How Bonsai CEO Nick Zadrozny grew to $6.6M revenue and 1.6K customers in 2021.

hello everyone my guest today is drew sellers he is building a company called bonsai dot io a managed search engine for sas are you ready to take the top absolutely let's go so what exactly does this mean i mean this is like algolia competitor in a sense but so the bigger way to think about this is we've all worked with developers inevitably there's a piece of technology that they're new or that's novel to them they get stuck on it and they spend days spinning their wheels trying to solve this problem our company comes in and just eradicates that as a problem from for search engines specifically and that's where the managed piece comes in what does that mean first i don't understand for search engines specifically people building search engines so people are building an application so let's say that you're building some new hot application that's going to show me all the best barbecue in austin texas um or in the world and i'm going to type in you know rudy's barbecue well if i do a lowercase r and uppercase r a database can't naturally figure out that those are the same thing and so you need a separate piece of technology and toolset to find that uh search engines are idealized for this particular model oh i see so so you're selling to companies that use search for discovery could be a restaurant or anybody else and help them make sure that their metadata is formatted in a way to increase discoverability in the search engine yeah so real quick a lot of developers have spent a lot of time working with databases when you get to a search engine it's a very different paradigm and so you don't have a ton of experience so we come in we don't all we i've heard this term like sas plus where we're not just hosting the tools like giving you that sas like you know pay a couple dollars get a thing we also then a go above and beyond providing a level of service and this is where we kind of hang our hat on that managed aspect because we're giving you you know consulting in a sense we're helping you understand how the tool works we're basically like your go-to resource for understanding how this tool works what was that split last year total revenue last year what percent was services versus us so it's all bundled together into one so we don't have a breakout and that's okay when did you launch the business what year we launched in 2011 2011. okay and well i mean walk me through those first couple customers how'd you get them i mean it's what everybody wants it's the dream story so we had an early partnership with the channel uh that in this case we're talking about heroku so if you're a developer you've probably heard of this it's a platform for developers to run apps and we were in the first cohort of add-ons so if you're building an app and you wanted a database there was an add-on for database if you wanted a full-text search engine you we had we our add-on was there on day one and so we had customers coming in the door just from the get-go do you are you still listed in like the heroku app exchange very much so how many new leads or traffic do you get per month from that from a leads perspective it's got to be it's not something i look at anymore it's going to be it's probably like in the hundreds but you got to remember um it's it's a little bit opaque to us at times because of pr apps and ci builds so there's this is one of the reasons we don't actively look at it yeah it's just gotten really noisy so how many customers are you serving now today we're serving um so we have about 1600 paid and 4 000 oh well okay interesting so i want to go back to how you've built that this sort of freemium model but let's talk about the 1600 page right now for a second what mr are you now doing are uh our mrrs around 550k oh wow this is super impressive drew congratulations well thank you it's i'm just the guy kind of running the show you know my ceo nixotrosney is the guy that really like took it from zero to 100 and i'm trying to take it from a hundred to a thousand i love that i like do you do yeah i want to say i don't know if you listen to the show or not but you know that i love founders that do this sort of thing especially in a capital efficient way yeah so are you getting professional did you bootstrap totally bootstrapped i think we our total initial investment was in the area of like five thousand dollars it was you know it was two guys they had just gotten done implementing um it's one of those like kind of romantic stories where they had just done like a search project and they happened to be in san diego i want to say the story is they were in san diego they were at like a ruby uh user group and they got into the cab with like a heroku person and like hit it off it was totally one of those serendipitous moments where they were like hey you know we need an add-on will you come and join in this thing and they were like well this sounds awesome yeah this is the cool thing to be in that's too funny okay and what does growth look like i mean you're 5500 500 a month today where were you like in december of 2019 december 2019 i want to say we were um a year ago our our annual would have been like four or nine okay got it 1.9 million healthy growth where are most these new customers today coming from the heroku exchange or somewhere else they're actually referrals is our current uh big winner from lead generation perspective and it's at our our enterprise tier offering is really what's taking off for us and so one of the things that's very unique about us is the level of support that we provide so we've been around for 11 years we've run solar we've run elasticsearch we know lucine back and forth which is the underlying thing providing the the the horsepower because we've been doing that for so long when people show up we're here to help you understand your problems um we oftentimes hear you know i got more benefit out of this sales call that i just did with you than i did in this paid engagement with this other company we love that i love hearing that and so you guys have bootstrapped this walk me through the team dynamic how many people total we have fourteen it's uh it's 11 developers one two three four 13 13 right now we just hired our second uh sales person and they'll be starting uh this month but we are otherwise 13 people and 10 of them are engineers and we have three non-engineering talent that's great now the two sales folks that you have do they both carry a quota uh neither of them carry a quota today we are very much this like we're a little new agey we're a little woo-woo and we like thinking about like what keeps people happy what keeps people engaged we have a four-day work week we have mental benefits we have health benefits we really invest back into our employees and so my ceo is really good about always asking the question like what's the intent or the goal of this practice in the larger business and is there a way that we can achieve it at a scale of 13 versus trying to cargo colt in an idea that's meant to be for a company of thousands yeah i mean 13 people and 6 million in revenue i mean what is that 450 000 revenue per employee that you know the average is 190. so i mean you guys are you're doing something right i mean how do you get so much productivity out of these folks we're only working for hours a week yeah so we are focused on our customers so we have uh we have our help channel where people come in and we don't just solve problems at the surface level we get in we engage with you we wanna and because we're running your search engine we can actually go and see everything and we can go in and say like oh you know this is a problem where the user had a configuration issue and so we might need to work on our documentation but we'll sit down and square them away oftentimes it's a technology thing right and we're all engineers and nobody there's no engineer in the world that likes repetitive tasks right there's a whole xkcd comic on should i should i automate or should i just do this manually and over the 11 years we've just been putting these little like paper cuts in right okay cover this one okay this is it this is an elastic search two problem this is an elastics or six problem okay band-aid band-aid you know and then do that for 11 years and we get to stay focused on product and is it is it sticky i mean what's your churn rate today churn rate is uh pretty much if you start with us you're not going to leave we i think that we've had two we've had one decent sized account churn and we've had one small account churn in my four years here do you measure that at all in terms of like annual revenue churn or anything since it's been up and to the right said you know we don't it's not something that we you know we've been successful we've been really lucky in that our growing numbers have been that our numbers have been up and to the right so substantially that we haven't necessarily had to focus on that and we let me ask a different let me ask a different question expansion revenue so a customer that you're up selling year over year what percent are you upselling customers year over year currently i don't know that that's great okay i don't let me ask it a different way you went from 4.4 million right to like a six million dollar run rate how much of that growth over the last 12 months came from upselling existing customers versus new customers all together do you know it would be predominantly new customers interesting and how many new customers did you add over the past 12 months would be maybe 100 interesting and so as we wrap up here referral program do you incentivize referrals at all is there an affiliate program not today it's something that we're actively looking into so what do you mean when you say referrals are your number one growth channel so we have yeah when word of mouth when people leave a company and go to their to their next job they bring us with them okay that makes sense and you obviously have the benefit of 11 years of history so there's a lot of job changes happening in there yeah and that's one of like our big things is we have one customer that we've been with for the last six years we've been through three search teams and as each search team comes on board we can effectively pass on that knowledge to that next team and what are you spending to get a new customer that pays you you know 300 400 bucks a month i we we don't no sales that's one of our problems to be fair like besides the sales um and he's mostly handling inbound sales right now we're about to turn on outbound sales for the first time but we this is one of our problems is that we aren't spending enough in marketing and in sales and that's one of the goals for this year interesting any plans to raise you like the bootstrap life uh we love the bootstrap life it lets us stay 100 focused on the customer yeah we love that okay let's wrap up here drew with the famous five number one favorite business book uh creating the corporate future by russell akkoff number two is there a ceo you're following or studying no i try to just learn from everybody but i will say that i quote from uh what is strategy by uh not paul krugman um anyways i love southwest's model there's a bunch of stories that i quote from southwest yep number number three what's your favorite online tool for building you're talking about herb teller i think right southwest no no okay i'd like the southwest story so it'd be the early stuff so it's probably her but i study the business versus the person i see okay number three what's your favorite online tool for building uh bonsai rome research right now interesting not an ocean guy huh all right any any rome research tattoos anywhere on you yet no not at all crazy culture i love it though love it and you're and you're an awesome are you in austin i am sir yeah so not elias and obviously is down there and talks about does a lot of room tutorials he's creating a course we're actually having a meet up on thursday at my house so you should come if you're free i'll send you an invite oh i'd love that i just got done going through his course oh very cool perfect small world how many hours of sleep are you getting every night eight to nine and what's your situation married single kids single that's how i get eight to nine no kids and how are you uh 42 42. last question drew what's something you wish you knew when you were 20. ah man learning how to take more risks that's a good one guys found that 11 years ago the company is now doing six million dollars in terms of run rate boots dropped up from four million about 12 13 months ago they're a tool that helps businesses understand how they show up in search optimize how they show up so they can get more leads more traffic and ultimately more sales over 4 000 free users and about 1600 customers mostly developers using the platform as they look to scale and continue to scale in app exchanges referral programs and otherwise drew thanks for taking us to the top thank you have a great day one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and