How Penji CEO Khai Tran grew to $21.3M revenue and 1K customers in 2024.

hello everyone my guest today is jonathan grazbowski he's the co-founder of penji a platform that gives you on-demand access to the top two percent of designers in the world you can submit as many products as you want get your completed designs back in under 48 hours and only play pay a flat monthly rate his personal mission is to empower the next generation of entrepreneurs to challenge simple minded patterns that help elevate execute and produce more revenue for their business johan you ready to take to the top let's do it my man so walk me through this i mean my old way of finding designers was like you know get a decaf coffee late at night open up dribble or behance scroll through and heart designs i liked and then try and manually reach out to the designers and hire them you're solving this problem yeah i think that strategy still can apply um but i actually would say that you could still do that and send the examples over to pengy and then we would design exactly just that but yeah it's ridiculously hard to find talented graphic designers dependable graphic designers and that was our problem when we were working as an agency prior to coming up with png and now we give access to as mentioned the top two percent of graphic designers in the world they all have to do is sign up for the service they have a 15 day money back guarantee if they like what they receive they can continue if they don't we part ways we understand we get it so walk okay so this spun out of your agency let's go back to the agency here for a second what did you launch the agency in oh man i'd say 2012 2013 2013. okay got it 2013 and then um how what was your best year in terms of revenue at the agency oh man probably like 200 at most uh and that didn't happen until four years into actually just making it like we were it was enough to pay the bills but and it was only like maybe four people five people to the max um and we knew we had to pivot because a lot of the stuff that we were doing as an agency just wasn't fulfilling um but the one thing that was consistent was a lot of people loved our graphic design um as you may know it's extremely tiring networking going to networking events at least for us we started local and we went to those like you know bni meetings we went to those like networking events that just for me as a young guy i was 24 at the time um i was the youngest guy in the room networking with people that were two times the the age of myself so it made it very difficult and through those struggles we we knew we had to pivot we knew we had to do something different and make it more accessible for everybody so what year did you officially shut the agency down and go on on png uh well we actually the first year of png was four years ago so around 2016 um 2017 we stopped the agency at that time and a lot of the revenue that we were receiving from penji and the savings that we were able to do got us through the initial spurts of what penju was able to do so we're actually bootstrapped we've never received an ounce of funding we've don't plan on ever looking for funding et cetera and so how much of your own agency capital did you put into png before your first dollar of revenue um are you looking for a dollar amount because the dollar amount isn't really all that high it was more so the technology we were using the capital our capital of people that we had in order to design and in order to um in order to build but in terms of actual cash we really didn't put up much in order to make it and make it run we did everything in the background and then we were fueling punji as we were getting customers and so we were using the revenue from penji initially and driving it back into uh advertising local marketing and things yeah that's right advertising until i wasn't saying what i'm trying to get at is founders that can figure out how to get their first dollar revenue without spending anything typically are like the best founders now sometimes they have a bunch of cash they're sitting on so they spend a bunch before the mvp what i'm just trying to get a sense on even if it's a very small amount of cash is is how much risk how much trouble did you put up pre or first project process through png from a paying customer do you know i wouldn't i would probably be i would i mean i don't know if this is the right answer that you're looking for and i don't i still don't understand the full question but i would say zero because we didn't spend any any dollars at all so you had no employees that that helped you build it you you coded it yourself penji in particular zero waterfront media we use the the leverage and the the uh the resources from waterfront media which was the agency to fuel that so i mean if you're looking for that i would say in all maybe 50 to 100 000 got it so just to be clear you had developers at waterfront agency who you were paying via the agency you just said hey spend three hours a day on building this new png tool correct yeah any downtime that they had that they weren't working on client work we had them work on png exactly right okay so what's waterfront today did you guys sell it or is it just shut down all developers are now part of png yeah we shut it down um we shut it down completely there might be a time where maybe we might consider opening it back up but at this point penji's doing well and we don't have a need to actually do it but yes everything that was once pengy uh was once waterfront media we actually did something very interesting we fired every single person on waterfront media and then rehired them under penji and that was a very emotional thing that we did we actually sat in a meeting we gave them a slip that says you're fired basically it was a little bit nicer than that we watched them tear up and say like how could you do this to me and that emotional thing that we did was was so needed because we needed to strip away that like uh everything that we once did and remove that mental block in order to focus on the future and what we believed was the future and that was penji so how many full-time folks are at panji today there are over 125 125 and how many team members did you have in year one 2016 i would say like people i would 25 somewhere around 25. you brought 25 people on full time like pretty quick which means either you put a lot of money from waterfront agency into supporting benji or you didn't well you didn't raise capital we never raised capital we got a ton of customers and we just were really smart with our money so we put out a survey before our customer or before we created png and said hey if we build this will you come essentially and we got a pretty decent amount of people that were interested in actually what's decent uh we interviewed 250 people okay got it and we did a lot of we have designers in-house from the agency prior to and um so we're doing a lot of the graphic designs ourselves and actually through trello and in the background while we were raising not raising but while we were earning uh revenue we were building uh what what we have as proprietary to us which is the technology arm which is our our core strength to this day uh and then we were just again fueling there was a time where i i didn't receive a paycheck for uh close to six years of just uh of saving and just driving it back into the business how did you pay your bills how did you eat um we did take money when it comes to the necessities but in terms of an actual paycheck it was never received i had my rent and money in terms of food uh covered but in terms of anything else i did net off we just literally put it back in i could say in full confidence i think i spent close to anywhere from a thousand to twelve hundred dollars a month in when it comes to rent and food so you're all in cost in 2016 2017 you are able to keep your personal living expenses under 2k per month so you could reinvest everything yeah i eat dirt for literally four to six years man and i and honestly to this day like real talk i think that was the reason why we are where we are today if it wasn't for those it wasn't just me either it was me it was my co my two co-founders like we sucked it up we lived together for a period of time um we made a ton of sacrifices both uh physically emotionally spiritually with with family etc yeah we ate dirt so let's now walk through like the business model right so you you send us a way out to 250 folks who are already doing design work for at the agency what did you pitch them did you say hey pay 200 bucks a month to try png like what were you actually pitching them yeah we were pitching them unlimited graphic design for 79 a month how does that work it didn't it didn't work at all it was terrible it was a terrible idea i think we got our first hundred customers in under four or five months um and some of them were paying 79 some of them weren't uh we had a really good outreach strategy what did most people pay you 79 bucks on the bottom end to how much well now it's a little bit different now it's much different but those are 500 though the cheapest ones 79. there some of them were paying 79 some of them were paying somewhere around like five hundred dollars okay got it and what does the average customer pay you today per month uh our middle package is 4.99 so uh i would say and on average would be that okay okay got it and so just to be clear this is not a marketplace model where you have designers you have brands any design work and you're taking like a fee like fiber of transaction volume through your platform that's not accurate correct correct yeah we have 150 designers essentially working for us we pay them full time they're under uh our brand they do not work for anybody else and it allows us a little bit more uh control and it also allows us to train the designer properly in order to meet the standards of what we that what we've set for uh for ourselves so you go from your first hundred customers back in 2016 to how many customers are you serving today now monthly yeah we're approaching a thousand now okay a thousand and so where today where are you getting most of those new customers each month what's the growth strategy acquisition strategy yeah acquisition strategy is is in our favor seo we're doubling down on content and just delivering a crap ton of content on a daily basis uh we're doing a lot of retargeting we're doing a lot of advertising email marketing and in inbound leads has been a has been a godsend we're still doing that's the main one the additional side stuff would be um cold outreach that's actually how we got on this show yeah right now is is literally saying a cold email saying hey what's up you're awesome and would you mind putting us on your show and you you ended up saying yes so um it does work for the people listening at home and so i mean can we do the math 100 000 customers at an average 500 bucks a month you're doing about half a million in mrr right now yeah i mean it's it's because of just like existing things and everything like that you're looking at around um a little bit over 350. 350. okay so 300 000 per month in revenue against still obviously healthy um yeah where was revenue exactly a year ago um i would say probably around 1 60 175 this time last year okay okay and can you go back up late to 2019 or sorry 2018 do you remember i would say somewhere around 100. it was for us to give you the full if you want to continue i might be able to go one more year but i would say for the people at home that are listening what's most important is for us is from 100 to from zero to 200 was extremely was a little bit difficult from 200 to 400 actually from 200 to 500 was ridiculously hard like we kind of stayed in limbo for a pretty decent amount of time close to a year a year and a half and then once we hit uh 600 you're talking customers 600 customers in terms of customers yeah yeah sorry for not clarifying that but once we hit 600 from 600 and above it just skyrocketed and and i think a lot of that has to attribute to just brand appeal um overall just look and feel of our of our website and our graphics and our work but also the advertising arm as well so what are you spending on average in terms of calc to get a new 500 a month customer today uh i would from advertising specifically yeah or yeah maybe fully weighted cap too if you want yeah uh i would be somewhere around two something um 240 250 somewhere around there and that's not necessarily like amazing in terms of uh advertising um but that's just the way the lay of the land is now i mean why do you say that you're paying 250 bucks to get someone that pays you 500 bucks in the first month you're it's an instant payback period absolutely but we want it to be better as everybody else would be but that's i mean that's that's already insane i mean that's like i mean how do you what would you do to try to improve that like why even focus any energy there that's already best in class yeah sure um and that's a good question i never really thought about it uh and i am i'm understanding your metrics right correct you pay 250 bucks to get a 499 a month customer yeah i mean through advertising specifically yes yeah yeah i guess i mean i guess the thing to consider is really in a business like what you're doing it might be a lot of virtual every designer you hire is essentially their own p l so if you if they have unallocated time or they're not working on designs for one of your customers it's basically like wasted money essentially for you so what margin do you like to make per full-time graphic designer yeah i'll be perfectly honest i i don't even think that i've even thought about that um and from a dollar amount because my particular background isn't necessarily the the the numbers and cents type of thing and that is definitely a valuable thing to to think about but what i would say is in terms of percentages it may not have been thought of in terms of the process and the flow it has been and so our unique prop is our unique uh strategy is there's two sides to pengy right there's the customer facing side and there's a whole another world of panji that pretty much eliminates that type of downtime and essentially once a designer is here and they do a project it's automatically given with as much detail as possible spoon fed to them on a silver platter so they know exactly what to do but in terms of like percentages and numbers and things like that that i won't be able to give you well i mean are you profitable today are you guys burning oh absolutely yeah we're definitely profitable um you know i'd say somewhere in a realm of 60 to 70 depending on the month 60 70 percent of your revenue goes to the bottom line every month uh in terms of profit that that would be our profit yes so you're saying i mean on 300 000 of top line revenue monthly 60 to 70 profit would mean your bank's going up 170 grand per month yeah okay got it so i guess the reason i'm asking these questions is because if 170 is going to your bank every month in terms of cash flow that means you've kept your expenses to 180 000 per month all in is that accurate yeah that's pretty accurate um we are extremely lean in all aspects of life were extremely like every ounce every penny is accounted for and that is something that i take a look at specifically is what more can we can we can we cut out do we need this particular subscription and we've even has gone as far as questioning the uh the roi of zoom which is you know somewhere around a hundred dollars and so if we can cut it we'll cut it no no i think that's fine i mean your biggest cost though all that stuff you just mentioned is fine but your biggest cost you have 150 full-time designers i mean that that's every improvement you make there is going to drastically hit your bottom line where i'm confused is you said these 150 designers are full time with you but if your total all-in expenses every month let's assume all 180 000 bucks your expenses went towards their salaries you're paying each of them on average 1200 bucks a month or an annual salary of like 15 grand and they're full time with you there's no way those design i mean depending on where they're from you can't make a living at least in the states on 15 grand a year correct and that's because and that's the beauty of of a service very similar to ours um we don't primarily source a lot of our talent here in the united states it wouldn't be feasible if we were to do it here in the united states we wouldn't be where we are today if it wasn't for that we primarily source our tax talent in we primarily source our talent in vietnam my business partner is actually vietnamese and also the philippines and we're trying to get into other areas of asia as well but that's what allows us to keep our dollars and cents uh so low yep no it makes a lot of sense that's a good obviously good way to do it now you mentioned your total team size is 125 people today that does not include obviously 150 full-time designers does it that's all-encompassing yeah i think we're at like 133 to be exact oh got it so you have 133 full time on the team how many of those are designers um we have 10 people here in the united states so it would be 123. 123 our designers and then 10 are actually running the business yeah how many of the 10 are engineers when you say engineers do you mean like design engineers write code um none okay i don't have anybody that writes code here uh we we primarily have all of our design our development talent in overseas so you sort of hire them on an as needed basis as as contracts no we have as mentioned my business partners vietnamese uh so we have a whole team that's specifically over in vietnam okay but you just said 123 people are full-time designers and the other 10 are so where who are developers yeah so i didn't take that into consideration so uh it would be there's seven developers so then it would be seven minus one twenty three which would be one sixteen yeah yeah i got it got it designers yeah that makes good sense okay cool yeah by the way i mean we live in a flat world now global arbitrage on talent is is really important and by the way this isn't like a bad thing right there these are probably great salaries from where you're sourcing these people from um do you have any so in terms of getting more customers on board obviously you're spending money each each month on uh facebook ads about how much are you spending on just total paid ads i'd say roughly 50. so that's by far your number one channel in terms of in spend yeah i mean that in terms of that's our biggest expense yeah absolutely yeah um what have you tried any sort of strange new channels that have worked well or is it all traditional google facebook ads etc it's a lot of grit and grind when it comes to seo seo is like our our biggest thing uh content legion things like that we do a lot of like outreach when it comes to partnerships so we do have a special connections to a couple of accelerators and incubators that generate affiliates essentially affiliate commission and things like that so that's been a channel that we're consistently growing and we see a lot of opportunity for we want to definitely grow that in 20 the rest of 2020 which is only a couple of months but for sure in 2021 we're gonna go pretty heavily and inside of just network marketing and things that nature which essentially is you um or us excuse me uh getting other people to promote who we are and what we do and getting ourselves in front of new audiences because a lot of people don't understand what unlimited graphic design is they have no idea what subscription models are when it comes to graphic design and we're trying to fix that so when people use an adjective or like a verb that says i need graphic design or graphic designing of any kind we want people to start using the word penji and not that of other industry leaders that are either in our space and also in a marketplace space so if someone brings you a 500 a month customer as a partner what commission do you pay them 15 over what period of time occurring yeah for the life yeah absolutely interesting um and how long does the average customer stay with you somewhere around four to six months four to six why not longer i mean this search to me like this is essentially replacing a full-time designer they should have really long life life cycles uh good question competition so competition and loyalty is something that is extremely volatile in what it is that we do like all type of service based sas is something great because once you're in it you're in it in the ecosystem and so now it's a matter of like how can you how can you build an ecosystem where people have no choice but to stay with you and that's something that we're we're we're slowly figuring out and i think we'll have a better answer for that in 2021 so what's your gross revenue turn annually uh for this particular year like expectations no like last month what was your revenue churn in the month or just turn in general how do you think about churn oh you said churn i'm sorry yeah so it's somewhere between 10 to 20 excuse me 10 to 20 percent depending upon the month and i say that because it was skewed because of kovid but in short we want to get under 15. last month in particular it was somewhere around 12 percent yeah by the way this makes sense now while you why your cac is so low compared to your monthly recurring revenue for a new account it's because it's not like traditional sas where lifetime value is 40 50 months your lifetime value is you know you turn over almost you know 120 percent of your base every year annually yeah absolutely and that sucks takes the business i mean yeah do you compete with i'd rather say not say the names on air um but there are some competitors that if they were if you were to google the word unlimited graphic design you definitely see a lot of people the thing is this is a super easy to understand this is a super easy to set up type of market um where it doesn't necessarily require a lot of a straight up investment in on your end you can literally start a business like this with a website and a funnel in order to just drive uh to drive them through so you could use it through trello you could do it through email if you really wanted to you could do it through slack so the cost of starting this up isn't necessarily all that high and i think for that in particular it kind of just it destroys the market so if somebody has a 15-day money-back guarantee which we do somebody else has a 30-day money-back guarantee somebody has a a free trial a freemium model it kind of disrupts it and so we have to separate ourselves in the marketplace as the industry leader a uh and also a reputable resource for them to use so we're not gonna so they go on our website they feel that that we could take care of them yeah a lot of emotion involved unfortunately in this world whereas sas maybe not so much but i mean canva is a sas version of you there's no people right there's no people it's it's just empower people to do it so easy they don't have to hire somebody else right so that's like your in my opinion that's your true i mean that's your true competitor yeah um i would say that or not like a 99 design for sure um that's probably our biggest uh our biggest competitor is that yeah how many designs are you processing per day that is not my world um at all i'm not the technology arm but we do have technology for that i would say in upwards like several thousand i would say in the close to the five digit mark yeah got it uh so yeah i'll call like a thousand per day something like that oh it's definitely more yeah it's definitely more than that but um and what what what is the number one use case people use you 400 designs like podcast logo or blog thumbnail or youtube thumbnail i'm not i'm going to use you as an example if that's okay um but very similar to people like yourself content creators people who are constantly posting interviewing people that don't feel like doing it themselves the second thing and i think is probably the biggest is agencies people who are have a ton of clients again another one of those businesses that's super cheap to set up you don't really have to do anything and you don't have to have the credibility to get a client but you do need the resources and you do need the power uh and the engine to help you that with that so agencies are probably number one um because they have an in-house designer already maybe they're extremely busy they don't want to hire somebody else full time at 60 000 a year they want to hire a company like ours at uh you know ten thousand dollars a year uh which is far better than that of 60 and i definitely want to say that we're not replacing graphic design we have a very strong passion for the world of graphic design and respect for it and there's a need for high talented sixty thousand hundred thousand dollar a year people um so we're not replacing them we're just adding it to it because that sixty thousand dollar person is extremely busy they don't wanna do small stuff in the grunt work and they give it to us you know i think people get that i think they totally get that um okay this makes good sense um anything else that you want to touch on that we haven't chatted about already no i mean you know i think in in in all i hope that people resonate with this story and i hope that they hear the numbers the dollars the cents but also the fact that we're bootstrapped we've never received an ounce of funding we never plan on doing that i think those types of businesses are few and far between i think it's now sexy to go out and get capital and i think that is an extremely awesome thing to do if your business needs that but if you can go as long as possible and eat as much dirt if not more dirt than we did i think that you'd be far better off as a business and as a human being um than just succumbing to capital right out the gate without an mvp or initial idea and jonathan i think to your point earlier as friends you have the diaper story from bezos right diapers.com in brazil uh was getting a lot of business bezos said you know what we can afford to lose more money for a longer period of time until these guys go out of business so i'm going to decrease our diaper prices why can't one of your competitors that's venture-backed go raise literally they go their pitch deck to go raise money says we're gonna spend more dollars on cpc to drive pengy out of the google ad market um they can't pay our rates and until they go out of business we'll keep our rates super low once they go out of business we'll jack them back up yeah there's nothing stopping somebody from doing that um and we've actually have seen that um in somewhat happening now um particularly i don't think that that would work because at the end of the day uh our seo in particular and our just brand recognition is going to speak for itself but yeah you're 100 right it's definitely possible i i do for your seo is it in-house in-house yeah yeah yeah i mean you do well i mean some of your top terms are like cool logos or graphic design websites or online shopping apps these sorts of things which drive you hundreds of free clips each each month yeah that's definitely um myself and my co-founders background is uh lead generation inbound and seo like that if you were to give me a definitive like definition i am the cmo not the ceo yeah and so my brain is more so in the marketing getting in front of people emotional aspect yeah no this all makes sense uh and i'm just going through ahrefs sort of looking at at again what what words you're ranking really well for paid spend things of that nature but very cool man let's uh let's wrap up here with the famous five number one favorite business book uh never get a real job by gerber good friend had him on my podcast amazing guy what's your podcast uh it's actually in limbo right now but i'm going to be calling it mine grapes it's going to be launching in 2021 it used to be called blind entrepreneurship but mine grapes is going to be it i hope it's entertaining as hell otherwise you're going to end up in the white noise of all the other podcasts launching why do you think i'm re-uh i'm redoing it it was it was so boring um it was just not as good you asked really good questions and and you're far more into more intelligent than i am so well i don't give me that credit i would just say i am very aware of the fact that even like i could be the dumbest person on earth but if i can create entertaining content i'm going to get the eyeballs over a phd covering the same topic matter couldn't agree more yeah i uh it's something i'm constantly thinking about but i i think the idea is i want to create more content so i can drive more eyes to the to the business and whether it's entertaining to me if it's entertaining to me it's going to be entertaining for somebody else yeah all right number two is there a ceo you're following or studying uh tony shea tony shea from zappos um i've always loved him i've i've always loved how he started zappos and he was able to upgrade your shipping in two days or whatever it may be he said it's gonna be delivered in seven it ends up being delivered in 24. um that that level of experience i think has never been matched it's it's never been done better than that to this day um so tony shea 100 number three what's your favorite online tool for building the company i think i'm gonna go out on a limb here and say something completely different than most but snovio i think was is a pretty dope tool basically what snow video does is it goes it basically gives you the email address and the contact of the person that you're looking for i think we spend somewhere around 50 a month for it they may have increased their prices but if you're trying to get into places i think that's a great tool to use number four how many hours i sleep to get every night seven and what's your situation married single kids single and uh i also think that that would be that was a another um that a tribute to our success is the fact that i don't have much responsibilities um and and i'm incredibly grateful for that i do have a girlfriend but i'm not married i kind of just live my own life i don't watch tv i love basketball but i don't really i don't have a netflix account i don't even have cable i haven't had cable in the past six years so um and how it already kind of gives you i'm 31. so take us home here then last question what's something you wishing you when you were 20. you're stubborn and you need to be more patient i think patience i wish i was taught that...