How Plot CEO Jack Parmer grew to $2.2M revenue and 3K customers in 2017.

hello everyone my guest today is Jack Palmer he is the CEO of a company called plot ly we're gonna jump into it today Jack are you ready to take us to the top yeah all right so tell us about the company and do you say it plotted out why our plot lay people say it both ways I personally say wait a second knowing is how I figure I never drive you crazy no it's all right I figure you know plot ly has a little extra information how to visit the website all right so what's it do so we make the fastest growing charting libraries for the web and for data scientists so if you make websites and you're looking for a charting library or you're using a charting library there's a good chance you already use us in our libraries are open source so they're completely free if you're a data scientist you probably program in our python and matlab and if you make charts there's probably a good chance that you come across just so you're already using us and our these charts people like the data scientists inside of a team will use to presented board meetings or team meetings or this is actually visualization for like in a blog post that consumers are read and they're using it for onboarding it's both but it's mostly the former um so internal exactly so like a good example is the data science team at Tesla uses us so they all program in languages like Python R or MATLAB and plot least kind of this communications platform where they make their graphs in Python or R and then they can share them through plotly with the rest of the team you know other departments at Tesla internally with themselves that's good and what's the business model ours is a SAS model it's both on-premise and SAS which is a little bit an on-prem interesting why yeah well we wanted to be a cloud company but most of our customers are either they're in like aerospace finance or even someone like Tesla won't use a cloud product for the data science teams they want something completely behind their firewall so you're literally going out to the office installing a server room helping themselves up I mean it's literally an on-prem solution it's literally an on-premise solution fascinating what present good we use a just a quick shout out we use a service called replicated to build our on-premise servers and they're really great service based in los angeles i think and anyone who does cloud is thinking that doing on-premise you look at replicated now is the on-prem model still monthly recurring they pay you a monthly fee to keep it going it's yearly okay and our cloud plans are yearly also okay good so the the model is still the same one just has higher costs so your margins are lower because you have to pay for the installation yeah and it's the same it's essentially the same software too you know we take our cloud server and package it up in a docker container and that's our own prom product interesting okay what does the average truster pay per year would you say so for on private starts at about two thousand dollars a year for a minimum of five users and then as you scale the morning to way so it's ten grand a year minimum yeah okay that's the minimum to get started in cloud cloud the starting plans much cheaper it's four hundred dollars a year to start ok and do you I mean what if you look at your your whole revenue PI as a hundred percent what percent of that comes from cloud versus on-prem interestingly it's um it's about 5050 ok ok that it yeah and so give me more the back story here on you what do I mean what you're Joe launch the company in I've started working on it in 2012 started writing the software and then we incorporated you know at the very end of 2013 and who's we what's your team size today and what the founding team looked like so we're about 20 full-time and then we sort of have a a team of about another 10 contractors that mostly work on the open source libraries and I was in Canada the 20 I'm mostly in Canada we have a VP of Sales in Boston Technical Sales Lead in New York but yeah everyone else's in Canada okay and have you bootstrapped the company have you decided to raise we we pre staffed the first year and it was just myself and one of my co-founders Alex Johnson Jeff co-founders yeah with for Holy mackerels there's five total yet it took a a four co-founder or four founders total including Gaeta myself okay yeah holy Mac way so what do you do just split 25 25 25 25 the lazy way um Alex and I were involved a little bit earlier um so it wasn't quite 25 25 25 25 but it was close it so basically at 30 30 20 20 something pretty close something like that yeah yeah okay interesting so good pretty fair now you were building on your story there I was imagining about to say we bootstrapped and then we raised X amount of money how much have you raised we we raised four and a half million seed and then took on a million in debt okay got it why go the debt route instead of raising additional cat like you know equity it was venture debt so we just did it as part of part of our round and one of our few CDs had a really good relationship with your change square one Silicon Valley Bank yeah that's good so just to be clear you did the four point five at the same time you put on another million on top of that yeah any kind of crazy covenants you regret no not really it's working for you yeah okay now you would only take debt if you knew how to spend money and make more money with it at a rate higher than the debt interest payments so how are you spending money to acquire customers and what gives you the confidence that you know you can do that at a pace greater than the debt interest payment well we're actually cashflow positive so we've got to a I think we spent it in a pretty smart way most of it the vast majority of it is just on product and specifically the open source libraries the only way that this company can work is if everyone is using our charting libraries and there they're truly the best thing out there so early on that was pretty much always spent money on and all we focused on forego fur go to market the most efficient way that we found to spend that money for our product and industry um was just making our content marketing and our documentation really really really good so now paid spend no Facebook guys no Google Ads something like that yeah I'm full disclosure we tried it you know we did all the experiments how much did you experiment with you know I would say since 2013 you probably spent 20 grand total on paid ads trying different things it didn't work it didn't really work there are few blogging sites where we've done banner ads and they're the sites are so niche that it works but it's not it's never been as great as the content marketing SEO strategy for us a niche stuff is hard to scale you have to keep finding new niche places to put the banner ad for it to work right yeah yeah so so what do you today in terms of total customers and let's just talk a cloud not on Prem yes so we have several thousand customers ok MK is it fair to say maybe between three and six thousand yeah okay good and then I imagine you have a much lower number of on Prem but it's 4x well 10x the revenue right I see is it I mean what you have about 300 and on Prem you know in terms of in terms of the number of users that these companies total oh your since 3000 that is he that's not logos that's users inside of all the logos for cloud yeah for cloud okay got it the three to six thousand yep yeah yep that's that's fair now if he I mean you told me earlier the the cloud makes up about 50% of your revenue and we just if we just take minimums from what you just told us you're half smiling cuz you know where I'm going with this but if we take minimums with 3000 customers at 400 bucks a year that puts you guys at what about a hundred grand a month or 1.2 million a year just on the cloud if I double that that puts about 2.4 million in ARR pretty healthy huh it's a little bit less than that I'm higher than 2 is is around there yeah yeah they say you have 15 days left in the year you think you'll break 2 by the end of the year yeah we broken - overall that's good for the year for sure that's good and what are you growing at year-over-year would you say if you count all of our revenue it's been about 1.8 per year so we've almost doubled every year um great you know our first year we did basically not paying less than $300,000 now and I was back in what year was that actually when did you launch 2012 we so we incorporated the end of 2013 in our our first year of selling was 2014 ok 2014's a 300 grand in 2014 you're now going 80 percent year-over-year we know today you're at about 2 million a year so 160 ish you know per well 170 ish per month so you are at what about a hundred grand twelve months ago monthly yeah overall about and you charge so when you look at the model do you like as any of that revenue big chunks of professional services related stuff to installation on the on-prem or no it's mostly truly recurring it really depends it's very seasonal sometimes part of installing a non-prime instance will be helping them with integration or adding something to the open-source libraries that they need but it's pretty seasonal and sometimes it's it's part of what we have to do to get the prime server in the door yep when you look at how quickly you like to get your money back when you put it out to acquire customers what do you like to keep your payback period under um definitely under net sixty okay sixty days yeah yeah oh that's amazing under two month payback period I mean that's that's great it's a lot of work Hawaii to get that well it's just there can be kind of a surprising number gymnastics when you sell enterprise software into large companies no often the you know that person you're selling to has no idea who works in procurement was you know the person that's gonna end up paying you so it can just be a lot of time on the phone tracking down how'd it get paid if you want to get paid quickly yeah it's just part of the enterprise sales yep and then if I back into that right so that two months pay back or net sixty and you're spending and call it people are paying you call it 30 40 50 60 even sixty bucks a month if we took a weighted average across on you know cloud and on-premise ition fully weighted man or you don't look at it like tell me how you look at it don't don't force you don't have to answer my question if you look at it differently you mean the money to get customers in the door yeah fully weighted so include salaries of content people and stuff like that well I don't know exactly but you know what I can say is we don't we don't spend money on ads as I already mentioned and we have to make documentation for our products since it's really a product for programmers anyway and we've been really lucky in that that document has done really well in SEO yeah um so we don't do a bad sales you know people start using our product and oftentimes people will come to us you know everyday people come to us from companies who have already been using this software for several years and I think if you just write if you just make a really great product and um you have at least one strategy like you know for us it's been it's been SEO with you know the thousands of documentation pages we had to write anyway yep so you're killing two birds with my own yeah yeah what's your turn look like today it's varied a lot over time you know for on the cloud side for paying customers it's about its I think it's about ten percent now annually or monthly annually yes that's healthy and an on-prem is probably much stickier right cuz it's a lot more work to get it going yeah more work to get it in more work to get it out yep yeah that's a blessing in disguise right yeah alright let's wrap up here Jack with the famous five number one what's the last business book you read oh man I don't mean business books I just work on making the product great what's last book you read oh let's see all the Pretty Horses Carson ah the Southern gothic writer I'm thinking yep never sinned of course number two is there a CEO you're currently following or studying oh you know like I like watching what um West's doing it's just it's just so inspiring number three besides your own with your favorite online tool um github fantastic number four how many hours of sleep to get every night I I like to sleep a lot I get it I know it's at least that's great ten hours and with the situation married single you have kids I'm in a long-term relationship okay not married at any kids are no no kids no kids yet alright and how old are you I'm thirty all right jack take us back ten years what do you wish your 20 year old self new man I think I think it's someone I think I wish I knew at that age that I could have started my own company I think it takes a long time for people to just build the confidence yep yep there you guys have from Jack build your own company earlier if he can have confidence there he founded plot dot ly back in 2014 when they incorporated that was their first year of sales at about 300 grand their team now is up to 20 people based mostly in Canada helping you both internally and externally visualize your data for communication whether it's again two internal teams or the consumers externally for content marketing purposes super healthy economics and that they passed 3,000 customers they've passed a two million dollar annual run rate retaining over ninety percent of our customers year-over-year and getting paid back on any acquisition cost which are already small and under two months Jack thank you so much for taking us to the top my pleasure thanks Nathan