Back in 2015 I left my full-time job as a growth marketer at a fast-growing YCombinator startup to co-found TrueCoach, a SaaS platform for personal trainers and gym owners. Although it felt risky at the time, I had grown confident enough in my skillset as a performance marketer to forfeit a steady paycheck for some time and take on the risk of building a startup. In reality there was very little downside and massive potential upside.
One of the benefits to leaving my job and going all-in was the pressure of having to make it work – “burn your boats” as they say. This forcing function caused me to focus like I never had before. I called off all client engagements, backed off from hobbies, cleared my calendar, and poured all of my time, energy, and attention into one thing: how to leverage digital marketing to efficiently acquire customers for TrueCoach.
In my back-of-the-napkin estimate, there were at least a million independent coaches, personal trainers, and gym owners in the world who would benefit from our product; a large enough TAM to make direct to consumer style customer acquisition a viable option.
We had a prototype at the time, a nascent version of the platform. Our first step was to take the leap from beta testers to paid users and start charging customers to use the app. Although in some ways my cofounder and I were worried that the product wasn’t “ready” yet, we knew that charging money for the tool we were building would force us to build something that truly delivered value to the target customer – something worth paying for.
To our surprise, our early users were happy to start paying us. We were fortunate to have an amazing group of supportive early users and beta testers – a group of serious coaches that used our MVP before it was fully-baked, who were willing to meet with us, talk about their experience, and feed us extremely helpful feedback and detailed suggestions to improve the product for their specific use case. These early users had paying clients and they were already getting value out of the app, using TrueCoach to design and deliver individualized workouts, automate communication with their clients, and track the results.
As a self-funded, bootstrapped startup we took what little budget we had, pooled from our personal savings, and allocated it to testing paid acquisition campaigns on Facebook and Google. Our starting budgets were just a few hundred dollars a week total, but even that was enough to begin driving targeted traffic to our marketing site. This yielded exposure to our target audience, a consistent trickle of free trial signups, a few paying customers, and most importantly, valuable data on what messaging and creative worked to convert cold traffic into engaged users.
In a few short months we were converting 10% of our free trial users into paying customers and, based on our best estimates at the time, we were acquiring new customers at a LTV / CAC ratio of 10 to 1. This was great, however we were severely resource constrained. At the tiny budgets we had, it would take a long time to acquire enough customers to start paying ourselves, hire employees, and increase our customer acquisition budget.
We needed help, so we started reaching out to our networks, sharing data on our early traction and KPIs, in search of capital and advice on how to grow our business. We applied to TechStars, partly for capital and partly because, as software developers and digital marketers, we knew we needed guidance on how to fund, build, and grow a real business. We started pitching customers, mentors, and angel investors on loaning us money via a convertible note to help fund the business in exchange for future equity.
Getting into a world-class startup accelerator like TechStars was turning out to be more challenging than we anticipated, but we didn’t let that dissuade us. We continued to execute, pushing new features to production based on customer feedback, testing new ads and landing pages, developing automated email flows to onboard new free trials, handling all customer support conversations and live chat requests ourselves. We were deep in the weeds of scrappy startup mode, eager to put in the time and do whatever it took to make progress and build momentum.
The first breakthrough came from an early customer who decided to write us our first check and become an angel investor in the business. We found a business lawyer in town, used standard open source convertible note documents we found online, collected the money, and used it to continue running and growing the business.
We also made sure to let everyone we had talked to up until that point know that we had successfully raised a small seed round. Soon after we were connected with Troy Henikoff and the team at TechStars Chicago. We sent over information and data about our business and early traction, applied to the program, and were accepted into the summer 2016 cohort. My cofounder and I quickly secured an apartment, packed up our belongings, and moved to Chicago to participate in the program and acquire the knowledge, connections, and resources needed to grow our startup.
With the help of Troy, the TechStars Chicago team, and an army of mentors and advisors, we went heads-down and got to work rapidly building the business. On the first night of the program they had each company get up in front of the room and pitch their startup on camera. We realized quickly how bad our pitch was – we were terrible at actually describing the problem we solved and the solution we provided in a clear, succinct, and compelling way. So we got to work on refining and practicing our pitch. Dozens of hours of practice and hundreds of mentor meeting later, we were finally able to clearly and succinctly communicate what we built, why we built it, and who it was for.
The next step was mapping out our KPIs along with the highest priority work we would need to undertake to start driving the business in the right direction. We built bottoms-up spreadsheets, models, and forecasts to understand and track the input variables that were actually driving the business. It soon became clear to us that, although there would always be areas of improvement and optimization, our unit economics were healthy enough to justify an increase in ad spend.
Using the seed capital from our first angel investor along with the TechStars investment, we 10’x our advertising spend on Facebook and Google immediately, from a few hundred dollars a week to thousands of dollars. As a result, traffic to our marketing site increased, conversion rates from new visitor to free trial held steady, and just like that, we saw a massive increase in the volume of coaches, personal trainers, and gym owners signing up for a free trial to try out our app.
The conversion rate from free trial to paid account also held steady at 10%, but we knew we could do better. We knew that if we could find a way to double this conversion rate to 20%, which seemed difficult but not impossible, we would cut our already efficient customer acquisition cost in half. We started tracking and reporting our KPIs back to the TechStars team and our fellow cohort companies on a weekly cadence, talking to customers, and implementing new features and updates to our marketing site, onboarding flows, and ads, at a rapid pace.
We learned to measure customer signups in cohorts, based on the week they signed up, following their activity as a group over time. This gave us leading indicators that we are able to use to assess the quality and viability of a new group of users within a matter of days, to predict the conversion rate and revenue we expected to capture from them in the weeks and months that followed, long before their 2-week free trial had ended.
We used this predicted LTV to increase the investment in customer acquisition even more and before we knew it, we were profitably acquiring hundreds of new free trials a week. We learned that, based on our early numbers, our average revenue per user was $50 per month, our average monthly revenue churn rate was ~3%, and if these numbers held we could expect ~$1,500 in lifetime revenue from each free trial we converted into a paying customer.
We were acquiring new free trials users at a $15 CPA, our conversion rate was still holding steady at 10% from free trial to paid, and because digital marketing was 100% of our total sales and marketing spend, we knew that our true CAC was $150, giving us a 10 to 1 LTV to CAC ratio – for every $1 we invested in digital marketing, we would get $10 back, and it would take us on average 3 months to recuperate our customer acquisition cost.
I put my head down and focused exclusively on executing and scaling this funnel week-by-week for the next 4 years. As we scaled ad spend, CAC began to increase, as expected, however we were able to offset this by making improvements to our onboarding flows to increase the free trial to paid conversion from 10% to 20%, cutting our CAC back down to size.Â
We used what we had learned in TechStars to pitch angel investors and capitalize the business through a small priced-equity round, funneling this money back into hiring developers and customer success reps, and continuing to slowly and methodically scale ad spend. Looking back, if I were to do it all again, I would have invested even more aggressively into customer acquisition sooner.
By early 2020 we had acquired 20,000 coaches, personal trainers, and gym owners in 100 countries, helping them deliver millions of workouts to people all over the world. Throughout all of this, we relied 100% on digital marketing and word of mouth referrals from happy customers, to power our growth – in fact, strangely enough, we never hired a single sales person – 100% of our growth came from digital marketing and self-serve customer activation, powered by Facebook Ads, Google Ads, Intercom Live Chat, and automated email flows.
The business was growing so quickly that we were approached by a strategic acquirer, and in March of 2020, I sold the majority of my stake and exited the business. It was a wild ride and I am eternally grateful for the experience, for the people I met along the way, and for the invaluable lessons I learned going from idea to exit in such a short amount of time.
After a short break to regroup, I launched GrowthMarketer.com to help founders and marketing leaders apply the same playbook I developed and ran at TrueCoach to scale their revenue through a combination of paid acquisition, automated email flows, self-serve user experiences, and structured experimentation. You can think of me as a fractional marketing co-founder that you can hire, for as long as needed, to develop a systematic approach to model your business, run experiments, and scale revenue through paid acquisition, with a heavy emphasis on Meta Ads, Google Ads, CRO, and analytics.
Depending on your needs, I can advise your team on building a testing program and leveraging paid acquisition within your company, I can get my hands dirty and dig in at deeper level to personally build your paid acquisition growth engine, or if needed, I can fully embed myself in your business and take over the direct management and scaling of your ad accounts for as long as needed to build a complete self-serve growth engine and profitably hit your long-term revenue growth targets.
If you’re a SaaS or DTC e-commerce business that needs help building a performance marketing program in-house, upgrading your marketing tech stack, or running, optimizing, and scaling your ad accounts, book a free 30 minute growth marketing strategy call with me today at GrowthMarketer.com, and follow me on LinkedIn and on X at @devevangelist, for more growth marketing content and advice.