Turning $1,000 into $28M ARR at lemlist

Plus, why lemlist's COO is betting on a reverse trial for their next phase of growth

Oct 02, 2024

👋 Hi, it’s Kyle Poyar and welcome to Growth Unhinged, my weekly newsletter exploring the hidden playbooks behind the fastest-growing startups.

lemlist stands out for a lot of reasons. They’ve grown from $0 to $28M ARR in six years — all bootstrapped. Guillaume Moubeche started the business with just $1,000 (how many folks can say that?!). And they keep evolving, recently launching a reverse trial to improve free-to-paid conversion and drive toward ubiquity. COO Charles Tenot joins the newsletter to unpack their journey and exactly what happened after implementing the reverse trial. Keep reading, then dive into my full Zero to One startup series.

In 2018, Guillaume Moubeche, frustrated with existing prospecting tools, decided to create a better solution. After an unsuccessful attempt to outsource its development in Russia, he invested his last $1,000 to start lemlist despite the crowded market.

lemlist's unique selling point was its ability to personalize cold outreach at scale. In outreach, success isn't determined by the number of emails sent but by the quality of the message. lemlist allowed users to include personalized images in their cold emails, helping them stand out and addressing the common challenge of low response rates.

lemlist’s personalized image feature, a unique selling point in the early days

One year after the launch, lemlist reached $200K ARR, and growth took off. In 2020, we achieved the first $1M in ARR. Just 3.5 years after the launch, the company was valued at $150M.

Today, lemlist is part of lempire: a multi-product company (with lemlist being its most popular product offering multi-channel outreach) with customers in 100+ countries and a team of 90+ people. We are fully bootstrapped with 40% EBITDA and 30% year-over-year growth, proving that to build a profitable SaaS, you don’t necessarily need to raise funds.

This success has been possible thanks to the “build in public” strategy that Guillaume adopted from day one. He has been documenting everything he’s done across social media, building an audience of more than 500,000 followers in total.

Let’s break down what exactly worked for each milestone because growing from $0 to $200K isn’t the same as growing from $1M to $10M.

From launch to product-market fit: Building a name in communities

Many founders underestimate Facebook, Reddit, and Slack communities, but these platforms teem with potential customers whose pain points your product can solve.

By actively participating and answering people’s queries about cold emails and prospecting, Guillaume started building his expertise and eventually became synonymous with solutions to users’ problems. It takes time, but it’s a powerful step that helps build trust.

He found early adopters of lemlist in a sales prospecting community on Facebook. Jon, the creator of this community, told him he was okay with sharing his new tool, as people were always on the lookout for new sales automation software that could provide better results. This one post generated almost 300 sign-ups for the beta.

Users loved the email personalization. lemlist was easy to use and offered self-service in contrast to the gated main players (Salesloft and Outreach). The low-friction onboarding experience accelerated adoption and growth, allowing people to set up their email campaigns without advanced sales knowledge.

From PMF to $10M ARR: Finding a $0 growth loop

It took 18 months for lemlist to grow from $1M to $10M, and a big part of our success is attributed to our very active Facebook community with over 30,000 people.

Every time our clients achieved significant results, Guillaume would ask them to share their stories in exchange for being featured in the community and getting exposure to thousands of potential customers. The success stories would get big engagement, bringing more people who wanted to try lemlist and achieve similar results to the community.

This growth loop is what set us up for exponential growth in a matter of a few months. We attribute this growth period to two different factors:

A strong and atypical GTM motion:
- A very active Facebook community with over 30,000 people
- Live webinars with over 2,000 live attendees
- Guillaume's LinkedIn profile reached 100,000 followers
- Several employees reached tens of thousands of LinkedIn followers
- Predominant usage of content, our Multi-Channel Outreach Masterclasses, marketed like paid masterclasses inspired by ClickFunnels’ techniques
Strong differentiators in the product:
- An email warm-up solution (then called lemwarm) that boosts email deliverability
- Integration of LinkedIn invitations and direct messages in sequences to combine email and LinkedIn (multi-channel)

Growing past $10M ARR: Product innovation backed by GTM strategies

I joined lemlist as COO 1.5 years ago. We had the challenge of re-accelerating growth for the next S-curve.

Since then, I've witnessed firsthand how we've significantly scaled our acquisition engine over time, mostly by growing our brand through content, the founder’s and employees’ personal brands, and community engagement.

Beyond $15M ARR, we started adding more traditional acquisition channels such as SEO, paid search, and paid social. lemlist’s SEO presence grew from 30,000 keywords to 74,000 keywords in 2024 according to SEMrush.

By combining our legacy channels (founder-led growth, content) and new channels (SEO, paid advertising, and affiliates), we have reached over 100,000 new signups per year in 2024.

Over time, we noticed a decrease in our signup-to-customer conversion rate. While the ratio remains rather good for a PLG company, we saw a decrease from an average conversion rate of 34% in 2020 to 15% in 2023/2024.

We ran multiple analyses to diagnose the reason for this decrease but didn’t find a definitive cause. Possible factors include:

Growth in acquisition channels leading to less qualified leads
Acquisition of less advanced users struggling with prospecting
Stronger competition in the market
Increasing product complexity

We noticed that signups with professional emails were converting 10 times more than those with personal emails.

Improving conversion: Switching to a reverse trial model

Given these challenges, we decided to explore new strategies to improve our conversion rates and expand our market presence.

We used to follow a standard trial model:

A new user signs up
They get access to a 14-day trial with all features
After 14 days, the account is frozen (campaigns are paused) and the user must convert to a paid plan
If the user doesn't convert within 3 months, the account is automatically deleted

There were four main drivers that motivated us to switch to a reverse trial:

1. Building a bottom-up acquisition stream with a freemium product

Our goal was to offer a free product that any sales representative could use without providing a credit card. This would allow us to identify sales professionals using our products within our ideal customer profile (ICP)—companies with 50 to 1,000 employees. Then we could reach out to decision-makers with targeted intent.

We differentiated ourselves with three key features:

Cascade enrichment to find emails: We aggregate multiple data providers to increase the chances of finding high-quality email addresses.
A clean UI fully embedded in LinkedIn's interface: This makes it seamless for users to gather leads while browsing LinkedIn.
A free tool to export leads' information from LinkedIn without limits: Users can get started immediately without any barriers.

2. Reducing friction for returning users

Some customers use lemlist, take a break, and then return to explore new features. Deleting inactive accounts like we did before created unnecessary obstacles for these returning users, diminishing their likelihood of resubscribing. This friction in the "comeback" experience needed to be addressed.

3. Strategic positioning: Becoming relevant in the data stage

While lemlist is renowned for its cold outreach and sales engagement software, we weren't positioned in the data market. Competitors like Apollo have successfully built cost-effective databases of leads. In prospecting, having leads is crucial before engagement, and moving upstream in the value chain would benefit us.

However, the prospecting data market is crowded. Offering a high-quality free product that provides email addresses is our strategic opportunity to enter this market. This approach aligns well with our new lead database feature. Through our free Chrome Extension, we gather data on how people use our platform, including lead types, geographies, and industries. This information helps prioritize the roadmap for the data provider aspect. (Our lemlist Chrome extension now has over 30,000 users.)

4. Improving conversion rates

Research indicates that implementing a reverse trial can increase conversion rates and that it is an excellent way to build long-term trust.

Unlike a standard 14-day trial that requires users to start from scratch, a reverse trial provides ongoing access to certain features. This continuous value delivery fosters greater trust in both the product and the brand. This approach aligns perfectly with our philosophy of building and nurturing strong relationships with our users.

Our high profitability allows us to absorb related costs, such as those for data providers.

Implementing the reverse trial

While the freemium offering is free, it significantly impacted our overall packaging and pricing strategy as we decided to leverage a new product category (data provider) in this offering.

We had to consider the upsell path for users wanting more than the free credits. We decided to offer 100 free emails per month or 25 phone numbers. This is quite generous, considering each email is found through a cascade of up to seven providers.

We chose to offer a weekly refill and weekly rollover to encourage recurring usage and prevent users from having to wait a full month for a refill, during which they might forget about the product. Thus, the email credits refill by 25 each week, up to 100.

Additionally, we opted for a subscription + credit model, inspired by models like Toast (subscription + payment). Users can choose a subscription with each tier offering more than the previous one. On top of that, users can buy data credits to find more emails or phone numbers, even without having a paid subscription.

So, how is it going?

1. Monthly leads enriched: While the business experiences seasonal fluctuations—with August typically showing lower numbers—September has demonstrated robust growth following the launch of the reverse trial.

2. Chrome extension users: We have increased our week-over-week growth for the Chrome extension fivefold. We're now acquiring 1,000 new weekly active users every week.

3. Trial conversion rate: It's still early to draw definitive conclusions, as the main objective of the reverse trial is to build long-term relationships. It will be most interesting to monitor the Freemium-to-Paid conversion over time. However, conversion within 7 days (on professional emails) has been increasing quite well since the launch of the reverse trial.

Challenges and downsides of a reverse trial

Implementing the reverse trial didn’t go without challenges. Some of the hurdles we faced:

Balancing free and paid offerings: To avoid revenue losses, we needed to clearly define what we provide for free. As a result, we decided to position this free offering within a relatively new segment for us—the data provisioning category.
Technical infrastructure changes: We had to overhaul our infrastructure to stop deleting users, which meant scaling our systems to handle a much larger and rapidly growing user database.
Billing adjustments: Introducing a freemium model required significant changes to our billing systems to accommodate new user flows, such as allowing freemium users to buy additional credits
Managing data provider usage: We use a waterfall enrichment with multiple providers to find emails. The surge in usage increased the load on providers' APIs, requiring significant improvements in our queue management and parallelization processes.
Developing a polished Chrome extension: We aimed for a very clean Chrome Extension, which took considerable time to perfect. The UI details added significant development time.
Benefiting existing customers: We decided that all these developments should benefit our existing customers as well. We leveraged this opportunity to add requested features to our Chrome Extension, even for paying customers.
Attempted acquisitions: We tried to acquire a Chrome Extension with over 50,000 users in the data world to accelerate our growth but couldn't find any available for sale.
Extended development time: Overall discovery and development took about three months. The project was delayed due to various technical reasons because we were integrating multiple components: the Chrome store, our app, and data providers.
Ongoing iterations: We are still iterating. Upon release, the load time was too long during peak hours, and some users thought it was buggy. We've found ways to speed things up but we are continuously making improvements.
Impact on data dynamics: The reverse trial significantly changes user dynamics since we can now have conversions from a trial after more than two months post-signup. This requires different mechanics for user engagement and tracking.
Don't overlook edge cases: We encountered many edge cases when deciding a user's status—whether they are on a free trial, freemium, or a paid plan. It was crucial to address these questions to prevent users from getting confused:
- What happens when a user churns? (Previously, a big red banner appeared, and many features were gated.)
- What if a user doesn't convert after the free trial?
- What happens when a user signs up through another app (for multi-product companies) or a Chrome extension?
- How do we inform users that they've switched to freemium, considering the conversion time in our free trial model?

The TL;DR

Implementing a reverse trial model has been a significant step in lemlist's growth journey. While it’s still early to be sure of it’s full impact, we are seeing good results in terms of virality, acquisition and conversion metrics.

Here are my top takeaways for anyone considering a similar approach:

When you have a large TAM, freemium can be worth it: If your Total Addressable Market is large, introducing a freemium model can help you capture a wider audience and build a bottom-up acquisition channel.
Strategic positioning matters: We decided to leverage freemium to become a player in a new category (data provider) rather than offering a freemium cold outreach solution. The main reason is that there's more demand for finding email and phone information (e.g., high SEO volume) than for sending a short campaign. Additionally, offering a freemium version of our core product could have cannibalized our paid offering.
Prepare for challenges: Transitioning to a reverse trial involves significant technical and operational changes. Be prepared for extended development time, infrastructure scaling, and ongoing iterations.
But don’t overthink: You can start with something small and iterate quickly. You don’t need to cover all edge cases, or try to fight everything that could go wrong before they already happen.
Focus on long-term relationships: The reverse trial is about building long-term trust with users. By providing continuous value, even on the free plan, you foster greater loyalty and increase the likelihood of conversion over time.
Leverage user data for growth: Offering a freemium model can provide valuable insights into user behavior, preferences, and needs, which can inform your product roadmap and marketing strategies.

In the end, adopting a reverse trial model has allowed us to enter new markets, improve our conversion rates, and continue our growth trajectory. It's not without its challenges, but for us, the benefits have far outweighed the downsides.