GreenPalrevenue & funding

hello everyone my guest today is brian clayton he's the ceo and co-founder of greenpal an online marketplace that connects homeowners with local lawn care professionals greenbell's been called the uber for lawn care by entrepreneur magazine and has over a hundred thousand active users completing thousands of transactions per day before starting greenpal brian founded peachtree inc one of the largest landscaping companies in the state of tennessee growing over 10 million dollars a year in annual revenue before it was acquired by lusa holdings in 2013. brian you're ready to take us to the top hell yeah let's do this how many times that lucid tried to buy green pal well it took about two years to get that first deal done uh but they were the best fit and that's why we worked with them i love that all right let's jump into greenpal so i want to dive into the first metric you gave so what does it mean when you say a hundred thousand active users completing thousands of transactions per day what's a user what's a transaction so for us users are homeowners people who need their grass cut uh like consumers on the multi-sided marketplace and so these are people that come onto the platform to get their grass cut and then on the flip side if service providers we have about 10 000 of those guys and gals that use the platform to run their business okay so 10k service providers um the user is the homeowner so we clearly understand the marketplace now help us understand sort of scale today so the last full month of business how many homeowners paid at least one of your service providers to do some sort of work yeah right now we're actually over a hundred thousand people actively using the platform to get their grass cut oh wow so what that means is last month in in september of 2020 you had a hundred thousand homeowners pay to get their grass cut at least once that's right that's incredible okay take me back to day one when did you launch the company yeah so uh rewinding my first company was a traditional landscaping company that i grew from just myself and a push mower to over 125 people so i spent 15 years in the landscaping business understanding how that business worked and growing from zero revenue to 10 million revenue so when i sold that business in 2013 i saw what uber was doing for ride sharing what lift was doing for ride sharing so then i decided okay green pile needs to exist recruited two co-founders and we just started hacking on the project passed out like a hundred thousand door hangers and got the thing going in the in the summer of 2013 and just kept grinding and hustling on it now where we have hundreds of thousands of people using it how many door hangers oh golly like over a hundred thousand i got bit by a dog uh and in the summer of 2013 we just sweated it out and it's hustled up a few first few hundred people to use it and then after that we started getting feedback uh we started talking to people understanding okay this is where we're actually adding value this is where we're not adding value and we just kept using that user feedback to drive how we built the product that's incredible okay so tell me first about your co-founders how did you find them and did you guys decide to just split the company 33 33 33 or were you like listen i just sold my company i'm bringing cash to the table i own majority yeah so the two co-founders i recruited were just lifelong friends of mine so they were people that i could trust people that i knew wanted to work hard people that i knew wanted to start a business and so that's really what i was optimizing for in those early days was who can i trust who will i know stay in the trenches with me and gut this thing out the problem was none of us had any uh technology background none of us knew how to build software none of us knew how to design software none of us knew how to market and distribute software so it we while we came to the equation with hustle and we came to the equation with domain experience we didn't have any of those other things and so we had to really kind of retool and reinvent ourselves as business owners as entrepreneurs and start learning how to write code how to how to design how to market and so that took several years uh in the early days of just try on air figuring out how to do this stuff and you know six seven days a week of of while working in the product and working on the business and also learning the skills that we needed to learn to actually execute so did you guys split it evenly thirty three thirty three thirty three yeah oh wow for today so we have three owners of the business and we have no outside investors so we have a very clean cap table and and we are all third owners in the company that's right so you've raised no capital for the company and so you totally bootstrapped that's right yeah so the level that we launched we actually paid a development shop in nashville around like 140 grand to build the first version of greenpal and it was a total flop total failure uh it didn't get any sort of traction but we learned a lot of hard lessons uh launching that first version and that was all of our own money that we brought to the table to breathe the business to life and uh we've been bootstrapped ever since for us we believe that that revenue is the best form of financing there is i agree with that brian there's a lot of founders listening right now getting started wondering if they should pay a similar agency a hundred grand to get their mvp launched and they're wondering what do i got to watch out for what did you learn from that money basically went down the drain it sounds like yeah it did uh we learned really quick that if we wanted to be in the technology business we needed to be able to build and execute and distribute technology and so it was a really hard lesson for us to learn if i could have done it again i just would have like bypassed that step altogether and i would have just started day one learning the skills that we needed to learn to literally learn how to code literally learn how to code yeah and and and uh and and i think even like you need to have those skills in-house that needs to be part of your core competency as if you want to be a tech startup you need to be able to build and distribute technology that's just table stakes i under indexed on that in the early days i really felt like that i knew the business inside and out that we would pay a shop to build this thing we would market it and we would just be off the races and that's not how it worked um we came to the equation with a bunch of uh untested assumptions that didn't turn out to be true and so we had to really rebuild this thing like like 20 times in the last six years and so having to having the ability to do that in-house is really really table stakes for in my opinion for any kind of tech startup i just find it fascinating that you went through that any of you guys watching the youtube videos see what i'm looking at here i mean brian his biceps are popping out of his green pal logo t-shirt his chest is huge he's got a slight tan between his outside a tiny bit by dogs and oh by the way he taught himself to code in his free time brian it's shocking to me you have the motivation to do that especially considering you just exited a company so you could probably afford to pay anyone any amount of money to do what you needed yeah you know i after selling that first business uh it freed me up to kind of do what i wanted to do and so i no longer had to go work a business or do a job i was kind of financially independent and so uh but i didn't also didn't want to sink all that money back into this other unproven business so it was it was really uh it was hard took a lot of discipline to not take the easy way out but uh for me personally my businesses have always been kind of the uh forcing function for my own personal growth and developments um and that's one thing i noticed when i sold my first company was i became lackadaisical i got sloppy i got fat uh and it was kind of funny that like for me my business is the vehicle for my own personal growth and to be like tuned and to be smart and to like always constantly be getting better and better and better in all aspects of my life so it was the thing that caused me to have to force myself to learn how to do this stuff looking back six seven years later i'm so glad i did because now i'm a completely different person than i was uh starting this company and that's one thing i love about business is that it it causes you to level up as a human being yep let's go back to the business it's a marketplace model marketplaces are two-sided you sent out a hundred thousand door hangers you get your first hundred customers that way but you gotta have people to mow the lawns were you the fur were you basically filling the need on the other side of the marketplace until you found other people that could mow lawns that you could basically bring on the service providers yeah great question in a marketplace you've got this chicken and egg problem everybody knows that and so for us the way that we solved it was was just sheer hustle dialing for dollars we we found we figured out that we could call every advertiser on craigslist on sunday when they weren't mowing yards and actually get like five seconds of their attention and kind of pitch them on the idea to use green pal and then the thing that kept them around in the early days was i gave free consulting uh to people on how to run their lawn mowing business how to grow their mowing business because i know that i i know that innately uh how to be successful in the lawn care business and so i would give free consulting to like the first 500 service providers that used our platform as a way to kind of be like the honey and the glue uh to keep their attention in the early days when the product was just god awful and so you know developing that early relationship with them allowed me to kind of keep their attention to where we had the service providers that homeowners could hire off the shelf so to speak and then also learn from them about uh the things that i didn't know like where the product really sucked and where we needed to improve so for us like that that user feedback constantly coming in like a river has just been core to our success even to this day with hundreds of thousands of users we're able to always be using user feedback to grow and make the product better and better better so to be clear you would go into craigslist and you would see someone that said hey hiring me to cut your lawn they were paying for ads you would click the ad you'd get their phone number you'd call them and say hey you should use greenpal to get more business instead of you know in addition to craigslist ads and oh by the way i just sold a company called peachtrek and helped you consult to grow your business in the landscaping world that's how you built a relationship do that 500 times first 500 lawn cutters service providers on your platform bingo that's exactly how yeah and now to this day you know we have we have over 10 000 service providers so we we have a more automated approach to it and we have a little bit of mind share in the landscaping business if you mow yards odds are you know about green power so we have more of a of an inbound strategy today but in the first day in the early days when we had to manufacture that momentum that was how we got the attention and and and framed the proposition to these folks to try out the product in september of 2020 you said there was a hundred thousand homeowners that paid at least a dollar to a service provider to get a lawn you know cut how many of your 10th hk service providers in september of 2020 made at least a dollar through your platform so in as of right now we have ten thousand active service providers now some of them are only doing one yard a week some of them are doing several hundred so uh our sweet spot is if you uh let's say you're mowing ten yards a week and you want to get to a 100 yards that's where we can really add value the really big companies that are doing like like four or five crews out there mowing yards we don't really add a lot of value because they already have their systems but it's a smaller service provider that's doing a handful that wants to do uh wants to do this full time that's how we get them from here to here so just to be clear in september of 2020 all 10 000 service providers made at least a dollar through your platform doing one to hundreds of lawns per month that's right fascinating okay let me then ask a different question i'm curious what portion of your full marketplace is quote unquote active monthly so if you look at all of your signups since 2013 how many total service providers have signed up relative to the 10 000 that are active yeah so we add about 40 or 50 a day so roughly 70 percent have entered the year with us and so they're legacy users we don't like to scale the supply side too much because then you have you have too many people at the party so we kind of have to throttle it and we kind of have to be careful especially on a market-by-market basis there are some places where we desperately need service providers but there's other places where we really don't and so we kind of have to we we have to be really careful about we don't let on too many in some some markets and we get just the right amount between the delicate balance between supply and demand so how many total service providers have you had sign up over the past seven years oh i don't i don't really know that number it's probably somewhere around 20 to 30 000. um if if a service provider comes onto the platform and they are able to get five or ten yards in their first month they stick around if they're not if we're not able to drive them that they then flush out yep okay so wait say that one more time sorry so if they can get five or ten yards in their first month then they stick around they run their business on the platform if they don't uh then they lose interest and then they don't they don't use the software anymore oh smart same question on the homeowner's side how many total homeowners have signed up over the past seven years roughly five hundred thousand six hundred thousand uh have tried the product and to this day we're able to retain around 100 000 of them to continue using it interesting when you say try does that mean they just put an email address in it or they actually paid someone to do one lawn cut they've actually paid that's what we consider active uh because we don't really like to look at you know vanity metrics um we get a lot of people to just look for free quotes and that's and that's kind of the value proposition of the homeowners they can sign on and in less than a minute they'll get five bids from lawn mowing services nearby them they can read over reviews and pick the one they want to work with but we don't actually ring them up as active user until they pay somebody i got that so now monthly active about 100 000 active home owners getting paying for at least one lawn cut that's right okay this is great i think i fully understand the marketplace we haven't talked about the one thing though that makes the whole thing work money it's right so so walk us through an average transaction i'm using you i get a quote to cut my lawn for a hundred dollars who gets what of the cut yeah so we take a very small transaction fee five percent of all of the money that comes through the platform so the vendor keeps gets to keep 95 of all the money they make now they still have to pay the uh the credit card processing on top of that but we keep five percent to run the platform we also have some some additional tools that service providers uh can can upgrade to if they want to uh such as like some routing tools and there's some other things that we're building in the future to make uh to where they can operate their entire business on the software and so there's some there is like a kind of a sas play there but for for the majority of the revenue it's it's the small transaction fee for the homeowner what the price they see is the price they pay there's no additional fees uh there's no like additional upgrades or anything like that they pay what they see on on their quote now after that first lawn mowing goes well then they can book them for lawn mowing for the rest of the season and they can also add on additional services like shrub pruning mulch seeding fertilizing things like that and so we we also get a five percent uh fee for that as well yep okay that makes sense and give me a sense of monthly so so average sort of transaction value through your system is about what size um for the for lawn mowing it's usually around 50 bucks okay got it so i mean can i take a hundred thousand home owners like times 50 bucks you guys processed five million dollars in transactions in september somewhere around there yeah that's that's that's a good that's a good ballpark okay got it um the sas product you just mentioned have you started charging anything for that yet or that's still in the road map yeah it's still on the roadmap we have some beta users using it we want to really dial it in before we roll it out system wide and so one of the the kind of conundrums that you face when you're building a marketplace is you kind of almost have to bet um am i a marketplace or am i a sas business there's very few uh examples of people doing it well uh at the same time and and so you know you might think about like upwork uh is a is a marketplace but they also have some upgrades on both sides of the transaction for sas but there's very very few uh examples of of players being able to do both well so we're really dialing it in until we roll it out yeah i mean and so just to be clear on five million of transaction volume through your platform in a month that's about 25 000 to you guys in terms of revenue so your guys run rate right now it sounds like it's something around 300 000 a year it's a little more than that but yeah that's in the ballpark okay on processing volume of something like 60 million dollars that's right and can you take more than five percent you can um but the problem is the the more the more that you take the uh the increase that you get in terms of this interest in the platform this intermediation uh you also don't get the value of suppliers bringing on their their their demand because we also have that occur we call that vendor-led traction and so for us we we are building the platform to make this entire industry run so much smoother and so if we take if we start dialing up to like 10 15 20 then then the whole thing starts to unravel and that's kind of you know we've seen in the last six years there's been some other uber for lawn mowing service uh startups come and go and between all of them they probably crashed about a half billion dollars of capital under the ground and it's because they've been a little too greedy on the take rate so for us we have a long view of okay we're gonna take a very small piece of the transaction uh we're not gonna be too greedy about it so the service provider can run their entire business on our on our software and make material income doing it uh interesting yeah because you've been bootstrapped now if you're doing sort of a 300 000 run rate today where were you exactly a year ago uh right about half that so we've been doubling every year and so in the early days we we were you know the numbers were very very very small but at least we were still doubling and so you know we've we've set out enough objective to double every single year um and and we're going to continue to as long as we can at some point we're going to reach the law of large numbers but for us you know if we can double year over year we're doing good i mean i will tell you i know you stated and you're right actually on a net basis there are very few companies that get marketplace plus sas right but i can also tell you there's a lot of some of the fastest growing sas companies are ones that started off as a big agency or marketplace because the second you build software for these landscape folks your service providers you already have a base to sell it into and if you can add enough value they're willing to pay 20 30 40 you know 50 bucks a month so if you get 10 to your 10 000 paying 30 bucks a month boom you just doubled your business that's another 30k a month in mrr yeah and that and that's that's really kind of exactly our thought sequence as well and and you know we we're always having to tell investors no thanks and you know we get bc uh interest on on a ongoing basis and but that's something they always point is like you got to figure out the sas piece of it and so for us you know that's something that we're looking to tackle but it hasn't even been um in the conversation until now because we still needed to distribute this thing nationwide we're now in every major city in the united states and we're going out for the smaller markets now because we have to grow this thing on a city-by-city basis and so so we're just now at a point where we've got several thousand service providers using it now we're at a point where we can start thinking about okay how do we layer on some premium tools that we can charge 10 20 30 bucks a month for and do you have plenty of runway i mean are you profitable today yeah we're profitable um you know we're growing through covid you know we're riding the wave of kind of this contactless ordering of you know wave that we're seeing uh and so for us we're we're profitable i've slept well at night during this crisis you know like we're default alive i guess you could say that's great it's a great place to be now the first three four years really really really sucked because you know my co-founders were living on like 10 a day food budgets and and uh you know there were no salaries for a very long time it was like hey can you live on 200 this week you know and so it's it was really really hard in the early days but luckily here we are now you know we're kind of in charge of our own destiny we don't have this convoluted cap table we can make the decisions we want to make and so it's a good spot to be in now but it was very much a exercise like a leap of faith in the early years and what's your team size today uh so three co-founders that work in the in the project and we have 20 contractors that we use for software developers designers content writers uh things of that sort so uh we're all we're completely distributed uh except with the exception of my two co-founders and and it works well for us you know being able to to outsource these things all over the world is one of our competitive advantages all right brian we're out of time quick answer if you can famous five number one favorite business book ooh the e-myth number two is there a ceo you're following are studying oh you can say none none that mapped to exactly what i'm trying to do number three is there what online tool do you use the most up work number four how many hours of sleep to get every night oh i sleep well nine ten hours as much as i want and what's your situation married single kids i'm single and that that's a competitive advantage too i bet so any kids running around or no no how old are you brian i'm 40. 40. last question what do you wish you knew when you were 20 what do i wish i knew when i was 20 uh focusing on what matters looking at what the one two or three things i can work on this week and only doing those and not even worrying about anything else guys green pal processed five million dollars in transaction volume in september here of 2020 that's from a hundred thousand home owners paying 10 000 service providers to come cut their lawns anywhere between once and many more times per month they'll process and do over 60 million dollars in transaction volume this year growing they're doubling year over year now all available all across the united states they've done this all bootstrap they're profitable which is obviously a great place to be team of 20 folks as brian continues to scale the company brian thanks for taking us to stop hey my pleasure thanks for having me on one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares backend dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here 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