Avanoo is a 500 Startups Batch 12 company that went from being a zero dollar business to hitting a million dollar run rate by the time they got to Demo Day this past May.
I first met Prosper and Daniel back at Founders’ Weekend in Vegas, and I’ll be honest — I was a tiny bit skeptical of these earnest young founders and their plan to build a business off of 3-minute self development videos.
But that’s exactly what they’ve done, with clients like Toyota, KPMG and Kaiser Permanente, among others of similar gargantuan stature.
Today’s growth case with Avanoo’s Prosper Nwankpa looks at:
- how Avanoo went from a 3% email open rate to 60%
- their biggest time waster for building out sales teams
- their early strategic mistake that almost cost them their business
- and how they went from zero dollars in revenue to a million dollar run rate in 10 months
Zero to a million. Give us the summary.
We partner with the world’s best experts in human potential — New York times bestsellers, renowned corporate speakers and others — and we work with them to create 3 minute a day, daily programs that help people unlock their potential and improve their performance in the workplace.
Back in August 2014, we had zero dollars in revenue. In April 2015, we did $50,000 in revenue. In May, we hit $80,0000 — our million dollar run rate.
When we joined 500’s Batch 12, we were still messing around with consumer and doing B2B as a trial, thinking about how to crack into the corporate training space.
When we started working with the Distro team, it became very clearly that we needed to focus on enterprise in order to scale.
So strategic guidance from the Distro team — aka Distro Real Talk — moved you to B2B, and towards that million dollar run rate.
Not only that but Distro also helped us to focus on a more systematic way to bring clients in and convert them to paid product.
Dominic, aka DistroDom, was instrumental in helping us figure out how to get leads, to turn cold leads into warm leads.
How did you turn those cold leads into sales?
We experimented in a ton of things: advertising on LinkedIn and Facebook, social media outreach through Twitter.
In the end what ended up working well was finding people in our target market through LinkedIn (looking at positions and companies we were interested in). We would then cold-email them and try to get them interested in Avanoo.
Early on, it was a pain in the butt because our emails were all going to spam or not being received. Even when they did go through, we didn’t have good subject lines and so those emails didn’t get opened.
Eventually, after a lot of experimentation and a few key fixes, we went from an open rate of 3% to over 60%.
We experimented a lot with where we got our leads. We started out with data.com because it was super cheap, but the emails were so crappy, and that’s how we got the 3% open rates. Heads up for anyone who’s looking for a bunch of crappy leads 🙂
Then we had to figure out how else to get leads. At first it was like, these are email addresses, why wouldn’t they work? Dom and Matt helped us to a lot here, to understand that just having a bunch of email addresses isn’t enough.
So we tried another source of emails — finding people randomly on the Internet, visiting the company’s website, using our gut to decide who the key decision makers were, doing whatever we could to figure out their contact info, and then cold-email. That worked a little better.
But it was when we got into LinkedIn that we discovered the gold mine.
We saw the open rates go above 60% when we started using LinkedIn for sales sourcing.
Then we layered Proleads on top of it, and that got our response rates up as well.
It’s a lot of grunt work (more on this below).
What were some things that you were mistaken about, growth-wise, in the beginning?
1. Consumer vs enterprise
I thought our big bet was going to be in consumer because we had started the subscription model and it was mildly successful early on. We had some early traction there, and I thought hey if we can just push it a bit more, it can scale.
But when we investigated, we realized that growing a consumer base wasn’t going to happen very quickly and/or we were going to have to spend a LOT of money to get it to happen.
Realizing that we didn’t have a lot of money to spend on marketing, we decided to focus on growth we can achieve for free, or with a lot of grunt work.
2. Grunt work
My second mistake was thinking we weren’t going to have to do a lot of grunt work 🙂 We thought, “I can just write a script to farm a bunch of emails!”
And I actually did this!
I got 3 million emails. And then I thought well now I have 3 million emails, all I have to do is email them and badabing badaboom.
We were wrong about that one too.
Anything you can do that easily, a lot of other people can do too. It would be overdone, and value-less — impossible for it to make money.
3. Enable domain keys
After we started using LinkedIn for email sourcing, we were able to get a 30% open rate.
But Dominic (aka DistroDom) kept telling us, “Dude, you can definitely get over 50% because I’ve gotten over 60.”
I was thinking, “In what WORLD are you getting over 60% open rates??”
It turns out we had to enable domain keys. Dom telling us, “Dude, I know you can do it!” and helping us figure out how was the key to this.
4. One magic bullet
It’s never one magic bullet that does it.
We learned the hard way that finding salespeople is not easy.
We figured once we have the leads, we can just hire a bunch of salespeople, and close the deals. We found some sales people, they could talk a good game, and had experience in other sales, but when it came to enterprise, it was worlds harder to close.
There’s a certain level of polish + passion + knowledge of industry + knowledge of product + timing + persuasion that is required to get the deal made. Not many people have this mix, and that was a hard lesson for us too.
What have you done about your sales problem?
My cofounder has been selling, haha.
And we’ve found one other salesperson who’s been helping him out. And we’ve leveraged everything else we can to free up Daniel’s time and make it happen.
We’ve also optimized the hell out of the process to make it easier for the salesperson to succeed.
As a success metric, we used to get to scheduling the demo on the 3rd call, but now we do them on the 1st call.
A huge factor is that we’ve gotten really good at being able to tell up front who’s going to be a good client, who’s ready to buy and then getting them into it.
Now we know our sales process works, and we just have to put enough firepower into it.
What advice would you give founders just starting out? Just starting out with growth?
We really paid attention to our customers to try to understand what they wanted, “listening between the lines” to understand what they really need. That helped us a lot in our growth process, to understand not just what they say they want but what they’re DEALING WITH.
If you think about who the user is, what problems they’re dealing with, this became really clear to us during 500 through all of the talks and workshops.
Understanding the customer is more important than building the product. Their situation will inform everything about what you do.
Don’t be afraid to blow things up! 🙂 hehe. Sometimes you need to blow things up and do something else, other times you need to keep it going.
What were your ANTI-time wasters?
Spending time with founders in 500 was more than worth it. There’s a lot of synergy, and people are really helpful in terms of making intros. I see it happening now, when most of us aren’t even that big yet. Imagine that those friendships remain this tight and we actually go places and grow much bigger networks.
500 pitch prep was very useful as well (shout-out Andrea Barrica). After Demo Day, a few of us entered a pitch competition, and that was just funny.
It was a world of difference to see the 500 pitches versus everyone else. We won all places — 1st, 2nd, and 3rd place.
What’s your favorite thing about the Accelerator?
We came to 500 for funding, and this is still reason number one just because it was so easy to raise funding and not have to waste months and months chasing money.
The second thing… would have to be Dom. It’s a hard pick. He’s a really close second to the money 🙂
Andrea helped so much as well. She understands the kinds of problems that startups deal with, and understands how to help you get some perspective.
We raised 3.3M total from very respected VCs in the Valley in SAAS and B2B. New money was about 3M. We did that in record time, valuation is strong at $15M premoney. We feel really fortunate.
What’s next for us is how to crack the content marketing conundrum. It’s a long investment that will eventually pay off for us. We feel like it’s a really big opportunity because we have nothing but really amazing content.
What are you most excited about coming up for Avanoo?
For me personally, I’m really excited about what we’re building because we have a real chance at changing the world in a meaningful way. 🙂
There’s so much hurt. Why do people ever get fired? Why do people ever divorce? Why do people not know how to raise their kids? There is so much potential not tapped.
What we found at Avanoo, is that the potential is all there within each of us. It’s simply about finding it and learning how to deploy it.
That’s our mission and that’s what I’m always excited about coming up — enabling people to become superstars in all areas of their lives.
MOAARR IMPORTANT ENDNOTES N STUFF
1. AVANOO IS HIRING
- Customer Success Manager
- Account exec
More info on Avanoo jobs here.
2. Check out the 500 Startups Accelerator
