How Supportpay CEO Sheri Atwood grew to $260.2K revenue and 2K customers in 2024.

Sher Atwood founded support B back in 2011 when she found no good solution for managing Child Care payments and other payments related to a divorce and supporting the children from both uh both of the the parents so she created support pay has ra gone under raise 7.1 million bucks most recently did a $4 million round of funding in 2016 did about c 300 or 400 Grand in Revenue now she has 2,000 paying customers paying on average 10 bucks per month for 20 grand in monthly recurring Revenue but add another 80 grand on top of that which in the form of $120 setup fees from new user she's converting into paid customers at the rate of about 12% of website visitors converting into an active user with just 3% annual churn so very sticky this is episode 714 coming up tomorrow morning you'll learn from Ryan this CEO doesn't care that his VC has him by the throat but first here's today's episode this is the top where I interview entrepreneurs who are number one or number to 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 5 and6 million he is help on global domination we just broke our 100,000 unit soul Mark and I'm your host Nathan lka hello everybody my guest today is Sher outwood she is the founder and CEO of a company called support pay she's also a former s Valley executive and a child of a bitter divorce who also went through her own divorce a few years ago she's created support pay when her search for a better way to exchange and communicate about child support system systems with her ex-husband proved totally fruitless support pay is the first ever automated child support payment platform poised to transform the complex timeconsuming and stressful process that impacts nearly 300 million parents exchanging more than 900 billion in child support and child expenses worldwide with support paid today's moderns today's modern families can spend less time managing and arguing about child support and more time focused on raising happy healthy children prior to starting support page she was a former vice president at sanch and also had been named number five of 50 women in Tech dominating Silicon Valley and top 40 under 40 executive in Silicon Valley she's energetic resourceful and lives by the model don't talk about it be about it Sher are you ready to take us to the top absolutely okay very good so my honestly the the first question that comes to my brain is you are incentivized to make sure people get divorced because you need more customers absolutely not I'm actually going to lower the divorce rate cuz I'm going to show people it doesn't get better it gets worse after a divorce so you might as well just stay married if no one gets divorced how do you make money because these Millennials these days uh actually aren't getting married anymore they're just having babies so it's actually not the divorce it's uh if people stopped having children then yeah maybe I'd have a problem uh say there exactly so tell us G again I give the bio but kind of tell us what support pay does give us a real life example maybe how when your ex-husband used it if you did or if you invented it after no we use it today I invented it uh because I didn't have a solution and uh what I found was um first child support's made up of two things one a base payment that's a usually monthly that's meant to cover only basic living expenses but then there's all these additional expenses uh education Child Care Medical extracurricular activities that parents have to share and typically what you hear is the person paying saying hey I have no problem paying I just want to know that the money is going to my kid and the person trying to get the money back is saying you know what I'm not even getting enough to financially support the kid so I was actually doing an expense report when I was working at sanch and thought wait when you do an expense report you uh enter an expense you attach a receipt why can't we do the same thing for child support so they actually see the money's going to their kid and then there's no argument about where the money's going or how much it actually really cost to raise a child yeah now uh what year did you launch this company in I started the company in 2011 uh looking for every reason to not do it uh as I say I'm the worst uh example of an entrepreneur as a woman over the age of a 30 single mom in Silicon Valley I don't have any parents I don't have a spouse I had no backup plan and I didn't have a tech degree uh so I had the idea I kept looking and trying to find people to tell me not to do it um and luckily for me and for them they said hey hey this is a great idea and not to mention much needed where were you financially at this point in your life you obviously were executive at sanch but where were you financially help us feel that yeah so I grew up super poor I was raised by a single mom who was a a drug addict alcoholic only one in my family go to college so luckily for me on my career side uh got super you know was one of the youngest VPS ever at sanch so I had saved a bunch of money from that what's a bunch Sher if you don't mind me asking I had multiple houses cars boats um I got a divorce and gave him a house to walk away I had stock and Equity um plus I had about two years of salary in the bank okay so that I mean can we say a couple hundred grand in the bank something like that yeah yeah okay and so I thought hey if I as a single mom and without a spouse or a backup plan um I can take the risk for about a year uh and and try to to work this out and so I bootstrapped uh in the beginning um and you know taught myself how to code built the first product myself and again Tred to find every reason not to do it but there was just nothing out there that was um addressing this problem and what is the I mean you mentioned you bootstrapped when you started uh have you raised Capital today and if so how much yes we've raised uh about $7.1 million we just closed our series a in December and how much was the series a for series a was for 4.1 million okay and what what made that switch for you where you went from on bootstrapping this to let me raise Capital yeah about a year into it is just I kept I've talked to over a thousand uh parents parents family law professionals judges Child Support Services uh and everybody I talked to is saying you know there's nothing out there to support all of these parents and it's something that uh I desperately needed I get calls from vendors saying either I need this or I wish I had this when I was a kid or I wish I had this when I was paying child support um so just the the sheer need uh that I would hear from people over and over again or customer saying thank you so much you've ended the the fin cial fighting that I'm having to do in front of my kids and talk to me about well this is appropriate money how do you generate Revenue so it's a subscription service so it starts at uh $9.99 a month or 10 bucks a month uh and that enables a parent to use the platform uh both parents it's more valuable both parents use it but both parents don't have to be on it and then we also have a free version so that if one parent chooses to pay and the other parent doesn't it doesn't impact the paying parent so each parent pays independently of the other and so what is the average you mentioned you have multiple plan what's the average customer paying you per month it's 10 bucks a month it averages 10 bucks a month uh that's build annually or it's 14.99 if it's build monthly I see okay so 10 bucks a month if they pay 120 bucks UPF front or $4.99 per month exactly okay very cool and so you mentioned you launched this back in 2013 right or did you say 2011 2011 I started it and I um actually started building the company or you know hiring people in 2013 many females that are your age or males for that matter if they don't know how to code probably have given up hope so you're kind of an inspiration there how did you teach yourself how to code well I started with the website so B basic HTML CSS PHP uh so building up the the website and then I it was out of necessity so where did you go was there a class you went through a website I bought books had books I had the um how to code JavaScript uh HTML CSS I went to Barnes & Noble and picked up every book could possibly find interesting very cool okay so you taught yourself the code that's impressive and then update us on your team now I assume it's not just you correct we have now 25 employees so I just hired 16 employees in the past three months uh so we're all uh we recently located to uh relocated to Sacramento California um from Silicon Valley and yeah now we have uh 25 employees made up of our development team sales and marketing how many of the 25 are Engineers uh oh that's a good question 14 okay and and why' you make the move to Sacramento from Silicon Valley I so after I raised my first um three million in capital I realized I could not sustain a business in Silicon Valley how much were you burning per month like in cash at that time I was only burning 990,000 okay a month okay but it wasn't even the burn rate that was the problem the problem I was having is um when it came to technical talent I could get them and they'd be super excited and about you know 6 months into it another company down the road would uh come and offer them more cash yep and I couldn't compete with that is your Equity table a mess now because of that absolutely how how what would you have done differently um what I would have done differently is I think I number one I would have focused on Revenue a lot earlier so at the time you know I think as you're probably well aware right June March of last year the whole world when it came to investment changed and it went from active users or a number of customers to amount of Revenue and thereby when you're not uh you know focused on Revenue um you're much more dependent on Outsider venture capital in order to sustain the business yep what were you doing at that point what were you doing in Revenue uh we I didn't launch Revenue until July of last year so I was giving the product away for free and I would had about 30,000 customers but I was focused on just getting customers not trying to raise um charge them for it how much how much uh transaction volume were they processing through your system they were processing about at that time or now at that time at that time they were processing about I about $3 million a month in child support got it and what is it today or last month that would have been April 2017 it's we're looking at about 14 million a month in child support wow and you don't take any cut of that you just stick with your flat fee correct okay and and how many customer paying customers are you at today uh today we have over 43,000 customers and we have about um almost 2,000 paying customers okay so what I did was I didn't I didn't want to charge the people that I would been giving the product away for free so we only started charging new customers and then we have been um and are in the process of launching additional features that will be premium features that will be able to charge um our customers got it so you've got 43,000 users and then 2,000 customers paying you 10 bucks per month yep okay so so I can I can break that down and assume you're doing in terms of monthly occurring Revenue about 20 grand uh no because we have some of that is monthly so we're doing about right now I think we're close to 100,000 a month okay got it um well so something's wrong with my math because if I take 100,000 and divide that by your by your 2,000 customers that comes out to a monthly arpo of around 50 bucks which is five times the 10 bucks $10 point you told me where am I doing my math wrong uh it's it's $200 up front or sorry $120 up up front okay right per user so we get that and so we're getting the monthly users and then we multiply that also by the $4.99 or $15 a month oh I see okay so that that that 100 Grand number you just told me takes into account kind of onetime fees that's one time plus recurring right correct okay so look that's a nice thing because obviously it helps you recover cash from acquisition quickly but if you just look at your PurePlay SAS model uh if you didn't add any new customers next month you and assuming churn is about you know normal you'd get you'd have about 20 grand in Revenue yes of just monthly recurring just the monthly fees yes got it why why put such a high barrier to entry for folks to start using you why put that 120 bucks up front oh well we don't so it's a free uh 30-day trial that they can use a system and then we have a free version of the product so that has limited functionality that doesn't impact you can use it on a day-to-day basis so the value of our product is not um what's happening on day-to-day it's the actual history so so to have that certified history that they need over time so they can have access to their uh information because at any point in time if they have to go back to court they have to provide a complete history of all the child support made have received we also provide the certified court records that they can provide that and then for them to be able to submit that so the value to them is not the day-to-day submitting the expenses the value is that longtime history and proof that they need when you went out you're you're Sav you're from the valley when you you said your last round was 4 million right correct when you went out and raised that um how did the investors value the one-time payment Revenue versus the true recurring Revenue um I don't think there wasn't one versus the other because it was a monthly I mean the yearly is something that will happen overtime yearly and we've shown from a churn rate perspective that we have very little churn once we get an active user what is it what's turn on an active user uh turn on an active user is about 3% right now annually or monthly annually okay got it and and what do you define active active is they've logged in and they use the system at least once a month okay got it um and what percentage of of kind of free users you mentioned you had 43,000 of them end up I guess I can do this math end up converting into an active user uh well right now our conversion rate to an active user for the new users from let's from all the way to if you look at the entire marketing funnel we're getting about a 12% from visitor to paid user okay so if I if you if your website gets 100,000 visits in May 2017 you you'll get about a you said you'll get about 1,200 of them converting into a paid customer correct okay got it so you're getting less visits than that obviously because right you're at 2,000 customers currently yeah okay interesting so um what I mean though again same question though when you went not raise that $4 million round did you did you and there and the question was hey Sher how much revenue are you doing did you say we're doing a 240 thou like we're at 240,000 bucks in ARR or did you say we'd have that plus we have this you know onetime you know subscription fee that doesn't recur and and did they what I'm asking is like did they build that into your valuation they built that into the valuation but for us the bigger valuation is you look at the problem here and if you look in the us alone there's 55 million parents that have this problem with 1 .2 million new parents having this problem every year globally there's 300 million parents um that are exchanging over $900 billion So today we're making money off of that Subscription Service obviously in the future we're going to be making money off transactions and transaction volume as well so the question that you always have is you go after Revenue yes but then if you're first U mover Advantage first to Market how do you capitalize on that and get people in because once as I've shown from the churn rate once they're in they're in we're locked in we have their data they're going to come back to us because they can't go anywhere else for it and again you said 12% of of visitors convert into an active paying customer and those people turn it less than 3% annually per yeah per year that's correct that's today yep interesting and go ahead yeah so so in the beginning it was focusing on just getting the market and getting out there before there was any other com competitors um and then you know in March of last year March and April that's when kind of the whole fundraising um picture changed and at that point in time then it was all about revenue and so we had to quickly change our go to market strategy as well as our development and really focus on Revenue I wasn't focused on Revenue at the time I was just focused on getting active happy users and a product that people wanted to use and tell people about um what was total 2016 Revenue uh 2016 I don't have those at the top of my head range couple hundred thousand okay but below 600,000 yeah okay absolutely and how did you so I'm looking at some of your investors how did you get a company like Salesforce Ventures to put money into this so that was an interesting one um I actually walked in to talk to Salesforce and what people don't realize is beyond the uh users uh or the the consumers you and I as taxpayers we spend $6 billion dollar every year to build and maintain child support systems in the us alone every state has their own system they're all custom built MH and they're all on average 10 years or older and made on Mainframe Salesforce obviously incredibly successful has done a great job in the private sector but hasn't had a lot of penetration in the government space and so they're trying to move uh government applications to the cloud and I happen to have an application that would get them into the government space quickly and something that again $6 billion doar alone is being spent on this yeah so they're they're learn they put money in really because they're going to be able to learn from your monthly updates it's an information right kind of thing no so I'm actually built on the force.com platform oh I see I see got it I'm built on it so we're yeah so going after eventually at some point um you know converting these consumer base to actually go after the government's space and then since I'm built on the for.com platform it would give them an in into the government understood and then we had back in episode 129 the guy who really invested an Elon Musk uh before anybody else Tim Draper uh Draper is also an investor in your company uh how do you land those guys I got a great introduction to him and you know he saw the value of the product and really saw you know the value more on the social side right so our goal here and I'm not in this to be to make money if I was wanted to make money I'd be back in Silicon Valley as a corporate executive um my goal here is I was that kid where my parents fought constantly about money I felt like that's all they cared about um and unfortunately when parents no longer live together um the only time they ever see each other is when they're exchanging kid and those turned into these Financial conversations so I really wanted to end the fighting that happens you know which impacts all of us socially and so Tim not only saw the business value but also the social value of hey this is happening in the world how can we um you know reduce the amount of conflict that kids have to witness when their parents are no longer um you know together got it I know you guys enjoy listening to every episode each morning but what if there was an easy way for you to get all of the data I capture on my podcast in a very simple Excel like format where you just go there you view it you sort all the companies by revenue or CAC or arpu or lifetime 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study analyze interpret and get an unfair advantage that's g t l t ka.com got it that makes good sense Sherry let's wrap up here with the famous 5 you ready okay all right number one what's your favorite Business book my favorite uh what got you here won't get you there oh that's a good one uh number two what is your favorite online tool like host skater uh my favorite stack Exchange number three is there a CEO that you're following or studying right now A sorry a what a CEO that you're following or studying right now oh yeah a CEO you're following or studying uh not one in particular obviously looking at Cheryl sanberg Mark Zuckerberg uh Elon Musk and what they've been able to do as well as um Mark Benny off number four how many hours of sleep do you get every night four holy mackerel how do you how do you stay alive hey that's what you got to do as a CEO entrepreneur and a single mother to a 13-year-old why do you have why though why I don't understand how do you that must be so unhealthy no I catch I try to catch up on the weekends i' I've never slept I've been working since I was 12 so I'm used to you know four hour four to six hours is a good good night's sleep okay and what's your current situation I obviously you said you're are you remarried or you're still single with one kid no I'm single with one kid okay and um usually I ask age because then I ask take us back to your 20-year-old self and and tell us uh tell us a lesson you wish you knew uh 20-year-old self wo I don't know as I tell my daughter don't marry the man you made at a bar in Tijana her yeah I met I got married at 19 right so that's what I say um uh but as far as just work is concerned I'd say yeah enjoy the enjoy the path enjoy the lesson as you go and and you know don't worry so much about getting uh getting there enjoy the path while you get there there you guys have it from Sher Atwood founded support Bay back in 2011 when she found no good solution for managing Child Care payments and other payments related to a divorce and supporting the children from both uh both of the the parents so she created support pay has rais gone on raiseed 7.1 million bucks most recently did a $4 million round of funding in 2016 did about c 300 or 400 Grand in Revenue now she has 2,000 paying customers paying on average 10 bucks per month for 20 grand in monthly recurring Revenue but add another 80 grand on top of that which in the form of $120 setup fees from new users she's converting to paid customers at the rate of about 12% of website visitors converting into an active user with just 3% annual insurance so very sticky Sherry thank you for taking us to the top thank you if you enjoyed today's episode with Sherry go back and listen to Ryan yesterday you'll never guess what salary he gave up to launch his startup