How PhoneWagon CEO Ryan Shank grew PhoneWagon to $1.4M revenue and 750 customers in 2020.

hey guys my guest is ryan shank he's the co-founder and ceo of phonewagon a call tracking and two-way business texting product for agencies all right ryan you ready to take us to the top let's take it to the top sweet man all right so for first example call tracking is very fragmented a lot of players in the space how are you differentiating yeah super crowded space uh everything you know especially like phone calls numbers minutes very very commoditized one of the things that we're doing uh we're differentiating in a few ways one uh design and just flow a lot of a lot of companies in the space have been in the space for a really long time and have just gotten so just like heavy so kind of taking the approach of like a zoom right it just works it's beautiful it's easy and you know you can go in and you can actually just you know make make it make it work from uh from the beginning the other thing we're doing is we're adding in and layering in a lot of like automations and true like voice and and like uh telephony features so you know uh like if there's a missed call so think of like an active campaign or you know something where you can build kind of like triggers and rules like a zapier right like if this happens then this happens based on either phone calls missed calls voicemails things like that and a lot of times you know uh that is the majority of the leads happening for most service businesses um right now is through the phone um so so that's one of the things ways we're differentiating uh in such a crowded kind of call tracking analytics space yeah and give me kind of a sweet spot so on average what's the company going to pay you per month or per year to use the technology so we're working with a lot of agencies right now our average agency pays about 115 a month and has an average of like three to four clients with us we have some customers you know that are paying 3000 a month they have you know 150 clients and we have some that's just the actual business not an agency pays like 45 bucks a month but blended average across the base is 115 bucks a month okay and what is the base today how many customers so it's right around 750 uh agencies as customers so 750 times 115 yeah that's good so then what's that put your monthly revenue at right now so right at like 87 uh 86 we actually just passed 87k today congratulations by the way the 80 the 83 the 83k a month number is a big one huh yeah we just hit that uh actually in june uh late june i believe we hit 83 we dropped a music video called we hit a mill it's on spotify did music videos on youtube uh we dropped a lot of like you know uh products that we use intercom slack tom tong's name jason lemkin's name so it was a really cool like sass video that we did just to celebrate the milestone and to get some momentum for uh for the company were you a rapper back in the day uh i was a wannabe rapper i actually was a rapper at uh my high school talent show so i mean pretty much pretty much the same thing you're basically two chains right this is undiscovered undiscovered talent sas founder and soundcloud rapper in one i mean come on all right i love that now where is most of the growth so sorry you're at 87 000 bucks a month today where were you a year ago ah good question um year ago we were probably uh so what was so what is it august of 7 august of 18 we're probably like 35 35 k so where is that most most that growth coming from adding new agencies all together or expansion revenue so we get a ton of expansion revenue we've actually had net negative revenue churn like five out of the last six months so what happens is you know a lot of our customers are agencies as soon as they add clients you know they're adding additional numbers additional usage with us as well so you know we'll see you know 2 000 bucks a month 2 500 bucks a month in expansion revenue every single month 1500 bucks a month insurance our our net negative uh you know retention is our net negative churn every single month is is there uh you know we had one month where we had to flush out a bunch of old accounts so uh so we didn't hit it but that is uh that is one thing that we're seeing a lot of good growth from um we're also seeing growth kind of just going back to the question uh you know we're basically like cold calling into agencies and we're doing a lot of content stuff so calling in agencies we sort of figured out a way to uh to be able to kind of get an angle in start having a conversation with them move it into a demo and our demos are closing at like 70 right now so we can get we can get these guys onto a demo our product is selling itself 1500 intern per month 25 2600 expansion that would mean on a percent basis it's about 24 gross annual revenue churn and 48 expansion for 124 net does that sound about right yeah yeah okay interesting so let's go back to the demo flow here for a second you said 70 of demos convert to paid yeah how many demos per month so that's the thing that we're trying that's the thing that's actually been on on the decline right now so i mean we were doing like 40 to 50 demos per month honestly within the past few months we've only been doing maybe like 20 to 30 demos per month and then we obviously get you know sales that are don't go through the same flow they don't get a demo they'll just either sign up for a free trial and then either auto convert um you know or whatever but uh yeah right now it's just like 20 about about 25 demos per month okay and how many new customers total business why are you adding per month uh so we're adding gross new ad we're adding about 40 to 50 per month um and then again we'll churn out maybe 20 and then so like you know net new ad 2025. oh so you're churning out 20 20 customers that make about 1500 a month in revenue exactly yeah yeah interesting okay very cool so that makes a lot of sense break down the sales process for me so what's the team size today and how many quota carrying reps uh so currently just have one quota carrying ae no sdrs uh we sort of leaned out recently in our sort and our focus really more on like product and marketing today uh so we just have one quota carrying rep uh quota is 2500 bucks a month in uh in in new mrr gross new mrr that's gross plus expansion um and yeah so we had a team of of sdrs and we found uh you know we're getting to we're getting to the prospects uh we're able to kind of get through to them but the thing is we didn't have like the right features or the right integration so i was like look let's take a step back on growth we know that we can do it we can get there but until we have it there's no point in getting to these guys spending all this money getting them to you know get on the phone and then it's like hey we're losing out on deals because of a feature or something like that so we're pulling back right now focusing on product uh engineering and at the same time just put down a lot of like content and everything and then we'll ramp it back up once we have a lot of these like integrations how many engineers uh so we have five engineers right now and total team sizes how many total team size is eight eight okay cool yeah that's good so interesting um interesting so how i mean is the quota is is your one quota karen guy is he hitting or she hitting quota uh they have not been they have so right now we just we have one we just uh scaled back to one rep um so he's gonna hit quota this month um so we had multiple reps i honestly i think we had too many uh based on the current volume that we have uh so they weren't hitting they weren't getting quoted though how are you getting new leads in the top of funnel yeah so it's it's right now we're getting a lot of referrals from uh from different agencies plus uh about a month and a half ago i actually launched a daily podcast sort of inspired by yours where i interview agencies or owners uh and that's actually been working really really well so we'll go in i'll say hey i want to do a podcast with you we'll do a 15-minute podcast they'll tell me tactical things about their agency and then you know just in that conversation uh they'll end up like saying hey you know we could use your software uh so that's been working out really really well is the podcast the other thing is just again a lot of times either a client will work with an agency they'll spin off from the agency and go to another agency so we're sort of getting a lot of sort of like bottoms up clients that way like hey i was using phone wagon with my last agency uh when they go to another one they will and then a lot of referrals uh and then we're doing it we're getting probably 20 uh 20 of our leads so we'll call it like you know maybe 20 uh leads per month from paid ads as well so we'll do you know we're doing a lot of like google ads per month unpaid on paid total rb spending yeah we're spending about 15k a month on paid we're doing it between like g2 crowd cap tara google ads um and 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