How 10Web CEO Tigran Nazaryan grew 10Web to $5M revenue and 3K customers in 2024.

hello everyone my guest today is de grand nazarian he's a technology and wordpress person turned into chief executive officer now building a company called 10 web dot io tigran welcome to the top hi natan thank you very much for the invitation see you pleasure to invest you're building uh this company out there based in armenia what does 10web.io do this is a sas company to to create web wordpress websites and manage them in an automatic and very simple way and is it a sas product or as an agency this is sas product yeah okay and what are customers paying to use your wordpress hosting tool we have agency customers developers and do-it-yourself type individuals and they pay for hosting and plus services for site creation and management this is all bundle and this is single solution for building and hosting and how much do they pay you on average per month uh they pay on average per month around 10 per website and the average customer has around three four websites okay so 45 40 bucks per month and how many customers do you currently have we have around 3 000 customers 3 000 3 000 hosted websites it's better to say this way got it so 3 000 hosted websites times 10 a website you're doing about thirty thousand dollars a month in revenue yeah approximately yes that's great what's the back story here when did you launch the company we launched uh time vaping so i started to work on temp in 2017 we launched the final version of the platform a few months ago in october 2020 but before doing 10 web we have big 10 year experience in wordpress we previously developed wordpress plugins and build numerous plugins more than 60 plugins we more than 25 billion total downloads but 25 million wow what were some of those plugins can you name them uh top plugins among them are photo gallery for maker slider by 10 web instagram feed they are quite popular plugins and during the work on these plugins we discovered which are the biggest challenges in web development and we created a sas company to address these big challenges the challenges and i will name just a few of them this is hosting problem well either hosting is too expensive or cheap but with low quality like shared hostings the second problem we encountered is that people do development manually and spend a lot of time so we've found a very good way to automate it using the ai solution and the third big problem is fundamental technological problem of how can on uh make websites having hype google page bit score that is seo and ads optimized so we've created one more technology to enter instant problems did you make any money on the downloads on the wordpress plugins you built or were they free uh we used framing models and we continued to use freemium model for plugins and we have revenue from plugins as well but how much revenue does you have on the plugins we have around 60 000 per month revenue from plugins but this is actually we don't want to focus on plug-in sales part but our focus is platform itself and plugins are legacy business for us do the plugins upsell 10web.io 10 a month per website to some extent yes although we bring 10 web customers not most of our customers are not our plug-in customers but you just bring them directly to mv platforms so your total business is 60 000 a month from wordpress plugins and another thirty thousand dollars a month from ten web right did the plugins help you go from zero to thirty thousand dollars a month in revenue so quickly on ten web is that how you did it yes they helped a lot because we have some initial customer base when we have some brand which is uh to some extent popular in wordpress community and people know us they know our products so it helped us to acquire our first you're doing 30 dollars a month have you bootstrapped or raised capital we have bootstrapped and we haven't raised any capital until now however we are going to raise seats how much money how much are you raising right right now we are raising tribunals right now on what valuation this is this is the point of negotiation we rise with saves and yeah what valuation will make you happy it doesn't have to be what you're actually going to raise at but what are you targeting i wouldn't like to disclose any number because we talked with those negotiations right now are ongoing again don't talk about your own negotiation for any company doing thirty thousand dollars a month raising a three million dollar seed round what do you think a fair valuation is uh it depends not only on the revenue itself but on the growth prospect as well because if you have sales type business it's scalable and so it can grow easily it's my valuation is much bigger than just in case of plain sales so this is sales model for 10 web and this is effectively is scalable better scalable than plug-in business why do you want to go give up a bunch of control of the business why not keep bootstrapping we have good product we have product to market feed but we need more money for growth and advertising and marketing itself that's why we decided to raise a city but you gave up i mean that that's not free you have to give up a big chunk of your company uh you have an investor you have to deal with why i mean why why not why don't you be selfish and use profits to reinvest in marketing experiments instead of going out and raising vc that's good question uh we this trade-off we want to grow very fast we can do the way you said and the reinvesting but it will be quite slower than just raising big capital where would you put the money do you have ideas of experiments to run yeah we have specific targets to channels to put the money what's the first channel you would test we have paid acquisition coupled with brain awareness so and we have to build this engine with these two components and it works well so we want to put more money just to accelerate the growth have you spent money on paid ads already yeah and so how much how much do you spend to get a 10 a month customer currently our customer acquisition cost is hundred dollar so then you can gain customer yeah yeah the average customer have several websites spending 30 40 per month so you're getting paid back in three to four months exactly so what gives you confidence that you can spend you know a million dollars in those same channels and hold those same economics yeah that's a great question we have tested we we we didn't have so much budget to spend to test it but to some extent we see the prospect of uh ads on this the current channel that it is quite scalable and without we can scale it up to several up to 100 000 per month i mean budget without losing its efficiency so if that's the case why wouldn't you go out and raise a hundred thousand or two hundred thousand spend it tomorrow drive growth and then use the growth and the revenue from the growth to keep doing that and then you don't have to sell equity why do you need three million today it depends in our case uh we have some small burn rate it's not big we can deal with it also how much are you burning per month around 20 000 okay so we would like of course uh would like to keep the equity but the best way maybe thought it's just raising a big and spend them on a proven channel so how much how many people are on the team right now we have a big team of more than 60 people six zero yes 60 people and they are based in armenia armenia how many engineers around half of them are engineers okay god and 35 people any sales people we don't have sale team but we have marketing okay got 15 15 15. wow and what are the people on the marketing team what are they doing they do several tasks conversion optimization digital marketing with socials paid acquisition with ads we have also worked with influencers and collaborate with industry influencers if someone offered you five million dollars all cash up front today to sell the business would you sell never that was quick that that that's too too late at least at least we see right now the prospect for 10 vap to grow at least 200 million dollar business so we don't sell it for 5 million what what comps in the marketplace have you seen that give you the confidence you can build to a 200 million dollar business uh we see the way to easily scale it i mean we have product to market feed we have uh the great product which is based on some proprietary technologies and we're soldering to to create a product we sold some really technologically challenging problems so we see the value of product itself but the the whole issue essence of issue is in marketing and spending money to market which we need so that's why i say that we see the prospect of 10 web to grow at least 200 million company um churn is critical in a sas business what's your turn over the past 12 months that's good question and the answer is not so straightforward because we launched the final version of the platform just four months ago in october and we have two type of customers with monthly subscription plans and yearly subscription plans so for year yearly subscription plans which are most and most staying customers with the biggest retention it's uh it's that is not enough to estimate the churn that that's that's the uncertainty we have right now however taking into account the hosting industry inside building industry in general we can say that average agency type client stays with hosting uh around few years up to four years you've only been in business for four months you're dividing one divided by churn and just assuming four years but you don't know if a competitor is going to come in the market a year from now or...