How Procurementexpress CEO James Kennedy grew Procurementexpress to $2.8M revenue and 250 customers in 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...