How PactSafe CEO Brian Powers grew PactSafe to $9.6M revenue and 200 customers in 2019.

hello everyone my guest today is brian powers he's the founder and ceo of pact safe a and a licensed attorney brian leads the strategic vision of the company's high velocity contract acceptance platform before founding the company his law practice focused primarily on representing the transactional needs of tech companies brian you ready to take us to the top let's do it all right when you say transactional needs of tech companies explain what that means you're talking like m a or fundraising docs or company formation or what pretty much everything so i help them start up they helped them raise money i wrote their contracts they helped them sell their business so everything but go to court okay so at what point would this friction get like so large or you said you know what i'm gonna hire some contract developer labor try and build something to like solve this pain in-house yeah so it was a specific pain right so a lot of my tech clients you know they were e-commerce and sas businesses that had uh they're doing lots of click wrap agreements so think about i check a box i click a button i'm accepting terms views terms of service whatever they all had these massive contract stacks and pieces of software to manage every other type of contract in their business nothing to manage click wrap agreements so pacsafe was built to do just that right plug in make sure those things were enforceable manageable and at scale what what is a clickwrap agreement click wrap agreement is any agreement where i check a box or i click a button or it takes some action on a website a mobile app a device where i'm accepting some sort of legal terms so you you've accepted plenty of those every day right um when you're just installing an app or buying something online or using a new sas product yep so what you're saying is these things are not legally enforceable you built tech to essentially give them more more teeth make them more enforceable they can be legal enforceable without pacsafe but what we do is help make sure that it's manageable and enforceable at massive scale so a lot of our customers we're doing millions of agreements like that per day right so when we've done almost a billion agreements like that as a as a business already um so it's if you're just talking about one click wrap agreement a day for a very small company not a very difficult thing to manage and prove yeah but when you're working with like you know some of our customers are like the wayfarers and doordashers of the world that are doing millions of these it becomes a very very difficult problem to solve yep okay so how did you structure your business model is it a sas model yep sas model interesting okay so give me a general sense here i'm sure you have hundreds of different customer cohorts but we don't have time to go down all of them i mean what's the average customer going to pay you per month or per year to use this technology yeah well it's it's a pretty wide range right but i would say average deal size for us is about fifty thousand dollars a year okay some of the some of those deals go way way above that and some will go down right so on the very very low end it's about fifteen thousand a year to use pacsafe and then on the very high end you know those customers are paying north of 250 000 a year okay but you think that the 50 grand a year is a fair average it is it is especially for our bread and butter click wrap use case yeah okay so describe that customer to me they sign up for 50 grand a year about how many contracts are they signing per month like how do you in other words how do you price yeah so if we're doing somebody's paying us 50 000 a year they're going to get very simply right that's 15 million and down click grab agreements a year and then from there you know the the larger the business right there's there you pay for more click wrap agreements for us to track um so that's that's in a nutshell that's what fifty thousand dollars gets you about 15 million click wrap agreements a year anything any other value based metrics you upsell against like number of seats or feature-based upselling sure so there's a pretty strong transformational use case for our platform where people want to use click wrap agreements for more than what you would expect to see right so they want to use it for ndas that want to use it for high velocity sales agreements where they need lots of people and seats with the ability to send out some of these agreements instead of having it signed via esignature on a pdf they want people to just click a button to accept um so so that is a significant driver to get you know those larger deals that i mentioned that deal size typically involve lots of seats right that's where the price starts to go up quite a bit okay so would you say upselling based off seats and up selling based off number of arraignment signed per year are your two most effective upsell uh channels yes yes and then um i guess the third one there there are different we call them delivery channels impact safe where you know you can get a contract accepted and by checking in a box you can get it accepted message you can get it accepted inside of a chat bot things like that so the the more you want to have the more options you want for acceptance right that is probably the third cost driver around our platform fees okay interesting put this on a timeline for me so when'd you launch the when would you write the first line of code for the software first line of code was in 2012 2012 okay and now this might be a painful question how much did you spend on the nvp before your first dollar of revenue um not a whole lot and i know those numbers because i self-funded the whole thing i figured it was about seventy thousand dollars oh okay that's not bad actually so how did you do that where was the developer labor was it there in indiana or somewhere else or what yeah it was right here in indiana how did you find them uh just actually some people that i knew from practicing law in the tech world um yeah i mean what'd you tell them like what was that first email to them like hey i have an idea i'm willing to pay you like this kind of amount to get it done or what it sound like yeah that's exactly it you know they uh i gave them a little bit of equity um a tiny bit of equity and uh paid them cash and we built you know what essentially was just a prototype of uh our click wrap api um things have changed a lot since then yeah when you say little you're talking like less than five percent what's that when you say a little bit of equity you're saying like less than five percent oh yeah yeah yeah okay very cool so you get the mvp built and then when was your first dollar of revenue on the product uh probably about a year and a half after that and it but at the time this was just uh it was meant to be a self-serving sas product developer goes in can access the api and they can you know drop a little snippet of code on a website and now hey you have click wrap tracking but uh around 2000 end of 2014 we figured out that this was more of an enterprise type problem and so we stopped being self-service then i went out and found two really smart uh co-founders one was a product guy one was a full stack engineer from salesforce and then we spent the next year building an enterprise-grade product that could solve the same types of problems right but at a much much larger scale yep okay good so you scale you scale now besides yourself i want to know how you got your first 10 customers first 10 customers um so a lot of just hustling with people i know uh which that barely counts we we did a uh um we had really good seo so some inbound interest from blog posts and stuff like that and then uh we launched a uh i think it was called beta list where you know we had like 200 different developers sign up for our beta and some of those turned into customers as well okay on the seo terms you remember like your most effective early seo term the one that brought you the most traffic and signups monthly yeah click wrap best practices that exact that was where our first batch of enterprise interest came in they found a blog post that i wrote that was called was optimized for click wrap best practices yeah that's interesting so is this is this i'm not a lawyer so i don't know is this click wrap term like oh this is a legal phrase people like search their lawyers say do you have click wrap and it's like a term that they know to go search and research it is it is and it's it's it's either called click wrap click through agreement or click to accept um we deal mostly with legal personas so we've zeroed in on the click wrap term but we use all three in our sales and marketing yeah it's about a um you're talking about the one that that katie wrote right back in 20 2017 january uh no this one was before the blog post yeah the click wrap you guys have a good article on cl that's ranked number one right now for click best practices yeah it that might be it might be a recycled one but yeah it was probably that one yeah interesting yeah and maybe you're updating it but no okay it's cool to understand these terms so that was the big term driver for you and then beta list also drove a bunch of these early sign ups that's helpful to understand um so what i want to understand these...