Knak is aggressively churning smaller customers in favor of enterprises
CEO Pierce Ujjainwalla reports contracts stable and no extra churn
The startup is still optimistic about 100% year-over-year growth in 2020
For almost 7.5 years, Pierce Ujjainwalla ran a consulting agency that helped clients set up their email campaigns via Marketo. During this time, he noticed a recurring client need: to make emails consistently on-brand without putting too much effort or resources into it.
He built Knak—a SaaS platform that does exactly that. It has integrations with Marketo, Eloqua, Salesforce Marketing Cloud and other popular email automation tools used by enterprises—who send emails in heaps to hundreds of thousands of subscribers. Our host Nathan Latka sat down with Knak founder and CEO to learn the numbers behind the product.
Knak Churning $99 Customers to Double $1.2M Revenue in 2020
Ujjainwalla was reluctant to share how many customers Knak has now—saying the number is still “in the hundreds”—but he did emphasize that the company is now focusing exclusively on enterprise customers, letting smaller $99 customers churn. Ujjainwalla’s indication that the company doubled its revenue over the last 12 months means that Knak is at around $1.2 million annual recurring revenue as of April 2020.
While the push for enterprise clientele is an almost obvious evolution, the CEO does point out that enterprise customers are much more likely to stick around. “$99 customers, just as easily as they came on to your platform, they’re gonna get off it,” Ujjainwalla explains.
But it’s not easy to just dismiss your old customers who helped you build your business. “We gave them a way to either join us on our new mission,” the CEO said. “Some people said ‘you know, we’re gonna opt out,’ which we totally respect and we still thanked them for their business.”
While the $99 monthly option remains to this day available for smaller customers, some chose not to continue their subscription. Ujjainwalla says some of the old customers had all the email templates they needed and didn’t want to continue their subscription with a company that’s becoming too big to focus on their needs.
Current average sale price has gone up from $500/mo to over $900/mo due to expansion into enterprise clientele.
Knak’s 25 Employees Safe, No Covid-19 Churn, CEO Says
Up until February 2020, Knak has been relying exclusively on inbound marketing. “Everyone we’ve ever sold on has come to us through our website in an inbound manner,” the CEO clarifies.
By April 2020, Ujjainwalla has hired 3 quota-carrying salespeople to accelerate enterprise sales. Knak employs 25 people in total, 8 of whom are engineers. All 25 team members are in Canada—some of whom work remotely.
The CEO says Knak is fortunate not to have seen a spike in churn due to the Covid-19 pandemic. “If you look at what companies typically dedicate to their marketing budget, a huge amount of that is gonna be in-person, physical outreaches,” Ujjainwalla ponders why the recession hasn’t affected his company yet. “Now, with Covid, I think digital channels are becoming more important than ever before.”
Looking at his platform analytics last month, Ujjainwalla has noticed that the number of inbound emails Knak got has doubled since February. As far as churn is concerned, the CEO says none of the customers have expressed willingness to cancel or postpone their contracts.
“We’re here to help them. I think one of the things we’ve communicated to our customers is that if they have an issue with their subscription, if they need to pause their subscription, we’re happy to discuss that. But up to this point, no one has churned because of this,” the CEO adds.
Knak CEO Still Looking to Grow 100% YoY Despite Pandemic
Not only Knak is not seeing any churn, they also have years of runway to survive the recession, according to the CEO. Sitting comfortably in a market downswing, Ujjainwalla can’t help but look to the future.
“One thing we see as a company is that when we started this, we thought ‘hey, this is a platform for marketers who are gonna help build their communications.’ What we have realized over time is that this is actually a platform for everybody in a company who needs to send out on-brand communications,” Ujjainwalla shares.
In-house communications, development communications, partner communications, sales communications are all potential targets for expansion, the CEO says.
Ujjainwalla is also looking at expanding the platform functionality. The current goal is to become a “platform agnostic” email marketing platform—meaning users could plug into Knak’s branded templates into any email software they use.
Knak CEO Happy Staying Bootstrapped With Canada Funding
Ujjainwalla says he’s happy staying bootstrapped for the time being, with Canada’s rigorous startup support systems, such as IRAP. With IRAP, startups can “nominate” specific projects they’re working on, and the government may choose to fund the development.
Adobe Summit used to be the biggest lead generation event for Knak, and this year, it’s not going to happen. For now, with plenty of runway and stable contracts, Ujjainwalla remains optimistic about their 100% year-over-year growth target.
Nathan Latka’s 5 Question with Knak Founder and CEO Pierce Ujjainwalla
- Favorite business book? “Who: The A Method for Hiring by Geoff Smart.”
- Is there a CEO Pierce is following or studying? “Basecamp founders.”
- Favorite online tool to build Knak? “Salesforce.”
- How many hours of sleep does Pierce get? Married, single? Kids? “Trying to get full 8 hours. Married, 2 kids. I just turned 35.”
- What does Pierce wish his 20 year old self knew? “It’s not all about making money and it’s actually doing what you’re passionate about with people that you enjoy doing that with.”
2020: 0 (bootstrapped, interview)
2018: $600k (interview)
2019: $1.2M (Getlatka)
2020: $2.4M (prediction)
2018: 600 (mostly small $99 customers, interview)
2019: 100 (churning smaller customers, Getlatka)