RocketReach

Amit Shambhag and his co-founder Andrew worked at a small SaaS company called Showcase, where they were trying to improve user acquisition. One of their tactics was pulling prospects from data.com, which is owned by Salesforce. They quickly found the data was about 85% inaccurate. They tried other tools, including FullContact, Hoover's, and various lead generation services, but the data was mostly wrong. Amit explained why this mattered: if you want to reach a VP and email five of their directors, and half the addresses are wrong, you will likely never reach the team. They saw a large opportunity, built a prototype quickly, and RocketReach was born.

The team began working on RocketReach around October 2015 and funded it themselves. The company's founding is dated to November 2015. Amit described a three-person founding team with a salesperson and a customer service person, for five people total. The team tried to raise a $750k seed round from institutional investors and received terms from two or three of them. Amit felt the terms were unfavorable and, about six weeks into fundraising, around March 2016, they stopped and went fully bootstrapped. He noted that their growth curve meant they expected to be profitable within a month or so.

At the end of December 2015, Amit said total revenue was $15. From January to March 2016, the company relied heavily on outbound email to acquire users. Around March, they were featured on Product Hunt and invested in SEO. Amit said that almost all user acquisition now comes through search. A person searching for a name or email address often finds a RocketReach profile page in the top five results, signs up for a freemium account, and eventually buys a paid plan. Their inside sales team then follows up with users who sign up from larger companies to pitch team plans or API access. They also ran a deal with 500 Startups, giving each company in its 2016 batch one or two free months, which Amit said led to a lot of good business and strong retention.

The clearest lesson was the value of leveraging distribution partners and organic search instead of relying only on traditional outbound and SEM. Amit said the team wished they had recognized this sooner. Pricing is subscription-based with three tiers, from $49.99 to $299 per month, and the average customer pays around $70 per month. Gross monthly churn was around 7%, and the company reported negative net revenue churn once upsells were counted. Customer acquisition cost was under $30, and average customer lifetime was about six months. Amit also noted that the company's growth would eventually hit resistance, and that servers had to be added almost every week.

By October 2016, RocketReach reported more than 120,000 customers, up from roughly 20,000 to 30,000 in March 2016. Amit said the company was not yet at $10 million ARR but expected to reach the tens of millions in the following year. He said it would then consider raising a seed round. When asked about an acquisition offer, he said that at the current revenue level, $30 million would be a decent offer. He valued SaaS companies at roughly 3 to 5 times ARR, adjusted for growth.