[Bootstrapped] Ep.85 - The First 100 with Lilit Davtyan, CEO of Phonexa

Lilit Davtyan is the CEO of Phonexa, a software company that provides brand marketing all-in-one solutions for calls, leads, clicks, email SMS, and more. Your company is fully bootstrapped and has reached more than $200 million in annual revenue.

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Transcript

Let's do it. Broadcasting from around the world. You're listening to the first 100. A podcast on how founders acquired their first 100 paying customers. Here's your host, Hadi Rodwan. Good to have you on the show Lilith, how are you doing today? Doing good Hadi, thanks for having me. How are you? I'm doing very well. Thank you for stopping by. I'll give our listeners a quick introduction about the company and yourself. Lilith Daftayan is the CEO of Fonexa, which is a software company that provides brand marketing, all in one solution for calls, leads, clicks, email, SMS and more. And impressively your company is fully bootstrapped. We have around 200 million in annual recurring revenue at the group level. This is extremely impressive. Let's take us back to the founding of HOM moment. How was Fonexa created? Yeah, it's a long story. It's a great story. Before Fonexa was created, because you mentioned the group, there was another company. There is another company that's actually one of the largest in affiliate marketing space for one specific industry. That company grew to be very, very successful. The system was very proprietary in terms of, you know, how do you in real time track the calls coming in, the leads coming in? How do you remarket back to the customers? And these are, keep in mind B2C companies. So we serve as clients that are consumer facing. And so when you have that, when you're able to, with a proprietary system, grow your company to be the largest in a specific industry, you start thinking about what powered all of that. And what really powered that company from growing that well is the technology behind it, the scalability of the technology. And so a lot of companies were asking questions about, hey, you know, you came into the market pretty late, how did you grow so fast? And so we started offering it to other companies and eventually we decided, hey, this is a legitimate business use case. Why don't we just create a brand new company called Fanexa and offer that as a licensing software. to similar, and pretty much any company that is dealing with real-time consumer leads coming in, real-time consumer calls, they need ways to track their advertising dollars and their conversions and ways to retarget back to the consumers, whether it's to bring them back for the product or cross market to them for other products. Amazing. So how did you early on identify that there's a pain point for this? And other than the validation you mentioned. How did you figure out what's your ideal customer profile? Great question. Well, ideal customer profile started out very differently than what it is today. Initially, it was the affiliate marketing space. We knew this well. We were very good at it. And it was more about being in the middle of the journey for the consumer. And so what happens with affiliate marketing is the affiliate marketers are selling products that they don't own, correct? So that goes through whether it goes directly to brands. At the end of the day, they are affiliate marketers are the ones doing the advertising to get consumers interested in a specific product. Where that ends up, at what point does the brand see this consumer could actually involve three other affiliate marketing firms, right? The consumer doesn't see any of this. But at the end of the day, a product is being marketed, the consumer gets matched, and there could be that affiliate marketer sends it to a network who actually sells it to the buyer. And so because we knew the space well, it's also a very specific type of a business model. It's not widely known and it's not widely utilized, but if it is, it's very profitable and very marketable industry. And so because we knew the space, we knew there's very limited technology that can handle that level of interaction from the consumer side to the brand side, we already had the ability to identify use case. That being said, The ideal customer profile does evolve over time. And so as of today, affiliate marketing is still a very big core industry that we target, but brands have become also very important to us. Take us back to your early customers. How did you find them? How did you attract them? Any non-scalable strategies that you implemented early on that's maybe no longer applicable today, or maybe it is still? I think a lot of the things you do in the beginning to try to get customers is not scalable. One of the things is, you know, obviously the good thing is that you should keep forever is transparency, right? You want your customers to know when you're just testing a product. You want them to know that you need their help to identify any bugs, for example, or to give you some use cases so you can build your features better or enhance your features. So that's scalable. I think that I'm a strong believer in having a business conversation with customers related to, hey, we're in this together, let's work on improving the system, right? I think it creates a loyalty across the board. What's not scalable that we've done early on is spend a lot of time with customers, right? It's almost like you're working the same business. You're constantly in there. You're looking at every little detail to make sure that you have covered all aspects of the business use case. You are testing it, retesting it. You're giving discounts. Sometimes you're giving features for free. None of that is scalable, but it is absolutely important to do because that is what creates your relationship with your customer. That is what your customers use to help you identify other use cases. That's also where customers start referring you other clients where you can actually end up charging. So while that's not scalable, you can't spend that much time with every single customer. You can't give everybody a free feature. You do want to continue for. a long time to treat those initial customers the same way. What has worked for you early on in finding those customers? Because you identify where they are and then you try to reach them with a solution. What has worked for you to increase that conversion rate, maybe from cold outreach to warm outreach, let's say? I would say being physically present where they're at was a big driver. So conferences, for example. Or even if you did a cold outreach, the immediate thing is, hey, how can we meet? How can we really sit down and draw this out? Right. I think that cold outreach is great, but it's really great when they can, as you're on the phone with them, they can just Google you and you have so much information already, you have the brand awareness, you have the brand identity. That's when cold outreach can work. But when you're first starting up. and they're like, you know, what's wrong with your website, for example, right? Or what does this mean in your website? You haven't done those tweaks and changes that take a long time to identify what wording to use to properly target your customers. So our thing was, you know, we were at every conference you can imagine related to our ideal customer profiles. Sometimes we saw the same customer in five different conferences before they agreed to be a customer because it's persistent. We have the same narrative. We weren't trying to... not be transparent and so at some point they're like you know what 50% off why not I'll try this out and then I'm happy to say most of our initial customers are still customers of ours after six years. Wow that's impressive so if we go back to the conference marketing you mentioned there's a lot of founders who would want to do that right but as you're starting probably you have limited budget so what advice or tips do you have for someone who plans to go to a conference? to make as much possible from it. You know, there is a lot of ways to do this. First of all, you can stay local, right? You don't have to spend a flight and hotel cost. This conference is happening everywhere, especially now it's coming back. It's actually more than I think ever. And that's one aspect, stay local. The second aspect is you will be surprised, and we own a conference as well, by the way, called MailCon, and so I understand when somebody comes in and says, This is my first time trying out your conference. I am a new founder. This is what I'm offering. Is there any way I could get a free ticket, a discounted ticket? Is there anything that I can do for you for me to be able to come to this conference because my budget is limited, but I could scale? There is a lot of conferences that will understand that. At the end of the day, they started off with, hey, how can we get you to our conference? It's a two-way street. They want more people at the conference. They want more targeted people at the conference. as long as you're offering something that their audience will be interested in. Have those conversations. If it doesn't work out, stay local, try to join them virtually. Those are always options as well. And then moving forward, just increase your visibility. Amazing. Fast forward to the future, take us to today. How has your acquisition strategies changed? What has worked for you quite well? Yes, we still do attend conferences, I'll tell you that. connection is never going to go away. That's one thing. But the second part is we've spent a lot of time working on our brand. Whether that's digital, whether that's how our salespeople even communicate when they do cold outreach, or it's when a client walks into our office how we present our company to them. Everything has to be aligned and every department has to be aligned. while marketing might speak differently, the sales, the executive level, the message has to be aligned. And so it takes you some time because we talked about how in the beginning, everybody's on deck with the client, they're always talking. You kind of forget all the outside narrative that needs to happen. And so we've worked quite a bit on that. I think I'm very proud to say our teams have done an amazing job on brand awareness and brand visibility out there. So every time now that we go to a conference or we do a cold outreach, it's not likely that they haven't already seen us or heard of us. And that goes a long way. That does 50% of our job. You mentioned earlier that you own a conference called MailCon. Can you tell us the power of building a community? Because I believe that's more not only a conference, but also a community of diehard fans. That's right. Yeah. The community is everything. When you're a brand that owns a conference, it's a completely different strategy than your conference and your profit model is to make money off of the attendees and the sponsors and the exhibitors, right? But when you're a brand, you are offering a community of people that not only understand your brand, they don't have to be users of your product, but they all speak the same language. So for example, one of the features that we offer, one of the products in our system is called e-delivery. It's an email and SMS marketing. And so MailCon naturally would drive audience that know the email and SMS space. And so when they come in, They're talking, when we bring in speakers and audiences, we wanna make sure everybody's aligned. You're bringing in experts like from Google, for example, LinkedIn, or anywhere else that you need the expertise to make sure that your emails are being delivered. And then you're bringing in a product like Fanexa, where, hey, here's an e-delivery product where everything that they're saying, we have built, because we have partnerships with them, right? So we can help you deliver with the system. But you know what, if you don't need it, here's an SMS expert that you can consult with. Here's an e-delivery email marketing expert that you can consult with. So then it's like, OK, let's create a Slack channel or let's create some kind of a webinar and let's invite each other to it. And then everybody, to your point, becomes a diehard fan of this one community. And everyone's asking each other for advice. And then you'll be surprised at how transparent people get over time with each other because they had that face to face interaction once or twice a year. whether it's at our conference or during the channels or they've had webinars together. It's amazing to see it evolve. Amazing. If a listener are here interested in using that strategy and creating their own conference and a particular niche areas, if you were to give them like the five pieces of advice is to start the conference, what would that be? A successful conference? To start the conference? Oh man. Okay, well, it depends. If you're a business that you're offering a product and your conference is tailored to bring in more business to that product, you gotta start with your customers. You wanna put your customers right up front to speak to the rest of your audience because sometimes talking about yourself doesn't go a long way, but somebody else talking about you goes a very long way, right? So you put your customers there, you talk to them about what their pain points have been, what solutions there have been, and whether or not your product has helped them. resolve those solutions. And when people listen to that and they can identify with that pain point, they will talk to you. But the other part of it is how do you actually get a big enough audience? I think your expectations have to be normal. It's always nice to say, I'm going to start a conference and my first conference is going to have a thousand people. Sure you can, most likely they won't be relevant people. So it really depends on what your strategy is. If you just want to have a conference to make sure that you have a thousand people. you will probably not have a very targeted audience. The other side of it is your mindset can change to say, I want a conference of 200 people. I want about 50 of them to be clients, 50 of them to be partners, potential clients, and then the other 100 just folks interested in listening to what we have to say. We're trying to get our brand out there. So I think your goal has to be very aligned with how large of a conference you want to do and who you want to invite. If we zag into Lilith, the CEO, tell us a little bit, how did your leadership style change early on when the company was scaling up and now? My time commitments have changed. Before, by way of background, I started off very on the ground, just hitting the ground running and rolling up your sleeves and working with every single person. But when I first started, I was the sixth employee. I also had to do a lot of different department jobs. And so in the beginning, as I was hiring more employees, I was training them myself. I've done the job. I had the processes in place, and I just had them implement and hire the next phase and then implement that and hire the next department, eventually expand. But what happens is when you become 200 plus employees, it's really hard to spend time with them. And so what I realized works, maybe a little later than I should have, the processes that you implement when you're not a lot of people need to change. And so I went to the department heads and I told them that, hey, I know that you adopted the way that I do things, but that worked back then because we had less people. If you need to make any changes, if you can automate the process, if you found things that could be done better or worse or whatever it is, present it and change the entire process. Make sure that the teams are okay with it. And now instead of spending time with every single person, I spend a lot of time with those department heads to make sure that I'm at least in tune with what's going on with the process. and my time management has done a little bit better. I think that's probably one of the biggest struggles for business people as you go up. You wanna keep hogging your projects, but it's really hard to do. You have to learn how to let go and delegate and trust. Thank you for sharing this. What is a business principle or a life principle that has served you well in your journey? You gotta learn how to put yourself first sometimes. It's really hard to do. You care a lot about your product. You care a lot about your employees. but you have to make sure that you're okay first. So one of the things that I did that served me amazing and I don't think I'll ever stop is I start doing the hardest thing I can do every morning, which is either go to the gym or run. And I push myself really hard. So by the time I get to work, everything else seems so much simpler. So I did a few things. I got something really hard and I got really motivated to go through the rest of my day. I'm working on myself mentally and physically just because that's what exercise does for you. And I'm managing my time better because my alarm clock goes off at the same time. I've got kids, I've got to make sure they get fed and I still have to make sure that I get my workout in before I get to work. I think it's simple. It sounds like, hey, why can't everybody do it? But the consistency is not that easy to have. Who is your hero? Will it? Good question. I have a lot of heroes, honestly. I think that there's so many. The founder of this company, David, is definitely one, I would say, because he is the one that threw me in meetings that I wasn't ready for. He had me run processes that I had no idea what they were. He actually, probably on purpose, would invite me to a call in the middle of the call. and asked me to take over. And so within the first 10 seconds of listening to the conversation, I had to just click and figure out exactly what the conversation was. I had to ask the right questions to make sure I filled in all of the gaps before I move forward, and he doesn't tolerate BS. So it definitely made me very, very alert, and that has really shaped how my career has grown since. Thank you for sharing this valuable story. One last question, Lilith. What's next for yourself and for the company? We have a long way to go. We are very good at what we do. If you ever saw our roadmap, it's never gonna stop being built because at the end of the day, we started with one product, we have eight in one suite now, and we're enhancing every single one of those eight. and we're looking at other products to build. So essentially, we want to be the hub for all performance marketing needs. We want anybody that wants to start a company related to performance marketing, tracking, advertising, and anyone that is way into that business, I want the first thought to be Fanexa and how the tool can be used to enhance them. But on the flip side, we also listen to them. We want them to be able to tell us, hey, if you can do it this way, there's a whole other market out there that you can go ahead and reach. That's the goal I think for the next few years will be the Fanexa, the performance marketing platform. How can people reach you? I'm on LinkedIn. Type in my first name, last name. It's not that common. It'll be pretty easy to connect with me and I look forward to connecting with the audience. We wish you the best of luck on your venture. Good luck on your company and your career as well. Thank you for stopping by. Thank you so much. Thank you so much for listening to the first 100. We hope it inspired you in your journey. 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