Boostopia Revenue, Valuation & Funding (2020)

hello everyone my guest today is justin winter he's the co-founder and ceo of boostopia a sas platform that allows you to manage your newly work from home customer support team with the world's first support department operations platform previously he was a ceo of diamond candles and went to liberty university justin you ready to take us to the top i am how the heck do you go from wax and candles to sas customer support yeah yeah good question so you know one of the challenges about scaling that company over the course of four or five years to about 22 million a year was really growing and scaling the support operation so i was the first support agent myself and uh you know very slowly became the manager and as the ceo kind of got to see it from all these different angles and um you know that's kind of what led to our experience there you know feeling the pain day-to-day of having a bunch of people to manage trying to figure out how to you know improve the customer experience you know whatever that really meant in practice um and then certainly dealing with the you know exploding costs of having to continue to hire a ton of people so after talking to a lot of other companies where we found it was kind of the same experience we realized that there was a huge opportunity here to help a lot of people and make a good business so wrap up the diamond candle story first before we focus on those topics so what what happened best year was 22 million in sales what year was that yeah yeah so that would have been around uh juicing 2015 or so yep so uh so yeah it was really a side project with me and the two other founders on the side uh one of the founders there had an idea to put a ring a piece of jewelry down embedded inside of a candle and you would have to burn it down to find it the ring and like like a real piece of jewelry ring right and the ring would be worth uh at least ten dollars but it could be worth up to as much as a hundred or a thousand or even five thousand dollars so um needless to say women were quite excited what's jewelry right um and uh and we were a very early shopify customer back when shopify was just a blip on the radar so we were kind of like direct to consumer 1.0 back in the day um and uh and yeah we were completely bootstrapped we manufactured the products ourselves and um you know it was no wholesale just direct to consumer um lots of direct response marketing email conversion rate optimization all those best practices and uh you know growing the business so it was a lot of fun so what so sorry you exited or sold it or what yes okay got it back in about 16 i believe it was and was that founding here for boostopia as well i believe uh it technically might have been yeah i so i did i took about six months off between things uh just doing kind of management consulting uh freelance while i was figuring out what the next thing would be and uh yeah i think it was about six months later before uh wistopia officially started yeah did you start writing this code when in diamond candles to serve your support need and you had to spin the code out so so we didn't um bustopia has had an interesting founding story as well so one of the challenges was that um me and my other two partners here now in boostopia were employees at the candle company so it's different partners um but initially we we had an acute understanding of the problem but we didn't have a clear vision as to what the productized solution looked like so we started off for the first couple years basically just being an agency service um almost like kind of fractional uh support managers um and that's what you know after about two years or so uh led to kind of a strong uh point of view on a product roadmap and we recruited our second uh our kind of our fourth and final co-founder our head of engineering a little over a year ago and then that's when we actually started writing code so up until that point um we were uh uh to some extent faking it until we till we could make it right um and we're doing some creative things to uh you know create value and kind of productize the service a little bit and have that be our our springboard into bootstrapping into getting the company going so this full support suite now what are folks paying on average to use it each month we're talking enterprise s b mid so uh smb so we're really focused on companies that have uh as little as one person at the company doing 30 minutes a day worth of support volume right so in some cases that's a founder right and and then we're kind of up to the point now where uh you know we have companies with around 30 or so full-time support agents so what we're doing already exists at the enterprise if you have hundreds of support team members but there's really no solution for support operations and management teams um if you have you know between one and you know really a hundred uh you know team members so so that's kind of what we're focusing on uh we're not vertical specific although we have a lot of e-commerce uh you know customers you know that we're working with so what does that translate to justin in terms of the average amount the customer's paying you per month yep uh so uh there are uh our average customer right now uh with us per year spends about 13 14 000 the uh right we're getting ready to transition here but up until this point we've required that any uh in order to buy the software you have to buy one of our kind of customer success add-ons uh which is our support coaching uh kind of add-on and we've you know we've used that approach to slowly transition to software only while the software has become more mature so the software is uh a hundred dollars a month per support team member and then our kind of customers success packages you know started around 500 uh you know a month so the 14 000 a year average acv you're saying about a hundred per month that's a 1200 of the 14 000 you'd say is true sas the rest is kind of services uh yes yes and then we have a couple kind of um onboarding jump start type uh you know service options for people like a lot of people will come to us with a uh you know they've just flipped on zendesk or some ticketing system but there's been no work to really optimize that configure that for the business so uh we've got to help them go from like turning it on to tuned in within 30 days so uh we have a couple options there um but but yeah probably we're about you know probably about 25 percent of revenue uh right now is software only um and probably about 75 is services and we basically have a transition plan to where uh over the next 24 months that basically flips yup makes a lot of sense and so since 2016 how many customers have you signed up on the software uh yeah so um the software has been live uh so the the actual software once uh we launched that we launched uh the software component back um in beta with our existing kind of service only customers um in october of this past year so um so right now we're um you know at uh well just a little north of uh 30 customers okay great 30 folks so this is a smart way to get a company going the largest sas companies today they usually start as some form of agency and they slowly morph into a more predictable software oriented solution so it sounds like that's the approach that you guys have taken today with 30 customers you say they pay about 100 bucks a month on the sas side so what is that like in terms of mrr today uh yeah yeah so so they they pay uh so probably our average uh customer has maybe uh three or four uh team members so like 10 grand a month in software sas uh yeah yeah yeah exactly so we're uh we're north of uh 30k uh total uh per month but yeah the software only is around 10. that's great okay so i love this um i assume because have you been scrappy with getting cash upfront with consulting that you've figured a way to keep all your equity and bootstrap this exactly i love that okay and so what's the team look like today how many people yeah so five people uh one full-time engineer me doing sales products miscellaneous um and we have two people uh running the support coaching um uh and onboarding kind of the the customer success department basically uh and then uh we have our head of design who's you know uh marketing product design uh and then we're about to start hiring for two more people uh next week that's great and are you operating basically right at break even you're reinvesting everything uh yeah exactly yeah that's the way to do it now you only have it sounds like six to eight months of total data here but do you have a good sense on just the software side what what monthly churn looks like yeah yeah so um i would say right now um you know we've been uh we've uh we've been coming from annual agreements uh basically on everything because we've had that service component so we're uh just now looking at kind of planning beginning to you know loosen those requirements as the software can better stand on its own so you know right now we're probably in the um you know on an annualized basis uh you know coming from the services piece you know we're probably like 20 something like that um and you know we anticipate we will you know pretty quickly be slipping into standard uh uh you know software uh you know kind of turn numbers um once you know as that continues to develop uh even actually this week a new product module uh you know we launched so um that's gonna be a lot more workflow oriented so it's uh so it's moving that direction and over the past 12 months how much revenue has been able to generate just from the consulting side to fuel the growth of the sas company uh yeah so the um uh we haven't positioned any of what we've been doing for the past couple years as consulting per se it's been kind of these um you know monthly uh kind of packages of these like fractional services so um from there you know we've just been moving and kind of the acv we've been keeping it uh constant and just kind of slowly as we've introduced the software uh just breaking that out kind of separately so uh we're um so we're kind of kind of in transition there so it's basically gone from october up until october you know it was technically 100 services revenue because there was no software to use how much was there pre-october though that's what i'm asking oh oh i got you got you um yeah so we were uh in the uh low low 20s uh per month uh total um and we had some back end software with like some manual uh reporting type stuff but nothing that anyone could really log into up until that point yeah yeah okay so it sounds like again if you get really going in 2016 you build this kind of fractional productized ish consulting where you're doing call it you know you know 20 grand a month in revenue as as early as just this past october it sounds like you're able to generate 100 200 grand in cash over that time frame to reinvest in the software yes exactly very interesting okay so you're growing you're scaling you've got your first 30 customers you're getting them from a lot of them from your consulting work for people i mean what is the growth plan how do you onboard people like efficiently at a high velocity directly into the sas product yeah yeah so um right now um you know our our sales team which is largely me um you know we are kind of um kind of premium onboarding service packages um you know we're able to create a lot of value uh there so the majority of our customers are choosing one of those and so we have our kind of our onboarding specialist on the team who's running a 30-day onboarding um and you know we kind of have that modeled out in terms of how many of those each onboarding head can handle and for us given the unit economics of that um that peace and extra that's one of the the highers we're going to be making here again soon um because uh the best couple months our business is starting to to take off um so we're getting uh pretty packed with things um so so right now at least um we are on the trajectory of a traditional like enterprise sas uh kind of uh you know onboarding only path over the course of 30 days to do things um but the plan in the future is um as we build the engineering team we will eventually migrate to uh you know building out the self-service uh kind of sign up component of the product and start driving you know product qualified leads that way to you know an inside sales team as opposed to um you know driving no demos you know from the front end do you have an idea today of what it costs you to get a new hundred dollar a month customer 300 a month customer if it's three seats uh yes um so our uh we basically have three channels now so referrals and word of mouth uh outbound sales development and then we um are just uh actually launching our first uh paid uh legion campaigns uh next week um which is gonna be getting going so up to this point most of our expense has uh really been that sales development component so uh we're just you though right uh so so uh so it's some tools and then we have some contractors that help with a lot of that the manual components of sales development to scale my time a bit more uh so uh so so yeah so the uh the numbers aren't super locked down right now uh needless to say but the um uh our kind of onboarding options and the margin there uh we're basically you know uh you know we have a lot of margin to play with to kind of break even on that first month um so we're not having to look at a multi-month payback period yeah so so what i mean what again what you're saying is you might be able to spend 200 300 500 even a thousand bucks to get a 300 a month customer but you up sell them custom you know consulting packages basically to get your pay back down to basically instant but but what is the number like if you had to quantify you know the salaries of the two other people you have helping you divided by new customers per month like what is the actual cost to get a 300 a month customer uh yeah yeah so um you know we're probably in the range of um uh and it's all in flux right now that's why i don't have the uh like a good solid immediate number um i believe we're probably in the um uh like 500 uh range i believe is where it's at right now yeah that works nicely obviously with the upsell plus even if you have any upsells you get paid back there in two months so it works justin good stuff let's wrap up here with the famous five number one favorite business book uh yeah uh i'm gonna go with uh with a classic uh a four-hour work week uh one of my favorites number two is there a ceo you're following are studying um so i've been following a lot of uh stuart butterfield stuff uh slack kind of that product led focus as i move into more of a product leader role and out of sales continue to grow number three what's your favorite online tool for building a business uh notion number four how many hours are sleeping every night eight that's good and which situation married single kids i think i saw a ring uh yeah married no kids no kiddos okay and how old are you i am 32. 32. last question what do you wish your 20 year old self knew enjoy the journey uh don't don't rush it uh slow down relax there's gonna be several attacks guys there you have it justin winter diamond candles grew that business about 22 million bucks in sales in 2015 before exiting it 2016 said you know what we got to solve a problem that we had at diamond candles support support support we started doing a lot of productized consulting work to generate about 200 000 of cash flow to fuel the launch of their now sas product they've got about 30 customers paying 30 or 300 bucks a month so call it 10 000 a month in sas revenue another 20 grand a month and kind of this productized uh module thing that they're upselling looking to transition to almost 100 percent pure sas here over the next 12 months they've hustled there's a team of five of them they've done this all bootstrapped justin we're rooting for you thanks for taking us to the top glad to be here thanks