Procurementexpress Revenue (2024)

hello everyone my guest today is James Kennedy he is the founder and CEO of a company called procurement Express which is helping make company spending more efficient and faster James we're ready to take it to the top yeah I'm very excited all right yeah so where you based this morning I'm speaking to you from a sheep farming town 200 kilometers from the nearest coffee machine in rural South Africa I would die I wouldn't say coffee machine turning away I wouldn't survive well that's the one thing I have I have in fairness we invested in a very good coffee machine here because there's no another available and that was my my requirement when my wife wanted me to move here I said you gave me a really really good coffee machine I'll do it why'd she want you to there um we start tell people we moved here to start breeding so we started having our first kid here five years ago max he's almost five now and not like sheep breeding that's correct yeah but when you move to a you know sheep farming town you pick up the vernacular of the locals right so I know a lot more about sheep farming than I did when I got here I'll tell you that much and the anyways we came here because we've always been you know digital nomads if you like for last 10 15 years and when it came to settle down we just wanted to be nearly near family and but okay our world-class business even from a small town like this and that's what we're doing so is that like kind of Cape Town area so nowhere outside Port Elizabeth it's in a place called a kuru which is technically a desert what yeah okay let's jump into the companies or procurement Express tell me what the company does and how you make money sure so what we do is we we help people spend their own money better it's the easiest way to describe it as a replacement for an order book you ever seen an order book where you need to buy something on the company dime you fill out the order book and you give it to your boss he signs it or she signs it hopefully and any use doubt when you're sending it out to the vendors and so the finance department who knows who's spending what and we've got an app that replaces that so instead of having to use an order book if you're on a construction site or you're a facilities manager you need to buy a book at a paint or you know a hundred yards or cement or whatever you can do it all from your phone and still the company can know who's spending what and why and it's a SAS model that's correct okay so so like give me a sense of what the average customer might pay per month average is by $200 per month okay so so kind of small you know small business maybe touching mid market a little bit correct yeah between 1 and 50 million in turnover is our typical customer okay and when did you launch the company what year four years ago okay so I would have been with what 2014 correct yeah that's right and besides wanting to breed more get me inside your head I mean where were you at that point in life did you just leave corporate or what so I know I've been I've been out of corporate for a long time like I've been a digital nomad I've been running online businesses you know having making red wine and steak money as I describe it well when I get when I got a kid I realize hold on I gotta grow up so we needed a business which had legs so I specifically said around looking for something that would could be you know much more than that I saw Jason Cohen give an amazing talk 2013 in Las Vegas about the attributes of an ideal lipstrob sauce business and I took that model and I looked around for something that fit it you know so Jason advocated you need to be you know selling b2b for starters ideally into the finance team hitting a recurring pain not be an emergency service all these things and when my partner Richard came up with the actual idea I realized hold on you know purchase order management actually fits all of that that's exactly what we need it's a big market and you know we deliver a lot of value so the rest is history that's what we ran for okay so it's 2014 and then I mean what have you scaled up to today in terms of customers it's just over 250 customers okay great and I want to get the story up kind of how I got the first one but first I mean that puts you somewhere around 50 grand a month if everyone's paying about 200 bucks a month is that generally accurate 65 yeah oh that's good okay it's a little higher than a tuner dollar ARPU mm-hmm okay and walk me through that first customer how'd you close them so the first two customer were pre-sales right so like I said my partner rich he he ran an IT support business in Dublin and two people called him in the same week looking for the same thing which was an online purchase order management system he googled thankfully not very well and could not find one so he said to me hey do you want to you want to pre sell this to these two customers which were UNICEF and Clarins a cosmetics brand in Ireland and that gave us enough to verify that there was a market and and then after that there was a long period of no sales so we actually started off with three partners but one of those partners gave up on us before we got to our next customer they were all paying right or they are all trials they're all paying so they pre we Pro we charge them like a couple of grand each if we build this will you buy it you know and they gave us the money a down payment that gave us enough confidence just to say okay and how tell me said hey we'll get it to you in two months or what yeah okay yeah okay so one of them one of them pulled out one of our partners one of our partners pulled out before we actually got to our real first customer you know our non non warm customer if you like so there were three partners in the business but like in your first three months when you're toiling away you know nothing but bugs and you know customer issues and requests it's it's a long long three months and I generally speaking I was doing a sales so I was sort of pitching people on the business I would get them to do a demo you know it showed him the product and then it would be woefully obvious how many features we were missing in those first three months and it was like a continuous cycle of you know slamming up against the wall trying to see if any was interested but the good news is in that three months we really understood like was a great customer development experience I really started I talked to hundreds of CFO's operations managers and you know after it I sort of you know after we got our first week time for you got one really good big customer early on call Holloman corporation based out in Texas they caught us the check for 20 grand which I didn't believe was even possible at the time without really are pre selling like a year or what they bought for the year you know it was this typical thing I was pretty wet behind the ears like I would say you know monta����s are like your product but the problem is you know we have 10 sites and you only support one side at a time you know and I was like well I guess you could buy 10 licenses and they were like yeah sure no problem let's do that you know I didn't even know that was possible but they were like sure yeah that's great and we demonstrated the part what we do what we do was good was did exactly what they needed they liked the way we were we worked they were willing to work with us on the early features and what we were missing yep and they and they gave us at first you know decent sized check if you like and that really got us so we're totally bootstrap set up helped us get along you're still bootstrapped even today we did a small round to em mm Kay three hundred thousand two years ago I think okay I know is that from like you did you put any that money in or us from angels from angels friends I'm Tommy okay so then diving into some of the economics I mean obviously are about sixty five thousand dollars today in terms of monthly recurring revenue what were you at twelve months ago what's your growth rate so bad doubled in the last year okay so call you know thirty three grand in December 2016 and now you're north of sixty five territory yeah that's great okay good and what about economics why so when you're you know you only bring on these new customers what are you paying on average what's your fully weighted CAC well we we aim at a hundred dollars okay obviously it all depends on the channel why is that your aim because that's just you know that if you go back to Jason's talk 2013 Michael Kampf in you know Jason Cohen he says listen this is the model it's all very well known you pay forty dollars per lead you know you convert one in ten fifteen ten and twenty one and 10 and one or twenty of those I will give you you know between 400 and 800 dollars in a sort of CAC and then and then that's you know should be around you know three to six months it was his aim worth of sort of payments you know payback time and that's what you aim for so a lot of those numbers are out there well-known and well-understood and we don't try to innovate that much on price because why bother yeah everybody knows difference between knowing the numbers and actually building a real business around the numbers right those are not easy otherwise everyone would have a successful company well the big thing is your conversion rate you know did comfort would in 20 or 1 in 100 right so that's where it all falls down well I'm not assuming that's assuming a freemium model right like in terms of the leads and how many leads you need to convert I was actually referring to say let's say trial two paid so you know they couldn't sign up as a trial you're right there's both stages of the funnel but they're the unknown numbers you know but like if you're not if you're if you're that's what we were what I was looking at the very start like was I at least getting one demo with someone you know from you know one in every 20 customers would they at least do a demo with me and if they were if they did a demo even if our product wasn't right yet it taught me okay there's a good thing about our product is no one does a demo of a purchase order management system for fun if if they were doing it there was somebody there it's just a question we had to close the gap about what we did and what they were looking for and once they can reiterate today from kind of Lee or demo to closed account it's one in twenty so you need about twenty demos to close one new customer more or less yeah and now those those figures are obviously all blend of the cross channel source it's radically change like a referral customer it's gonna be a lot different to a Facebook bleed to you know so much doesn't paid out which one's more valuable Facebook or referral referral of course don't know so that looks like you only need five referrals for one new customer Facebook might be thirty leads from paid spend to get one new customer yeah yeah and of course referrals are free right you never pay for that customer in the first place you go back to your affiliates we do have aquatics that we treat up separately we have a quite extensive partner network and we do pay up to thirty forty percent depending on but that's a kind of it we look at active every month I just on the first month the lifetime value attached contract oh wow as long as like yeah yeah so and that's been a very powerful way for us to kind of step change the size of deals we get into so you know we deal with some you know we deal with you know it might be a customer who's selling maybe there might be a large Microsoft reseller that might be selling ASAP business one there might be suddenly some of these other products and we fit in quite nicely with that and it helps us to sort of get into customers we could never get into ourselves yeah but but you're paying 30 percent per month in perpetuity as long as the customers active not like just the first year sure sure okay I'm I'm a peace with that because that's part of my model right thirty percent is the cost of acquiring customer and I'm happy with that and I think keep on acquiring customers of that rate uh that's fine I have no problem I know marketers and sales people need to get paid and so do i so and there's a lot of work in there right getting a customer so yeah sure but the work that the referral partner is doing really is heavy loaded to the front end I mean if you're able cuz your project is so sticky to keep them past a year I mean I doubt those referral partners talk to customers they help you close 12 months prior well that was true for traditional products but not for sauce because all of the value and sauce is in the upsell and the cross sell so you've got to maintain that customer over time you've got to make sure that they're looked after and that's where partners really do you know how does what they're doing after them well because like it's typically you go in as a consultant right you don't go in there to hawk some software you go in there to solve the procurement piece of a problem challenges that are going on or maybe there's an issue with fraud or our people go in with a sort of a business consultancy attitude got it these aren't consultants not like not like affiliates just trying to sell the next long product launch correct I see okay that makes sense all right very good and then what's your team size today we're over 20 people okay 20 folks all there and in your town 14 here and then you know a bunch and we have an office in Karachi and Pakistan and mm as well Pakistan in double as Pakistan mainly a development yeah that's correct product management very good what about churn tell me about your turn so return for the last four months is being in the order of 2% and that's lower revenue churn that's that's low go okay and grocer or net that's that's grow that's what do you mean what's the gross is Matt is its net number cuz yeah yeah yeah so net would be you're including any new customers you added that month as well yeah yeah actually no that's incorrect so what is gross so that we're talking about a total number of customers to turn divided by our total number of customers is one to two percent got it okay good that's gross logo turn now have you do you have kind of your upsell method working so effectively that you've hit a net negative revenue churn or you're still working to get there we are we have been there are different phases and it changes so recently that's fallen off a little bit but yeah so a 2 a 2 percent logo churn I mean you could do just the simple math wayne assume people are gonna stick with you for about 50 months and if two sixties your ARPU you can kind of back into an LTV of 13 grand is that Matthew use or do you edit that anyway you put out of the bed 13 us isn't it correct yeah yeah okay okay good and then um I mean that makes a lot of sense where do you think the next phase of growth comes from you is it do you know additional product lines to upsell current customers to larger plans or is it just getting more volume up new people on the top of the funnel well definitely all there is in the funnel you know like for our first user experience probably is builder opportunity for us and you know I heard an expression recently which I really like which is aa mature marketers focus on the top of the funnel but the pros focus on the bottom so we are putting more effort and resources into the bottom and as well as working with our partner network which is another way of scanning up if Intuit Brad Smith came to you today and offered you three million bucks to sell the company would you sell now of course not but but I having intuited are a great example of the type of you know they're a great example of types company the Lycos that serve SMBs kind of look up to you know for sure because of their partner strategy you know they've grown mostly tiny say of course not those three million I mean that's like almost 3x you're arr well because because I see the because I see where we're going and I see a potential and what we're doing you think you'll double you see again yeah yeah very good all right let's wrap up here James with the famous five number one what's your favorite business book my favorite person book is the checklist manifesto number two is their CEO you're falling or studying right now Rob walling yeah that's good one trip number three what's your favorite online tool for building your business besides your own uh segment calm yeah number four how many hours will sleep to get every night eight okay and what your situation married single have kids married two kids two kiddos good and are they sheep farmers yet or no they may go that way but not yet all right and how and how old are you James alright last question what do is your 20 year old self new except better go set bigger goals whatever you whatever you go for you yeah you surprised how easily well I think you do get there maybe it just takes a bit longer careful what you wish for you just might get it same as well wish for a lot found that his company again procurement Express back in 2014 now 20 people based between Africa Pakistan Dublin again making and helping you spend your money more effectively more efficiently tracking all kinds of stuff built in to make that a smooth process 250 customers closed to date doing about 33 grand per month 12 months ago now at a well north and double that at 65 grand per month 2 percent gross logo churn per month getting paid back in about four months they're spending up to eight hundred bucks to acquire a new customer that pays two hundred sixty bucks a month healthy economics James thank you for taking us to the top thanks buddy