How Springboardretail grew Springboardretail to $6M revenue and 625 customers in 2019.

hello everybody my guest today is gordon russell in 2006 when nobody knew what cloud or sas meant gordon uh who had launched the first independent lilly poulter store decided to bootstrap a web-based cloud-hosted project to create a sas point of sale system and retail management system this became springboard retail which today powers a thousand brands and retailers processing two billion in retail sales annually gordon you're ready to take us to the top sure all right so first off is your business model a pure play sas model or is it a transaction fee model no it's a it's a pure play sas model it is sas okay so let's not jump ahead of ourselves take us back did you get this idea from after you launched the first lilly poulter store well when i launched the first little pulitzer store it was 1997 and uh two years after that i launched the first transactional website and i found myself doing omni channel back before it had a name and the systems weren't available to support that workflow and actually they still are struggling today to support that workflow okay and ended up hiring in-house staff to build our own system and we so we built a proprietary system that worked very well and as time went on and people started using the name cloud to describe what we were actually doing because we built web apps to actually run the business we pivoted and put aside the proprietary system that we had built and embarked on a road to build a platform on the web uh that could work for um all all retail no very good and and walk me through pricing today so on average what's the brand going to pay you per year to use your technology well we serve um brands and retailers of all sizes from single stores up to uh 50 or 100 you know retail sites so the the pricing ranges from as little as 69 a month for a single store up to um as much as many thousands a month for a larger brand okay um we have a tiered pricing system that uh takes them up through uh starter and professional and enterprise tiers based on their requirements and um uh the services and and uh and uh features that they need from springboard gordon just because this interview is very short 15 minutes and i don't have time to talk about all of your types of customers if you did look at what your sweet spot was your average is it more like 70 a month or a thousand a month our sweet spot in terms of price is actually uh probably around uh 800 a month okay it's part of the average but what we're seeing though is the market is coming at us larger and larger profile uh omni-channel multi-unit brands are are coming at us as they're seeing that their legacy systems just aren't able to gordon that's a good thing that means you're doing something right that's a good thing that's a good thing when did you launch this thing well we launched in alpha in 2014 with a couple of my friends who ran retail stores and then we moved to a beta program at 15 and to the general public in the second half and 15. okay so between 15 and now today here in 2019 how many customers have you scaled to well we've got uh in the range of approaching a thousand between 800 and a thousand depending on how you look at it because many are in the onboarding process as we speak so okay in that range now gordon can i multiply that a thousand customers times that 800 number a month you just gave me you're doing about 800 grand a month right now or is that not accurate that's uh if if all were on board that would be accurate but in terms of our uh you know our gap numbers they're less than that okay fair enough can you give me a general range is it more like 500 grand a month in that range okay fair enough good so closer to 500 grand a month and if you're doing that today help me understand growth gordon where were you a year ago a year ago we were probably at you know 200 okay so you double 20. you doubled your over here yeah just about doubled where did most that growth come from new customer editions all together or expansion onto additional locations under the same brands it's come from both our our sure we have net negative churn in dollar terms so how negative uh two percent okay in in dollar terms we've lost a few names but those were smaller retailers that really shouldn't have actually been boarded and just be clear gordon that's not 100 churn that's 100 net revenue retention that's correct yeah that's correct that's correct and can you break can you peel back that onion for me so how much expansion do you have and then what gap is that making up on your gross churned revenue uh boy that's a good question um if you don't know that's okay i would say it's about it's about six percent pension i would say yeah that's expansion or turn expansion okay which means you had four percent churn add back six you get 102. i would i would that's a rough guess i don't have that number exactly close it's no problem no problem okay good so uh healthy healthy healthy economics there now have you bootstrapped this corn or raised capital um i bootstrapped it um until it was clear that i needed to get a stamp of approval really so i accepted uh you don't strike me as a guy that needs a step of approval for anything well i appreciate that uh generally speaking i don't but uh it i felt like uh in the long run that i needed to have someone other than myself invest in springboard retail that was the advice and i took that advice and so we we did business with a company called lighter capital out in seattle they have a great uh product it's non-dilutive it's lighter as the name says i don't have to do any uh collateral just uh they look into our records they know how many customers we have they know how much they see in our bank how much revenue is coming in and they take a piece of that revenue monthly and it's been a great relationship we've done three rounds with them over the past 15 months how much was the first one uh 200 000 in the second four and then five so we've gotten over over a million dollars in total from them um and it's been a great relationship uh with them and it's worked very well and their typical model is like a 1.3 ish repayment cap anywhere between kind of three and four years take and call it three to six percent of kind of gross receipts monthly are you generally in that range we were um but then in the last round we they call us the perfect customer so we couldn't we couldn't drive a better deal so they actually converted us and they're growing at the same time they're actually adding products so they converted us to a fixed uh credit instrument the fixed fixed rate fixed term um and so we're on a three-year term instrument with them now that's great so it's more like a term loan with a fixed interest rate that's correct with provisions for us if if and when we uh go on to a further round but gordon no no covenants or warrants hopefully none no personal guarantee none that's beautiful so no and this is all the only funding you've raised no venture capital no equity that's it that's wonderful okay so you've scaled to basically a six million dollar business here bootstrap do you still own or your founders on 100 of the thing and you've used lighter capital to drive growth that's correct that's correct that's great this model with a lighter capital really only works if you know how you can invest the first 200 grand they give you to drive back more growth than what the percentages you have to pay them the repayment cap over time how did you what what where were you putting that money to drive growth and how did you have the confidence at the time when you took the money to know that your pro forma would pan out well that's a really good question uh the number one thing i knew was that our product was supremely solid we we we did it product first and we had to do that because i also the the way i bootstrapped it was i owned a retail enterprise that was doing about 12 million dollars and had tremendous growth through the use of springboard retail so i had every bit of confidence in the product uh we we saw that the product was sticky when we got customers they stayed and they expanded so i had really no problem with that so what i did was uh invested in people because that was the missing piece we needed to have people on board who um who were experienced and and brought perspectives that we didn't have because the core group that was running springboard retail actually came out of my retail enterprise and that's good to a point because we understand the product we understand the domain we understand what our customers are going through but the whole business of sas was secondary to us we were learning that as a second business so we brought in people who have experienced in that world and that's that's been driving tremendous growth because the customer profile is changing and becoming more complex but gordon where did you so that first that first tranche of cash reminder it sounds like you spent it to grow the team a little bit where you're hiring engineers sales people who are you bringing in uh both uh okay uh engineers and to as a footnote we also made a decision to move to a work from anywhere profile so rather than uh have an office where we were geographically limited to who we were hiring we last uh year decided um it started by accident but we ended up uh remote we're not going to have an office that's great how many people today uh we're about 50. okay and...