How Referralrock CEO Josh Ho grew Referralrock to $1.8M revenue and 200 customers in 2024.

hello everyone my guest today is josh ho he's a 2x startup founder and now ceo of referral rock leading up products and marketing teams he's a full stack entrepreneur uh heart and you know through and through passion about startups handball and family josh you're ready to take us to the top yep all right what is referral rock and how do you guys make money uh referral rock is a referral marketing sas um we help b2b and b to see businesses get more customers using word of mouth as a channel okay now these kinds of tools the churn usually can be just through the roof so help me understand what your turn is today and how do you keep it low uh our turn our net mrr turns probably around uh five and a half percent what's gross what's that gross is maybe a little bit higher like six six and a half okay and that's monthly that's monthly yeah okay so six and a half uh obviously times twelve months is about seven eight percent annual revenue churn uh and then you're saying that you've got it sounds like about 12 points of expansion on top of that something like that annually yeah around there uh it's it's growing more on that area and we're reducing a lot of the churn from the we're lowering a lot of the children from the early cohorts yeah yeah yeah okay we'll come back to that i want to talk more about that in a second uh but first um help me understand you know on average what are people paying to use your technology each month uh average is about 350 a month okay so kind of a little a little bigger than maybe an smb kind of early mid market maybe um when did you launch the company what year let's see registered their domain 2013 debate about myself well i would say launches was like 2015. it's kind of hazy you know when you started starts out is very uh yeah it's like domain name registration first line of code first sale yeah exactly all right how many customers have you scaled to today uh we're about 200 customers right now okay so i mean can i take 200 times the 350. what's that put you at like 70 grand a month right now in revenue yeah it's about right and where were you where were you a year ago uh let's see probably around 45 okay close to that and where did you i mean so let's dive into some of the growth channels right so how did you get your first 10 customers where did you find them uh let's see the first 10 were probably all through the beta when i did uh i did a launch on what used to be what was it the list back in the day when that stuff used to work when a lot of those listing sites worked um and then i kind of yeah i just flipped the switch overnight after about a year of kind of tinkering in the beta just to see if it would stick and probably the first three four months um yeah i put up that paywall and and had enough buzz and enough users using it kind of flipped some of those beta users to paid users gave them like 50 off things like that um those were about the first 10 or 15 or so probably over the course of the course of like three months after turning that on that's great and that turn on date was 2015 yeah june 2015. yeah it's really great okay and then are you doing this yourself or what's your team size today how many people uh we're about 12 people now uh started out myself and uh all bootstrapped and yeah we're just slowly probably adding maybe one or two people every three four months that's great so bootstrap that means you're profitable today are you burning um profitable yeah okay like break even or are you actually like five ten grand a month in profit uh i basically run it at break even all the time so yeah basically yeah when i have enough revenue we bring on more to alleviate more pain and then uh kind of slowly incrementing that up again with myself too so yeah yeah relying on that revenue someone's gonna be risky again with the churn especially if it's super high what do you know you have to do to get a user to do when they first start paying in the first week to drastically increase the likelihood they stick it's probably not as much the first week for us so we have a a pretty good consultative sale we have a big we have inside sales team and a customer success team so the big things for us are getting the person to actually like check all the boxes to launch their referral program how do you afford an inside sales team on a 200 or 300 a month price point uh we do a couple things um the first thing is we started doing a setup fee so uh if you're doing we compete with you know but getting people on month-to-month contracts and then we'll charge a setup fee and we'll do a take a more advanced payment like a six month or an annual and we'll waive we'll waive the setup fee so that kind of covers our basis so we can get off the ground and not worry about like losing money on a customer what is that typically you're talking like like you know five a grand two grand uh right now it's eight hundred dollars we just changed it just based off of how much our cs team is doing and realizing how much ssmbs and different types of businesses uh need need assistance yeah i know it's a lot okay good so profitable 100 kind of year over year growth that's great bootstrapped how do you get your next 1000 customers where they come from uh mostly inbound so we set our foot in the ground and did a lot of like seo work up front and that's just kind of continuing to kind of pay dividends so it's a lot of a lot of inbound seo strategies to you know target specific referral marketing terms anything mostly stuff concentrate on the lower part of the funnel um which seo keywords driving you the most traffic would you say um probably just anything related to the words referral programs okay but i mean those are those are very very expensive keywords like you want to put it in now you've got like blue board get ambassador referral sasquatch aaron app i mean there's like four paid placements then all the organic stuff and i don't and i see you okay there you go you're the third organic mention here so i mean that's pretty hard thing to rank for yeah we're in the top 10 for most of the stronger more high volume keywords i mean yeah you're above hubspot right so i mean how did you do that are you like some special seo ninja hacker rock star or what uh i don't know i mean i guess you kind of pick everything apart as an engineer so um i probably know more than average enough that i could vet most people if they know what they're talking about but i have some good guys on my team that i've added on to kind of help me scale that out scheming scale kind of which keywords to go after get the landing pages up for each keyword things like that scaling our our marketing team in terms of what content um updating content getting backlinks all that type of stuff yeah are you okay so let's dive into that what is your full weighted customer acquisition cost look like today so what do you pay to get a new 350 a month customer uh let's see i calculated this just for you yes i love that it's uh about a thousand dollars okay good it's about a three month payback that's not bad right and what are you what are you built on you built on stripe uh yeah uh we use stripe as the processor uh we're using um was it a charge me as the as the payment kind of management on top of it oh interesting okay but everything kind of flows through stripe and then you use charge b to do the analytics things like that oh no we use we use chart mogul to do analytics um and then we have charge b actually is kind of more of a like a billing platform so it actually handles all the recurring aspects it doesn't use stripes recurring uh things so there's kind of a training so no stripe then stripe is the processor so it's still used if that makes sense we're not using like stripes recurring like product part um it's it's just doing all the payment processing through that yep yep yep no that makes sense very good all right let's wrap up here josh with the famous five number one what's your favorite business book uh the one i'm reading the most lately has been the messy middle i think that's the scott uh bluskey yes so uh number two is their ceo you're following or studying uh jason cohen the wp engine and lots of other things guy right yeah yeah he's great number four how many hours of sleep to get every night uh six to seven that's good and situation married single kids uh married two kids two kiddos how are you i'm 41. 41 last question what do you wish your 20 year old self knew uh probably not to hang on to losers too long not people like like stocks and business ideas or like business partners things like that and and people by the way we don't want losers on our team okay double down on your strengths instead so i love that by the way any plans to raise capital here in the short term or no uh there might be a reason to i'm kind of just i kind of stay at the level where i'm keeping my options open i bubble my head up every three or four months just to kind of think about it for myself but yep ever since then i've kept i kept punting so that's good but you're a single co-founder right uh yeah that's great love that all right let's...