How Greenrope CEO Lars Helgeson grew to $2.1M revenue and 3K customers in 2020.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is lars helgeson he is the ceo and founder of a company called green rope a complete crm and marketing automation platform started in the internet marketing space back in 2000 when he co-founded one of the world's first email service providers called cooler email as a pioneer in respon and responsible email marketing they grew that company to over a software company specializing in marketing communication with over 500 clients in 2010 after spending several years designing and implementing a more comprehensive way to meet the needs of small and mid-sized businesses he launched the current company green rope a cloud-based platform that simplifies and consolidates companies sales marketing and operation the company currently serves over 3 000 companies worldwide large is ready to take us to the top i'm ready all right those 3 000 folks those aren't just like you know free users dancing around those are that's cold hard cash right paying customers well some of them are so we reduce we do some trades and uh you know we help especially now we actually have a program we just launched that's been really successful going after or helping non-profits specifically for the kind of virus relief yeah well actually any non-profit because you know in times like now when things are really stressful people get really scared and when they get really scared they don't give money to non-profits and so we want to help non-profits get their word out and so we've actually taken on a good number of non-profits work we offer our platform for free for them so that they can use our crm our email marketing our fundraising all of those things that are built into the platform for free well okay so you came on last time this would have been back i believe in november of 2018 uh and you shared that you'd founded the company in 2010 right and so walk me through since then scaling up to today have you any product updates what have you released i need any pivot yeah it's it we've done a lot of um a lot of things to kind of change the way we we do business so when we originally launched we were focused on the micro business and because that was kind of where we came from with cooler email the email marketing days we were going after very very small businesses and the idea that we came to pivot to more of a more comprehensive approach to running a business with the crm was that every every small business needs to have a crm they needed the the but the problem that we found was that at the really micro business level a lot of businesses don't they're okay with using excel they're okay with using something free like mailchimp to do their email marketing and they kind of cobble these systems together our model was to create a unified platform where everything's all together and what we found was that at the micro business level a lot of those businesses just didn't have the wherewithal of the time to really take on a crm sure so we've gradually been moving more and more up market and we've actually we've we've gone after now government you know higher level universities and kind of some bigger customers and in the process we've churned out a lot of those really small businesses as clients i wish more people would talk about this because it doesn't get talked about enough because so many ceos like you see it as a weakness that their total customer account is now lower potentially than it was in the past but it is when you look at the most successful sas companies many like 50 of them go through this process and never talk about it right so how many so you've narrowed down your customer base because you have more customers you have less customers paying more how many customers are you serving today so the total is actually still around three thousand oh okay so the but what's what's happened is we've lost a lot of the smaller businesses and we've replaced them with bigger with bigger businesses we've also expanded our bar program our with what we call our complete crm or our reseller program so they've all grown over time as well so it's it's an interesting shift in how we've changed away from micro business we still have small businesses that use what we do but we don't we don't market towards them we don't really you know we're not we're not really actively pursuing the entrepreneur necessarily we're going people who are either in growth stage or are a little bit more established people that are little companies that are a little more price sensitive um with an integrated platform we can save especially a mid-size business a lot of money over over 90 total cost of ownership because we remove all those integration costs so it sounds like your average revenue per customer has probably increased over the past couple years you said 75 dollars a month on average about a year and a half ago what did that now today it's now 250. okay yeah so that's a significant increase obviously and how many just so we can understand that the value out of reseller network you've built better how many of those vars have sent you at least one paying customer over the past year oh well yeah so how many are there um so we have about 1200 of our direct clients and then on top of that we have another i i'd have to look at the numbers again i think it's about four or five hundred non-profits okay and then we also and then we have another the remainder of that another 1500 come through our partners through our reseller channel okay so hold on just so i make sure i understand this there are 1500 resellers that sold one customer each or there's like 30 resellers that brought you 1500. exactly that's it i see so how many resellers is it about 30 uh 25. oh wow okay i guess pretty close actually 25 resellers and can you paint like put a face on one of those what do they look like what's the website of one of them they're all over the place so um so some because we do a white label program we're pretty sensitive about that if you were to look at a company like kodama c-r-e-d-e-m-a dot e-u they're based in switzerland um and they do a lot of they they work a lot in the manufacturing and logistics um and trade um types of organizations so they're pretty they're they're an example of one and the idea is that we completely private label the entire experience for them and for their customers so they and their customers don't know that they're using green rope um they are using as far as they know um the credema platform interesting so and that's how it works with all of our resellers we have a reseller that targets shipping and logistics another one that targets churches and things more regional in texas we've got another one that targets law firms another one that goes after real estate another one that does janitorial services so i mean it's all over all over the place but typically we work with companies that are are really good at managing a channel so um and so yeah and each of them is various different sizes you know some of them are small a few people working together and some of them are bigger companies that have whole staffs and agencies like marketing agencies and sales consulting firms one of the challenges with managing a bunch of white label platforms across 25 different value resellers is you now have kind of you have multiple tech stacks that you have to stay on top of right and sometimes like a bug in one isn't a bug in the other or you release something on one and it impacts another how do you compartmentalize all these things so your dev team doesn't go crazy so we wrote the system to be extremely flexible and that's something that we did from the very beginning we actually don't really impact things that way because every time we add a new feature we make it something configurable so we're not going to force a change down anybody's throat around any particular industry because if we were going to say like you know we you're going to be forced to treat contacts or accounts or or appeals or something in a certain way that might impact everybody else then we say okay we'll make sure that we can make this available as an option for you and your customers but we're never going to force something down a configuration or the way the system works down that particular channel so it's worked really well and they appreciate that kind of flexibility and that's part of being value added is that they can go in and they can say we have this really flexible open crm platform but we can then go in and without having to hire developers or do anything expect they can go in and they can say we're going to customize this so it exactly matches our workflow so what's team size today how many people we're still small we're still 20 people 20 people how many engineers um let's see four if you count me five four okay okay so um okay and what is the do you have any at this price point can you afford quota carrying sales reps or is it all more like no touch uh no no so we we have our sales process is is very touch because crm isn't the kind of thing where i at least i think in my opinion i don't think you can go and set up a crm without having a detailed conversation without having a consultative sale it's so complicated and and because every business is different you know the way you manage sales we manage marketing customer service well do you have quota carrying reps then or no yeah well yeah so we have we it's all inbound so people come to our website they say they want a demo and then they get a demo with a live person every time but my point is do you pay commission to sales people are there any people that sales people how many just two okay two got it got it okay so how do you struck so one of the challenges that a lot of founders will get in is their price points are too low to afford to pay a sales person a competitive comp but they're too expensive where their customers never just gonna pay online with a credit card with no touch they need a demo or or consultative process how do you balance those two things um i think that's just sort of the benefit of having had cooler email when we started that we had some some residual revenue coming in every month from those email marketing clients and that funded the transition into green row so that we could go from because cooler email was that model you go in and do email marketing it's exciting for mailchimp for constant contact you know there's no you don't really need to show somebody and have a consultative sales approach to that so we use that as a runway to transition to the way we do business now i don't know that that's analogous or a lesson that i could that could we could impart to other founders but but you exactly hit it on the head the cost of having sales people like that is very expensive and it also really limits how many new customers you can bring on in a particular month if you have to talk to somebody that's right doing that you got to have a higher price point to make it worth it or volume like it sounds like what you're doing is you get you get they hit their quota because they have to process 10 demos a day or something you have a high volume approach uh yeah kind of i mean it's it also is it's the advantage of being a sort of an organically grown and funded company you know like i started this way back in the day in my apartment so i don't have any investors we just have to be organically growing and being able to pay our bills and the whole thing so while we've in that in that early growth stage we were funding that with cooler email now that we're in that stage now of being able to sustainably grow they don't have to do 10 different they have to do 10 demos a day they you know they average i think five to six right um so they're so which is a good pace because they don't get burned out they can spend a lot of time working with a potential lead and show them the system without feeling like it's a boiler room and they got to jump right to the next demo so yeah so it's a balance you know it's and it's always they always say that about business right it's always a balance yeah but like to run that out right so five demos a day times five working days in a week is 25 demos a week times four weeks on average right that's a hundred demos per sales rep your two sales rep per month right let's assume they have a close rate of 10 to those 100 demos that's 10 new customers at 200 bucks a month right so that's two thousand dollars a new ar a new mrr they're bringing on our 24 grand a new arr a good sales rep needs to be able to get their comp their their base plus quota up to like 150 160 usually you can't afford to pay 50 or 60 grand and comp on 24 grand a new arr added each each month from these folks well that's that's that and you get on another thing um our conversion rates are closer to 40 so okay so well even that 48 grand a new arr per sales rep doesn't leave you enough room to pay commission to those folks to get up to like a competitive like a good what a good sales rep can make so the one thing that we do that's also different is i pay indefinite recurring commission with our sales people so interesting they're just building over time it's like an mlm almost like they're they're managing a book of business yeah exactly oh i see that is unique okay so that's why i ask these questions and i learn new unique things people are doing that's very astute it's a very it's a very keen observation what if one of them leaves um well they don't yeah because they have a huge book of business right yeah yeah yeah yeah interesting okay so still bootstrapped you just mentioned that um are you operating right at breakeven or are you able to pull some cash out you know employee dividend checks things like that from cash flow we so we were starting to and then the things that we've been doing with all well the coronavirus like all the things that have happened in the market has has caused us to kind of be a little bit more cautious about that so um generally though what i do is i just pay my people more salary yeah so and try to distribute it as evenly as i can amongst everybody um and and that's generally worked very well so we we have enough in the bank that we can weather a storm like this and then um you know and so i'm not in our model i'm not actually trying to pull as much money out of out of the business as i can right now it's really about making sure my people are really taken care of our customers are well taken care of we're investing in the technology that we need to so um so i could be more than break even if i wanted to be but the reinvestment is a conscious decision for a long-term sustainable business model yeah okay good so you're reinvesting everything you're exactly break even right now yeah yeah okay that makes a lot of sense um next question here so if i take three this is obvious this is gonna be too high so i want i need to be corrected 3000 customers at 250 bucks a month on average puts you like a nine million dollar run rate i think you're doing well but not that well which of those numbers is wrong is the average customer paying less or do you have less customers so uh so it's the average customer is paying less but that's it's you know you if you factor in what's actually you take out all the comps that we do and then you take out the non-profits and all of that and you take out the lower average price point for our resellers because we've got we set it up as a as a with our resellers we do a 50 50 split with them on our retail rates so the average that we're bringing in now the average customer now is paying us 250 a month it gets it gets kind of weird and complicated if you start if you dilute that with all the trades that we've done and you dilute it with all the comp accounts that we give away now for the non-profits so it's um so you know it's kind of a weird i'm not sure what the average would be if you were to take all of that into consideration the non-profit accounts are free the 500. um yes yes okay okay yes you have 2500 paying and what you're saying is about you know call it 1500 ish of those or through your value added resale or network of which you have a 50 50 split on so it makes averages hard to calculate yeah okay i see roughly a little we're about two and a half million so yeah we're not a huge company but you know with 20 people we're able to take care of ourselves and make sure we have good technology and focus on our customers yeah well i mean look this is a different story than like a silicon valley entrepreneur that i would interview who's burning way too much money and god knows if the founder is actually going to make any money if because they have to exit for a billion dollars right you came on a year and a half ago and you were doing about the same two and a half million bucks in ar you're still doing about the same but the nice thing is you're profitable break even when you want to be if you want to reinvest and you've created 20 great jobs and you're smiling and you're happy and that's a perfect way to build a business and a life yeah i really appreciate you saying that because a lot of i think a lot of people in you know when you go around to startups you talk to the the um you know sort of like the startup culture is very focused on exactly what you were talking about how quickly can i scale a business up and sell it and you know maybe or maybe not make any money or maybe or maybe not actually help the world or whatever you know it's it's like you said it it is it is so important for me that i'm able to take care of my people and that i'm able to focus on helping our customers and not be distracted by by exactly that well lars you're more profitable than we work and you're more profitable than airbnb and i can name a huge list of large companies that you are more profitable than so kudos to you all right let's wrap up with the famous five number one favorite business book um am i allowed to include my own book yeah yeah what's your own book crm for dummies crm for dummies very good how's it doing how many copies have you sold um i i think we're up around 20 000 now that's pretty good it's with wiley right yeah yeah that's good all right number two ceo you're following or studying uh elon musk number three what's your favorite online tool for building your company besides your own um i would say boy that's a good question favorite for building my company right now we are we are working with um caftera and technology advice as two companies that were helping us get leads number four how many hours of sleep are you getting every night that varies from i'd say six to eight okay and situation married single kiddos single with a four-legged fur son and how old are you i am god i'm almost 48 now 48 great last question what do you wish your 20 year old self knew um be very careful who you get in business with guys there you have it green rope again helping uh non-profit small businesses and more so today even higher enterprise related customers three thousand paying customers paying caught between 70 70 500 up to 250 bucks per month he's growing the company nicely right it's a bootstrapped company great business that generates cash flow and creates 20 good paying jobs doing about 2.5 million bucks per year in terms of run rate right now lars thanks for taking us to the top thank you for having me you guys know i fight like heck to get these 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