Should you raise money today?, How to get a 73% free trial conversion rate, Netflix ads tier hits 40 million subscribers, and Netflix's password crackdown leads to…

0:00If you're looking to hire additional marketers for your team, there's no better place to look than hiring nearshore, hiring offshore. sure. And we found that we've hired amazing creative people. We've hired amazing people that can help with execution in the marketing side, whatever it is that you're looking for. Exactly. We are helping with that. We have recruiters from our side. All you have to do is go to marketing school.io slash hire. Once again, it's marketing school.io slash hire, fill out the information in terms of what you need. And then we'll have our recruiters reach out to you to help you with the placement.

0:32And it should be great for you at the end of the day, because you're going to save a lot of money and you're going to get the help that you need. So you're going to get help from a cost standpoint and also an execution standpoint as well. So again, marketingschool.io slash hire, and we'll see you inside. We've talked in the past about you not wanting to raise money anymore. And today when I asked Brian Johnson again, I was like, would you want to raise VC for this? He's like, probably not. If he does raise, it'd probably be from like a lot of friends and family because he has more of a brand now.

0:58Now, this tweet is from Jesse Pugy. And do you know how FanDuel got screwed? The founders of FanDuel got screwed? they raise too much money? Something like that. So you and I know what liquidation preferences are, but let me just explain. So the title of this one is How Liquidation Preference Hurt FanDuel Founders. So when the FanDuel Founders raised funds, two key investors received a liquidation preference that entitled them to the first$559 million in an acquisition. Founders and employees would be paid only if the acquisition exceeded$559. Because these guys are first in line, right? Because the Patty Power Betfair, I think that's the deal, was for just$465 million, the founders received nothing.

1:41So the question is, should people raise in this environment right now? You can raise if you're going for a moonshot thing, but I think for the vast majority of people, you probably shouldn't. Fandul, in my opinion, did not get screwed. The founders didn't get screwed. They raised a total of$416 million over eight rounds. the investor should get their money back first, plus a little bit more. I agree with that. But you would think, as a founder, I worked so hard for this thing. I've been doing it for so long. That's life. So would you raise... Going back to the point again, probably for the majority of people, you don't need to raise money.

2:18This type of thing, I think you probably should raise money though, for FanDuel. FanDuel, yes. I think you need capital for this. I'm not opposed to raising money. the problem is is i can't deploy the money correctly and here's what i mean by that so i've raised money in the past and the lesson i learned is for me at least it's either you're doing something crazy like a chat gpt or open ai that requires tons of money by all means go and raise money i'm not that kind of entrepreneur who's innovating like crazy i'm i'm actually innovating very little to none almost, right? I'm running a typical playbook.

2:55I didn't really look at mine. You looked at mine for me. So Neil and I, we took this personality test. This is from Ray Dali on Adam Grant. It's just the backstory. And Eric made me take it. You're like, take this one for me. I was like, dude, we're going to learn how we work. I know you didn't even read it. But the point is, on creativity, on a scale of 1 to 100, where do you think I am? 50? 60? No, like 90 something. Your creativity, where do you think you are? 10? Yeah. Yeah. But, but when it comes to you being like tough, you're like maxed out. Right. And when it comes to you being like super detailed and deliberate, like you're, you're maxed out.

3:29And so you're, you're very different me in like those areas, but like some areas you're very similar to me. Like we're both maxed out and practical point is you can finish your story, but it's my point. I'm trying to give everyone here is that you have to know your strengths and your weaknesses. And you don't, just cause someone else is going for a moonshot doesn't mean you need to go for it too. Totally. And what I learned when I raised money early on, and I raise it for Kissmetrics, and I raise money for a few other things too. But the big lesson that I ended up learning is if you're going to do something crazy that requires a ton of capital, go for it.

3:57But in today's world, it is cheaper to create a business. I'm talking about cheaper to get it off the ground. I actually think it's more expensive to do sales and marketing. Technology, the cloud, AI, has made it easier to launch a startup, and there's so much more competition now. I actually think it's more expensive to gain traction. My philosophy on raising money is if someone can give me a dollar and I know I can turn it into three or four dollars and I have a clear path, I would take a lot of money. And I wouldn't be opposed to raising money in that situation. I don't have a scenario where I can take$500 million and deploy it in an economical way that produces amazing returns for them and me.

4:40I have ways where I can take 20 million, 50 million,$100 million. But due to my corporation size, I don't really need someone's money for 20, 30, 50, 100. And I can continually recycle money so I can keep going for a long time. Someone gave me$500 million. It would take me more than five years to deploy it with my current playbook because the type of companies I buy, they're not expensive enough. And B, if I wanted to scale up to deploy that money fast enough, which I could, I would be overpaying for the companies and it wouldn't fit the economical or economic returns that I look for. So I couldn't make the math work with someone else's money.

5:17Yeah. Point is, again, what I was saying earlier is that for the majority of people, it also depends on the situation. It depends on what kind of bet you're trying to make. It probably doesn't make sense to raise money. And even if you are going for a moon, like you look at what Brian Johnson's doing, brain tree Venmo for the first couple of years, he actually bootstrapped it. He didn't raise for like four or five years, I think. And then for a don't die or blueprint, which is what he's working on now, he's probably not going to raise money for a while, right? They're already break even, which is great.

5:41So your mileage may vary, but that's where experience sharing on our side. All right, everyone, quick message from the Agency Owners Association. So this is the peer group for agency owners that Neil and I both put together. This is for people that are doing six figures, seven figures, eight figures, even nine figures as well. And we're all here to help you grow your agency faster. In this group, we share leads. We also, we share learnings with each other. It's a community where people can ask questions, their most burning questions, personally, professionally, we'll share templates, reports, things like that.

6:13We're constantly adding more value to the group. I will tell you that the price is continuing to increase. The good news is that there's no long-term commitment. So you can just learn more by going to marketingschool.io slash agency. Once again, that's marketingschool.io slash agency to learn more. And we hope to see you inside. What else you got? Or else I'm going to keep going. Keep going. I'm actually looking at Braintree. I wonder how much money they're raised in total. yeah well crunch pace it so i know i'm trying right now it just takes forever this guy this company i invested in this one company uh called synthesis and um this guy chrisman frank i believe he's the i don't believe i know he's the ceo of synthesis and um by the way you should check it out for your kids kids really love it like the kids can't get enough of the learning from this thing and because they've gamified learning he was like i'd rather look at how much money so-and-so raised instead of take care of my kids.

7:07No, I need to take care of the kids, but I can't find it online because I don't pay for a Crunchbase account, but Brainstreet didn't raise a lot of money. It doesn't look like it. Good for him. Yeah. So anyway, Crispin Frank says this, free trial conversion rate for synthesis tutor, solid progress. Primary reasons people don't convert right now, content not right for their child, blah, blah, blah. He says all these things. So let me just simplify this. He has a free trial conversion rate right now. So from free to paid, 73%. Wow, that's high. That's extremely high. Yep, 73%. Is it free with credit card or free without credit card?

7:41I think it's free without credit card. That's extremely high. Free without credit card to paid. If you're at 10%, 20%, you're doing a pretty good job. Yep. And the reason is because, one, in this tweet, he was talking through a couple of objections, right? Primary reason people didn't convert. Content wasn't right for their child. What's the website? Synthesis. How do you spell it? Synthesis.is. Yes, S-Y-N-T-H-E-S-I-S. I think it's.is. I don't know if it got the.com. Synthesis.com? Yep. For kids who think Synthesis Tutor 5 Plus. Let's see. Start your free trial. Are you checking the funnel? Is it a credit card?

8:22Yeah, I'm checking the funnel. It's too high of a conversion rate. I think they require a credit card. There's just no way. If so, good for them. Anyway, let me continue. So they didn't have a chance to use it before the trial expired. Their conversion rate is not crazy. It's a credit card. Credit card? Yeah. Okay. So the kiddo didn't like it. My sense is, so basically they upgraded the product and they made it a free trial type of scenario and then 73 % of people continued on, right? So what would you, you said it's not amazing now. It's not amazing. It's not bad. It's actually good, but it's not.

8:53It's not like. It's not bad. It's not great. If it was no credit card, it would be amazing. It would be amazing. I've never seen that. That's why I was like, I need to check out this one. Point is, look, if you have a really good product, I think, you know, my interpretation of Brian Johnson's quote, like making money is, what do you say? Making money is the most expensive thing you can do. So they're deferring gratification. And then actually in return, they're actually getting more signups. So we'll see how this plays out for them. But this just goes to show you that you got to, you got to keep testing these, like, by the way, what they're doing over here is not necessarily anything new or mind blowing.

9:25It's just for this podcast, it's on us to call out recent examples of people doing things that continue to work. Because sometimes what's old is new again. Dude, for sure. And if you don't continually test even the stuff that works, you're going to shoot yourself in the foot. I remember when we were running Kissmetrics, it was an old analytics company, but just think of a software company that failed. And we had people sign up. Our flow was register with your name, email address, etc. The moment we switched to sign in with Google, we were able to get more than a 90 % lift. It was less than 100%, but it was actually closer to 100 % than it was to 90%.

10:03And then over time, the conversions tanked. Want to guess why they tanked? Why? Because people didn't want to be forced into signing in with Google due to privacy concerns. But when we started the company, people didn't really have privacy concerns. And now they're like, oh, my personal information and yada yada. And even though Google limits on what they give people and you disclose it, people are just worried. So the moment we had that as the only option, we kept seeing our conversion rates ting. Then when we switched it to sign up with your name or email address and password or with Google, so we gave them an option, the sign-up rates just skyrocketed back up.

10:40It's like on the sales checkout pages, when you add in options to buy with Apple Pay and then Google Shop and PayPal, your conversion rates shoot up. So a lot of the stuff seems like it's table stakes, but a lot of people still miss it. I was trying to buy some stuff yesterday from a beauty store and I couldn't Apple check it. I'd just like fill everything out. It was really annoying. Quick note, this is about my company. It's called Single Grain and Single Grain is an ad agency where we're focused on driving innovation. And so I want to talk about a couple of new strategies. And if you need help with marketing, great.

11:07If not, here are a couple of new strategies that you should try out. One is programmatic CRO. So we are doing programmatic conversion rate optimization on our site. So we're building products that will automatically optimize your site to increase conversion rates. We're also auto-optimizing, auto-updating from an SEO standpoint. And we're constantly thinking about what else we can do in terms of enriching the visitors that are hitting your website and also tailoring custom messages for them using AI. And so there's a handful of things that we're doing from a marketing standpoint. And our mission is just to drive more innovation.

11:40So if you want to learn more, just go to singlegrain.com, grain like rice. So singlegrain.com to learn more. And we'll see you inside. You have something here about Netflix ads, 40 million subscribers. Netflix ads, 40 million ad tier subscribers in which they're receiving ads when they watch Netflix. Or Netflix ads tiers hits 40 million subscribers. They didn't add 40 million, but more so the people who are on the ad plan is roughly 40 million. That's a big chunk of people. I do believe as a company if you're not marketing on Netflix you're not marketing on Disney Plus, you're not marketing on all the streaming channels, you're missing out on a massive audience it's like the new form of TV but it's trackable and it's way better trackable than it was to doing TV advertising.

12:29I'm excited to see where it goes. There's actually a good Wall Street Journal piece that we should talk about, I don't know if we'll get to it today about how TV is slowly dying but I want to continue on the Netflix thing real quick So this is an Instagram post from Private Wealth Guy. And he talks about Netflix's password sharing crackdown has been a huge success. It helped add 30 million paying users in 2023. Second highest year ever. Bloomberg has details on the rollout. Netflix built a model to differentiate a single user traveling or one person sharing with lots of people. They tested two methods to shake freeloaders.

13:01One, pay per household. So this is Reed Hastings' plan. He's the famous CEO for Netflix. and an account, number two would be an account could add new users for additional fees. So this is the new co-CEO, Greg Peters plan, right? So these co-CEOs had one test versus another, right? So they ran the A-B test in Latin America where password sharing was the most widespread. They found Peters method, number two, based on users. So charging people a fee per new user led to more upgrades. So that's why it's the second highest year ever because of this password crackdown. so i was borrowing someone else's netflix username and password they gladly shared it with me i was using it for many years they even had my own image when you logged in our profile and i wasn't paying for it and then the crackdown happened and i was so pissed because then i had to spend like 20 bucks a month or whatever it costs my god so so bad it adds up tough life so then i was like all right all these platforms are going to start doing it so i just went all out i bought disney plus netflix Prime already had because of Amazon Max I added Max Paramount Plus Peacock I paid for you paid for those?

14:07I paid for all of them dude I paid for literally most of them okay Apple TV I paid for of course because I'm a Mac user and now when my sister she's like oh what's your Netflix so then I gave her my Netflix she lives in San Francisco started having issues it was logging me out logging her out I'm not going to ask my sister to pay for Netflix right? I said to pay for another one no Netflix that's it for today everyone please don't forget to rate, view, subscribe, marketingschool.io slash agency. We're going to show you all how we build this community. And if you have an agency, we're going to help you build your agency faster.

14:37So that being said, we'll see you tomorrow.