Just three years after launching, productivity software company ClickUp now serves over 30,000 companies across 300,000 paid seats. In June, they raised $35 million in their Series A, and CEO Zeb Evans told Latka in an interview that the company plans to invest a large portion of that into organic marketing, the engine that’s largely driven ClickUp’s growth.
Productivity software is a crowded market: ClickUp counts established companies like Monday — valued at $1.9 billion — and Asana — similarly valued at $1.5 billion — as its competitors. “I didn’t want to get in the most competitive software market, but it just happened,” says Evans, who decided to pursue ClickUp after building it as an internal tool for a previous startup. As of the time of this interview, ClickUp was at almost $3 million MRR and ARPU is around $150 per year.
ClickUp’s early, bootstrapped approach to growth proved successful: foregoing a sales-heavy approach, the team doubled down on organic content — which still drives the large majority of its sales today.
“Content is certainly king,” says Evans. “We create helpful articles for people searching long-tail keywords of competitive information or productivity hacks. We also started with other organic stuff: [posting on] Reddit and Quora still really works, especially for your first hundred customers.”
Source: GetLatka
With a strong funnel to bring in clients, ClickUp’s next priority has been keeping them — which it does exceptionally well, with a monthly churn rate of under 2%. Evans’ secret? “We ship a new version of ClickUp every Friday, and it rallies our customer base around us,” he says. “It shows we care and how intentional we are about improving the product.”
Today, ClickUp, which has about 130 employees total, including a small sales team to look after its enterprise customers, and the company has started investing in paid acquisition. However, Evans still plans to invest most of its Series A funding in organic marketing and building out a strong customer support team. “I want instant demos and instant response times, 24/7,” he says.
With a solid team, a proven business strategy in place, and $35 million to spend on growth, ClickUp is now aiming to scale and gain market share. “This market is just so hot and frothy right now,” Evans says. “I’ve exited a company in the past, and I don’t have any interest in doing that [again]. This is the one to go public and create that meaningful lasting business that’s here when I’m gone.”
Get to Know Zeb Evans, CEO of ClickUp
Name: Zeb Evans, age 30, single
Where to find him: Twitter | Instagram | LinkedIn
Company: ClickUp
Noteworthy: A serial entrepreneur, Evans wishes he knew earlier that tech would be booming — he would have learned to code far earlier in life.
Favorite business book: “The Slight Edge”
CEO he respects: Elon Musk
Favorite online tool for building the business: Front
Average # of hours of sleep/night: 4.5
Transcript Excerpts
Teasing features to convert freemium users
“We do feature paywalls a little bit differently, in the sense where everybody actually gets access to a paywalled feature and they don’t really know that it’s paywalled until they start using it. You get a hundred uses of every feature. It changes user behavior because users generally will optimize for the features that are free — if you don’t really let them know that they’re not free, then they start using them. There is some pushback at the end of the day, but… people end up appreciating that they actually started using the feature that they would have not used otherwise.”
Becoming profitable before raising capital
“Go as far as you can without raising to get product-market fit. Then, when you do raise, you have the levers to pull. You have leverage.”
Why raise after bootstrapping quite successfully?
“We’re in a very, very competitive market. Everybody rips everybody’s features off. We have people copying our messaging, copying our ads, copying many of our features. [Raising capital] is a defensive play in many ways. It’s about getting our brand out there and getting market share pretty quickly.”
The power of SEO for acquiring customers
“It’s a long-term play — SEO is very long-term. You’ve got to set it up for the future and know that it’s going to be years before you get real value from it. What we set up two years ago… is starting to pay off. It’s just about putting those pieces in place where you have a great team and can crank out content.”
Full Transcript Nathan Latka: Hello everyone. My guest today is Zeb Evans. He’s a serial entrepreneur that started several software companies with over a hundred million dollars in revenue. Currently, he’s the founder and CEO of ClickUp a product-to-B platform where people plan their work. Zeb, you ready to take us to the top? Zeb Evans: Absolutely. Thanks for having me, Nathan. Nathan Latka: You bet. Nathan Latka: We were just chatting, we’re both Virginia Tech dropouts. What was your first company drop out, Zeb? Zeb Evans: Yeah, so I did a social media firm where we did social media automation and management, kind of at the early phases of that in 2009, 2010. Nathan Latka: Very interesting. Nathan Latka: Okay, so give us sort of the download on ClickUp, and I won’t bury the lead. You guys bootstrapped, I think you launched in 2017. You bootstrapped, you just raised a bunch of money. We’ll get to that in a bit, but tell us what the company does first. Zeb Evans: Yeah. So ClickUp as a productivity platform to put all of your work in one place. Usually, you have separate applications for project management, docs, resource management, time tracking, mind maps, all of the productivity and separate locations. And ClickUp is just a place for you to bring all of your work into one platform. Nathan Latka: And are people loving it? How many customers do you have, you going to say? Zeb Evans: Yeah, we’ve got about 30,000 paying teams that use us today, and we’ve got about … We have a lot. We have a freemium product as well, so we have a lot of free users. Nathan Latka: Okay. Got it. Freemium. Nathan Latka: You, very specifically used word team. Do you measure customers based off teams or the number of seats inside those teams? Zeb Evans: We measure customers on the number of teams. Zeb Evans: It’s about 10 seats per team, would be our average. Yeah, team is just the high-level organizational unit. Nathan Latka: What is that organizational unit that’s typically using guys? Who are those 10 seats? What are their titles, usually? Zeb Evans: It varies. Literally, the whole goal of ClickUp was being flexible enough for you to work on it for any type of use case. It started as an internal tool. For that reason, we have families that use us and then we have people that are sending rockets into space. Nathan Latka: That is one organized family using you. Holy crap. I can’t, their things [inaudible 00:02:05] must be wild. Zeb Evans: Yeah. I don’t know if I’d want to be in that family. Nathan Latka: Yeah. That’s great though. Nathan Latka: Okay, so this is interesting. You started a freemium your model and then again, is launch [inaudible 00:02:16] is about 2017? Zeb Evans: Yep. End of 2017. Nathan Latka: End of 2017. You said this was an internal tool. What were you building in 2017 where you then made a decision to spin this out? Zeb Evans: We were actually going to do a Craigslist competitor, where you could pay in-app and remove the sketchiness from Craigslist. Craigslist is actually the source of the largest fraud in the United States. That was our whole goal was preventing that. While we were doing that, ClickUp had always been an idea on the back burner, just for an internal tool, from the frustrations of having 15 different productivity apps that we were using at my previous company. Nathan Latka: You built this though, but it’s still a tough decision. People build internal tools all the time. The decision to actually shut down the past thing. Because you have a real opportunity. To actually take the leap into the new thing is not easy. Or maybe it was for you. Zeb Evans: Well, so to be clear, we didn’t actually get started on the Craigslist competitor. It was in the idea phase. And when we were like, let’s just spend a month and create this platform, and we can put all of our work there. And that’s what we did. And long story short, we got into it after that month and realized there was a lot more. Zeb Evans: I’ve had four near-death experiences. I had my third one, and that was when we moved out to Palo Alto. Fortunately there, we met neighbors that had companies, had tech companies, and they started using our software, our internal tool, because they asked us what we were working on. Zeb Evans: I didn’t want to get in the most competitive software market, but it just happened. Nathan Latka: Yeah. It’s a very competitive space. I also want to touch on that here in a bit, because anytime I see someone with real revenue in a very competitive space, it’s clear to me that they’ve built some mousetrap that other people have not thought of. Take me back to your original mouse trap. How’d you get your first hundred customers? Do you remember? Zeb Evans: It was all organic stuff. I mean, blogging is not dead. Blogging helps a lot. Content is certainly king. We create helpful articles for people searching long tail keywords of competitive information or just productivity hacks in general, things like that. Zeb Evans: We started with organic stuff. Reddit, Quora, all of that stuff still really works, especially for your first hundred customers. Nathan Latka: Do you remember those first original blog posts? Was there a particular other platform you were targeting that you felt you were doing something better on? So you would do something like ClickUp verse Monday.com, and why people are switching, or something like that? Zeb Evans: Yeah, it’s exactly like that stuff. I think we even did … When people didn’t know our name, they weren’t searching ClickUp yet. We did a Sauna verse Trello, and just capitalized on those. Nathan Latka: Super smart. This is very much an early SEO play. You were inserting yourself in the decision making process, people were looking for these tools, and then eventually said, “Oh, by the way, we have one.” Zeb Evans: Exactly. Nathan Latka: Super compelling. Interesting. Nathan Latka: What did that original team look like? It sounds like get some SEO brains on the team early on. Zeb Evans: Honestly, I did most of the SEO. We were very, very bootstrap-y and lean. At my previous company, I had a lot of experience doing organic marketing there. Early on, it was just three or four of us that were working on this. Nathan Latka: Is that mind and just your background, why you rank the first position for critical keywords, like “free project management software,” according to Ahrefs brings in what, 7,800 clicks to ClickUp every month? Zeb Evans: I would say that’s the start of it. Of course, we have an amazing team now that I don’t do that anymore. We have an incredible team. Look, it’s a long-term play. SEO is very long-term. You’ve got to set it up for the future and know that it’s going to be years before you get real value from it. It’s starting to pay off what we set up two years ago. And again, it’s just about putting those pieces in place to where you have a great team that can crank out content. Nathan Latka: What does your team look like today? How many folks? Zeb Evans: We’ve got about 130 people. Nathan Latka: Okay. Nathan Latka: How many engineers, out of curiosity? Zeb Evans: 20. Nathan Latka: 20, okay. Nathan Latka: What do the rest spend most of their time on? Zeb Evans: Customer service is huge for us. Probably 40 customer service people. We just started hiring our sales team a few months ago. We’ve got a decently-sized marketing team now. We were all organic until a few months ago, and then we started doing paid acquisition. We’ve started building out that team. Of course, we have the ops team, and our product teams, design teams as well, and QA. Nathan Latka: I want to come back to how you are incentivizing your first couple of sales hires here, because I believe your model is you were freemium, and now you’re a low-ARPU high-volume play. On average, what are customers paying you per month? Zeb Evans: It’s roughly 10 to $15 per seat per month, becomes the average. The ARPU’s 150 per user. Nathan Latka: 150 per user, sorry, so it’s $10 per seat or …? Zeb Evans: Per year. Nathan Latka: Oh, per year. Got it, got it, got it, got it. Nathan Latka: So it’s 300,000 customers, again … Sorry, seats across 30,000 logos. Again, those 300,000 customers. It’s TSR between 10 and 15 bucks a seat. Walk me through how you think about the for sales hire. A lot of people would say at this price point, unless you’re doing a high volume of demos, you can’t make the commission structure work to have and put touch on the sale. Zeb Evans: No, I actually was in that camp prior to starting it. I wanted to go very slow and methodically with sales. But we have an awesome head of head of sales, Tommy, and he’s really pushed us hard on sales hiring and it’s worked phenomenally well for us. I think that the reality is, again, going back to this flexible platform that you have simple use cases, but also very complex use cases. The complex use cases takes a hand-holding process. Yeah, it started off small, but it’s a big portion of our revenue today is the hand-holding process. Nathan Latka: When did you hire that first VP strategist and Tommy? Can you tell me what sort of revenue hit before you pulled that trigger? A lot of founders wonder when to pull that trigger. Zeb Evans: We were around just a few million dollars in revenue, probably a little bit more than that. I would say six, seven, eight million in revenue. Zeb Evans: Of course, we had some enterprises reaching out to us and I was using a fake name to be the acting salesperson in some of the calls. Zeb Evans: Yeah, when he joined, we hired our first couple of sales people and it’s just been a rocket ship growth on the sales side. Nathan Latka: Why did you feel you needed a fake name? Zeb Evans: You appear small. You appear small when the CEO is the person doing the sales and answering the question. I had to do that early on. Nathan Latka: What was your fake name? Zeb Evans: Tyler. Nathan Latka: Tyler. I love that. All right. Cool. Nathan Latka: Zeb Evans: We’re a little bit less than that. Nathan Latka: Okay, a little less. Do you think you’d break $36 million run rate by the end of 2020? Stretch scope? Zeb Evans: We’ll see. Nathan Latka: Stretch scope there. Nathan Latka: It sounds like you had a meaningful revenue. When you look at the $35 million raise that you guys just did, a lot of people would say that’s a lot of money for the first money into a company, but it sounds like you had scale. What was the tipping point for you where you said, “You know what, I’m going to intentionally choose the VC path,” which is very different than the build a $20 million profitable, pay myself dividends as founder path. Zeb Evans: Yeah. It’s a great question. The simplest answer is that I didn’t enjoy many of the VC conversations that I had until I met David Sacks at Craft. He’s obviously an entrepreneur himself and I think was more in the mindset that I was, and letting us run the company and doing the same things that we’ve always done. Zeb Evans: That, I would say, would be the biggest piece to it. But the second piece is, look, we’re in, again, a very, very competitive market and so we’ve had competitors … Everybody rips everybody’s features off. And we have people copying our messaging, copying our ads, copying many of our features. It’s a defensive play in many ways, is to do this. I think that it’s more about getting our brand out there and getting market share pretty quickly. Zeb Evans: What I always will advocate for is, go as far as you can without raising, to get product market fit. Then when you do raise, you have the levers to pull. You have the leverage. Nathan Latka: Walk me through a conversation with David Sacks. Obviously you had leverage. I assume you were profitable going into the VC race. Zeb Evans: Yep. Nathan Latka: Yeah, and obviously you’re not profitable now because you’re now investing that cash. Correct? Zeb Evans: We’re trying not to be profitable. Nathan Latka: You have to be. Zeb Evans: Nathan Latka: It’s like once you raise, you got to invest it to drive growth. Zeb Evans: Yeah, exactly. Nathan Latka: Interesting, okay. Nathan Latka: In your thesis, I believe you already touched on this, your thesis in driving growth, as you said, you just started really scaling up paid spend. You also just started scaling and bringing on your salespeople. Anywhere else you’re going to invest that 35 million? Zeb Evans: It’s mostly that. Of course, we’re going to ramp up our organic marketing side also. That’s our engine behind … That’s still vast a majority of sales today and self-service. We’ll continue ramping that stuff up, as well as customer service, or customer service companies. I want instant demos, instant response times 24/7. Nathan Latka: Last couple of questions here before we wrap up. Churn is obviously critical in this sort of business. What are you guys trying to optimize for in terms of gross churn monthly? Zeb Evans: We’re under 2% monthly. 1 to 2%. Nathan Latka: That’s incredible. I’ve talked to a lot of other people in your space and they’re not under 2% gross revenue churn per month. Are you doing anything specifically that you feel like is really driving those great numbers? Zeb Evans: We ship a new version of ClickUp every Friday, and it rallies our customer base around us listening to them, and they broadcast us because of that. I think it really just … We’ve created this organic fan base around releasing every Friday, and shipping a new version of ClickUp every Friday. People live stream the event, everybody Tweets about it. I think that has a lot to do with it. But it also is just the preface for how we care and how we’re so intentional about product and improving the product that I think people stick with us. Nathan Latka: Now, flip side of churn. When you have a seat base of 300,000 paid seats, a two or $3 ARPU increase across that base starts to become meaningful. Do you have meaningful expansion revenue yet, or is that something maybe for 2022? Zeb Evans: I mean, we do. Our net retention is very high. I think that it certainly, obviously, increases as you go up market for retention. Our SMB, I don’t have the exact numbers where SNB is certainly less than our enterprises. Nathan Latka: When you say high net revenue retention, or net revenue retention, what does that mean? How high? Zeb Evans: We’re like 150. Nathan Latka: Incredible. Nathan Latka: If you’re churning 24% and you’ve got to be expanding 75% to get to net 150. Interesting. Zeb Evans: Yeah, something like that. Nathan Latka: Most of that is seed expansion or additional product features? Zeb Evans: It’s it seed expanse. Our actual most revenue product is our middle tier, our business tier, which is the premium one, but the vast majority of people, it’s like 95% of people, start with the unlimited. Zeb Evans: We do feature paywalls a little bit differently in the sense where everybody actually gets access to the feature that is paywalled and they don’t really know that it’s paywalled until you start using it. You get a hundred uses of every feature. Then it changes user behavior because users generally will optimize for the features that are free. If you don’t really let them know that they’re not free, then they start using them. On the flip side of this, really, our mission is just saving people time, making people more productive. We strongly believe that lots of these paywalled features do that. That’s why we want to get them in front of users. Nathan Latka: I can feel folks listening to episode going right now, “But Nathan, you’ve got to ask Zeb, but if you don’t tell them that it’s paid upfront and you want to get them addicted first and then throw a paywall up, there’s got to be pushback when you throw up the paywall.” You’ve obviously thought through this. Zeb Evans: There is some at the end of the day, but again, our value I think is outweighed on that. People end up appreciating that they actually started using the feature that they would have not used otherwise. Nathan Latka: Yep. Fair statement. All right. Nathan Latka: Last question here on cap, it sounds like you know the numbers pretty darn well. If you’re bringing on a new account with 10 seats at 10 bucks a seat, so a $100 per month account, what are you willing to spend to that customer? Zeb Evans: Yeah. We’re still figuring all that stuff out right now, and it greatly depends on what channel you’re buying from. We can get customers for as low as a thousand bucks, paying customers for as low as a thousand bucks. We want to aim for low thousands. Honestly, as you know, when you start testing some of this stuff, it gets expensive. It gets a couple thousand, $3,000. But the reality is, our blended CAC, it becomes so low because of organic. 95% of users are still organic, is that we can spend a little bit more outside of what our lifetime value would be, I think, for most companies. Nathan Latka: Zeb, before we wrap up with the famous five, is there anything you’re like, “I can’t believe Nathan didn’t ask about this. This is the big thing right now.”? Zeb Evans: I know we touched on all of the revenue stuff, and I think, again, that this market is just so, so hot and frothy right now. It’s the right timing market to be in, but it’s always a competitor differentiation questions that we get. How are you different from your other products? Nathan Latka: You obviously got evaluation from Sachs. Why not take that evaluation and go to Monday and say, “Want to buy us before we scale and try and beat you?” Zeb Evans: I don’t really have any interest in doing that. I’ve exited a company in the past, and I feel like this is the one to go public and create that meaningful lasting business that’s here when I’m gone. Nathan Latka: Public or bust. You heard it here first from Zeb Evans. Nathan Latka: Famous five here, number one: Favorite business book. Zeb Evans: Thanks so much, Nathan. Zeb Evans: Yeah, my favorite business book, I actually love, it’s the called The Slight Edge. Everybody at ClickUp reads it every single day, or every single time they start. It’s basically about our core value of progress over perfection, growing 1% every day. Nathan Latka: Number two: Is there a CEO you’re following or studying? Zeb Evans: I love Elon Musk. Nathan Latka: Number three: Favorite online tool besides your own. Zeb Evans: Front. Nathan Latka: Number four: How many hours of sleep are getting every night? Zeb Evans: 4.5. Nathan Latka: 4.5. Very specific. Is that … What’s you situation? Married? Single? Kids? Zeb Evans: Single. Nathan Latka: Okay. Got it. Nathan Latka: No good. Last question … Sorry. How old are you? Zeb Evans: 30. Nathan Latka: Nathan Latka: Last question: What’s something you wish you knew 10 years ago when you were 20? Zeb Evans: Great question. I think that tech was going to be the hot thing, and that I would have learned coding earlier than I did. Nathan Latka: Guys, there you have it, ClickUp. Flirting with call it a 30, $35 million run rate, serving over 30,000 companies across 300,000 paid seats, that average 10 to 15 bucks per month. They’re driving great growth. They just did their first round $35 million round, but they had all the leverage. They were profitable, had many millions in revenue. Today, they’ve got a team of 130 people, scaling quick. 20 engineers, scaling up their sales team, marketing team of 40. First hundred customers all came from organic and SEO inbound. Now testing many more channels. Nathan Latka: Zeb, thanks for taking us to the top. Zeb Evans: Bye bye, thanks Nathan. Nathan Latka: One more thing before you go, we have a brand new show every Thursday at 1:00 PM central. It’s called Shark Tank For SAS, we call it Deal Or Bust. One founder comes on, three hungry buyers. They try and do a deal live, and the founder shares backend dashboards, their expenses, their revenue, ARPU, CAC, LTV. You name it, they share it. The buyers try and make a deal live. It is fun to watch every Thursday, 1:00 PM central. Nathan Latka: Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2:00 PM central. To make sure you don’t miss any of that, make sure you subscribe button below here on YouTube. The big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn’t want you to miss breaking news in the SAS world, whether it’s an acquisition, a big fundraise, a big sale, a big profitability statement or something else. I don’t want you to miss it. Nathan Latka: Additionally, if you want to take this conversation deeper and further, we have, by far, the largest private Slack community for B2B SAS founders. You want to get in there. We’ve probably talked about your tool, if you’re running a company, or your firm, if you’re investing. 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