How Seeforge CEO James Mcdonough grew to $5.4K revenue and 50 customers in 2018.

hello everyone my guest today is james mcdonough he's a passionate entrepreneur technology ceo and past top tier management consultant he's now bringing and blazing new trails here at sea forge which helps digital forms and procedures uh occur in seconds with zero coding we'll talk about that today james are you ready to take us to the top excited all right tell us about sea forge that the bio is a little confusing what do you guys actually do and how do you make money yeah so c-forge is the company's name uh the platform is called fat finger our customers named it and it came from my work you know i worked my entire life in heavy industry and basically we enable frontline employees to build apps in seconds and so those apps are typically based around forms procedures checklists anything that bob uh is walking around and maybe an oil refinery or a field service worker is doing things like safety quality field tickets anything on a clipboard bob is able to build an app for himself or his team or his company um with no code not low code uh in basically seconds so it kind of empowers these folks to kind of not have to wait for the corporate id department to check off a bunch of boxes they can just empower them and do it themselves exactly so it's a it starts from a uh you know from an end user or or bottom of the pyramid and it starts working its way up when they start you know adopting and what will bob the frontline kind of oil refinery worker who's on the rig in the middle of the gulf of mexico what will he do if he says i'm sick of filling out these forms every day oil gets all over him you can't even read him i want to make this an app what does he do that night yeah exactly so uh you know they start searching around and now bob is kind of in our generation i mean kind of you know not using paper and and wanting to you know be mobile enabled and so you start searching around find fat finger sign up to our free trial go through our 60 second tutorial um and you know at the end of it he's created his first custom app and and then that really gets the kind of wheels spinning um the juices flowing to to say wow oh i could not only do my original intent which might have been his safety inspection but then oh why aren't we doing our xyz processes or procedures and that starts uh um maybe sharing the app with other people or gaining momentum but james does i mean does bob on that oil refinery does he have a laptop it goes to back in his bunk that night to do it i mean is it orzole on his phone the building uh the creation of the app he does that from his desktop or or your web browser uh and then the actual use of the app is as from any platform including mobile okay and and let's say he builds the app what enables him to then make that the standard app that all the other people use versus all of them going and creating their own apps to do the same thing right that's why there's process in the first place yeah of course so basically bob would invite uh his colleagues to the team so it'd be like you know the exxon team or whatever uh companies using it and then they would join uh that basically that that account and then they would depending on the access and privileges that's being set up um is what that user will see so we've got the ability to uh let's say that the safety team will see the safety apps and templates and the maintenance team will see you know that those type of procedures but but i mean what i'm really curious about here though is is like the friction right so like do they then have to like take the time to understand and learn bob's form and and do they actually do that or do they just stick with the paper that has been working all along after it's been created no so that the the new user let's say bob's colleague or or sam the person supervisor whatever sam george whatever uh they get an invite saying hey welcome to that finger download it for free as soon as they log in they'll see what bob has created and that's it so it's super easy okay but i guess what i'm trying to say is the reason that these archaic systems exist in the first place is because it is part of a bigger system so you're essentially enabling systems change from the bottom up instead of from top down and so my question is how do you actually drive true system change and adaptation you know outside of just bob's own usage how does he then sell that up from there so the whole thing gets more efficient yeah so that's the magic so i and that and that's really why i founded the company is is that that friction or that frustration is uh the front line employee knows their job they're passionate about their job and they're they're tired or really frustrated with basically people not listening to them or just waiting you know waiting for the bureaucracy to kick in or corporate i.t who is traditionally um under under-resourced and just can't keep up with the sheer demand of let's say digitalization of of uh procedures and so when bob and his team start using it liking it and it spreads to other teams because it's so easy to create more procedures and flexible um that they they really are selling it upwards and so there's this disconnect or this this i guess incorrect thinking that um that that the the i guess the field workers or the front line aren't i guess uh aren't guess motivated to change and that's that's completely wrong it's just that that typically enterprise software is sold to the sea level and and uh they're not i guess bringing the front line or the true subject-matted experts from the business um into those decisions and so we went the opposite way instead of selling to the cio or the executive we sell from the bottoms up and allow them to bubble up uh the usage and the i guess the initiation of change okay so so okay i understand the product walk me through pricing does bob pay directly he's the one using it yeah so uh a lot of times even with really large companies you know we have from exxon to other uh you know fortune 100 companies using the platform uh the they they start for free so we we take away that friction to at least start it to basically start the ball rolling maybe allow them to show their supervisor etc and a lot of the times uh they that team might just use their personal credit card to maybe in the first five ten users and then now they've got enough traction to you know put a business together and flip it over to it this reminds me this reminds me a lot of kind of how um uh oh the the name of this game expensify with david burnett out in boulder he did the same thing where it's like he it's basically receipt and a billing platform right so the individual janitor to do expense reporting might pay five bucks a month to do it but once the janitor and the secretary and everyone else then you'd sell it up to a bigger plan there's always a lot of friction between i know this sounds so simple but it's always very difficult to say okay we're looking at our systems records you're on your backend of stripe and you see like you know 40 like at exxon.com accounts sign up and you're going oh this one it makes sense to put touch on try and sell the cio directly you call the cio they say okay we'll put on our credit card but then you got to like figure out how to get all those users on that credit card and then shut off their personal cards and then there's like expense issues how do you deal with that yeah so that that that flip over from uh i guess you know individual team to larger enterprise and that's where it starts slowing down in terms of the automation because you know bob the trial to first users and credit card that we don't see any of that we just kind of see the data behind it when they start flipping over then that's where you know we start getting involved in more of an enterprise sale because then corporate it starts vetting us taking us through the security and compliance and all of the you know manual billing and that type of thing so that's where it does start bogging down but also the i guess the contract value started higher yeah so what what would bob start out i mean is it a lower price point a dollar five ten something like that a month yeah we start so we have a kind of standard pro plan ranging from nine to fifteen bucks a month uh per user unlimited apps okay and then uh and and then maybe some enterprise plans that if they're wanting some more enterprise features on top of that okay and what would i'm trying to i'm trying to figure out the right question asked to understand how much of your business is from the personal folks versus you've sold it to an it department and then they sell it and they triple the volume inside of that one organization so would you say like more than 50 of your user base is coming from a long tail and let's call that teams of five or less ah well so when they flip over they'll buy big chunks of users right so the enterprise starts i guess becoming much more important than the it's kind of like the top of the funnel we almost treat the the teams almost as leads um and and nurturing them to the larger deals yeah which then those that that yeah that revenue is is more uh than than the smaller teams yeah well what do you what do you track more closely what do you build your internal systems around number of logos using you or number individual seats uh so we obviously make money off of seats but the logo is really important because the logo dictates how much opportunity there is with inside of that logo so for example like we have a team that might bubble up to go from five people in the safety department to only a fifty person company versus a hundred thousand person company there's a lot more opportunity you know within that account so let's ignore a number of seats how many logos would you say you have at least you know one person active on your platform oh uh because we do free trials instead of thousands oh god i got it got it okay well how many paid just do logos yeah um so i guess we're around maybe 50 accounts yeah okay so then it is it is then still pretty targeted i mean those are it sounds like you may have some that have thousands of seats and some that have two seats but if you've got 50 and you have a real business you're building you've got a lot of enterprise accounts yeah yeah okay give me more of the backstory here when did you launch the company so actually we're seven and a half years old uh we launched in perth yeah i'm in this long story and then moved to the silicon valley about six years ago and then we ended up raising around uh in houston texas to focus in oil and gas at the time okay so how much raise today total uh what one point one is 1.5 1.5 okay good and now where are you guys all based is everyone in houston uh so my core team is in in houston myself as well and then we have some we have a dispersed team all over okay so houston and kind of remote and what's total team size uh nine oh nine people okay good so you've kept it kind of lean and mean now are you are you casual positive now today or no you're still burning so we go in and out uh depending uh and so yeah it's been interesting we have some competitors that have raised you know 100 million dollars name one uh like uh i auditor's almost there and um yeah and there's yeah the number of ones that raised big venture dollars which we don't really understand because we think we have a on par product and we've we've kept it lean and mean uh kind of on purpose yep no that's good okay good so that's helpful 2011 nine people houston remote 1.5 raised um you were in oil sorry did you see you were in oil and gas before this that's how you knew the market existed yeah so i've got kind of a weird background since i was 16 i work for some pulp and paper like in the equivalent of kind of a refinery but in pulmonary sawmills did that throw a high school university then did my mba in australia and china went into management consulting and spent a lot of time i guess on oil rigs mining sites kind of heavy industry sites all over asia pacific and uh again saw the frustration of end users at the time kind of mobile the ipad had just been released which is hard to believe now yeah and kind of the whole mobile first that was the buzzword at the time and we saw an opportunity to say hey this mobile thing is going to be big let's you know make it super easy for the front line and and just build a a just elegant product at that front you cut out there for a second but i think you just said you want to build an elegant product that makes it easy for frontline to use yeah yeah okay very good and then you look a good measurement of that as again how many active seats you've got on the platform so are you in the thousands at this point or you know dozens or where are you uh yeah so that's i guess private on uh okay exact numbers but okay when do you think you like um let me maybe ask it differently what's your next kind of big uncomfortable stretch goal for number of seats like is 10 000 the milestone or a million seats what's your next big thing uh i guess so we've got some logos that have uh eat it those companies have have arrow in the hundreds of thousand employees or a hundred thousand in tens of thousands employees and so trying to get mass adoption uh okay basically they call them strategic tools yeah and then you're in you know you're basically a strategic partner of those companies and you might have what a couple hundred of them only today like less than one percent of the workforce yeah uh i guess i maybe in in they're usually location dependent or or country specific so let's go to more basically facilities or locations yeah yeah let me let me ask you a different question what the average team size using you what what would you say are we talking hundreds thousands or a couple of 510 uh well it starts in the in the kind of the 10 because it starts in the kind of department or team just naturally and then that kind of site has you know in the tens or 50 or et cetera and then uh maybe that site has a hundred or whatever and then and that's where we're trying to take it across sites okay good that have that champion take us and i know i know you don't want to share your kind of your current revenue numbers but can you give me kind of what you're aiming to get to at some point like when do you think you'll maybe pass 10 million or five million whatever your next big milestone is uh yeah yeah i guess yeah we're private on that okay well i mean look you said you kind of go in and out of kind of cash break even you have nine employees right so if you assume a you know pretty small salary i'd call it 60ish especially for developers that's 540 a year right there so so so yeah we'll say maybe somewhere around there at this point since you don't want to share more um what would allow you to scale growth faster in other words do you have people on this nine-person team that are inside sales doing the land and expand strategy or what no so that's uh again we've raised it you kept it ultra lean we only do digital marketing so uh really the only time we get in flipping the enterprise side uh we don't have any i guess it's not like the sdra well why not though james you say that that's your biggest strategy is to take a ten person team and make it a hundred thousand person team that seems like me that's like exactly what an inside rep does or a county account executive does yeah so it's it's been interesting and i guess the history of the company we've been around a while uh we used to do that and what we find uh is having the front line person take it at the speed which uh basically decisions are made um we can't break that as an i guess a little company or an inside sales person so usually we invest in success and make it super easy for them to start adopting and then when they're ready or they have that adoption we're there to basically support them in in any way to to get i guess go larger but we don't we don't do any i guess outbound say hey we should use this product and uh you know take them through the demo cycle it seems like you just maybe had a shitty account executive in the past yeah i mean this is what they're hired to do is to accelerate this process uh yes there's but that's usually sold at the it to the the uh the ceo or yeah yeah we don't do that right we sell to the we sell at a low ticket friction list yeah but how do you how do you go from making this up the houston office to the to the perth australia office that those employees on the refinery floor are never talking to each other they're not like on a walkie-talkie each night you've gotta go up the org somehow and then come back down on the other side yeah usually success um it starts more than up because uh maybe i t in in that region finds out about it and then they they're either expressing wins from a business level and and so boom account executive yes i mean that's like that's exactly where you put it i'm just curious like why it didn't work out if if we raise more money or or yeah that's uh definitely definitely an opportunity all right so what most the nine right now are developers yeah yeah okay we're yeah basically product focus company okay good what about charn what's your turn today uh so we chert it's very low in terms of paid uh and and the enterprise side like anyone who's adopting isn't isn't churning they just it's basically you know they they get addicted to the product we churn out maybe the small really small businesses that are uh either going out of business or they're looking for free and they're experimenting first yeah well ignore logo churn since you have such a huge bandwidth of kinds of customers but revenue trainer i mean are you above 100 net revenue retention annually meaning your expansion outpaces you're lost oh yeah okay you said it with a lot of confidence how far above like 110 120 uh well because they when they flip up to enterprise it just it just kind of dwarfs the the ones that we lose yeah i mean so how big i mean is it like 200 300 uh yeah right i guess yeah right around okay no i mean that's healthy i don't know why you'd be shy about that that's great okay very good um and then what about cac so what are you paying to acquire these new guys you know at the bottom at the bottom of a pyramid uh so most of it happens through uh word of mouth and uh but if you know doing our different testing from online marketing we can acquire a trial for about just over 20 bucks okay and then you can acquire uh you know an enterprise logo for um around a thousand around a thousand okay and then how quickly do you like obviously you have to manage your cash tight because you're you know you haven't raised a ton on your break even how long are you willing to wait to make that money back in terms of what they're paying you your payback period uh so the the the larger enterprises they take a long time right like you're you're you're going through the enterprise sales cycle um but really i i guess we are making that we're making the marketing uh in i guess the the cap back on the smaller companies and then the larger ones are flipping um you're going to put us in a different category okay i don't understand so if you spend a thousand bucks to acquire a customer you should know like okay we give that money back in a month or on average we get it back in 18 months you're not it sounds like maybe you're not quite sure what that is it's we get it we it's it's i guess long uh because the the majority of our revenue comes from the longer sales cycles but if it's a longer sales cycle usually that also means they're paying more per month you see what i'm saying so like it should actually yeah i mean so we might acquire a logo for let's say about a thousand bucks but then we'll land uh you know 10 times 100 times that uh um 16 months later oh i see because it's expanding yes yeah i see what you're saying okay good all right very you kind of have to take educated kind of bets there in terms of what the potential account value could be well yeah that's what i mentioned at kind of the beginning is there depending on the logo and the account opportunity just based on the size of that company is very important and we're i guess where we stick our effort all right james very good let's wrap up here with the famous five number one what's your favorite business book of all time yeah probably uh stephen covey's the how to win friends and influence people with pets yeah that's good number two number two is there a ceo you're following or studying right now yeah i love peter d mantis uh number three what's your favorite online tool for building a business other than fat finger dot io uh probably asana we run our run my life on it number four how many hours i sleep to eat every night around eight okay and what's your situation married single kiddos uh married with our first daughter on the way oh it's that's very exciting congratulations yeah all right and how old are you james i'm 33 33 last question why do you wish your 20 year old self knew uh probably just to do to relax but dude do the same thing you'd be doing but enjoy it more guys relax stay focused enjoy it morkon from james again launch this company highly specialized niche product which i love back in 2011 bootstrapped it and then raised 1.5 million bucks now serving about 50 logos we'll call it hundreds or thousands of seats across those logos a bottom-up approach to helping these folks these front-line folks build apps that make their lives better once they tell their buddies eventually the cio or the cto gets wind of it and then before you know it they're expanding location to location they've got a team of nine people based between houston and other remote locations call it 200 or 300 net revenue retention annually they have a really effective kind of expansion revenue strategy just based again from usage there paying about or sorry charging about nine bucks a seat across those logos james thank you so much for taking us to the top awesome thanks for the time