Hassl Revenue & Valuation (2020)

hello everyone my guest today is mitch furlong after working in agencies his whole career he landed he launched an award-winning creative agency three years ago out of this agency came a tool called hassle a project management app for people who hate project management apps mitch you're ready to take us to the top sure all right so monday's in the news there is 150 million base camp trello there's hundreds of these kinds of apps how are you guys standing out uh well i mean at the moment our big one is basically uh user experience and uh having everything in one place um so a bit of context like really early on uh throughout my whole professional career and when i started my previous agency a really big thing that just annoyed everyone and uh couldn't keep everyone on the same page was you have something like teamwork and then you'd link that up with like your dropbox and then to slack and then to harvest and then somehow link that all up to your email uh and a it was obnoxiously expensive and uh be you know people wouldn't get on board with everything particularly the designers because uh their designers i suppose and so i was right so let's let's look at the expensive part first joan i kind of break this down on average right now what are companies paying you to use the tool per month uh it's 4.20 usd per user like per seat um so we're about like a little less than half the price of most people yeah so so not on a seat not on a personal basis on a company basis the average company that signs up what's the company going to pay you on average uh well i'd say the average company that's using our business plan is maybe like 15 20 users so that's maybe like 60 70 usd a month something like that so okay got it so team of like you know 15 to 20 paying you know caught four or five bucks a seat yeah around that okay and then what year did you write the first line of code for this uh we started building well i started building it maybe around two years ago uh the business version came out of beta only about three weeks ago but we've had a free version running for a little under a year now uh we went to and over the past three weeks i'm just curious how you've converted so are you talking like how many customers have you converted from free to paid so far i'd say approximately four to five percent at the moment don't make it difficult for me what's the number you've done it for three weeks it's a it's four five six people how many companies uh companies at the moment we're looking at about maybe 20 22-ish or something like that okay 22 that's great and then so you you get this thing going in 2017 you're building up this big freebase how many free users have you had over the past whatever two three years uh over the past year or so we got around six and a half thousand um but a lot of those yet quite early on when we're still in alpha and what do you do like again when you onboard a free user the the way to get them to pay is obviously to activate them quickly so what have you defined as your active activation metrics and what do you do in the ui to drive that behavior um basically uh the way we get people to convert really is um with a bringing a lot of extra features um so the free version is is limited in some respects uh it has some features that the business version doesn't uh but a big one on top of that is just we limit the amount of projects you can have at any one time to 15 and your file storage is around five gigabytes okay so which one of those is more powerful for converting to pay do people hit the 15 limit first or the storage limit first the project limit easily um you'd be surprised quite often 5g goes quite a long way but uh 15 projects often does not if you're at the appropriate size so when you're when you look at the 6500 freezers you've signed up i mean what how long does it take on average to get their first project going and what percent of those folks have actually launched one at least one project uh about 65 have at least one project uh and generally speaking if it's more than two hours before you make a project uh something's not right we set a little follow-up card to make sure that everything's making sense on your end okay so about 36 of the 6500 have at least set up one project in the first you said in the first uh in the first two hours um yeah generally speaking within two hours yeah okay and then so i mean um how do you drive that behavior did you have to do things with onboarding and test the ui and the onboarding to drive that behavior or did it just happen naturally definitely it's still an ongoing process um pretty much every single day we make updates to how the onboarding works and how people kind of get into the app get comfortable with it and then convert from there um really early on we tried a really hands-off approach wherein uh you know you just have all the functionality and we lightly hint that there's some extra bits here and there whether you need it or not i suppose uh but slowly but surely we tried really hard to stay clear of asanas model and things like that where it gets really aggressive really quick and just try and work out the points where you would like to see this information so for example you know after you make a certain amount of projects um you know a button will appear up in your header that goes like hey maybe you'd like to check out what business has to offer it'll show a bunch of extra features and a bit of extra context there uh so like light pieces of uh ui here and there that just uh try and stay out of your way but kind of show you that they're there so a huge focus is on the user experience and things like that so 70 bucks a month across about 22 paying customers right now that puts it at about 1500 per month right now in revenue is that accurate uh yeah more or less and where was this tool about a year ago it sounds like nothing right you just launched the paid version um yeah definitely i'm back only free and we're very very hard on sleep about the fact it was all in beta um so we're like at the if you sign up before our business version comes out you get unlimited projects and you get a whole lot of extra storage uh just as a thank you for coming on so early um and and when we presented at uh forbes under 30 something in boston or website in portugal we threw out a few uh extra little niceties for people there on the day uh to kind of like jump in and give it a go we had um extra little like kind of playing cards that you can hand out to your team to discuss workflows how many how many signups did you get from web summit uh website a lot more than portugal uh we'd be looking at maybe three hundred four hundred maybe five hundred of those okay that's 500 free users um yeah yeah at the time you couldn't pay even if you wanted to yeah and what about the forbes 30 under 30 summit um that was quite a big lesson i guess i'd say it's because it was a lot earlier on there was a lot less people there um forbes under 30 i'd say maybe like 200 ish okay what was the other summit you used web summit forbes 30 what was the other one uh those are the two major ones at the moment uh in about two weeks we're going to cheering festival in edinburgh stuff where you're it's free they've reached out to you to speak um thankfully with forbes we got it 85 percent off i think just because they wanted some australians there just to mess things up so they gave us like a huge uh discount on that one um and then website we got some amount of discount i don't quite remember what it was but um yeah i think people want someone uh from the other end of the planet too but web summit i mean general range we're talking like you spent like three four five grand something like that on a sponsor booth way less than that i think it was between one and two i didn't need to find our bills a hell of a lot less than that yeah okay interesting did you actually have a booth for 200 bucks oh no two grand two grand oh two grand quite a big one as well it was it was fantastic it was very nice of them to do all this stuff for us and the forbes 30 under 30 summit what that was that like a grand or something super cheap yeah somewhere around that as well yeah very cool okay and so that's kind of your cost historically um do you know what it costs you fully weighted today to get a new paying customer um we've kind of looked at the uh kind of cost per acquisition to get a paying customer and at the moment we're trying to aim to get it under about five dollars australian uh which is working well so far but it's primarily because we haven't spent a cent on ads uh everything you've done suppressed but that's the goal uh at the moment why is that the goal that's if five dollars is like a very small amount of the 70 they pay you in the first month can't you afford to spend a lot more to get a customer we definitely can um at the moment we're bootstrapping as much as we can and try and push off uh seed investment as long as possible so it's totally bootstrapped right now no money in the only cash that's coming in has come from our agency um so it's very very very lucky that we have that i suppose but uh we haven't taken any into an external investment or at the moment how much have you allowed in from the agency just to support the development and everything um i'd say excluding because a good chunk of my wage comes out there as well but i'd say excluding that maybe like 15 20 grand over the past year and a half or so okay um and so i mean if i ask you how much you put into the mvp so all the way up to three weeks when you had your first dollar revenue would you say it was about 15 20 grand in cash um possibly it was it's difficult to say at the moment like we didn't spend any on development any on design any on premium because it was your sweat equity yeah yeah very much so um so it's kind of it's kind of difficult to calculate but i'd say it was less than that okay interesting um talk me real quick i don't talk a ton about the agency but when did you launch the agency what year uh it'd be three years ago so maybe about 2015. okay and last year how many people did the agency have uh as in staff yeah uh six six folks okay so are we talking like like kind of like a 200 000 of total revenue last year or more like a million uh around 1.5 australians that might be maybe 1.1 for a usd or much easier that sounds pretty profitable with with that team i mean it sounds like you have a lot of margin there so you essentially said hey we have this cash flow let's plot into the sas company precisely uh the the agency's working fantastic and that's a huge asset for launching something like this uh there's a lot of people running successful agencies like this where the opportunity cost is so high to leave that cash flow behind and never go in and launch the you know big sas company with long-term prospects what has given you the confidence to like you know step away from a cash cow to invest in something that might have bigger returns over the longer period a longer period of time uh essentially just hiring right i suppose um the agency is still doing fine uh i've hired a couple of good developers over there that can do most of the technical side of things uh my other hassle co-founder uh splits her time approximately 50 50 at the moment between the agency and hassle which kind of keeps things running quite well but we just have a really really good team over at your creative uh who can basically helm a lot of things more or less without too much input from myself or my other co-founder which means you can kind of be cake and either too uh we can we can launch this and it's for us it's often kind of risk-free realistically uh because the agency doesn't really suffer too much and that still seems to be worth it so what's that what what is hassle right now when you look at all-in costs right what's it burning per month would you say uh including flights and all of that kind of stuff i'd say probably not a lot at all maybe like uh eight eight grand a month something like that and that's all of my wage uh all of the other founders wage uh any other profit from the agency we just pulled like reinvest so it's just two folks on the team right now in hassle it's just the two of us yeah yeah okay cool so uh so okay so that makes sense um two folks are you both engineers or what are you doing sales um i do all the technical side of things and she does the uh shaking hands and the promotion a lot of immediate stuff do you guys own the same when you look at the cap tables of the agency versus hassle uh are they part of the same entity or are they separate and do you guys own the same amount in the agency and hassle they're totally separate uh the agency has three directors um so myself the other hassle co-founder have a third each uh in hassle we're essentially 50 50. okay okay interesting so how does the how does the third founder in the agency feel about his his or her other two founders going off and spending their time on a software product that he or she has no upside in that's an important point um he we gave him uh ten percent of hassles so between me and the other we have ninety percent so regardless he still has uh some skin in the game i suppose that's good of the 22 people that are paying you for the tool right now has anyone started paying and then stopped in other words do you have any churn uh so far only one and they're a team of one um they were one of the very first to come on and um yeah it's a bit of a shame but realistically our churn rate is uh something i'm still quite proud of i guess i'd say well yeah you look you're extremely early right um the more interesting thing to look at is is which which of your free cohort how many of them were active last month but not active this month meaning maybe they made a project last month but not this month are you tracking that and if so what's that number um we're vaguely tracking we're tracking six month windows at the moment um so last month for this month it's kind of difficult to say um a lot of our like everybody that's been an active user for the past six months has continued to do so how do you define an active user active users uh if they have logged in and created at least one task or one entity in the app uh in the last couple of months i'd say okay interesting how's that compared to other activation metrics on other kind of product and uh and uh project-based management tools uh my my understanding um of these sorts of things is the conversion rate for these sorts of things from free to paid uh across most of our competitors is somewhere in the three to five percent window uh sometimes it gets up to 15 uh which is fantastic and that's what we're aiming for but at the moment uh we're kind of following on the same lines as they are and that's it's not terrible who is that uh we're currently looking at i mean our main competitors are basically asana monday teamwork reich and jira to a slightly lesser degree yep yep all great companies all right very good mitch let's wrap up here with the famous five number one what's your favorite business book uh oh jesus that's a difficult question uh i guess i'd probably say anything by seth godin uh which one uh pretty much anything myself got into anything okay yeah i read quite a while now number number two is there a ceo you're following or studying i mean i hate to make it a cliche but the only one that's immediately on my radar is the stuff musk is doing it's uh it's got very sort of frat boy to parade around the elon musk stuff but it's still uh to some degree a source foods products number three what's your favorite online tool for building your company besides hassle oh that's a difficult one i i guess i'd probably just like keep it quite simple and go with gmail or something like that like any other productivity tool we kind of use in-house essentially at this point uh the only one we're yet to knock over is email so it's uh the one we use the most frequently number four how many hours of sleep to get every night varies wildly at the moment i'm trying to get eight but it's bouncing around maybe six or seven okay and how old are you i'm 27 okay 27 and what's your situation huh i turned 27 yesterday congratulations happy birthday thank you very much thank you very much and what's your situation mitch married single kids i'm very much single very much thank you guys column linkedin messaging make sure it's a good cold email good cold note all right so no no kids 27 years old not married last question what do you wish your 20 year old self knew uh a little bit more javascript very tactical answer hassle dot co competing with monday asana jira other project and task based management tools they've got about 6 500 free users right now first line of code in 2017 spent 15 grand just building an mvp this is all being fueled by their 1.1 million dollar agency they're funneling that cash into the sas business again now 22 paying customers doing 1500 a month in revenue just launched pricing about three weeks ago as they look to scale bernie eight grand a month mitch thanks for taking us to the top thank you very much nathan