GrowSurf Revenue & Valuation (2024)

hello everyone my guest today is kevin yoon he's a he's the co-founder of grow surf a referral software for tech startups he's sharing their journey to million dollars publicly at grow surf dot com forward slash open at the bootstrap growth for their b2b sas previously he founded the ux ui design boot camp that was acquired by wework and flatiron back in 2018. kevin are you ready to take us to the top yes i am i look i love your building in the open i love that you're bootstrapped i love the space you're in my good friend jeff had built a tool called ambassador which was also sort of in this same sort of referral marketing space so tell us when he exited that now so i'm not as allied with that tool anymore so tell us more about grow surf what are you building yeah yeah first and foremost nathan just want to say i've been a big fan uh listened to your podcast over the years and uh it's definitely you know one of those that uh kept me going through like the hard times of building this test so thanks man just like awesome work um but yeah getting into grocer uh we really built it back in like you know 2017 it kind of dates back further it's just like there's a lot of email marketing software there's like other uh just tools that you expect to to have just out of the box so when referral mark when it came to like uh having some type of referral marketing software so that you could have your own referral program we didn't really see like a tool that was like uh you know that was that was perfect for like tech service we saw like enterprise really pricey i think ambassador kind of falls into that um and then we have a lot of like viral tools that aren't really set up to leave like uh be built as part of your stack so growth surf kind of comes in becomes the referral software just kind of plugs into your product uh for tech startups and you're you're writing about this you're sharing with publicly what is mrr today yeah mrr is 26 000. and when was the first dollar do you remember uh first dollar way back when um i want to say like 2018 uh but that didn't really count well okay so why doesn't that count did you guys first start writing code back then were you full-time yet or no yeah yeah it was part time uh we tried charging so the way we did it was like we built the product in a couple months we want to ship something out um we made a lot of compromises so like even though we did try charging for that version one it was like you know we didn't make any type of money everybody was just going to turn in a few months it didn't really count so uh we really spent like a whole year just rebuilding the product from scratch and i guess you could say like a little over two years ago we kind of made our first real customers with our new product now how many co-founders do you guys have uh it's me and derek that's the co-founders there's just two okay got it got it that's always a tough conversation right how did you guys decide to come together to just say 50 50 or did you make it more event somehow yeah yeah so the way that works is basically it's like whoever goes full time right so it was 50 50 at the start um you know we're just trying to make this work uh when we started from the uh the ground up for version two that's when you know we had the conversation like hey how do we want to do this um you know derek is gonna continue part-time but if i'm doing this full-time we're just gonna you know split like 75-25 but uh right now i think it was like um 70 30 that's kind of just how we start but like now we have other people on i guess our cap table and stuff yeah yeah yeah so you said i'm going full time i'd like 70 and derrick was like i would have 30 because you're taking more risk yeah yeah i think i think it's fair usually for most technical founders building something failure out there that makes a lot of sense it makes a lot of sense okay so uh how did you get your first customers uh first first ten you remember yeah yeah we toiled so hard we built such a crappy version and just like we're pulling our hair out um we were just so excited to have this and like really wanted to persist in making something but um it really did take a like a long time just like you know looking into ourselves understanding like what customers were saying or not customers i guess users what prospective customers were saying kind of like how our product um just didn't like you know meet like their expectations or like solve their problems so it was um it was a real challenge so we really again just had to rebuild from the ground up uh spend the whole year just stay in court to like what the principle was which is hey we have a customer uh profile we need to help them you know make referrals how do we make that happen we need to reflect our product on it and growth is kicking in i mean i think about a year ago you're at 12 000 bucks a month in revenue you've more than doubled year over year without raising capital is that accurate yeah yeah it's it's in my opinion it's very slow um but obviously you know it's it's very incremental and it's it's very bootstrapped and resource so like it took a lot of effort just to even you know get here do you think guys will stay strapped or do you think you'll raise yeah yeah uh definitely staying bootstrapped um no plans but you know i don't want to say like you know we would never race but did you raise uh in your last company that you flipped or sold to wework and flatiron no no other than you know friends and family uh about 30k um no yeah yeah living the tough life here um okay very cool so understand it was a toil you had a pivot you turned things around your first call at 10 20 grand a month in revenue how are you growing today walk us through some of the growth tactics by the way you guys doing incredible i'm hoping you touch on content because you guys did an incredible job with content cool yeah so we started to uh build in public that was uh something we started doing like a couple months ago uh we just brought a new cmo who's uh pretty badass and what he does his name is chris uh tweeting and you can see him on twitter as well um but we just you know picked him up this month uh we're hiring for csm we're tackling a lot of the to do's on their list that just made sense like now that we have some you know capital um we got a burn rate we're very intimate with like you know the revenue coming in expenses out and so now we have like a game plan and how much are you burning per month right now uh it's going to be about the same so like we have cash reserves and then 2016 green got it so you make 26k you'll spend 26k each month you're about to break even every month yeah yeah and i think with bootstrapping it's also kind of balancing out on like forecasts too right so for a long time we don't spend money we don't hire because hey we're expecting like a down month we've never had that we've had like stagnant months but like hey can we hit the down month like like that that feeling is very scary so like we want to make sure we're not doing that or like understanding what growth looks like for us historically so we've had that time to build up and obviously most of those expenses go towards head count how many folks on the team today yeah yeah so we have four so that's uh three full time one part time that's great okay three full time one part time and the part time is dark yeah yeah yeah that's great and so so you they're the cs the who who what are the other two uh we have a technical support specialist who's full-time and uh we have chris or cmo and the new one yeah very cool okay uh talk to me um a little bit about uh customers today how many folks are you serving yeah we have about 210 213 210 213 and what are they paying on average per month to use the tech yeah rpoo is about 120 120 very cool and um i can tell you're on your metrics people always want to know what dashboards people are using what dashboards do you like to use oh we use profit well nice very good like patrick love what they've built okay so 213 customers 210 oh 120 now this price point is an interesting one because many people would argue once you get above like 50 60 80 bucks a month in terms of the paywall on the website you have to put touch on the sale because people if it gets big enough they want to talk to a human have you been able to drive no touch sales at 120 bucks a month pretty easily that is literally like that that is the struggle um kind of as like a small bootstrap team everybody wants to talk to you uh everybody wants to have a phone call even at other price point you know we have people bless us on twitter kind of reach out saying like hey and then like at the end of the day um so i spend a lot of time just talking like different people uh just like what's the minimum number where having like say like uh like a dedicated csm or kind of sales force makes sense where you're having calls um and that's like 700 and so we're nowhere near that um our ltd is so low like it doesn't make sense but that's our unique problem and that's what we're you know constantly working on improving will you move hard one way will you either go and decrease your price point open up top of final but say no touch or will you quadruple your price plane go more enterprise or try and just keep going down this middle imbalance yeah yeah so because because now that you know we've had so much feedback we kind of know like what's the natural feel of like what do customers want like they need a person to talk to so we can't fight that we do need a higher csm in the fortune in the future i do foresee you know a price increase just because you know we're still now that market um in order for us to just be like a sustaining business um things have to make sense so pricing does come into play and now are the once you sign these folks up are they sticky what does churn look like today yeah yeah churn is definitely something i'm not you know satisfied at all with so um it's around eight percent eight to eight to nine percent on average um per year uh that's just like uh i think the last six months average but averaged out like per month or over the last six months eight percent have turned oh right right so like every every single month will be like a different number but averaged out got it got it so we could take sort of eight percent times 12 to get your annual turn yeah yeah yeah yeah okay yeah so obviously you know it's high right so you're doing some interesting things on your pricing page right you're pricing right now against number of participants is that the right utility value to upsell against yeah yeah that's very interesting because we have b to b and we have b to c i would say the b2b customers definitely get like a higher return on their investment just because it's such a low price point they're not having tens of thousands of users they have like a couple hundred they need referrals for so uh definitely something we're still working on but as far as our model goes um it does kind of make the most sense um but we're still you know testing things out yeah it's a look it's a much in my opinion for your revenue it's a super mature pricing page because you've set yourself up to upsell against all three axes number of team members right so team based seat based up selling you have feature based upselling beautifully built in you have many utility values built in where you're sort of betting that hey people willing to pay more for more campaigns or pay more for more participants and you price against those as well so did you are you seeing natural expansion happen will someone sign up on 90 bucks a month and they'll upgrade themselves to 190 a month yeah yeah so we have all the upgrades on uh which is the cool part so that's what a lot of our growth comes from uh two of just customers naturally kind of you know growing um that being said you know the churn does come from customers who don't get the results that they need and you know obviously all the upgrades don't happen there they just kind of turn out so the the better customers that we get are just the ones that do grow and um you know that's how we reduce churn get those customers yeah i mean it sounds like you can double down on those people right and you know ignore you know okay the ones that leave fine that you know they weren't good fits but if we can quadruple like the value that we're giving to these folks for it is a good fit your your net dollar retention is still way above 100 yeah yeah and i mean that's the goal net retention just like how do we get from what we have right now to like above 100 um what is it that right now in that i think it's about 90 percent there's no that's actually not like horrible right uh so you're 10 points away from your expansion revenue making up for all your lost revenue in any given period yeah yeah yeah not bad at all great very cool um talk to me a little bit about um the space in general right so it's a super fragmented space in my opinion why are people choosing growth circle for some competitors yeah yeah that's a great question so uh we really did build out uh we really did set out to kind of build something that can scratch your own edge uh build referral software that plugs and plays uh seamlessly into your product if you're gonna build something today you shouldn't build it yourself just use a service so uh when we kind of went back to that in like the realignment with version two um that's just something that like really helped so as far as customers goes you know having that product that that is just like it checks all their boxes and so that that's essentially what we ended up building i think a lot of the other referral software out there had kind of different design flows weren't really set up for like tech startups and and so that's where our product really shine yeah very cool kevin on that note let's wrap up here with the famous five number one favorite book uh the halo effect by uh paula rosensweight number two is there a ceo you're following or studying uh yeah paul from copy.ai he's uh he's a big on twitter number three what's your favorite online tool for build and grow for building grow it's uh probably had a couple of days ago i'll say email right now just because you know we try to keep things async number four how many hours i sleep to get every night about six to seven okay and what's your situation i'm married single kids single okay um and uh how are you how how am i how old are you oh 20 29 29 last question what's something what you knew when you were 20 uh just um things take time nothing is easy guys there you have it grosser.com playing the referral marketing space they've got over 213 customers paying 110 bucks a month broke 26 thousand bucks in mrr up over 100 year-over-year from 12 grand a month just a year ago uh they have natural upgrades happening even at this early stage great expansion revenue but they are trying to figure out ways to control churn nice thing is their swat team team of four small nimble and quick growing nicely kevin thanks for taking the top thanks nathan 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 back end 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 on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the 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