The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:33:10 · Harry Stebbings, Luke Harries
[00:33:10] S0: When you look back at the distribution, the channel strategy, what mistake do you think you made? [00:33:16] S1: The mistake I think we made is not hiring early enough. We had super strong PMF right from the start. We had channels working right from the start, but we didn't actually have anyone focused on certain channels. So for example, affiliates, we set up over a year and a half ago, and that now is bringing in over, you know, tens of thousands of dollars of MRR per month. But this was set up a year and a half ago by one engineer in one week, and then no one's touched it since. And what we should have done is once we've seen signs of life, given we already have PMF overall, staff one person who can focus on growing that one product and those one set of KPIs and nothing else, keep them laser focused. So, yeah, overall, I wish we had staffed up more channels with more dedicated people sooner. [00:34:00] S0: When we think about a channel working, what does that mean? I had this conversation with our team because, you know, we have not... I I think 300,000 followers on TikTok and Yeah. Millions of views a month. Honestly, the conversion back to the main pod, not clearly attributable.
00:34:00 · Harry Stebbings, Luke Harries
[00:34:00] S0: When we think about a channel working, what does that mean? I had this conversation with our team because, you know, we have not... I I think 300,000 followers on TikTok and Yeah. Millions of views a month. Honestly, the conversion back to the main pod, not clearly attributable. [00:34:15] S1: Yeah. Maybe it's there, but not clearly attributable. Is that working? I think social channels are tougher. For core performance marketing channels, it's very clear. Is the CAC less than the predicted LTV of the person? So for, say, affiliates for different paid marketing, that's super clear. With organic and particularly enterprise marketing, trying to gauge that relationship is much harder overall. And instead, the way I do it is you have to look over a longer time horizon and allow for more fuzzy attribution. So for example, we're going to be doing a big enterprise marketing push in San Francisco. We're doing billboards. We're doing podcasts. We're doing newsletters. We're doing events on the ground. And we're not going to measure any one channel in isolation, but instead, we'll look over the campaign. What was the relative lift in number of leads in that geo compared to a comparable like New York or Seattle? [00:35:06] S0: So it's converted dollars. It's site visits in that geo? Yeah. How do you think about North Star which actually determines value?
00:35:06 · Harry Stebbings, Luke Harries
[00:35:06] S0: So it's converted dollars. It's site visits in that geo? Yeah. How do you think about North Star which actually determines value? [00:35:14] S1: What we've landed on for the marketing... So this is the enterprise marketing team with the enterprise parts of our business. What we've landed on as our North Star metric there is number of marketing sourced sales qualified leads. Marketing has identified a lead. Someone signed up for a webinar or an email or even signed up from the product. We've managed to get them to book a call with an SDR, and then that SDR has said, yes. This person's great. And so that's our North Star metric, and the entire marketing team is focused on how do we drive that number up. Webinars. [00:35:45] S0: Yes. That's still a thing. [00:35:47] S1: It is a thing. It [00:35:48] S0: makes me think of, like, you know, the, like, kind of phones for you customer support with the Microsoft. Hello. This is Greg. He reached your webinar.
00:35:48 · Harry Stebbings, Luke Harries
[00:35:48] S0: makes me think of, like, you know, the, like, kind of phones for you customer support with the Microsoft. Hello. This is Greg. He reached your webinar. [00:35:56] S1: Yeah. So webinars do definitely work. The key issue with webinars is the name webinars. And so I would argue that what we're doing now is basically a webinar on growth. The only thing that actually we're probably missing is like, one, we're not live streaming it. Two, we're not doing email capture. But then you can then take this podcast, and then you can repurpose it and push on all the different platforms. I think OpenAI did something quite smart recently where they called it OpenAI Academy, which is basically a webinar platform they're putting on videos for businesses or videos for educators, and they're doing email capture. They're effectively doing webinars, but because you're calling it Academy and it's focused on giving value, I think it goes down a lot better. So, yeah, I think we'll be rebranding ElevenLabs webinars to something else soon. [00:36:40] S0: I'm gonna throw out some bold statements on topics we mentioned. You said cat to LTV. Yes. Does cat to LTV matter because it's so inaccurate and transient? Reason being Mhmm. Your cats go up and down very quickly over time, and your LTVs as you expand product lines [00:36:56] S1: Yes. [00:36:56] S0: Can significantly expand and come in as an entry product and suddenly I'm using four or five. Does it really matter and can it not mislead you?
00:36:56 · Harry Stebbings, Luke Harries
[00:36:56] S0: Can significantly expand and come in as an entry product and suddenly I'm using four or five. Does it really matter and can it not mislead you? [00:37:04] S1: Actually, the day to day metric and ratio we're really thinking about is CAC to payback period rather than CAC to LTV. We set different payback periods depending on which product line and how aggressive we want to be, but these vary between, say, twelve months to twenty four, maybe even thirty six months for that payback period. [00:37:22] S0: And the thirty six would be for the heavy enterprise.
00:37:22 · Harry Stebbings, Luke Harries
[00:37:22] S0: And the thirty six would be for the heavy enterprise. [00:37:24] S1: Yes. Exactly. Where you know the customer is going to retain, they're maybe even signing multi year deals. And the way we set it up is each different channel has a marketing lead, and they're thinking about this ratio. And if it's positive, that basically means they should be putting their foot on the gas as quickly as possible. You're exactly right though that over time you may be able to increase your payback period sooner. So for example, you may layer in an enterprise product and then you can sell your creators onto your enterprises. The way I would think about this for other companies and as well as for ElevenLabs is you set this goal. If you're above that ratio, if the ratio is looking great, you should absolutely be putting your foot on the pedal and be trying to grow as quickly as possible. Some people go, oh, we'll just raise our performance marketing spend by 20% a week. Well, no. Like, take advantage of the opportunity. Grow it as quick as you can. On the other side, if it's actually below, you could give yourself more freedom because maybe you got a bet on the thesis of how it will play out where still you're like, okay. Yes. We are losing money over the first two years for this product, but that's a bet we want to make. But, actually, if your marketing's going very well, which for lots of these great AI companies there are, then, actually, it's more just, like, clear permission to grow as quickly as you can.