Clutch revenue, CEO Matthew Hager, team size, customer count, churn, and more 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 matthew hager he is the founder of a company called clutch began writing code at the age of eight and at 20 he started a company called poetic one of houston's leading technology agencies now a ceo of clutch he's working towards his lifelong passion of making building software faster and easier than ever before when he's offline get this he spends time with his wife of 11 years four kids 17 chickens matthew what are you on 17 chickens and two dogs amazing matthew you ready to take us to the top i am let's do this have you taught the chickens to write code that's the question uh we haven't attempted that yet but i don't know they're they're they're not the smartest uh creatures i'm not gonna be able to do it all right so you set the context here for us is is this an agency that helps people launch an mvp like a code mp quick or are you actually building a sas platform yourself so we're building a sat platform uh but it started in the agency and so i think this is a great case of uh building a solution for a definite need okay so we spent tell us how yeah tell us how you use this in the like tell me how you built the agency and when you realize this thing you want to spin out as a sas product yeah definitely so i started the agency when i was 19 um and grew to about between 40 and 50 people depending on you know what where our demand is and i just found us creating the same things over and over and over again uh so we started hunting for a better way to allow what designers create which currently today is pixels uh how can we make that translate into final products easier we've actually you know you've had a vlad from webflow on your on your podcast yeah so uh we use webflow uh in the past and it worked great but we found that if you want to build apps things beyond web sites that it became limiting so our goal was basically to build squarespace or webflow or a wix or one of those products but that could actually build enterprise level applications and when you say apps you're talking iphone apps it could be iphone apps could be web applications um things that are beyond a simple website maybe with a login or a database that you can search that kind of thing okay good so that'll we're gonna get into that here in a second give me a sense of the agency so you launched it when you were 19 what year was that being 20 2007 2007. okay and you grew up to 40 or 50 people and what year do you stop the agency to focus on the sas um 2019 end of 2019. okay so just last year now was the agency was the agency declining when you shut it off last year or was 2019 your best year at the agency it was uh every year at the agency was actually the best year so in the 2019 um we did over 5 million in revenue um and you know it was great i actually my partners actually were really wanted to keep it going so they were able to buy me out and so kind of everybody won which is great this is fascinating okay so if you listen to enough episodes you know that one of the things i see all the time the most successful sas founders almost always come out of an agency but the struggle from shutting down or getting out of the agency to launching the sas product is where most of these die great smart people get stuck in an agency because it's pumping off cash they never have the they never have the risk they have the appetite to launch the sas company so be very valuable to the extent you can to share how you actually business-wise made this work so there were three of you that had the agency in 2019 you knew you wanted to spin out and start building a sas company is that accurate that's correct so what'd the conversation sound like hey fellas we're doing five million buy me out i mean how did it work well so i was draining a lot of our profit into the product and uh so right off the bat i was i had the most equity the partner with the second most equity really wanted to keep doing the agency model and he's like this thing is an atm machine it grows every year like why focus and do something risky and i think i was burnt out i was bored i've been doing it for 12 years and so there was sort of alignment he'll take it he'll keep running the uh the machine and then i would split off and go uh buy you know for the amount that we've invested i would buy the product out and we go our separate ways it did take well over a year so my advice is you need to find somebody first off so let me back this up i had to hire a ceo who could take over for me okay so you were the ceo at the agency i was the ceo uh and while we had um people doing most of the things we didn't have somebody who could basically fill my shoes yep so first thing is you spent all this time making yourself indispensable then if you want to do this you need to make yourself dispensable you have to do the opposite so i'd do that for a year and then convince my partner that we should go our separate ways which i did and then the next thing we had to do is you need to figure out how to make the agency actually worth something because if if your partners obviously know that you want out there's no vested interest in paying you what you might think it's worth so the next thing i had to do was shop it around and find other people who are highly interested and get other offers on the table once i was able to get a few offers on the table that was able to set a price because agencies are extremely hard to sell um what were you able to get i mean most agencies i've seen sell it's you know you're lucky to get 1x ebitda i mean is that kind of the offers you were seeing um i actually was able to get right around one times revenue wow that's impressive so you basically had like a four or five million dollar offer that you were used to set the valuation of the company yes but it included it included um the amount that we had invested into the product and so after selling then i had to come back with some of that and buy the product back out i see i see and how much had you sunk in money had you sunk into building the product at that point uh in total about 600 000 okay okay interesting now this was your baby i mean right you founded the agency when you were you know back in 2007 right so i mean did you own more than 50 of the agency just yourself i did interesting okay so and this should be clear there were three parties negotiating here or two parties you and a partner well just me and the partner that owned the second um the second most amount because between the two of us we had the the majority vote okay so like how much like 70 80 between the two of you uh between the two of us we had over we had about yeah 80 okay fair enough got it so the third partner over that was do they just go along with the other partner that's still running the agency um no the he got bought out as well so he got drug along through it um which is he with you know on this ass product no he's not but we're still great friends he was the original partner that's been on since the beginning interesting okay so so if you owned more than 50 personally yourself the second person owned somewhere between kind of 20 and 40ish percent you had to set the value of the agency so you went and tried to basically sell it get offers you got an offer for somewhere around 5 million which is impressive 1x the top line which means that your partner would have had to come up with something north of 2.5 million dollars to essentially buy you out how did that work um well without disclosing who the partner is in this um they're a massive he's a presidency of a really massive company already so they basically leveraged that company bought the agency and then integrated it into the into the bigger entity i see okay so you essentially got something north of 2.5 million in cash of which you had to take 600 000 of it to go buy back the code that you want to spin out as a sas company that's correct i see okay so through all of this you essentially net call it you know 1.8 ish million right you now have your sas company you have the code the early product you put 600 grand into it where did you find the people did you take engineers from the agency no so um i think this is another great thing for people to hear um uh whenever i got started on the mission i decided that at this company i was only going to find other people who are already on this mission and everybody that works at clutch either reached out to us or they are people that were already working on a similar tool that i convinced to sort of merge in so the first person that i found had was building a um a product called relax and i found his open source repo on github and it had 10 000 stars or something that's very popular and i didn't know where he was he happened to be in portugal and i just said hey join me i'll fund this whole thing let's let's do this for real why don't you quit your quit your job i'll cover your salary and so um he came on on board and then he's my co-founder in this entity and then we had people just reaching out to us they would see what we're doing and they would say that is such a cool thing i want to work on it so we don't have a hiring page on our website at all um everybody who has joined has had to reach out to me via linkedin or something else and um that's what that's what really keeps the team food together this is amazing okay so let's get into clutch now now we understand how we got to this point so um you're playing in the kind of the no code space right empower the marketer the person who doesn't know how to code to basically build these apps which saves them developer costs uh the ui looks beautiful by the way uh you know when i'm looking at what you've built compared to figma compared to other you know even web flow these folks you know there's there's the best in class products and then there's the best in class distribution channels and the ones that have usually the best channels end up winning over the best products so you know the only thing i would tell you is this thing looks incredible um my prediction is you're gonna sell a lot of it if you can find the right way to sell it yeah distribution distribution is everything yeah and that's no doubt that's one thing that you learn at running an agency is you uh in the early years you constantly say but we we do better we build better products than you know um accenture or whatever i can't let people pay them all that money well accenture has billboards at every airport and runs you know shows and does everything else to where they're top of everybody's mind they have distribution down distribution kills um everything else yeah um and so we focused a lot on that and um being a front end as a service so you can build your front end in our tool and you can connect it to any back end we realize that the um the barrier to entry to using a back end is building a front end the barrier to entry to using front end is a back end so instead of doing what webflow and wix and squarespace did where they give you both the front end to back end and then pit themselves against wordpress and drupal and shopify we reached out to the shopifys the drupals the wordpresses the contentfuls uh of the world and we said hey we just now built the easiest way to build a shopify store you can now do it wysiwyg like you can do with webflow and we reached out to uh next and zeit and all these companies and we have found that all of them are excited to work with us so we're cutting co-marketing agreements where we will build pro uh like build a shopify store in 30 minutes yep and we'll push it they'll push it build a contentful website in 30 minutes and then you know so we're planning on doing more of like i would say is like the zapier model of sort of being friends with everybody yeah that's good now just to clear up some of these metrics here you're no no paying customers right now correct uh so we actually uh started landing some paying customers already even though we're not launched um but that was not necessarily the goal but there's been a lot of people that really wanted it so we did some early beta and already one company has said can we do an enterprise deal okay but has anyone actually like has anyone paid you any money yet um we've got an agreement in the works and hopefully we'll get inc next week but you are correct no every week yet that's right fair enough fair enough okay and then start like if i asked you what the launch date was for this company i mean when did you start writing code for this first at the agency what year uh end of 2016. okay so between 2016 and 2019 you sunk about 600 grand of agency profits into development salaries to build this thing you're now have spun it out you're taking it to market do you have any idea what you're going to price it when you do launch a pricing page you do launch real pricing yeah so it'll be uh sas at the low end of this thing we're looking at 40 a month for the first paid tier and then 150 a month for the uh for a painter that comes with like enterprise level support and slas and then there will be an enterprise tier which is where the first customer is coming in where we actually have engineers on our staff that will help you build interfaces um or do other things using the product yeah and that's where we found our when we were out doing user uh customer discovery they would all say this tool is phenomenal but really we have a shortage of front-end engineers and so while the tool sort of helps with that because you need less of them we still need them at all and so we said well what if we staff that what if we have front-end engineers who will actually utilize this tool and and sort of become a part of your team and so that's going to be that enterprise here that's great now have you ever i assume you're probably just using your own two-ish million that you got from the agency buyout to fund this right or have you raised capital um i've been funding everything myself yeah but now probably funded up through a million or so uh get we need to get some initial metrics and then uh after that we'll we'll go raise funds yeah yeah what do you when do you think you might raise do you think it'd be like q3 q4 yeah roundabout yeah i think so interesting and and do you do you see a path to bootstrapping this i mean could you sell pre-sale enterprise contracts and bootstrap well i was skeptical but our our ceo the company uh who comes from the vc world she she started convincing me let's try to bootstrap this you know they're you know they're vultures they're going to take over the company that guy what's what's her name oh i don't know i'm gonna get in trouble come on i i i love that by the way i'm not gonna hit her i actually love that you're not gonna tell me your name though huh uh yeah well it's samantha okay you guys can put the put the pieces together you find her on linkedin anyways yeah but she said she said let's try to bootstrap this i didn't believe it was possible but now that we're you know each just that one enterprise contract alone extended our runway you know a few months so then she said if we just do like two a handful of these let's bootstrap it you know and i'm all about that i'm not from california i'm i'm from houston i live in texas we're more conservative we don't like to you know blow up and raise all these big rounds and all this kind of stuff so if there is a if there is a way to to bootstrap this like what i did with the agency i would love to do that now but but samantha is based in california correct san francisco is everyone remote yeah she's in the heart of the she's in the heart of it all so if she's the one telling me hey let's try bootstrapping this i think i should take your advice yeah yeah i mean by the way i mean i think it's great advice by the way um now is the whole team remote yes so the rest of the team is uh there's another person here with me in houston the rest of our team we built around our cto out of portugal so we bought it we we actually went ahead and got our own office there it's fantastic in downtown porto um and that's where the large amount of our our team is that's interesting really interesting okay good so so good so you'll go to market when do you think you'll launch pricing um so we'll probably be launching a pricing page in the next couple of weeks okay um for we have a free tier which is what everybody will go on and during our beta um we're allowing a free forever tier where so long as whatever you build stays open source and everybody else can fork it and clone it um then you can just use the product for free and it's only whenever you want to start building private uh projects that you need to determine whether or not you want to pay 40 a month and just it's self-serve or whether or not you want to pay the 150 and be uh have our whole support team behind you and how did you meet samantha [Music] she reached out like everybody else really reached out via linkedin everybody sees it and says i want to i want to be a part of that team but come on how did she had i mean she was working with jason i believe at launch right i mean how did she find you were you did you go to a launch conference or something no i never left houston well i've been yeah no there was no contact ahead of that she heard about it from some one of her friends and uh and she reached out messaged me on linkedin and i just replied and said you know i'm not looking for you know a ceo or anybody really right now we're just keeping our heads down to building the product and she was persuasive and so we had a chat and i was like all right let's let's try this you're going to you're going to shorten our runway but if you're if you're if you can do what you say you're going to do you'll end up you know making this profitable so let's see what happens so she came on board all right so how many people are full-time right now uh seven in total okay how many engineers see you'll be five engineers okay so heavy engineering yeah including you no okay so you do you come from an engineering background i do i started writing code whenever i was about eight years old okay and then i was a senior engineer at poetic for most of those years yeah yeah okay fair enough okay good so five people plus samantha no quota carrying sales reps obviously because you haven't you know you're still getting the sales engine going um and so what does that mean i mean so you said you fund this up to a million bucks and spend i mean what are you burning like 100 150 grand a month right now something like that oh no i mean significantly less than that but um you know i'm not i'm not drawing a salary of course because i don't need to yep um but now we've been able to keep this thing pretty lean and we're basically trying to get a little bit of market validation out of it and then at that point i think our burn is going to go up significantly as we build out our marketing engine yeah yeah i mean i respect people that build stuff and are scrappy so i would love to quantify like how low you've kept burn is it like more like 50 grand a month are you comfortable sharing uh yeah that's let's just say it's in that in that range okay very good all right let's wrap up here with the famous five number one favorite business book uh zero to one number two is there a ceo you're following or studying uh amanda these are all going to be so uh stereotypical but elon that's good number three what's your favorite online tool for building your company besides your own uh g suite number four how many hours of sleep to get every night ooh six okay and situation married single kids four right married for 12 years and four kids four got married and started the company in the same year that's incredible now when you filled out the thing to come on the show you were married for 11 years so did you just recently celebrate anniversary uh yes we did so congrats well very good all right and how old are you uh 32. you had to think about that last last question take us home what do you wish your 20 year old self knew uh that distribution matters more than anything guys there you have it coming from matthew hager he built a five million dollar agency owned more than 50 percent of it then wanted to spin out a piece of the tech so he sold back more than 50 of his equity to the founders that stayed on and are now continuing to grow the agency that was a 2.5 million dollar deal he then had to spend 600 grand to pay back to that company to pull out the sas code he's now using the call at 1.5 ish that he has in cash from that deal to fund up to a million dollars this new sas business which really is playing in the kind of the no code front end as a service space very hot space based in houston remote team beautiful interface rooting for you man uh thanks for getting to the top awesome thank you these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it more so if you want to get more of this stuff make sure you subscribe up here and then additionally go check out one of my other ceo interviews right now