How Inflectra CEO Adam Sandman grew Inflectra to $20.4M revenue and 5.5K customers in 2024.

and flexure was launched in 2007 they sered customers like large defense Contractors Supply Chain companies mix of on-prem and Cloud Solutions they'll do a million dollars per month in Revenue up from 830,000 a month just a year ago so nice growth serving 5,500 customers many customers pay have several hundred thousand per year which is great nice expansion there and he's done this all bootstrapped was incredible by Adam he owns 100% of the business company will profit C 5% this year as he looks to continue to scale uh we'll see what happens next hey folks my guest today is Adam Sandman who founded INF flra in 2006 he's been a programmer since the age of 10 today he serves as the company's CEO he's responsible for product strategy Technology Innovation and Business Development he lives in Washington DC with his family Adam you ready to take us to the top yep I'm ready all right so inflectra helps customers deliver quality software what does that mean oh an engineer would say quality is Fitness for purpose but for us what it means is keeping the world running I mean that's what uh our team does every day day that's what our passion is we work with uh companies that are in the biospace utilities energy companies literally every sector of the economy that you rely on to get to work every day to have power in your house to clean water we work with those kind of companies to make sure all of the it systems they have uh work as they should uh and and going forward in the future anticipate risks that might come so that uh you know as as the world evolves and changes they're ready to address those risks so that's what we're for that's what we're here for and we spoke back in May of 2022 told me your biggest customers are large defense contractors and supply chain companies a mix of on Prem and cloud is that still the case y that is definitely still the case uh a lot of Bio companies I think have added into the mix uh but definitely a lot of Aerospace when I say a defense a lot of Aerospace uh companies but also martime and but large platform companies are making uh big Hardware as well as uh companies working in the supply chain manufacturing space uh Automotive Aerospace but also General manufacturing um as well iot and those sort of sectors mhm M mhm um let's sort of fast forward the past 12 to 18 months want to talk about sort of how you thought about product obviously we're in a very different economic clet today than we were in May of 2022 curious how you've changed or pivoted I guess but first um have you decided to sort of expand with the current customers you had back a year and a half ago you had about 5,000 you told me or have you focused on expanding into new accounts uh that's a great question and we've done a bit of both but a lot of it has been expanding into adjacent buying points in the same customer as well as referrals and Partnerships so finding working with Partners at braders deals and finding more deals with them uh and then obviously looking at larger customers and finding adjacent buying points or following referrals where you know oftentimes people are Consultants they move from organization to organization and they bring us in into those organizations uh and that's been a large part of the you know direct set of sales as well as partnership sales and then of course we're still looking for new buying points that fit our ideal Target client one thing I think we've done a better job of in the last 18 months has been defining our ideal client we we spent a lot of work this year on messaging and message development and uh our website is still in the midst of that transition if you go to it so it's you'll see it's in evolving state but really trying to hone down what is our our ideal customer what is our USP at a much more at a much more deep level not just the technology that sells you know quality software but what is our client trying to do which clients do we find resonate the most and then putting our resources into those clients rather than chasing everyone Under the Sun so I think when it comes to the new sales really Hing down obviously we'll be opportunistic if someone comes to us but not spending resources and not prospecting and not you know focusing outside of that core as much as we might have done you know 18 months ago so I'm curious how much you've grown over the past 18 months and then I want to drive deeper into how you decided what ICP to go after because you had a huge bucket of customers to choose from right so what has growth looked like the past 12 to 18 months uh it's been about a year period of a period about 25% so we would hope to be actually higher about I think 30 35% I may have said so it's been a little bit lower than we' we'd hoped uh but what we and the reason for that number one reason has been just to be clear Adam sorry just to give everyone a number so you said I think you were about $10 million run rate last time we spoke that would put you at about 1213 today is that right that's right that's right that's right um so we were hoping for a little bit higher but I think what we found is that the sales Cycles this last this year particularly a little bit less than last year have extended typically our sales cycle is 60 to 90 days a lot of deals are taking 30 to 60 days longer than that and mostly it's not in the the uh the buyers it's the procurement it's the legal and the compliance uh a lot of those stages are taking just incredibly amounts of time um client says yes we want to buy the tool we we've you know the the CTO the CIO the VP of engineering whoever the stakeholders has said yes all the bureaucracy now takes another 60 days longer than it did a year ago a lot of its budget a lot of it's also compliance security cyber uh gdpr and privacy um a lot of things just seem to be taking longer and it's hard to move those Wheels your bureaucracy also as our you know we're dealing with these large regulated Industries where it's much harder to ex pressure on them because they have a a Cadence for buying software and validating it and doing all the the compliance stuff that you can't really accelerate so what does that mean for today still serving about 5,000 customers or slightly more U more yeah more than that I think it's about 10% more than that because obviously we've added a lot of existing you know deals and cross selling into our other customers oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2,000 87 interviews I've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different valuations inside of your founder paath dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when I hover over here right so the teal is what a VC would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on YouTube all these datas are built from Real Time valuation data points Founders share with us on the show so traction 1.2 million seed round 3.7 raise they sold 22% of their business go in here and filter by 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right let's jump back into the interview yep so C be 5,500 today now again there's a lot of people right now listening sitting on a customer base of a th000 2,000 but they want less customers that pay more what process did you go through to figure out what customers you want to serve a lot of people would say I just download from stripe I sort from which customers that pay me the most to the least and then I go find more that pay me the most uh so we what we've done we did we've done a two Factor two factors one is we have some all the clients that were on older pricing we've been ratcheting up and that by natural attrition will will do that the second thing is we found that we wanted clients that would have a longer LTV with us customers that are going to be with us for 5 to 10 years because of the onboarding time takes time the training it's a wealthy complex suite and that we find that customers after the first year will stay with us for five to six years but if the first one or two years are rocky they'll leave so we want to find customers that really align with the with the com with the product and not just the product they might buy but the product Suites they can upgrade and what we found is if we look at the sectors and the types of customer it's customers that have a degree of compliance needs but yet also need to be agile so we we looked at the world in two lenses which is the agile devops fast-paced technology companies we look at these industries that are very traditional with lots of compliant needs and we find the cases where the clients are trying to make a move for a digitized future but they have these regulations these are most qualified clients so think of a life science company that's got a a relatively new medical device that they wanted to deliver in a very agile way and take the market by storm but they've got to get FDA approval in three years five years whatever it is so they they have to have a well- defined Software System like ours they can't just wing it together using spreadsheets or you know other tools uh so that's a great example of a client that we we would now proactively Target and then similarly clients in the um manufacturing space that again they want to digitize their future they want to be able to deliver software defined Vehicles software defined manufacturing so they want to be agile and differentiate but they also need to follow all the process they already have whereas a client that's never going to change we don't want them as much or a client that's just you know a IT company that's just going to release software change tools every year um they they're not going to be a long-term customer with us or they're certainly not going to expand and grow and be the reference that we would need we want clients to only want to be our customer but evangelize to other customers for us and so when you look at your concentration at the top of your book today like obviously I don't name who they are the logos but your top customer say do you have anyone paying $500,000 per year what's the top C what's the top group of customers paying yeah so the largest defense type companies are probably paying I'd have to get the numbers but somewhere in the I guess if you look across all their buying points a couple hundred thousand a year that would be and they're mostly the large defense companies or aerospace companies um and then from there you're going to go down into the large biotech large it companies manufacturing that are paying 50,000 60 70,000 a year and there's a is there is a large tale of the people paying 12 to 15,000 15,000 a year um which obviously forms the base of the pyramid so you're not a sales guy but if you want to go Target the folks paying 10 12,000 per year and get them up to 50 $60,000 per year what does that look like are you putting another product in front of them are you asking them to buy more seats in the same in the same business unit or how does that look uh it's both it's first of all identifying additional uh personas in this use in their organization that would use additional features and that's why we actually have three flavors of our product so so we don't just even though it's really one product we sell it in three distinct flavors which Target different personas what are the three one two three oh sorry spy test Spyro team and Spyro plan one product one's for QA audience one is for a like an agile engineering team one is going to be for a pmo program management risk management team you sell to the QA team first you can then expand it to the dev team to the the wi the team that's using the tool and then you can go up the ladder to the pmo that's managing team of teams and that way you're expending from 15,000 a year to you know 75,000 a year then we have a second product which is an automation Suite more specialized we don't go into that to try and sell to customers stand loan because the cost of sales is much higher the the pcc's all of the things you have to do to sell is much more complicated but we when you've got a qualified client on our primary platform we can cross sell that uh very effectively how that ad do you have a sales rep that is dedicated to the customer that is responsible for upselling product two and product three or is there an add a different sales team per product line uh we we we used to do it per product change it to per industry so when you plan it for us uh because of the discontinuity so what happened is you bought product one I get to know you know your problems hand you off to product person to hand you off to customer success so we've gone to an account management model by industry and by region so if you're in North America and in AA space you'll get one person if you're in North American Healthcare you got someone else if you're in Europe you get someone else across all of so then your sales team has to be well educated in all three product lines they can't be a specialist in one that's right now obviously we do have pre- Engineers who can you know augment knowledge but yes they have to know all the products and they have to know at least two or three Industries we're not big enough to have one person for industry as we get bigger you would expect to be of an industry you know knowledge as well so we're taking uh so our sales people have to be technically smart no sales and also un understand the industries they serve which is quite a big ask interesting do you when you recruit sales reps do you recruit them from the specific industry that you want them to then sell to or do you just go find the best salesperson you can that knows how to hit quota uh We've most the latter uh and then we find the industries that they will fit best with um and and that seems to work best some have come okay so just be you find great sales reps and corre them more about the industry we're not Hing a finance person yeah we're not hiring a bio person we have someone who knows these kind of products is really good good at communication good at closing good at following through and then they will learn the industry stuff I see how many folks are fulltime today uh right now about 50 55 I think how many carry a quota uh we don't uh we don't carry individual quotas we have a team we have a company quota uh and we everyone's paid salary we don't do any commission so that's one unique feature so how many are on the sales team uh other 55 including if you exclude customer success and you exclude Partnerships I think it's about 15 okay five and how many are actually writing writing push and code every month Engineers oh oh sorry code um Team size across both the two platforms so 5 plus 515 about 20 20 interesting so did I hear you I hear you're doing the math Did you sort of put five engine did Engineers work on all three products or do you put five Engineers on product one five on two three uh five was on product one and there is another uh 10 to 10 on the other core product and there's another five that do like add-ons extensions and uh you know the but you let them specialize in that same product they don't switch between products Mon and month yes that's correct that's correct 100% very interesting okay why no quotas team coll we found that team collaboration is the key we we did try it years ago and what we found is if it's my deal or your deal we're not going to work together and because the products are complicated and the industries are often interspersed and we have multinational companies if you got a sales team in EMA who's working with a sales team in North America sorry salesp person North America we want them to collaborate we don't want them fighting over who's going to get the Target and that was the main reason very interesting you uh last year you were bootstrapped are you still bootstrapped today we are we've had many offers and uh we've talked to companies we're not in the market yet but maybe what's what's the most interesting offer you got don't name the company but what was the price like what they say want to buy you for 100 million bucks or what uh there's ones that want to do uh probably less than that now because the evaluations are down a bit uh ones that wanted merg one is interesting one that wants us to be part of a manufacturing very very industry vertical approach other ones uh want us to go you know very horizontal across all Industries what was the highest offer you got though Adam that you rejected we honestly we haven't got to a firm firm offer so they they're all talking you know 6X 8X I would say but we hadn't got into milli 80 million something like that right exactly so who someone's listening right now they really love you they really want to partner with you or buy or whatever what is the right partner for you what are you looking for uh for a partner it will be a a firm that that has a service offering a consulting firm that wants to expand their business that wants to be able to extend their range of services uh and is willing to not just sell a product but also build an offering at their company around that service I see and you would consider something between an 80 million and $100 million all cash offer today uh oh sorry uh when you say partnership I think you meant to partner with the company to acquire us um strategic alignment cultural alignment is number one and then the other stuff yes we can negotiate on Equity or cash I have to say the number one thing is cultural alignment all the people here would want to work has to be someone that we all want to work for or at least hand over the company to I don't how much Equity does the team own today what's the ESOP pool you've set up 10% 15% no actually none it's there's no uh I'm so owner that's awesome okay so you own 100% do they have like Phantom shares or anything we we will do that when we if we if once we start uh yeah the plan is once we get near an offer an actual offer we would do that exactly that's exactly right we do a phantom uh stop plan Adam this is very sensitive but you are very rich on paper right do you already have some exit where you're able to go buy the house you want build the family vacation when you want like how do you diversify your net worth out of your SAS company a little bit um yeah great I mean I have all the I have first of I have rental I have real estate rental real estate which is great because it's a nice cash generating asset that's uh low lower growth but very again very safe and gives you that diversification how many beds how many how many beds do you have in your in your real estate portfolio uh three three single family houses okay great uh plus my own house we live in the house that we love the kids have gone are in college almost finished so that's all paid for um so there's not a ton I need it's more it's more the fun of the chase there you go he he keeps his expenses low and makes some money off his real estate which is great that's nice nice nice position to be in now are you guys do you operate right at break even or is the company 10% profitable to 20% Prof uh depending on the year 0 to 10 some years 10% some some years Break Even what do you think this year will be um I would say around 5% just because we the rates a bit lower than we'd hoped I mean still 5% uh profit on 13 million AR I mean that's 500,000 bucks of profit this year that's pretty good right right and that's you know we want to reinvested we don't want to stay on cash so makes sense yep yep yep very cool if you do you just go buy another investment home right yeah yeah my wife's she she wants to go to California so who knows get something out there to rent out and then move there UPS if we can afford California who knows that's awesome Adam all right let's wrap up here with the famous five number one a book you're reading right now oh I just finished reading um it's called The Glass Hotel I forget the name of the author it's a a New York author she also um it's really really good it's a really good book I I really enjoyed reading it I'm also reading another book by David Mitchell called um oh God it's about Utopia Avenue it's about a rock a fictitious rock band from the 1960s which is just a great read he's a great writer he did Cloud Atlas did bone clocks I love all of his stuff amazing number two is our CEO you're following or studying um oh geez uh I always like Richard Branson just because uh but I think I said that last time that's okay you can say it again number three what's your favorite online tool for building the business right now instantly I love instantly uh we just started using that to cold emails and prospecting and it combines the best of Apollo and zoom info and a bunch of tools so I love instantly and guys if you want to hear the instantly story search Latka instantly on your podcast app or on YouTube we had them on the show they went from 0 to $2.4 million run rate very quickly starting off as an agency model moving into sash really cool story there uh glad you glad you liked Adam uh number uh number four how many hours of sleep do you get every night uh eight okay good and except when I'm in jet lag ex when I'm jet I came back from Dubai and I was W waking two in the morning sorry do you have customers in Dubai uh yes we do we just closed our first one a week after the conference actually wait what was that like I mean is it same sales process as in the UK or the US um small C well small companies in Dubai like anywhere they'll buy the credit card easy large companies you got to have an office there presence there you got to do a lot more of that in person what's the what's the inflection point anything below 10,000 contract value credit I would say yeah sounds about right also is it is it a government own Enterprise or is it like a private small like a a lot of firms there are Indian companies that have set up shop there or or of other companies those private companies easy to sell to 10,000 15,000 government entity that's building out a large part of the infrastructure that's a whole different Beast interesting okay so married two kiddos they're out off the college I believe you had a birthday so you're 48 now December 4th so coming up not yet almost okay so still 47 MH all right very good so 47 years old last question something you wish you knew when you were 20 raising kids what a pain uh but we love them um oh don't don't worry about what other people think of you do what you do what you enjoy do what you love and don't let people tell you you can't do it that's what yeah that's what I would say I love that guys in flexure was launched in 2017 they sered customers like large defense Contractors Supply Chain companies mixed of on-prem and Cloud Solutions they'll do a million dollar per month in Revenue up from $830,000 a month just a year ago so nice growth serving 5,500 customers many customers pay have several hundred thousand per year which is great nice expansion there and he's done this all bootstrapped was incredible by Adam he owns 100% of the business company will profit call 5% this year as he looks to continue to scale uh we'll see what happens next Adam thanks for taking us to the top thanks so much Nathan have a good one one more thing before you go we have a brand new show every Thursday at 1:00 p.m. central it's called Shark Tank for Sou we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares backend 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 p.m. 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 Sass World whether it's an acquisition a big fund raise a big sale a big profitability statement or something else I don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack Community for B2B SAS Founders you want to 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 up for that at Nathan la.com slack in the meantime I'm hanging out with you here on YouTube I'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode and 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 got to push them away click the thumbs up below to counter 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Introduction hey folks my guest today is adam sandman he founded inflectra in 2006 and has been a programmer since the age of 10. today he serves as a company ceo and is responsible for product strategy technology innovation and business development the company helps you manage the entire software life cycle adam murray takes the top sure absolutely so inflection was founded uh really in 2006 to help companies of all sizes improve their quality of their software development software testing at that time in the market there weren't many products focused on the smaller medium-sized businesses a lot of tools for large companies not a lot for the mid-size and against start-up companies so started the company 2006 to provide that missing solution in the market and as the market evolved uh basically we've grown the company now to focus a lot more on more complex regulated industries and more complex business problems providing quality reliability and compliance to customers in various different industries so who are some of those customers adam um like customers from large defense contractors um you probably don't know the names large supply chain companies uh banks insurance companies uh people like cincinnati insurance uh people like northrop grumman lockheed martin healthcare systems hospitals supply chain food retailers uh people for bananas what are these folks paying on average per year to use your technology uh the average deal size is about ten thousand a year um we do and we do a mixture of when we say sas it's a mixture of on-premise and cloud-based but it is recurring revenue so we that we maintain both a traditional self-hosted option but it's still subscription-based as well as a cloud-based offering and when you look at your total revenue from 2021 what percent was on-prem versus sas in the cloud total revenue uh was uh 60 cloud for 40 percent on-prem uh new business is more like 70-30 uh but we do retain and anticipate retaining a significant uh on-prem business very interesting and take me back to 2006. do you remember the year you got landed your first customer yeah well the business was found in 2006 the first customer didn't actually land until september 2007 so 2006 you found the company start writing the software released the first video you're the founder i'm so founded correct do you still own 100 i do oh wow that's incred that's rare that's incredible congratulations well thank you and you know that those nine months from january launching the first version to the first sale in september was the most nerve-wracking probably in 1516 wherever it is amazing i i i would probably agree with that okay so how many customers are you Currently serving 5000 customers serving now today uh currently today uh 80 000 users for 5 000 paying customers 5 000 are they all paying at 10 000 bucks a year no no that's the average i mean it goes from like the you know 1 000 years more customers up to the you know 150 000 a year larger customers 200 000 a year type customers well i mean but can we can we multiply 5000 Monthly recurring revenue customers times 10 thousand dollars in acv you're doing about 50 million in annual revenue no i would say it's not only because again it's not that the average is not weighted so it's uh our revenue right now is just under 10 million okay that's still fantastic okay and if revenue today is 10 million what were you doing back about exactly a year ago um it was about oh my goodness eight point something last year and so where's that growth coming from this is fantastic you found a way to drive growth without having to go give up a bunch of equity uh really two main channels the online channel which has been our traditional channel direct sales online seo all the stuff you do online and then we recently launched our uh partner channel and this is something i would recommend anyone look at doing uh as a small company where you don't have a huge sales force uh launching a partner channel where you can bring in they call off sheet balance off balance sheet sales folks is really important who is the partner uh well these are partners we're consulting firms for the most part because we you know our software is used for development and testing so companies that will do software testing and project management they need tools they're going to bring in clients to us and so bringing in partners that can bring in the product and a lot of times independent consultants who move from client to client they will sell the tool for us but they're not actually employees they're just simply freelancers and then consulting firms that need tools that are evangelists for us oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview adam you mentioned seo is critical for you name a keyword that's driven you a bunch of great customers and traffic uh requirements traceability is probably the number one say it again requirements traceability interesting it's officially long tail that it's not like testing software that everyone goes for but it's not so obscure yeah that's super interesting i'm curious right now i'm gonna look it up requirements traceability okay interesting cool okay so yeah you're number three this this makes a lot of sense interesting and this was intentional right so how do you go find other words like requirements traceability to go rank four to get free traffic so first of all i would recommend what we did is do adwords do paid search find which keywords you rank for find the competitiveness of those keywords on page search and then translate them over to content writing in organic in the seo search write write articles write blogs see what starts to rise and then write more of them and ultimately bring an seo firm we did a lot of it organically ourselves but at some point you will need to bring an expert who can help you deal with the technical and you know links and the structure side of things adam what's the name of the seo firm you used uh effective spam based in austin texas effectivespend.com yes correct and they were good they are good they do paid search we've used them for paychecks for many years uh we brought them onto seo a couple years ago and when you say paid search like they started off like how much are they managing per month for you uh they're managing uh about 13 to 13 000 a month in adwords spend um typically whatever i i don't wanna slow their fears that's probably not allowed but they they've charged a percentage of that which is typical in the industry uh very empty yeah ten to twenty percent is usually pretty difficult yes yes they're yes they're on the lower end of that range it's hard you know a lot of founders listening right now they go i want to find an seo firm but all the agents they've tried are trash so it's hard to find ones that are really good what have you done like what what assets have you given effective uh effective expenses yeah where you think you've set them up for success oh that's that's a good question i don't um i think working very honestly with them and being very transparent with them we you know they did it for an index of our website they spent a lot of time researching and analyzing it looking at the what was ranking they also were our paid search vendor so they knew which keywords were affordable and profitable and a good roi already so it was actually easier bringing them in um i think also we spent a lot of time looking at the content on the pages and doing some partnership work but we would they would suggest pages that needed improving we would write some of the content the problem with an seo vendor especially b2b is they don't know your industry as well as you do so they're not going to write such good content potentially but you can write good content you don't know what to write where to write where to structure it so having i think having some organic writing resources combined with an seo firm is paramount you kind of say here's my website seo it that's i think unrealistic and if you don't spend at least 5 000 a month on seo it's not worth spending anything so if you're not going to spend at least five thousand yeah yeah a firmware's not charging at least five thousand probably isn't gonna make any difference to your uh ranking very interesting okay what year did you start working with effective spend uh for paid search it's about seven or eight years ago for seo it's only two years wow that's incredible you rarely see relationships this long you've been working with working with them for seven or eight years correct and how small were you in terms of revenue when you first started working with them uh must be two or three million a year wow uh okay very interesting um very interesting did you how long did it take you for you to go oh man because the two million spending five grand a month you might be like oh well that was it that was yeah that was the paid search the paycheck was only 10 the lower range of your range percent just kidding uh yeah ten percent of the the outward spend also has gone up so back then we were probably spending about four to five thousand in an adwords spend they were managing that and then we've now grown up to i guess 1314 where i said a thousand in nse and an adwords spend so and that's a vendor like that is great because you can scale your spend with them as you your adwords builds up and then once we get a certain size we're now able to afford you know an seo service that really was out of reach back then how did you find them out of curiosity it's an interesting story and it was it was we were working for another event called with another vendor called gary lsf they were doing our adwords and our uh some early seo work and they went out of business and we found out that they'd actually outsource all their work to these guys and so we inherited them because they were the ones doing the work anyway we're like let's cut the middle man that's hysterical okay very interesting and take me back you launched in 2006 first customers 2007 what year was your first million in revenue um was it being around oh my goodness 2010 11 something around that i have to go back in the records and and it was very hard to break that million i mean that was i think the hardest the hardest thing is to break the first million uh i think then five is probably the next but it's it's that i think that breaking the one billion mark is the hardest of all because i think what happens is you have to change everything you're doing um you can go from you know everything can be online it can all be self-service you can have online trials once you you get to a certain point your customers will expect more handholding and as a founder you're used to doing everything but you know being kind of the jack of all trades you got to start specializing so hiring a customer success person a partner person people through demos that aren't me you know that was a big change and you're going from basically the the brains of the builder to being the manager and the coach mm-hmm yeah very interesting how many folks are full-time on the team today uh four times a day or something equivalent uh 50 full-time equivalence about 40 full time plus some part time uh sorry say that one more time 40 full time uh 44 10 plus 10 other you know uh part-time is that i see out of the 40 how many are engineers um 15-20 15-20 do you print money from this Profits business so so would say do you print money from this business uh at a company level yes but we invent we reinvest most of it to grow the company um so as a personal level not as much as i could but i want to grow the business and build a a long sustaining business with a with a great culture so i'm actively reinvesting everything we can apart from what i need yeah so what what do you need how low have you kept your living expenses uh we you know we have a 2006 subaru as one of the oldest cars on the team uh i take the bus to work uh actually mainly because i like to work on the bus and get things done um but you know i've stayed in middle class existence i haven't you know we've got a kid going to college uh shout out to usc uh in a few months so i gotta pay enough to cover that but my wife worked full time which really helped she when i started the company she works for the government so that really helps having a working spouse who can you know let you follow your dreams what's the largest uh m a deal you've turned down oh to buy the for us to buy uh to buy us um we honestly we haven't we've we haven't pursued any any we've had people come close to talk to us about you know generally buying the company the problem is that uh we don't really want to sell the company at the moment and so we haven't gotten just to just avoid distracting us we haven't gone too far down that path so we've talked to some people but nothing's gone to the point right whether we've been on the table really what what kind of number would have to be out there where it's worth your time to be distracted to pursue the deal i think at this point probably 50 to 100 million something that you know we want to be the point where this was going to be they're going to take us to the next level as a company that we can't do ourselves we're growing 50 year-over-year we're making good revenue we've got a strong culture we'd have to be able to do that at scale if we're just going to roll them into a large bms that's you know for other companies we don't want to do that would you be open to something that's like 75 million where 50 is cash 50 of stock and you keep running this thing and growing it together yes yeah that'd be great very interesting i think you might get some calls after this interview we'll see um okay so Bootstrapped again just be clear totally bootstrapped today used to 100 any co-founders uh uh nope my wife and i i mean she technically is a part owner just to keep our marriage straight but uh she's just really working the company i've got so i've got a leadership team but you know no one has any equity uh if we ever decide to go public or something we obviously figure out what to do with that so that's something to think about is what do you do when you've rounded a company you're gonna you know you want to reward people long term the problem is giving out stock when you're private and you're not you know investor backed is it's a lot of legal complications dealing with that giving away private stock so we have a good cash based compensation with a team bonus we do things that are uh encouraging teach me about that so many bootstrappers go nathan how do i set up a bonus for my employees and i go i don't know i've never done it what how do you do it what's the calculation uh what we do is we put every year we look at the profit target for the year for the company we divide it by the number of employees we obviously allow how much we want to retain and then we say that funds the bonus pool look at the number of employees give everyone based on their role uh a allocation of the bonus pool and then at the end of the each six month period we say if if say we're gonna make x x thousand dollars in revenue that's right in profit uh and we made it everyone gets their full bonus for six months that they had in their pool if we made fifty percent of our target everyone is fifty percent but we actually on one thing we have no sales commission so everyone even sales people are all on salary and everything is a team bonus that the company makes as a whole that and for us that's really important encourages that we work together as a team more synced as a team so last year in december when you looked at this sort of six-month thing what was the profit pool at the end of 2021 i can't give you the dollar number but i can say we fully funded it uh for the year and football for that six months period and i see are we i mean are we talking like a million bucks and we're like like like 500 grand you're splitting up uh a little the lower number yeah more okay so just just to run the math with hypothetical numbers yeah five your target is 5000 bucks in profit last six months of last year right you hit it congratulations for check smart didn't take 500 grand divided by 40 people on the team it's not a straight because some people uh you know people make more money and have been longer potentially have a higher because when we give raises we might give a raise in base we might give a raise in bonus pool so it's not as simple as everyone gets exactly so that's what i'm saying how do you decide the multiplier or the percentage of the bonus pool that each person gets what are the templates i yeah primarily it was it's the primary one is actually base salary it's sort of a rough percentage of that but it's also tenure so it's a combination of those two factors i would say and so if i'm making 100 grand as a senior engineer at flextra you might say okay nathan you're eligible for five percent of 100 grand in the bonus pool so 5k uh probably more like 10 to 20 honestly okay so there's 10k and then i've been there for how do you how do you decide the 10-year multiplier is it 10 years is one thing five years is another uh it's not as formal as that being small it's more like when we do a pay raise we'll say okay you've got a great year we're going to raise your base by x and guess what your but your uh your bonus will go from say 10 000 a year to 15. so it becomes more step function it's not like a smooth uh graph as we as we get bigger and more formalized with hr we probably will do more of that but right now it's been very much a you know you did a great year you've achieved above and beyond we're going to raise your base we're also going to because we want to incent you to to to work hard for the company we'll raise your bonus pool buy from 5k 10k but it's definitely more lumpy than probably would be in a larger company really really interesting okay this is great uh let's wrap up here adam with the famous five number one favorite book oh my goodness um you give uh favorite favorite book i read so many books i love them all uh my mind's gone blank um can you come back to that one a second i don't think i would ever get you with how this interview is gone your mind going blank i think i've won the interview man yeah i just love so many books um i can't win this i love it my last favorite one is hatching twitter which i haven't shared a lot of red i love that book um i read the um the guest list which is a great thriller set on an island in the uh uh west coast of ireland it's a lot of fun so i love it all kinds of books but those there you go number two is there a founder you're following or studying oh i love richard branson i was i've always had a soft spot for him number two uh three what's your favorite online tool for building the business oh my goodness uh i i do love canva i will say uh that's one of my favorites little side side hustle i love just doodling around with it number four how many hours of sleep do you get every night eight and what's your situation married single kids uh married two kids one in college one finishing college that's exciting uh well and one's going into us one's going to college and one's just finished college finished yeah so i'll be an empty nester in about two months that's exciting okay and how old are you 47 47 last question something you wish you knew when you were 20. oh um it will you'll have time for all of it don't worry about the order guys there you have it inflector launched in 2006 2007 got their first customer last year broke 8.6 million bucks in revenue this year breaking 10 million growing almost 40 50 year over year as a bootstrap sas company adam stone's 100 super rare this guy's my kind of unicorn right this guy's my kind of unicorn uh profit sharing with team 40 people full time 10 contractors uh using paid search all this stuff you sort of expect to scale nicely and then just recently launching uh relationships with partner networks again helping you bring a harmony to your software life cycle tools for managing and testing all those applications adam thanks for taking us to the top thank you very much 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 backend 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 sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to 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 up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 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 got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya