Growing WhatConverts to $4m ARR in a market with well-funded competitors

Who says bootstrapping to a multi-million dollar business in a market with well-funded competitors is impossible? Michael's story will prove you wrong.

Growing WhatConverts to $4m ARR in a market with well-funded competitors

In this post of "My First 1000 Users", we will cover the story of WhatConverts and how it gained 40,000 users in 7 years.

The content of this case study is taken from the podcast episode I recorded with Michael Cooney, who is the founder of WhatConverts, which is a call tracking software.

Let's dive deep.

How did Michael get the idea for WhatConverts?

Michael started as an electrical engineer building gold mines in South Africa. During this time, he had to deal with many suppliers and struggled to keep things up to date.

So he made a directory and made money by selling advertising to equipment suppliers. To justify the value of his advertising services, he had to track the leads the suppliers were getting.

He then transitioned into a digital marketing agency and faced the same problem.

He got great results for his clients but struggled with tracking leads and calls. This gave him the idea of starting a platform that tracked all leads so he could show his clients the results of his marketing efforts, and that is how WhatConverts is born.

Learning #1 - Sometimes, great ideas are already around us, in our everyday life.

Take a look at your and your friend's struggles. A good solution doesn't exist?

Perfect - test your idea out.

Usually, if there are 5 persons who experience a problem, you can also find 50.000 of them.

First 100 customers

Since Michael was already running a marketing agency, he used WhatConverts on his clients first. He told his clients about his software and ensured he got results for them.

He knew if, as an agency owner, he was facing this issue, then all other agency owners would be in a similar situation. He then started to look for ways to connect with agency owners facing the same problem.

He knew many agencies use Google Analytics and Google Analytics had a partner directory. So he added his site to the directory and asked his clients to review them there.

This resulted in WhatConverts being ranked among the top 5 software companies for call tracking for Google Analytics and further increased the number of reviews as more and more people started using WhatConverts.

Michael also used Google Ads. He tested a lot of different keywords before finding a real winner, which was the keyword "call tracking."

Testing hundreds of keywords allowed Michael to see what keywords and messaging resonated with his ideal customers and change accordingly.

So the bottom line, WhatConverts got its' first customers from the directory of Google Analytics. Overtime review sites like Capterra and G2 have also started driving signups.

Learning #2 - To position yourself in the consideration set of the users who need solutions like yours, you need to be present at the places where people like that hang out.

We can roughly divide those places into three separate groups:

1. Bottom-of-the-funnel keywords (i.e. {Competitor} alternative; Best X tools, etc.)
2. Review sites (i.e. Capterra, G2, Trustpilot, etc.)
3. Native platforms (in WhatConvert's case, that's Google Analytics' app directory. Others can be app stores of popular products such as Slack, Salesforce, Zoom, etc.)

So in order to win there, you need to have a strong and trustable presence.

Has Michael ever thought about raising funds for his company?

On seeing WhatConverts' competitors raising funding and outbidding them on Google ads, Michael did consider raising funds. But he believes raising funding reduces one's optionality, and one loses the freedom of having a lifestyle business.  

Every founder has to choose to raise funding and grow aggressively to secure more funding at higher valuations or grow a bootstrapped business at their own pace.\

Note #1 - I shared my view on Bootstrapping vs Fundraising inside this article.

Journey to the first 1000 customers

With the infusion of money from venture funds into competitors' companies, the cost per user acquisition from Google Ads went up drastically.

In the first year of using Google Ads, WhatConverts spent $8000 and got 150 customers, resulting in spending $53.3 to acquire one customer.

In the second year, WhatConverts had to spend $24000 and got 40 conversions only, resulting in spending $600 to acquire one customer. That's 11 times more than a year before.

Michael had to change something.

So in the second year, Michael's team started going through the content route.

Their organic conversions were almost the same as those from Google Ads in the third year.

Now, Google's organic traffic is the most significant contributor to conversions for WhatConverts, followed by Google PPC.

According to Michael, going the organic content route worked well for them because:

  • ✨ He could compete with well-funded companies for the first 8 spots on Google Search. Even if a competitor got the first 1-2 spots, he still could work towards ranking on the rest of the page. Since the terms have high search volume, he is still getting a lot of traffic and conversions.
  • 🔥 Funded companies risk losing focus, so the founders worry more about explosive growth rather than creating meaningful content to target their users. Smaller teams are more focused and can create really strong content.
Learning #3 - When you're competing with category leaders with almost infinite budgets to spend, you need to find other, more creative ways to stand out and create/capture demand.

Especially focus on things your competitors "can't copy", such as your brand awareness.

In most cases, you will achieve that through:

- Content Marketing game
- Thought leadership
- Building your own communities and tribe of loyal fans

What is Michael's growth strategy for WhatConverts now?

Michael follows a "land and expand" strategy.

He found out that he could convince an agency to try WhatConverts with some of their clients.

That would eventually lead to the agency becoming long-term customers and bringing all its clients to WhatConverts.  

The company's guiding statement is to be helpful.

The team of WhatConverts makes sure every agency that signs up for a trial is fully onboarded. The team takes them through the demo, informing them about the benefits of the software.

WhatConverts also has an excellent customer support team, which typically replies to any queries within 15 minutes. Their customer support also helps them differentiate themselves from their competitors.

Michael's team has also focused on targeting brand keywords of their top competitors leading to competitor analysis/comparison pages.

What are the future goals for WhatConverts?

WhatConverts has over 1400 customers and 40,000 companies using their software. The company plans to expand its organic reach by creating more content for its target audience.

The team is also looking at more outbound channels and account-based marketing to target specific agencies directly.

For this, the team also plans to upgrade their social media game.

What is the single most crucial strategy that drove growth for WhatConverts?

According to Michael, understanding the problem first is most important.

People only buy a solution if they have a problem. So founders should always focus on creating a product that solves a problem effectively.

If Michael had to start WhatConverts all over again, what is the one thing he would do differently?

Michael believes the first four years of any business are the scariest because, as a new founder, one has little idea of what to do, and there are so many inputs and suggestions coming his way.

So if Michael started WhatConverts all over again, he would stick to the fundamentals of starting any business.

  • ⚠️ Find a problem.
  • 🔅 Create an effective solution to the problem.
  • 👀 Find the people who are having this problem.

While starting, Michael's team developed products because the customers were asking for them, and then the customers didn't end up using them.

But now, if Michael had to start over again, he would make sure he only develops products that many people want and are willing to pay for.

What are some of the books that had a high impact on Michael as a founder?

Michael likes reading about the journeys of entrepreneurs and founders.

Some of his favorite books are "Lost and Founder" by Rand Fishkin and "Super Pumped - The battle for Uber" by Mike Isaac.

The Bottom Line

If you want to succeed, find a burning problem and create an effective solution for it.

Always focus on creating a great product that solves a significant problem because everything else can be improved and worked on later.

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