How Functionally CEO Tim Brewer grew Functionally 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...