How Billyapp CEO Joshua Waldman grew to $84K revenue and 700 customers in 2019.

hello everybody my guest today is josh waldman he started a career advice blog in early 2009 and turned it into a six-figure business in 2016 he founded billy a cutting-edge accounting software offered uh him the ceo role uh once he decided to take that on he now moved to portland lives in portland enjoys the ukulele meditating and cooking vegan food with his wife josh ready to take us to the top yeah nathan absolutely so just be clear this was not your thing you launched from scratch you were brought in as the ceo correct yeah billy was in dire straits i wasn't doing so well as a business about two years ago okay um and uh so i approached the ceo or the current owner and i said look i think i could do better give me the reins for a month if i can get us back on our feet i'm the guy for the job if not find someone else so he uh he took that offer why would you do it i mean did you have a do you have equity or he paid you a lot of money or why do this i ended up with equity yeah but you know i believed in the product i i really liked what they were doing like their vision i think they were solving a problem that i had as an entrepreneur and i thought we could make the world a better place with it and when you say dire straits i mean you didn't have access to their financials how'd you know it was in dire straits um it was not going to be in business anymore basically their funding had completely dried up and they had maybe seven paying customers how much had they raised the founder put in about uh three hundred thousand dollars to translate yeah together sebastian uh toki toki okay got it so okay so he put in the money they were almost out of capital um they sent out a thing that said hey we're basically shutting down you said wait let me try to turn this thing around yeah exactly i had actually been working with the previous executives uh in a marketing consulting role i see really interesting okay so and what year was that 2016 you said yeah yeah okay and you said back then they only had about seven customers so basically no revenue yeah they they had attempted to use a freemium model but hadn't figured out a way to monetize tens of thousands of free users so that's a problem right yeah that's a problem okay good and i mean literally were they doing what seven times 20 bucks a month they're doing like 140 bucks a month back then yeah that's probably about what they were making interesting okay what's the for people not familiar with the app what's it do so billy is an accounting software platform it's a quickbooks alternative most small businesses get really confused when they try to use quickbooks um or xero it's it's a way of creating really simple bookkeeping and accounting for you know uh one to two people businesses and what do you charge for it now per month on average so the range is between nine and fifteen dollars right now maybe say ten bucks is a good average something like that yeah and and 2016 is when you really started going full time yeah that's right and what i mean so if you're only asking you go on for a month it does well i mean how much equity did you end up with uh i ended up with five percent of the company this is that's like nothing why would you that you're like a turnaround artist you only get five percent why why are you valuing your time so little yeah um there are things i can't quite disclose right now but um that actually is going to end up being about double okay okay even still let's say 10 still this thing is failing it's going out of business why wouldn't you just go launch another one yourself own 100 and grow it yeah i don't know i mean i got asked that question a lot by a lot of different people you know you're crazy to keep doing this for i didn't take a salary for almost six months um just to get us back on our feet i was willing to sacrifice a lot yeah why though i believed in the product you're just a good guy who wants to donate his time i felt like it was going to go somewhere and it is okay um talk to me about customers what do you say in terms of total customers uh so right now we're about 7 000 users um 700 of which are paying okay good so 10 conversion from free to paid how did you figure out that that nut how'd you crack it yeah so our biggest deal was with appsimo we approached these guys [Music] okay keep going so it so what what'd you do so we needed the cash right and i needed to find a way to get back into our operating budget as quickly as possible so we did an absolute deal in 2016 in july selling lifetime plans i imagine we sold lifetime plans we up sold into onboarding services we upselled into an educational program so we were able to monetize that plus there was a groundswell so as we had all these kind of free basically free users coming on board we started to get really good reviews on capterra g2 crowd we started getting ranked on gartner quadrant and as those free users just kept talking about us we we started uh increasing regular paid subscribers so today there's 700 paying at 10 bucks a month so seven grand a month about yeah that's right okay and and the 700 none of those came from appsumo correct because the absolute people were just they paid one time that's correct yeah the absolute people are either going to upsell into a service or they're not going to pay again yeah yeah yeah okay interesting okay so seven grand a month is where you're today have you raised additional capital or it's all been bootstrapped it's all bootstrapped all boots dropped and how many people on the team today um five people five people so profitable or no um not not yet not yet profitable yeah i'll just say if you have five people you're only doing seven grand a month i think you're probably burning what are you burning like 10 20 grand a month something like that uh not that bad um i think we're probably burning to between two and five depending on the month it's kind of a seasonal business so what's next i mean you've been doing this for two years you only own five percent of a company that's doing about 70 grand a year i mean you're basically giving away your time what's going to happen over the next 12 months so we're looking for investors or acquisition we think that with the right team behind us we can do a lot more than what we're currently able to do so if i wanted to buy this from you right now what would you sell it for um i would sell it for uh 500 to 750. okay and how do you get into those numbers uh looking at forward projections yeah but who the hell cares about ford project i mean you can protect whatever the hell you want right why would you use that as a basis to value it well you have to compare all these different things so if you look at four projections compared with what would it cost to build this yourself um so billy billy comes from denmark it's it was developed five years before it came to america um the owners put in millions of dollars in development costs to to get a user interface that's just really easy to use well maybe they were really shitty at finding developers that could get work done so they wasted a bunch of money why would i now pay for that um actually one of the founders now works at google he's he's not a slacker okay i mean by the way if founder was doing it uh he wouldn't have been paying himself millions of dollars to do it it would have been sweat equity uh i don't quite catch you you just said one of the founders is now at google and my counter there was if they paid developers millions of dollars to build it uh then maybe the developers weren't that great why was the pounder founder paying himself millions of dollars to build his own product i know he had people working for him but yeah at some point that's my point though right so it's like so so so why why put all this complexity into a product that clearly the market's not valuing right i mean it is to an extent seven grand a month but was this the traditional kind of over developed thing um so keep in mind that billy is actually a danish company and the software is was built for danish market um billy is currently valued at 40 million dollars in denmark so they they did something right they're they're one of the top three danish owned uh uh accounting com software companies i don't understand i don't understand so so yeah these are two separate entities yeah there's two separate entities okay when were you going to tell me that yeah so just to be clear i only want to talk about what you're running what you're on the cap table of i want to talk about capital and that company and yeah that story so we license we license their core code right okay so it's a licensing for zero dollars and then we build our feature set on top of that so that we're more user-friendly for the us and canadian markets okay got that have you put millions of dollars into customizing that code for the us market no no we have not okay so talking back to the valuation question and so are you just now wanting to you're looking at potentially selling just the us portion uh correct yes okay um why doesn't the danish company just roll that up and buy it um they're just really focused on europe they don't want to get into other markets okay um walk me through again how then you're valuing this at 750 grand when it's doing about 80 grand a month or 80 grand to you right now in revenue so it's almost 10x yeah um i mean 10x is what i would love to get for the company um we we think that okay so in the accounting software platform the biggest challenge that any accounting software has is user acquisition it's the highest cost once once you have a customer using your accounting platform they usually don't switch we haven't figured out the secret sauce for acquiring customers we know that uh with the correct partnership whatever that is whether it's you know some kind of freelancers union if you look at other acquisitions in the space for example um bench being acquired by fiverr they can now solve that problem they they have you know thousands tens of thousands of freelancers around the world who are using their newly acquired accounting platform so we know that with the right partnership we can solve the user acquisition problem and we know we have a good product yeah but the partners bringing that value to the table you wouldn't value your company based on what the partner is bringing you see what i'm saying yeah yeah so back to my question how do you value yourself at 10x what you're currently at i really don't know i mean i i think that's what we're worth okay so do you have i mean look the market will tell you if you're worth it either you'll get an offer at 800 grand or you won't get an offer 800 grand so do you have offers on the table right now for 800 000 we we have offers for i can't tell you specifically but we have offers between uh 500 and 800 and it's all cash up front no stock no or announced no silly dilly weird terms that's right i think you should take that immediately run as fast as you can i think it's ridiculous seriously i think those people are totally overpaying it sounds to me as someone that that you know you know maybe it's strategic or whatnot but that seems crazy to me i don't know why you wouldn't be why don't you know when you're on the podcast right now i'd run with the money as fast as you possibly can it's stealing in a good way for you noted i mean you must feel i mean if you actually have that offer you must be thinking you nathan right now i'm about to get a half million dollar check you're wrong um well i i am thinking about taking the offer so what are you thinking about why would you not 100 why on earth would you ever not take a half million dollar check for a company doing seven grand a month and you've been doing it for three years and only on five percent of it yeah what are you thinking about i'm taking the offer yeah so the same like what and just be clear when you have conversations with whoever this buyer is yeah why are they telling you they're willing to write you a 500 000 check for a company this small uh the synergy makes sense um it's just uh the vision of what they have for us is incredible it's really exciting actually yeah but that's for what might happen in the future they have to value it based on what you currently have right so what are they telling you that you currently have that they really like uh they like our software um they want our user base for other services that they sell you you have 700 people paying 10 bucks a month we have 7 000 users who are all upsellable okay well you haven't been able to upsell about 6 300 of them to a 10 price point there's not a ton of value there well that's because we only sell accounting software okay so you think they can cross market why not why not just i mean have they asked you to run an email blast to your user base to one of their other products to at least test what the ups opportunity is like they have tested their their list as well yeah no not their list your list against their product oh i see what you're saying uh no we haven't done a test for their product if that's why they were buying you wouldn't they ask you to run that very simple test before writing a half a million dollar check for it i would have asked me yes so do you not worry about when they buy this and then they try this and it doesn't perform potentially how they think it is and there's gonna be blowback um yeah i worry about that all the time so how do you risk that um i think by being methodical with how we roll things out um let's move past the acquisition stuff what's churn look like today uh churn is between one and three percent okay that's actually pretty healthy for this kind of price point that's three percent logo turn per month yeah um interesting why is this been why have you been able to get so low um i think that well in this industry uh people don't really switch between accounting platforms very often if if they're canceling the account it's because their business is failing and that they just don't need accounting software anymore um and how are you winning accounts over like fresh books we actually don't compete so we don't think of ourselves as competing against fresh books or quickbooks um we think of ourselves as competing against spreadsheets people who are just starting a business they're keeping all all of their books and expenses all sort of listed in a google document they just need something more sophisticated but not as complicated as freshbooks or quickbooks okay i mean i use freshbooks for literally the screenshots you have beautiful invoices it's sending in seconds that's exactly what i use freshbooks for i'm just curious you're saying you don't come up against them in any sales calls no actually we don't freshbooks doesn't offer double entry accounting so you won't find any any bookkeeper who's willing to work inside that platform i see i see interesting makes sense okay very good uh let's wrap up here with the famous five number one what's your favorite business book um one minute manager number two is there a ceo right now that you're following or studying um no however i'm reading brene brown's latest book on uh leadership uh number three what's your favorite online tool asana or asana as some people say uh number four how many hours of sleep to get every night between seven and eight hours okay and what's your situation married single kids married and i have a daughter who is turning 21 yeah one week oh congratulations maybe i think hopefully and how old are you i'm 40. 40. last question what do you wish your 20 year old self knew um don't be such an [Laughter] guys i don't think you're an at all don't don't be such an guys coming by the way you're giving up your time basically for free there's no way you're an so joshua launched billy app actually didn't launch it but joined in 2016 took five percent of the company as he's looked to scale it now 700 customers paying 10 bucks a month to call it 7 000 a month in revenue currently looking at an acquisition offer that i'm looking at it going i would take this and run so fast keep listening to uh figure out what that price point is but burning about you know two three four grand a month right now a team of five is look to scale less than three percent logo turn per month so healthy there again as they look at this acquisition offer or to scale josh thanks for taking us to the top thanks nathan