He started Groupon for SMBs, grew to $36M ARR—then exited for $170M. | Saurav Chopra, Founder of Perkbox

Saurav started a Groupon-like offering for SMBs in 2011. He quickly learned it wasn't going to work. He and his team pivoted and started driving leads to suppliers using Facebook ads. It worked and they generated revenue—but they were becoming a digital advertising agency. It wasn't at all what they wanted to build.

So they pivoted again.  They used the cash from that business and built Perkbox. The idea was a subscription-based offering that that gave perks to SMB customers. Telcos started buying it and attaching it to their products to drive sales. Then, they pivoted again, this time moving away from customer perks and to employee perks.

This time, it worked. They grew from $2M in ARR to $14M in just 2 years. They kept growing and hit $36M in ARR. Then he sold the business to PE for $170M.

It took longer than expected. There were more pivots than expected. But it was a huge success.

Here's how it happened.

Why you should listen:

• How to use new social media channels to drive growth.
• How to leverage partnerships to get end user adoption.
• Why having a profitable agency can be a great way to get started.
• Why capital efficiency can be a huge edge.
• Rebranding can help clarify market positioning.
• What it feels like to make $10s of millions in one day.

Keywords
PerkBox, Groupon, startup journey, business model, SMB market, marketing strategies, recurring revenue, partnerships, entrepreneurship, exit strategy, venture capital, entrepreneurship, startups, employee benefits, social media marketing, capital efficiency, business growth, acquisition, rebranding, emotional marketing, lessons learned

Timestamps
(00:00:00) Intro
(00:01:48) The origin of Perkbox
(00:04:52) Going after SMBs
(00:12:16) The Pivot
(00:26:35) Creating Viral Ads
(00:32:28) Demo to Close Rate
(00:40:12) Selling to PE Firms
(00:49:38) A Piece of Advice

Chapters

• 1:48 The origin of Perkbox
• 4:52 Going after SMBs
• 12:16 The Pivot
• 26:35 Creating Viral Ads
• 32:28 Demo to Close Rate
• 40:12 Selling to PE Firms
• 49:38 A Piece of Advice

Transcript

Saurav Chopra (00:00):

But we very quickly realised after running the business for about six, seven months is that, hey, this is not going to work. I mean, Amazon is going to kill us any day. You will always make mistakes, right? But the quest is you make them less and correct much, much quicker and faster. The greatest victory is where there's no battle. Probably one of the most important things is about being capital efficient and really, really taking care of your cash because that gives you optionality. The fact that we were able to pivot and all those things is because we were so capital efficient. And we had the cash, one of the ads, we still don't know why it works so well though crazy. It's still the highest performing ad ever was cupcakes. So the ad was just an image of beautiful images of cupcakes, 10 years in the business. Nothing's outperformed those ads. 

Previous guests (00:48):

That's product market fit, product market fit, product market fit. I call that the product market fit question, product market fit, product market fit, product market fit product market fit. I mean the name of the show is Product Market Fit.

Pablo Srugo (01:00):

Do you think the product Market Fit show has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone, you have to leave the show five stars. It lets us reach more founders and it lets us get better guests. Thank you, 

Saurav. Welcome to the show, man.

Saurav Chopra (01:14):

Thank you for having me.

Pablo Srugo (01:15):

Cool, man. So listen, you built a hugely successful business. You exited for like 170 million, you grew it over $30 million in revenue, and you raised venture, but you raised actually less than you generated in revenue, which is a huge kind of milestone, something that very few companies actually end up doing. So you had one of those big successes that everybody dreams about. Take us back. Let's start at the beginning of Perkbox. First of all, what time frame are we talking about and what was the original idea?

Saurav Chopra (01:48):

Yeah, first of all, thanks for having me, Pablo, and yeah, we're going way back now. So yeah, we started in 2011 Perkbox in a very different iteration. It was called a company called Huddlebuy as in huddle and buy. our thesis was that Groupon was all the rage. We felt that the collective buying model would suit businesses really well because obviously with startups, small businesses, they buy so many things, they spend so much money, but there was no collective buying model for businesses. So the thesis of HuddleBuy, which is the first situation of PerkBox was that, hey, it wouldn't be amazing if these businesses came together and bought the products and services that they needed. And so that was the first iteration. We're talking about almost March, 2011. So we're going way back when

Pablo Srugo (02:39):

And where are you based at this point?

Saurav Chopra (02:41):

We're based in London, so me and-  three of us, my two other co-founders, all based in London. We all came from a combination of tech and companies like Yahoo, apple. So we raised the seed round pretty quickly, thanks to our background from Angels, some very well known European tech angels, so we raised a round pretty quickly.

Pablo Srugo (03:05):

How much did you raise?

Saurav Chopra (03:06):

That was about…. back then it was 350,000 pounds, so that's about half a million dollars.

Pablo Srugo (03:12):

Okay, so it's small. I mean, this is the old seed rounds where a lot of people don't know. It wasn't 5 million bucks back in the day.

Saurav Chopra (03:17):

Yeah, exactly. It wasn't five million bucks. And the notion of seed,pre-seed. I don't even know if there was a term called pre-seed back in the day. 

Pablo Srugo (03:25):

seed was pre-seed. That was the whole idea was like you seed to do something with it. Then it was, no, we got pre-seed in the future's it’s going to be pre pre-seed, I think.

Saurav Chopra (03:32):

Yeah, yeah, yeah, exactly. Yeah. So that's how it all began.

Pablo Srugo (03:36):

And what were your backgrounds that helped you kind of get that round off the ground with just an idea?

Saurav Chopra (03:43):

Yeah, so us three co-founders. So my background was I was at Yahoo, but then I had done a bunch of two other valley-based tech companies as a part of their early growth teams, and they had exited. So I had come from a big company in tech and my background was more biz dev (business development)/ commercial. My other co-founder was actually from Apple. He led the Apple online team at one point when it was just ramping up online sales. We were talking about 2007 to 2011, he was doing that. And then my third co-founder was a very, very strong digital marketeer who was Ex-Yahoo, Ex-Microsoft. So I think the brands helped to get us

Pablo Srugo (04:29):

The big logos always look for that, that’s right

Saurav Chopra (04:31):

The big logos and some startup experience helped to get the around going very quickly from some very, very good angel investors.

Pablo Srugo (04:39):

And I mean 2011, I'm thinking that was very much in that mobile right after the iPhone, a couple years after the iPhone era. Was the idea to build a mobile app, was that kind of the original thing? 

Saurav Chopra (04:52):

Actually, mobile app was not really top of mind, really. Web was the focus primarily, but it was not just the mobile that was taking off, collective buying was taking off as well. So you had all types of iterations of Groupon going around, Groupon for this, Groupon for that. So that was the real kind of thesis around, hey, let's focus on B2B and SMB. But what was different then is that, to be honest with you, after the angel round, we had a very hard time raising any VC then to top up because no one wanted to touch SMB back then. So SMB was kind of a dirty word, right? The SMB businesses really did not make money. SaaS for SMBs was just not there yet, especially the micro SMBs and all that. So once we raised our annual, we did say, Hey, let's top it up with a few half a million more. But no VC wanted to touch us back then because SMBs was just, no one did SMB SaaS businesses back then.

Pablo Srugo (05:43):

And what did you see? It's one thing to say Groupon is successful where could we use it, but SMB isn't a natural place to go. Did you know something about SMB or why did you guys' minds go there in terms of collective buying?

Saurav Chopra (05:57):

Well, we had worked in startups and it was a big pain point, right? There were no startups- And Mike, one of my co-founders was also consulting too, he had left Microsoft and he was consulting to SMBs, and he was really seeing all the day-to-day pain points that I had worked in the startup, but I was like, wow, this is really, really painful. Everything is three times more expensive. I don't get my hotel rates, I don't get anything that I used to get as a big corporate. So it was pretty,

Pablo Srugo (06:24):

You'd seen both sides. because I'm also from startups, but I guess I never saw the fairy land of the apple, Yahoo.

Saurav Chopra (06:31):

Yeah, exactly. So we had seen the corporate world and we had seen the startup world. You're fighting, fighting, fighting, and you see a whole different world once you get out of the bubble of the big brand startups. It's just a very different world. So we felt that pain and having been on both sides, we thought, Hey, this could work really, really well. And the cost differential was big time. And then you see that you had our old traditional versions of buying groups, like procurement teams, and there were buying groups that were completely offline that were already in place. So we're not trying to do something that's not been done before. Everybody knows the economies of scale, and we were just trying to make-

Pablo Srugo (07:10):

Costco's history is also a little bit like that no?

Saurav Chopra (07:13):

Exactly, exactly. So Costco, I mean obviously they have more of a- yeah, it's a Costco card, but effectively,  The Costco model, if you apply to BV, that's exactly what we're trying to do with a business, but aim it more towards products they buy or services and so on and so forth.

Pablo Srugo (07:30):

And so how do you start? It's a little bit- well it seems more complicated in smb. In consumer, you would go after something really hot that everybody wants and just discounted like crazy. And I would think that's how you kind get early demand. What'd you guys do?

Saurav Chopra (07:41):

Yeah, so again, we followed that classic consumer playbook. So we started looking at things that businesses buy at a high frequency. So it could be things like printer cartridges or hardware accessories, keyboard, this and that. But what we very quickly realised after running the business for about six, seven months is that, Hey, this is not going to work. I mean, Amazon is going to kill us any day because you make 200 printers, you sell and one comes back, there's no margin. So it was unfortunately learned through a lot of pain that this model is not going to work as a collective buying model. So that's when we said, Hey, and we were actually very good at doing PR, so we were kind of punching above our bait in terms of newspaper articles and visibility and this that.

Pablo Srugo (08:32):

But in those six, seven months, did you transact? You actually had people buying stuff?

Saurav Chopra (08:36):

Yeah, yeah. We were buying stuff. We were shipping stuff. But our worst nightmare was that one of these came back, and again, I think, I guess we were just trying to prove some vanity metrics. So we were just trying to prove transaction vanity metrics without realising and just to show to our- obviously this is the first time that we had actually as founders, we had started a business as a management team. So we're probably just driven by a lot of vanity metrics to say, Hey, this is what we want to show investors. This is a transaction growth, this, that. So we were spending money and we were doing transactions, but that was not sustainable at all. 

Pablo Srugo (09:08):

And what was the model? Were you buying these printers and then reselling, or you just have partnerships? 

Saurav Chopra (09:14):

yeah, pretty much. yeah. We were trying to build our database, and then we had-  there were some partnerships, but effectively initially we were leading with hardware because they were the highest transaction-

Pablo Srugo (09:24):

That's pretty different from a business model then a Groupon, which just kind of partners and it takes a little share and kind of no risk on sell through or whatever.

Saurav Chopra (09:33):

Yeah, yeah, exactly. So I think in the early days, there was an inventory, actually, so sorry. We were not holding inventory as much. So we had partnerships where we were not taking inventory risk or any of that kind of stuff. But the reality was that it was so competitive. and effectively, even though Amazon is not a group buying platform, but effectively their economy of scale is so high that it effectively becomes a group buying platform. So I think that's where we didn't see that coming and said, oh, hang on a second. You call it ultimately whatever the SMB cares about is not that they want to be part of the buying group, they want the best price, and it's very hard. It can compete on hardware and transactional stuff, especially when it's transparent pricing, very hard. It can compete on whether it's completely transparent pricing to our model. So we had to,

Pablo Srugo (10:23):

Well, when you're in product, you're not in service. That was the group on things. A lot of it was services. So it's different.

Saurav Chopra (10:28):

That's exactly right. And that's where maybe we did the first pivot, because what we found is that as you were running these campaigns, we were getting a lot of buzz and our whole position was, Hey, this is democratisation of buying for SMBs and all that. We're giving them the power and the big guys have. So our press story was great, and what we found was that sometimes you start getting companies like Zipcar and Pitney Bowes and they’d said, Hey, can you actually help me promote my services? And we're like, okay, we'll negotiate a collective deal and we will send them to you. And so we move from products to services as a first pivot, baptism by fire, as they say. And then basically we found that on one Zipcar business, if I sent one customer, we made more margin than selling a hundred printers, and there was no inventory, no hassle. We're like, wow, this is actually quite interesting. Then we started doing franking machines and all that. And what we had to do very differently back then was that everybody, everybody was obviously using Google ads, and they're very, very expensive. We didn't have that kind of money by this point. We had three, four months of money left in the bank

Pablo Srugo (11:42):

From the first round. From those first few hundred K that you raised?

Saurav Chopra (11:45):

Yeah, exactly. So we were like, okay, hang on a second. So we can't use Google AdWords or any of that kind of stuff. So we had to really be very, very, so we started using Facebook, and back then no one was actually using Facebook for B2B, right? So we were actually one of the first advertisers for that.

Pablo Srugo (12:02) 

That was early. This is pre-Facebook, IPO, right? Or right around that time? 

Saurav Chopra (12:07)

Actually, no, it's post IPO for sure, but still, actually I don't- .No, definitely post IPO.

Pablo Srugo (12:13):

I think IPO was 2010. Yeah, so you might be right. Yeah.

Saurav Chopra (12:15):

Okay. So it was used for B2C big time, but not B2B. And credit to my co-founder, who had this incredible marketing experience, he was like, Hey, we can't afford B2C, no chance. So Zipcar can do their own PPC, but we're going to try to promote this on social. So we started coming off with these B2C, like social ads, and no one ever thought that you could do it, but it started working. We started promoting franking machines, Pitney Bowes, franking machines on Facebook, and we were like, oh my God, there's a market for this. And because again, the SMBs, micro SMBs behave like consumers. So they were on Facebook and our cost per click was, oh my God, it was so, so low. We're talking about cents to the dollar, and we were talking about 2012. So this is where we like, oh wow, this is quite interesting. And that actually this whole, the move towards collective services helped us, but using social, using apply B2C social strategies for B2B acquisition. Actually Facebook also featured as one of their first case studies in the UK for B2B, and that was way back when. So I think that the fact that we didn't have the money made us really go innovate and push harder than anyone else would have and help us crack this B2C driven model for selling B2B services. That was kind of the first pivot for the business.

Pablo Srugo (13:41):

Sorry, I have to ask this maybe a stupid question, but what's a franking machine? Dude, I have no idea. “Franking”. Sorry. Franking machine. 

Saurav Chopra (13:47):

Franking machine. Yeah. So fracking machine is those metres that Pitney Bowes, I don't know if you know 'em. So they're a 150 year old American company where they are just putting stamps. A lot of businesses will use a franking machine to stamp the envelope and then ship it. So it's,-

Pablo Srugo (14:03):

I don’t emember last time I wrote something with this pen that I'm holding I mean? So let alone put stamps on something?

Saurav Chopra (14:08):

Yeah, exactly. Exactly. So anyhow, it's a pretty good business and it's a very good business model.

Pablo Srugo (14:16):

But you were selling these machines or service associated?

Saurav Chopra (14:19):

Services. Yeah, we were just generating leads for them. So we were basically just saying, Hey, here's a special franking machine offer. So a lot of e-commerce merchants use franking machines to ship products. So all the eBay guys, so we would run ads, it would say, Hey, here's a special offer, collective buying offer. Here's the link go redeem that offer here. And we got caught every time a transaction takes place with a supplier, but we were negotiating that collective offer, but we're not physically selling anything. We were just selling the leads.

Pablo Srugo (14:49):

You're selling leads. So that was the difference between that in printers where in printers you were actually selling the item.

Saurav Chopra (14:53):

Yeah, exactly. Yeah, we were taking payment here, we're not taking payment. We're packaging everything as a free offer, a special three months free, blah, blah. But basically using the power of collective buying to generate a high quality leads, a special discount to the supplier.

Pablo Srugo (15:11):

And how did you do the collective? If you're just doing Facebook then and one SB sees it, how are they part of, because in Groupon until a hundred people buy it, it's not activated.

Saurav Chopra (15:21):

Similar. We had some of those triggers in there initially, but to be honest, by the end, our brand was well known for collective buying. So we didn't necessarily need to have triggers at that point in time. but that was later. We started off with the triggers, but at one point we didn't need that activation of triggers

Pablo Srugo (15:38):

Because everybody knew that that was the idea. It was all about collective.

Saurav Chopra (15:40):

Yeah, that was the idea. Exactly. Exactly. So that was our first pivot, and that actually got us to over a million and a half in revenue,

Pablo Srugo (15:52):

Just off leads, basically mainly just selling leads.

Saurav Chopra (15:55):

Yeah. And that was basically, we were running 70% plus gross margin, and it was very profitable, but we didn't really leave our jobs to create a lead generation ad agency type business.

Pablo Srugo (16:12):

It was basically a Facebook ad agency

Saurav Chopra (16:14):

Effectively. But we were also- at that point, we just didn't want to go back to investors and VCs and all that to raise another round. We were just like, Hey, whatever we do, we're going to power on with our own profits and all that kind of stuff. 

Pablo Srugo (16:30):

Did you become profitable on that model?

Saurav Chopra (16:32):

Yeah, yeah. We were sitting on probably about three quarters of a million profit or something like that. We were sitting like, okay, what do we do? We're like, we cannot do this. This is not our business. We're techies. We are not here to- But we said, okay, well look, we are selling all these leads to these companies and they're creating recurring revenue businesses, so why don't we create a recurring revenue business out of this, and why do we send leads to others so that they're creating a recurring revenue business? So we said, okay, what kind of recurring revenue business can we create? So then we basically try to create a Costco model for business services. So we call it the HuddleBuy Gold Card. And we said, okay, we'll give you this membership option where we can bundle these products and services together at a great rate, and you pay us like 150, 200 bucks a year or something like that. So we said, okay, that could be our recurring revenue model because we are very good at driving conversion from Facebook at a low cost. So we created this new service. We were like, okay, hey, Costco works really well. What if we created a Costco for business services, but it was a subscription pricing and we could do it directly and we could also offer it to brands.

Pablo Srugo (17:47):

And so the idea- just to simplify, so a business would pay, let's say 200 bucks a month and they would get access to what?

Saurav Chopra (17:53):

So 200 pounds, so actually 250 bucks a year. So very, very cheap

Pablo Srugo (17:57):

A year. Sorry, a year, okay.

Saurav Chopra (17:58):

Yeah, a year. So they would get things like- they could get free office space for X days a year, they could get free Google maps SEO listing, blah, blah, blah. So we might list a preferential discount on Apple. So there's some discounts, but also some absolutely free things.

Pablo Srugo (18:17):

And for the partners, for them, it was kind of a way to just generate leads that's cheaper than Google Ads.

Saurav Chopra (18:22):

Yeah, exactly like that lower cost of acquisition. So we just say, Hey, what's your cost of acquisition? Let's roll it into the deal. And so that's where we'd always look at the cost of acquisition, say, Hey, how much does it take you to acquire a customer? Okay, Zipcar, it takes you, costs you 300 pounds. Okay, let's make the first year membership free. And so that was basically the model we were operating towards. So that was where we said, okay, this is great. You've got this cash, but we can't keep generating leads. This is a bit soul destroying, so let's create a recurring revenue business out of this. So that's what we slide on. And so we created this product, which we did amazingly well for two, three months. And then what happened is that our cost of acquisition was primarily driven by Facebook because Facebook was very cheap then, No one was using it. I don't know what happened. Was it 2013 or something like that? I don't know what happened. I think it was 2014, but Facebook's cost went up 6x in three months literally. And we're like, oh my God, this is not- this will be brutal. They love our product, but they'll never pay more than 200 bucks.

Pablo Srugo (19:34):

This is the upside/downside. When you find one channel that really works, you have to go all in on it, but at the same time, it's so precarious and you constantly, I'm assuming before this happened, you already had that worry, you and your founders, if this ever changed, this is just such a crucial point of dependency. If Facebook ever gets more expensive, it's going to be tough.

Saurav Chopra (19:53):

We were expecting it to get more expensive. We just didn't expect such a sharp ramp up so quickly

Pablo Srugo (19:56):

6x

Saurav Chopra (19:58):

So that just basically said, but then the other thing, but we had started business. This whole model, we had actually two prongs to it. One was going direct, the other was white labelling it. So we said, okay, this whole model, which is like this is your Costco services model, we could take it to telcos, payment companies who had big SMB customers and almost create a loyalty proposition out of it. So the direct model didn't actually work, but the loyalty proposition worked really well. So we had some big energy companies who have a commoditized product, no differentiation. So they started paying us a lot of money to offer the same product under their brand.

Pablo Srugo (20:42):

And for them, it's what? let's say telcos, you're opening up an SMB that wants internet. Well, if you sign up with us, you also get access to all this package?

Saurav Chopra (20:50):

Exactly. So it's a package. So it's like Amazon prime bundles and all these services that you get. So we were almost creating Amazon membership clubs for payment companies or basically commoditized products. There's no differentiation. So they're trying to shine in any way they can. So the same product we wrapped in and it got surprisingly, and then we don't have to pay for acquisition. It effectively becomes a licence business where someone is paying us a fee to run their SMB loyalty programmes and all that kind of stuff.

Pablo Srugo (21:23):

How did you make- One question I have about partnerships. Always the challenging part is when you’re-  these are big companies, utilities, telcos, these are not little companies or massive companies. And whenever you try to partner with them as a startup, there's always this, I mean, look, and I hear this all the time, right? Oh, I have a partnership with Microsoft or name your favourite company. And it's like, yeah, in theory if all their salespeople started pushing it, it would be amazing. And the reality usually is crickets, because oftentimes from their vantage points, why am I going to push this thing? I've got a million other things I could push. You don't have any proof points. How did you manage to make it work?

Saurav Chopra (22:00):

Yeah, so we had a hypothesis. We were again testing it, right? We're testing this direct hypothesis obviously with our direct product, and we said, Hey, look, we had seen some models, equivalent models. So there were established models in the consumer world where O2 is one of our big operators here. Or when consumer telcos would offer a member benefits or Amex would have, Hey, here’s my gold card. So the consumer world, we knew it worked and we were just trying to say, Hey, can we take that hypothesis and apply it to the B2B world? So basically we try to package it in the right way. Our hypothesis did land, we got positive responses. I got the CEO of the biggest energy company to respond to me in a cold email, which was pretty remarkable because I think in the UK, which is British Gas Business is multi-billion, it was a targeted email or someone gets back to you that means, Hey, you've actually nailed their problem right now. They didn't necessarily become our biggest customer, but we said, okay, so there's no-.  so first you have to have the right hypothesis. And then I think, yeah, I mean I didn't know anybody. We did just outbound try to usually get a network, and then you have to go through a pilot phase. So we did some pilots, but it did take a long time in the scheme of things with some of the customers to land. So yeah, that gave us basically a few million in revenue,

Pablo Srugo (23:36):

But it took time. How did you fund it through that? Because your lead gen business is kind of gone? No?

Saurav Chopra (23:41):

Yeah, no, actually, so lead gen was running, I mean there was a cash, we got our first deals in a year and big chunky deals in year two. And one of the things that, so yeah, we used the cash from the previous lead gen business to actually fund this new development. And then we started doing pilots, which were paid pilots. So we were getting cash and we were very lean teams, so we were very small.

Pablo Srugo (24:08):

And the deals with these, let's take this utility or whoever it was, they would prepay upfront or it was just like when they sell a membership, you get a cut and they get a cut, like a rough chop?

Saurav Chopra (24:17):

No, no, it was a bundled deal. So we didn't rely on them to sell anything. So it was our loyalty programme. So we're selling hundreds of thousands of licenses. So yeah, we were not relying to sell and I would not rely on a- as a startup, relying on a big enterprise to sell your product. As you said. 

Pablo Srugo (24:36):

That's what I was asking. It was actually not really a partner. It was more of a customer for you from your vantage point, it’s a customer.

Saurav Chopra (24:41):

It was exactly a customer. So we’re reselling, yeah, it's very, very risky for a startup unless you are maybe open AI or whatever, but it's quite risky. So yeah, it was effectively, they did a pilot with us. They did a small pilot, they saw the results. They felt, hey, this could improve my retention, this could improve my convergence. Small pilot three months. And if you hit the right pain point and the person really has that pain point, and as a commercial person on the other end, in our case, if they were all CMOs or lower down chain or has a retention, they will run a pilot if you make it easy for them. And they saw the results and that allowed them to scale up. So that allowed us to fund, and again, we generated significant revenue through this exercise, but at the same time, when we launched. These people, one of the biggest asks they had was, okay, hey, it's great you're giving me these benefits.

Saurav Chopra (25:37):

Can I give these benefits to my employees? So that's where our third pivot came. We had so many of these people we were launching, they said, Hey, I love what you're giving me. Can I give them to my employees? Can I give them to my employees? So at that point I think, Hey, this is quite interesting, and so many people are asking us to give their benefits to their employees, all SMEs. And that's when we launched Perkbox as an initial test again, because we were so good on social, in running campaigns. So again, Facebook had become expensive, but instead of selling $200 annual licences, now we had a product we could sell for $2000 to $5,000. So the unit economics change because when you launch employee benefits or perks to your employees, then you're not paying me for one licence, you're paying me 20 licences or 30 licences.

Pablo Srugo (26:30):

And the test there was selling these Perkbox employee benefits to SMB’s, but through Facebook?

Saurav Chopra (26:35):

Yeah, a hundred percent. Again, using the B2C social strategies, because again, PPC came later there probably a bit of PPC, but most of it was again using B2C social strategies because we were so good at that. We learned how to do it, how to use visuals, and still Facebook was not being used. We're talking about 2015, 2014, we did some outbound as well. We got some responses. So it was a combination of outbound and social. So outbound gave us a response, but when we started running these Facebook campaigns, it was insane. It was like we had people responding like crazy. and that's when you start feeling- like employees tagging their managers because sometimes SMBs employees have their managers also on social. So it doesn't happen in enterprise. Your manager, if you're Oracle, your manager is not your Facebook buddy, but in small businesses it does happen. And so employees start talking to managers and sharing and all that kind of stuff.

Pablo Srugo (27:36):

You love this show, you don't want to miss the next episode. Why would you? so hit that follow button? Trust me, it's in your own best interest.

 I'm curious specifically about phase one. Know it was a long time ago, but what were some of the things, what were the ads? What was it that would really resonate? I'm sure it was in generic employee benefits, was there some specific benefit that you tended to push or something that kind of led to that amount of resonance, to that amount of sharing?

Saurav Chopra (28:03):

Yeah, so this is- again, my co-founder was leading the charge on this, but if you start with your usual like, hey, apple at a discount and cinema at a discount, things that are very emotional to people. So you go to the same cinema and if we're giving you a 50% discount on your favourite cinema, so that obviously more emotional, emotive, experiential, the brands that you have very strong affinity with, and again, these are closed groups, so these are not available publicly. No one can offer you 50% off cinema tickets all year round. There's only employee benefits. So some of those were food, restaurants, all that. But actually what's really interesting is that one of the ads, we still don't know why it works so well, was crazy. It's still the highest performing ad ever was cupcakes. So the ad was just an image of beautiful images of cupcakes and if we tried everything, everything the teams tried and it annoyed a bunch of people, but it just got so many people excited.

Pablo Srugo (29:08):

Was it like free get free cupcakes, something like that? Was that the kind of tagline? or was it-

Saurav Chopra (29:13):

I think it was the tagline, I can't remember exactly. Tagline was not necessarily, the imagery was around really, really these amazing cupcakes and that was the highest performing ever. 10 years in the business. Nothing's outperformed those ads. And they still realised-

Pablo Srugo (29:28):

How long were you able to run it for? Did it have its moment and then died out or was it-?

Saurav Chopra (29:32):

Yeah, it was and then it comes back. And then ice cream, nothing new. We don't have ice cream discounts or anything like that, but it was just crazy, and that's the whole point of testing, testing, testing. I was like, this is not going to work. I was the guy who was saying, why was this going to work? Why are we not going more on point? They were like, look at the data. I was like, wow. 

Pablo Srugo (29:51):

It's crazy. No, it reminds me. A few years ago I had Derek, the founder of Drop, which is also a mobile rewards app in Canada back from that same era. And I asked him that question and he said the number one most best performing ad for him was the junior chicken, the McDonald's junior chicken, the chicken burger. like that. Just a free junior- sign up, get a free junior chicken and just through the roof. Something about obviously something in that era as well that worked, but this mix of something everybody knows and wants, easy to share. You could think about every single one of your friends would probably want that. You just kind of comment, share, whatever. It just drove crazy viral reality. But it's so surprising, this sort of thing, and it changes all the time. I dunno what would work best today, but it's to your point, testing and also finding just a way to keep things super simple. That tends to be the best formula.

Saurav Chopra (30:45):

Yeah, exactly. Simplicity is the key. So yeah, that's when we started seeing that something that we had never seen before in terms of response rates on ads calendar booked, we had at one point we were getting about 5,000 inbound leads every month. And as we ramped it up from a few hundred to a few thousand, we went from salespeople. We went - salespeople, from 5 to about 60 in the course of 18 months. And again, we had not raised money.

Pablo Srugo (31:19):

five to 60 salespeople?

Saurav Chopra (31:22):

Yeah. So in that timeframe,

Pablo Srugo (31:24):

Wow. contracts too, you said 2 to 5,000 per employee per year?

Saurav Chopra (31:28):

No, no, no, no, sorry. That was per company, right?

Pablo Srugo (31:31):

Okay.

Saurav Chopra (31:32):

What was unique was that we were targeting this micro SMB segment that no one had touched. So there were tons of providers or all the big companies, or if you're a few thousand employees, but if you're like 10 to 50, no one was touching you. And because the go-to market model was so expensive, no one's going to do outbound on a thousand dollars deal, but because of Facebook, it was incoming, Incoming inbound, inbound, inbound. And that was basically the salespeople, their calendars were stacked. We didn't have an outbound SDR because we didn't need to, and we didn't even know what that meant. This only when we decided to go upmarket and we were like, oh, wow, okay, what is this outbound playbook? Right? There was no need because the calendars were stacked, right? We were very, very, very fortunate, very lucky because we were using a channel that not everybody used. At that point in time-

Pablo Srugo (32:28):

Do you remember demo to close rates or something kind of more in the low end of the funnel, what those ratios would've looked like?

Saurav Chopra (32:35):

Yeah, so I think the demo to close rates back then were probably on the lower end for us. I think probably around 10% as opposed to being 20%

Pablo Srugo (32:49):

well you had so much top of funnel. You had obviously a lot of noise, I would assume through that

Saurav Chopra (32:52):

Yeah, there's a lot of noise. Plus, to be honest with you, the LTV/CAC  was so amazing that at that point in time, perhaps we didn't necessarily have the guidance to focus more on, Hey, let's optimize it a little better, or for that matter, focus on churn. We were just ramping so fast, the ARR was ramping so fast. You're like, oh my god, three, four years, you're struggling. Are we going to survive or not survive? And all of a sudden you get this ramp up. So perhaps that excitement, we were just in this grow, grow mode and perhaps you could have slowed down a little bit and looked at the, what is the kind of customer we're getting? How long are they going to stay for us? And all that kind of stuff. Yeah. So that was our kind of final pivot=

Pablo Srugo (33:38):

But in a sense that is product market fit, where you don't kind of optimise all the stuff around the edges. There's so much demand that things just kind of take care of themselves. And when you look back, there's so many low hanging fruit, but you don't even have time to look at those. There's just a flood of inbound.

Saurav Chopra (33:54):

Yeah, exactly. So I think obviously, that was kind of the story and where it grew, and thankfully we were able to be very, very capital efficient, and then hence we were able to build a business with less capital than others have raised, to get to a point where we got to.

Pablo Srugo (34:14):

And how quickly? walk me through that ramp, like you said, five to 60 salespeople. How quickly did ARR or revenue grow in those 18 months?

Saurav Chopra (34:22):

If we look at- so there's probably about 60 commercials, so there'll be some CS people in there as well, but predominantly salespeople. I think we probably in two years, two and a half years, we went from I think one or two to about $14 million, something like that, ARR. So it was a pretty rapid exponential curve because we had this motion that was working very nicely on the acquisition front.

Pablo Srugo (34:54):

And is that when you raised?Once you were kind of at this 14 million?

Saurav Chopra (34:57):

Yeah, yeah, yeah. We raised at that point in time. So we raised capital then and then some of our very early investors wanted a little bit of secondary, so we raised to make sure that they are able to, they have been in the business for some time by now.

Pablo Srugo (35:13):

What did you do? When did you rebrand and then what did you do with your old businesses?

Saurav Chopra (35:18):

Yeah, at some point the employee engagement business became so big that when we launched this employee business, we called it PerkBox. And that was simply because we thought that, hey, when we are launching with a customer, our old brand called Huddle by, which was a Groupon business. And then when we launched the employee business, we called it first HuddleBuy Perks because it was an extension and it was very hard. It didn't roll off the time. It was pretty complex. And then we launched it, we actually used to send this box where we threw in some perks in it, like little goodies and all that. We actually sell physical boxes just for our first, they're like, oh, hang on a second. This HuddleBuy Perks doesn't roll off the tongue. How about we call it Perkbox? And I don't know how it came about. And then I was like, oh, that's actually much easier. So about 2015 early, we rebranded the employee side and actually pretty much the whole business by the end of the year to Perkbox we actually had to sunset our customer- the other businesses, two, three years down the line. There were some contracts that we needed to commit to because it was really, really hard to sustain both sides of the business, which had different customer bases, different technology stacks and all that kind of stuff.

Pablo Srugo (36:35):

And so then if we fast forward, you end up growing to over 30 million in topline. And then I think it was last year that you were acquired for one 70. How did that come about?

Saurav Chopra (36:44):

Yeah, so I mean, again, when we were growing fast, that was very, very good. Obviously we were excited about it, but then with obviously Covid, the business did have a bit of a slowdown. So again, because a chunk of our business was around SMBs and mid-market, so we were growing beautifully, and then Covid came along for two, three years. So that basically meant that our growth rate had to stabilize and it didn't-

Pablo Srugo (37:12):

And why was that? What was the effect? people were still hiring. What was the effect on perks?

Saurav Chopra (37:17):

I think what we found was that a lot of SMBs were suffering a lot, and then at least in the UK, everything was shut down. So while certain types of businesses grew like crazy, people are either not travelling, they're working from home. So employers are saying, Hey, I'm not making any revenue. Plus, we have a lot of hospitality type customers and type customers where they're like, Hey, my revenue is shut so I can't, or my employees are on furlough and all that, so I can’t. So I think that two, three years were a bit of a damp in terms of growth. We still grew a little bit and all that, but not perhaps the rate we were growing earlier. And so at that point, the business, obviously having been in the business for some time, we felt that we wanted to get the business ready for a transaction in 2025. So the original plan was to do it this year. We brought in a new CEO who has had- actually, he was my biggest competitor. So when I was running the business, we had this competitor and we used to compete head on. They were the enterprise giants and we were the SMB mid-market. But obviously as you do, we built up a great relationship. So last year we brought him into the business because he had moved on from the previous company, which was our biggest competitor-

Pablo Srugo (38:46):

He was a professional CEO of that other company? he wasn't the founder of that other company? 

Saurav Chopra (38:50):

He was a professional CEO, California based. And our competitor was also acquired by a PE firm, so very seasoned, one of the top HR tech execs in our space globally. And obviously we had a great relationship and we felt the business was ready for a transaction. We needed someone who has done that before at scale. So we brought him in as the CEO, which he kindly accepted because he knew our business and he knew what we had managed to do with the business. He loved the brand. And it just goes to show you, always be talking to your enemies. I don't call them enemies, no, everybody is friends here in that sense, you compete head on, but relationships are so important. So I brought him in last year as the new, actually, sorry, it was the year before last. So in 2023, I brought him in

-Pablo Srugo (39:40):

with a mandate to, hey, go sell this company?

Saurav Chopra (39:43):

Yeah, the mandate to go deliver an exit in 2025. However, when he came on board, we got approached by the PE firm and we felt that it was a very good opportunity. The timing was right, the offer was right, business felt. And so we decided to do that transaction at that point in time.

Pablo Srugo (40:03):

And when a PE firm comes like that, do they buy just over 50%? Do they buy all of it, leave you with some, what was kind of their playbook?

Saurav Chopra (40:12):

Yeah, so again, different PE firms operate differently, but most of them are majority buyers. And it really depends on what is their thesis. So if their thesis is to combine two different entities, which is what they've done with Perkbox, and another company they bought, which is now Perkbox-vivup group, which is actually now serving 4 million people in the UK. So it's a very, very sizable business. So when a PE firm comes in with that thesis where they're going to bring in two businesses, then they are pretty much going to own most of the business with obviously an incentive pool for management. If they're coming as a growth round investor, then they may do, hey, go in with a little bit more than majority. Rarely do they do minority holdings, which some growth equity PE firms will do minority, but typically they'll always go for majority. And in some cases, either they will take the whole business or in some cases they'll take a very significant majority, but leave the existing management team in place to run for the next phase of growth if they're not bringing company and do the next round of acquisitions.

Pablo Srugo (41:26):

But in your case, it was they bought basically the whole company?

Saurav Chopra (41:30):

They pretty much bought the whole company,

Pablo Srugo (41:34):

And I assume for cash then, since they then kind of just merged with the other one?

Saurav Chopra (41:38):

Yeah, that's right. So it was a full cash transaction.

Pablo Srugo (41:41):

So walk me through that, and especially from an emotional point of view. I mean, you'd been in this for over 10 years and obviously had seen, I mean, you'd struggled for that first three, four years. It was some signs weren’t there, some signs it was, and then you kind of really took off. You had the Covid piece. So another, that's the thing, it's always so precarious when you think you got it, then something else comes in and then this kind of comes inbound. What's that feel like as it starts developing? What's it feel like when it really materialises and takes place?

Saurav Chopra (42:13):

So I think obviously when it comes in and you've got the term sheet and all that, and you're going through that phase of exclusivity, and then you've got the real due diligence happening until the actual contract is signed, right? Anything can happen. So you're almost like, Hey, obviously there's a lot of time spent on due diligence with the lawyers and you're feeding all this information. Obviously the right PE buyers, something's going to happen, but at this point, anything can happen. But obviously when it does happen, there's a huge, huge, huge sigh of relief and obviously there's a big emotional- I can't describe it. Right. 

Pablo Srugo (42:53):

And were you able to ground yourself through the negotiations? or were you kind of how it is before a big event like that you have this uncertainty mixed in with what it could mean If it happens and it's kind of a little hard to fall asleep at night, it's hard to not think about it. The anxiety all builds in or the kind of person that just was even keel. If it happens it happens. If not, it'll happen one day.

Saurav Chopra (43:15):

Yeah, I think I've just been- when you've gone through all these cycles of turmoil, you're like, Hey, what's the worst that can happen? So we just said, Hey, look, what's the worst that can happen? And they walk away, we're in a very good place, we've got a fantastic management team. They'll come back or someone else will come back as long as the business is solid, has a good team behind it. So that's how I kind of reason myself and I stay grounded, like, Hey, what's the worst that can happen? And then you're pretty much grounded in that. And again, as I say, you can only control the things that you can control. Don't worry about the things you cannot control. So we work damn hard on what you can control and try to improve it, and that's pretty much the best you can do. So I think that's my philosophy, perhaps having gone through so many different ups and downs and all that kind of stuff. So I think, yeah, it was good. I mean, we were grounded. The team was grounded as well. The team that was negotiating on our side, and I obviously the buyers were very serious. So I think they gave us a lot of confidence that it is going to happen, but that's how I stayed grounded.

Pablo Srugo (44:20):

What about afterwards? What was your- after it happens, were you like, okay, I'm off. I'm taking a one year hiatus. Were you ready to build? What’s the next move?

Saurav Chopra (44:33):

Actually, because I became the chairman of Perkbox just before I brought in the new CEO. So I actually have another venture that I've been running for the last few years. So perhaps that helped me stay even more grounded because I started at Bottom again. And so I'm hustling, I'm building, and-

Pablo Srugo (44:57):

What's the new business?

Saurav Chopra (44:58):

So it's called 5mins.ai. So it's the number five, five Mins ai, and we're kind of a AI powered TikTok style training platform. And that was one of my pet peeves when I was building Perkbox. I felt that to get the team excited about learning and growing as individuals was very, very hard with a lot of existing systems. And obviously this is before AI came along. So when we started this, we're looking at, Hey, how can we use GPT2 to make learning much more efficient, effective? And so that's about how do we democratise learning and growth for any company, any size. So it's not just the big corporates who can spend a tonne of money to train their people. Any company, any size can do that. So that's why we created this 5minutes.ai, because I've been working on this. I've stayed grounded and not taken years off because at heart I'm a builder now I really, really enjoy building.

Pablo Srugo (46:02):

What is it that motivates you? What is it that you love about building?

Saurav Chopra (46:05):

I love solving problems, and I think that's what motivates most, at least that's what keeps I think a lot of founders, entrepreneurs going is that you see a problem, you want to solve it, and you want to see the fruits of your work at some point in time. So that's what really is the motivation, like, hey, this is the problem, going to solve it. And the vision of that solution where you're making that impact is the motivation. So you see yourself, okay, five years down the line, this is how it's going to work. And my team created this and solved this big pain point for people, just like we did with Perk Park before we entered the market. It was very, very hard for SMBs to motivate, to keep, retain their employees, give them the benefits at a very, very low cost. So yeah, that's the motivation really, the impact you create through the problems you solve.

Pablo Srugo (47:03):

Is it different on your second one, especially after a big win? Because I think most founders are builders and they love solving problems, but they also really do want that win. Once you have that and it's checked off, let's say, and certainly financially secured for life on that second one. Does it feel different than the early days of Perkbox?

Saurav Chopra (47:24):

Yeah, I think obviously as a first time founder, or if you had an exhibit that was perhaps not so great, the financial motivation is obviously very, very high. But when you do a second round around, it's not really about the financial motivation, at least for me, it could be for someone else, but for me it's, it's not needed. I don't need to do this. So that's the positive that you can really think about the long-term and you're not driven by, hey, quarter to quarter or whatnot, but you can really focus on a long-term vision. So I think that's one of the key benefits. Obviously you learn from a lot of your mistakes, that's the other benefit. And so lots of mistakes were made, and this time obviously I'm overcautious, but at the same time, you still make mistakes. So I can reflect and say, huh, maybe I was a bit more overconfident in this one.

Saurav Chopra(48:24):

Maybe I should have tested this a bit more. So there's always mistakes, right? It's like you will always make mistakes, but the question is you make them less and correct much, much quicker and faster. And the fact that you've done it before helps you play the long game and you're acutely aware of things as they say, you can never time the market. You just never know what's going to happen in the markets. And once you've gone through that journey, you realise that that is real. You can never time anything. You can just do your best, give it your best shot, keep talking to your customers, keep testing, keep testing, keep testing.

Pablo Srugo (49:01):

Well, we talk a lot about the difference between first time and repeat founders, and of course everybody makes mistakes, but I think as a repeat founder, hopefully you make less of the avoidable mistakes than your first time around. So listen, this has been great. Let's stop it there. Let me ask the last question. We talked about the product market fit moments. I don't think you have to go through that, but maybe just in terms of a piece of advice, especially as you were talking maybe is a good segue, some of the lessons, some of the mistakes. So when you think about your whole journey with Perkbox and now you're starting your new company, what's some of the biggest piece of advice that you would give to somebody that's just starting out today?

Saurav Chopra (49:38):

If I had to pick out a few areas, I think probably one of the most important things is about being capital efficient and really, really take care of your cash, because obviously that gives you optionality. The fact that you were able to pivot and all those things is because we were so capital efficient and we had the cash that was there. I think a lot of tech in particular, the people, the mission of the culture is perhaps not something top of mind for a lot of people. And we made that mistake in the early days also at Perkbox. But thankfully we had almost a self-correcting mechanic in our company where there were people who were very, very passionate about it. So thankfully, very quickly, we really started honing in on the people, mission and culture piece, which is very, very important regardless of the size of your organisation, celebrating wins, celebrating the losses, being everybody feel so empowered because you are a small team.

Saurav Chopra (50:48):

One person goes or one person does amazing things and goes above and beyond. You feel it. So I think that's the second piece. I think that's really, really key. I think, again, people talk about it a lot, which is the focus aspect. So there's so many opportunities thinking about, hey, how do I really, really focus on what's the most important thing? And finally, I think for me, one of the things that has been a big, big learning is that there's a famous saying by this guy Sun Tzu from a thousand years ago. He said the greatest from his book, the Art of War, the Greatest Victories are that which require no battle. So I think that's where we built such massive competition. And you go, rah, rah, rah, we're going to kill the competition, all that kind of stuff. But hey, if you can enter a market where there is no competition, that doesn't mean there's no market, right? No competition doesn't mean there's no market. So I think spending a bit more time finding that finding, fighting that market where there's no competition or victories, which requires no battle, is something I don't think we emphasise so much on. But I think that's been my key learning and I'm still working on it. I'm still working on it. It is like the greatest victory is where there's no battle is something that I'd encourage a lot of founders and entrepreneurs to think very, very hard about.

Pablo Srugo (52:23):

Love it. Well, Saurav, thanks so much for sharing the story with us.

Saurav Chopra (52:27):

Thank you so much for having me and we'll speak soon.

Pablo Srugo (52:31):

So guess what, I met this founder who listened to every single episode of the Product Market Fit show. He just called me and he sold his company for over a billion dollars. That's right. If you listen to every episode of the product Market Fit show, that's what's going to happen. I can't say it's guaranteed, but it's what I've seen. It's what I’ve seen in the past. But you won't know for sure unless you try it out for yourself. So go back because there's over a hundred episodes of the product Market Fit show and you haven't listened to most of them. Check them out.