How Clockify CEO Nenad Milanovic grew to $26.4M revenue and 10K customers in 2023.

hello everyone my guest today is melanova he is an entrepreneur with 15 years of managerial experience in engineering and software development the founder of a clockify a time tracking software with over a million users worldwide his company's uh cohen develops software service solutions but also it's it has its own products as well as invest in technology startups all right nana you ready to take us to the top yeah thanks thanks for having me so so let me just be clear cohen c-o-i-n-g is that like an agency that holds all your sas projects pretty much yes yeah that's the holding company and clockify.me is your biggest one well yeah yeah i mean clockify is currently the only successful product that we have in portfolio well um we should either talk about all the failures or we could just focus on the one success i let me just ask the ratio then we'll focus on clockify how many ones failed versus this one success eight fail to success i love that all right let's talk about clockify what's company do and how do you make money well it's a i mean it's time tracking software right pretty uh pretty known concept and uh we make money by uh charging subscription per workspace it's 10 and 30 bucks a month in the cloud and we also have a self-hosted enterprise edition that costs significantly more because uh each time you have when we have a big customer they have some special needs that we have to uh customize so uh so that's where we make 80 of our revenue interesting so if you took it if you looked at kind of what the average customer is paying you per month or per year on a logo basis like the company basis not a seat basis but the company what would that number be so in the cloud the average customer is nineteen nineteen dollars so one nine per month and uh yeah yeah and when it when it comes to uh when it comes to enterprise edition that goes too significantly more so uh so i'm not going to pull that one into uh into this average so but you said 80 of your revenue comes from the enterprise cohort correct yeah so what is the enterprise code let's just talk about that for a second the enterprise core on average is paying about what per month well it starts at 450 that's the minimum that you have to pay to have your company use clockify on your own server but like i said average average amount is a lot bigger than that so okay um well so i need i need a little help understand this so i can frame my questions right you're either selling 19 per month plans to smbs or you're selling 450 per month kind of on their own server plans or you're selling something way more expensive than that to much much bigger enterprises which one is it well i mean you're your main cohort yeah so so i'm if you define a main cohort by where the biggest revenue is coming from that's the big enterprise companies like hp and so forth okay and on average what are those enterprises paying you per year for clockify well it's it's typically hundreds of thousands of dollars oh okay so what is a hundred thousand bucks a fair average uh it's it's more than that so i i can't really go into specifics of that but i don't wanna talk about any specific customers but i wanna understand if it's a hundred grand or nine hundred grand right i mean generally speaking it can be it can be 900 grand we have that and or it can be 150 grand we also have what is the average that's why i don't want to go on every customer card because we don't have time the average in the enterprise is what is it 200 300 400 sorry i'm sorry i can't disclose that information why can't you disclose an average in your enterprise cohort we're not talking about any specific customer well typically i'm i'm not communicating that uh data so i uh i mean typically i know what i can say and what i cannot so so this is unfortunately one of the things that that i cannot give you the exact number i'm not okay you've already told me though it's between 100 and 900 right so i mean i'm asking you for a little bit more specificity around that you've already shared the basics why would you not show the average well like i said i just have a i just have a list of things that that i know that i can say and some other things that i'm not oh are you so are you working for are you working for somebody is this not your company well it's my company i'm 100 owner of the company okay listen i'll just i'll just do my best to ask questions without knowing what kind of that ever that that cohort is so tell us more about the back story here when did you launch the company what year so it was uh i guess the real launch was august 2017 and we started building it in uh march so let's say yeah it took us four months to uh release the initial version so i would say that august 2017 is the birthday when we actually uh posted the product on product hunt okay and what's your team size today how many folks on the product well in clockify there's around 70 people now 7-0 yeah and what's the breakdown how many are engineers uh around half so around 30 something people are engineering that can be quality insurance or front-end and do you have g are the price points it sounds like if you have an enterprise price point you have some sort of sales motion built do you have kind of the sdr to ae to cs rep kind of system built out or no well we don't we don't get that many uh inquiries for the enterprise edition so uh typically if that goes through our support team i'm the one who is going to be uh doing all the sales so uh so i'm pretty much the uh the only the only person that someone will discuss uh enterprise uh deals with so okay well just because then with that in mind uh you can't be processing a ton of hundred thousand dollar plus acv accounts those all require touch and if you're the only guy handling them you have a limit how many can handle per month well uh like i said i mean i maybe do one call a week that that that can be considered a qualified lead an enterprise an enterprise-level lead yeah yeah yeah yeah yeah so yeah typic on average it's one call a week that i that i do that i demo the product and show it to people that are actually considering investing into uh on-premise time tracking solution and so since 2017 what you've closed a couple of handful those two three four something like that well we typically close one enterprise account a month so you're having five calls and you're closing one of those so you have a 20 close rate on a demo of a hundred thousand dollar plus level i wouldn't i wouldn't say say that because we get a lot of inquiries that go to our support email and sales email so i would say that one out of the 100 comes to uh talk to me right so uh so no it's not it's not that closure rate that's only what i discussed i'm only i asked you who's doing enterprise sales and you said you are the only person that do the enterprise sales is that accurate so how it works is that someone emails our email that it's on the website it goes to our support team that is also a sales team at the same time but in email manner right so they just they typically disclose uh starting points starting figures and typically people just don't move forward to that and then if they do uh and if if they're comfortable about talking about these kind of digits that require us that can actually make it viable for us to uh spend that much time on one account that's what comes to me and typically that's only uh that's only one one call a week and those are enterprise those that's your enterprise cohort big 100 000 plus acvs typically yeah yeah so that that was back to my point if you're doing one of those calls per week how how and i said you have closed you said you've closed one of those per month if you're doing five a month and you're closing one a month that's a 20 close rate on your enterprise cohort is that accurate if if we look at that part of the funnel and i'm pretty much the last part of the funnel that would be correct but we can't observe it in that way because there's a lot more leads that you know that don't you're misunderstanding meaning i'm only talking about your qualified leads for enterprise i i don't care about everything that hits support i don't care about the thousands of leads at your support that don't turn into anything i'm talking about the qualified enterprise leads which said you're the only one handling those and you're handling one of one a week so five a month and i'm just asking are you you said you're closing one of those a month out of the five that would be a 20 close rate on your enterprise qualified leads well if you if you like to observe it from that part of the funnel i guess that would be uh yes will do your enterprise leads go anywhere else except to your desk uh well yeah i mean if you close the deal it's gonna go to engineering and it's gonna go to the economy no no i mean before up to closing the deal you are the only guy close you don't have a inbound sales team focused on enterprise accounts where there's a base plus commission and an sdr to an ae to a cs rep no we do not have that yeah so it's you you're the guy you're you're you're you're the rainmaker well i i'm sure we can we could improve uh if someone better would be doing that but uh at the moment it's only me and it's and it's doing quite good i mean we have a really really good value in the free tier and that attracts a lot of users that's a 19 per month plan i don't know we also we also have a plan that is uh that is absolutely free and you can sign up as many users as you want so uh talk me through that right so that's your top of funnel how are people how are people finding you in the first place so if you type time tracking we're gonna be first in google so if you type time tracker we're gonna be first in google so so with that position in google it's very easy for us to get the top of the so i just type time tracking into google and skipping over the add results i see timetracking.co toggle.com zapier and then clockify in the number four spot and you're saying that number four spot drives you a lot of traffic well uh typically it's the first spot so i guess it's it's i guess it's a bit different when you're looking from that location where you are sure yeah i'm in the u.s yeah but on average our position is 1.2 or something like that so got it but that's driving mostly organic yeah that's i mean we spent zero dollars on advertising and uh yeah that's most of our traffic and most of our top of the funnel leads are coming from search engines it's you know it's impressive i mean it's impressive your alexa ranking is really high as well 9700 traffic rank in the us uh your little widget under your signup button says 48 310 people signed up last month those are free people using the the tool yeah that's really great so how have you i mean there's there's some lessons built in there right so how have you been able to rank so well from an seo perspective is this like something you're really good at no i mean we if you if you actually do the seo analysis of us you will you will conclude that google is actually telling the truth that that the content is the most important thing and it's not that we have a great content in terms of that we have some sort of articles it's just that we provide a really high value for the service and for the product yeah there's a lot no no no no i'm sorry i don't believe that and i'll tell you why there's a lot of companies that have the the most amazing product but no one knows about them so it doesn't matter so they have to create great content great seo great mouse traps to get people to view the product and then it snowballs so i don't believe it that you just you have the best product and magically everything else fell into place you did things tactically to make sure you had top of funnel well that's a good assumption but it's not it's not that so the thing is if you do the analysis of the market of time tracking products you actually make a conclusion that our product in the free edition gives the biggest value i mean it's it's literally a ten dollars a workspace and you can sign up thousand people so if you're a company with 100 employees you can get a time tracking with additional features for 10 bucks a month yeah you understand i'm agreeing with you right i am agreeing with you that you have the most valuable i'm saying i'm gonna take you out your word you have the most valuable free product i'm not arguing with that what i'm arguing is you can have the most viable free product and still nobody finds you you have done tactical things to make sure people find you like this seo ranking and what i'm asking why are you rolling your eyes when i say that people don't you rank number three for no reason i know it sounds impossible and crazy but we actually only have one person doing the seo and like i said if you do the analysis if you actually use one of those tools to count our backlinks and so forth like all these things that people are focusing on you're gonna see that we kind of suck at that so uh so it's i don't know what google likes about us but i would assume that it's big number of people coming signing up and coming back again so okay that's my assumption got it that's fair enough you're saying it's not an seo play it's just google recognizing that people keep coming back to the site over and over and that lots of people are signing up every month and and they're factoring that into their page rank they have some sort of mechanism i mean if you click on the result and uh if half a second later you click back they're going to know about that yeah so they don't need to they don't they don't need to take your data from your browser they're going to know about that yeah so i'm sure i think it's connected to that because we don't have backlinks we don't have we don't have pr you're actually the first guy who ever got in touch with us to give us some sort of coverage that means that means i'm pretty smart because you're building something pretty special right well it is but like i said no one uh no one is covering it in terms of like there's no big outlet that actually made a coverage about us who who cares about press they cover they cover companies usually anyway that have raised a bunch of capital that are burning cash and the founders are broke you're doing it the right way right that's why i want to have you on well thank you if yeah have you really hold on hold on hold on have you raised capital or are you bootstrapped reboots i love it see i knew i was gonna like you a lot this is perfect so bootstrapped um how have you when you launched the company back in 2017 how did you fund the original over the original growth was that from the coin kind of other agency revenue yeah so let me tell you so in the in the consulting industry you don't have a project always maybe some companies will always have a project but sometimes it happens that you some people on the bench right and at that time we had uh i had eight engineers on the bench and i just didn't know what to do with them and i was like oh let's build time tracker so uh so so we launched the product after four months of work with eight engineers and the initial version is was quite useful actually so it was buggy of course and we didn't have any paid plans but it was useful enough for us and a lot of our colleagues as well and that's how it came into existence and how many totals over the past three years right since 2017 today how many total customers are you now serving so uh okay so if we're talking about the monthly active users we have in the cloud we have around 600 000 okay now are those are those all paid or are those free and paid no most of them are not paid and when it comes to the paid customers we have uh it's it's it's in tens of thousands but but uh active users are a lot bigger so okay can you when you say tens of thou i mean can you share more specifically you're talking like forty thousand or fifty thousand no i'm sorry i cannot i can only say that it's in ten thousands okay well that's fine i'll just basically take that right i'll take the kind of the worst case right which is 10 000 people paying you said that plan is 19 bucks a month so that puts you at about 200 that's the average that's the average we have 10 and 30 uh bucks a month so average is 19. cool so again assuming worst case scenario here you said tens of thousands let's just assume 10 000 which is the minimum right at 20 bucks a month puts you about 200 grand per month right now uh in revenue is that generally accurate well yeah it's you it's a it's it's good to assume that it's exceeding that that's good and then what does growth rate look like over the past 12 months uh so if you're out caught north of 200 today where were we at exactly a year ago do you know so when it comes to the revenues uh it's not slowing down ever since we started charging for something uh our revenues are growing up 20 almost 30 percent month over month okay it's still like that so i'm kind of watching every month and hoping it's not going to slow down and it's still not slowing down do you remember i can't i can't do that math in my head that quickly 20 month over month growth over the past 12 months so i mean can you help me with that math there so do you remember what you're doing a year ago well we started charging in april 2018 so oh okay so april so that was literally about a year ago yeah yeah okay well let me ask a different question when you closed out 2018 so that would have been like six or seven months ago do you remember what you were what december 2018 mrr was uh even if i did remember i i would i wouldn't be able to tell tell it publicly like this okay well no one does that you haven't listened to you haven't listened to the show i've had almost 3 000 people on and almost every single one of them has so you are just a unique guy but i like that it's working okay so i'm sorry about that don't apologize i think it's fine what i do want to say though is it's fair to say that over the past 12 months you've gone from nothing a bunch of eight engineers and burned from nothing to over two hundred thousand dollars per month in revenue that's accurate yeah yep great how have you where did you decide to put the paywall up and the free plan to convert you know you have 42 000 people signing up each month for free how do you know where to start charging so uh so what we did uh was actually pretty fair in my opinion so everything that we started with that was free and that started attracting users everything is still free and in april 2017 we added a bunch of new features that we said okay this is gonna this is the stuff that we're gonna charge so we're not taking away anything that used to be free so here's some new stuff and if you want them you pay us 10 bucks a month and then a couple of months later actually around six months later we added another batch of features that we said okay these are the premium features if you need these pay us 30 bucks please per workspace hold on just to be clear do you not have any usage-based upselling it's all feature-based upselling exactly so like i said even if you have hundreds of employees you're still going to pay 30 bucks a month hold on if i have 10 000 employees and all i need is access to your api apps and integrations i can get i can do that at z on your zero dollar plan yep yeah so the only r what i'm asking is the only reason people would go to ten dollars per month let's say now i have still 10 000 people right on my team i could pay just 30 bucks a month for all 10 000 total to use the tool and they'll get hide pages alerts project templates time for others so it's 30 bucks just because it's not per seat that's 30 a month for the entire company of 10 000 people exactly okay how do you not lose money on me it costs you more to serve ten thousand active users than thirty dollars a month well uh maybe the secret is that most of my employees are in serbia uh no your cost of goods sold on aws for serving 10 000 active users nope that's maybe if you're serving images like in jpeg or something but if you're uh if you're actually time tracking all these time entries are really small transactions let me ask you a different question you said you're processing you have no options here for a hundred thousand dollars per year but you told me you're closing 100 000 per year deals so what are people buying for a hundred thousand dollars per year if you're most expensive your most expensive planner is 450 bucks per month yeah but it's self-hosted so you can take the software install it on your own server and not worry about that we're going to leak some data or stuff like that okay so those big enterprise ones are where you're doing like basically on-prem installations yep you have no plans where you're charging per seat or per number of you know users projects or reports we do but that's the enterprise uh enterprise well hold on hold on you say unlimited time tracking use some products and reports on your free plan yep but in the cloud so all those plans that you see for 10 and 30 bucks they're in the cloud so the enterprise plan is for the on-premise version so you get the software you install it and i see okay so a lot 80 of your revenue is coming from this these enter this enterprise plan where people want you to install it on their server and in those plans which i'm not seeing on your website you do charge per seat per project per report et cetera per user okay that's the key to your success really i mean that's where you're driving most your revenue yeah exactly i mean uh it's a big issue privacy and and security and and all these uh concerns that companies have they're solving in a way to have the ability to have the control over their data yeah and they're ready to pay for that just so just to be clear and then we'll wrap up here with the famous five the the the ten thou you said tens of thousands let's just call it ten thousand people using your cloud solution at a twenty dollar rpu on average at 200 grand per per month that that's just your cloud solution you have a whole another business which is your enterprise version correct okay got it very cool and you see that enterprise version makes up 80 of your total revenue yes which means it's at least four times as big as 200 grand per month yep okay got it so you basically have a at minimum an 800 000 per month business on your enterprise side in addition to your 200 000 per month cloud side sorry i i didn't follow that exactly so you said that you said that only your cloud i'll walk this very clearly you said that 80 of your total revenue is your on-prem solution it's not on the cloud is that right yeah you said you said that of your cloud solution you have tens of thousands people using it at about 19 per month which is a assuming a minimum of 10 000 users that's 200 000 per month on your cloud solution is that right yep in order for your your installed version not the cloud version to be at least 80 percent of your revenue that has to be at least four times your cloud revenue which is 200 grand per month right so four times 200 is 800 000 per month on your installed on their server and that's where i'm that's where i'm getting the numbers from yep so that would mean all that would mean all together the business is doing at least a million dollars per month well yeah we could say that okay i just want to make sure they're generally accurate i don't make you look too big or too small okay no problem okay the on-prem installation is that one timer is it recurring it's recurring it is recording yeah so i mean look this is a great business you should you should you should have be more happy to talk about it that's great well yeah i mean i'm very happy that uh that everything's transformed in terms of business and i'm super excited that where that we came from from really casual start to something super serious in terms of that amount of data that that we help companies handle and and some big names that i actually grew up uh grew up using their products when i was a kid you know and now i'm serving them through a very simple app i love it how many of the on-prem installations have you facilitated over the past year well uh i think i i don't know the exact number but we're we're closing to uh we're gonna we're gonna get to to our 30th big customer soon okay 30 yeah yeah that makes so so 30 of the kind of on-prem ones and again you're harvesting all of those leads from your massive top of funnel free user sign up because of the value of your free plan well yeah that's that's the assumption i mean a lot of these there yeah uh it's there's always a funny story about someone using the free version and then uh recommending it to their company and uh yeah that's that's typically how the upgrade happens goes all the way to the enterprise i love it it makes a lot of sense all right let's wrap up here with the famous five number one what's your favorite business book uh well i i wouldn't say business book but let's say that the non-fiction would be the rich dad poor dad i like that number two is there a ceo you're following or studying [Music] uh i read a lot about elon musk and do you want to literally do you own the flamethrower no unfortunately all not number three what's your favorite online tool for building your company besides your own trello number four how many hours you sleep you get every night as much as i need let's say eight hours okay and what's your situation anond married single kids i'm sorry i cannot disclose that you can't disclose if you're married or not no i cannot sorry about that that's so funny all right not uh we'll just say no answer there uh yeah i just i just don't want to talk about private life sorry about it no no no that's fine that's fine um talk to me about um how old you are i'm 33 33 okay last question take us back to your 20 year old self what do you wish that he knew oh my god that's a tough question at least everything i know today no that's a that's a cop out some something something tactical you can take your time uh what would that be yeah if i knew uh that consulting is not really a scalable business model that would save me a lot of a lot of time and and nerves guys consulting doesn't scale clockify dot me a big surprise here right they're doing they have tens of thousands of paying customers on their cloud solution doing paying about nineteen dollars per month so 200 000 per month in revenue there then they have about 30 enterprise accounts where they actually because for privacy reasons install their software on that company's local servers those are north of 100 000 acv accounts so the company altogether doing more than a million dollars per month today in revenue they have a great free engine 42 000 new free sign ups every single month uh really valuable free tool gives them really good ranking on google which is driven most their growth team of 70 people totally bootstrapped which i love nan thank you for taking us the top thank you for having me