How platformOS CEO Adam Broadway grew platformOS to $6.1M revenue and 1K customers in 2024.

hello everybody my guest today is adam broadway he's a lifelong tech entrepreneur adrenaline adventurer whose deep technical knowledge and strategic business acumen helped him uh helped in the acquisition of his previous sas business to adobe in 2009. he's an expert in building high performance teams technology and marketplaces he loves his adam and his team love to solve hard problems alongside enterprise and smb clients alike his current product called near me is going through a reband we're going to talk about it today adam are you ready to take us to the top absolutely well thanks nathan for having me on the show of course what are you rebranding to platform os okay form hyphen os.com is the website and what's it do well the the way we came to be where we are now is after the my last company business catalyst was sold to adobe in 2009 uh there was a shift going on in what we saw from traditional e-commerce one-to-many type businesses to more of the marketplace you know that they talk about the changing place of of work uh marketplaces for accessing talent on an ad hoc basis uh airbnb ebay was a good example of a new way of connecting people to products uh obviously lyft and uber marketplaces and so we decided to to shift from what we'd previously seen as one-to-many type of e-commerce to a many-to-many model which is the traditional marketplace and near me marketplaces was what we originally branded as but over the last two years in particular our product breadth has gone from just not just marketplaces to learning management systems and crm and accounting and you name it people are building that on us so we decided platform os was the new brand and what is the so can you give an example of a customer that's using you that you can talk about and really describe yeah sure i mean i can even do a screen share if that screen share won't screen sure won't work but tell me about one you bet well intel is a client and here's an example of an enterprise who like many enterprise companies are going cap in hand to the big social media companies like facebook and twitter and linkedin and saying can we please get some um information on our community because people are going off and building a facebook group and in there there might be one related to intel so intel say hey why can't we build our own version of facebook and that's what they've done with devmesh devmesh is a intel branded facebook for developers all over the world to connect with other developers in the intel ecosystem and they're listing up their projects they're joining groups public private secret groups so intel has their own version of facebook if you like on our platform hallmark is another example and so where are you playing in that you're like an sdk that they use to code this faster you you could say that it is like an sdk but it's fully hosted so you don't have to worry about back-end technology our platform is a big wrapper around aws around azure around google hosting around ali alibaba as well so you can deploy on any other infrastructure as a service i see i see and this is a power play sas company so we're a platform as a service and we have sas businesses building on top of us but i guess in our direct relationships with bigger brands we are the sas provider but underlying that is our platform product on which sas companies are building as i said learning management systems and and the like so so on average and i want to avoid going down every customer cohort here because i'm sure you have many use cases but on average what's the customer paying for this in terms of acv would you say okay so at the at the low end say the we have a startup that came to us three ladies who quit their day jobs as lawyers and they wanted to start a high-end ladies fashion dress rental business they set up the site for less than ten thousand dollars and are paying five hundred dollars a month so that's at the low end for a marketplace we go down to a hundred dollars a month for uh smaller just non-marketplace sites but that's so that's thinking of the smaller medium-sized businesses on the high end uh uipath i don't know if you've heard about them recently in the news robotic process automation company uipath they had a one billion dollar valuation at march this year and now have a three billion dollar and they are now running their marketplace on our platform as well as a whole bunch of other things they're at the enterprise tier and in that scenario they have their own dedicated stack devops and a whole bunch of things that they effectively rent from us so that pricing point is you know you're starting at the 80 000 set up and going up from there and monthly rentals start at 2 000 a month okay so so basically f ignoring the setup fees you basically have 500 to 2000 bucks per month something like that and would you fair to say what i mean which one do you skew towards would you say it's more 2000 or more 500 actually this is a nice split at 50 50 right now there's a lot of entrepreneurs jumping in and creating marketplaces in very specific niches a lot of communities of practice if you like prices say that an average might fall right in the middle there about a thousand a month yep okay interesting and you do you that setup fee is that always kind of a portion of the first year acv like how do you price that setup fee yeah so the setup fee is more around the heavy lifting on getting it the site or the instance set up now we've automated a lot of that but it's usual for somebody to want some customization for their front-end design to be applied and so that's where that comes in interesting okay so so let me ask you a question then over the past 12 months when you look at your total 100 revenue pi what percent has come from kind of the one-time setup fees versus true sas okay uh i would say 30 percent okay 30 to 40 is on so true the model is true sas it's recurring arr is where we're focused and now that we have channel partners because developers come on board and build on top of us we have there's no setup fee involved they're they're basically selling and building anything on top and it's all subscription oh cool okay got it that makes sense and and put this on a timeline for us when did you launch what year so we launched uh just on four and a half years ago and so was that 2004 we started with 2004 2014. sorry 2014. yeah dropped and dropped 10 years out of there good catch um and so i'm wishing my life away that's okay we we kicked off with a marketplace called desks near me we wanted to make sure we could build a marketplace and understood not just the technology nuances but what's the customer experience like outside of the technology you need to be able to answer the phones you've got to understand how both sides the guests and the hosts work so after building that we we then had been doing that on our white labeled marketplace engine that's when we went into uh near me about 18 months after launching destiny we opened opened up the platform for others and then since then we've seen a lot of different types of businesses come and go and now we're really consolidated our growth is is starting to get into the what do you what do you call it uh crossing the chasm we're on that chasm we're we're on the other side of the chasm on that jeffrey jeffrey more language there um so quick questions here about how you've done this bootstrap to raise capital bootstrapped we have we've been um putting our own money in as far as working hard getting real customers solving real problems and how many how many how many customers have you scaled to today uh so we have over 300 sites not all of them are live and some of them have dropped off along the way um just like active live today would you say active live i would say 150 about half why they drop off so in the case of entrepreneurs and and you might say that some of them are entrepreneurs they want to be an entrepreneur the entrepreneurs go in and they don't have the stick ability they don't realize that it actually takes about three years to get a business to full gestation and ready to rock and roll so when they're not a billion dollar unicorn in the first 12 months some of them just go uh too hard others just haven't researched their niche well enough and go off and go okay i'm gonna come back and build something on this a little differently so that's uh the main reason why interesting now so if i take 150 active today right and you said the average is called maybe a grand per month it looks like just the sash string you're doing about 150 grand per month right now is it accurate that's very accurate and take me back a year what were you doing in terms of just sas in november 2017 oh uh yeah it would be probably [Music] less than a quarter of that oh wow okay so so call me 50 50 40 50 grand yep okay that's impressive growth so where's most that growth come from it's it's coming through in that split so half of it's coming from the smb mid-tier market and half of it's coming from our enterprise clients we've got a lot of solid enterprise clients and their their monthlies are anything up to 15k a month are you so when you look at your revenue churn per year what is that today gross don't add back expansion uh so on the gross a range is cool a range is cool too by the way sorry excuse me that's okay uh well i i'd have to have to have to sit down and do the sums on that i'm not good on my feet that's okay well i mean churn's critical though in a sas company most ceos know what their churn is um true and uh well in the last six months our churn has just been reduced dramatically so we got a lot of our churn early on in the business which is when we had a lot of uh mostly small medium businesses on the platform who dropped off because well they weren't the right fit so how high was it how bad was churn back then i would say we had about a it was high i would say a 40 to between a 40 and a 60 churn oh we haven't uh we probably have about a it's down to around five percent and going less because the uh annually okay so wait so we went from 50 from 50 annual churn down to 5 annual turn in 12 months okay and i mean why that's significant why how'd that change because some of the the churn was uh us actually letting go of the client this relationship isn't working so we encourage them uh to actually go to other suppliers in some cases because the uh our development and the direction that we were taking was not in line with what they wanted to achieve and so some of that was us saying hey look this isn't going to work out let's depart and end the business relationship so in in some cases we effectively i guess you would call it sac the client interesting okay so revenue turn is down now today and then when you look at you know the customers you had exactly a year ago what percent do they typically expand by year over year do you know so i just said there was a little bit of a lag there that's okay expansion revenue what's that you'll have to define expansion revenue for me i'm not familiar with that term yeah so if you have uh folks uh that start off in year one paying you a grand per month or 12 grand a year by year two what do you expand them to typically so they're stepping up in tears so the the tiers that they would step up in it really depends on what their niche is so in the consumer market where they're going after say dress rental we're seeing quite large expansion on that revenue so let's say they start at 500 we'd expect them to be at a two thousand dollar per month uh rate uh in the next nine months whereas a community site more like um a hallmark where they have say forty thousand uh members and it's its growth is very steady incremental what we also see is that the expansion in revenues isn't necessarily based on the number of users or products or services that are sold through the marketplace it's around usage so as the usage increases and they turn on more functionality yeah but usage of what uses specific so there's different modules that can be turned on in a marketplace maybe they start just purely transactionally like hey buy my stuff buy my product or rent my address or rent my office space but we turn on a community functionality and suddenly people aren't actually going straight to the transaction they're discussing topics of interest within that community of products like per topic if people have a thousand topics you your usage very similar to the aws model so we just go based on how many computational cycles how many api calls how much data is uploaded that's one approach with our ecosystem of developers developers might have functionality like a learning management system and they may have a license fee for x number of users to use that ip on someone else's marketplace adam add up all this together as a macro level right if you go back a year all the people you signed up november of 2017 and you look at all that same cohort today are does the expansion revenue more than make up for any lost revenue oh absolutely by how much 100 over 100 how much i would say yeah i would say i would say at the low low end of 120 it's it's definitely just over and it was a good move it hurt when we were going through that you know deliberately reducing our our client base uh but the investment has paid off initially and then in order to get a new thousand dollar a month customer what's your fully weighted cac typically everything so far has been organic so we haven't done any formalized advertising but fully weighted so including team members customer support onboarding marketing sales okay okay gotcha gotcha um i don't have a number i can give you on okay that's okay you don't you don't use that metric related drive acquisition no what's the team size today 25 and where's everyone based we have people in the us uh so we have on in san francisco in the midwest out of st louis missouri we have uh sydney australia and predominantly in the euro in europe we have our engineering team based out of there that's great so san and europe 25 people today uh not sure on in terms of cac yet what about i mean what about funding you have any plans to raise capital do you want to raise capital we i think you know throwing some fuel on the fire would be useful in the year ahead uh and i think some strategic investment for the from the right type of people and that may even be some of our larger enterprise clients might well come in and say hey we can actually label this and take this to our customers let's invest so that's probably where we'll go we don't necessarily need to do an investment round right now we uh break even nicely so what we have uh is in the last company we built we built and sold without getting without taking funding not a dollar that's great so if we can repeat that great would you ever are you if you do raise it i mean you only just talked about equity would you ever consider those something that's non-diluted like venture debt right that is something that's come up actually and and not something i've really considered in the past but like you are the first person to mention it but it's something recently that somebody's brought up you know venture debt is some one way even going to the bank and getting a loan if you've got a good cash flow business and you can show that you've got regular income stream banks are tough though because you're gonna sign in personal guarantees they're a venture debt usually they don't no warrants no covenants no personal guarantees typically um yeah and they're the pros and cons that we'll be looking into yeah are you bullish on it we're very bullish yeah yeah so i think strategic money with that with a good solid tech company um would be our best not just providing some some good strategic money but also revenue stream through their own channel partners yeah very good adam let's wrap up here with the famous five number one what's your favorite business book oh crossing the chasm from geoffrey moore has been a great one number two is there a ceo you're following or studying right now there is uh actually shannon lucas who isn't a ceo but should be uh she is with ericsson doing their um global innovation rollout so yeah shannon lucas is inspired customer oh uipath absolutely they're incredible sorry sorry no no no you're is shannon one of your customers oh is she a customer no she's not okay okay number three what billing tool do you guys use building tools a billing billing or billing tools uh we use xero and we are switching out of xero we've built our own oh internal interesting billing tool that we've used it's great number four how many hours of sleep you get every night ah that's a good one it varies from seven to four okay so we'll say maybe five and a half there on average something like that i would say on average yeah and what's your situation married single kids i'm getting married soon and i've got five boys oh my gosh congratulations that's great and how old are you i'm 46 46 yeah 46. and uh last question what do you wish your 20 year old self knew oh boy that's a oh that's a tough one um oh a little bit more humility would have been good at my age back then i think yeah guys there you have it be humble more humility back then now launched again near me really uh kind of allows people to build their own version of facebook internally for their own companies like intel uh and uh and uplifting some other companies launched in 2014 again now serving 150 companies paying an average a grand per month so 150 grand per month right now on pure sas revenue that's up from 40 grand per month just a year ago so a healthy growth totally boots dropped which obviously is great five percent logo churn per year net revenue retention though well over 120 percent year over year as they you know work towards more kind of enterprise higher value accounts they've got 25 people based between san fran st louis sydney and europe rebranding as platform company here coming up early next year adam thanks for taking us to the top thank you nathan