How does a marketer with a history of service-based agencies and failed SaaS startups hit the jackpot by generating $2.4m in ARR in only 9 months? CEO and Co-founder of Instantly.AI Raul Kaevand recently shared his story with the GetLatka team about his new venture’s meteoric rise as a cold email outreach SaaS.
In a space filled with significant competitors like Lemlist, Kaevand and his team have found a unique way to approach lead-gen emails that proved successful and cost-effective. Meet founders like this in person at these top saas events.
In this episode, discover how Kaevand grew his customer base from 22 to 2,900, the surprising place where he found his lead developer (and how much equity he gave him), and what he considers his “secret sauce” for early success.
- Team of 15 FT employees, with 2 engineers, plus outside marketing contractors
- $2.4m ARR
- 2,900 customers
SaaS solved lead gen scaling problem for 22 customers, led to agency closure
Kaevand explained to Latka how he started a lead gen agency last July after owning other service-based marketing businesses like SEO. After adding multiple clients, “We noticed that as soon as we tried to scale, the prices increased instead of decreasing.” At that point, the agency founder tried to solve the problem using technology. “Then we realized we had something new and now proven,” shared the Co-founder. He quickly decided to pivot from service to SaaS.
With AI, agency grew to $10-15K MRR before closing
“Because the AI was doing so well, we decided to end our consulting services, which had grown to $10-15k MRR. We began offboarding clients and focused solely on SaaS,” Kaevand shared, adding, “It was hard to abandon, but we knew it was the right approach.” The Co-founder clarified that it took about 3 months to wind down, and he wishes he had started sooner.
Developer relationship began during pandemic
Since Kaevand is a self-proclaimed “full-stack marketer,” Latka asked him how he found a developer to partner with. He replied, “2 years ago, I had a startup and was looking for a developer. I posted on In/Hackers and Reddit. I got randomly messaged by one developer. We messaged and talked a lot. That SaaS didn’t work out, as it was a travel idea that died during COVID. But I reached out again with this, so we linked up again last summer.” Kevand added his key learning: “It was completely random, but it worked out that I proactively messaged and put myself out there.”
4 Co-founders, developer gets 50% equity in Instantly
When asked about his founder situation and equity split, Kaevand shared that the SaaS began with just him and the developer, who split equity 50/50. Then the CEO realized he needed additional help, so he brought in two more sales and marketing people. The three of them now share the other 50% of the equity.
Secret sauce helps accelerate growth to $200k MRR
Latka asked if starting with an agency was the secret sauce, to which the CEO replied, “Yes! It was the secret sauce. The first agency clients became the first SaaS clients.” Kaevand later added, “They gave us our first success stories.” The new SaaS grew to $200k MRR in just 6 months after launch.
Growth to 2,900 Instantly customers, separate from AppSumo launch
The Co-founder identified many approaches that Instantly undertook to launch quickly. “We use our own product and success as a selling point. Plus, we promote our agency clients’ success stories as well,” Kaevand explained. He also shared that they initially launched on the AppSumo store. But he has mixed feelings about it: “AppSumo definitely helped us get the word out. And we had a unique offer, but it’s not the right solution for everyone. Those customers have a lifetime plan, so we don’t count them in our 2,900 because they don’t bring recurring revenue.”
Strong support leads to additional growth, mitigation of 10% monthly churn
Kaevand relies heavily on solid support, as evidenced by nearly half his team working on the support team. He explained how they carefully build their onboarding experience and are now focused on rethinking how to proactively prevent churn, which hovers around 10% monthly. “We now know that people are leaving not because the software doesn’t work but because they’re not experiencing success. So we’re now investing in more content and helping to get them better results,” he shared.
Content through webinars, email flows, 1:1 help
“Our main focus today is building out our content,” noted Kaevand. Aside from webinars, email flows, and the offer of 1:1 help, the company has also built a Facebook group with 6,000 members and is active on Twitter and YouTube. “We got 3,000 of those members from AppSumo, as joining the group was part of the onboarding checklist,” revealed the Co-founder. Latka asked how they named the group. The CEO indicated that they went with “Cold Email Masterclass by Instantly” because it was better for Facebook SEO with cold email. “Masterclass” is today’s term for the best training, and “by Instantly” added the branding.
Best email opens that lead to $2.4m ARR
Latka asked Kaevand to describe what emails work for him to drive new business. “First, keep it simple. Subject lines are overrated,” shared the marketing expert. “Our best emails start with “Quick question, name.” When Latka then asked what the content looks like, Kaevand said, “It would go like this. Hey Nathan, we built a tool that helped us get $100K MRR in 2 months. Do you want to see if it can do the same for you?” The CEO added, “You need different angles, like MRR, for different people. But short is always best.”
Acquisition plans, option for $150m Founder Fund?
When asked if Lemlist has approached him, Kaevand quickly responded, “No.” Latka followed up, “Would you want to buy them?” The CEO revealed, “We have no pressure now. It’s nice to buy, but we don’t want to raise funds for that.” He’s shared that several people have expressed interest in investing, however. Latka shared that the $150m Founder Fund was built specifically for bootstrapped founders to keep their equity and instead take loans to build and grow.
Favorite Book: Co-Founder and CEO Raul Kaevand shared that Zero to One by Peter Thiel is his favorite book.
CEO he’s following: Raul named Naval Ravikant as the CEO he follows. “He’s great,” added Nathan.
Favorite online tool: Raul chose Intercom as his favorite online tool.
Balance: Thirty-three-year-old Raul sleeps 8-9 hours per night. He is currently single.
What does he wish he had known at 20? “Not to get complacent when things go well. I had early success, then I got super lazy. Still keep pushing, keep doing it.”