How Process Street Reached 500 to 1,000 Customers with $1.3M Raised and a 21-Person Team (Interview with CEO Vinay Patankar)

Nathan Latka

00:00This is the top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per talk. 5 and 6,000,000. He's hell bent on global domination. We just broke our 100,000 unit sole market. And I'm your host, Nathan Latka. This is episode seven zero six. Coming

00:29up tomorrow morning, I talk to Manny where the government gives him power to let nonaccredited investors invest. And I asked him, I said, Manny, are you in with the government? Why did you get the first rights to do this? You beat out all the big guys. You beat Indiegogo, Kickstarter, everyone else. Why you? Well, even tomorrow to learn learn about this new way that you can invest in any company. Hello, everyone. My guest this morning is

Introducing Vinay Patankar and Process Street

Nathan Latka

00:51Vinay Patankar. He's the CEO of Process Street, the simplest way to manage your team's recurring processes and workflows. Can You easily set up new clients onboard employees and manage content publishing with his tool. He also co hosts the podcast business systems explored where he goes deep dives into business systems with industry experts. If you see how other entrepreneurs structure their sales recruitment, marketing engineering teams, check out business systems explored. Alright, Vinay, are you ready to take

01:19us to the top?

Vinay Patankar

01:19Yeah, I'm ready. Let's do it.

Nathan Latka

01:19Alright, good. So tell us what got a little taste of what process street is. But how would you describe it? And how do you make money?

What Process Street Does and How It Makes Money

Vinay Patankar

01:28Yeah, so we're a tool that helps companies build and manage workflows and processes. We're a SaaS product, we make money by charging a monthly or yearly subscription to the product based on the number of users you have on it. And so, yeah, like, the the kind of vision for the product is to make workflow really easy. And when you think of what workflow is, it's kind of two two main parts. One is coordinating tasks. So who

01:52needs to do what when? And then the second is, like, coordinating data, because a lot of the time who needs to do what when depends on some type of data along the way.

Nathan Latka

01:52Mhmm.

Vinay Patankar

01:52So there's been a lot of tools that have... And there's a lot of incumbents that have built workflow products. Know, all the big IT companies you can think of, Oracle, Microsoft, IBM, have kind of incumbent solutions. But they've all come at it from

02:19a very enterprise, the textbook, how you kind of design a business process. And we're basically trying to come from a from a very user and intuitive perspective. So it's kind of like if you've never gone and studied business, if you don't have an MBA, if you've never drawn a flow diagram before, you if don't know what BPMN is, it doesn't matter. Like, it's just intuitively, oh, things need to get done in this order, and this person

02:41needs to do this and when, and this is what I need to do now. Right? So just kinda taking it taking workflow and consumerizing it essentially.

Average Customer Pricing and Deal Size

Nathan Latka

02:49And what is the average customer paying you per month?

Vinay Patankar

02:53We don't really we don't really publish that.

Nathan Latka

02:55But hold on, you're you're what do we know about your price points on your website?

Vinay Patankar

02:59$12.50. Yeah. Price points on our website, we have we have between, you know, single user seats all the way up to hundreds of employees in the company. And then, you know, you can see our pricing on the website, which is currently $15 user a month.

Nathan Latka

03:12So Yeah. I want... We only have fifteen minutes. So I wanna avoid the conversation of having you do, like, break down every single cohort. I'd rather just talk about averages. So, I mean, are we talking the average customers paying you a $100 a month or $2 a month or $10,000 a month? What's the range?

Vinay Patankar

03:25Yeah, it's it's it's probably it's 4 figures a year would be like in that range of 4 figures a year. So between like kind of 2 and 5,000 a year.

Nathan Latka

03:34Got it. Got it. That's helpful. Good. So between 2 and 5,000 per year, and do you do you make them sign annual plans? Or do you have a monthly product?

Vinay Patankar

03:42So we have both options for pricing, we give you discounts and incentives for going on annual. We even do two year contracts as well on some of the bigger deals, just to get that cash up front. So yeah, we incentivize annual basically.

Nathan Latka

03:54Okay. Got it. Per year. Got it. And then what is the... Give us more of the backstory here. So what year did you launch the company in? Autumn? What year did you launch the company in?

Company History, Team Size and Total Funding

Vinay Patankar

04:03So we we launched the company in 2013 pretty much as a side project, But we raised our seed round one one and a half years ago. And so now... And so that's kind of really when we actually built the proper engineering team and took it out of a prototype into a into a into a proper product. Now we're 21 people in the company.

Nathan Latka

04:22Okay. So that would have been that seed round would have been late twenty fifteen, early twenty sixteen. You're now 21 people. How much total have you raised?

Vinay Patankar

04:301.3.

AngelPad Accelerator and Funding Structure

Nathan Latka

04:31Okay. Got it. So was that round that you just did, I guess, about a year and a half ago, is that a priced round or was it a convertible note debt?

Vinay Patankar

04:37That one?

Nathan Latka

04:39And did you say like that?

Vinay Patankar

04:41Yeah, it's like the SAFE, right? The YC SAFE, basically.

Nathan Latka

04:43Yeah. Did you go through YC or one of those accelerators?

Vinay Patankar

04:46Yeah, we went through AngelPad.

Nathan Latka

04:47Got it. And what was that? Are they what are they doing? Like 5% for $100 or something like that?

Vinay Patankar

04:52I believe AngelPad has changed it many times over their cohorts. But when we did it was like, six for 55. So 6% for 55 ks.

Competition and Distribution Strategy in a Fragmented Market

Nathan Latka

05:01Yep. Got it. And how are you so going back to this product space? First off, this space is like super fragmented. And people I've interviewed many CEOs in this space. And anytime they try and tell me their technology is a differentiator, I just call bullshit, because I think the person that's going to win this space is the ones that are better at distribution. So like, first off, let's talk about the elephant or Trello, right? You could

05:21argue it's in this space just had a massive exit. You You didn't have other companies like daPulse, right, which is doing very, very well. You have Smartsheet, which is kind of old and ugly, but they're killing it in the Google Chrome store with over 5,000,000 users. Then you have smaller ones that are embedded in like Gmail, like Yanado that are doing like $30 per month. So how do you beat all these guys?

Vinay Patankar

05:39Yeah. It's a good it's a good question. The distribution is definitely key. Finding a scalable, repeatable sales process and then getting like your price point right is important as well. But I think that in this market, it's not necessarily about being the market leader. Like you said, it's very fragmented. Even in the incumbent space, there's 300 plus companies that don't include any of those products that you just mentioned. Right? And so there's kinda two... There's this

06:07kinda two big parts of us.

06:11You need to basically take that market, which is like a giant $13,500,000,000 market. SharePoint's the biggest product in that market. And then there's the kinda emerging SMB market, mid sized companies market where it's like a lot of these people are moving off Excel, essentially, and Word. Right? And then they're moving on to something like Trello and Basecamp or whatever. And so I don't think that you need to beat the companies. I think that you just need

06:35to be able to grab large enough share of both the the the incumbent enterprises that are moving off and then the kind of new emerging.

Nathan Latka

06:42So let me let me change my question. What distribution are you going to go try and own? I mean, why is somebody gonna find you and not find SharePoint?

SEO as the Core Growth Channel

Vinay Patankar

06:50Yeah, I mean, we've currently been focusing on on SEO. We're probably we're very strong in it, I think, relative to our competitors, we definitely destroy SharePoint. And so that's been how do measure that's been great. Just in terms of in terms of ranking for the keywords that we're targeting. And

07:10and that's that's been a really cost effective strategy for us. But I believe as we scale, we'll continue to go after less efficient channels as long as they're still profitable.

Nathan Latka

07:21Right? Someone might be listening going, wait, what do you mean SEO is costly? What does that cost you?

Cost of SEO and Blog Traffic

Vinay Patankar

07:27So I basically have a team of marketing team. Right? So I have a team of writers and marketers that help with distribution. And so it's pretty much like a flat cost for the team. You know, we have some some products or whatever that we use. And and it's... And so it's relatively cheap because, basically, my lead volume of SEO increases every month from the same same spend. Right? So now our blog probably gets around 200,000 visits

07:53a month, you know, and that's grown, you know, kinda doubled each year. And the spend has pretty much been the same throughout that whole time. And so I think that's a great channel. I don't know how big it will scale, you know, if we want to hit 100,000,000 in revenue, but, you know, it's definitely not gonna be the only channel that we're using. But at this point, it's very cost effective as a channel.

Nathan Latka

08:15When you look at kind of its cost effectiveness, I assume you know that because you look at that cohort of kind of traffic, and you kind of divide total new signups per month from the blog by your total spend or whatever. What is

Vinay Patankar

08:26it cost the revenue they generate?

Nathan Latka

08:28Yeah, yeah. What's it costing you to acquire a new customer just through your SEO cohort currently?

Customer Acquisition Cost Through SEO

Vinay Patankar

08:34Yeah, it's about $150 right now. And that's really cheap. You know, because some of our customers can be much, much larger than that.

Nathan Latka

08:45You said earlier, your minimum annual price point is like $2,000 some up to $5,000. And if I take is that right?

Vinay Patankar

08:51That's our average average deal size. But our minimum is is one one seat user, which is $150.

Nathan Latka

08:59Okay, so $2,000 is average across your entire customer base.

Vinay Patankar

08:59Yeah.

Nathan Latka

08:59Okay, well, if I so if I divide it by 12, it's what $167 per month. So if you're spending 150, that's a one year period, that's good.

Vinay Patankar

08:59Yeah. Yeah.

Nathan Latka

08:59Interesting. What's your least profitable channel that you're still trying to fine tune and figure out?

Sales Infrastructure Investment Over Paid Acquisition

Vinay Patankar

09:16I... We're not really investing in other channels at this point. So what we're doing right now is kind of the marketing budget is being set, and we're essentially investing in sales, which are building our sales infrastructure around converting the leads. So we're kind of... We're investing deeper in the funnel versus investing at the top of the funnel because until our whole sales infrastructure infrastructure is is really strong, we don't wanna continue pouring money in in in

09:43in the top of the funnel, to to make sure the conversion conversion rate and price point is right. You know?

Expansion Revenue as a Portion of Monthly Revenue

Nathan Latka

09:49Have you gotten to a point where you can predictably kind of guess what expansion revenue is and for each new customer, if you're focused on bottom of the funnel stuff?

Vinay Patankar

09:58Like, we have an average. Right? So we can look at like at an average across the customer base, but it does vary dramatically depending on the size of the customer. Right?

Nathan Latka

10:06Like for example, Smartsheet knows that when they get a $10 per month customer paying called 120 per year, they know that that's going to expand to at least $150 per year, year over year, like do you know some of those expansion numbers?

Vinay Patankar

10:19We we know, what the average expansion rate of our customer base as a whole has been. And we know we know we have a pretty healthy kind of expansion revenue as a portion of our our revenue revenue that comes in each month.

Nathan Latka

10:32What is healthy, though? I mean, help people understand that.

Vinay Patankar

10:35For us, it's it's it's about depending on the month, it's between 20 and 30%.

Nathan Latka

10:40So if I'm paying you $10 in month one, you can pretty, you can pretty much count on me going up to 12 or $13 next month.

Vinay Patankar

10:47Not the next month. Yeah, not necessarily the next month. But yeah, that's like what we're seeing is is the percentage of our of our expansion revenue.

Nathan Latka

10:56It's revenue over what time period a month or a year.

Vinay Patankar

10:59Yeah, that's that's per month. Yeah. But yeah, but I guess if you average it out over all the customer bases of the entire customer base, then you'd expect that. Yeah.

Nathan Latka

11:07But you just told me that $10 doesn't go to $12 the next month.

Vinay Patankar

11:12Well, yeah, that's the thing. It's not necessarily per customer, right? One customer could just start on average.

Nathan Latka

11:17Yeah, exactly.

Vinay Patankar

11:18Yeah.

Team Composition and Headcount Focus

Nathan Latka

11:19Okay. Got it. Okay, interesting. And are you so of the 21 folks you have, how many of those are focused on either marketing or sales?

Vinay Patankar

11:2815.

Nathan Latka

11:29Okay. And is your price point high enough where you actually can have inside salespeople putting a lot of time on closing deals?

Pricing Optimization and Increasing ACV

Vinay Patankar

11:35Not not exactly. And that's something that we're going to be optimizing this year. That's a big focus of our pretty much our number one focus this year is increasing our ACV. So we'll be rolling out some higher price points and products around that.

Nathan Latka

11:50You have to add features to like make yourself feel good about increasing price? Or do say, know what, fuck it, we're gonna triple the prices?

Vinay Patankar

11:56What kind of we're gonna do a little bit of both?

Nathan Latka

11:56I love that.

12:00Some people that's one of the biggest things like people ask me to consult all the time. And I say I don't do consulting, but all you have to do is on your pricing page, double the prices, you can thank me later. I mean, it works almost every time.

Vinay Patankar

12:10Yep. Less support, something like that.

Nathan Latka

12:14Yeah, that's awesome. Okay, so you launched it twenty fourteen. Again, up to or sorry, 2013, up to 21 people now $1,300,000 raised. Where are you at now in terms of kind of total companies using your total customers using you?

Current Customer Count and MRR Range

Vinay Patankar

12:29We're between 500 and 1,000.

Nathan Latka

12:31Okay, so good range. So again, we'll just look at the minimum. If I take the 500 multiplied by you said, again, average, call it $2,000 per year, if I make that monthly, you're doing well over, you know, call it $80,000 per month, right? And MRR?

Vinay Patankar

12:44We're on our way there.

Nathan Latka

12:45Yeah. Okay. So you maybe have some historical users that you let in kind of early at a cheaper price?

Vinay Patankar

12:45Yep.

Nathan Latka

12:45Got it. Got it. Fair to say between 70 and 80 k?

Vinay Patankar

12:55Around that range. Yeah.

Nathan Latka

12:57Alright. Fair enough. Good. What's your goal by the end of the year? Let's talk about it maybe that way. What's your goal to get to by December 2017? In terms of run rate?

Series A Target and 2017 Revenue Goal

Vinay Patankar

13:03Yeah. So we want to we want to raise an a round, say, of q one q two next year. And the typical range for that is, you know, 1.5 to 2.5 ARR, kind of for a a rounds at the moment. So that's that's kind of the range of our target.

Nathan Latka

13:17So you wanna get to by December 2015 or '17 doing somewhere to call it one hundred fifty one hundred sixty one hundred seventy grand per month.

Vinay Patankar

13:24So that would be nice. Yeah.

Nathan Latka

13:25Yeah. That's great. Good. And then you said you mentioned earlier marketing budget, but you'd only really talked about the people aspect of that. Are you spending on paid acquisition through like ads?

Vinay Patankar

13:25No.

Nathan Latka

13:25So marketing budget is just your... You mean just people's salaries?

Vinay Patankar

13:25Yeah.

Nathan Latka

13:25Alright, guys. I talked about this earlier, but I schedule, like, so many meetings that would blow your mind. I mean, all my podcast interviews. Right? Hundreds of entrepreneurs I talk to monthly, I

13:48schedule. And you know what? I do it so efficiently. I get them all to agree to my calendar so all the calls are back to back to back. That means I'm not switching in between tasks all day long. I get them to batch so that can be very efficient. It's so critical. I use a tool called Acuity Scheduling to do this at nathanlatka.com/schedule. It eliminates the back and forth between me and people I'm trying to meet

14:12with. It makes it very simple. And most importantly, they help me keep my no show rate very low because they send out reminders. Helps you look very professional. So go to nathanlatka.com/schedule to sign up, and you get a great deal. You know, you guys know this. I hit people hard. I make great deals. And Gavin, the CEO has given us a great deal. If you sign up like normal people, okay, on their website, you only get

14:35a fourteen day free trial. If you use my link, nathanlatka.com/schedule, you get forty five days free. Okay? It's the best. It's free. Go to nathanlatka.com/schedule right now to sign up, and I'll see you there. Alright, dude. Let's wrap up here with the famous five. You ready?

Vinay Patankar

14:35Let's do it.

Nathan Latka

14:35Number one, what's your favorite business book?

Famous Five

Vinay Patankar

14:57Good question. I mean, four hour four hour work week was, was one of my initial inspiration books. I think hard things the hard way, has been,

Nathan Latka

15:07You mean Ben's book, hard thing about the hard things?

Vinay Patankar

15:10Exactly. Have been about that means that's been kind of a more relevant book to me recently, I think. So I think it's dependent on my on my stage. But those are two big standout ones.

Nathan Latka

15:18Number two, is there a CEO you're following or studying right now?

Vinay Patankar

15:23Yeah, a lot. Elon Musk always always follow. I follow quite a lot of the the SAS CEOs like Larry Ellison and Mark Benioff.

Nathan Latka

15:33You listen to my show?

15:36There's a right answer to this question.

15:40All right, good. What's your favorite online tool?

Vinay Patankar

15:43Process Street, of course,

Nathan Latka

15:44you know, besides your own.

Vinay Patankar

15:48We use a CRM called Close.io. I like it a lot.

Nathan Latka

15:51Yep. Close.io. And I believe that's with Steli runs that right?

Vinay Patankar

15:57Yep, exactly. We actually have an episode of our podcast with him.

Nathan Latka

16:00Yeah. And if you guys want to hear up Steli on my my my podcast, nathanlatka.com/thetop463, he revealed that they passed $200 and MRR past 500 customers paying a minimum or an average of $400 per month. So listen to that one and listen to Vinay's version on what's it called business better? What was it again better business systems explored business systems explored? Good. Alright, number four. How many hours of sleep do get every night?

Vinay Patankar

16:26Eight.

Nathan Latka

16:26And what's

16:27your current situation? Married single? Do you have kids?

Vinay Patankar

16:30The girlfriend.

Nathan Latka

16:31Okay, so not married. No kiddos yet. How old are you?

Vinay Patankar

16:34Yep. 31, 31.

Nathan Latka

16:36Alright, take us home, man. Take us back eleven years. What do wish your 20 year old self knew?

Vinay Patankar

16:43That you could make money on the Internet.

Nathan Latka

16:46There you

16:47guys have it from Vinay, Founder of Process Street. You can make real money on the Internet coming from a guy that launched his company back in 2013, has raised 1,300,000 in funding has a team of 21 currently, again, has 500 customers that pay him to help make and streamline their business systems. Those customers pay on average about $167 per month or about $2,000 per year. They're doing somewhere between, call it, 70 to 80 grand per month currently with

17:13the goal to grow to about between a 1.5 or a 2 to $2,500,000 annual run rate by q one of twenty eighteen so they can go into their series a round. Vinay, thank you for taking us to the top.

Vinay Patankar

17:25Thanks. Have a good day.

Nathan Latka

17:27If you enjoyed today's episode with Vinay, go back and listen to Scott's episode yesterday. He's raised $8,800,000 and look, I think this could be the ultimate machine learning tool because of what Scott has done. You'll have to tune in to find out what he's done. It would mean the world to me if you guys got any value from this episode if you would go leave a review on iTunes right now and then subscribe. You know, I

17:51hustle like heck to get these episodes out every freaking day for you guys. And trust me, I love it. I would do it with no listeners, but boy, oh, boy, it makes my day, and it makes my team's day when we see great reviews and get your feedback. So thanks so much. Okay, Top Drive. I love giving away free money. I feel like, oh, we're giving away cards, and I have something special for you today. How

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