The founders at iZooto have had some tough learnings. They saw their previous startup shut down without a say because they diluted their equity to a minority stake. With iZooto they took a better bet, to grow the Value SaaS - read capital-efficient - way. Four years down, they’ve come a long way from initial missteps - from pushing publishers to change mental models to getting customer hugs in editorial rooms. The bet has paid off spectacularly, not only for them but also their investors and employees.

iZooto grew 20X over the last 4 years, crossing $1mn in ARR and recently wrote dividend cheques to their investors and implemented an ESOP buyback for employees, a rarity at their stage of business.  

About iZooto: iZooto is an owned marketing platform for media businesses that helps them engage their customers via push notifications and reduce their dependence on Google and Facebook for marketing.

Growing 20X in 4 years: Customer persona focus delivered

Creating a product is a long process. There is a lot of grind and the rewards are slower. When we started iZooto, a lot of our use cases were around e-commerce. E-commerce businesses were looking for push notifications and we were selling to travel, banking, publishers and so on.

We soon realized we can’t have too many ICPs, each with different requirements. It became a nightmare for engineers, product managers and account managers. And we saw a lot of churn as customers were choosing products that were built for their genres.

We had to choose a segment and we had a lot of discussions around product-market fit. We asked ourselves:

  • Who are the right customers?
  • Why should we be serving them?
  • Why should they be having us?

Collectively, we decided to choose publishers as our customer segment. That’s because when we worked with a lot of publishers, we found that they were extremely underserved on the marketing front. We were able to make an impact in their businesses.

We decided to stay niche because as a bootstrapped startup we didn’t want to get into a race, where it’s assumed that whoever raises more capital wins the market. When we joined Upekkha we were at $20,000 MRR and now we are at $400,000 MRR. It's been a 20x jump in the last 4 years. We gave out our dividends in October 2021 and it was 3x of what we have invested in iZooto in the last 5 years.

Choosing publishers as our target segment was a major turning point for us. It has brought a lot of confidence in the team, we have gained clarity in what kind of people we should hire, how they should be trained, what kind of conversations they should have with our target audience. It might sound simple but it has made a big difference in the way we have built our organization. It has helped our product team understand how they should think about the product.

Why Value SaaS or capital-efficient growth?

All four founders of iZooto had just come out of a company that was played by investors. While it was not a great business, there could have been some meaningful outcome for us. But as our investors had a majority stake in the company, we, the founders, didn’t have any control. Eventually the business had to shut down.

So all four of us didn’t want any investors to come onboard at least for the first 12 months of building iZooto.

When we joined Upekkha, we realized that there are a lot of benefits in remaining as founders and not raising capital too early. The other reason is we became profitable right in the first year, which helped us sustain ourselves.
Meet the iZooto team: Credit - iZooto

Disrupting norms: iZooto’s vision for publishers

We are not helping marketers in publishing companies and making their lives easy. We are challenging them to build their own audience.

Publishing companies do not call website visitors as customers. They call them visitors. They do not have a CRM process, do not calculate the lifetime value of their customers because that’s not how their business is built. We want to challenge all these notions about the publishing business.

They are more dependent on Google and Facebook to bring visitors to their website. We have been telling them that they should build and own their audience so that more revenue streams around subscriptions, e-commerce open up. It wouldn’t happen unless they start owning their audience.

So we not only want to educate them but also provide them a platform to own the audience, have direct communication with them, understand them better and build a long-term relationship with their customers.

Customer hugs to returning churned customers

A good surprise is when customers come back after leaving you. They churn out and go to a competitor product because they did not like the product or the pricing. After a few months they come back as the other product was able to only meet their pricing expectations but not product expectations. Customers coming back after churn delights me the most.

Very often - and especially in the publisher space - churn happens all the time. When they use our product for a long time, they hear someone saying the other product is better and so they churn. But after a few months, they realize our product meets their expectations more than the competition and so they come back.

Sometimes, when we walk into the editor's room for customer meetings, we get hugs because we help them over-achieve their targets. I have heard publishers telling us during our customer meetings that iZooto is their lifeline and achieving targets completely depends upon how iZooto is performing.

iZooto creates a larger impact on our publishers during the first and second quarters, helping them to over-achieve their target by 20% to 25%. We contribute to 25% to 30% of the traffic for the largest publishers we work with.

These accolades put a lot of pressure on us to deliver more and more. But we enjoy it when our customers love us.

How iZooto is structuring for scale

We are four co-founders and I am not someone who is specialist at everything. So, I do not try to stay on top of everything, honestly.

We have learned it the hard way that as founders we won't be able to focus on everything.

I depend on my Co-founders Sachin and Vivek to solve their parts of the puzzle so that I can focus on things that I am good at. When we do it together, we remain in control and keep everything in check. Even when some critical people leave us, one of us steps in and fills in their shoes.

Over the last one year, we have built processes that allow seamless information flow among us. Be it finance, legal or operations, we have built processes based on the learnings we have had at the Upekkha cohort.

The knowledge sharing that happens between startup founders of the Upekkha Community has helped us understand the process better and streamline it to suit iZooto's requirements.

The Value SaaS way: Building a startup is not a ‘go big or go home’ gameplay

What we have learned from the Upekkha Community is that every action we take during our journey should have a purpose, be it marketing or PR, and not fall for vanity metrics that startups measure. For example, the number of likes, comments and shares. They are not always value-driven metrics.

With the help from the Upekkha Community we have taken purpose-driven decisions that have helped us remain profitable without any external investment.

Building a startup is not a ‘go big or go home’ gameplay. You don't have to be a $100mn company to succeed. Small SaaS companies can also succeed without raising a lot of funds. With the Value SaaS way, founders can build their SaaS business capital-efficiently and maintain their optionality to find meaningful founder outcomes. If you want to build a bootstrapped SaaS business, then Value SaaS is the way to go to.

Value SaaS Community: Paying it forward in tough times

It's extremely reassuring to be a part of such a community. As founders, we do not always succeed and there will be tough times. But at Upekkha, we have a strong community that is ready to jump in to rescue you from the bad phase.

When pandemic hit two of Upekkha startups very badly, we offered monetary assistance in the form of a loan to them. And we are extremely happy that one of them was able to build their business back and do well. When the other startup was not able to recover and its founder was unable to keep up with the loan commitment, once again the community joined hands to ensure the loan amount was settled. No one feels left out in the community and it's a wonderful feeling to be a part of this group.

‘Startup advice is like a doctor’s prescription’

There are prescriptions for everything but as a founder you should figure out if the prescription would work for you. For legal and compliance related issues, you need to exactly follow the prescription, black and white. But when it comes to sales and marketing, you need to analyze, experiment and choose what works the best for you.

Thank you Malvika Tegta for editing the blog and giving it its final shape

Applications for Upekkha Value SaaS Accelerator are open. APPLY HERE

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