How FunctionFox CEO Corina Ludwig grew FunctionFox to $6.4M revenue and 1K customers in 2024.

hello everyone my guest today is karina ludwig she's an accomplished senior executive advisor and board member with more than 30 years of success in business tech and advertising now for the past 21 years she's led function fox a global leader in time tracking and project management she also sits on the board for women in science and tech and the innovation and the advanced technology and entrepreneurship council karina are you ready to take it to the top let's do it yeah so you were one of the you're one of the sas ogs 21 years huh yeah it was before dial up around that time broadband people weren't even doing online banking so you know to have a sas company at that time it wasn't even sas it was like asp now what is your story in terms of the founding team at function fox were you one of the founders or were you brought in afterwards uh brought in before it even was an idea so ceo founder is mary lynn and she's still around today there's four of us we all started 20 years ago and we built it for ourselves she had a suburbia studios which is an ad agency and thought you know we really need something to track our time manager projects uh and there wasn't really anything in the market and so we built it for ourselves and thought hey this is actually pretty cool put it out to a few other people and they said yeah this is really great and so we built it into a business it was not uh on the onset to go hey let's build a big business it was build it for yourselves which is always i think the best and uh 21 years later we're still selling globally so what happened where did it go from an internal project where you're eating your own dog food to custody to new people going wait what is that thing you just used i want to use that time tracking too and you actually spin it out on a separate cap table and launch it yeah so how it worked was we were looking for ourselves we did lots of research we called around we really couldn't find anything there was clients and profits at the time um you know was installed really expensive and so we called about 300 agencies in the us and said hey what are you using and people are like oh excel pen and paper and we're like there's there's a need here um you know when it's working for us and so we shared it with a few of our local agencies and they're like this is really cool we would use it so we're like okay do you guys want to try it and beta tested it um and then we thought you know what there's something we've got here so we did a launch sort of locally and and said hey anyone interested come and see we had a huge turnout um and from there we thought okay let's build a website and they'll come i mean that we thought no demo no trial we'll just launch a website and they'll all come and buy and no that wasn't the case at all so yeah we built a demo and um slowly started to put it out to people that we knew and got them to beta test and give us feedback and built in sort of feature by feature as people needed things and requested them and we've built you know onto that ever since so officially launching it was about a year later where we said okay let's actually build a team and bring it together and it was very organic and it's been organic you know for 20 years and i there's a lot of folks listening right now that are building uh like tools inside of the company that they're stuck at that make their life easier and they might go i want to spin this out but they don't know where to start they don't know if they should give their their current employer a part equity if they spin it out they don't know if the employer actually owns part of the tech because of their employee contract they don't know how to necessarily fund it per se how did you work through all these things as you guys spun function fox out of the agency yeah we didn't know ourselves right it was just kind of trial by fire and we like built we didn't know about really a cap table and how to build it we we went out to friends and family we have more shareholders than we wish to admit um and so we spun it out and kind of said okay well if it's working for us and we built all of the tools that we need so at the time there wasn't like the sales force or the hub spot we built all that stuff internally so today to run our business we use nothing but our own internal tools so not just function fox but we have our own sms system sales management system crm system we do all of our own billing and tracking and anything that we need for our system we built and so there's 20 other products that we probably maybe even more that we actually could sell um and it's just a matter of staying focused so yes we could do all those other things but we said you know what this is the bread and butter this is what we believe in and this is what's you know making an impact in other people's lives so that's what we've stayed true to how much did you bring in in that first year from friends and family all that to really like kick this thing off i mean are we talking like a hundred grand or like a million no not even so it was uh half a million five hundred thousand for friends and family one was a big chunk from sort of one investor that was really a family friend and we haven't raised money since so for 20 years we've really you know based on our own profits we're a very profitable company we're very different than a lot of other companies out there they're you know 35 million or they're in their third round or whatever it may be we've never done that we've just kind of said okay this is where our growth is going to be this year we're profitable we want to have this as a lifestyle business and if we need more injection of cash we raise revenue in a different way so we'll put out you know price increase or we'll do a feature an add-on or do upgrades that kind of thing and then we'll build naturally and organically and that's worked very well for us and very different than a lot of other players in the market i love profits i love capital efficient founders i love getting creative with getting cash from customers instead of vcs when you say very profitable what does that mean to you well i mean you can say okay there's you know the big players out there and uh they're playing with big money we're in the smaller pool we're small fish and a big in the big scheme of things and we're canadian company which is also very different we're playing in a u.s market as a canadian subscriber so profitable for us means huge dividends for all of our shareholders every year you know they're like wow if i got these kind of dividends from all the other investments i'd be doing really well um you know so they've they've won their money 20 times over in some cases wow um you know really really happy for them and for us it's it's a great business can you put brackets on that i mean again we don't want to disclose information you can't disclose but over the past 21 years do you i mean have you paid out more than i don't know 10 million in dividends to all your investors would you say oh yeah definitely much more than that more than 100 yeah i you know what it's private right but okay i won't push if you can't share it but that's incredible yeah it's been you know people have done extremely well one of the questions i imagine they ask you before you're about to give a dividend payment is is there a way to use this in the company to keep growing the company how do you decide like whether to pay up 10 millions and millions in dividends versus use it to build more tech internally yeah good question and so we look at cac ratios and we look at you know where is it going to be really profitable and so we can say okay we'll spend x on marketing um what are we going to get in return for that and you know if we have a big idea or we want to launch something new we'll set that money aside obviously to do that yeah and then pay the rest out in dividends but we've been paying dividends ever since we've been profitable which was like year four or five wow okay i love this story do you remember what um in 2000 take us back to that first year in revenue first year in business do you remember how much revenue you did in 2001 how small was it oh yeah it's not even it's not even worth mentioning honestly um we did projections in our first year and you know we were really optimistic we thought we'd do really well and i think we hit those projections maybe in year 15 so wow we were a bit out to lunch in terms of our projections um but you know looking back it was like in the first couple years it's like can we make payroll can we hire people um you know are we going to keep this company afloat for another month or two right so it was a lot of hard work and um you know i was putting in close to 20 hours a day and and just work right and her whole team was and so we've come a long way wait how optimistic were you guys with your bright and shiny eyes like in 2001 what did you were like we can hit this much revenue this year how optimistic were you yeah we were you...