How Patrick Campbell plans to take Profitwell to $100 million+ in revenue
How Patrick Campbell plans to take Profitwell to $100 million+ in revenue
Patrick Campbell (00:02):
We want to be a $100 million plus company in terms of revenue. We want to go beyond that even.
Peep Laja (00:05):
How far do you have to go still then?
Patrick Campbell (00:07):
Sneaky. Sneaky there.
Peep Laja (00:12):
I'm Peep Laja. I don't do fluff. I don't do filler. I don't do emojis. What I do is study winners in B2B because I want to know how much is strategy, how much is luck, and how do they win? This week, Patrick Campbell, founder and CEO at ProfitWell. ProfitWell helps businesses to analyze, optimize, and automate subscription revenue, pricing, and cancellations. As Patrick says, "Most of the market aren't even aware that this is a problem that needs solving," so what's their plan to win? In this episode, we talk about the challenge of educating customers.
Patrick Campbell (00:46):
Most of the growth comes from people who don't even know this is a problem yet.
Peep Laja (00:49):
We hear about the power of building an audience.
Patrick Campbell (00:52):
That show, when we're in season, tens of thousands of people watch that a month. It's insane.
Peep Laja (00:57):
And we learn the subtle art of throwing shade at your competitors.
Patrick Campbell (01:01):
It's not directly calling them out or anything, but it is imbuing some of that doubt based on the things we know that they're weak at and we're strong at.
Peep Laja (01:08):
Let's get into it. So Patrick, you started 2013 as a services company. Is that right?
Patrick Campbell (01:16):
Well, sort of. So we actually started as a pure software company for pricing. Basically, we built this product where we built algorithms into it. You could collect data and put them through the algorithms and get some answers around willingness to pay. But what we learned in studying the market a bit is that pricing is one of those things where there's a big trust gap where they don't feel confident and they want to talk to a human. They want to talk to someone who's seen it before.
Patrick Campbell (01:38):
And this is why most pricing solutions prior to us in the market involved hiring some gray-haired person who's been in software for 30 years and all that kind of fun stuff. And so we evolved into, what I think most people call, a tech-enabled service, which is it's you can't buy us without our software. We won't just come and give you advice and charge you for it. And that opens up our content, but it's not like you can't buy our software without us, if that makes sense.
Peep Laja (02:08):
So many now successful companies started as an agency or a hybrid, MailChimp, Basecamp. Wynter exists because 10 years ago, I started an agency that later added on a new learning company, and then used the know-how and profits from the two companies to start this new SaaS company. Contentstack, which is a three-year-old company taking on enterprise CMS players, has its roots being an agency. Here's how their founder Neha Sampat describes that.
Neha Sampat (02:35):
We started off by building a profitable services business and that services business helped us to uncover real use cases for the products that we wanted to build. And as we started to build those products, we were doing that with the profits from the services business. So that allowed us to extend our time without needing any outside capital and building really cool products that we were able to test in our customer base before we really, essentially, went to market.
Peep Laja (03:02):
Who is your key audience that you're serving and what is the main problem that you're solving for them?
Patrick Campbell (03:07):
In the beginning it was just pricing, so it was basically pricing subscription products.
Peep Laja (03:11):
How much do you charge?
Patrick Campbell (03:13):
But even, it's more than that because a lot of people think pricing is just the number, but it's your packaging, it's your ideal customer profiles, it's all of these different pieces. And that was the biggest hurdle was convincing people to take this seriously and also convincing people, "Hey, this is not just a one-time thing. Like all things in your business, you have to be continually optimizing it."
Patrick Campbell (03:32):
But we've kind of evolved our mission to a place where we are focused on subscription revenue. We have a free subscription financial metrics product. You plug it into your billing system, gives you all your free metrics, and then what we do is we study that data, and then we build products that basically help you automate, basically, your revenue, your subscription revenue. So we have Price Intelligently still that helps you optimize your pricing, and that's a paid product. And then we have our Retain product that helps you optimize your cancellations, and that's also a paid product. And so we're looking to be the subscription revenue company, if you want to kind of put a nice little bow on it.
Peep Laja (04:07):
You launched as Price intelligently, and then along the way, ProfitWell came about. Then you had, or have, two brands there.
Patrick Campbell (04:16):
Sort of, yeah. Never change your name. That's my most prescient advice I can give you. No, basically what happened is we started because, hey, pricing is this problem. It's important. It has impact but no one knows what they're doing, and that's a really good opportunity for a company.
Patrick Campbell (04:30):
We were helping a company that was about to IPO with their pricing using our software, and all of a sudden, we discovered they were calculating things like churn and their MRR, even, completely incorrectly. And so we started putting two and two together and we were like, let's build an analytics product for financial metrics for subscription companies. And we thought, oh my God, we're going to be billionaires. It's going to be amazing. Everyone needs this.
Patrick Campbell (04:53):
Obviously, that didn't pan out quite yet. But it's one of those things where we basically found that, to get back to your original question, that our mission as we were studying the data needed to evolve because we started noticing all these high leverage growth opportunities, not just in monetization, but also retention that no one was really doing. And if you made these little changes, all of a sudden your revenue would increase substantially based on the work you did.
Patrick Campbell (05:15):
And so, that's when the mission kind of widened into subscription revenue. And long story short, we had a little a problem because we're bootstrapped where we didn't want to sacrifice or confuse the Price Intelligently revenue, so we kind of built these two brands. And then what we should have done is as soon as we saw ProfitWell working, we should have just immediately combined everything and just start with the ProfitWell story because changing your story gets really, really hard.
Peep Laja (05:39):
A brand cannot stand for more than one idea. That's why line extensions are mostly a bad idea. It was bad in 1993 when 22 Immutable Laws of Marketing ranted against it. It's bad now. I made the mistake of launching the e-learning arm of the business at CXL Institute, when I already had CXL, the agency. I was ignorant about the challenges ahead. People got confused, "Are we an agency? Are we an e-learning company? What are we about?"
Peep Laja (06:07):
Line extension seemed like a good idea on paper, which is why I do it too, but it brings with it a mountain of problems since people won't know what you're about anymore and confused mind doesn't buy. We later spun the agency out as a separate brand, now called Spiro. That was an expensive endeavor. All of this could have been avoided. There's a plethora of books written on the topic, and I read most of them. Alas, too late. Most of them basically tell you to avoid it.
Peep Laja (06:35):
So, that was one of the decisions early on that eight years later you're now revisiting. What other bets or assumptions did you have early on that didn't really pan out?
Patrick Campbell (06:45):
We built this financial metrics product, and it's free now, but it, originally, we were going to charge for it. And I was actually very anti-freemium back in the day, which is really interesting. But what ended up happening is we discovered when we did pricing research on the product, that the willingness to pay wasn't great. And this is notorious for analytics products. Most of the time, unless you're niche, you end up going up-market because people don't appreciate analytics that much. They don't appreciate how much work went into making that number somewhat accurate, if not very accurate because they only check it like once a week or once a month when they're doing their reporting. And this is why retention's really hard for analytics as well.
Patrick Campbell (07:20):
So long story short, while this was happening, we had a bunch of competitors in the market, companies like ChartMogul, companies like Baremetrics. There was a long tail of a bunch of different other types, and then there's obviously broader analytics and BI tools. We basically were like, oh, this whole monetization path doesn't make sense. All of these companies are going to have to go up-market to be a bigger business or pivot. Or go free, which is what we did because our thesis became, again, sucking in that data, understanding it, and then deploying that understanding into product. So, that's one thing that didn't work.
Patrick Campbell (07:51):
One thing that didn't work initially, but then we pivoted it a little bit, accuracy is a big thing. So one thing we noticed really early on is that the larger the company, the more they cared about accuracy. Because unlike marketing products that can be off by 3% to 5%, and most marketers, unfortunately, don't care about the accuracy of their marketing data, finance people really care. Because they're thinking, well, that's cash flow I could have invested in the business for my forecasting and such. And probably 95 out of 100 finance people care. Well, maybe 10 out of 100 marketers actually care.
Patrick Campbell (08:25):
We discovered it was so hard, but our competitors were moving really quickly with features, but their accuracy was not good. We basically said, "All right, for the next 12 months," because it that's how much time it took, "we're only going to focus on accuracy." And we thought, oh, this will be a big selling point. Well, what we discovered is it's not a selling point unless you've had the frustration.
Patrick Campbell (08:47):
And that's what's really interesting about brand and advertising and product marketing in some of these cases. We initially were like, "We're the accurate people," and all of a sudden, it wasn't really moving the needle. But as soon as we made that messaging into competitive ad campaigns, that's when those became some of those highest ROI campaigns we had because they had used the other products, they had been frustrated with them. They thought, oh, there is no other solution, so I guess I'm just going to be frustrated. And then we would email them and be like, "No, no, no. We're accurate. Maybe we don't have all the bells and whistles quite yet, but we're accurate." And that's what really helped us over the first few years.
Peep Laja (09:21):
How often do you look at those companies, what they do in terms of their product strategy, in terms of their positioning messaging, and how often do you intentionally do something else?
Patrick Campbell (09:32):
When it comes to competitors, we do very little from a product perspective in the context of competition. We do study and we do look at what they're doing. We use their tools, we talk to their customers, we run NPS surveys on their customers.
Peep Laja (09:46):
How can you run NPS on their customers?
Patrick Campbell (09:50):
Market panelists. So, market panelists and ads and we can find them through BuiltWith or some of these other products. And so we're able to basically send surveys and things like this. We do keep a track of that and we look at reviews on G2 Crowd and stuff like that. But from a product perspective, I think that it's really hard to follow a competitive strategy that is running product. And the reason for that is because you're assuming your competitor's winning.
Patrick Campbell (10:16):
I don't think any of us have won the market yet. I think we're probably ahead just in terms of volume and things like that, but you're assuming they're doing the things right if you're copying their product. And most of the time, they're not. Most of the time everyone's trying to figure it out, and unless you're going after like HubSpot or something like that where you basically just have to get every feature, the product's competitive research shouldn't steer the ship.
Peep Laja (10:39):
Standard playbooks rarely lead to competitive advantage. If everyone follows the same recipe, then they usually just reduce differentiation, and without being aware of it, increase direct competition. This is a major reason why sameness is so pervasive. Yes, your competitor is your first prototype, but be ready to break the wheel. And this applies to cold calling, emailing, content gating, and all the marketing tactics you see online.
Peep Laja (11:04):
It's no wonder most spammers on LinkedIn use, "I was impressed by a profile language." They copied the scripts from some blog post they read. Have you read The Law of Shitty Click Throughs by Andrew Chen? It's a real thing. If something works really well, more people start doing it, and then more. And then, eventually, its effectiveness drops down to near zero.
Peep Laja (11:25):
It's just so much easier to use a playbook rather than be creative and do something unorthodox. After all, experimenting with new stuff might fail. That being said, playbooks do have their place. If you've never done something before, they can be very helpful. Master the basics before innovating. Even Picasso mastered classical painting before going on to do his own style.
Patrick Campbell (11:49):
From a brand and positioning standpoint, we do a lot around, and this is somewhat controversial, but we do competitive ads just through search. So someone's searching for ChartMogul, you'll see a ProfitWell ad. They do it to us as well, for what it's worth. We're the ones who get a lot of crap for it on Twitter because I think we're the bigger people in the market now, but long story short, we do stuff like that.
Patrick Campbell (12:08):
And then we don't do competitive pages, but all of our sales enablement copy, our decks, our landing pages, they're designed to basically imbue some element of doubt if we're talking to someone who's using a competitor. And it's not directly calling them out or anything, but it is imbuing some of that doubt based on the things we know that they're weak at and we're strong at.
Patrick Campbell (12:32):
The bigger thing is we're all facing, not each other as much, as we're chasing the market. We're not in a market where there's a HubSpot where we're going after, we're in a market where it's like we're just educating people for the first time. And your competitor customers are already educated, which is great, but most of the growth comes from people who don't even know this as a problem yet.
Peep Laja (12:51):
So most future growth will come from people who use basically nothing, their spreadsheets.
Patrick Campbell (12:55):
Totally. They use spreadsheets or they use some genericized tool. Or for our Retain product, they're not even aware of the problems that we solve or that you can solve it through a product like ours. If we were in CRM, we would need a lot more around competitive stuff because there's hundreds of CRMs.
Patrick Campbell (13:11):
But we're in a market that's like, it's niche. And on top of being niche, it's also we're educating people about the problem. It's not like they wake up and they're, "I'm looking for this solution." So that's where I think it's really important to be like, this isn't something we worry about every single day, but it is a good proportion of our leads and a proportion of our new revenue, so it's enough to have a strategy, but not enough to be the majority of the strategy by any means.
Peep Laja (13:34):
And so knowing that the biggest part of the market is not using anything, and it's about awareness and educating the market. I've seen you guys double down on, let's call it, brand. So you got a blog, you're on every podcast it seems like these days. You guys produce your own podcasts and the teardowns and the drop and all kinds of stuff, so tell me about that. How are you thinking about competing on brand here?
Patrick Campbell (14:00):
So, here's the thing. You have to understand your logo TAM. How many actual target customers are in your market? And fun fact, when it comes to subscriptions, there's only 150,000 subscription companies. And that includes SaaS, subscription media, subscription e-commerce, subscription nonprofit. It includes all the categories.
Patrick Campbell (14:18):
Now that number is growing, but it's not growing exponentially. We're not talking about millions of potential leads, and we're not talking about a consumer product where you might have tens of millions of actual leads. And so when you have a lower logo TAM, brand is extremely important, but not in the sense of how we traditionally think about brand where it's the assets, like what the logo is and things like that. But brand in the sense of I need to not only make my potential buyer aware of my existence, but I also need to educate them on the problems I solve.
Patrick Campbell (14:49):
And so the thing that we've said over the years ... and content's been a huge portion of our strategy since the beginning. I would say in the T kind of growth, it's our T, or the length of the T. In the beginning, it was just me in a HubSpot account writing blog posts and writing about pricing in particular. And then over time, we've kind of evolved from an inbound marketing strategy to a media strategy. And the difference is basically instead of writing a blog post to drive someone to an offer, and that's kind of your playbook, the difference is you build audience. And, you build audience.
Peep Laja (15:23):
If you don't have an audience yet, start cultivating one like your business depended on it because it does. It can be your best note and your strongest distribution channel. Volkswagen spends around $6 billion a year on advertising. Tesla spends zero, and Elon has 50 million followers on social.
Peep Laja (15:42):
When in doubt how your company should spend its time, allocate that resource to hours creating more high-quality content, add more value to your community, educate, invest in brand building. Put yourself out there. Also don't shy away from controversial and strong opinions. In fact, it's necessary to cut through the boring vanilla. People like strong opinions. Mix data with a strong point of view. The nail that sticks out gets occasionally hit, yes, but do it anyway.
Patrick Campbell (16:14):
We have three main verticals we target, B2B SaaS, consumer subscriptions, and subscription e-commerce. We have three types of content we want to produce, pricing content, retention content, and then general content. I call it top-of-the-top-of-the-funnel, interviews like this, just stuff that's interesting for these types of buyers. And we basically want to show at every intersection of those points. The first thing we produced was something called Pricing Page Teardown.
Speaker 4 (16:42):
Welcome to Pricing Page Teardown, where Patrick and Peter break down the pricing pages and strategies of subscription companies from all corners of the market.
Patrick Campbell (16:53):
It was just me and our GM, Peter, who leads our revenue team. Basically, we collected data from the market, very similar to how we do it with our pricing products. And we would tear down, in a nice way, we would basically talk through what brands were doing well or not so well with their pricing.
Patrick Campbell (17:10):
That show, when we're in season, tens of thousands of people watch that a month. It's insane. Even if I had 1000 people a week, that's a win because I have 1000 people, learning about pricing and talking about us or referring our content to other people. We have another show called Boxed Out.
Speaker 5 (17:28):
ProfitWell Recur presents Boxed Out, where we dive deep on the retention strategies of today's hottest brands.
Patrick Campbell (17:35):
Basically we buy subscription e-commerce products and we study their retention. What do they do when we try to cancel, what do they do when our payment fails, these types of things. And these little case studies on each of these companies in 15 minutes or less that people can watch or read in the content.
Patrick Campbell (17:50):
And we've invested a lot in this because, again, we need to educate people on ProfitWell as an entity. And if we're going to be that subscription company, that subscription revenue company, they need to know who we are. And as we put stuff out, they need to be like, "Oh, this is quality. I know I'm not going to waste my time and I'm going to learn something." "Oh, I didn't really need or want to learn that, but I still learned something, but let me forward it to someone else."
Peep Laja (18:12):
How often are you thinking about moats? I mean, obviously your brand stuff that you're doing, all the content you're creating, that's a moat, a hard to replicate. What else?
Patrick Campbell (18:21):
I think it is a good moat. Brand is a very good moat. But when we talk internally, it's not about building brand. It's about building audience and doing it with quality, and therefore, brand will build. Because I think this is where a lot of brands get this wrong is they do an exercise with brand, and then it's like, cool, it's done, and then it doesn't permeate throughout the business at all. You want it to kind of permeate.
Patrick Campbell (18:42):
And that comes from the values of what do you value as a company, and then also it's like focus on what are the principles of content. Our content, it needs to be trust-reinforcing. You need to be able to learn something from it, even if you're an expert. Those are some of the things we think about.
Patrick Campbell (18:58):
I think from a product perspective, that's where we have more of the moats. Because our free product, that's a moat. Let's say we don't win the market, we're going to mess the market up enough for our competitors. You know what I mean? That was one of the toughest thing, I think, for our competitors that we came out and initially it was free and good enough. And now, it's free and it's better.
Patrick Campbell (19:17):
From a future parity standpoint, and some of this is subjective and biased, but it's more accurate in a consistent manner, and has more features. We'll say that's better. And there's some features we don't have, but our customers tend not to care about those or we're going to build them. And so that's a moat.
Patrick Campbell (19:33):
I think another one of our moats is we aggressively focus on turnkey. And what I mean by that is when you buy one of our products or you sign up for one of our products, you do very little work beyond the initial implementation. For Retain, you do zero work. So basically, you just look at every month how much money did we make you? Here's how much we're charging you. You do literally no work. We do all the testing, everything like that. So there's a little bit of a service element through our product team, but it's not a service element of we're talking to the person every week or something like that.
Patrick Campbell (20:04):
I think the future of software is very much like, no, no, no, sign up and it's done. Either through AI and things like that out that are coming, or just through like having some sort ... We have a rule on our product team that there's no wizzywig editors. There's no what-you-see-is-what-you-get editors, unless they're on only internal use.
Patrick Campbell (20:23):
There's some places where we might break that notion, but the basic idea is it's turnkey, we do it for you. Because a lot of these problems that people face, if this was a priority, we'd be in a very different business. And none of these things are high priority, and that's why we have to convince them of so many things. So, those are some moats that we kind of think about.
Peep Laja (20:41):
Those principles come about organically over time? Or did you have, from day one, you had a vision of this is the product we're building?
Patrick Campbell (20:50):
A lot of arguments, actually. Not volatile necessarily, some of them probably volatile. Product people, capital P product, are interesting humans. They are emotional, but rational. They're constantly balancing precipice. Our CPO is no different. It's like, "Well, this is how the world should look." "Yeah, but this is kind of how the world looks now, so we can't quite go to where you're talking about because we've got to be a little more practical." And that friction creates those principles.
Patrick Campbell (21:17):
And then when those principles exist and there's some sort of data that looks like it's defying or is working against those principles, we have to take a step back and then it's like a bit of an existential crisis and there's debate. Is it going to be good? Is it not? The struggle, the thought struggle.
Patrick Campbell (21:32):
So I think that's where a lot of it came from, but the important thing was we had them. It's not important that they're right. I think if they're right, it's great. But if they're wrong and you're not intellectually dishonest, you find out they're wrong pretty quickly. Because if you're the right type of person, you see new data and you go, "Is this a time where I need to lean into the future or is this a time where I'm wrong?"
Patrick Campbell (21:55):
And that's a real struggling question. And most really good product people, they spend time struggling with that. And the great ones, they'll shift. Sometimes they don't shift soon enough, sometimes they shift too early, but it's just one of those things where it's the fact that you have those principles, I think, is so important. And we have those on our content team too. And I think that's important because we can look at every post or every episode and go, "Did it do these three things? It did a lot of this one and not so much of these two, but it did do those two. Okay, great. Great, ship it." And I think that's really important.
Peep Laja (22:24):
I love it. Looking into the future, what's the dream? Is there a point that you're building towards?
Patrick Campbell (22:30):
I like the build. I like the build. I like the problem solving. I like getting better and better. And so money's good, but at this point, problem is not going to go to zero. If we discover that there's going to be troubled waters, and if I get bored or something like that, or our team starts falling apart somehow, we'll make it a really good Wistia or a Basecamp where growth is still going to happen, but we're not trying to grow 100% or 200% year-over-year. But I think right now we want to keep growing. We want be a $100 million plus company in terms of revenue, we want to go beyond that even.
Peep Laja (23:03):
How far do you have to go still then?
Patrick Campbell (23:06):
Sneaky. Sneaky there. Here's what someone told me. "Once you're beyond $10 million, you stop talking about revenue publicly unless you're raising money."
Peep Laja (23:13):
Ah. ConvertKit is an exception, I guess.
Patrick Campbell (23:15):
Yeah, that's true.
Speaker 6 (23:17):
Transparency is core for us. All of our metrics are public. You can go to convertkit.bearmetrics.com and see we're at $27.4 million ARR. It'll probably say, Updated 27 minutes ago," or something like that.
Peep Laja (23:29):
What kind of bets are you're making? There's a game you want to play, there's a goal you want to reach, there's some obstacles in your way, how are you going to win?
Patrick Campbell (23:37):
Here are the bets. Our products need to basically make you more money to the point that it's so obvious we can take a cut of the money we make you. So our Retain product, up to your current recovery rate, it's free. Over that is what we charge for. And it needs to be good enough, obviously, to be good. It makes our retention amazing because people are only paying for what they're getting. But that's a bet, and so each additional product we come out with that's how we think about it.
Patrick Campbell (24:03):
Or it needs to be so close to revenue that maybe it's not quite where we can take a cut of what we make you, but you can justify the product easily and we can charge somewhere between $1000 and $10,000 a month. We target an [RPOO 00:24:20] of about $3000 a month. That's kind of what we're going for. So, that's the first bet.
Patrick Campbell (24:24):
Second bet, multiproduct. Multiproduct's hard, especially early in a company's lifecycle, and most people wait till they're $100 million to do it, but more and more companies are being multiproduct earlier. We probably did that earlier than we should have, but we're still all in on it because of the TAM constraint that we talked about. And then I think the other bet is that, frankly, brand and awareness is something that is going to drive revenue. And the numbers do indicate it does, but as we're scaling up and up and up, that ROI gets a little different.
Peep Laja (24:54):
Awesome. Thanks for coming on, Patrick.
Patrick Campbell (24:55):
Absolutely, man. Thanks for having me.
Peep Laja (25:00):
So, what were the three key strategic decisions ProfitWell made in order to grow and succeed? One, they educated their customers.
Patrick Campbell (25:07):
I need to not only make my potential buyer aware of my existence, but I also need to educate them on the problems I solve.
Peep Laja (25:15):
Two, they rolled out a very competitive free product and aggressively focused on turnkey.
Patrick Campbell (25:20):
Because our free product, that's a moat. That was one of the toughest thing, I think, for our competitors. And we came out, initially it was free and good enough. And now, it's free and it's better.
Peep Laja (25:30):
Three, they focused heavily on building a media machine, building an audience. Patrick is now synonymous with pricing, and ProfitWell has become a clear knowledge leader in the space.
Patrick Campbell (25:41):
When we talk internally, it's not about building brand. It's about building audience and doing it with quality, and therefore, brand will build.
Peep Laja (25:47):
And that's how you win. I'm Peep Laja. For more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.
