How OpenPhone CEO Daryna Kulya grew to $480K revenue and 4K customers in 2019.

hello everyone my guest is the co-founder and ceo at open phone open phone gives entrepreneurs and professionals a supercharged business phone number in an app before open phone she was a product manager at vidyard michael it obviously has been on the show many times she founded product on toronto the first and largest product community in the world started her career at deloitte first in consulting and later in innovation all right during are you ready to take us to the top oh absolutely all right having me tell me about open phones like we've seen like david hauser and grasshoppers come along we've seen other like formations of kind of the business phone number through the through the decades how are you tackling this uh problem yeah so you know we uh we've seen in um so before starting open phone we noticed me and my co-founder that's still a lot of entrepreneurs whether it's startup founders or business small business owners they're still using their personal phone number for business and it's just so limiting and it's it's a bad decision that they make when they start their company and although there are solutions on the market there is still no easy modern mobile first solution um that is really built for you know for how you use tools in today's day and age so we definitely saw an opportunity to build something that people would love and want to use so actually i mean tell me about a customer that recently signed up and how they're using it yeah so um oh i i talk to customers a lot this is uh well specifically if it's an agency owner who uh who wanted to get a business phone number to put on their website instead of listing their personal number um our signup process takes less than a minute it's really 30 seconds so they go on our website they pick their local number um they download the app and that's it so it's really the easiest fastest way to get started with the business phone number on top of yourself okay so this is not a ad model attribution tracking thing where you will generate 10 000 phone numbers for the same business and a phone number per billboard so they can track attribution this is just like get your business phone number so it's not your personal phone number exactly exactly very simple that's it very cool okay put this stuff on a timeline well actually first pricing model so how do you price for this thing is it sas or usage based or combo yeah it's sas we we we have a simple unlimited plan since we're still pretty early we actually wanted pricing to be also transparent simple and something that makes sense it's ten dollars per month per phone number you can have up to five numbers in in your account and you can also have your team members so the key is you start your company you get your personal your your business phone number and then as your company grows you have employees so it's you know ten dollars per month per phone number or per user okay okay got it so you just to be clear what i know you're early but are you betting right now that three four five years from now when you come back on the show you're gonna be driving most of your expansion revenue by driving more seats in the same company or more phone numbers across the same company or some other upsell much we haven't talked about already that's right yeah and that's we are seeing early signs of this we're still early as you said but this is definitely something you know we want to be the phone number you get when you incorporate your company and we want to grow with you all the way to ipo um you know to we we that's absolutely well so so how do you define it i guess my question is how do you i have an agency of 20 people i get a phone number from you how do you define a user yeah that is the person who has their number so user would be you nathan someone on your team who uh who gets an open phone number that would be a user but what it's the same what if it's the same what if it's the same phone number as mine i have one phone number with you for the agency can all 20 use it for 10 a month so i love that question we're building that out right now um we so one of the big and i'm sure you you would ask this one of the big things we're focusing on is allowing for that use case where you have one phone number shared with your whole company so you're only one-to-one you're only one-to-one right now you don't have a one-to-many option that is the case today i see yeah i see interesting but that's a huge as you can imagine that's a huge uh growth opportunity and something we're very excited to build yeah of course okay so then i mean it sounds like it's fair to say than your kind of average customer today just because we don't have time to talk about all of them but it's like on average or paying 10 bucks a month something like that we have quite a bit of customers with multiple numbers uh and we as a as i said we already have customer i think it's fair to just to simplify that would be the case just to keep it simple but we are seeing um and one of the reasons why we're excited to build open phone for teams is because we already have customers in bigger companies where they have a number someone else on the team has a number they have multiple numbers in a company so we're seeing that gross already yeah well i mean i think you should correct me if you're wrong i mean if you see a sweet spot where it's actually average like two seats per account or three seats per account that would be like more like 20 or 30 bucks a month but you're saying you're seeing isolated incidents but it's not big enough yet to be a trend we haven't so it's it's definitely a trend we are the reason why i'm you know not talking about it much is just because we're right now building the product we're building support for this officially in the product we are seeing this uh with some kind of manual work on our ends to support it it's a trend that's that's pushing us forward um yeah but we're still building the products to support that okay got it okay good fair enough cool all right and then putting this on a timeline for me when do you like right guys right the front excuse me when did you write the first line of code two years ago okay so 27 it might have been or even uh maybe two two years and several months ago yeah it was it was probably like spring 2017. the reason i asked this question is i think founders deserve a lot of credit who figure out how to get their first dollar revenue before spending a lot on the mvp so my question to you is how much money did you sink into your mvp before your first dollar of revenue yeah so so it's my co-founder who built um you know who built the vast majority of the product you know from from those very early days um i think that i would i would kind of ballpark it at um you know under 10k yeah okay i mean i consider that pretty effective actually yeah we you know we from from the very beginning we've the one thing about us is from the very beginning we have been using um the the best tools and the best uh tooling to support uh you know to support the product um yeah when was the first so 2017 was first line of code when was the first dollar revenue remember the month of course i remember the person we i would love to give him a shout out the first um it was actually someone from twitter who who was the first paying customer the first dollar was in march late march 20 um this yeah this was already 2018. okay and how did this person from twitter find you so you know we've followed each other for a while and and this is uh kent he runs growth at claire bank uh he's awesome by the way probably someone else who would be great for this podcast he um you know we followed each other i actually just dm'd him because he has um an e-commerce store and we saw a lot of interest among income ecommerce founders getting a phone number for their store um and i just told him hey you know you're someone i've i've kind of been following i just would love to get your thoughts i didn't think oh i want to sell the product i just wanted true honest feedback and he loved it and he absolutely loved it um and yeah you know that that was awesome i uh i love that story expect didn't expect it it would be twitter out of all the places well so okay so he signed out about twitter he's now at clearbank is this kind of a common theme of how you got your first couple customers kind of going down the e-commerce use case yeah so actually a lot of our absolutely a lot of our first customers were e-commerce founders that i found through facebook groups and run it um one of the ways that um so our first customers were you know it's not like people just randomly found us i wish that was wait sorry can you say that a name name a facebook group that you used early on oh there are so many i wish i could there are so many i have to i mean i have i have to probably but you would just type like e-commerce you type e-commerce into facebook search and just go down the list exactly i would join a lot of groups um i joined way too many groups and you know i'm now a part of probably like hundreds and um i joined e-commerce groups and also just groups for entrepreneurs because when we just got started you know ecommerce ended up being a great sort of category for us but we still didn't know what type of entrepreneurs would be best the best fit for what we're building yeah so i joined a lot of groups and i was you know i was definitely careful about not spamming or anything like that i just said hey guys this is what we're building we believe existing solutions are very limited limiting and there is really no simple easy way to have a business phone um and people started responding and i saw that's how we got a lot of interest in a lot of signups so these are these are the first few beautiful months the infancy months now fast forward today how many customers are you serving yeah so we are between we're north of 4000 customers okay well okay so four thousand folks paying um so i mean when you look at your growth channels today is it still just like a more you're still using facebook groups just more effectively or have you gone into different channels we've definitely gone into different channels um we're still doing things that don't scale i am a huge proponent of that name two of those things so we great question so recently we just did in this experiment where for people signing up through specific uh communities we uh be specific tell me the actual community that sure so for we are part of uh we um so so we uh graduated from y combinator so for the latest uh y combinator graduates what we did is we offered them uh free business cards together with their open phone number so what we did is we um you know they get their first business phone number and we order them and make these custom beautiful business cards uh because for many of them they don't still have business cards and they're still early so how big is the batch and how many actually signed up on a paid ten dollar a month account as a result of this campaign uh i can't disclose i mean you given it's the current batch i can't disclose the size or or those type of details but what we do this i i would actually say it's less of a acquisition strategy and more of a retention and wow word of mouth strategy it's it's lucky but how can you how can they get do word of mouth unless you've activated them and they're paying how can you retain someone that you haven't they haven't activated yet right so our activation is starting to use so we look at activation is when someone is starting to use their phone number so when someone is like you they get their number and they give it out to people so in a way business cards is one of those ways that they start you know using their number got it your thesis is once they print your number on their business card they're not going to change their number because it's on all the business cards exactly so how many using the business card strategy would you say i'm trying to get i'm trying to quantify this channel just so we get out of talking about like kind of fluffy story right so if you send out whatever the channels you send out a hundred companies free business cards right and you activate them how many of them will actually you know move to the point where they are however you define retained or active how many of them become active on open phone yeah that's a great question i i really wish i gave you had this number for you because we literally just did this so this is uh yeah we we just um so we are still shipping some of the cards uh this is something so you're still testing it we're still testing it um i'm i actually just have a batch of cards that we still need to spend no problem um real quick some faster questions here because i just realized i'm enjoying this but we're running out of time turns critical in a sas company what's your turn today and how do you make sure to keep it low yeah so uh we have some turn and you know um i can't necessarily show the the the exact number a range is fine though i mean talking like less than five percent a month it's it's somewhere there yeah somewhere wrong well i mean i would say most people that are at this price point churn is actually typically like but not less than five it's usually between five and ten percent gross revenue term monthly it's just a small business as they go out of business you're in that range we are and i mean the thing for us is that um you know what we've noticed is that we made we've made it way too easy for people to sign up right we've uh we make it almost way too simple so um so so there are people who are using us for non-business purposes and so we can't we don't count that towards term okay okay got it well then you can't count them as a customer and you're either right that's that's true yeah do you actively do that when you see a thousand new customers sign up in a month do you actively say oh we can't count these three they've paid but they're not our target fit or do you still count them in your customer number so the one thing is we have in so given because of this we have changed our onboarding process to ask these qualifying questions um so our web onboarding in our web onboarding we we have this figured out already we're now implementing that in our mobile sign up because the one thing for us is that yeah we have a lot of people downloading us from the app store play store and we're just in including that qualifier question in those what's the breakdown the team for me today how many folks on the team we're just five people right now i love that how many engineers versus like sales people marketing so uh you know my my co-founder is uh still very much writes code so we'd say three engineers so we have two engineers my co-founder myself on sales marketing ops and we have someone on customer support okay so kind of three two split there interesting okay cool and then um uh talk to me quickly about growth so at 4 000 customers today do you remember where you were exactly a year ago we were very close to zero we were very i mean we were very well to specifically a year ago i'm realizing it's almost august yeah i was gonna say you you got your first dollar revenue in march so you had march april may june july august okay good point so we were um we were probably like 1 000 uh or or somewhere around that range maybe a little less a little more um you know we launched officially in july um if you you know we have 2018 of 2018 we did our product hunt launch we did our techcrunch launch uh everything was uh around that time that's great now if i take obviously 4 000 accounts right at minimum 10 bucks a month it's fair to say guys are doing north of 40 000 a month right now in revenue correct that's right is it a stretch goal to say this year you feel like you can break that million dollar mark or is that probably going to have to wait till next year oh it's definitely you know we we we're very ambitious i think i think that that's definitely on our books but what i'm what i'm asking is how aggressive being this year you've already articulated that you're seeing some patterns where folks are buying two three four five accounts right per customer do you feel like you can reach that 83 grand a month by december this year is that too quick i think so we um so so the one thing for us is we've been investing in a lot of um you know we're we're gearing up for a very exciting fall with a lot of things we want to uh to launch um that will definitely bring us closer to that number yeah like these like these like these one-to-many kind of phone numbers things like that exactly exactly which we see as the huge growth opportunity for specifically because of what you mentioned how um we can now serve bigger companies and um we can we can be um a better fit for a bigger bigger team uh real quick product hunt july 12th launch 744 upvotes do you remember how many new like website hits or sign ups you got on that day oh we product was one of our best channels both for quantified though how many signups yeah you know what i will tell you right now she has the data i love it yeah um it had been july 12th 400 customers and that would be the very least 400 people not not signups actual people that started paying 10 a month from product time exactly oh wow absolutely that's amazing okay so the reason i asked that was that more more or less effective than when the day you got the tech crunch placement oh that um so i think the the one about thing about techcrunch placement is given how much it has boosted our seo and also when it shows up in the search results techcrunch keeps bringing us people constantly so um so techcrunch was also very effective you know um i would say similar effectiveness um but over a longer period of time exactly i still see people signing up through techcrunch you know like yesterday i that's one of the channels that just almost keeps bringing us people uh as we go that's great now talk to me real quick before we wrap up with the famous five up funding you went through yc so what have you raised to date so yc was 120k um we also raised a seed round that we will be announcing soon shortly after yc very cool okay good and then how aggressive like most people would say at this stage you're raising for like 12 to 18 months of burn how aggressive are you being with burn i mean can you sleep at night with like 10 20 grand or a month are you being more aggressive yeah i mean we we definitely can sleep at night we we uh you know from from a burn perspective we invest in having again we we are we invest in hiring the best people and having a very very strong team so um we are pretty cost effective when it comes to everything else but we don't compromise on you know people and after the raise though what i'm asking just how comfortable you be so after the raise i mean are you in your plan are you comfortable scaling burn to something more like 30 or 40 grand a month or is that too aggressive yeah i mean uh we are i mean we have enough runway like we're comfortable for the next almost two years in terms of runway after the next raise you you announce that's right very cool all right let's wrap up with the famous five number one what's your favorite business book uh how to win friends and influence people it's i would call it a business book number definitely it's definitely business book number two is there a ceo you're following or studying um i think recently um well other than as you mentioned michael lit who i worked with back back at vidyard so definitely learned a lot from him um i also look at now given what happened with slack and their journey so stuart butterfield number three what's your favorite online tool for building your company um web flow yeah that's a good one we had vlad on if you guys want to listen to that episode back uh i want to say like three or four months ago good good company now number four how many hours of sleep to get every night i get at least seven seven and a half yeah i love sleeping what's your situation married single kiddos uh in a relationship single i mean not married not married no kids and can i ask you during a hell jar i am all last question i'm 29. okay take us the reason the reason i ask is take us back to your 20 year old self what do you wish she knew i wish uh i wish she took more risks earlier i wish she just wasn't afraid of uh of trying things like trying more things and failing more i i love that guys open phone dot co gives your business a phone number doing uh has more than 000 customers paying 10 grand at 10 a month so more than 40 grand a month in revenue right now hoping to hit maybe that stretch goal of that million dollar run rate by the end of 2019 here especially as they announced their second fundraise they've raised 120 000 so far just obviously from the yc batch they have a team size of five folks three engineers to uh sales marketing including uh darina again scaling nicely about caught between five and ten percent monthly revenue churn as i look to scale pretty expected at this price point but again scaling now into more uh more enterprise options more enterprise features darina thank you for taking us to the top thanks so much nathan