How Plannuh CEO Peter Mahoney grew Plannuh to $48.6K revenue and 18 customers in 2019.

hello everyone my guest today is peter mahoney he's the founder and ceo of a planner and has more than 30 years experience in technology marketing development and general management peter has run businesses up to 650 million in annual revenue and has been the top marketing executive for companies from startup phase to multi-billion dollar public companies peter you ready to take us to the top i am ready nathan let's go all right this is planner p l a n n u h dot com with that good old boston accent right that's exactly correct well done what's the company doing how do you guys make money well we sell a marketing planning and budgeting platform uh and we make money by licensing uh this to companies from very small companies up to departments of large enterprises uh in with annual license contracts okay interesting so when you use the word license i want to make sure i'm clear you're you're going dart to consumer you're not going through yeah yeah there's no value added you're not in other words you're not white labeling it to agencies and then the agencies are licensing it to end customers you have the direct relationship that's exactly right it's a it's a classic sas direct to customer uh and the customer is anyone from a uh relatively small size company all the way up to i mean we have michelin you know a small department of michelin in australia uses our software and this it looks like it's hyper focused on marketing budget is that right that's exactly right very specifically on marketing because they have some very unique actually that's uh not correct there's no such thing as very unique they have unique requirements for the way that they uh they plan their uh their budget and spend well we'll learn more but i was gonna one of my first questions gonna be this is a very competitive space you know zero is growing extremely fast there's a lot of companies in the space but but you have hyper focused on one specific expense line item and i'm sure that's giving you a competitive advantage where others might see a weakness that's right in fact uh budgeting in general may be a relatively crowded space marketing budgeting is not uh and uh because it's very specialized uh and in fact i was the cmo of a company called nuance a two billion dollar voice recognition leader i went out to look for solutions and it was very very little out there there were some very high-end very expensive things but nothing that was what i expected to see which was more like a typical sas model like a slack or an asana that i could just start and get going for cheap and easy and grow from there so i saw a huge opening in the market for doing that that's why we built planet that's great okay so what is cheap and easy what's the average kind of company paying you per month to use the tool yeah so right now we've just launched at the end of december i mean the very end of december i think the 28th was the first paying customer of 2018 right of 2018 exactly so there are 18 customers so far the average annual revenue right now is about uh 2700 to be pretty precise okay and you're selling that all up front pretty significantly in fact if you look at the last five it's more like 4 500. okay that's great sorry i didn't mean to cut you off there peter so are you selling that full 2700 per year contract they're paying it all up front or they're paying about 230 bucks a month monthly all up front all upfront cash upfront that's great okay so 18 folks at that rate you just passed about kind of caught four grand in monthly recurring revenue something like that yeah exactly and we we think arr but obviously translate to mrr it's about 4k it's uh arr is uh you know 49.50 just under 50 000. i love that you're so comfortable coming on talking about those numbers because most people especially if they've come from a place where they're like listen nathan i've run a multi-billion dollar company don't don't grill me on my freaking 40 000 bucks in arr right now but everyone has to start from nothing right nathan this is your show i'm a listener of course oh you listen i love that i love that that's great so tell me tell me real quick because i want to get in your head a bit you you've run like massive companies before so what like life event happened where you said you know what i want to get back and dig in the weeds and put on my patagonia you know sweatshirt and go at it again so i it's like always wanted to do this nathan and uh and it's been way too long in fact i'm i'm the son of an entrepreneur and unfortunately my dad died a few years ago before he could see me do this i wish i did this first because he'd be thrilled to participate in it and and i always wanted to do it i always had an excuse and i had the perfect opportunity i had a 13 year very successful career at nuance uh it was very good for me and it was the right opportunity to uh to to take the plunge and do it i couldn't come up with any more excuses so what year was that when did you take the plunge when's the first line of code so 2017 april of 2017 is when we incorporated the company okay and where yet today in terms of team size so we've got five full-time people right now we've got a couple of part-timers and then we've got a team of seven in ukraine uh doing the hands-on keyboard coding okay so five full-time and then seven contractors in ukraine yep okay so calling me 12 there total how did you spend a lot of companies when they're launching they've heard about these big cost savings in ukraine and argentina and some places in india but they go i don't know anyone over there how can i spin up a dev team how did you do it how did you find your point person in ukraine it was an interesting journey so we actually started with a team in india and we found them through a local connection here in boston that we had some experience with and they were great for our early stage but then when we needed to start to really harden and get the system ready for a different kind of scale because this is a system that's going to need to support a lot of a lot of users it's intended to be quite a large scale system and we need the right sort of privacy and security stance we needed a different level of team and our head of engineering uh was the head of engineering for uh a team called a company called jaibo that made the the uh the robot uh sort of an emotional robot thing great experience with this company we had in the ukraine so that was our reference in and that's how we found them interesting okay very cool now how have you funded this are you bootstrapped or have you raised so we've raised some cash uh we've raised uh about two million dollars to date uh be all via a convertible note uh it's primarily angels including me i'm our biggest angel that's the best place to be yeah absolutely and and we've got two uh boston-based vcs who've got sort of small placeholder checks in this glasswing ventures and accomplice okay very good and and um okay glass one compost uh did either of them have to like leave the convertible loan or did you did you lead because you took you know the majority of it yeah i i did it first you just set the terms i i set the terms up front uh and then they begrudgingly joined me very good all right and then obviously it sounds like you just launched so revenue 12 months ago was zero can't really calculate a growth rate yet at this point you're too early that's exactly right unfortunately we can't uh we can speculate but that wouldn't be too useful yeah tell me how a company like yours um thinks about kind of onboarding and churn and how strong is your bucket you know you don't have a big enough cohort yet right to really have like gross churn and expansion revenue data but you still have to think about keeping customers and getting them activated so how do you balance that yeah absolutely in fact it was an interesting journey nathan because when we started the original thesis was we wanted to go out really wide and have a real freemium model because we thought it would be great to have lots and lots of people because this is a data play for us my cto is a data scientist the idea is to build sort of ai based recommendations to not only build the plan but actually help people understand what they should do with their plan uh and so we originally said let's go out in a freemium model we decided that one the product wasn't quite ready to be magical to get people up and running and do that coaching up front so we decided to focus on on really getting sort of the paid customers up and running and successful uh and and to do that we provide uh we provide uh onboarding services to to get people up and running so we we white glove them everything from we take all their data we set up their budget we train them we do all these things uh we initially did that for free uh and and we're now uh moved to charge for that so it's a thousand dollar charge to get people up and running uh with with the system and people are happy to pay that because we not only provide the services but we actually give them some expert advice on what they what their budget is you know what are they are they doing the right kinds of things so it's it's a super valuable service for them to get up and running well you the price point you've chosen is a tricky one so when i look at i've...