Hello to Canada’s SaaS Community,
After working in multiple startups, Chris Noble founded Penny to empower direct and social sellers—and recently closed a $33.9 million Series B. Speaking with SAAS NORTH, Chris explained more about how he built the company from a free user app to an enterprise company.
Key takeaways:
- Always validate what’s unique about your product first before targeting a business model or monetization.
- When validating a business model, make sure it continues to deliver value for users—don’t remove value for the sake of monetization.
- Look at what worlds might merge or clash in your industry to inform your future strategies.
Co-Founder/Producer, SAAS NORTH Conference Editor, SAAS NORTH NOW
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After years of building everything from iPhone games with friends to enterprise products at Hootsuite, Chris Noble co-founded Penny to help social sellers and direct sales entrepreneurs grow. But revenue growth for Penny as a business actually comes from enterprise clients, not individual premium users. Speaking with SAAS NORTH, Chris explained how he validated his product and leveraged individual users to secure large enterprise contracts.
Validating your product
When Chris first graduated from the University of Waterloo, he built iPhone games with two friends. Then he moved on to a couple of startups before heading to Vancouver to join Hootsuite Labs, the company’s product innovation hub.
After moving to BC, he met a man named David Abbey, who shared a problem his wife, Terri Lynn, was dealing with: she was a successful direct seller for a large skincare company but was having trouble managing all of her customers. Chris saw an opportunity.
“I looked at her day-to-day and thought ‘this is exactly what a computer is meant to solve’,” said Chris. “This is also what I built all the time.”
Chris also noticed there was not a clear leader in the direct sales space, which meant there was a market he could capture. He was initially cautious of the space, though, acknowledging direct sales (or multilevel marketing) has a “bad rap” for infamous cases where sellers would have to pre-purchase a lot of stock and then often lost money. However, he noticed the industry was beginning to change–it looked a lot more like drop shipping these days, and he wanted to empower those entrepreneurs to be successful.
With Terri being user number one, Chris built the first iteration of Penny. Ultimately, she found success with the platform and started to invite her team onto it along with other sellers in her network.
This early traction continued, but Chris was clear that a key growth lever was not charging for the platform. Instead, he saw the first phase of the business as purely product validation.
“We didn’t charge to begin with because that would have prevented growth right off the bat,” said Chris. “We weren’t looking for validation on monetization. We were looking for validation on product. And after we had validation on product, then it was time to validate a business model.”
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Validating a business model
Chris’ approach of not charging for the platform worked—it grew to 15,000 users within three months of launch. And it seemed like they had strong product-market fit: users raved to Penny privately, many posted on social media about the experience, and some even encouraged friends in the direct sales space to sign up.
Then came the need to validate a business model.
Giving away the app for free might have felt good–Chris had built something that empowered entrepreneurs–but it didn’t provide the foundation of a sustainable business. To test out monetization, the company launched a low-cost premium individual tier so power sellers could access more features.
The real business model came from going up to the companies themselves. Instead of trying to entice more individual sellers to upgrade to premium, for example, the company launched an enterprise sales motion. They leveraged the number of individual sellers on the platform–and the success they were having–to pitch for an enterprise deal where the company purchased licenses for all their sellers.
Chris said this sales model became so successful that marketing toward individual free users became a “prospecting tool” to know which enterprises to target next.
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Navigating an evolving market
Starting with product validation before moving to business model planning paid off; the company raised a $33.9 million Series B round in mid-2022.
Now Chris is focused on the future. Direct sales is once again evolving as brands are looking to expand their reach with both influencer and affiliate marketing. Many direct sales organizations, already looking like drop shipping companies, are starting to flatten out their structures and remove uplines and downlines to comply with changing regulations and lower their commission payouts.
“This is all this big mix that is commerce,” said Chris. “And everybody has their little own little trick of how to make money.”
A common thread, though, is the idea of social selling—building an audience on social media and using that to sell goods and services. One way Penny is working to change this is through social storefronts. Unlike affiliate and influencer marketing which relies on share links, Penny hopes to provide a social storefront that links fulfillment and commissions in one for a better customer and seller experience right inside the social channel.
“Influencers are just selling stuff on behalf of companies,” said Chris. “Direct sales is just people selling stuff on behalf of companies. The worlds are combining. So now, now we’re looking towards the whole social selling ecosystem.”