Proven
Proven started in 2009 with a simple idea: connect people with jobs through text messages. Over the years the founders pivoted several times before landing on a small business hiring tool that helps businesses such as restaurants and retail shops post a job once and distribute it across job sites, then collaborate with other managers on who to hire.
The company's main differentiator was its mobile product. Pablo Fuentes described it as one of the best mobile apps in the business, available on both iOS and Android, and said it was the only app in the app store that allowed users to post jobs directly from their phones. Revenue was zero in the first years. Proven then moved to a pay-as-you-go model, away from subscriptions, so customers pay per job rather than per month.
Proven initially tried a direct sales model, with inside sales people calling businesses. Fuentes said that model didn't work because the product wasn't priced high enough to justify the cost of a sales force. The company made a big bet on content marketing and organic traffic instead. Its blog grew roughly 10x from January to August 2016, and Proven ranked on the first page of Google for terms such as job boards, job descriptions, HR blogs, and how to post to Craigslist. Alexa rankings improved from around 400,000 in October 2015 to around 250,000 by September 2016.
The content-driven organic strategy worked. Proven reached just over $1 million in 2015 revenue, projected about 60% growth for 2016, and became profitable with roughly 50% gross margins. Average customers paid about $350 to $400 per year and stayed around two years. Customer acquisition cost was around $200 to $250, with an LTV to CAC ratio of about 3.5 and a CAC payback of six to eight months. Subscription revenue had dropped to under 25% of total revenue, though some legacy subscription customers remained.
Proven has about 1,500 locations from roughly 1,100 companies and 10 employees, mostly remote and based in Austin, Texas. The company raised a little over $5.5 million across six rounds, including convertible notes and priced equity from investors such as Draper Fisher Jurvetson and 500 Startups, but said it was no longer raising and was funding growth from its own profits. Fuentes said the company was not focused on an exit and was pursuing a clear path to grow substantially.
- •Shifting from a direct sales model to content-driven organic search gave Proven a customer acquisition channel whose cost did not scale with a sales team, which is what made its unit economics work at a low price point.
- •Pay-as-you-go pricing lowered the barrier for small businesses to try the product, while still letting Proven earn repeat revenue from the same customers over a two-year average lifetime.
- •Keeping CAC low relative to LTV, with an LTV to CAC ratio of about 3.5 and a six to eight month payback, let the company grow profitably without outside funding.
- •Ranking on high-intent job-related search terms meant Proven captured buyers already looking for hiring solutions, rather than needing to create demand from scratch.
- 1.Identify high-intent search terms your buyers use when they need your product, such as job boards or how-to searches, and build content that ranks for them.
- 2.Test a sales-led approach first, measure whether your price point can justify the cost of a sales team, and move to organic channels if it cannot.
- 3.Track LTV and CAC religiously, including the salaries of content producers in CAC, and aim for an LTV to CAC ratio above 3 before scaling spend.
- 4.Consider usage-based pricing if customers use your product intermittently, so they can start without a subscription commitment.
- 5.Reduce fixed overhead such as office space by going remote, and reinvest the savings into the channels that drive growth.
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