How Backboneplm CEO Matthew Klein grew Backboneplm to $2M revenue and 200 customers in 2020.

hello everyone my guest today is andrew klein after four years at ralph lauren and another four years at tommy hilfiger as the menswear senior designer he gained affinity for improving processes having spent years working on various product categories and spending two years living in china part-time as well as managing production in south america he saw an immense opportunity in streamlined product design and development and decided to take action in 2014. he teamed up with his brother matthew kline to start to backbone plm and aims to revolutionize the product making industry andrew you ready to take it to the top yeah let's do it all right man so tell me about the company what do you guys do and what's your revenue model how do you make money awesome um so we help to streamline uh the complexities in the manufacturing process so um product development is it's pretty tough in terms of uh the physical prop creating physical products um and we have a sas model so we provide a platform and we charge by the user um and we have uh different plans from uh entry level uh like individual designers and freelancers all the way through um like small mid-sized businesses to enterprise okay so give me a give me a general sense um and i'll put this on a timeline in a second but on average what's the customer paying you per month for access to the technology um per month i would say we have um plans on average because i know there's a massive range but we can't talk about all of them so i'm just curious what the sweet spot is what's the average yeah yeah um i would say our our acv i know annually it's probably between like i like 30 to 50 000 so yeah yeah no do you have people so basically by the way 30 grand a year is 2500 bucks a month do most people pay annually up front yeah yeah we do a lot of pretty much annual contracts that's great and then look put this on timeline for me you and your brother when did you guys launch this thing 2014. 2014. okay and you had you were just frustrated working inside these bigger kind of clothing companies and said i'm going to go like what what was the last thing for you said okay i'm quitting i'm doing my own thing yeah no great question and um just a heads up matt matt is business development so he he really does handle like sales and pricing and things like that but um you know as a visionary for the product um that's a great question for me to answer um you know i was working at these uh you know sort of larger legacy um apparel companies the ralph laurens and tommies of the world great organizations really awesome processes i learned a ton but in terms of the supply chain in collaborating with the manufacturers the technology was just really clunky that that existed a lot of it was like either homegrown or um just really fragmented so um you know kind of growing up in this digital age um you know being you know one of the oldest millennials but i'm very used to just technology solving problems in in a really efficient way where i think those older companies just weren't forged in that fire so um i was like you know what there there's got to there's an app for everything um there needs to be an app for product development of like consumer goods so um in 2014 i i basically started to concept the idea i i was also i have a graphic design background so i was able to do a lot of wireframing and um just get the ball rolling which was which was helpful what's your go-to wireframing tool i use balsamic for any software design yeah balsamic's really cool we we did use balsamic in the early days i was using like just adobe illustrator it was got it easiest for me because it's was it just actually a design tool that yeah we go from like from like hand sketches in the like brainstorming session around the table to balsamic to then envision when there's some color put on the balsamic wire frame and then obviously to coding yeah yeah that's pretty much our process now that's cool that's cool okay so 2014 was launch date how many customers are you working with today so today we have about 100 brands um you know thousands of customers that are individual users so okay now where are you i know this is a tricky question because you have both but are you building like when you're making design and vision kind of decisions are you doing this for the hundred brands or for the 3 000 you know freelancers at their home yeah it's a good yeah great question um so what what's what's great about um the product development process is is regardless of the size it's one thing i noticed early on is that um you know whether you're two a team of two or a team of 2000 the complexity is the same i mean it's really just managing um those processes from concept through prototyping through your production order so um you know we definitely back our uh you know decisions around the product it's definitely connected to you know the revenue that we think it would produce come uh system wide but um we really do a great job at empathizing for you know users at all levels yeah okay very good and then how have you guys chose to capitalize the business are you guys bootstrapped or have you raised capital uh yeah we did go the vc route we were introduced to um a venture capital firm um early on through a buddy of ours and it was just it was it was a really awesome match i don't think we were aimed at at going to vc route initially but it was we looked at it as a really strategic partnership and it proved to be um they helped us open a lot of doors they helped us with early decision making and and um it was tremendous yep you're talking about like spider well yeah spider was one of them but uh the first or davis the first vc we we brought on was um uh beanstalk yeah yeah you have a lot of really i mean i i'm i'm close with davis smith of codepoxy i know he he got in on your guys's deal um i don't know the folks at peterson i i know them at spider but you guys have a great group of folks so you've raised how much to date um i want to say upwards of um i think 13 million sounds about right yeah yeah um that's that's great um and all that's been equity right you guys haven't done any weird debt stuff no yeah there was i mean i know it was um there was like some notes and things like that but i mean matthew really kind of heads that up and i follow his lead but no that's good that's good all right and what's the team size today how many people out there in boulder uh including paid interns we're about 30 deep i'd say it's nice that you pay your interns that's good yeah yeah all right so um is everyone in colorado uh prime pretty much we we do have some sales um in utah and then uh la and new york but um the core team is is in boulder and then help me understand kind of general size today so if you've got 100 brands obviously that you're working with that are paying caught 30 000 bucks a year minimum i mean that will put you guys you know around 250 grand a month right now in revenue as a minimum is that fair to say um we are i know we're we're coming up on uh um you know we we our early adopters did have some discounts so we're starting to renew those contracts but i know we're gold for 3 million in revenue this year which we're on on track to beat do you know what you beat last you know and what you finished with last year yeah we were we were um gold at a million and we beat it oh that's good okay so you're if you're if you beat a million in revenue last year and last year just ended it kind of a month and a half ago that means you guys were doing call it 80 45 grand a month yeah yeah yeah right that's good and where is as the visionary guy that's building a brand do you ever spend time now directly with customers or you leave that to the sales and marketing mostly yeah so um it really depends on the deal um but you know i definitely play the sales engineer road role at this point so um you know uh we recently um we're talking to movado in a major way and um kind of creeping up on um closing that deal with and uh so that's something that i was heavily involved in um upper baby uh peter millar golf so it really just i would say some of like the the larger deals i'll i'll definitely be involved in and what is your guys's growth kind of look like so if you finish this past year with a million bucks in ar what were you doing like a year before that do you remember yeah i would say probably half that okay so you're doubling your every year yeah yeah yeah we are exactly and we were and that was you know we weren't really revenue focused it was more about getting the product dialed in and um really honing in on on those things yeah so i'm going to ask you this question it's really a question for your brother but i'm curious how it impacts you and i'll use this as an opportunity to see how it impacts you um usually when i see like lopsided um ratios between how much you've raised and your arr it's usually saying to me that there's there has to there is definitely some pressure with the group of investors to be like why are we growing faster right so you raised 11 or 12 you're doing a million today that's pretty lopsided do you guys feel i mean how...