With Special Guest and Founder and CEO of Castos Craig Hewitt
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Intro: Welcome to the WP-Tonic podcast where each week Jonathan and his co-host, interview the leading experts in WordPress e-learning and online marketing. Jonathan, take it away.
Andrew Palmer: Hi, it’s Andrew Palmer. It looks like it’s Jonathan Denwood, but it’s not he’s out at, some conference or other, you know all these people online they go out and entertain themselves. And I’d like to introduce you to Steven Sauder. First of all, Steven Sauder, first of all, who’s a regular, co-presenter with Jonathan. And I’m Andrew Palmer. As the name says, it’s not Jonathan Denwood, it’s Andrew Palmer. And also we have with us today, our main sponsor, which is fantastic. So Castos produce, Castos rather because it’s, I’ve gotta do a Jonathan there and get the name wrong occasionally. So it’s, Castos podcasting and it’s Craig Hewitt who’s the main person, the starter, the founder, the man that did it. And has allowed us to, be sponsored by him, for quite a few months now. So we’re all very grateful for that. So Craig, introduce yourself to our audience and tell us a little bit 30 seconds of who you are? Why you are? And where you are?
Craig Hewitt: Yeah, absolutely. First of all, thanks for having me here, looking forward, to kind of diving into everything. But yeah, my name’s Craig Hewitt I’m the founder of Castos, we’re a podcast hosting and analytics platform. We’re a team of 15 people all over, all over the world, four different continents and yeah, we’ve been in business about four and a half years and have several thousand customers and yeah, that’s kind of who we are at this point.
Andrew Palmer: That’s basically who you are. So you make it easier basically for people like us to go out and podcast and do stuff and kind of monetize it or do it for entertainment and things like that. Now I have one question for you. So you bought, simply podcasting, there was a plugin you bought that basically started this off four years ago four and a half years ago. But I’m interested in what you did before that and then we can maybe into why you bought that and what your thought process was to buying a podcasting plugin.
Craig Hewitt: Yeah, absolutely. Yeah. So definitely, the way we got started with this was, purchasing the seriously simple podcasting plugin. before that I was also in the podcasting space, running a productized service, that does, and we still have of it kind of within the Castos umbrella now, kind of done for you podcast editing and production. So folks, record content like a piece of content like this, ship it off to us. We mix it with intro and outro. We have a team of audio engineers that cleans up all the mums and uhs and levels and makes everybody sound really great. Write Show notes, create some marketing assets, publish and do website. So you record send us and next Thursday it’s life in apple podcast and Spotify and everything. So ran that company for it was called podcast motor, ran that company for gosh, all told probably like four years, but like, a year and a half as a side deal while I had a day job. Was able to quit my day job and go full-time on that. And then about eight months after quitting my job and everything, the opportunity to acquire seriously simple podcasting came along and that’s been my kind of big thing ever since is building Castos.
Andrew Palmer: Cool. Right, one important aspect you missed out on. What was the day job that you were skying off and, creating this little empire that you’ve made?
Craig Hewitt: Yeah, so it was totally unrelated. I was in sales, in the medical field. So, in the US like medical technology and medical equipment sales and everything is just an enormous industry, and all very privatized. And so we sold capital equipment and disposable equipment to hospitals and doctors.
Andrew Palmer: Oh, cool. Okay. Well, you’re helping kind of aren’t you? Because we all need- We all need to keep our health going. Steven, you got anything to Steven you got anything to ask Craig while I like, cause I’ve got about eight questions I’m gonna batter him with so you can carry on.
Steven Sauder: Yeah, I, I have at least 16, but- So you bought a plugin which kind of really launched you into the space. It sounds like a lot of people that kind of like go that way seems like they were like programmers or like they were moonlighting as they had like their development job and then they like get into the plugin space. what was it like hopping from a like non-development job all of a sudden you get this, WordPress plugin, like did, did you, did you know PHP? Did you know how to program, did you have people on your team that could do that? Was it scary? Was it intimidating? Like yeah.
Craig Hewitt: Yeah, yeah. Just absolutely terrifying. No, to this day don’t, I know, so I know a little bit of code, but don’t write any code and never have. And that’s really hard like I think non-technical founders have just an uphill battle, as opposed to folks who can write code. I guess in a way, in a way they do as they can’t write code and not even like can’t write code, but can’t understand what it means to develop software. And like worked for a long time with, Jonathan Bossenger, who was our first developer and was with us for years and years and has since moved on to a role at delicious brains, outside of development, coincidentally. But a lot of just how he and I communicated and how we form a development process as a company and how I get what’s out of my head into something that they can work with, is just a huge learning curve for someone who’s not a developer.
At the same time, like I have pretty decent and skills in sales marketing And so like I didn’t have to learn that, which I think is a maybe bigger hurdle for technical founders to come in and say like, Hey, I can write all this code, I just wanna make the product better and better, better all the time. And I think the reality is like after a certain point, a better product is not gonna change the growth trajectory of a company, it’s sales and marketing that’s gonna really make a company, a company because otherwise, it’s just a product. And so, yeah, I mean, getting back to your question, it was really challenging, to learn how to work with the developer to create a product. It was my first real product and jumping into SAS directly was a huge mistake I think, but, it worked out. It worked out in the end because we were able to self-fund the product and Jonathan’s time from the profits of a productized service business.
So I think that the model is really good for, maybe a lot of folks listening to like how to have a small agency or are developers, are freelancers, and have, either flexible time and or money that they can invest in a product, while not just like cutting yourself off at the knees, going headfirst into this thing, but just like, yeah, burn the candle at both ends for a little bit, take extra profits you’re getting from your business or from freelancing and put it into a product that can then sustain you independently later on. And kind of bridging the gap that way is a nice, easy transition, easier transition than just going ahead first.
Andrew Palmer: I’m gonna interrupt you though Steven, because I know Jonathan Bossenger really well. He was one of my first developers on the elegant marketplace. I used to own an elegant marketplace and I’ve been lucky enough to meet him a couple of times, met him at, Berlin, but we’ve had many, many, many hours of, zoom calls and phone calls and WhatsApp calls and everything certainly during the early days. And, I was really pleased to see him developing on that. And I’ve been pleased to see his progress actually as a developer going onto, from codeable or from elegant marketplace to codeable to now doing what delicious brains. I dunno what he does with Delicious brains. I haven’t spoken to him for about seven months to be honest, but yeah, I think he really helped and that’s the key, isn’t it finding a developer that you can actually get on with and he is quite chill as well.
So he kind of doesn’t get too stressed out and just well I’m doing it as fast as I can. So that’s key to finding a great developer to work with. And that’s important and fact, one, another thing that you did cause I develop other stuff as well, and I’ve got an agency, Steven does it himself as well, and we’ve both had successes and I wouldn’t call them failures, but things that didn’t quite work out, through finance more than anything else, because I don’t want to go, like you probably didn’t want to go into the VC world or into investment or, how are you- One of the questions that I had for you, which trips on or really segues great into what you said is how have you financed your growth? Is it specifically through sales and marketing and getting customers on what’s your churn rate like? What’s your acquisition rate like? What’s your acquisition cost like? because I think anybody that’s interested in developing a product for WordPress or, SAS product needs to know this kind of little tips and tricks from a, let’s say successful, founder, like you. Cause, let’s face it you’ve got thousands of customers paying customers, how you’re doing it.
Craig Hewitt: Yeah. Yeah. So I, I think just to hit on something you said, like finding a developer that you really get on good with is so key. And like when we hire developers now, a very significant part of it is just communication. Can I have a cup of coffee with them and communicate about a thing? Can they come to me and honestly and openly say like, hey, this is weird and I don’t understand this. And I think we’re over-engineering this thing, and hey, we’re under engineering this thing, this is a huge operational gap for us over here? Like I think just being able to be really open about that is important for me as a non-technical founder for sure. And I think it sounds like for you all, as technical folks, working with developers is really important.
So yeah, I mean, I think finding Jonathan was a really lucky thing for us. And would be hugely important if I ever do this again to find probably like a co-founder, that’s a technical person that I can just a hundred percent rely on, everything they say, and we’re really aligned on a kind of where we’re going. But to answer your question about like, kind of the finance or the acquisition side of the business, we were, self-funded for a long time bootstrapped up for a long time. So like the productized service allowed us to buy the plugin and pay for Jonathan’s time for, however many months until we got the first version. We were very lucky to have quick traction to where we had to pay customers on the first day that we rolled the first version of the product out, and were to like $10,000 in an MRR, like within the first year. Which is pretty decent for a self-funded company.
Andrew Palmer: Absolutely. Yeah, really cool.
Craig Hewitt: Not long after we did take financing, we’ve taken financing twice now. Not from true venture capital, but at first from a startup accelerator program called Tiny seed. So folks who listen to this podcast might know of Rob Walling and what he’s done. And we were part of the first batch of Tiny seed, where we took about 120,000 of financing there, to be part of the accelerator program. And then earlier this year, June, I guess, a couple of months ago, raised a more kind of proper seed round or pre-seed round, I guess, technically you call it, of about $750,000, from kind of individuals and companies, and companies that, folks in this podcast would know in including Automattic, and the Yost team, invested in us.
But I think that even with raising the amount of money we’ve raised, we still work a lot like a bootstrapped company. Where, like, if you go raise 200 million like you don’t care about anything related to profitability, cause the goal is just, what do we need to do from now until we raise our next round? Whereas, we’re just kind of like this series of dips and, and returns to the mean like we are burning money right now and that’s the whole point of raising money is we want to invest in the company and the growth and the people now instead of just amortizing that over, the next year when we could be able to afford it. So we raised money or spending more money than we make right now and know that in the next year we need to get back to this point where we’re breaking even again, at least. And so it’s just a totally different mindset as opposed to true venture capital where the goal is just to do what you have to feel good about raising seed and then a series A and a Series B
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Andrew Palmer: Where’s the money going?
Craig Hewitt: Yeah so it’s really interesting. So for the first time ever, four and a half years we first calculated our LTV to CAC ratio last month. So LTV lifetime value, CAC customer acquisition cost. And so CAC is basically all the money you spend on sales and marketing paid acquisition, ads, people, content, all that kind of stuff. And it was really interesting. Like it was really good and this is a funny thing, because like good is kind of bad also like there’s this ratio like the sweet spot of LTV lifetime value to customer acquisition costs should be around three times, right? So your lifetime value should be about three times what it takes you to acquire a customer. Ours was higher than that which means we’re acquiring customers efficiently, but at the same time, not spending enough on marketing. So it’s kind of like-
Andrew Palmer: And you get to that because you say, well, we are acquiring customers efficiently and it’s not costing as much as we thought it would be because our LTV is like, whatever. It’s is greater than. And that suddenly makes you realize that you’ve gotta spend your money either more effectively or you’ve gotta spend more of it at a particular time. What’s your churn rate like?
Craig Hewitt: Yeah. We’re fortunate. It’s really good. It hovers around 2%.
Andrew Palmer: That is really crazy good when you’re talking about ISPs hosting. In our genre, if you’re talking about cable companies, you’re talking 25% churn, right. So, and their customer cost acquisition is like two years’ worth of ARR, right? So [Interposed talking16:36] well, it is tough to make it work, but they’ve got massive institutional investors. I know that I used to work for NTL now, Virgin media now their customer acquisition cost was like two grand. And their monthly was 21.99, so it takes a while to get that back. But when you’re dealing with institutional investors that have got gazillions of money to put in, they really don’t care because at the end of the day, they’re investing in these companies to do their buy their sell-out or whatever. I think NTL got sold about 18 times during the time that I was working with them for six years. But Steven I interrupted you there that, I mean really great answers to the, those questions totally open as well. Amazing Keep it up.
Steven Sauder: Yeah. I appreciate that is the idea behind, spending more money in marketing that you can get more efficiencies out of that, that like if you invest in marketing like by increasing that dollar spend, you can increase the efficiency of that dollar, in trying decrease that acquisition cost? Or is that kind of a weird way of thinking about it?
Craig Hewitt: I don’t know, like, I guess I’ve not thought of it in that way. What you’re saying doesn’t seem wrong. Like I’ve not thought of it in that way. the ways that we want to invest more in marketing, with both kind of raising funding and kind of seeing our LTV to CAC ratio being, good to where we should feel good about spending more money on marketing is really like a market share strategy, like podcasting. And this is where I think like your strategy and our strategy for like raising money had a lot to do with the industry that we’re in. podcasting is really dynamic a lot going on a lot of people being bought and sold, companies being bought and sold. And because of that, we said like, Hey, we should take money because the chance of something really great happening if we raise some money and are able to invest in the company and the growth of the platform and the team now versus, just spreading that out over a few years, probably gets us ahead of, where we would be otherwise. Yeah. And also like-
Steven Sauder: How creative do you get with that spend then? Like, so now you have money to play around with marketing a little bit more, do you say, oh, these are some tried and true methods. Like, let’s just try to refine that where you’re like hey, let’s go try some off the wall, crazy new ideas. And do a mini TV Series or I dunno what.
Craig Hewitt: Yeah, no, you’re spot on that like, and again, like we didn’t raise enough money to where we can do a bunch of super crazy things, like get a billboard on the five interstate in LA or something like that. But like, but we are, yeah, like we’re, we’re creating an original podcast series right now. That has nothing to do with podcasting, has nothing to do with SAS or WordPress or marketing. And the goal really is like, Hey, we have the time and the resources and the talent on the team to create this really a piece of work. But it also is gonna serve as a purpose, right. It’s gonna be like, kind of like our calling card or our digital resume. Like folks come to say, we want to create like, this really amazing narrative-style podcast. We’re gonna say, cool.
Like, if you wanna see what working with us is like, here’s what we do, you know? And so we’re just able to do a little, little bit more than a smaller company or a company that’s entirely bootstrap because that money has to really go to work well when you’re bootstrapped. And if you’re not super profitable, it’s tough to think about taking that kind of bet. At the same time, I’m pretty pragmatic when it comes to sales and marketing. Like it’s not complicated, it’s just hard. Like, create a bunch of really great content, build that organic engine that takes care of those leads, and prove your value proposition to ’em in sales. And like how you do that is the really hard part, but it’s not super complicated. Like it’s just a matter of doing all that really, really well. And like, what we’ve found is that, like, it’s just, the people are so important. It’s the people on the team realizing like, Hey, we can create a, s***ty sorry, [Inaudible 20:48] a really bad piece of content-
Andrew Palmer: It’s WP-Tonic, you can swear out as much as you like get on it.
Steven Sauder: That’s pretty tame you’re way behind the usual guests.
Craig Hewitt: Hey, p***y. You can create average content, right. And it’s gonna do an average job. And like, just what we’re finding across the board, like whether it’s sales, marketing, product development, is that like, I’m coming to realize like, that really amazing people are, are really like the thing they make the difference. Yeah. We talked about Jonathan Bossenger before and like, Jonathan if you’re listening it was a real bummer for him to leave because he’s an amazing developer, and a great person and-
Andrew Palmer: He’s an amazing person. Yeah, I totally agree. He’s an amazing person. I absolutely adore him. He’s just a wonderful guy and really just honest, but, on that with the people, Matt Medeiros is still with you right. [Inaudible 21:44] yesterday and today and stuff and carrying on, even though he kind of question one of your investors quite a little while ago, that came bit him in the ass, as a couple of times, but, that was-, How did you feel about that kind of situation with Automattic giving you some cash and, having criticism from one of your podcasters that works with you, but works independently as the Matt Medeiros’ podcast and Matts great. I’ve even bought a hat, because he, by buying the hat, you contribute to the big orange heart, which is a, it’s like close to my heart and it’s the UK based as well. How, do you handle and Yost being bought as well? Did Yost invest or was it the [Inaudible 22:27] that invested, which was it, how does that affect you when you then suddenly find out that Yost is now part of a new order? It kind of must go through your mind and going, oh, s**t what happened there? This kinda stuff going on.
Craig Hewitt: Yeah. Yeah. I mean, like, I think one of the real values that we have as an organization, we have a bunch of different people from really different backgrounds, with different priorities and perspectives and things that they think are important. And, when you really are able to embrace that and try to amplify it as much as possible is when really cool stuff happens is what we’ve seen. like we have people just in sales and marketing from the auto industry and web hosting and, all these really different agencies and like all these really different, backgrounds to where, like, when we put all of that together into what we’re doing now, it’s really cool. And we have a bunch of different perspectives. We’re able to cherry-pick like the best of this one and the best of this one and best of this one.
And so, like, I think that when it comes to like specifically what you’re asking, like Matt and his opinions and his stance on certain things, like we really embrace it because that’s a big part of what makes us, us. And, I, I think, what you’re talking about specifically, like, I think I know Matt has a ton of respect for Automattic as a company, and what they’ve done for the ecosystem and stuff. And for him to be, honest and challenging, in, what he’s doing is really healthy. And I think that everyone would say that.
Andrew Palmer: Isn’t that the- We have the WP-Tonic podcast and sometimes Jonathan is quite challenging let’s face it but isn’t that the host’s duty almost to be challenging without trying to be too controversial but to, challenge. And, how do you see that growth of, we’ve got a couple of challenging podcasters out there, one was bought by Shopify? I won’t mention his name particularly, but, everybody knows who he is a particularly challenging host on there. How do you feel about having a tool that can, broadcast people’s opinions that you don’t, or may not particularly regard as appropriate?
Craig Hewitt: It’s really challenging, and I think this is where my personal beliefs and how the company operates need to divulge, divulge-
Andrew Palmer: Divulge.
Craig Hewitt: Yeah. Whatever
Andrew Palmer: Or divorce.
Separate whatever. Yeah. Because yeah, my beliefs are not what the company should do necessarily. And I think that one of the responsibilities that a platform like ours has or wordpress.com has is the responsible, ability to let pretty much anybody say anything they want, within some confines and with some guardrails. But to say like, hey, if it’s not hurtful, it’s not inciting a riot at the Capitol it’s not like actually hurting people or spreading misinformation. The ability for someone on the far right, or the far left of the political spectrum to come in and say, whatever they want, as long as they’re not hurting anybody is the right that we create as a platform. And like where it goes off the edges from there is the super challenging part because a lot of times it’s subjective, it’s like, what is hurtful?
Sometimes it’s really clear and a lot more of the time is not. And so then it’s just a judgment decision that the company has to make to say like, Hey, I understand that you may think this is okay, but, but it’s not.
Andrew Palmer: And it’s always our right as individuals to be offended. I mean, it’s my right to be offended, but, I’m pretty much not offended. I’ve been ginger most of my life. And, it’s kind of goes I’m going gray now, the fact that I’m ginger was, criticized or not ginger any longer was criticized last night when I was out partying, I went, oh, you’ve gone gray you’re not ginger anymore. That’s right. Thanks for mentioning ginger, but it’s, I know that Steven has set up a few companies and stuff, and I think the advice that you are giving in the openness here is like our outrageous, it’s great about financials and who’s investing and all that kind of stuff. But the main crux of it are you building this business to sell?
Craig Hewitt: Yeah, that’s a really good question. And I think that anyone who takes outside investment and says, they’re not gonna sell the business at some point, is lying and, or doing a bad job to their shareholders. So yeah, I mean, when, when we took the money, the idea was at some point, our shareholders need to get a return. And the easiest way that that could happen is sell or to IPO And that IPO is, like, I don’t know that that’s a really interesting one. Like it doesn’t have to be on the NASDAQ anymore. There are a lot of, new places coming out, where smaller companies can go public and, create a liquidation event for their investors and for themselves. Yeah. And I don’t know what that’ll look like for us, but, yeah, I think at some point, our investors need to get paid for sure.
Andrew Palmer: Cool. Steven, I’ve totally over-hosted this. Carry on.
Steven Sauder: No No great, great questions. That’s super interesting the answers too. As far as like Castos and like WordPress integration, like it’s been really deeply tied to WordPress, as you grow, what happens with that is there a need to like say, oh, we’re also deeply integrated with these other environments. Is WordPress always going to be like the darling that you focus on? Kind of what direction and where do you take things as Castos gets bigger?
Craig Hewitt: Yeah, yeah, absolutely. Like, I think that the natural, kind of evolution is a little bit out of WordPress, but like, it will definitely always be like our core in terms of integrations and the kind of place we come from. You were asking before about starting a software project. I think like add complexity to that is like an open-source project and supporting an open-source project is just infinitely more complicated than. I have a Ruby on rails app and it’s all my world and everything that happens in there, I have complete control over. But, an open-source project is just complicated. But it is really, really powerful and, the ecosystem of WordPress is just amazing. And like, I just can’t imagine us ever wanting to separate ourselves from it, just because I think it’s great. It’s a great community. It’s a great product. And for us as a customer acquisition channel, it’s great because a bunch of people uses our plugin and it’s entirely free and it will always be entirely free. And then some of them decide to use our hosting platform too.
And I think what we’re doing in general, and it applies both to WordPress and not to WordPress is just giving more inputs and outputs to our platform. And so, we have a brand new, absolutely beautiful marketing site, coming out in a couple of weeks. And one of the things on the homepage is that Castos is the center of your audio universe. And that’s really where we’re going, is like, if you think about a product like WordPress, right. Where, like, I use the analogy of like Typeform a lot. Like there’s a lot of things that come into Typeform and Typeform does it things. And then there’s a lot of things that come out of Typeform into a Google sheet or a payment tool or something like that. And so we see Castos as a similar kind of thing in the future where like, yeah, WordPress may be a lot of the inputs to what we’re doing with Castos, but then there are gonna be outputs from casts to social media and email and Shopify and things like that that will be coming in the future. So, yeah I mean, think we, view how WordPress and our involvement in WordPress evolve kind of similar to other tools that we’re integrating with. But it’s always kind of the first place that we go for those pieces of expansion, I guess.
Andrew Palmer: Cool. Right. So, it’s now time for us just to take a little break, and, announce actually this is episode number 630. So we are just gonna take, a little break so that we’ve got time to have some messages.
Outro: Thanks for listening to the WP-Tonic podcast, the podcast that gives you a dose of WordPress medicine twice a week.
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