How Paubox CEO Hoala Greevy grew Paubox to $10M revenue and 1.2K customers in 2024.

hello everyone my guest today is huala greavy he's the founder of a company and ceo of a company called palbox a b2b sas startup that focuses on being the easiest way to send and receive hipaa compliant email the company is located in san francisco and has over a thousand customers in all 50 states who all likes to go kayak fishing in his spare time while are you ready to take us to the top let's do it man all right so interesting take here on email marketing hipaa compliant so tell us what the company does and who your main customers are yeah so uh like you uh aptly described we're the easiest way to send and receive hipaa compliant email uh we launched in 2015. i'm from hawaii now i live in san francisco um and our value proposition for our customers is that we removed the friction typically involved uh when people need to send a secure email in healthcare so we got rid of the portals the app downloads the key installations we just removed all the friction and what's the business model is it a pure play sas or what where b2b sas the provider pays for our product not the patients okay what do you mean by that give me an example of a real provider uh we got hospitals doctors and everything in between uh social workers sleep disorders autism non-profits and on on average what are these these guys i mean are we talking like a hundred bucks a month or 100 grand a month so our average customer pays us about a thousand dollars a year okay so we're really strong in smb that's good and and what i mean what do they get for that pricing is it based off number of seats or what's it based on generally it's on the number of seats correct okay so a hospital might have 10 people that need it and they'll pay a grand for the year for it yeah so our model we uh we encrypt all email for all users and every device so we wrap around an organization's domain name and we provide blanket protection for all the employees okay so hospital i mean how if a hospital signs up i mean how many seats are they buying in one shot typically i for our hospital customers it's at least 500 typically okay so they're getting 500 seats for just a grand a year no the average customer pays a 5 000 yeah okay so do you have kind of power laws you have a long tail but then you have four or five customers that are huge uh yeah more than five but yes that's correct we're very strong in smb and we're trying to move up the food chain yep okay very good so launched in 2015 have you bootstrapped or raised capital uh well we're in silicon valley man so uh we've raised 600k to date and in this part of the world that's practically bootstrapping all right and and what's your team size at today uh we're at 12. 12 people all remote are based there in the valley 11 and sf okay good so so right there in the valley or the thick of it um and then walk me through uh what you've scaled to in terms of total customers using you 1200 customers all 50 states four countries um early product market fit very thankful for that um and yeah we're just um this year is about crossing the chasm that's our strategic objective jeffrey moore that's a good book um i mean i want to talk about more what that means for you but first i mean if i take 1200 customers times a grand a year you guys that are what 1.2 million in an ar right now something like that we're north of 1m a orr that's correct okay that's good so doing about 90 or 100 grand a month right now that's correct what does crossing the chasm mean to you well we want to be the default mainstream choice when it comes to hipaa compliant email so we want to become we want to switch from the early adopters the innovators which we do very well with we want to position ourselves to the guy who doesn't want to get fired for buying pow box and that's what crossing the chasm's all about as as you correctly described that's jeffrey moore and um we'll you'll probably ask me that question a few minutes but that's my favorite book right now man for sure what is the i mean so someone someone that you sign up that has 500 seats i mean what is that contract value at for you for a year yeah so that'll be a six-figure contract okay got it good so you you are i mean so on a per seat basis what are you typically charging or it depends because it ranges on price volume yeah so if they buy a lot of seats you give a cheaper per per seat yeah and we'll do like other people you know we can be flexible if we can do customer success or a logo pretty standard sas flexibility for a startup tell me about churn uh well below the average churn so we will be well below seven percent this year annual turn customer trend seven percent okay is that logo churn annually yeah we'll be well below that now what is your revenue charm ah man that is the one kpi we are not tracking right now okay you don't have it yet i mean that seems like that'd be critical for you because if you have customers that range from a six-figure contract all the way down to someone that's just a grand contract you don't mind churning people paying you a grand but my god if you turn one of those big customers that's not a good thing that'd be a very high revenue churn yeah so knock on wood the customers that churn generally retire uh join a bigger firm you know just normal smb kind of things that happen in the business so yeah we don't have turn on on the larger customer yeah that i mean just to be clear though that churn in the smb space seven percent that's annual i mean yes right so like that's less than one percent monthly i mean that's well below standard for smb space that's correct which makes me wonder like are you totally under undervaluing this are you underpriced should your price point be five times what it is yeah that's a great question man we've done a lot of experiments and i i think we've settled on an appropriate pricing model have you ever just said you know what we're going to suck it up for a day see what happens and just 5x our seat price and see what happens for a week uh we've done that too what happened uh not the greatest results what what happened uh we had a bad month how so a lot of people walked yeah he had a lot of churn not churn they just didn't buy prospects did buy if they have this need and they don't buy from you where are they buying oh there it's it's a rather crowded space and um you know the other products introduce tons of friction right so um remembering to type in a keyword forcing the recipient to go to a portal create a password log in i mean just complete nightmare but uh you know some of these prospects they're just looking to be compliant and they just want to check a box and they'll go buy the cheap stuff uh even though in the long run if you factor in the cost of your staff and help desk uh it's it's going to be much more expensive so like if i'm a patient emailing you know my local emergency center that i went to last week because i broke my finger playing football and i'm emailing them via gmail i mean can i use gmail and you figure out a way to make that hipaa compliant somehow or i have to go and log on to some membership site somewhere great question nathan that's one of our top blog posts uh so gmail.com is not a hipaa compliant email solution but if you're using g suite it can be configured to be hipaa compliant and that's where we come in we can seamlessly wrap around a g suite account and provide that hipaa compliance for our customers and and i mean you seem like a pretty cool dude you're from hawaii this is like a very unsexy space why the hell do you get into you know like the you know the the the health tech space specifically hipaa compliant emails yeah man uh talking to customers that's that's how this came up but do you have a background in in like were you working at a hospital or something we are outsiders to healthcare i've been doing email for a long time and um you know our customers started talking about this hipaa stuff did some research and i was like oh man this is a really messed up industry so yeah email strong suit healthcare outsider got it uh but i think that serves us it can serve us well to be an outsider what are you paying to acquire new customers what's your cac hold on a second i got those numbers for you i love it you must listen to the show you know all your numbers hey man i want to do my homework are you are you listening oh yeah good yeah good good you're why do you listen well i wanted to be prepared for today's call man okay so you listened just to prepare for today's call but now i'm starting to listen to more stuff now yeah good you're hooked that's that's good to hear sarcax 900 okay guys you're spending 900 bucks and so that means that it takes you a little under a year to get that money back that's correct okay and what do you assume lifetime value is on these customers well with our low churn our ltv as best we can calculate for being a startup's approaching 12k yeah i mean yeah that's where ltv can get so dangerous because you have such a low churn if you just do it based off math you know one divided by your monthly churn gives you the number of months they stay with you times...