How GrowSurf Reached $26K MRR and 213 Customers While Bootstrapped (Interview with Co-Founder Kevin Yun)

Introduction and GrowSurf Overview

Nathan Latka

00:00Hello everyone. My guest today is Kevin Yun. He's co founder of GrowSurf, a referral software for tech startups. He's sharing their journey to million dollars publicly at growsurf.com/open as they bootstrap growth for their b to b SaaS. 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?

Kevin Yun

00:19>> Yes, I am. I love I love that

Nathan Latka

00:21you're 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 is also sort of in the same sort of referral marketing space. So tell us when you exited that now, I'm not as allied with that tool anymore. So tell us more about GrowSurf.

00:35What are you building?

Building GrowSurf and the Referral Software Market

Kevin Yun

00:36>> Yeah, yeah. First and foremost, Nathan, just want to say I've been a big fan. I listened to your podcast over the years and it's definitely one of those that kept me going through the hard times of building this task.

Nathan Latka

00:46So Thanks, Kevin.

00:47Good to hear that, man.

Kevin Yun

00:48>> Just, like, awesome work. But, getting into GrowSurf, we really built it back in, like, you know, 2017. It it kinda dates back further. It's just like there's a lot of email marketing software. There's, like, other just tools that you expect to to have just out of the box. So when referral when it came to, like, having some type of referral marketing software so that you could have your own referral program, we didn't really see, like, a

01:11>> tool that was, like,

01:14>> perfect for tech startups. We saw enterprise, really pricey. I think Ambassador kind of falls into that. And then we have a lot of viral tools that aren't really set up to be built as part of your stack. So GrowSurf kind of comes in, becomes the referral software, just kind of plugs into your product for tech startups.

Nathan Latka

01:32And you're writing about this, you're sharing with the public, what is MRR today?

Kevin Yun

01:36>> Yeah, MRR is 26,000.

First Dollar and Early Product Struggles

Nathan Latka

01:38And when was the first dollar? Do you remember?

Kevin Yun

01:41>> First dollar, way back when. I want to say like 2018, but that didn't really count.

Nathan Latka

01:48Okay, so why doesn't that count? Did you guys first start writing code back then? Were you full time yet or no?

Kevin Yun

01:52>> Yeah, yeah, it was part time. We tried charging. So the way we did it was like we built the product in a couple months. We wanted to ship something out. We made a lot of compromises. So even though we did try charging for that version one, it was we didn't make any type of money. Everybody was just going to churn in a few months. It didn't really count. So we really spent like a whole year just

02:13>> 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.

Co-Founder Equity Split

Nathan Latka

02:21Now, how many co founders do you guys have?

Kevin Yun

02:24>> It's me and Derek as the co founders.

Nathan Latka

02:26Oh, so 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 fifty-fifty? Or did you make it more event somehow?

Kevin Yun

02:35>> Yeah, yeah. So the way that works is basically, it's like whoever goes full time, right? So it was fifty-fifty at the start. We're just trying to make this work. When we started from the ground up for version two, that's when we had the conversation like, Hey, how do we want to do this? Derek is going to continue part time, but if I'm doing this full time, we're just going to split like seventy-five/twenty-five. But right

02:58>> now, I think it was like seventy-thirty. That's kind of just how we start. But now we have other people on, I guess, our cap table and stuff.

Nathan Latka

03:05Yeah. Yeah. Yeah. So you said I'm going full time. I'd like 70 and Derek was like, I would have a 30 because you're taking more risk.

Kevin Yun

03:11>> Yeah. Yeah. I think I think it's fair. Usually, for most technical founders building something really out there.

Nathan Latka

03:16That makes a lot of sense. That makes a lot of sense. Okay. So how did you get your first customers? First first 10, do you remember?

Kevin Yun

03:22>> Yeah, yeah, we toiled so hard. We built such a crappy version. And just like we're pulling our hair out. We were just so excited to have this and really wanted to persist in making something. But it really did take a long time, just looking into ourselves, understanding what customers were saying, or not customers, I guess users, what prospective customers were saying, how our product just didn't meet their expectations or solve their problems. So it was a

03:57>> real challenge. So we really, again, just had to rebuild from the ground up, spend a whole year just staying core to what the principle was, which is, hey, we have a customer profile. We need to help them, you know, make referrals. How do we make that happen? We need to reflect our product on that.

Nathan Latka

04:15And growth is kicking in. I mean, I think about a year ago, were at $12,000 a month in revenue, you've more than doubled year over year without raising capital. Is that accurate?

Kevin Yun

04:22>> Yeah. Yeah. It's it's in in my opinion, it's very slow. But, obviously, you know, it's it's very incremental, it's it's very bootstrapped and resourced. So, like, it took a lot of effort just to even, you know, get here.

Nathan Latka

04:34Do you think guys will stay bootstrapped or do you think you'll raise?

Kevin Yun

04:37>> Yeah. Yeah. Definitely staying bootstrapped. No plans, but, you know, I don't wanna say, like, you know, we would never raise, but

Nathan Latka

04:44Did you raise, in your last company that you flipped or sold to to WeWork and Flatiron?

Kevin Yun

04:49>> No, no, other than friends and family, about 30. No one ever had

Nathan Latka

04:55You're bootstrapped through and through.

Kevin Yun

04:58>> Yeah, living the tough life here.

Nathan Latka

05:01Okay. Very cool. So understanding it was a toil. You had to pivot. You you turned things around. You your first thought, $10 to $20 grand a month in revenue. How are you growing today? Walk us through some of the growth tactics. By the way, you guys are doing incredible con I'm hoping you touch on content because you guys do an incredible job with content.

Growth Tactics and Hiring Plans

Kevin Yun

05:16>> Cool. Yeah. So we started to build in public. That was something we started doing, like, a couple months ago. We just brought on a new CMO who's pretty badass in what he does. His name is Chris Tweeten, and you can see him on Twitter as well. But we just picked him up this month. We're hiring for a CSM. We're tackling a lot of the to dos on our list that just made sense now that we have

05:37>> some capital. We got a burn rate. We're very intimate with the revenue coming in, expenses out. And so now we have a game plan and we're

Nathan Latka

05:46just How much are you burning per month right now?

Kevin Yun

05:48>> It's going to be about the same. So we have cash reserves and then 26 ks burn.

Nathan Latka

05:52Got it. So you make 26 ks, you'll spend 26 ks each month. You're about breakeven every month.

Kevin Yun

05:57>> Yeah. Yeah. And I think with bootstrapping, it's also kind of balancing out on, like, forecast too. Right? So for a long time, we don't spend money. We don't hire because, hey, we're expecting, a down month. We 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 wanna make sure we're not doing that or, like, understanding what growth looks like

06:21>> for us historically. So we've had that time to build up.

Nathan Latka

06:23Obviously, most of those expenses goes towards head count. How many folks are on the team today?

Kevin Yun

06:27>> Yeah. Yeah. So we have four. So that's three full time, one part time.

Nathan Latka

06:31That's great. Okay. Three full time, one part time, and the part time is Derek?

Kevin Yun

06:35>> Yeah. Yeah.

06:35>> Yeah. That's great.

Nathan Latka

06:36And so so you, Derek, the CSM, the who who what are the other two?

Kevin Yun

06:41>> We have a technical support specialist who's full time, and, we have Chris, our CMO.

Customers, ARPU and Metrics Dashboard

Nathan Latka

06:46The new the new one. Yeah. Very cool. Okay. Talk to me a little bit about customers today. How many folks are you serving?

Kevin Yun

06:54>> Yeah. We have about 210.

06:57>> 213. Two ten. Two thirteen.

Nathan Latka

06:58And what are they paying on average from up to use the tech?

Kevin Yun

07:02>> Yeah. ARPU is about one twenty.

Nathan Latka

07:04One twenty. Very cool. And I can tell you on your metrics, people always want to know what dashboards people are using. What dashboards do you like to use?

Kevin Yun

07:11>> We use ProfitWell.

Pricing, Touch Sales and LTV

Nathan Latka

07:13Nice. Very good. Like Patrick, love what they've built. Okay. So two thirteen customers, two ten to one hundred and twenty dollar ARPU. Now, this price point is an interesting one because many people would argue once you get above $50 $60 $80 a month in terms of the paywall on the website, you have to put touch on the sale because people gets big enough where they want to talk to a human. Have you been able to drive

07:34no touch sales at $120 a month pretty easily?

Kevin Yun

07:37>> That is

07:39>> the struggle. As a small bootstrap team, everybody wants to talk to you. Everybody wants to have a phone call. Even at our price point, we have people blast us on Twitter, kind of reach out saying like, hey. Then at the end of the day, so I spend a lot of time just talking to different people.

07:57>> Just like what's the minimum number where having, say, like a dedicated CSM or kind of sales force makes sense where you're having calls? And that's like 700. And so we're nowhere near that. Our LTV is so low. Like, it doesn't make sense. But that's our unique problem. And that's what we're constantly working on improving.

Nathan Latka

08:16Will you move hard one way? Will you either go and decrease your price point, open up top of funnel but say no touch? Or will you quadruple your price point and go more enterprise or try and just keep going down this middle imbalance?

Kevin Yun

08:27>> Yeah, yeah. So because now that we've had so much feedback, we kind of know what's the natural feel of what do customers want. They need a person to talk to. So we can't fight that. We do need to hire a CSM. In the future, I do foresee a price increase just because we're still not at market. In order for us to just be a sustaining business, things have to make sense. Pricing does come into play.

Monthly Churn

Nathan Latka

08:54And now once you sign these folks up, are they sticky? What does churn look like today?

Kevin Yun

08:59>> Yeah, churn is definitely something I'm not satisfied at all with. So it's around 8%, eight to 9% on average per year. That's just like, I think, the last six months average.

Nathan Latka

09:14But averaged out like per month or over the last six months, 8% of churn?

Kevin Yun

09:18>> Oh, right. Right. So like every every single month will be like a different number, but averaged out.

Nathan Latka

09:22Got it. So we could take sort of 8% times 12 to get your annual churn?

Kevin Yun

09:27>> Yeah.

Pricing Page, Auto-Upgrades and Net Dollar Retention

Nathan Latka

09:29So obviously, you know it's high, right? So you're doing some interesting things on your pricing page. You're pricing right now against number of participants. Is that the right utility value to upsell against?

Kevin Yun

09:38>> Yeah, yeah, that's very interesting because we have B2B and we have B2C. 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 100 they need referrals for. So definitely something we're still working on. But as far as our model goes, it does kind of make the most sense. But we're still testing

Nathan Latka

10:01>> things out.

10:01Yeah. Look, in my opinion, for your revenue, it's a super mature pricing page because you've set yourself up to upsell against all three number of team members, right? So team based, seat based upselling, you have feature based upselling beautifully built in, and many utility values built in where you're sort of betting that, hey, people are willing to pay more for more campaigns or pay more for more participants and you price against it as well. Are you

10:23seeing natural expansion happen? Will someone sign up on $90 a month and they'll upgrade themselves to $190 a month?

Kevin Yun

10:29>> Yeah, so we have auto upgrades on, which is the cool part. So that's what a lot of our growth comes from too, of just customers naturally growing. That being said, the churn does come from customers who don't get the results that they need. And obviously all the upgrades don't happen there, they just churn out. The better customers that we get are just the ones that do grow and that's how we reduce churn.

Nathan Latka

10:55It sounds like you can double down on those people, right? And, you know, okay, you just say the ones that leave, fine. They weren't good fits. But if we can quadruple the value that we're giving to these folks where it is a good fit, your net dollar retention is still way above 100%.

Kevin Yun

11:07>> Yeah, yeah. And I mean, that's the goal of net retention. Just like how do we get from what we have right now to above 100%.

Nathan Latka

11:13What is it right now, net?

Kevin Yun

11:15>> I think it's about 90%.

Nathan Latka

11:17And that's actually not horrible, right? So you're 10 points away from your expansion revenue making up for all your lost revenue in any given period.

Kevin Yun

11:25>> Yeah.

Competitive Positioning in the Referral Space

Nathan Latka

11:26Not bad at all. Great. Very cool. Talk to me a little bit about the space in general. It's a super fragmented space in my opinion. Why are people choosing GrowSurf over some competitors?

Kevin Yun

11:40>> Yeah, that's a great question. So we really did set out to build something that scratched their own itch. Build referral software that plugs and plays seamlessly into your product. If you're going to build something today, you shouldn't build it yourself. Just use a service. So when we kind of went back to that in the realignment with version two, that's just something that really helped. So as far as customers go, that product that is just like

12:11>> it checks all their boxes. And so 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 tech startups, and so that's where our product really shone.

Famous Five Rapid Fire Questions

Nathan Latka

12:23Yeah, very cool. Kevin, on that note, let's wrap up here with the famous five. Number one, favorite book?

Kevin Yun

12:28>> The Halo Effect by Paul Rosenzweig.

Nathan Latka

12:32Number two, is there a CEO you're following or studying?

Kevin Yun

12:35>> Yeah. Paul from copy.ai. He's he's a big on Twitter. Paul Yapuki.

Nathan Latka

12:41Number three, what's your favorite online tool for Build and Grow?

Kevin Yun

12:44>> For building GrowSurf? It's probably

12:51>> I had to call it days ago. I'll say email right now just because, you know, we try to keep things async.

Nathan Latka

12:57Number four. How many hours of sleep do get every night?

Kevin Yun

13:00>> About six to seven.

Nathan Latka

13:00Okay.

13:01And what's your situation? Are married, single kids?

Kevin Yun

13:04>> Single.

Nathan Latka

13:05Okay. And how are you?

Kevin Yun

13:08>> How how am I?

Nathan Latka

13:09How old are you?

Kevin Yun

13:10>> Oh, twenty twenty nine.

13:12>> 29.

Nathan Latka

13:13Last question. What's something new when were 20?

Kevin Yun

13:15>> Just things take time. Nothing is easy.

Nathan Latka

13:21Guys, there you have it, growsurf.com playing in the referral marketing space. They've got over two thirteen customers paying out over a $120 a month, broke $26,000 in MRR, up over a 100% year over year from $12K a month just a year ago. 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

13:43quick growing nicely. Kevin, thanks for taking off the top.

Kevin Yun

13:46>> Thanks, Nathan.

Nathan Latka

13:48One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. 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, 1PM

14:12central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two 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 SaaS world, whether it's an acquisition,

14:34a big fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You wanna get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign

14:55up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. If you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We

15:13gotta push them away. Click the thumbs up below to counter them and know that I appreciate your guys' support. Alright. I'll be in the comments.

15:20See you.