasn’t easy. Communicating the move from a freemium to the paid product was a change, for sure. They had to let go of a few people, something he didn’t take lightly. Caya has always been transparent with the team about how much revenue they make, the reasoning behind decisions to hire people, and to expand budgets. For example, communicated that if within 6 months Slideban didn’t get the results they needed, they be in trouble. It was one of the toughest times for the company and he didn’t keep it to himself.

Culture is important to Caya. One interesting move he did was around building a strong culture. They promoted one person to a “vibe manager”. This person wasn’t a founder, but had very close links to the team and understood the culture. They would work as a bridge between founders and the team members they wanted to keep happy and productive.

The vibe manager is a part-time position. Half her time is on marketing for video production and half is on vibe management. She does one on ones once a month with the team. Caya believes it is different when you have one on one with your boss and another when you are with someone whose job it is to keep the office environment happy. She does some office management work such as running happy hours and events to keep things fun.

Every role in a company must be accountable. The vibe manager has KPIs with some happiness metrics they track on an anonymized, monthly basis. The survey includes questions such as how much pressure they are under, whether they are comfortable with jobs, and the like. She is not just focused on sharing problems though, she is tasked to come up with ideas as solutions. An example could be that management comes up with ideas that staff hate, but don’t have the guts to tell management. She will decide if it is worth it to bring up, making a change, or if the staff is just being whiney. I find that funny!

In hindsight, the wisest decision Slideban made was a switch to premium given the landscape. They realized they were too late to become a Prezzi who was the first web-based PowerPoint competitor to compete against Microsoft, as they started in 2007. Caya believes that was the time to raise on the potential of the idea. 2014 was too late and they know that now.

Today there is Google Slides which is effectively a PowerPoint clone. Bunker, a French company launched around the same time they did and had many of the same ideas about how problems could be solved. They went out of business as they bet on the millions of users bet, believing they could keep on raising money to scale their operation. They weren’t.

SlideBean was forced to monetize early and was able to survive because of it, unlike the others. He’s been able to keep 25 people underemployed.

When you are faced with both a high level of churn and customers demanding conflicting features, it can be hard to know what to do. Slidebean started out with double-digit churn and had too much noise and customers complaining about a lack of features. It made it very difficult to decide what to focus on. They put a circuit breaker on it. What they tried to do was to have a barrier for customers by filtering to only their target market. That still didn’t work. People would still sign up for a month, complain, and leave.

Moving to annual was the big change. Whatever combination of psychology it was they had both with annual contracts and the pricing which they randomly picked has been working really well. The result is that 60% of customers renew at year-end. The logic might be a function of the fact that people who get the product create a lot of presentations over the year and now they are hooked with it and don’t want to leave. Caya wonders if it simply takes a few months for clients to understand the value they provide rather than testing for one month to do one presentation and churning out. It’s working anyway as they have 10% MoM growth after a long time struggling with the high churn. There was no magic, it was just trial and error!

Lamenting on investment, Caya says in the end the profitability thing gives you time. Reducing costs cut your burn. If they hadn’t had shrunk their team they would have run out of time for experiments two years ago. Longer runway allows you time to figure things out.

What now of the investors they raised a convertible note with? They still have investors from their original round who are expecting a return. The investors of course want them to grow and then raise so they can convert at the next round. This is a tricky conversation to have with investors. Caya tells them that they haven’t found a clear route that will take them from $1m ARR (Read: ARR Monthly Recurring Revenue explained for SaaS startups) to $10m. Without this path, they aren’t going to raise.

The thing with convertible notes is that you can pay investors back. Caya has told investors they are in a position to pay them back. However, it’s not something that they would want to do though as they would have to downscale more. Caya has comfort that they could though if they have to. It removes a lot of pressure, and no founder needs that over them.

That is not to say that talks about raising again are not off the table. Caya had a chat with his cofounder the day before we chatted and they discussed their options. The result was that if they raised more money now and they aren’t sure they could scale to the point they can sell, then all they are going to earn is more pressure from investors who have more money at stake. That’s not something they want.

The new AI product they have been developing may be the route to that $10m ARR.  If they see drastically higher conversation rates and lower churn, they could have a path to a new age. If so, they will do it.

Slidebean is in a position where raising money is now a choice, not a necessity. A position all SaaS founders should aspire to be in.

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