Mixmax’s CEO on How to Achieve Near-Zero CAC through Viral Growth

July 17, 2018

If you’ve ever been frustrated by the limitations of email, you’re not alone. In fact, startup Mixmax was founded to fix your frustrations. Rather than building an email replacement, Mixmax aims to wholly improve your email experience with a host of features including one-click scheduling, templates and rich automation with your CRM.

Mixmax’s decision to build on top of one of the world’s most ubiquitous platforms was intentional from day one. With an estimated 2.6 billion email users, Mixmax Co-founder and CEO Olof Mathé wanted to go after users where they already were.

“It’s much easier for people to adopt a product that enriches something they already use than to try to relearn a new flow,” Mathé said.

While Mixmax’s potential user base is vast (anyone who uses email), its marketing budget is not. Like other startups, Mixmax has limited resources – monetary and otherwise. But a bit over three years in, Mixmax has over 10,000 customers. And it got there with near-zero CAC. The company’s method to achieve this growth? Go viral of course.

You get 0 CAC

Mixmax’s go-to-market approach, and the basis for achieving virality, is part of a phenomenon OpenView calls product led growth – a strategy that relies on product features and usage as the primary drivers of customer acquisition. Successful product led growth strategies have enabled companies like Slack, Expensify, Intercom and, of course, Mixmax to achieve hypergrowth without spending huge sums on traditional sales and marketing.

Five Types of Virality

Sounds simple enough, right? You know better than that if you’ve ever tried to make anything go viral. But thanks to Mathé’s singular focus on growth and their reliance on a product led model, the company has been able to achieve what can only be described as viral adoption.

Through it all, Mathé discerned five discrete types of virality:

  1. Network Effects: Your users work to get other users on your product because it makes the product better for them.
  1. Value Virality: Your customers provide value to other people (who aren’t users) and make their lives easier, simply by using your product.
  1. Exposure Virality: Your customers show off your product, (because it makes them look good).

Exposure Virality

  1. Referrals and Invites: Your customers get rewarded by you for sharing your product.

Referrals and Invites

  1. Word of Mouth: Your users love to talk about your product, without having a particular incentive

After three years of painstaking testing, Mathé and team have distilled which of the above strategies work for their business.

Virality: What Works and What Doesn’t in SaaS

Looking back, what worked best for Mixmax was word of mouth (aka brand), which accounted for 44 percent of the company’s signups. For SaaS products, Mathé refers to this as the “office pod dynamic” in which one employee talks up the product and encourages others to sign on.

“The other thing that I think seems to have worked better than expected is asking people to invite others to the product.” In fact, 12% of sign ups came from referral virality. Mathé hypothesizes that this is because they ask for referrals early in the customer lifecycle and because Mixmax has broad appeal. “Perhaps it’s time we replaced NPS with asking for actual referrals” says Mathé.

Surprisingly, widely touted network effects accounted for less than 1 percent of signups.

Design Principles for Achieving Near-Zero CAC

In the end, Mathé and the Mixmax team came to understand much about virality that challenged their initial assumptions. But one thing remains certain, the only way to achieve $0 CAC is to grow through virality. Mathé’s lessons to other founders headed down this path?

  1. Instead of spending to grow…instill a culture of frugality. Constraints breed creativity, creativity breeds $0 CAC.
  1. Instead of charging a lot…don’t get pricing right at the outset. Err towards simplicity and making it easy to buy, bringing on as many customers as possible. Mixmax started with just a single plan, monthly only.
  1. Instead of building a platform…enhance an existing workflow. Existing platforms like Salesforce.com, Gmail, Slack, Netsuite and Intuit have huge built-in audiences/users that you can leverage.

Ready for more viral growth lessons? Check out Olof Mathé’s deck on achieving viral growth below:

Kyle Poyar

Partner at OpenView

Kyle helps OpenView’s portfolio companies accelerate top-line growth through segmentation, value proposition, packaging & pricing, customer insights, channel partner programs, new market entry and go-to-market strategy.