How Churnly CEO Adam Baker grew Churnly to $6.5M revenue and 90 customers in 2022.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is adam baker he is building a company called churnley.ai a customer turned software he's a three-time sas founder with two exits and former ceo at the guardian dropped out of school at 16 and started his first company at 24. now working again on charlie to help companies deeply understand their icp analyze online customer behavior and predict churn you don't want to mess with him either he's a competitive mixed martial artist and brazilian jiu jitsu brown belt living in london adam ready to take it to the top thanks like your logo needs to be like an animated version of you doing one of these kicks and it's like you know kicking down churn or something yeah i'm not sure how well that would go down but yeah cool all right so first off how do you is the ceo at the guardian tying in were you in charge of subscription management at the guardian no uh i wasn't i was responsible for the user generated content um at the guardian okay and so the company that i built um prior to um to joining the guardian was called blotter and we kind of championed use generated content we found ways of authenticating using machine learning to authenticate news footage and so joining the guardian i basically headed up um they their ugc um division interesting okay very cool all right so then take me through the transition how did that take you into churn um so i you know i guess that um every company that so both companies i've had with churn customers and as a sas business it's it's very painful um and kind of when you look at kind of cac and and an old tv and it's it's really expensive to work to acquire customers it's it's really painful to lose them um and then as i've kind of evolved my career and i've become more more of an investor in other companies uh in kind of early stage businesses um churning is a big problem you know in every boardroom and every meeting that i i sit in um it's all about how we reduce churn you know um how we understand churn better and so it was became very apparent that there was a there was a an issue here particularly with with sas businesses um and uh and so i thought that i would try and look at addressing that particular problem okay and now what's your revenue model are you taking a percent of retained or like earned back revenue or are you a pure place ass model yourself pure play sass model okay got it so on average i'm sure you have a bunch of different price points but on average what are customers pay you per month to use the tech yeah on average it's about 900 bucks okay so not cheap i mean you're dealing in mid-market at that range right yeah exactly yeah yeah okay and then what year did you do that uh when'd you launch the company so we launched the company uh officially uh in june last year um june 2018 um but we've been we've been kind of in kind of deep engineering mode for about 12 months before that um so so we've been we've been around for about two and a half years um we've we've kind of been you know domiciled um for about a year how much cash did you sink into the mvp between the first line of code and your first dollar revenue yeah um somewhere around about 300k and why was it so expensive um mistakes if i'm honest um so i think that um what we what we discovered very early on is that um churn churn models aren't very scalable and so we we we started out with a bunch of a group of customers five or six customers that gave us their data um all very different customers also sas for all very different markets and they're very different definitions of churn and kind of triggers of churn um and we've got a great team um a smaller team than we had um we're sorry than we have today um and and so figuring out churn for each individual customer was actually not that difficult um what we found difficult was how we scale a model that can work across all sas organizations regardless of the the the vertical they're in um and the type of you know churn that analysis and churn um kind of triggers that they they they work towards and that's been the challenge and so we've had to bring in outside experts we've had to develop build our team out um what's the team look like today how many folks um how many engineers um so engineers so software engineers we've got four um and we've got seven um data scientists okay got it and then well that's 11 right there so no no sales reps or anything you're looking at him right here okay just you you're doing all the sales yeah right now i love that all right very good now uh you launched obviously you have these four or five customers you're working with how many customers are you at today um so we're just under 20. okay 20. and is it still pretty high touch or are you starting to feel like you're systematizing some things um we're systemizing things but it's pretty high touch still um i i guess um you know the onboarding process is something that we're working really hard at the moment um and uh and so there's there are integrations um so we build connectors to to pull in the data from whatever data source our customers use um there's obviously ensuring that um our dashboards are are kind of built for each of our customers and so that the data that um who is used by customer success teams and folks um it's translatable you know you don't need to be a techie to really kind of understand you know the the the kind of the data that we're we're pulling out for our customers yeah and so one of those i would say 20 of those people at 900 bucks a pop i mean you're doing about 18 000 a month right now in revenue is that right and where were you a year ago um almost zero okay um so a year ago where are we now september so yeah a year ago we we didn't have any paid customers no no paid at all okay so this first five or six you work with they did it on like a trial basis free basis yeah so we spent a lot of time with those folks um really kind of um you know fine-tuning the model optimizing the model um back and forth uh with with them um and and then we took our first few customers on free trials um and they all converted into paid which was great um and that told us at that point we probably had something that we could then start to take out a little bit a little bit further and uh and i i guess that's where we that's where we are at the moment you know we're kind of um we're we're still pretty early on we but i don't think by any means we're prosper market fit um we've definitely got a good understanding now of what type of customer we can work with very well and what we can service and and we're at the point now how we think about how we can onboard new customers and different types of customers and how we can work well with that are you bootstrapped if you're raised in our bootstraps bootstrap okay it's like where'd you find the 300 000 bucks up front to put into the company you're just personally built and sold to companies so i've been fortunate enough um to to be able to take a risk with my own cash in this and uh and and why not because i believe in it and uh and and you know yeah are you back to castro positive yet are you still about uh still burning no no we're burning okay yeah like how okay i mean how aggressively 20 30 grand a month um burn uh no it's more than that um we're we're probably burning about 40 at the moment that's net or gross uh knit okay got it so you're spending total like 58 000 60 thousand yeah and is that i mean are you cool with that you can sleep at night that's no problem it's worth it to you well i mean i'm cool with it for now i i i guess you know it it kind of crystallizes our focus because you know i i don't want to keep doing that for long um i'm happy to but i don't want to and so really it's you know how do we get to break even how do we get more customers and to do that it's all about product what i've realized about this business more more so than any other the sas business or other companies i've worked with for is that this is all about product we have to nail products and it and it's a really complex problem to solve if we get it we get it right on scale i think we've got an amazing business here there isn't there isn't a company i haven't sat in front of that have said we don't have a churn problem um you know we we you know we don't care about what our customers are doing behaving we don't care about no it's a big it's a massive problem everybody has churn you know um so yeah so by the way i imagine i always talk about churn with every sas seo interview we've done three thousand imagine if this section sounded like this all right so let's talk about your churn obviously you can decrease churn using churnly.ai but let's talk about your turn today so adam what's your turn today past 12 months gross revenue churn is zero zero really so no no downgrades that even nope nope okay what about expansion revenue on the cohort again ignore new customers just expansion yeah um it's difficult to be honest that's a difficult one um because we haven't really expanded our customers um that we have currently um so the way that we work our model at the moment and we might change this by the way but the model at the moment is that um we base our our price point on how many customers how many lost customers and then how many customers are our customers have right so we train our model on lost customers initially so the most important thing for us is you have lost customers we can understand and go back through historically what happens to your customers while they leave and then we look at how many existing customers you have and how many you know what what kind of the value of those customers is to you and then that's how we price it and so um over the last i guess nine months since we've probably been monetizing um our customer base hasn't really grown exponentially sorry our customer's customer base hasn't really grown exponentially so what that essentially means is you know we haven't had any extra bandwidth to take on or we haven't had to process any extra data really why do you upsell based off number of customers lost i mean any company that's moving up market will have high logo churn but low revenue churn so we've tried a few models um i don't think by any means we've probably got the right now the right model pricing model at the moment um but it's one that works for us and it works for our customers so you know we were we were looking at um you know percentage of revenue we were looking at number of customers they have um we we've kind of modeled and tried a few quite a few um we've we feel that um the price point that we've landed on which is anywhere to be honest between seven and twelve hundred bucks a month and it kind of averages out about nine feels about right for us and it feels about right for the customer um i i don't i'm not sure if in the next 12 months or 18 months two years this is going to be the pricing model that we'll stick with so to get a new 900 a month customer i mean talk to me about how you're growing right what are you willing to spend to get that customer in the first place so at the moment we're not within anything um really to be honest apart from our own internal resource so we obviously attribute value and cost to to you know our own our own team um taking time out of whatever else they're doing to on board you're the only sales guy though right yeah and you're doing nope you're doing no paid spend facebook marketing google fake linkedin nothing more so so we've spent yeah a few conferences um we went to sas stock last year we picked up 75 leads uh we closed one of those leads actually two weeks ago so that's a you know a cycle of almost a year because stocks again is i think it's next week or a week after the next um and so what was that what was that one customer worth about 900 bucks a month yeah okay so so was that just out of curiosity i mean what did sass stock charge you for the sponsorship was it was roi positive um it will be uh i mean it was more than 900 bucks um but but it definitely will be over the course of 12 months so are you sponsoring again this year um when we were thinking about it the reason we're not is because i'm actually in new york um and and so um i'm not going to be there and i'm the only commercial commercial person we have right now so it doesn't the time it hasn't worked out um otherwise we would because it was great um but to go back to your question um you know with when we when we first when we were in development i stuck up a square a squarespace page uh and and just we did put that into facebook but not paid we just stuck into a few groups uh and on quora et cetera and we had 270 odd sign-ups companies that wanted to go onto our waiting list and so essentially we've been working our way through that list we spent quite a bit of time um using an external seo agency so um if you search for customer churn software particularly in the uk but i think if you're in other markets but in brazil we've optimized really well in brazil we've got four customers in brazil right now um and so you know we come up on page one for um particularly in brazil um and yeah i don't i don't see in the us it's it's all it's our gain site yeah yeah yeah yeah um and so we've found we find that currently um through seo um we're getting about six leads a week coming through and so essentially we've just taken on you know why did you pay the seo firm um paid the seo from about well we paid them incrementally so we paid them monthly um about 400 bucks a month okay so if you're getting six leads a week right or 24 24 a year yes what's up um and and so we we're not at the stage yet where we i want us to ramp up sales because i'm still learning how to sell this thing um we've got some good customers we're working with those customers um at the point we're ready to ramp up the first thing i'll do is hire more people to help us do it um you know we want pre-sales we obviously want maybe an sdr and then we'll invest some money into marketing but i think because i'm bootstrapping it right now um my my goal is to kind of we've got a couple of metrics we really want to hit um that i think we need to hit to be able to go out and raise some some cash uh and as soon as we raise that that cash then we'll obviously ramp up soon yeah very good all right let's wrap up here with the famous five number one favorite business book oh um well i'm not sure it was a business book but thank you for being like number two is there a ceo you're following or studying um no there isn't but there's lots of work with who are great okay number three what's your favorite online tool for building your company um i love confluence confluence and out of curiosity i imagine you probably have some more than just the 20 paid connected how many total companies have connected themselves certainly um oh connected as in how many we've spoken to no no actually connected like their stripe account i think to do a turn analysis um oh i see um i mean through through the kind of early phase maybe like 80. okay interesting yeah i guess just under 80. okay number four how many hours i sleep to get every night i'm not as many as i want um probably seven six maybe seven what's your situation married single kids um single kids how many kids um one and she's 23. she's not actually a kid oh there you go yeah all right and how old are you i'm 45. 45 last question what do you wish your 20 year old self knew um everything that i know now anything in particular um so i will i i guess um more on a basic very basic level more more empathy uh and more kindly so on a business level i think that um you know business is really hard and it's all about time you just need to give yourself some time guys 900 sorry 20 customers paying 900 bucks a month to solve their churn issues with charlie.ai doing about 18 000 a month right now in revenue founded in 2018 spent 2017 building the mvp poured about 300 000 bucks of his own money into that and now the company's burning about 40 thousand dollars a month which adam is subsidizing versus from us prior to exits that he had as a successful entrepreneur 12 people on the team today mainly engineers that they look to continue to scale adam thank you for taking us to the top no worries great to see you thanks so much these ceos rarely give these kinds 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