How Castos CEO Craig Hewitt grew to $3.6M revenue and 2K customers in 2024.

hello everyone my guest today is craig hewitt he's the founder of castos a fuller remote team remaking uh how podcasters create great shows grow their audiences and further their brands craig grady takes the top yep i'm ready so what came first for you are you a technology guy that got into podcasting or a podcasting guy that wanted to solve his own scratch his own itch and learn the tech yeah definitely the second uh kind of got into podcasting a roundabout way and and kind of the business side of it and uh yeah it's been yeah just over three years uh since i've been around and cast us and it's been a lot of fun very cool okay so for folks i've not heard of it what does castos do yeah so we're a podcast hosting an analytics provider that also has a built-in production service so for shows like this for folks who want to kind of host their podcast distribute it to places like you know apple podcasts and spotify that's what we do provide analytics around that and then have kind of a done for you service arm that that takes care of all the editing and show notes and publishing uh so we're kind of your built-in podcast producer so would you categorize this i mean more as a it's pure software running this show or is it really software plus humans some professional services built in yeah we're software with the service yeah okay interesting so just so we understand sort of the split and this will kind of guide my my questioning um if you look at your total revenue over the past 12 months what percent would you say is is software requiring revenue versus setup fees professional services yeah like 70 30 70 sas 70 cents yeah okay so let's focus on that for a second then we'll circle back to professional services if people pay you just for your what you offer on a sas basis what would they be getting uh so you get hosting and analytics uh so we host your audio files help you manage rss feed which is kind of the thing that podcasts are uh and then we give analytics about you know where folks are listening and how many downloads your shows get so very similar to like libsyn or other other players like hosting platforms like this yeah yeah at its core we've done a lot of you guys kind of expand no because i mean i think that's the that's the easy that's the easy analogy but i think what we've done is is kind of expand the idea of that a lot so we have things to kind of repurpose and extend the content that you create so we have things like automated transcriptions we have automatic republishing of your content to youtube so for folks who aren't recording video like this they just want to do audio because they don't want to you know get all pretty for the for the camera and stuff like that we can give them a way to have a presence on youtube uh where they don't have to record native video content so we've done a lot with a platform to to do that to be more than just a hosting platform but really kind of like a marketing platform for podcasts i see i see okay and what do people what do podcasters pay you on average to use this per month yeah so we have plans starting at 19 a month all the way up to 100 a month um and we have annual plans you know for like 20 discount off that would you say the average is probably around the 1920 mark yeah something like that yeah most most folks are on the beginner plane because a lot of folks you know podcast is for a lot of people is not a revenue generating thing so they have a hard time paying too much for it what is the upgrade tactic you use to get folks from 20 bucks a month to 100 bucks a month yeah so we feature gate a lot of a lot of what we do so um things like the youtube republishing automated transcriptions uh an integration with a tool called headliner to create audiograms um and some advanced analytics uh the last part really gets up into that that higher tier i think analytics as you probably know is something that the podcasters are hungry for more of and we have some some proprietary uh analytics that we provide folks in our and our pro tier at the 100 month plan and and when did you launch the company uh yeah right at three years ago we launched uh the company officially once okay put in 2017 and you bootstrap today or you decide to go to the equity or raise capital uh we took a small amount of investment and joined the tiny seed accelerator um about just over a year ago so we were part of the first patch there uh so we got a little bit of money there um but otherwise have been bootstrapped we just had inaura on who really broke down how how tiny seat operates and works and how it all works and he surprised me with the statement he said he believes 80 percent of the fund returns will come from companies exiting not dividends which is kind of the i in my opinion that's really idea of what they're building which is you never have to sell you can build a great profitable company pay yourself you know dividends and oh by the way pay us our dividend cut as well what are your thoughts on that as a founder on the other side um so i mean you know being in the podcasting space we're not you know a crm where we're going to be around forever we think we could be around forever you know there's just a ton of kind of velocity in the podcasting space these days and so we expect something to happen with our business in the next five years say and so that's that's a lot of why we joined tiny seed and that's that's kind of the path i expect us to take cause something will happen i don't know what that is we have a lot of options because you know now we're profitable um but but i'm surprised to hear uh that that you're surprised by that because i view like tiny seed getting their money back being mostly in in exits for for founders um just because i think that's the way a lot of businesses go i think a lot of people at some point i see my thought though is i mean i when i interview bootstrap founders many of them have built extremely comfortable lives sitting on castro from the business they are the exact opposite dna of a founder that wants to scale big and sell for a bunch of money it's like the exact opposite dna so the fact that and by the way like when i listen to how anar and rob and the team sort of talk about tiny um it feels very much to me like we are for the bootstrapper in kentucky that's happy with a 5 million ar company and 2 million a year in profits that never wants to sell so it just that's why it surprised me niner said no we think 80 of our fund returns will come from companies exiting yeah i think i i would guess that the the founders are maybe a little more ambitious than the person you described why do you why do you equate an exit to ambition i would argue that there are extremely ambitious founders that have built great profitable companies and that's actually sometimes harder to do than get some big exit yeah i think that's a fair point i think that you know if you look at really kind of changing your life and putting you on a different trajectory you know selling a business for 20 million and taking home you know whatever 10 uh it changes your life versus a business that cash flows you know half a million dollars a year that's great but you can't just go f off and do whatever you want for the rest of your life like if you sold for a bunch of bunch of money and you could just put that into dividend funds and things like that then then you have complete control over your life and there's a different kind of risk i guess uh involved with your uh your path from there sure sure no that makes complete sense when you came back on on january 9th of 2019 you'd said you passed a thousand customers at that point what do you guys thought today yeah we're right at 2 000 customers oh wow the good timing on the show then exactly exactly doubled yeah okay very cool um so uh 2000 and then have you done anything team related so how many folks are on the team i think you were four people last time we talked yeah so we're seven full-time people uh and with the services arm we have some contractors that do you know audio editing writing with some folks on the marketing team that help on a contract basis yep of those seven folks how many are engineers uh two two okay and i imagine you probably don't have quota carrying sales folks for this price point right that's right yep yeah yeah yeah it's more but so let's go down that path for a second how are people finding you what's that what's the playbook here yeah so we do uh we we do a lot in kind of content and seo that's that's kind of our main acquisition strategy these days um we also have a wordpress plugin that we own and maintain called seriously simple podcasting that is uh that is kind of the way a lot of folks find us is throughout wordpress integration so if you have a wordpress site it's called seriously simple podcasting so if you have a wordpress site you want to kind of plug in a a blog to it or a podcast i'm sorry then you install our plug-in let you kind of add a podcast area to your site manage your rss feed from there and then cast us as a hosting platform is an optional kind of add-on that you can have there interesting was that intentional that i was going to be sort of your mouse trap at the top of funnel yeah that's that's really how the business started is i acquired the plug-in it was it was a free plug-in before and i acquired it from from the guy that created it and we kind of built the hosting platform around that uh and for a while it was the only way that you could use the hosting platform is through wordpress since then we've opened it up to to be either use it with wordpress or use it by itself if you you don't want to have a full website or you're not on wordpress or whatever you can use castus by itself you know like you use lipson probably interesting okay good so that's starting with your top of funnel uh and again two thousand customers twenty bucks a month so you guys are like forty forty five thousand bucks a month right now in revenue yeah and so they win the services we're right at sixty thousand a month okay so let's dive into this the services component if i sign up to you today on the twenty dollar a month plan what will you recommend to me in terms of services i should buy from you as well yeah so i mean we have we have kind of you know opt-ins and and kind of messages and new email and onboarding within the app to say hey you know you don't have to do the solve by yourself we have a team of you know professional audio engineers and people that know podcasting in and out if you need help with starting your show and then ongoing editing and producing your show we have we have teams that can help with that and is do you when you do a cohort analysis of your 2000 customers the ones that have paid for some professional services those that have not do you see the same trend that other founders tell me they see which is the ones that you give services to the net retention rate is through the roof compared to ones you don't touch at all yep it's great i wish we i you know you asked me what the split was i wish it was higher to be honest because services are not hard um you know if you get the systems and the people in place and you know those things are are working well and kind of optimize that they're not hard to run our services arm requires less of my time than than things like product um on the software side and you funded all this again you said you took tiny's deal what do they i think they usually do 100 or 150 is that what you took 120 yeah 120 000 okay interesting and what was that process like the onboarding process there for a tiny seed yeah yeah i mean you know they they had kind of their standard deal i'm sure ain't talked about that uh when he was on it and we we didn't have kind of too many questions there and you know we signed up there and they took a percentage of equity um in return for for that investment and uh and with that we hired our first marketer and kind of took one of our engineers full time that's what we used a lot of the money for i think the first cohort was a little different than the second and probably subsequent ones and that a lot of uh companies the first cohort kind of weren't to profitability and didn't have a good degree of product market fit we did i think um it was probably around the time i was on the show last is you know we were you know paying my salary and everything and so we were able to just take that money and invest in growth not in you know paying my salary and paying rent and things like that were you able to negotiate down the equity slide they take i mean i think typically they take ten percent so if they're taking ten percent for 120k it's valuing the company in a million bucks but you're already at a quarter million are at that point a year ago and now at half a million bucks an hour i'd argue that's undervaluing the company yeah yeah we negotiated a little bit yeah okay good so you had some leverage going in with real revenue yep got it and profitable today yeah paying dividends or no no no and we plan to reinvest in the company as long as i can i guess yeah yeah very cool all right so so what is i mean when you talk about obviously keeping customers professional services touch et cetera churn's critical in a sas company last time i think you told me you had about 72 annual retention on a revenue basis has that improved uh yeah i mean our monthly churn is like two and a half percent okay got it so about 20 24 annual return today and why are most those folks stopping or the ones that do stop yeah most all of it is just you know i i'm not podcasting anymore i can't do this it's too hard i don't have time to talk to people and editing and things like that and yeah i mean the professional services when we get the right fit helps reduce that a lot you know i think you can probably attest that if you had to do all this yourself you wouldn't do it so finding a good solution to that is really helpful last question here before we wrap up with the famous five when you're acquiring new customers obviously the chrome plugin is a critical aspect of that but if you do try and back into a fully weighted customer acquisition cost for a new 20 a month customer what would you say your cac is oh gracious um that's that's a tough one i don't i don't have a number for that i guess i mean almost all we don't do any paid acquisition hardly at this point so all of ours is organic you know content and seo so i don't have a number but it's very low yeah how many new customers are you getting per month would you say uh we have about 800 new trials a month and can you finish the funnel for me how many of those typically convert uh 150 200. okay that's pretty high that's it's pretty high yeah uh okay 150 to 200 convert and then um and then again they stick on average about 98 every month yep that's great okay very good so not really a good massive page strategy they're mostly seo and inbound um good stuff craig let's wrap up here with the famous five number one favorite business book uh built to sell built to sell number two is there a ceo you're following or studying uh yeah it's the same one i answered last time uh jordan gaul from kart hook uh just really respect him he's kind of like one step ahead and just love listening to what he's doing number three what's your favorite online tool for building the company notion number four how many hours you'll see breaking every night oh at least eight okay good and situation married single kids yes all that married two kids married two kids and how old are you craig i'm forty forty four to the big four oh all right last question what do you what are you wishing you when you were twenty well i wish i would have started this before yeah i mean i spent uh about 15 years of my professional life in kind of the corporate world and i wish i would have started as an entrepreneur sooner it's it's a lot of fun and really invigorating guys there you have it castos helping podcasters get going but not only get up and going also distribute their content once it's live manage the hosting production et cetera now serving over two thousand customers each month that paid twenty dollars per month to call it 480 thousand dollars in monthly occurring revenue as craig introduces scale to companies seven people they work for tiny seed early on and raise 120 grand otherwise completely bootstrap spending nothing on uh cac mostly using a chrome plug-in strategy to get new top of funnel users along with an seo content strategy craig thanks for taking the top thanks nathan 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 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