In this post of "My First 1000 Users", we will cover the story of Drop and how it went from 0 to $500K in ARR with just 20 customers by creating a category of its own in the social selling space.
The content of this case study is taken from the podcast episode I recorded with Benjamin Benichou, the co-founder & CEO of Drop.
Let's dive right in.
How did Benjamin come up with the idea of starting Drop?
Benjamin started his company with two of his co-founders. Shu Pan, one of the co-founders of Drop, met Benjamin at a design school in France in 2007.
Benjamin was already building websites at that time to pay for his studies. After school, he decided to launch his first creative agency.
When he started his agency, his dream was to work for Nike.
His agency aimed at working with enterprise and mid-level brands who knew the power of social media content.
After four years of running his agency, Benjamin got the opportunity to work with Nike.
Benjamin realized it was hard to measure and justify their work was having on such a large brand.
Around the same time, smaller digital native companies reached out to Benjamin for help regarding social media growth.
This gave Benjamin an idea of starting something that thousands of companies could use.
Around 2016, he was traveling a lot between US and China for his work. Once in China, he noted that everyone was paying for their coffee at Starbucks using Wechat. WeChat is a messaging app popular in China.
Benjamin had a revelation that WeChat was not just a messaging app in China, but people also used it to pay online, consume content from brands, etc. The idea of a messaging app having multiple use cases was new to the western world.
So Benjamin got the idea of creating a similar experience for messaging apps used in Europe.
Benjamin moved back to Europe and started working on this idea with his technical co-founder Jonathan.
Jonathan agreed to work with Benjamin for a few months as he exited his previous company.
Benjamin was obsessed with creating an MVP of a product that allowed brands to engage via messaging and drive revenue.
Benjamin started experimenting with chatbots for FB messenger and WhatsApp.
He set up his company at the end of 2019. Within three months, Benjamin secured some great clients, including the NFL team Rams from LA.
What made Drop different was that many brands were using chatbots for lead generation, but Benjamin wanted to go beyond leads and create a nurturing flow and maximize clicks and revenue for brands.
You don't need to be perfect, just try to be 10% better than the other alternatives in the market. This can be done by adding more features to your product as Drop did by creating a whole ecosystem rather than limiting itself to just chat bots.
How did Benjamin get his first client without an MVP?
Benjamin showed Rams a couple of slides and a motion presentation to give them an idea of the app interface for the fans.
At that point, Drop's value proposition and messaging weren't clear.
But Rams liked the idea. The timing was also perfect as the team was looking for something to increase audience engagement.
Benjamin was also introduced to the team through a trusted agency owner, which further worked in his favor.
The journey from 1st to the 5th customer
Benjamin closed his first client just before the pandemic.
Since Drop had a massive client in the gaming and entertainment sector, Benjamin thought his ideal market should be sports and entertainment.
Benjamin also started attending sports conferences and had discussions with FC Barcelona and other major sports teams.
Benjamin knew every sports organization wants to interact with its audience, and there are a lot of monetization opportunities in this space.
But then covid happened and vapourised most opportunities in the sports and entertainment industry.
Benjamin then pivoted to helping ecommerce and D2C brands. At this time, retail stores were closing, and everyone was moving to the online first approach.
Getting to the first five customers involved a lot of networking, referrals, and personal Linkedin.
Drop did not have a free plan or trial. Benjamin wanted to sell his solution from the start. Because if companies weren't willing to pay for Drop, he would have to change his entire business model.
At the start, Benjamin struggled a little because he felt companies were paying for him and his team's expertise in the topic. He thought the companies would have paid him ten times more with the agency model than SaaS.
With the onset of the pandemic, Benjamin was flexible enough to pivot to online commerce rather than sticking rigidly to sports and entertainment.
This has to be the biggest driver of Drop's success today.
What strategy did Benjamin follow to get the first ten customers?
Benjamin aims not to cross 1 million in ARR as fast as possible. But to do it systematically and sustainably.
Drop has a targeted approach. They spend a lot of time understanding the brand they are going after.
All prospects are divided into three categories.
- Best fit
- Okay fit
- Not a fit
Drop's potential market includes all Shopify merchants making 1 million ARR with at least 200k followers on Instagram.
This list then goes through a series of qualitative analysis and tests that refines the list of one million stores, of which 6000 use Shopify plus.
The 6000 stores go through further analysis to get to a list of 400 brands that Drop focuses on getting as clients.
Drop's team uses social selling and drip email sequences to get in front of their ideal customers.
On the inbound side, Benjamin utilizes his personal LinkedIn to drive sales. He has around 10k followers and has been using LinkedIn for the past ten years.
Benjamin has also tried attending trade shows to get in touch with brands.
This will not only save your time but also generate better results in terms of revenue and client retention.
What is Drop's sales email strategy?
Benjamin tries to be in front of all his potential clients through drip email sequences.
However, Drop never pushes its solution in the first few emails.
Emails are used to pick up the prospects' interest and build a repo.
After sending out hundreds of emails, Benjamin realized that emails work differently for European and American prospects.
He is also aware that people get bombarded with lots of emails and phone calls every day, so he tries to be very helpful in his emails.
Drop is always trying to develop new content and resources to add value to its prospects' lives.
The team recently created an ecommerce calendar with all key events in a year that an ecommerce brand should use to push sales.
The emails aim to provide a lot of value upfront, so when the prospects are actively looking for a solution, Drop should be their first preference.
Benjamin also plans to create more video content this year. He has realized during his fundraising campaigns that videos perform way better than text because of the added human element.
Do not see emails as a means to closing sales but as a way of building relationships with your prospects.
The journey from 10 to 20 customers
Drop witnessed a string network ripple effect as they continued getting big brands onboard.
Those brands' competitors also hoped due to fear of missing out on the opportunity.
Benjamin wants to double down on this fact and figure out how to incentivize early adopters to get more people on the platform.
The closing rate for prospects coming from referrals is high due to the already established trust. In addition, referred prospects already know about the platform, and minimal education is needed to onboard them.
Benjamin's target is to reach 100 brands this year and refine the product to build the best social e-commerce platform possible.
Instead of reaching out to everyone, Drop is selling premium experience and exclusivity, which creates a fear of missing out among brands.
Benjamin also experimented with paid ads, but that experiment didn't perform well. He targeted bottom-of-funnel keywords. But since they are working in a new category, the quality of the leads wasn't excellent.
So closing one big brand may mean eventually having multiple brands in the same niche due to FOMO and competitiveness.
How does Drop differentiate itself from its competitors?
Drop does not have any real competitors.
A couple of solutions in the market allow brands to build bots for Instagram.
But the core value proposition of Drop is CRM and social e-commerce.
Benjamin is trying to build the next-gen CRM platform that will collect all social info of customers along with their email, phone numbers, and transaction history to forward very personalized product recommendations to the audience.
They are also working on a seamless, integrated checkout feature directly embedded inside the messages tab.
Benjamin views the current solutions in the market as opportunities for strategic partnerships rather than competition, as each of them focuses on different parts of the buyer's journey.
But Benjamin wants brands to build on in the social selling space as having competition leads to better pricing, features, and development of the overall industry.
Benjamin is excited to be creating a new category. But when he has meetings with brands, it sometimes becomes challenging to explain their value proposition in terms of the companies' current benchmarks.
So he thinks education and competition are necessary for this space to evolve.
Instead, focus on improving yourself every day and learn to take cues from what's working for your competitors.
What are some of Benjamin's best takeaways about the fundraising process?
Drop has raised two rounds for around $5.5 million, and this process has made Benjamin realize that raising money is hard.
He advises any new brand to go to business angels for money instead of VCs. As VCs may not entertain your ask for 4-5 million dollars if they deal with a billion-dollar fund.
Having respected people in the space on your team also helps as it creates a ripple effect. One of the investors from the first round of funding talked to a VC and helped Drop raise funds further, so always focus on gathering expertise and funds.
Also, do not waste much time talking to VCs when you know they are not a good fit.
Initially, aim for strategically planned angel investors to be on your team.
Similarly, if you are a nobody in the fundraising space, go for business angels to secure your first funding rounds.
Don't solely focus on funding alone, also try to include talented people in your team that have expertise in the field.
What would Benjamin do differently if he were to start Drop tomorrow?
When Benjamin started Drop, he spent a lot of time building a complex MVP. If he were to begin again, he would save time and go with a very simple MVP.
He would then utilize those precious hours talking to his customers and try to know everything about them.
You could also try talking to the customers first and then building an MVP based on customer insights.
What is the one book that has had a significant impact on Benjamin's life recently?
Benjamin recently read Play bigger by Al Ramadan. This book helped Benjamin gain a new perspective on how he can become a huge “game-changer” in his field.
He recommends this book to everyone who wants to learn about category creation and design.
The Bottom Line
Be a believer. Benjamin sold his first clients the idea of his company without having a working MVP. You just need to believe in your idea and have a strong conviction about implementing it.
Don’t be afraid of change. Benjamin’s brand would have come to a halt during the pandemic if he stuck to sports and entertainment but he saw the rising trend in online retail and pivoted to Ecommerce and DTC brands. Do not be afraid of pivoting your business if your current niche is not profitable.
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