How Ampogee CEO Jonathan Woahn grew to $600K revenue and 10 customers in 2019.

hello everybody my guest today is jonathan won he's a mckinsey operations consultant worked with manufacturers and essentially leveraged those learnings on how to drive organizational performance to found his current company ampugee all right jonathan you ready to take us to the top yes sir all right what does the company do and how do you guys make money so we do performance management solutions for manufacturing companies and uh easiest way for me to describe that is to say you know we we bring like saver metrics to the workplace which is a way of you know being able to put point values to activities and then you know rate people's performance based off of you know how many points they earn are these for like are you trying to gamify this for like people that work inside of manufacturing companies yeah uh we are i mean the audience that so you ask how we make money you know the people who are paying for this is going to be the leadership in the manufacturing companies um and so we use this as a tool for them to be able to have a level of insight into the performance of their organizations that you know frankly does not really exist anywhere today and what do they pay on average per month or a year for this uh our client size range anywhere from our base is 2 000 000 per month and then it scales up from there depending on the number of uh applications they're using would you say that's like a fair average i was like two two thousand bucks a month something like that uh somewhere around four four four six is probably closer okay so you do have you do have kind of an enterprise player that's maybe five six seven grand a month that pulls that average up yeah so we work uh you know some of our customers are more of what i would call like a small to medium sized manufacturing kind of mom-and-pop manufacturing shops they're doing anywhere from you know 50 to 100 million dollars a year in revenue uh and then some of our larger customers are you know global manufacturing companies that are doing anywhere from you know eight to 100 billion dollars a year in revenue yeah so they've got you know a little bit more spending power that's great when do you launch the company what year so i was at mckinsey uh just before and i left at the beginning of 2015 straight into launching apogee 2015. okay and how many customers have you scaled to over the past three years uh in the last three years we've got about we've got about 10 different logos at this point and um you know a lot of our energy and time it's where we are has just been around um you know identifying product market fit we're doing something that's very unique in this space and uh and so trying to figure out you know the right way to get the messaging out and the right way to have a technology that can work in any of these environments has been a large part of our focus and we're dialing in on that and this is the year where we're starting to focus on the you know acquisition play that's good so ten customers four thousand bucks a month on average you're doing about 40 grand a month right now in revenue yeah so we're actually uh we're doing about uh closer to 50. okay fair enough and where were you exactly a year ago back in college january 2018 revenue monthly yeah you're 50 000 bucks a month today where were you a year ago 14 000. oh okay so significant growth where does most that growth come from uh what do you mean where is it like are you are you expanding logos or adding new goals all together how are you getting new customers it's been a combination of two i mean mostly adding new logos but we have had a couple expansions that have taken place within the organization and so walk me through that i mean you're at a beautiful place right you have to hustle to get these customers what are you doing to land these customers uh it's a lot of work uh to get these customers in hand uh and and to be honest like that's that's a big part of the the questions that we're we're answering right now is the right way to get in front of this audience manufacturing is um from a from a b2b sas perspective um is kind of is a difficult territory to work into i mean these companies are ones that are historically have been you know have strong relationships with some pretty strong incumbent uh or uh you know yeah and jonathan by the way i agree with all of this that's why i'm asking you specifically how did you get the first customer what did you do tell us the story lots of hustle so the first customer uh was one of my i was the contact that i had while i was and i had this idea for this application during that time and i reached out to them to see if they were interested and they were and uh so over the course of about 10 months uh being on site with them almost every single day we deployed the first version of the application with them got their feedback you know iterated as quickly as possible and then got into a place where they were saying yeah we're willing to start paying for this that's great so just be clear this is a great way to like use mckinsey or deloitte or something to kind of spin out launch your own company obviously take your rolodex there with you did mackenzie try and say wait you got this customer through us we own 30 of the company no that was actually one of the conversations i had with them before leaving as i said look i'm leaving to go start a business the concept uh behind what we're doing i came up with while i was there um there was no you know intellectual property overlap and i checked with their attorneys i checked with my attorney and everyone said you know i'll checks out i don't there's no conflict of interest here that's great um good so you basically had free will to kind of work with your contacts you made at mckinsey including customers you're working with to kind of talk take them to this new idea absolutely i mean that's one of the biggest benefits for working for you know a company like mckinsey is you know you get exposure to businesses and companies and people who you never would otherwise and so you know they recognize that that's part of uh you know what i get personally is being able to build that network yep now are you bootstrapped today or have you raised so we've finished around uh last year uh in the spring of last year we raised 1.1 million um from about 14 different investors we had three large kind of institutional investors who participate in that round um including uh social capital uh and tech stars were two of our biggest ones one one's total today 1.1 million correct that's great and now are you at a place now where you're break even or profitable are you still burning that cash to drive growth uh we will be uh break even we'll be cash flow positive within the next couple months okay but come on tell me where it's at today so i mean you're burning like 10 grand a month five grand a month what is it we're at about 15 our burn is about 50. okay that's not crazy i mean so that's manageable yeah most of it on headcount uh yeah about you know 90 of his head count so what is the team size today how many folks there's just three of us right now oh good okay and where's everyone based uh myself in our vp of engineering are here in salt lake and then our director of customer relations is based out of greensboro north carolina that's very close to where the majority of our customers are right now got it utah remote yeah great north carolina a lot of manufacturing um talk to me about churn how do you think about churn uh so i think about churn in terms of just like our the the revenue um and we have definitely had some some churn in revenue uh we lost a customer this last year um basically because they told us that they needed some functionality that we were not currently equipped to be able to deliver for them and they they needed it pretty much immediately so what is revenue churn like are you talking like 10 20 30 annually um it's it's closer to say i don't know 30 percent okay so that means that means like if you started out 100 grand a month at the end that that cohort will go down to 70 grand a month but maybe you make that up by adding new customers to fill the hole yeah and and it's a it's a tough i mean that's a number i've never really had to think about before i mean i could you know think through the clients something through how much their revenue represented it's it's actually not 30 it's probably gonna be closer like 15 okay but yes exactly like you described it yeah fair enough now customers that you sign up at say two grand a month and then in year two they go up to five grand a month uh what's the number one reason they're typically you know paying you more um we've we've had one customer where that's been the case where they've had that kind of growth and um the the reason is because they saw the impact that it had in the first area that we deployed in and um and they expanded the other ones now the reason we haven't really seen it in our other customers is because we've been able to deploy essentially a scale from the start so you know one of our clients right now they've got 2 000 employees and we essentially signed a contract with them where we are deploying across the entire organization so let's let me go back let me focus on the upsell stuff first before we go to the other one so so that one that up sold you just said oh they went to a second team but i don't know specifically what metric are you pricing against is it they went to another team and that increased their number of seats and that's how you drove the upsell or is it some of their usage metric is it like are you asking how we do our pricing essentially i'm asking what gives you the teeth to drive upsell revenue right so is it is it because they want to expand the teams and you price per seat or do you price per some other thing you haven't told us yet oh yeah so we we do pricing by mobile application and so effectively one mobile application maps to a single department within the manufacturer and so when they you know we roll out to one or two departments to start with and then they've got you know departments three four and five that they say okay yeah we're we want to roll out to these ones and so that's what that's what drives our additional revenues just more departments more people more data yep now do you know i mean you have a team says three it's not like you have a big inside sales engine but do you know what it costs you your fully weighted cac to get a new six thousand dollar or two thousand dollar a month customer uh that is not a number that i have in my head right now it's you know you don't track it right not yet yeah yeah our volume is is not high enough right now for me to be able to draw any kind of meaningful you know well right now right now right now it's literally just take all the company expenses divided by new customers per month that's your character basically yep that's exactly it yeah all right very good let's let's wrap up here with your famous five jonathan number one what's your favorite business book uh i love the book drive by dan pink number two is there a ceo you're following or studying um i've been following uh not a ceo no okay number three uh number three what billing tool do you use we use uh zero xcro right xcro yep number four how many hours of sleep to get every night so i just had our second kid uh so what you did this is new yeah uh so between that and uh having the other kid as a business um not a lot taking like five hours five hours four to five was about right and okay so married and two kids you said okay and how old are you uh i'm 35. 35. last question what do you wish your 20 year old self knew people people make such a tremendous difference in you know running and building a business and uh i think i thought a lot of it was just around having a great idea and uh i think a bigger power is people guys people matter coming from jonathan launched apogee after a successful synthetic mckinsey where identified a big customer need he took that customer that person basically ended up being his first customer in his new business which again is called amputee helping these manufacturing companies currently 10 of them paying caught four grand a month doing about 40 50 grand a month right now in revenue up from just 14 or 15 grand a month just a year ago so healthy growth they've raised 1.1 million bucks burning net burn is about 15 grand a month right now a team of three in utah and remote uh location in north carolina 15 annual revenue turn or something around there driving expansion via number of mobile applications which map back to uh that manufacturing um division or single department in that manufacturer all right jonathan thank you for taking us to the top thank you nathan appreciate it