Bootstrapping to Inflection: Dan Stewart, CEO of Happy Grasshopper (Part 6)

Sramana Mitra: Talk a bit about the ramp in customers. What was the first year and how did it grow from there?

Dan Stewart: In the first year, we ended up with tens of clients from the real estate coach who was talking about our service. Somehow, a very prominent real estate agent up in Washington named Ben Kinney heard about us, and he subscribed to our service. I had no knowledge about him but he enjoyed the result of our service. One day on a webinar, he mentioned that he really liked us and he told his audience that they should take a look at us. We thought we were being hacked because our web traffic just spiked. It was completely unexpected.

From that, we ended up with hundreds of clients. We got to know Ben. He is one of the most successful real estate agents in the world. He has multiple millions of dollars in gross commission income per year and offices all over the world from Pacific Northwest to London. Ben is just an amazing individual. He helped us get from tens to hundreds. Through referrals, that grew to low thousands. Then we got to the point where it seemed like our churn, which had always been low, was still low.

At scale, it came to be at par with our acquisition rate. We kept focusing on it. We recognized that our clients wanted more from us than just messaging for their past clients and sphere. I remember that you and I discussed this. I wanted to pivot a little bit and start writing these lead conversion campaigns. Your advice to me was a no and to stay the course. I didn’t listen to you. We went ahead and we added the lead conversion and eventually the recruitment campaigns to our offering. That helped us break out of the plateau. It also had another really beneficial effect.

In hindsight, we really didn’t have a choice. Geological’s revenue was beginning to be affected by that change in legislation in Florida. It became important that Happy Grasshopper become self-sustaining. With the custom content campaigns, we started by collecting a few hundred dollars to see if people wanted it and then raised the price to $1,495 for single agents and $1,895 for teams. That’s their initial investment. That decision to collect that revenue allowed us to continue to cash flow our business and growth.

Sramana Mitra: This is basically a discounted annual rate for an agent?

Dan Stewart: No, that’s the initial investment.

Sramana Mitra: Setup charge.

Dan Stewart: Exactly. The setup charge allowed us to cash flow our growth. Then the MRR is either $99 or $199 per month.

Sramana Mitra: In terms of actual calendar year, which year did you go introduce that setup fee-based model for cash flow mitigation?

Dan Stewart: 2013.

Sramana Mitra: What did that do to revenues? Form 2012 to 2013, what was the revenue?

Dan Stewart: I’d have to look it up, but it was the introduction of that model that got us above a million in revenue.

This segment is part 6 in the series : Bootstrapping to Inflection: Dan Stewart, CEO of Happy Grasshopper
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