How Functionally CEO Tim Brewer grew to $84K revenue and 10 customers in 2019.

hello everyone my guest today is tim brewer he's the co-founder and ceo of a company called functionally a people alignment software platform that empowers organizations to scale without breaking he's worked with some of the technology's most respected and fastest growing companies including dropbox sugar shot connectwise accord and many others and functionally he brings a wealth of experience of to building the platform which is solving the people alignment pain points associated with scaling companies using its industry first platform tim you're ready to take us to the top yeah absolutely let's do this all right so this space like the risk is people don't understand the specific use case and it kind of gets lost in a bunch of jargon so kind of explain what you're actually doing and how companies are using you yeah absolutely so let's start with a problem and that is when companies get to about 30 people and they have mid management and things start get out out of whack out of alignment and for ceos that looks like a whole lot of pain miscommunication fighting fires spinning plates in the air is kind of how they describe it to us but what that looks like on the ground is middle managers are trying to design a great place to work but struggling to do so in the context of of that layer of mid management so first let's start with what work design is so break it down into pieces so good work design is good job design good team design and then good org design and when you're small you know 10 or 15 people you can remember all of that in your head you know what everyone's doing as an organization grows that context gets lost in the complexity of of scale so what we do is kind of uh if you think about job descriptions we stick all the job descriptions in a blender and build kind of an industry library of what all the functions or key activities look like in a given vertical or workplace like software as a service or managed services and then we go about building um people's jobs from those pieces rather than just kind of starting with a blank sheet of paper um and in doing so we built kind of hold on so where are you getting that data from are you basically taking indeed listings from a company that just signs up with you and then putting them on a blender and then saying here's what your job roles like should be uh what we did is we actually previous to it being software this is something that's kind of the most common thing i'd get asked to do previous or post selling my last business is to come and help people restructure their companies i kind of stumbled onto it by accident helping them build out it took a long time and a lot of effort um to build out a list of all the key activities you know in a pretty high resolution uh way that people use and need to deliver in a company and then once you do it over and over again in particular industries say sas you know now when we're deploying our library we're really only making kind of five percent change to what goes on in a company and and not in like when people say functions um not in like a really high level like shotgun approach big pieces like marketing we actually get right down to the detail of those responsibilities you typically see on a job description like you'll go all the way down to like that marketing or as seo and they're targeting like these keywords and we want to go after high you know comp competition words with more than a thousand clicks a month like that specific yeah we go right down and then we let organizations customize it everyone's got kind of nuances to how they want to do that but um the challenge that most ceos have is they lose visibility and control the better seen in the organization at that level so being able to catalog that is is what we do and how do you price is it pure play sas uh yeah um pure play sas we do have an implementation within i mean we're super early right so we launched first product in november last year first customers and then officially launched at sastra in february um so we i'll say we're testing price and by the moment we do manager pricing and we target um just under a hundred dollars per manager per month okay and so launched in you started coding kind of in 2018 you launched uh early 2019. how did you get your first 10 customers uh well we just kind of hit 10 customers so um basically it's a mixture if you look to kind of cross the customer base some of its relationships from the team we've got a good small fast-paced team uh some of it weirdly people get super pumped on what we're doing as as they're trying to solve that problem within their organization so we've got this really high advocate uh ceo yeah but that doesn't answer the how question right so yeah someone knows they have this problem but how do they find how do they land on you was it a search term is it a trade show first ten is uh half of them will be relationship and then the other half has come from trade show and we took a bet on sastra in february and that's worked out really really well for us we had a great reception there how's that i mean actually paid back though i mean i know sponsorship rates it at sas stock and if you've got 10 customers at 100 bucks a month you're doing a thousand bucks a month right now um even if all those came from that sponsorship fee that would not be a good payback period yeah so it's a a hundred dollars per manager so uh our kind of average per company sits about seven or eight hundred per month oh got it slightly higher so it works out look our goal was threefold launching at a conference which is um you know we debated long and hard how we're going to do that first was to get as many conversations as we could because we're really focused just listening to the market and our customers um and speaking to investors they have a huge um you know a gradual experience seeing a lot of companies push through these same problems um so that worked out really well and we think that you know we'd like to see it pay that period of kind of circa 12 months and we're on our way there but it wasn't did you pay though or were you invited on as a as a speaker we were we paid in february but we also went to sas to europe and that was at invite so we were lucky enough um is jason is jason an investor uh no he's not okay are you bootstrapped or have you raised i know we raised in uh october last year and we raised about seven hundred thousand us uh in a couple of we're actually really lucky that we raised it in just kind of probably four or five business days from open to close we didn't intend to raise that much why do you need the money why couldn't you bootstrap this so they don't have to give up delusion yeah yeah uh look we we looked at it i mean look boots for most people that i know that have bootstrap they've kind of come at it uh with a fair amount of uh personal wealth so me and my co-founder damian looked at what we wanted to do in the different places we lived and wanted to launch and kind of hatched a plan to get through to the end of mvp we don't feel like we kind of see it like partnering with people that see that the problem needs to be teased out rather than giving up too much delusion would you spend on mvp like before your first paying customer how much did you sunk in yeah a couple hundred thousand dollars probably two two hundred thousand dollars okay and most that was engineering uh yeah most was engineering product related like engineering research um and and early stage testing so very first customer that i didn't have a relationship with that was one of my proof points before we raised um when we literally did it with sticky tape and spreadsheets which customer was that i was a company called a cello in the us a great um [Music] um i actually was flying back from san francisco and met jeff on a plane and at the time we're in full test mode so i just sat and interviewed him as a ceo and at the end of the conversation he kind of like about half the people we interviewed were like oh i totally get this problem it's a problem i have and so once we started getting serious on product i gave them a call and said hey we're going to run a mvp are you interested in us spend more time on flights yeah actually our biggest investor i also met on a flight he was used to be the vice chair of merrill lynch here in australia so i've got some good flight stories that's good all right um talk to me about some other economics here so you raised 700 000 of 10 customers call it 700 bucks a pops you're doing about 700 a month right now in revenue what's your goal to hit kind of by the end of this year uh yeah i would like to get to about 120 arr um through the end well through the end of this year you kind of take in holiday periods kind of in end of november december um is our goal at the moment we're not trying to accelerate we're trying to spend a lot of time with customers as we deploy the product we've got some pretty big product changes coming in the next three or four months so that's our core focus um we think we're pre-product market fit at the moment like where we want to see that we definitely have problem market fit but right now our focus isn't um scaling as hard as it is just like consistently adding customers and learning through each cycle of the one or two customers we want to add a month so as you're learning obviously it means you're burning some cash to do that right so how aggressive are you being with burn are we talking like 20 grand a month 100 a month uh yeah we're we sit between 30 and 40 at the moment but we we're dropping that back down kind of every month as we roll along so we've got runway until it early billy's the stuff you're dropping it because you're spending less or you're dropping it because revenue is increasing uh revenue we've slightly changed so we spent a bit more through the start of the year as we launched building our marketing stack but now we've just kind of tuned that back it kind of runs once it's built but it took a bit to get there what's team size today uh we got six fta at the moment but it's about eight people got a couple part-timers mainly based in the west coast of the us but i live in perth australia at the moment i'd be open to move back to the us i did live there in 2013 and then my co-founders in london um damien who built a great task um app on the the slack slack do you know anything yet about churn and expansion or is it just too early yeah so i mean we're like like nine months in so we've had no churn yet so we've been lucky there but we estimate we'll have some just because we're so early um so our answer that's to spend a lot of time one-on-one with each of our customers arguably over servicing them for like a long term play but you know we learn so much and have such good advocates that's that's our current plan um in terms of spend for marketing i mean even that's too early we think we've got our theories on it and what we'd like it to be well your current pro forma i think you said you want to see a 12 month return on on paid spend so at 700 bucks a month you're willing to spend eight or nine grand to get a new customer yeah um interesting yeah these are these are all the all the levers to pull early stages of company that's how it works what was the last company you had by the way what was the name of it uh yeah it was a company called uh cord we sold it to an entity that ended up being listed in australia called anatel and it was a man managed it services that was we sold that in 2010 i worked for them for two years and then wanted year off in the us and a couple of weeks after i got there got introduced to dropbox and back when they were just small like 260 staff and i ended up playing an advisory role to them as they launched their channel program for dropbox for business very cool did you get equity i didn't you know what the exchange what the hell is wrong with you why were you working for why were why were you working for cash at that point when you just sold the company that makes no sense dude i've been i'd been obviously like right in my first business um for a long time and when you know i just want to year off i don't want to commit to anyone i don't want any equity because that was like commitment obviously now that was a massive mistake um but but since i've been really lucky and and played i've been at angel invest in a handful of companies uh here and in the us and the companies i have worked with over the last five years i didn't think i'd go back and found another company very lucky to put you there very good all right we're out of time so let's wrap up quickly with the famous five number one what's your favorite business book uh my favorite business book actually i have just been recommended one that i'm super keen to read on um building product people love and i can't live me remember that um the author at the moment but probably my favorite listen to stuff so much now i stopped reading a while back um listening is fine just your favorite content great what the impact would be most as a young lady great number two is there a ceo you're following or studying yeah i actually really enjoy um jason limpkin's written work like i really enjoy his blog post he's got a very interesting style of writing i kind of get a buzz from that um my favorite ceo uh in sas probably a guy called jindo lee from happy co in san francisco and i really like the guys um at profit well patrick's a great guy we love his stuff yeah yeah very good and by the way jindo and patrick were both on the show in the past week so if you guys want to go hear about happy co or profwell you can go check them out doing eight million dollars and and six million dollars respectively in a in revenue on both those guys uh number three tim what's your favorite online tool for building a company um i'd have to say at the moment uh because we're our team's completely remote is probably slack we get most done across the slack platform today number four how many hours you sleep to get every night um between three and seven my goal is seven but you know some nights stuff has to get done so you just keep working out what's your situation married single kids i'm married two kids 13 and 15 and they're they're awesome and how old are you i am 41. 41. last question what do you wish your 20 year old self knew um i think uh there's a really good question i would like to tell my 20 year old self um to be at peace with who you are and the faster you can get there the better guys be at peacefunctionally.com currently storing about 10 uh enterprises they can't call it mid market accounts that spend about 700 bucks a month on the platform so we're doing seven grand a month right now in revenue hoping to scale that up to 10 or 20 grand a month by the end of this year just launched it about call it six to ten months ago uh now burning about forty thousand dollars per month they've raised seven hundred grand in funding so they have some runway team of six as they look to continue to scale just again being super high touch with new customers to understand what works and making product updates along the way tim thank you for taking us to the top my total pleasure great to meet you