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Bo Møller, EasyPractise:

Presentation at SlideShare: The Magic Money Machine and plugging the bathtub.

October 1, 2015

BO: When I was a child my dad always told me that if I could invent a pocket-size portable helicopter, then I would have made a money machine. I haven’t really succeeded in building this portable helicopter yet, but I think this is my first try at something that could turn into a money machine. (Who has the clicker? Thank you.) And just to kind of let all of you understand what I mean when talking about a money machine, I imagine something where I put one dollar in and I get three dollars out. Now we have two founders at Easypractice. The other founder is a great guy; he believes in building a great product and he loves our customers. So I don’t see any problems in me saying I only care about strategy and making money because the other founder is the nice guy. So, the focus today: growth, profit, making money and building a money machine. First I’m going to talk about the recipe. I believe actually Morten you were the one introducing me to this metaphor and I really love it, so I’ve taken this metaphor and I’m running with it. What we see here is basically a bathtub – that’s what I’m going to call it anyway. The bathtub is filled with water. The water is customers. There’s a small hole in this bathtub. The customers, the water, is pouring out, but here our marketing manager, Jesper, that’s the guy sitting there, is eagerly pouring water into the bucket — or using his bucket to pour water into this bathtub. And that’s basically what we work with. If we zoom out a little bit, this is the churn. This is the amount of customers we lose every single month. And up here, the Jesper task, the bucket of customers, that’s the acquisition. Basically those are the only two parameters we focus on at Easypractice: acquisition and churn. I don’t really care about anything else. If we do something at Easypractice, we want to make damn sure that we either reduce churn, we reduce – we put something in this little hole – or we increase the amount of customers that we acquire. So the strategy: find a big bucket, start pouring; put something into the hole in your bathtub, and go to #1. And I’m a firm –. Thank you for the laughs. I’m a firm believer in execution, so and I think this is rather simple: I believe that once we have this established, it’s just about getting going. Now I have some examples later on about how we do our apps but I actually think the most important part is execution and I’m happy to say that I suggested that to Morten for the list this morning. Yeah. Basically the pouring part, at Easypractice we call that marketing; sometimes we call it customer service as well. The hole, the churn, that’s what the product developers handle. Yeah. So when we go into this whole philosophy of looking at just churn and acquisition, then it actually makes all the decisions in the company rather simple, because the first task we could look at would be finished as the churn. So if we minimize the churn, then we are sure the customers stay longer. If the customers stay longer, then we’re sure we’re going to make more money because we are a subscription based company, so we get 200 kroner each month from our customers so we want them to stay on for as many months as possible. It’s pretty simple. So, in other words, the longer they stay on the smaller the churn, the higher our customer lifetime value. That’s another key metric for us. And I’m mentioning this because this is something we track rather rigorously. High customer lifetime value in turn generates more money for marketing, or product development, or whatever. We can experiment when we have more money with reducing our acquisition costs. This gives us even more money so we can get more customers because we can spend more money on marketing. In other words, we start growing. So, this is kind of a magic circle and that’s the way we work. It’s the only thing we do, really. You can start anywhere in this magic circle, but basically it’s a matter of –. Let’s say we start here. We loan some money. We put them in marketing. Then we stop working on getting our customer acquisition costs down by experimenting with the marketing we do. Making new ads or making new ad formats, or whatever. Then we get more money because we have customers signing up. Then we can start developing even more on the product. So we have less churn, then we in turn get more money and we can spend more money on marketing, and it just snowballs. Basically, that’s the idea, anyway. It has been a rather long process but this is in theory. (Just leave that there for the minute.) I think this is really important. So, yeah, that’s the strategy part. Execution – the most important part. I’m sorry there’s not really any more to the strategy. I think it’s rather simple. I love the ideas that you have, Steffen, and we’re not so many people so we can’t really implement it right now; at least that’s what I’m telling myself; but everything is really in the execution here. This is just to show you where were are currently. We started somewhere – actually Emil founded the company somewhere around 2013 while he was working full time as a development manager – and then sometime later I joined and we invested 50,000 kroner each. We spent that on marketing and a little bit more product development. At the time line at the minute we just crossed 7,000 customers. We’re running a freemium model so they’re not all paying customers, but we are growing rather fast at the moment, around 500 new – I think that’s fast; I know it’s not Simplesite fast – 500 new clinics sign up currently each month in 13 different countries. Right now India is the biggest country for us, so that’s amazing. This is the timeline. How much time do I have? Like two minutes or something? Five minutes. Sure. So, the way we started, and I think this is rather important, is we built a proof of concept, then we called 20 clients, figure out do you want to buy this or should we build something else? So, we sold the stuff on phone in the beginning. Then we spent a little more time figuring out do we want to build a company? I have another company with 26 people working there, which is doing great, so it was also a big decision for me to start something else, but at some point Emil who was the development manager at the other company quit. We dedicated him full time to work at this. Then we increased the budget, we figured out, okay, it looks like this magic circle is actually working for us. The more money we put in, the more customers we get, the more customers we get, the more money we have to reduce churn, and so we decided, what the heck? Let’s start experimenting some more. So I loaned around a million kroner to the company. That was last year. Then we hired the best developer we could find from a competing agency to help Emil, then a little further in –. And we opened in 10 countries, actually, which a person wrote some articles about. Actually they wrote it twice. I don’t know why; I don’t think the journalists knew each other. So that was rather funny. And I didn’t mention it. Then we opened in 10 countries and obviously we didn’t open in the countries because we wanted to market ourselves in 10 countries; it was an experiment. We figured out, okay, the UK and Sweden is working fine for us, so for a while we were in Sweden, UK and Denmark, and the websites we made were actually just Google-translated in the beginning – actually advice from Morten I think or perhaps we made that all ourselves; I’m not sure – we just Google-translated the websites, started marketing ourselves, and all these countries figure out where do people sign up, and then we focused our money on that. So reasonably we did this again. I loaned another million to the company. We hired some more people and we opened in three other countries: Singapore, Thailand, and India; because we figured out they’re really, really dirt cheap on Facebook. So why the hell not? And now we can see India is just going crazy. Our acquisition cost is five times – the Dane acquisition cost is five times bigger than the Indian one. So it’s crazy. Yeah. The way we run the company, we have two teams. Team Churn – that’s the product builders. My team in Belgrade, Serbia, and here. Key actionables. (I’ll move fast.) Validate the business through phone. I think that’s extremely important. Sail the ship before we build it. Never send receipts for customers. If they get a receipt they know that they are paying for something, and if they know that they’re paying for something they might sign off. So don’t do that. Don’t be afraid to open countries and close them again. Just experiment. Do it as fast as possible. Use Google-translate for validation. It works fine. You’ll get some complaints, but then you know you have customers. Complaints are good because that means someone wants to do something with this. Having a great domain name doesn’t matter at all. We don’t and it works fine. Make job postings on Facebook – not because you want to hire people but because you want to have people tag themselves for reach. It’s a really good idea. They tag all their friends and everyone if there’s a job where they know someone who could be interested and then everyone sees your brand. So, great trick. Don’t hide your signup form. Put it just right in front on your website. If you go to EasyPractice.net you will see our signup form is the first thing. Ask your customers for favors — like what Steffen says. We also send out hyggemails. We don’t call them that but it works tremendously well. Track progress. Track your lifetime value and your acquisition cost. It’s extremely important. This is the way we do it. This is from 2014. And this is something we’ve got ourselves. We don’t use so many fancy systems. We just execute. So it could be much better. But here we track the acquisition costs, how much money we spent, and then we know how much money we will make because we can see how many customers we have. Yeah. I have a lot of ad examples. I’ll just scroll through them now because I think my time is up. Thank you.