John S. Kim is the Co-Founder and CEO of Sendbird (YC W16), the world’s no1. conversations platform for mobile apps powering 300M+ people every month.

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Guest Resources

Sendbird – APIs for better customer communications.

John Kim Twitter – Follow John on X.

3 Value Bombs

1) “Ikigai” is finding purpose in life is having a deeper introspection of yourself and finding what you want to do for the next 30 years will ultimately make you successful and deeply happy.

2) Terminal ARR may seem too negative but it also gives leverage to the company to be able to grow and change the total growth potential of the business.

3) A lot of metrics are hard to change as the company grows so think long term and think about the value of your customers ,how to retain them , how to structurally increase the gross ARR of your business.

Sponsors

HubSpot: Starting a business doesn’t have to be so hard. Go to ClickHubSpot.com/ent to download HubSpot’s Entrepreneurship Kit for free right now!

ThriveTime Show: Attend the world’s highest rated and most reviewed business growth workshop taught personally by Clay Clark & football great Tim Tebow at ThriveTimeShow.com/eofire!

Show Notes

**Click the time stamp to jump directly to that point in the episode.

Today’s Audio MASTERCLASS: Maximizing Customer Retention

[1:14] – John shares something that he believes about becoming successful that most people disagree with.

• Most people try to fit in the latest trends in the market but to him is “Ikigai” or finding purpose in life is having a deeper introspection of yourself and finding what you want to do for the next 30 years will ultimately make you successful and deeply happy.

[2:35] –  John talks about Terminal ARR and what it means and why it is critical for long-term success.

• ARR or Annual Recurring Revenue is the value of the recurring revenue of a business’s term subscriptions normalized for a single calendar year.
• Growth rate slows down pretty significantly as time passes. It is defined by the value proposition and fit in the market and understanding the overall dynamics of a start up on when it will grow fast or when it will slow down and how to navigate the risks around that.
• The concept of ARR comes from consequal carrying capacity, the same concept we use in other learned sciences (e.g. Biology and Engineering).

[4:33] – John talks about Carrying Capacity, its value and how it is applied to both business growth and revenue stabilization.

• Carrying capacity is simply the ability to sustain up to a certain limit or scope.
• The total growth potential of a start up and when it will grow fast or slow down until it reaches an equilibrium.

[6:25] – John shares what are the two metrics needed to calculate Terminal ARR.

• Terminal ARR may seem too negative but it also gives leverage to the company to be able to grow and change the total growth potential of the business.
• The 2 metrics are Gross New Revenue and Churning Down Sale Percentage over a period of time.

[9:15] –John talks  about one client.

• Most business owners focus on the gross revenue and not on the turning down sale. It is important to be sensitive with the retention in terminal ARR  because it can significantly affect the revenue of the business over time. The business may grow fast in the beginning but if the factor of retention is missed, it will greatly affect the future revenue of the business.

[13:18] – A timeout to thank our sponsors!

• HubSpot: Starting a business doesn’t have to be so hard. Go to ClickHubSpot.com/ent to download HubSpot’s Entrepreneurship Kit for free right now!
• ThriveTime Show: Attend the world’s highest rated and most reviewed business growth workshop taught personally by Clay Clark & football great Tim Tebow at ThriveTimeShow.com/eofire!

[16:20] – John talks about the calculation formula.

• The formula to calculate the terminal ARR is gross annual revenue divided by churning down sale percentage of the same time period.
• It highlights the importance of customer retention because  a lot of founders overlook it. A drop of 10% in retention will greatly impact the gross annual revenue and it will be difficult to fix.

[19:12] – John talks about Long-term Perspective.

• It comes down to re-understanding the underlying total growth potential of your business.
• Look back at your customer base early and plan ahead because it takes a minimum of 12 months to influence your gross revenue retention or customer retention.
• Keep stacking new products and new innovations to keep your business growing.

[22:09] – John gives his final takeaway.

• A lot of metrics are hard to change as the company grows so think long term and think about the value of your customers ,how to retain them , how to structurally increase the gross ARR of your business.

[23:59] – Call to action.

• Sendbird – APIs for better customer communications.
• John Kim Twitter – Follow John on X.

[24:20] – Thank you to our Sponsors!

• HubSpot: Starting a business doesn’t have to be so hard. Go to ClickHubSpot.com/ent to download HubSpot’s Entrepreneurship Kit for free right now!
• ThriveTime Show: Attend the world’s highest rated and most reviewed business growth workshop taught personally by Clay Clark & football great Tim Tebow at ThriveTimeShow.com/eofire!

Killer Resources!

1) The Common Path to Uncommon Success: JLD’s 1st traditionally published book! Over 3000 interviews with the world’s most successful Entrepreneurs compiled into a 17-step roadmap to financial freedom and fulfillment!

2) Free Podcast Course: Learn from JLD how to create and launch your podcast!

3) Podcasters’ Paradise: The #1 podcasting community in the world!

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