Scaling to $10 Million: Humanity.com Founder Ryan Fyfe (Part 4)

Sramana Mitra: Take us through to the next round of financing. What were the milestones for that round?

Ryan Fyfe: The next round was a painful experience for me. The company was doing fantastic. We were probably at about $150,000 MRR. Customers loved us. Since I was flying in and out of San Francisco, I wasn’t really that much in tune with the corporate culture and what was going on on the ground.

I signed a term sheet with a tier one VC. I found out a lot of things that were going wrong within the company. I walked away from that term sheet and ended up closing a much smaller funding round with a VC that was a lot more understanding of what was going on. That’s the path I ended up taking at that time.

From there, it became about scale. The biggest thing that I struggled to scale is myself. Scaling teams or adding developers was easy and natural for me, but when it came to hiring an executive team, that was something I just had no experience with. That was probably the most challenging thing.

Sramana Mitra: Maybe you can summarize for me two or three different rounds of financing that you did and the metrics for each of those rounds.

Ryan Fyfe: SaaS valuations historically were fairly typical in terms of multiples of MRR. The kind of range that we always use was about 100 times MRR. It would vary a little bit based on that. It looks like we’ve raised two or three rounds. In reality, there were bridge notes that go in to making that up. One was at about $150,000 of MRR and the next one at about $300,000 of MRR.

Sramana Mitra: You said that’s $12 million in total.

Ryan Fyfe: That’s correct.

Sramana Mitra: In terms of customer acquisition strategy, what would you say is your journey? What did you learn? What worked? What experiments did you do? How did it all play out?

Ryan Fyfe: The thing that has worked for us since the beginning was the online organic marketing. Those are customers who found your product through search engines or review sites. They are highly qualified leads. The two things that worked well on that was their low cost of acquisition. In the early days, we were able to do a 7:1 LTV which is phenomenal when it comes to cost.

As we started thinking through new channels, we experimented a lot, but to be honest, most of that stuff just didn’t work for us. It wasn’t just in our DNA. Dealing with outbound sales is very different from selling a prospect or engaging with someone who already knows that you have the solution to a problem. That’s something that we’ve struggled with quite a bit.

This segment is part 4 in the series : Scaling to $10 Million: Humanity.com Founder Ryan Fyfe
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