How Purechat CEO Hamid Shojaee grew Purechat to $1.3M revenue and 4K customers in 2017.

hello everybody my guest today as I made show judge he he is the founder of three software companies one that crashing burned and two that are flourishing he's helped create several multi-million dollar sales products including access off transfer big files calm get crackin and pure chat I meet are you ready to take us to the top yeah let's do it good okay so what do you I mean so are you an advisor to these companies are you an investor are you a CEO of 100 more to spend your time no I I started the companies and and those products in particular a couple of them or three of them are underneath the same same company access off and then one of them is a separate entity it used to be part of access off but we've broken up into its own company called pure chat account but yeah each one is a multi-million dollar SAS SAS company essentially which one lost the most money for you the one that crashed and burned that was a previous company prior to starting access soft I I was involved in a company called VY tricks which was creating software for biometric devices like fingerprint readers and it struggled quite a bit had for millions of dollars in that company and of your own money or investor money part my money and most investor money unfortunately and yeah it did it didn't go anywhere it certainly wasn't moving as fast as we wanted so I finally call it quits and left and went to work for Microsoft for a few years so that was the end of that okay let's for this interview let's focus on one of these products so which one are you most proud of our is doing the best which one you want to focus on we can focus on pure chat if you like that's the this the company that I'm CEO of now and and really focused on and we're no tell us what it does and how you make money so we provide the live chat software that you see on websites that provide the little pop-ups that say you know chat with us if you have a question we actually have a free live chat tool for websites and and what we do is we besides the live chat capabilities which are now 100% free we also have real analytics so once you put our widget on a website you can get a lot of insight into that into that website visitors and who's on there how many people are on there at any given time what pages they visited where they've come from that sort of thing God and we charge for full time analytics portion of it and what's the average customer pay your per month for would you say so we have tons and tons of free customers and and you know like in the hundreds of thousands of signups and the paid version is $99 per month so the ones that are doing on the paid model are paying $99 per month okay and that's your only price point yeah we've experimented with a bunch of different price points which is something I recommend to all entrepreneurs but our current price point is $99 I was telling one and what year did you launch this company in in 2012 is when the product was launched and then we separated out into its own company in 2014 ok and bootstrapped or have you raise capital for it no we we did an angel round for about one and a half million locally in Arizona okay and it was at a price drowner convertible note price round and and what's this so you said you did it out there in Arizona what's your team size out there today we're nine people right now though yeah so and actually we've been plus or minus that but by like a couple people from from when we separated it out into its own entity so when we when we when we broke it off into its own company the revenues were 0 in 2014 and we basically for all practical purposes were at break-even point right now and which is what we're definitely we're about 1.3 million in revenues right now an AR are in AR so you're doing about a hundred grand a month yeah a little bit more than that fair enough and how many customer sorry how many do can I just take 99 or a hundred divided into the 100,000 to get your current customers no so what we did is experimented with a lot lower price points initially and what we decided and we charged for the live chat or what we decided to do is and we gave away sort of like analytics but it was a per operator pricing initially so we moved away from that so a lot of our customers are paying less than the $99 but the new customers are all paying $99 so we actually have over four thousand paying customers right oh wow ok so so if I take your your your call it a hundred and one hundred and five grand and mor and divide the four thousand into that your average customer is paying about 26 bucks a month on the historical cohort but new ones are paying a hundred per month correct got it interesting okay and why compete in this space I mean you know the play drift HubSpot intercom facebook Messenger embedding on the site I mean this is a very competitive space why get into it yeah so this is a great question and I think that what's interesting is that this space is extremely large right I have every website could potentially use a live chat tool and obviously every website needs some sort of analytics like most of them are putting Google Analytics capabilities on there but there's a lot to be desired there's a lot of potential improvements that can be done in terms of ease of use and for the vast majority of companies that want something very simple very easy to use they don't necessarily have what they need in those tools and that's what makes the opportunity open I mean like and almost everything is sort of that way right there's always room for a better mousetrap if you will what rate are you growing at so December of 2016 what were you doing in mr our that's a good question I don't have that off the top of my head but one large one of our biggest focus lately has been around user growth as opposed to revenue growth so we went to this sort of mostly free live chat model about three months ago and we've doubled the rate of growth as a result of that you know I mean someone could look at and just say oh great I just doubled their support cost they have a bunch of new free users they have to support their infrastructures more burdened now so let's talk more about your freezer race in a second because there is value to obviously growing that as a conversion tool but can you making even a general sense have you doubled your over a year are you flat year over a year yeah no no we are up about 70 percent you're a reader okay so that's pretty healthy you were doing call it seven sixty five seventy grand ish about a year ago something like that that sounds about right actually so tell us okay tell us more about the free strategy what why turn it on three months ago at all why make it free so so you know that there is there is a lot of competition out there and we think we have a a better tool but what we decided to do is if you know if we make it free we have a shot at becoming the standard sort of live chat tool for the web and if we can become the standard live chat tool for the web our support cost and infrastructure costs are sort of like minimalist sort of like the non like we don't worry about that because it's just such a small expense in comparison to it's just personnel in general right but if we can become the standard that we can figure out other ways of monetizing it such as the real-time analytics that provides additional opportunities through to our customers to like convert their wizard errs into into sales so every website if you think of it like this every website has a list of things that they want to know every website owner has a list of things that do want to know about their website whether it's that hey it's functioning properly hey I have you know how many visitors do I have on my website or you know is there a burst of traffic all of a sudden that happened as a result of some some mention that somebody did but nobody has that visibility easily into the website even Google Analytics doesn't provide you with that kind of things and if we can solve that problem for everyone then we have an opportunity to really shine and and carve out a niche for for ourselves is the product sticky what's churn look like currently so it's with the free model it's actually been the stickiest it's ever been because so about three months ago when we decided on the live chat stuff should be free we've doubled the rate of signups and people who are actually sticking and coming sorry just just soon or short on time can we just focus on the paid cohort so once they're paying you how sticky are they oh we have about 3.8 just around 4% attrition rate on Monday okay yeah and that's on logo that's obviously oh I guess they're there with logo and your revenue turn is the same since you only have one price no now it is but in the past price points okay and with a 3.8 percent monthly churn and if I do the math you can assume essentially them to stick with you for about twenty six months at that hundred dollar price point so you're assuming LTV is about twenty six hundred bucks on a conservative more aggressive side it's just a finger in the air what do you want what's with but that's about two thousand dollars a little over two thousand dollars it's what we're we're at like right now but but it goes up and down...