Hubdoc
Hubdoc's relaunch grew out of a personal-finance product that had some traction but never really worked. Its second incarnation launched in late February or early March 2014, aimed at small businesses and the accountants who serve them. Yusuf West, who had earlier co-founded the stock analytics platform Vuru and led it through its acquisition by Wave Accounting, came to Hubdoc to lead growth.
The core idea was to make accounting invisible. Hubdoc built more than 700 web scrapers that log in on a user's behalf to pull bills and statements, such as a Verizon bill, then extract the key data and push it into the accounting system. The company planned to grow that number from 700 to 7,000 over five years. Its target customer was the accountant or bookkeeper, who spends about 30 percent of their time chasing clients for documents. West described the product's Net Promoter Score as being in the 80s, which he compared favorably with Apple's score of 89.
Hubdoc's acquisition was mostly inbound. Apart from paid conferences, "everything we've done" came through inbound channels, and the cost to acquire an accountant or bookkeeper customer was about $350. Each accounting firm averaged about six clients on the platform, and the company said it had added over half its business in the four or five months before the interview. In November 2016, West estimated that more than 1,000 accountants and bookkeepers were paying, and that 6,500 to 7,000 of the 7,500 small businesses came through them. Those accountants were the real distribution engine.
The unit economics looked strong. Customers stayed about 32 months, the lifetime value was roughly $3,000, and gross monthly churn was under 3 percent. Because accountants kept adding clients, the company saw negative revenue churn in nearly every month since it started charging. West admitted the company did not spend enough on marketing and needed to invest more. The team was also thin, with about one and a half marketing people, which was a constraint on scaling.
As of November 2016, Hubdoc had 22 employees, most of them in Toronto, with two in Australia after a recent launch there. The company had raised about $2.5 million, was generating roughly $132,000 in MRR, and set a 2017 goal of growing from about 1,000 accountant customers to 5,000.
- •Selling through accountants and bookkeepers turned each customer into a distribution channel, since each firm brought in roughly six or more clients of its own.
- •Automating document collection removed a recurring pain point for both accountants and their clients, which made the product sticky and easy to recommend.
- •A strong NPS in the 80s and negative revenue churn suggest the product expanded revenue within existing accounts as firms added clients.
- •Mostly inbound acquisition with a $350 acquisition cost against a roughly $3,000 lifetime value gave the company a favorable unit economics profile.
- 1.Identify a professional intermediary, such as an accountant or bookkeeper, who manages many end customers and sell to them first rather than to each end customer individually.
- 2.Automate a tedious, recurring task for that intermediary, such as collecting documents from clients, so the product becomes essential to their daily work.
- 3.Price the product per client or per account so that a single intermediary's growth increases your revenue without extra sales effort.
- 4.Track NPS and churn from the start, and watch for months where expansion revenue exceeds lost revenue, which signals a product that can grow inside existing accounts.
- 5.Invest in marketing once acquisition cost and lifetime value are proven, rather than scaling spend before the channel is working.
Similar Companies
247.ai
$25.0M/mo247.ai, founded by PV Cannon in 2000, is an AI-powered customer service automation platform serving over 150 enterprise customers with $300M+ in ARR. The company raised only $20M from Sequoia (2003) and bootstrap, achieving 10% net profit margins while maintaining a 12-month CAC payback period and 100% net revenue retention. Despite a security breach setback around 2018, 247.ai has recovered and recently achieved 20% new revenue booking growth in their best quarter.
iCIMS
$13.3M/moiCIMS is a bootstrapped SaaS provider founded in 1999 that dominates the talent acquisition software market as the #2 player, serving 3,500 enterprise customers with an average monthly spend of $4,000. The company exited 2017 with $160M ARR and is targeting 25%+ annual growth while maintaining profitability, recently acquiring Text Recruit to expand into candidate messaging and recruitment advertising.
Zoom
$12.0M/moZoom is a freemium SaaS video conferencing platform founded by Eric Yuan in July 2011 after he left Cisco to build a next-generation collaboration solution. The company has grown to 850,000+ paying customers across individual, SMB, and enterprise segments, generating over $12M in monthly recurring revenue with approximately 100% year-over-year growth. Rather than focusing on customer stickiness or aggressive growth targets, Zoom emphasizes customer happiness and organic word-of-mouth acquisition, which has proven highly effective in driving viral adoption.
Madwire
$10.0M/moMadwire is a comprehensive SaaS platform for small businesses (1-100 employees) that combines CRM, payments, invoicing, billing, e-commerce, and multi-channel marketing tools in a single platform. Founded in 2009, the company has grown to $120M ARR serving 20,000 customers with an average revenue per user of $500/month, while maintaining strong unit economics ($3,000-$4,000 CAC with 3-month payback) and recently turning profitable with a focus on reaching 15-20% EBITDA margins. The company is exploring an IPO within 12-18 months without having raised substantial capital beyond an initial $7.5M.
SwiftPage
$7.0M/moSwiftPage is a CRM and marketing automation platform founded in 2001 that targets small businesses. Under CEO John Oshel's leadership since 2012, the company scaled from 60,000 customers with $26.2M revenue in 2015 to 84,000 customers today with an estimated ARR of $36M+, maintaining 1.5% monthly logo churn and a 6-7 month payback period with a sub-$500 CAC.