How Proposable CEO James Kappen grew Proposable to $300K revenue and 500 customers in 2018.

hello everyone my guest today is James Tappan if you haven't heard of him before he is a designer and entrepreneur who loves solving problems using technology his current company is proposal James are you ready to take us to the top sure all right tell us about the company what's it doing how do you make money so proposal helps solve the pain in the sales proposal process so trying to help with moving things from Microsoft Word and legacy platforms onto the web creating a web-based document that could be tracked and and updated in real time so kind of a you know taking the sales document and moving it online basically trying to create some automation for companies that need you know some more processes and for their sales proposals so how are you winning customers over from other folks on this base like doc send so we're kind of focused our you know our platform looks like a document it looks like a Google Doc a lot of these kind of newer platforms it's kind of a you know they're using it for marketing they're using it for sales it's kind of an all-in-one kind of thing we're focused on the proposal process itself so creating the proposal drafting the proposal getting a manager approval sending it out and getting an e site getting an e-signature to close the deal so really focused on that specific process whereas some of these other platforms are focused on everything from marketing to sales to document management that sort of thing so you mentioned signing but I mean how do you beat point solutions they're like write signature DocuSign and many of the others in the space yeah so they're completely focused on the signature itself but document the signature signature Z signatures are becoming a commodity everyone does these signatures now they're all legal most of them are legal it's kind of the the general consensus that a signing is a legitimate way to sign documents and close deals so you know instead of kind of using a service like proposal and then exporting to PDF uploading to another service getting it signed we just sort of include the e-sign all within this one smooth workflow of sending a proposal out sorry did you just argue that one who is your different than dachshund is that you just do the one thing versus doing marketing and sales and everything else but now you're arguing that you do more than the point solution so which one is it so like I said before the proposal process is a specific process it's a it's a sales document specifically for proposing a deal but quotes or or a bid so I think you know you see you know the docq signs and these that it's it's really about the signature so it's you can upload any kind of document you want and get a signature whereas we're saying you know consolidate it into kind of a single workflow and not kind of bouncing the document out to a signing product and then moving it out to a redlining product moving into dropbox dropbox to store it you know kind of bringing all that into one kind of smooth workflow for you know people to do a lots of proposals and what's the revenue model is it a pure play SAS yes okay got it and give me a general sense of size of customers what do they pay per month on average would you say um well our smallest plan now is $39 per month per user so we kind of go from there up to you know some some bulk discounts for larger customers okay I just to avoid going on every different customer cohort what would you say the average you know pays per seat um like 39 you think it's higher than that it's more like 50/50 okay good and give me more the back story when did you launch this thing so it's way back in 2009 okay what were you doing back then what what did you quit to do this yeah so right out of college I started an ill-timed advertising company paper advertising company here in Santa Barbara a magazine in fact so kind of the worst time to do that all the print advertising space was really going downhill quick so kind of work my way out of that lost some money and decided hey you know I'm gonna spend any entrepreneurial time I need to focus on the internet because that's where I saw people excelling even in the downturn so I thought hey some of the some of the you know things I learned during that process of doing the the advertising piece you know I saw some holes in the sales process and thought hey this web-based sales tracking solution might be helpful to me and others and what have you scaled to now today in terms of team size how many folks are with you we're still a small team so we're five of us okay everyone in Santa Barbara know we're all spread out oh great why Indiana that's great yeah and would it be scaled to in terms of customers using the platform so we're right around 300 okay and is this just you kind of nose to the grindstone hustle and hustling cold email and how are you getting these guys you know we have kind of an interesting lead magnet source we have a lot of proposal templates on the web that rank really high so we get kind of a lot of folks coming through that and we rank well organically for Proposal software the term proposal software and a few other terms where you know folks are coming you know to purchase software like ours you're talking about like your agency proposal templates social media proposal Web Design proposal etc right right yeah interesting it's a beautiful layout by the way I'm looking at it right now it looks great now in terms of in terms we mentioned the 300 but I want to make sure - are those companies using your those are the seats total seats using you so I haven't looked within the last week so I'm not you know totally up on what's happened in the last couple weeks but we have actively I just looked at the active user count we're right around we're over 500 active users what does that mean though is that like those paying seats those are paid seats paid seats okay so 500 paid seats 300 businesses so on average 1.7 seats per business something like that sounds right interesting okay now can I take that 500 number times the 50 number you gave me earlier and assume you're doing about 25 grand a month in revenue mm-hmm that's about about right and you've bootstrap this thing or you raise capital yeah there was a little seed around actually launched through a company called sprout box back in Indiana out of Indiana University they had kind of a shark tank esque kind of thing happening in 2009 and of winning that competition with this idea so I got some a seed round of funding they kind of produced the MVP how much was that that's what we've done that was 250 K okay was it that was a convertible note though right not equity that was equity but that was oh wow - it was 200 grand how did you value the company back then great question it was like yeah I was like a baby yeah was so mean what are they did where they take ten twenty percent for that amount of money um you know I won't say at this point but how many years I mean this was years ago right yeah they probably they probably have this on their website somewhere I mean this was like seven years ago yes so they just save me - save me the searching what did they wear they take for that amount of money um I mean how much equity how many shares do they take yeah just I mean most of these accelerators they say we're gonna give you a hundred grand for 10% of the company I mean these is usually public so I can either go do the work and research it or I can just tell me yeah so it took 30 percent okay and is that is that they do that every year with a new company whoever wins yeah they did for a period of time and I think they they've adjusted their model accordingly it's really aggressive it is it was very aggressive do you regret that no I'm thankful for it it gave me an opportunity that I wouldn't have had being a designer and not having the team in place so that's kind of what they were able to do is kind of take folks like me with with hustle and an idea and kind of provide the team to build the MVP give the kickstart get it off the ground what are you growing at right now year over year would you say um I think let's see doubling tripling flat no I think we were we were we were flat I think last year to this year so 12 months ago you were Steve doing about 25 grand same as today right right okay and so is this I mean is this your main gig I mean it has been yes okay what what you like look if you were deep in thought when you're ranching that what's going through your head I'm an entrepreneur so I'm actually you know I have lots of other projects kind of in in the mix like I'm sure you do too so this has been my main focus Sun can be anything is there another project you're more excited about and you're like wait should I mention on the show if my investors here they won't be happy exactly okay so why not just sell this company for a quarter of a million give them their money back and go to your other thing because then I wouldn't get a payout okay well what payout do you okay change the number to get whatever payout you want why not sell the company then go do your own thing yeah I would be interesting what would you sell I mean what kind of analogy would you look for and try terms I've come up with a deal I might have to think about that yeah I'd have to do some soul-searching yeah I mean...