How Redbrick Grew Revenue From About 200,000 to Between 10 and 20 Million in Five Years (Interview with CEO Tobyn Sowden)

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.

Tobyn Sowden

00:18>> 5 and 6,000,000.

Nathan Latka

00:19He is hell bent on global domination. We just broke our 100,000 unit sold market. And I'm your host, Nathan Latka.

00:28I just finished traveling Southeast Asia for forty one days, and I usually always get sick when I travel.

00:33And quite frankly, eating is difficult for me. It's hard to find a restaurant, and I'm spoiled in Austin with my personal chef. Well, I took these little packets with

00:41me this time, 30 of them, in my carry on suitcase.

00:44They kept me totally healthy with 11 different secret ingredients. You can

00:48see them at nathanlatka.com/juice. I'll tell you more later on in the show. That's nathanlatka.com/juice. Folks, many of

00:56you reach out to me and you say, Nathan, so many guests on your show talk about the importance of batching. But whenever I try and batch, you tell me this. You go, Nathan, they don't book back to back times. So you... Or they don't show up after they book. It's frustrating. The answer is guys, you have to use smart tools. I use a tool called Acuity Scheduling @nathanlatka.comforwardslashschedule. I'll tell you specifically how I use it later

01:17on in the episode. This is episode six thirty nine. Be sure to tune in tomorrow morning for episode six forty with Bill Bryce. His company is called ProntoSign. They've just passed 300 enterprise customers with 50 to 500,000 annual contract value. That's the average to help manage secure signatures.

01:36Good morning, everybody. Nathan Latka here. Our guest this morning is Tobyn Sowden, and he is the CEO of Redbrick, the second fastest growing software company in Canada and the birthplace of a product called Shift. Tobyn, are you ready to take us to the top?

Tobyn Sowden

01:50>> Absolutely.

Redbrick Named Second Fastest Growing Software Company in Canada

Nathan Latka

01:51Alright. Tell us first. That's a big statement. Redbrick is the second fastest growing software company in Canada. How do you measure that?

How an Independent Ranking Measured Revenue Growth

Tobyn Sowden

01:59>> We didn't measure it. It was an independent organization, and I think it was called Profit Fund. How did they measure it? They measured it on revenue, revenue growth over the five year period.

Nathan Latka

02:10Oh, fascinating. So it's kind of like kind of the Inc 5,000, but for Canada?

Tobyn Sowden

02:15>> Yeah, you could say that, so definitely a smaller version of it.

Nathan Latka

02:18And what is the, so how old is the company? How many years of data did they have?

Revenue History: 2010 to 2015

Tobyn Sowden

02:24>> They took a full five year period, and so I think the beginning was around

02:32>> 2010, and 200,000 in revenue, and then we were

02:39>> reported in the range of 10,000,000 to 20,000,000 as far as our final fiscal year end.

Nathan Latka

02:44In 2016 or 2015?

Tobyn Sowden

02:48>> It was 2015 and reported in 2016.

Nathan Latka

02:50Got it, very good. And what is the... I guess my question was, did you... Was that launch year was 2010 or were you around before that?

Tobyn Sowden

03:00>> Launch year was 2010.

Nathan Latka

03:02Okay, great, very cool. Alright, cool, so now that we have some of those metrics, tell us what Redbrick does and after you do that maybe that's focusing on Shift.

What Redbrick Does: App Distribution, DeskMetrics, and Shift

Tobyn Sowden

03:11>> Sure. Yeah. I think it's probably easiest to give you a bit of a history too. You know, the way we started the business was was from a from an app distribution perspective. So we're helping helping other developers acquire users for their products usually on a performance basis. So either on a cost per install or revenue share or a percentage of... Or or, you know, like a a CPS cost per sale, and and that business, ramped up

03:34>> very, very quickly for us. What we're ad was agency. Right?

03:40>> Well, it was it was it was it was a very specific software distribution business, and so we had developed our own tools in house to to track and and provide analytics internally in order to really grow that quickly. And so over time, we realized that that is a business on its own. Let's open that up and acquire software publishers to use our own analytics. And as we did that, we kinda had the the desire to build

04:08>> some of our own products, and and in some cases, actually use those products as a proof of concept to show how our analytics solutions really worked and and and how we could grow products using them. And so our our main software, our desktop software. At one of the solution, DeskMetrics is integrated into Shift and it's one of the ways we've been able to rapidly integrate on the product and grow it so quickly.

Nathan Latka

04:29And you say, offering the website DeskMetrics currently has 500,000 active users. How do you define an active user?

Tobyn Sowden

04:35>> At least one event in a in a monthly... In a month.

Nathan Latka

04:38Okay. And and what could an event be? Could it be as something as simple as a sign in?

Tobyn Sowden

04:43>> Yeah. It could it could be anything, but mostly it's a heartbeat event. So basically, we know that the user is online and active at least once during during the thirty day period.

Nathan Latka

04:51And then what's the relationship between those 500,000 active users and the other metric you put out, which is 800,000,000 downloads tracked?

Tobyn Sowden

04:59>> Well, I guess the the relationship is just not all downloads become active users. And so downloads... The reason why we call out downloads versus active users because some of our technology actually provides attribution, and so attribution can be a complicated thing. It's talked about a lot on the mobile side, but not a lot on the desktop side. So we've developed, some some unique features in our SDKs that allow us to attribute across from, the browser into

05:23>> the desktop environment and and connect those together. It's the reason why we call it downloads and, users is because we can actually attribute those directly to your app together.

Nathan Latka

05:31Got it. And those of you non tech folks listening SDK just means software development, kit. That's impressive, though, Tobyn. 800,000,000. I mean, how are... And it sounds like you've come from the world of driving app downloads. So so maybe make sense that that number is is so high, but give us some perspective for somebody listening right now looking to drive new app downloads for maybe their desktop software. Where where would they start?

Facebook Paid Acquisition Strategy and Spending

Nathan Latka

05:54Well, they can definitely start with us.

Tobyn Sowden

05:56>> We we can provide some consulting services as far as where where to acquire users from. However, I I think, you know, one of the the big sources of of user acquisition right now is Facebook. Facebook's got a phenomenal ad platform. Their their tracking is is is one of the best, and and the ability to attribute, not just on a, on a download, but also multiple points through the funnel, and kind of working in conjunction with the

06:20>> solution like DeskMetrics, it it works wonders and it can optimize very quickly. And obviously, with the, you know, with the size of the audience that Facebook commands, you can grow up a product quickly, if you're using those type of, you know, right tools.

Nathan Latka

06:33How much are you spending per month just on paid acquisition exclusively through Facebook?

Tobyn Sowden

06:40>> We are currently spending probably $30,000, but we've got a commitment to grow to a million dollars in a quarter.

Nathan Latka

06:48Oh, interesting the way you phrase that. You have a commitment. What do you mean by that? Is it... It's just a goal?

Tobyn Sowden

06:53>> Well, it's more of a commitment. We're working closely with some teams at Facebook in order to grow, to grow our our our businesses and and some of our customers' businesses. And they're they're supporting us in a way that requires us to commit to be at a level that is a million dollars a quarter.

Nathan Latka

07:07Yeah. I'm gonna try and put more brackets on that, and you can confirm if you can. That basically sounds like, hey. You'll... You know, from Facebook, Tobyn, we're happy to give you early access to some of these things we're testing in exchange. You gotta grow your ad spend this much by this date, something like that?

Tobyn Sowden

07:20>> That's the idea.

Nathan Latka

07:21Got it, very cool. Okay, take us through, and then the business model, let's now focus in on on Shift instead of DeskMetrics. So what's the revenue model? How do you generate money?

The Origin and Business Model of Shift

Tobyn Sowden

07:31>> So the idea behind Shift originally was Electron the framework, it's really starting to become something we're seeing, you know, in applications like Slack, where you can build once for the desktop and then deploy across all the platforms, and Slack's a great example of a company that's done that well. And so we thought, hey, why don't we build software analytics for people that are building on top of the electron framework? Well, let's show people how to do

07:59>> it, let's build an app ourselves. So we ended up building Shift to do that, and it turned out after we could have launched it in preview release in September that it was something that, know, people really wanted, and so what Shift does is light to switch between your Gmail accounts, your Google accounts in general, in between your your mail, your calendar, and drive. I think a lot of people have had this issue whether whether or not

08:20>> they're using, you know, multiple browsers or incognito mode or the account method or they just straight up use IMAP or POP. It's not an easy thing to do. So it was an itch that we wanted to scratch ourselves, and Shift is a great solution. There are a lot of solutions like I said, but Shift is a great solution for us. And so as we were experimenting this just to showcase our analytics service, we realized that there's

08:45>> actually great business here on its own, and so we decided to increase the team from a single developer to later in the quarter, I think we had about 10 developers working on the project, and we launched on December 20, and we acquired, you know, about 15,000 users in a very short period of time.

Nathan Latka

09:03How did you do that?

Tobyn Sowden

09:05>> Well,

09:06>> so so the business model is that is simply, you know, software as a service, it's $20 a year. We we feel definitely gated by the price of Gmail today, and so we wanted to have some sort of reasonable amount on an annual basis that we were charging, so we can continue to iterate the role of the product. And so also by charging for for the product, we knew that we could profitably acquire users. So today, we're

09:29>> using primarily Facebook, but we're also advertising on

09:35>> AdWords as well as Twitter, Quora. We're on some of the native networks and a couple other places.

Shift Launch Metrics and Free-to-Paid Conversion

Nathan Latka

09:42And what is the... How many total customers are you serving today, q one twenty seventeen, just on shift?

Tobyn Sowden

09:48>> I think we've seen about 20,000 installs on any given day or week, think we have. So in any given week, we have about 10,000 active users. Okay. And

10:00>> our free kind of our free to pay conversion rate is around the four to 5% mark right now.

Nathan Latka

10:07Okay, so I can take around at a minimum 4% of 20,000, so about 800 paying customers something like that?

Tobyn Sowden

10:13>> Yeah, and so that was just kind of our our... This is our initial launch and we're we're iterating iterating toward, hitting a a goal of about 10%.

Nathan Latka

10:21Yeah. This is... Was gonna say this is just like... I mean, this is only two month... Two or three months old. Right?

Why Shift Launched on December 20

Tobyn Sowden

10:26>> Yeah.

Nathan Latka

10:26Yeah. I mean, by the way, why pick a... That's a hell of a launch date five days before the holidays. Was that strategic, or or your developers must have been killing you because that's usually when all the bugs pop up and they're on Christmas trying to fix the bugs, or why'd you decide that date?

Tobyn Sowden

10:39>> Yeah. No. That's a that's a great question. It wasn't the original date, like, so many projects launched. The original date was, was a week early, a week earlier. And so we had to make a tough decision whether or to launch on December 20 or wait until the first or second week of January. And I decided that, based on how we were investing in the product, it was better to get it out there, and to get some

10:59>> testing before, spending any more money on the development.

Nathan Latka

11:02Yep. And you said that you said price point was 20 per month or per year?

Tobyn Sowden

11:06>> It's per year.

Nathan Latka

11:07Per year. Got it. So good. So look. 20,000 installs, 800 paying customers times $20, you know, $16,000 early on. That's that's a good way to say, hey. Yeah. There's a market for this. Right?

Tobyn Sowden

11:17>> Yeah. I'd love to be charging more.

Nathan Latka

11:18Yeah. Why did you decide? Interesting question here. You mentioned that there's other... A lot of other people in this space, and a lot of them choose to attack this problem via extensions or things in browser. Why did you decide to go to desks? Like, literally, I mean, if you guys go try shift, which you should in the show notes, it's actually a desktop download. Why did Tobyn decide to attack the problem that way?

Tobyn Sowden

11:38>> Well

Nathan Latka

11:39Was it just so you could show off DeskMetrics?

Tobyn Sowden

11:42>> Oh, yeah. That's that's how that's how it originally... You know, that's where... That's the angle we came from. However, I think if you look at, you know, the browser model when it comes to how sessions work, it's it's not an easy thing to, to build the experience like we built with shift within the browser, just the the the technical restrictions on how browsers are built. And and so we thought shift was was, you know, the the

12:06>> best way to solve the problem, and I think what you'll see in the future versions of shift is we're gonna continue on the path of keeping that kind of, you know, productivity experience with within Shift rather than when you go to a, you know, go to drive and click on that on a dock and and it pops out into your browser, and you've got that issue again. We're gonna try and incorporate more of those things within

12:26>> within Shift. So obviously, we don't wanna recreate the browser, that's something that, you know, I'm faced with a lot of questions even just from my own team. Why don't we have... Why don't we support Asana? Why don't we support Slack? Let's let's let's continue to add these type of integrations into shift, and and I think that as we do that work, it's gonna like, you know, as as those... The number of integrations goes to infinity, our

12:49>> our shift becomes a browser. So so, so I really wanna avoid that and and continue to make the focus of of shift, mostly on communication and a little bit of productivity as far as how it's linked to those those primary mail accounts.

Three Parts of the Redbrick Business

Nathan Latka

13:03And then let's quickly jump back to DeskMetrics, if it is indeed. Is DeskMetrics your your main source of revenue to date?

Tobyn Sowden

13:10>> No. No, it's not.

Nathan Latka

13:11Well, so what is? Yeah. Help us understand that. You have all these SaaS products, but what is the main source?

Tobyn Sowden

13:16>> So so we have, really three parts of the business. We have our app distribution business where we're distributing our own apps as well as, our customers apps. We have, DeskMetrics which is our analytics solution and then we have own and operate software. So, Shift being example of one of those.

App Distribution as the Primary Revenue Driver

Nathan Latka

13:31Okay. Got it. So the majority is coming from your software distribution business, kinda your... What what you were born with? Yeah. And that's the model of people can come pay you, app developers can come pay you for distribution and you take whatever either a cut or percentage of spend or something like that.

Tobyn Sowden

13:45>> Yeah, yeah, and I think I think we're we're on this path where as much as we love that business and and it has been very good to us around quickly over the years and helps us build what we have today, it's not it's not predictable, it's not consistent, we can't... We we can know, it's really hard to continue to grow a business when you don't know how that will fluctuate on any given month, and so that's

14:07>> why you see our our our later products like DeskMetrics as well as Shift where we're we're looking for recurring revenue.

Team Size and Location

Nathan Latka

14:13Yep. What's your team size right now?

Tobyn Sowden

14:17>> I think we're around 37 ish.

Nathan Latka

14:1937. And where are you guys all based?

Tobyn Sowden

14:23>> We're in Victoria, BC on Vancouver Island, which is on the West Coast Of Canada.

Nathan Latka

14:27Everybody or anyone out remote?

Tobyn Sowden

14:31>> We have a small team in Poland and a small team in Brazil.

Nathan Latka

14:40Why?

Tobyn Sowden

14:41>> Honestly, they're just great people that we've come across in our physical lives, where... Whether they were in Victoria or we've met them somewhere, and we just wanted to continue to work with them. And so we've brought them on as contractors, in their hometowns remote.

DeskMetrics: Product Overview and Pricing

Nathan Latka

14:57Very cool. Well, hey, before we get into the final part of the show, let... Let's put a little bit more spotlight on DeskMetrics here for a second. So, you know, tell us tell us more kind of about what it does for somebody listening that might be a perfect customer for you.

Tobyn Sowden

15:11>> Yeah. So DeskMetrics is primarily a desktop software analytics platform. It has SDKs for Windows, Linux, and Mac, as well as some unique ones that are based on JavaScript for things like Electron as well as, extensions. So you integrate an SDK, and then a number of events are automatically tracked. The things from install to launch to to heartbeats to uninstall, etcetera, as well as you can integrate your own custom events. One one of the the big value

15:45>> propositions that we have is is attribution on on the desktop space that I've already talked about. The ability to track the user from the the web and onto onto desktop, their activity within the app, and how that relates back to your marketing campaigns essentially. It's what we're using for shift, and it's working phenomenally.

Nathan Latka

16:01And what's the average customer paying you per month?

Tobyn Sowden

16:04>> We we have... Our our pricing varies. I find I find in the SaaS business pricing is always in flux, and we're definitely still, you know, searching for the right pricing.

Nathan Latka

16:12Yep.

Tobyn Sowden

16:13>> But I would say the average, you know, the average customer is quite paying us on to the tune of about $500, and then we've we've

Nathan Latka

16:20Annually, Tobyn, or monthly?

Tobyn Sowden

16:22>> Monthly.

Nathan Latka

16:24And what are the key what are the key kinda drivers you're using to get higher ARPUs from people? Is it seat based or number of install based or impression based or what levers?

Tobyn Sowden

16:33>> So, previously, and and how we started the business was with the number of users. The more users you have, the more expensive, it is, and we have no gate on on the number of events, and the idea being is that we believe you should track everything, so we don't want to stop you from tracking things just because you wanted to limit what you're paying DeskMetrics. And so, what we what we realized is that it just

16:56>> doesn't work. We've got to change to a model where we actually we've got real costs associated with events, and, you know, we see user bases that are small, highly valuable, and they wanna track a lot of things. And so we're moving to a model now where it's a combination of of, users and events.

Nathan Latka

17:12Got it. And what year did you launch DeskMetrics in?

Tobyn Sowden

17:14>> 2016.

Nathan Latka

17:15Like late twenty sixteen or early?

Tobyn Sowden

17:18>> Yeah. I guess March or April. And I guess it should be should be noted as well that we've been building the technology and using in house for our distribution business for, you the three or four years before that.

Nathan Latka

17:32Yep. And so do you have a... Is that enough of a historical kind of sample size or historical cohort for you to be able to kind of pretty accurately predict the lifetime value because that would lead to my next question of what you're willing to spend to acquire those customers?

Tobyn Sowden

17:43>> Yeah. So we have a lot of predictive modeling that we use, and it's it's, obviously, we're using DeskMetrics to... As as the underlying data store, and and we use those in house for our own and operated products. But it's something that we're exploring as far as how can we open up the predictive analytics in a scalable way and allow our customers use it as well.

Nathan Latka

18:03Guys, I get asked all the time. Nathan, you post all these interviews, hundreds of them per month. How do you do them efficiently?

18:09And guys,

18:09the answer is simple. People always agree to my calendar back to back meetings. I batch my interviews to stay very efficient. And the way that I do it is I use a tool called Acuity Scheduling at nathanlatka.com /schedule. And the reason I use them is very simple. They keep keep my no show rate very low because they send out reminders about when the interview or the meeting is coming up. And also, they make it very easy

18:33to schedule time. Right? I don't have to go back and forth via email 10,000 times with people I'm trying to meet with. [email protected]. Helps me so much. And by the

18:45way, look, I like to have so many meetings.

18:47I'm the best in meetings. Okay? I do the back to back very, very efficient. You guys know me. Many people say I'm the most efficient they've ever seen. Okay. So I use the tool. It's so efficient. And by the way, I got Gavin. I said, Gavin, he's the CEO. Said, want a great deal for my people. He said, Nathan, well, most people get a fourteen day trial. Isn't that great? I said, no. He's giving us a

19:05forty five day free trial at nathanlatka.com/schedule. That's not gonna stay up forever, so go get it now. Nathanlatka.com/schedule. Let's wrap up here, Tobyn, with your favorite book and some other things. These are the famous five. You ready?

Tobyn Sowden

19:21>> Yeah.

Famous Five: Books, Tools, and Personal Background

Nathan Latka

19:22Alright. Number one, what's your favorite business book?

Tobyn Sowden

19:27>> How to Win Friends and Influence People.

Nathan Latka

19:28Number two, is there a CEO you're following or studying right now?

Tobyn Sowden

19:36>> No.

Nathan Latka

19:37Number three is there... Besides your own, is there a favorite online tool you have like HostGator?

Tobyn Sowden

19:42>> HostGator? Favorite online tool. We're using InVision a lot right now.

Nathan Latka

19:48InVision. Oh, that's a design and product management. Right? Yeah. Yeah. I love that app. Number four, how many hours of sleep do you get every night?

Tobyn Sowden

19:55>> About six.

Nathan Latka

19:56Okay. And what's your situation? Married, single, do you have kids?

Tobyn Sowden

19:59>> Married with kids.

Nathan Latka

20:00Married with kiddos. Alright. And are they... I always ask this question because parents always say, I can't launch a business because I have young kids, but then happy like you on that are doing it. Are they young or are they old or are they out of the house?

Tobyn Sowden

20:10>> They're seventeen months apart and they're age,

20:14>> 1.5.

Nathan Latka

20:15Holy mackerel. So two young ones. Alright, and so how old are you?

Tobyn Sowden

20:21>> I'm 32.

Nathan Latka

20:22Last question, take us back twelve years. What do you wish your 20 year old self knew?

Tobyn Sowden

20:30>> So my 20 year old self really struggled whether or not to get a degree in business or to get a technical degree in computer science or engineering. And I think if I was to go back, would tell myself technical all the way because learning business is a lot of fun, and I think there's a lot of value that comes with that process learned, in the real world world as well.

Nathan Latka

20:50So you would have told your 20 year old self that you had wished you got a technical degree?

Tobyn Sowden

20:54>> I did get a technical degree, but it took me six years to figure that out.

Nathan Latka

20:57Oh, got it. Got it. Got it. So you wish you had it earlier?

Tobyn Sowden

21:00>> Yeah.

Nathan Latka

21:00Awesome. There you guys have it from Tobyn, he wishes he got a technical degree earlier. Again, building Redbrick fastest growing software company in Canada by third party launched in 2010 at about 200,000, by 2015 doing between ten and twenty million bucks in revenue. They're getting out of the space of kind of professional services and one on one consulting for distribution and moving into kind of SaaS plays with their new companies launched in 2016, DeskMetrics and Shift

21:26each with several 100 or sorry. Yeah. Several 100 high hundreds of paying customers, desk shifts specifically about 800 paying $20 per year, about $16,000 there for good signs of early traction. Tobyn, thank you for taking us to the top.

Tobyn Sowden

21:40>> Thanks, Nathan.

Nathan Latka

21:43If you enjoyed Tobyn today, go back and listen to Patrick yesterday. He breaks down alternative investment ideas, and I dig deep into his book deal where he negotiated a 10% royalty and a $100,000 advance. 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 hustle like heck to get these episodes out every freaking day

22:07for 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 Tribe. I love giving away free money. I feel like, oh, we're giving away cars, and I have something special for you today. How many of you have heard our super sharp guests talk about

22:28success they've had with Facebook and Google Ads? Well, all of you listening right now, Liz, if you're listening, you get a $100 in free AdWords. Here's how you get it. K? Again, thanks for listening. Get the free $100 from Google right when you sign up with my website host provider, HostGator. Go sign up now to get your free money. Hostgator.com/nathan. Again, that's hostgator.com/nathan. So, guys, I'm so glad to be back in Austin.

22:57I just got back from a major tour of Southeast Asia. I went to Sydney, Bangkok, Bali, and Japan. And, you know, I always get sick when I travel. And this particular trip, my gosh, 15 different airports, 20 different hotels. I mean, flushing in airport bathrooms. I was worried about germs and getting all the nutrition I need. I mean, finding a restaurant in Japan difficult because nothing's in English. So it's hard enough to figure out the train

23:20system. But my point is, I had a guy named Drew Cannoli on the show who said, Nathan, if you're concerned about that, take these little green packets with you. You just mix them once per day with water.

23:30They'll keep you super healthy.

23:31You get all your nutrients, and they'll keep you from getting sick. So I took them. And guys, they worked unbelievably well. I got no sickness, just mixed them with water once per day. They didn't make my water bottles all sticky. That's, like, nice. A lot of these mixtures, they make them sticky. It was very clean and smooth. Took them once per day, never got sick. So we've got 11 superfoods, and they're perfect if you're not traveling,

23:52but you're just on the go from your office to work. So you can check them out at nathanlatka.com/juice. That's nathanlatka.com/juice.