SeriesCode Revenue (2024)

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is john steele he's been coding since he was a teenager and had a career in i.t before he went to law school and decided what he really wanted to be was the ceo of a sas company siri's code is his company was founded upon his passion for coding he's married has two kids and cashed in on two world series of poker events john you ready to take us to the top yes i am i kind of want to just talk about poker screw sass i'm fine with that going to vegas tomorrow for ces and uh i plan to play on the weekends so that's interesting what what's the just uh for sassio's listening that might get invited to like backyard bbq texas hold'em games what's like one tip you'd give them just to stop losing so much money playing hold them oh man there is so much um that one's really really hard actually i would say if you're in denver or come to denver come to my backyard game you play in the garage right no one's gonna want to play you when you say you've cashed in on two world series poker events man you want to play with the newbies no they like it right it's a challenge plenty of people knock you out right if you're good if you're a good professional player you cash in 15 of your tournaments so there's plenty of chance to knock me out yeah i love that no one of my this is like i don't i never really talk about this publicly because uh it just has never occurred to me but um i i like slowly in san francisco and new york city got invited into these like super high-end kind of texas hold on poker groups where it's like lps investors exited founders and we all play and honestly that is some of the best friends i've made in the best networking ever because you sit there for eight hours you only play ten percent of the hands and you talk and network the rest of the time yep that's exactly right i love that all right let's focus on series code so what came first by the way poker or series code uh poker did actually okay i started when i was i think 21 in tucson arizona wow okay so when did you launch series code the series code um the parent company is auxiliary teams and it was launched in 2016 and then series code is an offshoot of that that launched this year okay so you launched it in 20 oh i guess 2019 or 2018. oh sorry 2019 or 2020 2016 and then oh yeah sorry 2019 series code uh rolled out okay so for those that are not familiar with it what's the company do so we provide world-class software development at a startup price so we help startups build their sas products so actually we serious code we don't have a sas offering ourselves we help other people build theirs okay so can you talk about one or two that you've helped build um so there's uh 11 software who's out in portland oregon they do internet internet authentication in hotels so if you've stayed at a marriott you've probably used the software there to crack open the lid of your laptop and put in your last name room number to get online um there's a company in in austin texas called swoovy they do uh it's a dating app where they connect people to go on a non-profit volunteer adventure okay so give me a general sense of scale here you launched it i started doing this last year what how many people are on your team today just as just you i know so we have 28 people worldwide so and we're remote first so there are four uh five of us here in denver but then everybody else is spread around the globe okay now you've bootstrapped this it's really an agency correct yeah 100 bootstrapped okay we love that and how many engineers are the 28 um it's about 20. i don't have to recount but yeah that makes sense right if you're building sas apps you're heavier on engineering um yeah and what's the typical so so i mean what's the typical gig if someone's sitting right now and they're going nathan i'm a business person with a big idea but i can't seem to get a developer to work for me at a decent price and they want to use somebody like you what are they going to pay you to get a kind of a basic mvp up so that's the thing right we go to a lot of uh you know like the fun conference or tech stars or rocky venture club and i get to hear a lot of people talk about the either themselves or the friend they know who you know scrape together 50 or 100 000 to build something but that's not enough to usually go get an agency to do something for you so they hire some guy in the basement i mean i'm in a basement but hey um you know they get some guy in the basement who they can afford and many times after that they have nothing to show for it and they're out you know that money was put on their credit card or their home equity so our goal was to bring world-class software development and you know true agency to people who wouldn't usually be able to afford it so we put together packages that help uh startups actually be able to afford it so people can split the payment between cash and equity um so for example our published rate is 84 an hour but we'll do a 50 50 split so you can get the cash portion that you have to pay down to 42 dollars an hour which is usually at or under what you're going to have to pay anybody else and for that you get a team leader and usually a front-end developer and a back-end developer okay i want to actually walk through a real example here right so like let's say someone's listening right now they have an idea the mousetrap they're gonna launch with let's say is a chrome application right so they want to pay you to build a chrome app um hopefully you're familiar with those i mean give me a ballpark how many hours yeah how many times that gonna take you to build so it really depends on how difficult it is a chrome app is usually gonna be pretty straightforward and usually we're talking mobile apps or web apps something a bit larger than that chrome app is probably in the 25k range but we like to tell people that when somebody comes to us and they say hey i want to build this app i just want you to build it and go away um they usually don't understand software because software never dies if you have customers who like your product it's going to keep going and going and you need us i tell them think of us like electricity yeah you're going to put it in your budget and keep paying i get that but i also try and like when i a lot of founders ask me about companies like you and they say hey should i work with john should i work with this other you know team that does and my answer is always the same which is define spec wise what you think the the lightest mvp you need is to get your first dollar of revenue right and then figure out how much they are going to charge you to build that mvp right correct so so uh chrome app kind of in 25k range and i know obviously these are ballparks they're highly dependent on the specs what what might a sas web app cost to build with you so sas web apps i i've seen them uh out in three months um you know oftentimes you can have an mvp to the first dollar in in you know in three months 90 days that's typically uh in the range of 50 000 okay um and then half of that can go on equity half cash so 25k cash okay so let's go down that so i'm a new sas founder i'm using you to build a web app i pay you 50k i don't have 50k so i pay you 25k tell me how that actually i own 100 of my company what percent are you getting for the 25k i don't pay you in cash so instead of there are other companies that do something similar and they have this standard we'll take seven percent warrant or something like that we um i don't think that's fair because you don't actually know how much we need to do for you so what we do is we accumulate an equity balance so when your invoice comes you choose uh okay i'll pay 50 we we store that balance up and we put it on to something like a safe or an equity kiss so basically when they it comes time to do a financing round we would participate like your other you know angel or seed investors okay so that's safe let's let's just stick with safe because it's more common than a kiss uh what what what are the term i mean what cap are you putting on it or is it so we don't put a cap we believe we'll take a smaller piece of a larger pie we don't want to and caps usually turn into limits for future rounds we don't want to get into that game we'll let people grow their company as large as they can okay so it's uncapped again 25k is now on the safe what's the interest rate um so we don't do an interest rate but we do ask for the 20 discount which is pretty standard yeah that is standard so so it is truly a safe 20 discount no interest rate no cap right okay uh let's then say over the next 12 months um i need you doing 5k of maintenance work per month squashing bugs launching a new feature here or there things like that so you accumulate over the next 12 months another 60k right of of basically cash that i owe you can i can put all that on the safe or do i have to pay 50 in cash we have to do 50 we do have a program that goes as low as 18 in cash and 82 equity but that's for companies we really believe in we've vetted the standard program though is 50 50. and and the key is here that you know smart entrepreneurs they want to give away the least amount of equity possible they kind of understand the value of that and so they'll start at the 50 but then they'll go to well 80 90 right they want to put the least amount in into the equity and pay as much cash as possible well the the so let me do the flip side of that as a smart founder who wants to preserve cash early on they're not actually selling you equity right safe is really a debt instrument with the expectation it's going to convert to equity so they could after a year and a half screw you because there's no interest rate pay you back that money and legally there's no recourse for you correct um well i don't think they can pay back the money if you know it's in that safe if they have a financing round we get to participate in it but there is the possibility that it just goes nowhere and like all safe holders you get nothing i mean we really are banking on it going somewhere got it got it got it so okay so you obviously can't extend this to everybody because you have to make you have to put on your vc hat a little bit and say what's likelihood they're going to do a funding round or not so i mean how many times have you done this with a company and still today a year two three years later they still haven't raised any equity or had a liquidation event so our early clients are like that the ones where john steele was the salesperson right um we have a couple that are still you know in that they haven't shut their doors but they're still going we're still providing um work at a really great price um we are getting better and better at uh vetting clients who come out we haven't had anybody go through a round yet because the series code so as auxiliary teams i was doing this it was the wild west whatever john could negotiate is what we went and got we decided to put a product around it really and that's where we got the lawyers involved and wrote up the the contracts and made it a standard offering at the beginning of this year so all of those clients who've come in this year nobody's gone to financing yet it's a little too early yep um but yeah so we're still going through it well so give me some context in 2019 how many customers did you serve um so we had four at that time okay four and how many of them are still paying today because it's monthly maintenance monthly feature releases etc or just right continuing to to build the product um so all of those are of the so we've had we've had 10 customers since we started three years ago only one has left okay so so 2016 when you launched the agency you you know since then you've accumulated 10 customers um all but one uh you know paid once and still today pay you something each month correct interesting um okay and then so what are what i mean i guess i'm curious monthly so monthly today you have 28 people on staff across these 10 customers how much total monthly recurring revenue are you doing so uh december was at 85 000. okay so so pretty okay so 10 customers each one's paying between call it six and 10 grand a month something like that 8k average yeah on average yep okay um of that uh of that 85k in december um how much of it were was one-time payments like to get the mvp out versus true recurring payments so we don't have any actually one times right now everything is on a recurring ongoing so the contracts are the statement of work is ongoing work until you tell us to stop and that's how all of our contracts are arranged right now interesting okay um one of the fears that new founders have in working with somebody like you is what if i get to the point where it takes me longer to scale i can't afford john's bill even with the equity share i can't lose him because then i'm screwed he knows the whole code base right how do you deal with situations like that so of course we can just put everything on hold um you know that that's usually not what we want but we'll usually pop down to that um we'll call it a bridge time where we'll go down to 18 in cash and the rest on equity don't don't tell anybody this yeah but uh we'll usually do that to help people get through a tough time because we often come in say a few months before the seed round is going to close and oftentimes those take a little bit longer than people expect to close so we'll we'll help out during that time and we'll usually you know do it in a way that we can continue developing so that we keep making progress on the product as well that seed round though let's say it's on a convertible note your safe doesn't convert into the convertible note right you're still gonna have to wait yeah we would still wait we're usually waiting until there's a round of with a valuation of a million dollars yeah uh raising a million dollars yeah evaluation much higher what if you um what if someone uses you and then two years from they don't raise any equity then two years from now they sell for 10 million dollars uh do you basically just i mean how do you convert your money into that 10 million dollar sale price and it's built into the safe um we there is some kind of sale price that's determined and then you take the balance that we have and you determine what that would have been so give it a 20 discount basically yeah yeah uh okay interesting um i'm trying to think about how your model scales right i mean can you build this into a company that's gonna do five million this year it's tough um our five million goal is in three years from now um we we've been growing at 100 a year but that's because we've been small we expect to grow about 75 for the next three years um it's not like i said series code is not a sas operation um it's tough to uh grow because the the team captains right the person who runs a team of developers um is the architect is the project manager is the client contact they kind of are the glue that hold this thing together and we have to find that person each time we need you know each time we bring in three or four clients there's a new team captain that goes in there and that's a that's a tough job it takes us a while to vet and find the right people you did eighty five thousand dollars a month two months ago just or a month ago december 2019 what what we got a year prior to that december 2018. that was 30 30 000. okay got it so yeah kind of more than 100 year over year growth and are you operating everything in breakeven right now are you profitable we are just at break even oh that's good that's good that's obviously a good place to be now could you raise company equity you know cash for what you're doing or no we probably could it's funny we sponsor a lot of uh these entrepreneur events like the rockies venture club and when we have a booth there we have a lot of investors come up to us oh so you're raising money what's it for we say oh we're not we're like you should be um but we just right now aren't looking into it we turn it down yeah i mean how is there a way i mean you only want to raise capital if you can deploy in a way that helps you grow your your business right your right bottleneck is finding more engineers to take on more hours of development work that's like a hard thing to grow right i mean you're an agency yeah and so we actually are really good we've i've been doing it for i mean even before starting this up for five six seven years of finding developers themselves um we have a process that takes 40 applicants and funnels it down to one person who who joins the the team including you know a programming test that is actually paid and so we give everybody the same testing so we know um where they fit in the in line and stuff so we actually can get developers in pretty quick in a week or two and we've been able to do this just routinely over and over but we don't have that same kind of system for the team captain who is a bit more dynamic and has to have a higher level of skill and i just don't know the way to to bring with them in yet without working with them and and kind of getting a good where are you sourcing the 40 developers i mean are you using sites like top up work and then basically bringing them onto your own platform and then hiring one full time correct so yeah we use those freelancing platforms that are out there because they have so many people around the globe connected to it yeah do you put your current projects through top talent upwork or do you actually hire these 28 people are full-time on your personal balance sheet and p l so they're since most are out of the country they're 1099 but they um and and we use those things as payment uh methods vehicles because it's everybody's on there that it's easy to get the money through we don't post the project itself we post only the test project and then once they pass that we bring them into our own systems to actually do the project work but we treat our developers so that was one of the one the things that i didn't like about software development um years ago and i wanted to change and we have um you know we're ranked as the top in the top seven percent uh for engagement by gallup uh across the globe um we wanna make sure that developers feel like they belong the developers so we treat even our contractors like their full-time employees their their workload doesn't go up and down we guarantee they're gonna get whatever many hours a week that they want to get and they don't have to look for other work or be worried that they're not going to have work yeah um this is interesting so you find them through upwork and then you don't or top tell them you don't post the job there but you'll use the upwork like processing features for like you know time tracking and screenshots of their desktop to see what they're coding and you actually will pay through upwork as well yeah yeah yeah makes it all smooth that way we don't have to worry about all these different payment methods yeah interesting okay very good let's wrap up john with the famous five number one favorite business book uh right now it's traction by gino wick yeah that's a good one uh number two is there a ceo you're following or studying i'm reading the biography of elon musk i think that guy has done some really great things number three what's your favorite online tool for building your company um well we use amazon web services right that's just across the board so yep number four how many hours i sleep you get every night seven okay you can't let that go was your situation married single kids i am married uh we've been married ten years we have two kids they are uh two and five i'm amazed that's amazing how old are you i'm 40. 40 last our last question yeah what do you wish your 20 year old self knew you know i wish i knew that there are bad actors in the world but that's that's the minority not the majority i'd say to myself don't give up on your dreams um don't lose your sense of wonder guys don't lose your sense of wonder coming from a world series of poker guy who's cashed out many times they're now launching serious code helping founders get their mvp built and trying to basically save cash at the beginning as well so he'll take equity he'll take cash payments as they look to again help you build your company and get to your first either equity round or a liquidation event john thank you for taking us to the top thanks nathan these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it more so if you want to get more of this stuff make sure you subscribe up here and then additionally go check out one of my other ceo interviews right now