Bootstrapped to $5m

founders what's going on you guys know i love in-person events and they are back the recording you're about to hear is from our most recent event where we had hundreds of founders come together share intimate details templates kpis okrs about their business and it was something special something special we'd love to meet you in person if you want to see the next live events we have coming up via our schedule the link will be down below in the description if you're listening on itunes check this out on youtube you'll see the links in the description or you can just google

founder path or latka next event we'd love to see you in person in the meantime though enjoy this recording it's a good one our business is about helping people build great companies and the reality is is every single one of you out here has an operating system the question is what kind of operating system do you have there are about five operating system types that are out there if you think about it first of all when you start a company you've got this thing called an accidental operating system right so you've got papers and excel and powerpoints you're just trying to get

your act together and you're working like dogs just trying to get make things happen right and so a bunch of people are doing a bunch of different things and you're probably not even using the same tools to figure it all out and then all of a sudden you're like wait a second we can't have people's names in one document here and another document another document here let's bring it all together and that's called an intentional operating system and then you're like you know what people have built businesses before someone's probably figured this out why are we sitting here creating all these tools when i'm sure someone's already

done this there's books on how to do this there's tools out there has someone figured this out and if you go out and you look there are a bunch of books out there there's e-myth right there's traction there's the great game of business there's the advantage by patrick lincione trying to think of some other names that are out there there is rockefeller habits scaling up there are a bunch of books that are out there right and they kind of lay out how people have been doing this for decades and decades so that's called a designed operating system right and then after

that you come to a holistic operating system because some of the systems don't have everything in it so as an example eos which i'm very close to really doesn't have anything about figuring out how to build value right because the reality is in our industry right we're not focused at least lots of us aren't focused on ebitda we're focused on growing revenues right and so the value of the business is based upon the revenues not the ebitda so get your arms around how you create value and then the last type of operating system is actually what we're doing we're creating

an integrated operating system which takes all this information all these tools all these disciplines and puts it all together so it's almost easy to build a great company mark before you go forward go back one i'm going to sell you for a second go back two slides just to the right revenue growth graph so people they're more likely to pay attention i know uh at least i am the revenue success of the business right so you get going in 2017 small revenue where you at today so arr as of today is about 10.4 million

okay so this is this graph is actually a little bit old 10.4 and um how much did you grow to before you raised so fully bootstrapped so we uh raised money last summer and at that point in time our ar was around four around four million yep and then how much did you decide to raise so we raised 20 million okay that's the lead now let's keep going we'll come back to that in a bit all right all right so what i'm going to do here is share with you um these three

playbooks right so number one we're going to talk about community how we leverage community to to get going how we activate people when they get into our system and then the top metrics that insight partners looked at and fell in love with and we're going to share with you that they didn't actually understand our business as well as they loved our numbers which is kind of a funny story so how we use community so we don't sell we serve and this is an important thing i want to talk about this a bunch of different times because there's so much i'd love to share with

you all right but one of them is i believe we're moving into a new age of work all right and i believe that every single one of you to succeed in this new age of work you have to have high trust relationships with all of your stakeholders all right so think about that you have to have high trust relationships with all of your stakeholders and obviously your employees and your customers and your vendors are all stakeholders and ultimately society is a stakeholder because we're moving into this age where everybody pretty much knows what's going on you can't hide anymore all right and so

so we don't sell we serve there are a bunch of books in the market about operating systems and so people are aware of operating systems the market is aware of what it is we're selling big picture wise and there are coaches there are thousands of coaches and they're all sales people for us right and in particular we've been close to the eos community right the book traction which i'll show in a second and there are millions of copies of traction out there which is super cool and they're like i said thousands of coaches

and there literally were up until recently about a thousand coaches just selling eos and so we're very close to those folks and mark what so when you say selling eos what does that mean is the eos a website is it a template is it a playbook yeah so eos is a book and it describes the six key components of a business and it teaches you how to master those six key components so getting everybody on the same page in terms of vision getting right people right seats getting really good with data getting really good at problem solving getting really good at building out your

processes remember one of the slides just a bit earlier right getting everybody on the same page with regard to who does what i call it agreement-based leadership and then ultimately getting the title of the book in the us traction we call it getting smart done right but just getting traction so it explains how to get strong at all six of those key components cool so here is the slide that shows you the number of coaches and as you can see just in the eos community it went flat grew went flat but then you can see the number of coach companies and these are

companies that all the coaches have coached there's over 12.5 000 companies out there and if you saw the slide earlier we've got 50 200 running on our software right now now the reality is is for every coach company that's out there there's about nine times as many companies that can't afford a coach because coaches cost like 25 to 30 000 a year and our software makes it almost easy to master the tools without hiring a coach and we're only 14 bucks a seat per month

all right so talked about the book so here you can go back to the book for a second yeah so so now we'll go back to that slide so do you guys do you own this so i do not own it yeah so how does that work yeah so we just pay a license fee to eos to use the terms so we pay 10 of our revenues to eos to be able to use their trademark terms in our software we got about seven trademark terms so we're paying almost a hundred thousand dollars a month for seven trademark terms right now cool huh should we talk more

so people i mean it sounds like i'm gauging reaction people say well that feels high does it feel high or is it worth it oh you're a customer okay i guess it answers that question all right so as you can see what's interesting is um at first all the clients were coming to us through coaches but now we've got a bunch of companies out there running on us they're aware of us they're telling people about us right i'll give you a couple punch lines here

ahead of time net promoter scores go up and down because sometimes you know in software everything's not working perfectly but we're typically between 50 and 70 on that promoter score which in the smb space is pretty damn good right i'm going to give you the really big punch line if you use our system and you cascade it all the way down so everybody in your company is using our tools including the feedback tool our churn rate annualized is less than one percent

that's an smb guys less than one percent you know how many companies go out of business as percentage in the smb space every single year right so what does that mean it means it's sticky but it also means we're helping a lot right i've got emails from entrepreneurs saying please don't super jack up your price of your software because we're so dependent upon you right now does this make some sense because we're in everything right their meetings their goals their processes

their feedback we're involved in everything the company does to do work on the business we're not working in the business tools like we're not a marketing tool we work on the business tools so all of our tools touch every single person in the company so the good news is we're getting a lot more growth from the non-coach side of the world all right so how do we activate so this is really cool so i'm going to talk about we three users if we can get three users in during a trial period we're almost at like 80 90 percent conversion

rate we have world-class chat remember i said we're moving in the new age of work called the age of understanding high trust relationships we're there within five minutes always with real people answering your questions doing everything we can and we're going 24 7 as soon as we possibly can because if you're an entrepreneur and you're working on building your business and it's one am in the morning my son's in my head right now one am in the morning dad is redundant all right but if it's one o'clock in the

morning right we got to be there for you so world-class chat and then um and then ultimately we get them to expand the use of the tools so that's how we do it so i mentioned earlier the conversion rates if by by the end of the trial if we can get three plus people if there are 10 plus people in the company at least almost 98 percent five member talked about chat so intercom right we're there for you we understand what's going on we've got real people and and um we make sure that

we get you we get your issue solved as fast as possible and one of the things that's really super important in my company is you care we care about that's our number one value proposition is we care it's not innovation it's making damn sure we're taking care of you and you know we're taking care of you so if you go to trustpilot as an example we're like 4.7 and are people just like man this is one of the best customer service experiences i've ever experienced in sas right and then support staff knows product

well it's really key so i mentioned the one percent less churn right so getting people to use the tool we do webinars we do anything we can to help our help people master the tools wait wait go back real quick because this is the first time you showed a screenshot of your actual product interface this gives you guys an idea of sort of what he's you know what 90 is selling uh they're on the right right you mark do you want to talk anything a little bit about that maybe you know um it's funny um i'm gonna be really just you know this is what we do here right we talk real honestly so um

we've got a new tool we're working on right now and i reached out to metalabs and they came back and said you know can we can we can we help you with your user interface i'm like you know we just went through a whole process to update it and they're like yeah but you know we think it could even be better and i'm like right so we tried to make it super easy super intuitive super super super navigatable we hear this from 95 of our clients every now and then there's someone out there who's like really critical and we

love that right we want to get better and better and better but uh yeah it's the ui is really super simple people can get up and running on it and we start doing demos like oh i get it's just all right there boom you look click on it and it's obvious it's a meeting tool it's an accountability chart it's all obvious stuff is that cool yes you're up now to like 4 million in revenue and the next slide you're going to talk about when insight reached out like what do they think about so take us through that journey yep cool all right so going up went the wrong direction so

there are somewhere but just in the united states alone um and it depends on whose data you look at so if the zoom info guys were here right but it's at least our target target market is companies with 10 to 250 employees and um and somewhere between one and three million small mid-sized businesses fall in that category in the united states it depends on who's whose number you're looking at and my my research suggested on average it's 40 people right and i think that the us represents

approximately a third of the sort of the world that's going to be interested in our product and so you take that number times three so let's just go in the middle and let's say 2 million times 40s 80 million times 3 240 million people times 14 you guys can get the size of the market from that math probably right so it's a big market um we've been growing at five to eight percent month over month revenue um to be direct with you on the the data you saw

earlier we put our first price increase in last month february so we never increased prices so we were 12 bucks up until up until last month so that's part of the reason our numbers are growing have grown as far much as they have in the last couple weeks um but we've been doing five to eight percent month over month revenue growth for several years now cac payback period we got coaches we don't even pay them a referral fee you can get the sense for that payback period and then we have our marketing

but on average our payback period is about three months the way to top that coaching team it sounds like there's a licensing fee you pay right does that come with the licensing i don't have that included in the cac good point but what makes the coaches sell you because we make their clients lives so much easier so they can make more on their services if they get their clients on eos 90 software yeah and i don't know this is a really good one just like one of my colleagues um but it used to be that you'd have your clients 80 of your clients would graduate it

takes about two years to teach someone how to master eos so about 80 would graduate i'm pretty confident if you think about our math that we and we turn that graduation rate up to 90 95 percent but more importantly it's just the the the whole experience is that much easier right you walk out of a session everything's there you just go back and you just have your weekly meetings it's really easy to master eos in our opinion using our software and i remember old clients before we got the software out there go god i can't

believe we used to do it this way right because you'd have all these sheets up you know tear sheets and stuff up you have to go back i don't even remember what i wrote there i can't read my writing it was kind of a pain in the ass so lesson and then user churn is less than seven percent and our net um revenue uh net dollar retention is 135 percent so in sas smb um i can tell you that i'm going to show go here actually i'll

go later but i'll give you a piece of insight no pun intended on those ratios in a second so we've already done that one um this was it's funny inside partners so they just reached out to us we were not raising money we had no interest in raising money i'll get to this in a second but they just reached out to us and said we'd like to um to get to know more about you guys k1 reached out to us battery reached out to us a bunch of people started reaching out to us last year and um and i said look we have no

intentions of raising anything until we're at least a 10 million ar because that's when i think in my old world that's when you started to be able to have conversations with almost anybody you wanted to right so that's where we were um just back to the coaches there's you know 100 000 plus coaches out there so it's a huge market um already talked about the numbers here net revenue retention mrr growth all that good stuff kec payback we already talked about that user churn um talked about that less

than seven percent um annualized and that includes you know we have a lot of small companies you can get into our software for 14 bucks right so there's a lot of small companies in there there's a lot of one or two offs um but uh but generally speaking that's uh you know obviously less than close to it's it's been averaging less than half a percent per month for years um so why why did we raise the money um i've self-funded it for the first you know three four years um i didn't want to i could do that

i didn't want to give up um any equity and you own 100 before that basically well i i had sold some to my colleagues okay and and some customers and things like that but yeah so i was at 80 percent up until insight came in only had one full-time employee up until i want to say 19 um and then all the rest of us including me i was an eos coach for years right so i got in there i had the idea back in

2005 sitting on a bunch of boards and i'm going to use an expression that someone shares and it's it's crude so apologize but i would go to these board meetings and i'd i'd invested in 100 companies i built a business that made our shareholders over a billion i'm like guys this isn't that complicated and i thought it was me right but every time we'd go to a meeting i'd say you got to do these things these things and these things these are the right disciplines they'd say yeah yeah yeah they'd smile me is the expression right

and i got tired of it i'm like there's gotta be a better way i'm gonna write a book i'm gonna create software it's gonna be easy and obvious and that was 2005. right so it's a long road right but i was the uh so i was this coach because eos had this book it was pretty popular there were 35 coaches they were growing i'm like i'll join the community if they're not going to do the software they said software's too tough we're not going to do it and that's the story so i had a still to this day have a fractional head of marketing coach support we're full time now pretty

full time actually we're not totally full time data is fractional engineering's fractional finance is fractional talent all fractional people now what i got was really really good people right that i could afford so it was half cash sometimes all equity but um but i've got people that honestly cost you know 200 300 400 500 500 000 and more a year to support the journey up until now and so now we're doing hiring full-time people we're actually

at 50 and we're going to 100 this year and we're getting everybody full time and so wait why is that so to me what i heard was super resourceful found the talent you needed to get contract model very similar to john darbyshire and how he's doing smart suite but now you want to move and basically increase your ftes from 50 to 100. why not say it's like super rational conservative you know milk of what you can use contractors um

well because we think that we can grow first of all um contractors aren't cheap and so what happens is we know that we're going from medium two days to three days to four days right and so right now i've got two senior guys in marketing and together they're costing me over half a million does that make sense so and data we've got there's we part of what we want to do is make data a superpower for all of our clients and so we need a full-time head of data like asap there's so much

opportunity for us on the data world and so and then talent right with growing and then and then so you just start to all of a sudden and you just and then as the team gets more and more full-time they want their colleagues who are supporting them to become more and more full-time because we're all running as fast as we can run does that make some sense all right um pursued by long list of vcs i mentioned that earlier didn't raise we talked about that

insight gave us forward credit um given the consistency of our growth in paying companies paying users mrr and churn um i've already mentioned these things and this is we're proud of this can't can't lie jeff horns who the managing partner of insight said we had the best kpis he's ever seen in smb that's a cool thing that's a cool thing

thanks um what they didn't see was they fell in love with our numbers but they never really wanted to understand our vision and where we wanted to go until after they got in there and now they see it and now they believe in it and now they're now they're really you know they're stepping up and they're giving us a lot of support but it was kind of funny because it's like good news bad news right it was like oh man we love your numbers these are amazing let's just do it and it's like wait a second where you guys

going where do you want to be in 10 years it's like okay all right let's do it um and that's uh that's all i got for you so just be clear before we go home before we're rapping before we clap and all that jess so um you you you raised um are you comfortable sharing was it all equity or is there a part secondary it was all equity okay it's all on the balance sheet you're talking about it got it and um how was the first board meeting great question i gotta give it how was

the last board meeting it's probably the better question but that was the first one we've only had one um so we rate all of our meetings it's what we teach right so we rate our meetings on a scale of one to ten and um so uh chris and i and then we've got a another vc uh friend of ours who's also a coach plus a friend of mine who runs a the best myers-briggs teaching company in the world on our board and then we brought insight one person from insight and uh everybody gave the meeting a nine or nine and a half except for insight

and they gave it a they gave it an eight and they gave it an eight because we didn't give them all the numbers the detailed numbers that they wanted to see and and i'll tell you why it's because i thought the board meeting was the appropriate venue for them to hear our long-term vision because they never asked for it and i want to make damn sure going forward they understand why we're doing all the things that we're doing and so they gave us an eight guys mark abbott with 90. give him a round of applause

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