How Hubstaff CEO Jared Brown grew to $32.9M revenue and 14.9K customers in 2024.

hello everyone my guest today is Dave Novoa co-founder of hub staff calm which helps teams communicated better through automatic time tracking and activity tracking he's been running the online business since he was 23 and now manages a team of 40 remote employees they was honored as in one of Indianapolis his top 40 under 40 entrepreneurs and focuses on teaching others to manage remote teams Dave are you ready to take it to the top all right thank you all right so I believe it was let's say genuine fur March it was April of 2016 you were last on the show and I think you communicated you had about 2600 customers at that point about 1.1 million in AR 20 employees no funding give us a quick update there and then tell us what the company does for those that are new yeah so still no funding still bootstrapped we're at about three point you know 3.8 million ere are now a little over 7,000 customers and we still are in the the world time tracking we do a little more we've got activity tracking we've got location tracking that kind of thing and just so those we don't know it's basically helping managers and business owners reduce waste in their company so how do you go from again about you know you're an alpha 26 enter customers now 7,500 which to unless that growth word-of-mouth good SEO we we try to get we do we do advertising we just basically try to put our product in front of the users that are searching actively searching and then drive them to a drop and if I take obviously the the 3.8 million in ARR divided by 12 you're going about 310 320 per month right now something like that yeah and every yeah 13 okay yeah it's perfect and then if I divide this one you have on our customers into that it looks like someone can get started with you for about 40 ish bucks a month that's the average price is 43 yeah for it 42 43 that's perfect good and then walk me I mean so you do you said you do a lot of SEO a lot of content on inbound are you have you tested any paid channels yet or no yeah we do paid we have not had a lot of success with that yet we've been trying for a long time tell me about one of those rise yeah I mean we've tried everything it seems like we've tried everything I've tried about five different consultants we've tried Facebook who tried AdWords and you know it's not like things are terrible it's just their channel we have not be able to scale anything into into a into it into a significant channel so a lot of people struggle with this right they they hear their competitors doing really well I'm making this up on Google Adwords so they go well I don't know that let's go hire a consultant right and then the consultant just takes their money and fails miserably um what have you learned about how to hire especially a remote consultant for this sort of thing yeah we also we've also had in-house people do this as well and we're doing it right now maybe you know right now RCM I was doing it but so I think you know trial trials are good you know and we we've never had to spend a ton of money on consultants doing this why people charge based on Aspen lobby it'll charge just on flat fee with the third flat fee for this kind of work and basically just the number one thing is make sure you get somebody that's gonna help with analytics and understand what's going on on the backend and conversions not just pumping traffic so name is that maybe a few questions that you might ask someone who's who you're looking at potentially hiring to be a consultant yeah you know number one look for past success make sure that they've had success in in a similar industry because you know b2c does not translate well to b2b at all on pain Facebook AdWords all that's totally different b2b so that would be number one make sure that they have success in a very similar thing ecommerce doesn't even doesn't translate you know yet at all so they've really got to understand different different things how do you have to drive that traffic understand there's less of that traffic understand that each sale is worth more money and understand that basically you know conversions are the most important thing when it comes to advertising and how are you going to track those conversions and how deep are you wanting to be involved in the process so now what is your fully weighted attack look like considering all these experiments you've done yeah so it's still pretty still really low I mean it's like a hundred bucks right now yep I'm curious thought let me see how that compared yeah so it was yeah that's about what you said last time so we could you know most people I think would say to raise that yeah I think why people would say to raise that I we just well they I think you know what I've read the lodges they basically try to say okay you want to do about a third of your LTV which raises up to about you know two hundred dollars to fifty right and do you assume customers right now a lifetime value is 750 yeah about seven hundred okay and you know it's it's G and we just we we just feel like we haven't be able to spend that money profitable so you could spend the money and try but it's just why spend the money if it's not it's not gonna be profitable well and something else to note is right you've been really smart and bootstrapping and so you have to manage quick payback periods so if you're only spending a hundred bucks or getting paid back in two three months right two and a half yeah and that's that's been comfortable for us it's been pretty flat you know but it's been comfortable what do you mean flat well we haven't been able to lower a lot well but that's pretty damn low days yeah that's a really good payback period I mean I talk to beyond the value all the time they're talking 12 16 18 months so that's fantastic another question here cuz I think it's important a lot of people that was into the show have large either user based or customer bases and they always look you know how to get new customers versus driving expansion revenue you know of a couple dollars across a big user base last time you're on the show which was a year and a half ago your our pool was around 33 bucks it's now up to 44 bucks which is meaningful that's ten bucks a channel per customer and you have 7500 of them what's driven most the expansion revenue well we have introduced a new plan a new a new higher price plan and we also have been building a lot of features that we've added to the heart plan so trying to get people to upgrade okay - yeah mine yeah like like for instance like we're just moving a little bit upmarket regarding like what people what our customers are looking for like things like timesheet approvals time off you know that kind of thing so we're looking they're looking to do things with the time and basically for that you know they need to pay for it basically so they can track all the time they want and if they're only looking track time they can get that the basic plan but then they need to upgrade in order to do a lot of advanced things with that time data and has there been one specific additional feature that's driven the majority of that upsell revenue like one thing is just killing it for you probably like app tracking that kind of thing weather I mean there are locations that kind of thing so we're like locations would be example like like GPS locations where you know where a construction company for example can can make sure that one of their subcontractors is on a job on site versus being in their house or whatever so that's an example and the more companies that you get that are looking for premium type features the more that that revenue number average revenue number per customer Rises no medical tell me about churning have additional products decreased you know not really now turn has been turns a little bit of a problem right now turn catching up to that to that level where you know for a long time turn doesn't really have an effect and then once these customers start to age if it hits well you're getting big doesn't matter you know yeah so what is this right now something it's like six six percent that's no below 6% logo turn per month yeah okay and is it if you calculate that on a revenue basis is it about the same it is okay and is that something that you think is just you know it's inherent in the customer you're going after it's gonna happen or you think you can you think I can bring that down at all or no I don't think we can bring it down yeah I don't I think we need it I think we need to fight it towards so I think we need to fight it in in ways that are because you know there's little things going on I mean like for example like fifty percent of our customers are out of the US so you've got that going on you've got we we take we get very good data from our customers when they when they leave it's usually things like for example projects ending or going out of business things that we it's that it's not really like hey we decided to leave for a better product or you don't you know we decided that we're just not using this offering more it's not really like that so it's hard and then we you know we've done a lot of work with dawning and things like that you know to - to hell with this we yeah the dead news so sure I think we need to fight it in other ways like more trials in the door finding new areas to grow into and that would help us more than you know continually sighing sure yep what percentage of the churn is due to credit card failure uh quite a bit of it but I you know like probably if I'm guessing you know one and a half percent okay oh that's actually okay that's also to say I was gonna expect it to be something like thirty or forty percent for you I remember when we were bullying sorry sorry I meant one and a half percent oh okay got it yeah got it yeah yeah yeah that makes sense yeah I remember one err driving when we were building hey oh and we had about the same price point as you about the same amount of customers it was our biggest frustration was credit card failures because it we couldn't put a home in on it to reach out to every person they get the card adjust wasn't efficient and that's what I was going to like with the out of the US there's there's there's problems there as well because you've got a US company trying to build an international company and there's just higher rates there higher failure rates there yeah in here alright let's let's switch away from your specific economics for a second TSheets tell me what you think about tea sheets they did great obviously they did very well I mean they they did very good business they had a good business model they they built it well and yeah I mean congrats on when not came on the show mean he shared you know they're doing about thirty million bucks in a are and to it paid essentially a 10x multiple on it do you think Intuit overpaid I know I don't think so because they you know they've got a great product and a great customer base and and I mean I I'm not one to judge that I guess in the first place but you know look at what book what you know what books can do with the product once it's theirs and and they and you know they've been building that product it takes there's a lot to these things man we've been building for five years and what I most being done yet no he they created I think Matt launched in 2006 yeah and it's a heart very it's a very hard technology to build and so what makes it Ronnie why well you know desktop clients mobile apps you know we've got we've got you know to mobile apps we've got a Chrome extensions we've got you know Windham excellent Mac Linux we've got web-based JavaScript timers we've got the whole server side so you know we talked to a like about a for example like a I don't know like a web-based web-based only write software I mean they're doing one piece of code we've got six so so it so if Matt sorry if if Brad from Intuit came and offered you the same 10x multiple so offer you 30 a million bucks to sell would you sell that's getting really close yeah like like very close because you know what we we think that we're not we think that we can grow so for example like our goal this years and double again so to six so that's why it gets very close did eww every year so like 30 nights ago you were about 150 yeah it was like 95 percent okay we're trying to do it again we're trying to do that again so in the next few years and that's the goal and we think we can do that for some of the you know we think we can do that but but it's gonna be hard and point is this would be kind of a bad time to sell if we can do yeah of course yeah I mean if you believe we can keep doubling doubling of course you you should never sell that company it's it's a question of what's the risk and execution right yeah let me let me ask you another question so Matt told me when he came on the show again CEO of tea sheets you know he felt like he was cheating and I said what do you mean by that Matt he's like well we're ranking over warming into an app store for this thing so our our poos are higher than normal and people are super sticky because they're in the Intuit ecosystem do you ever have that kind of relationship with any other tools like into it know what working working on it I was gonna say is is it just that's just a hard thing to do it's hard to do you've got to build you know he's got to build for well you're gonna be well they've been there for a long long time it would be very hard to overcome like key sheets in Intuit marketplace yeah because it's just they've got the rankings they've got the ratings they've got they've got their relationships they've got the users so you know it'd be hard it's hard to do and it's kind of like one of those things where it's like once you're there you're there and you've got to do he's got a build for their product and there's a lot of risk in that so for example I mean if I'm gonna build for their marketplace there's a lot of risk in that because I don't really know that that's even gonna work like for example we we have integrations with a lot of integrations but it's not very the pick up rate is not very hi for our product whatever reason now for TSheets it's a little different they've done a different type of product a different type of customer yeah so I mean and they built that into their UI you know it's kind of like when I use tinder right when you use tinder about every 40 or 50 swipes doesn't matter if it's left or right they'll say are you enjoying tinder and they you rate it and then they say well you go leave this in the App Store now it's like I remember when Matt gave me the tour before the podcast research I did with him I mean he showed me where on the onboarding they would go ask people to go rate it specifically to get that spot yeah you know who drives you right now have all your partnerships which one get I know you don't you don't get anything it can't lift from any of them but who's the who's the best to drive annually yeah it is I wouldn't say as a whole is significant but you know for us you've got the three B's like you know you've got trouble you've got a sauna you've got you know that content that's destined most for us just because of the volume yep yep do you get traffic from these tools that kind of connect other tools like like the Zap years of the world segment as I say we don't have we don't have those integrations got it too and that's just a limit on your on your engineering time right yeah it is yeah and we have we have a lot of engineers I mean but you know we've got about 25 engineers so it's not a small sum of small team but it's it's a you know it's it's just limit yep and you obviously I love that you're bootstrap I love that you're an indie I think it's so important and wonderful I mean is there anything chipping away your resistance to again a raising capital do you think you might be something you considered or driving future growth or no well you know Jared and I just kind of wanted to build this thing as a wife steroids or co-founder yeah yeah so yeah we've been together since the very beginning and you know the two of us on it right now and if we get another party involved no I don't know it's just it's just not there it's not totally appealing to us and the even the bigger reason is that you know yes I think we could find money I think we could find some money in in better ways than dead raising capital and giving away equity like what so well and friends and family you know if we needed money we just don't we don't really don't know you the real things here's you don't know where you'd spend the money to drive an accelerator than building other than you're going out and finding awesome engineers and basically just saying you know what but even with that all said I mean we're getting to the point now where we don't even I mean there's not there's more engineering but you're not starting from scratch yeah I mean in your cash flow positive right cuz you're bootstrap yeah yeah all right Dave good stuff man let's wrap up here with the famous five number one what's your favorite business book uh the 80/20 principle number two is their CEO you're following or studying right now you know not really I mean not really just keep it heads down Lenny that's good number three besides your own with your favorite online tool for building your business Google Forms number how do you use Google Forms uh my job is hiring and they helped saved me a lot of times higher got it number four how many hours will sleep seat every night eight no I'm yeah that's pretty good what's your situation married sing we have kids yeah married two kids okay and how are you 38 38 last question what he was your 20 year old self new to really I guess add value to the world and you'll be paid back I mean you know every time I've done well is when I'm creating new things yep guys there you have it from day bad-guy to the world you get paid back cover spots doing well growing a hundred percent year over a year about six about thirteen months go to 150 grand a month in revenue now up to three hundred sixteen grand a month in revenue so three point eight million dollar run rate 6% logo term per month he's working on bringing that down bootstrap totally bootstrap which I love they're not because seventy five hundred paying customers paying about forty three ish bucks per month they're got a team of 40 people totally remote getting the paid back on their CAC and under three months healthy economics again helping with everything related to time tracking hiring employee management things of that nature Dave thank you so much for taking us to the top thank you