How Backoffice CEO Felix Rodriguez grew Backoffice to $936K revenue and 300 customers in 2019.

hello everybody my guest today is felix rodriguez he's a serial entrepreneur he started built and sold three tech companies just graduated from 500 startups patched 24 fixing his own paying accounting and finance four smbs felix's ready to take us to the top yes yes nathan all right how many by the way how many episodes have you listened to uh over 300 now i love it we're talking about four you're a fan of this show you know what to expect so this will be a lot of fun yes for sure i've listened to some of them a couple of times too i love it i love it all right back office what are you guys doing and are you pure play sass so we are made accounting and finance for small to medium-sized businesses and uh yes definitely we're pure place sas with a little mixture of customer onboarding uh for the types of services that we provide customers don't really sign themselves up since it's north of a hundred dollars plus per month yep okay so the average customer is paying north of 100 per month yes about 150 160 now okay amazing and these folks uh these folks that are signing up um are how many people are on the team typically like or or what what do you bill against so we do it based on the size of the company we look at their revenues we look at uh how how frequently they want their books done uh whether it's weekly monthly or even daily we can scale with the company and the fees are related to you know the frequency and the size okay and put this on the timeline for us when you launch the company uh january of 2018. 2018. okay so fairly new very good how many customers have i scaled to today uh we're over 300 now getting close to 400. very good so where i mean walk me through how you signed up 300 customers and under kind of 12 months where'd you find them so mostly direct and through partnerships with accounting firms that don't want to focus on bookkeeping they rather do consulting work and file taxes name an accounting firm that's driven you the most in in terms of new users or customers so we have a small one here in florida called uh saloon and associates and they're a cpa firm that does both personal and business taxes for high net worths that's s-a-u-l saul and associates uh z with a z as as uh zebra z-a-u-l yes amazing okay how did you know that cpa firm did you work there and then leave and build this form or what was a story no so i'm actually a network engineer i've been building companies and accounting is one of those things that we always face that was never at the core however without the right books you couldn't get funding couldn't get a loan and you know frankly couldn't even execute on the business plan so um it's something that's vital and uh when i launched it it was just a hypothesis i wanted to know if other uh business owners felt like me like this is something we could offload so that we could focus on our core sales and marketing do you give zoll and is a kickback on the 150 a month for any customers they drive you um actually we give them the tax work okay so they basically improve their margins now do they pay you directly or their customers pay you their customers pay us directly that's just one of the channels on how we get customers um the others are direct to customer and uh through franchises okay name a franchise you work with that has driven you customers uh exxon mobil gas stations what tell me more yeah yeah absolutely so exxon mobil sell individual franchise to uh an investor that wants to be an operator in a business and what they do is they provide the gas and uh they just you know provide you with the wholesale gas deliveries and you sell cigarettes and candy and water and uh on top of that you make a small margin on the actual uh gas that's being sold through the station interesting okay so exxon is basically saying the reason you should franchise an exxon thing instead of one of our competitors because not only do we give you a gas you make a margin there we'll also hook you up with this very cool back office software that'll help you run your business better so bundle absolutely and we also have allstate agents as well and they're the same they're all small business owners that have a blue a blueprint a playbook on uh on a small business that works and they're able to leverage that franchise to get all the existing operational knowledge so that they have a better chance of being successful interesting but you have worked your wizardry and you are not this is not costing you anything you're not paying any of your partners any referral fee affiliate for your kickback they're using you because you bring them efficiencies absolutely and on the accounting side you could just focus on doing taxes and you don't have to worry about employees because the biggest pain is once you hire one bookkeeper you got to hire a second because when they need to go on vacation or if they get sick guess what you don't want to be left holding the bag doing the work so 300 customers 150 a month you're doing about 45 grand a month today in revenue no we're much higher so at demo day we went through 500 startups that just concluded in february of 20 uh you know the last day of the month on february it concluded at that point we were doing about 600k in arr and we grew the ar from 10 000 a month to over 60 000 a month in just three months so hold on so which of my numbers is wrong 300 customers or an average price point of 150 a month so uh the average price point it kind of starts at that and it scales up okay got it so let's see uh so how much are you doing now per month today sixty thousand you said about sixty thousand yeah actually no altogether close closer to closer to 80 now nathan okay so got it so you've got 300 customers paying something more like 260 bucks a month something like that puts you about 80 000 a month in revenue absolutely yeah and when you look at the cohorts you can split them up between small business medium business depending on the size they're all paying different prices fascinating taking back six months how much mr were you doing in december of 2018 uh about 7k a month okay so are you lying to me are you really about 10x the revenue in six months no we really grew so when we got into 500 startups um the funding that had come into the business was you know i put i put the money myself and then we had to wait a couple of months after the start of the uh the accelerator to get the funding and once we got that funding we were just growing like crazy well dude i love it i mean i'll tell you guys now full disclosure i'm an lp and pat matthews on active capital which led your was it your series a felix c round series c so how much have you raised how much total do you raise uh all together with pat's about two point three i gotta call pat and go pap man you got behind a killer i love this feast i went from seven grand a month to 80 grand a month in under six months so you're making me money man indirectly i love it yeah no absolutely we're really we're really just getting started now we're really uh we just brought on a full-time cpa to help out because we uh we have the ability to sell higher plans five hundred a thousand two thousand dollars a month it doesn't really end at around the 260. so how'd you decide on the 2.2 to raise is it you managing for number of months of burn you want covered or how did you get to the number uh actually it was interesting so the first batch of money that we got was friends and family and myself and 500 startups that was about 300k and uh by the time pat put in the money we still had some money in the bank we had about 100 over 100k in the bank so we weren't really burning money um we were really looking to deploy capital in a smart way to make sure that we have enough people to onboard the new customers so how much today do you have in the bank after this round something like two-ish most of the cash most of it okay so about two then right two yeah yeah we we haven't really burned much of the cash okay how much are you burning per month right now or are you profitable no we could be if we wanted to but we're really focused on growth right now so we're preparing ourselves to burn anywhere from 30 to 50k a month yeah which which seems if you got two million in the bank obviously people can do the division that's plenty of months of runway right relative especially relative to your growth um so 2 million cash in the bank you do the 2.2 with this raise what do you hope you'll be able to drive revenues up to before you have to go raise again so we expect to reach profitability and uh also really focus on the product side of things so if we think we can scale 10x what we're doing with the next infusion of capital um we're gonna do that so probably i'm going to say in a year we'll go out we'll go out and raise again and accelerate the growth how much do you hope to have an arr in a year uh i'm going to say three to five hundred thousand dollars a month okay got it so again so q3 2020 ideally raised again hoping to have about 300 north of 300k a month in ar at that point or an mri at that point yes that's correct yeah that's great and do you think most that...