Interview
How TeamBuildr Reached $1M ARR and Close to 1,000 Customers While Staying Bootstrapped (Interview with Co-Founder Hewitt Tomlin)
- Interview Date
- November 7, 2018
- Interviewee
- Hewitt TomlinCo-Founder
Company Metrics at Interview Time
ARR (2018)
$1M
Customers (2018)
Close to 1,000
Revenue Retention (2018)
90%
Total Funding
$0
Team Size (2018)
10
Historical Snapshot
These numbers were given or confirmed by Hewitt Tomlin during the interview recorded in November 2018 and are a historical snapshot, not current figures. See TeamBuildr’s current numbers.
Key Takeaways
- 01TeamBuildr reached $1M ARR in 2018, up from $500K in 2017
- 02The company serves close to 1,000 customers, primarily high school strength coaches
- 03Revenue retention is 90% per year, achieved with a dedicated customer success manager
- 04Without anyone in a retention role, he said, TeamBuildr would churn out 20% of its customers; a dedicated customer success manager brings that down to 10% per year
- 05The company is fully bootstrapped with zero outside capital raised
- 06TeamBuildr has one salesperson who converts 25 to 30% of sales-qualified leads
- 07New customer additions run at forty to fifty per month
- 08The team of 10 is based in Landover, Maryland, with some freelancers in Denver
- 09Growth is driven primarily by inbound content marketing and customer-written blog posts
- 10The company doubled revenue year over year without any outside capital
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| ARR (2018) | $1M | Interview, Nov 2018 |
| ARR (prior year) (2017) | $500K | Interview, Nov 2018 |
| Customers (2018) | Close to 1,000 | Interview, Nov 2018 |
| Gross Revenue Retention (2018) | 90% | Interview, Nov 2018 |
| Gross Churn (2018) | 10% per year | Interview, Nov 2018 |
| New Customers Added (2018) | 40 to 50 per month | Interview, Nov 2018 |
| Sales Reps (2018) | 1 | Interview, Nov 2018 |
| Team Size (2018) | 10 | Interview, Nov 2018 |
| Total Funding | $0 | Interview, Nov 2018 |
| SQL Conversion Rate (2018) | 25 to 30% | Interview, Nov 2018 |
Growth Breakdown
Revenue
TeamBuildr reached $1M ARR in 2018, doubling from approximately $500K the prior year. Growth has come primarily from adding new customers rather than expanding existing accounts.
Customers
The company serves close to 1,000 customers as of the interview, adding forty to fifty new customers per month. The core customer is a high school strength coach managing hundreds of athletes with limited staff.
Team
TeamBuildr has grown to 10 employees based in Landover, Maryland, with some freelancers in Denver. The team includes one dedicated salesperson and an in-house product team.
Funding and Profitability
TeamBuildr has raised zero outside capital and has been fully bootstrapped since founding. The founders made a deliberate decision to avoid outside investment and have sustained growth entirely through revenue.
Growth Strategy
Inbound Content Marketing
TeamBuildr relies almost entirely on inbound leads generated through content. The team produces blog posts and other content in house, and happy customers also contribute blogs and interviews that are branded and used to attract new visitors.
Customer-Generated Content
Customers who are coaches and athletic performance experts are willing to share their expertise through written content and interviews. TeamBuildr brands this material and uses it to build top-of-funnel traffic without paid advertising.
Online Demo as Primary Sales Tool
The highest-converting sales activity is a thirty-minute online screen share demo. Once a prospect completes the demo, conversion rates are strong, though the sale often requires a second stage of approval from an administrator above the coach.
Two-Stage Sales Collateral
Because coaches must get budget approved by administrators, TeamBuildr provides post-demo collateral written in business language covering return on investment and cost savings, targeting the decision maker rather than the end user.
Bootstrapped Discipline on CAC
Operating without outside capital forces the team to stay conscious of customer acquisition costs. They test acquisition channels quickly, back off when costs are too high, and focus on efficient inbound methods rather than paid ads.
Best Quotes
“We're a software as a service company, which there are a lot of those out there. But at the time when we built it, software as a service wasn't, as popular of a model. And as former collegiate athletes, we actually saw that our strength coaches, you know, performance coach, was writing our workout programs on Excel, printing out paper packets, and handing it to us.”
“We've been in existence for about five years now, and, we just reached that threshold. But as a bootstrap company, we did not seek any outside capital to date. We have not raised a cent in outside capital or any kind of capital. We've been bootstrapped the whole time.”
“If if no one touched customer retention, meaning if no one was in that role, then we would churn out 20% of our customers. But the fully dedicated customer success manager, someone whose role is retention, We actually reduce that churn to 10% per year. So we retain 90% of customers year over year.”
“We're purely inbound, and that stems from the fact that we're bootstrapped. We don't purchase a lot in terms of web ads. We don't acquire a lot of leads in terms of web ads. We try to stay away from that rabbit hole. So we focus on customers or content generation, bringing people to our top of funnel, and then basically building a large audience that way.”
“We're probably adding, I'd say we're probably adding somewhere between forty and fifty new customers a month.”
“I look at my company size and we doubled in the past year without it, and I'm not unhappy with that. So I don't necessarily see, I see the benefits of throwing fuel on the fire, but the fire hasn't stopped growing.”
“Be more confident than you think you are.”
What Happened Next
At the time of this interview in November 2018, TeamBuildr had just reached $1M ARR and close to 1,000 customers without raising any outside capital. Hewitt Tomlin said the roadmap was to stay bootstrapped for the next twelve months, and that the company was moving into a new market: helping trainers sell programming online. Visit the TeamBuildr company profile for current figures.
View TeamBuildr’s current profile and metricsFull Transcript
Chapters
- 0:00Introduction and Company Overview
- 0:23What TeamBuildr Does and How It Makes Money
- 1:16ARR Milestone and Bootstrap Journey
- 1:49Customer Profile and Use Case
- 3:30Churn and Revenue Retention
- 4:31Inbound Sales and Content Strategy
- 6:54New Customer Growth and Sales Efficiency
- 8:38Team Location and Year-Over-Year Growth
- 9:12The Next Move: Helping Trainers Sell Programming Online
- 9:44Venture Debt and Capital Considerations
- 11:08Staying Bootstrapped for the Next Twelve Months
- 11:14Famous Five
Introduction and Company Overview
Nathan Latka
00:00Hello everyone. My guest today is Hewitt Tomlin. Having worked in sales and marketing for three software startups for many years, decided to launch a software company with his college roommate with the decision to bootstrap without any outside capital. They've got a strong passion for sales and athletic performance and that company has grown to nearly 10 employees and over a million bucks in ARR. The company is called teambuildr.com. Hewitt, are you ready to take us to the
00:21top?
Hewitt Tomlin
00:22That's right. Yeah.
What TeamBuildr Does and How It Makes Money
Nathan Latka
00:23Alright. What's the com... Okay. So it's teambuildr.com. What's the company doing and how do you make money?
Hewitt Tomlin
00:28Well, we're a software as a service company, which there are a lot of those out there. But at the time when we built it, software as a service wasn't, as popular of a model. And as former collegiate athletes, we actually saw that our strength coaches, you know, performance coach, was writing our workout programs on Excel, printing out paper packets, and handing it to us. And when we did a little bit of digging, we found out that
00:50the entire industry used Excel on printed paper because at that point, it was just like an industry standard. Well, my roommate, and teammate at the time was programming, and I was interested in business. So we just kinda put our heads together and said this would be a fun project. And like a lot of companies that you see today, the project evolved into a product, and the product evolved into a company.
Nathan Latka
01:11That's great. I love that. And you just passed, you said 10 employees and a million bucks in ARR?
ARR Milestone and Bootstrap Journey
Hewitt Tomlin
01:16That's right. Yeah. We've been in existence for about five years now, and, we just reached that threshold. But as a bootstrap company, we did not seek any outside capital to date. We have not raised a cent in outside capital or any kind of capital. We've been bootstrapped the whole time.
Nathan Latka
01:32And launched in 2013, you said five years ago?
Hewitt Tomlin
01:35Yeah, five years ago.
Nathan Latka
01:36That's great. So walk me through... Sorry, so a million bucks in ARR and how many customers today?
Hewitt Tomlin
01:42We're probably reaching close to a thousand.
Nathan Latka
01:43About a thousand. Okay. So break down like one of their stories for me. What are they paying you for specifically?
Customer Profile and Use Case
Hewitt Tomlin
01:49Well, let's take our average customer. This is a high school, a high school strength coach. And this high school is probably certified and has a master's degree in kinesiology or physiology. But that coach nonetheless is in charge of training competitively 300 athletes. Anytime you have a 300 to one ratio, there's gonna be some inefficiency there. And by principle, my workout programs are more effective for someone if they're individualized for that person. But if you think about
02:16individualizing 300 programs, that's just not a possible task. Our software helps that coach write more individualized programming by basically saving them time and effort in the actual process of assigning and prescribing training programs, but also collecting data through our digital interface so that data is not written on paper or on a whiteboard. It's collected on the app, really simple. We can populate charts and graphs, then we can reassign their athletes new kind of goals based on
02:43their performance without a coach manually having to do this for each athlete.
Nathan Latka
02:47Interesting. Okay. And is that kind of the high school use case a really strong use case for you that's your main demographic?
Hewitt Tomlin
02:53Massively because high schools typically, if they're able to afford a strength coach, they can only afford one. And they have typically dozens, if not hundreds of athletes. So that's a very typical use case. Yeah. You see the same thing in small colleges, and then you think of a bad use case. Think about a well endowed collegiate program like in Alabama. When you're that well endowed, you have the money and resources to just fix those problems with
03:17brute force. You could just hire a lot of people and throw a lot of bodies at it, but, you know, that's not the case, and for the rest of the market, that's where we come in.
Nathan Latka
03:24That's great. Now what about churn? So when someone starts paying you, is it pretty sticky? What's your revenue churn over the past year?
Churn and Revenue Retention
Hewitt Tomlin
03:30That's the name of the game for any SaaS company, and we're no different. So churn for us means that we have to constantly provide new value. That's where we believe that SaaS product is not something you build once and sell over and over again. Our product team is in house. It's not outsourced, and we have to deliver on new features, take customer feedback. If a customer's not being listened to, it's hard for them to shell out
03:53the same amount of money year after year.
Nathan Latka
03:55So so what is churn though? How how how good are you doing at this? What's the what's the retention day?
Hewitt Tomlin
04:00If if no one touched customer retention, meaning if no one was in that role, then we would churn out 20% of our customers. But the fully dedicated customer success manager, someone whose role is retention, We actually reduce that churn to 10% per year. So we retain 90% of customers year over year.
Nathan Latka
04:17That's good. So 90% and that's on a logo basis and a revenue basis?
Hewitt Tomlin
04:22That's on a revenue basis.
Nathan Latka
04:23Okay. That's great. That's really great. So 90% revenue retention, and then talk to me about getting these new customers. So what's the sales process look like?
Inbound Sales and Content Strategy
Hewitt Tomlin
04:31We're purely inbound, and that stems from the fact that we're bootstrapped. We don't purchase a lot in terms of web ads. We don't acquire a lot of leads in terms of web ads. We try to stay away from that rabbit hole. So we focus on customers or content generation, bringing people to our top of funnel, and then basically building a large audience that way. So a lot of our content generation is done in house, but also
04:53by our customers. A lot of our customers are happy to write blogs. They're happy to do interviews and share their expertise. And then we brand it and then leverage it into content that attracts, you know, people to our website.
Nathan Latka
05:06And so, I mean, if you ignore paid spend, because it looks like you're not doing a ton of paid spend, but if you like your, you at your fully weighted customer acquisition costs to include any salespeople, marketing people, onboarding people, etcetera. What are you spending to get, you know, to get one of these new high schools paying?
Hewitt Tomlin
05:23That's that's our sales demo. It's an online demo. It's not different from what we're doing now. If we can get a coach to spend thirty minutes with us on the phone and to do an online screen share demo, that's the number one tool in our toolbox that creates the highest conversion. So when a lead kinda reaches the part of the funnel where we feel like sales can maybe schedule a demo with this person, that's what we'd
05:45zero in on. And then once we get that person on the demo, typically, we've sold them, but the sale is not over. They then have to go to someone on their end and get funds approved, and we've been through that process. So some of our sales collateral that we hand our prospects after the demo, is actually sales collateral that doesn't directly speak to them per se, but it speaks to the person above them, usually an administrator.
06:08And it talks to them in business language, return on investment, cost savings, efficiency. So it's kind of a two pronged sales process, one upfront for the prospect and then for the decision maker in the background.
Nathan Latka
06:19Yeah. No, he would understand that. So so when you look at that salesperson, right? And that that function that you're repping every single month, right? So if one sales rep is doing 20 demos and they're closing 50%, you can back in, you know, you go to salesperson salary, you can back into what your CAC is based off the efficiency of that person. So I'm trying to get a sense of how efficient are you guys?
Hewitt Tomlin
06:38We're probably dialing in at with sales qualified leads, converting about 25 to 30% of them.
Nathan Latka
06:45Okay. So do you have one, you have 10 people right now. How many of them are sales?
Hewitt Tomlin
06:49We only have one salesperson.
Nathan Latka
06:51Okay. One. And so how many new customers are you adding per month?
New Customer Growth and Sales Efficiency
Hewitt Tomlin
06:54We're probably adding, I'd say we're probably adding somewhere between forty and fifty new customers a month.
Nathan Latka
07:01Okay. So if we have 40, so right now you're a million bucks in call it ARR, got a thousand customers. I think that comes out to about $83 a month. If you're adding 40 new customers per month at an $83 a month price point, that's like $3,000 essentially in kind of new sales. If you look at what you pay your sales rep, it's probably, I imagine their salary. I don't know what it is. We don't have
07:18to disclose that, but it's either higher or lower than kind of $3,000 per month. I mean, do you look at that kind of efficiency yet or are you guys too early really to be like tuning those turns?
Hewitt Tomlin
07:28No. I I do look at those, but if we interpret those things literally, if we search for our ROI on every decision and try to quantify it, I think sometimes you lose the forest for the trees. I can tell sometimes when we're acquiring customers at a really, really high clip, and it's not worth it. And we test those things out, and then we back off really quickly, and then we know when we do it efficiently. So
07:52your figure is not far off, there but is a lot of stuff that goes into lead generation before then, and then every sales process is not that easy. Some are longer than others. So there are some things that kinda distort that CAC. But around the same ballpark, we we always stay conscious of it. We have no choice. We're a bootstrap company. We can't, you know, acquire customers really expensively.
Nathan Latka
08:12No. No. I get... I mean, I get that. That's why I'm asking. Right? So the only way for you to accelerate growth without raising additional capital is for you to fine tune this this CAC. It's get your payback period really low. It's... But first, you have to know what the CAC is. It sounds like to me that, like, like, I've asked for a number a couple times. You... It's not something you look at. You don't know
08:28what your dollar CAC is.
Hewitt Tomlin
08:29No. No. We don't. We don't. I ballpark it. I I don't write it down.
Nathan Latka
08:33Yeah. It's just too early. Okay. Very good. And then where's the whole team based? You guys... There's 10 of you guys.
Team Location and Year-Over-Year Growth
Hewitt Tomlin
08:38We're all based here in Landover, and then some freelancers are based in Denver.
Nathan Latka
08:45Okay. Good. Maryland and Denver. And give me a sense of growth rate. So a year ago today, you're at a million bucks in ARR today. A year ago today, where we at?
Hewitt Tomlin
08:53Probably 500,000.
Nathan Latka
08:54Oh, good. Okay. So about... That's still... Know, look. That's still pretty good, you know, year over year growth. Has most of that come from just adding new customers or expanding old customers?
Hewitt Tomlin
09:02Mostly from adding new customers. We expand, but expanding customers is not a significant portion of our growth.
Nathan Latka
09:08That's great. So what's, I mean, what's the next move? How do you get to $5,000,000 a year?
The Next Move: Helping Trainers Sell Programming Online
Hewitt Tomlin
09:12Well, we're getting in the business of helping trainers sell programming online. So there's a market for people who want to purchase training programs over the web. You see it on Instagram a lot, but there's a submarket. It's for more traditional strength and conditioning style programming. We have the medium to help people deliver programming, and then if we can efficiently help people actually set up the logistics of transacting those programs, that's our new market for us. And
09:41we see other people doing it too, because there's a lot of promise in that business.
Venture Debt and Capital Considerations
Nathan Latka
09:44Yeah. Have you guys looked at using something like venture debt to fuel growth? So you're not having to take dilution, but it's still friendly.
Hewitt Tomlin
09:53I've looked at some of those things, not not that one per se, but I have seen models out there that do operate like that. I would do it, but I look at my company size and we doubled in the past year without it, and I'm not unhappy with that. So I don't necessarily see, I see the benefits of throwing fuel on the fire, but the fire hasn't stopped growing. So for me, it's it's a good product,
10:20but my pain point is not painful enough to loop that in yet.
Nathan Latka
10:23Well, yeah. Look, it's always hard to quantify what could have happened if you had x. Right? So like, sure you doubled without money, but what if you put a four x with it? Right? Like, have no... You just have no idea. Right? So like, I mean, I'm not advocating you take it or not. I'm just curious if it's something you'd considered.
Hewitt Tomlin
10:37Always consider it. I always keep an open mind. And at some point, I have... My intuition tells me that my intuition then would tell me that it is the right thing to do when there's so much opportunity, and that's what we've gone with so far. So at the moment, you know, there's a lot of work to be done. And then at the point where we feel like it's right, I'd be open to it.
Nathan Latka
10:57Yeah. You're planning though, that's one thing, venture debt's one thing. You're planning on staying bootstrapped for a while, Or are you in any acquisition talks right now or talks to raise capital?
Staying Bootstrapped for the Next Twelve Months
Hewitt Tomlin
11:08Yeah, for our roadmap at the moment, bootstrapped in the next twelve months, 100%.
Famous Five
Nathan Latka
11:14Yeah, that's great. Very good. Hewitt, let's wrap up with the famous five. Number one, what's your favorite business book?
Hewitt Tomlin
11:20You know, I was given this book called The Ultimate Sales Machine by a guy named Chet Holmes. It was in my first job, and the VC actually that invested in the startup I worked for handed it to me. And I love this guy because he wasn't new age. I think he wrote the book in the nineties, but it worked so well for me and worked so well for my psyche that I just love it, and I
11:39still give it to employees at my company.
Nathan Latka
11:41Number two, name an under the radar CEO that you really respect.
Hewitt Tomlin
11:47That's a good question. I think there are a lot of underrated CEOs out there. I'm trying to think of one off the top of my head.
Nathan Latka
11:56Just like your favorite in Maryland. Who who do you get lunch with when you're stressed out?
Hewitt Tomlin
12:01A good question. Well, I would say that, probably it's Vee Band. He he was a CEO of Contactually. Company called Contactually. And, I worked for him. I have a lot of respect for him, of course, I love him. He... He's well known in the DC area, but I think naturally, people will know him, but he's something... He's someone to know.
Nathan Latka
12:17Yep.
12:18Number three, what's your favorite online tool for building the business?
Hewitt Tomlin
12:21HubSpot.
Nathan Latka
12:22Number four, how many hours of sleep do get every night?
Hewitt Tomlin
12:25Eight.
Nathan Latka
12:26And what's your situation? Married, single, kiddos?
Hewitt Tomlin
12:29Married, one dog.
Nathan Latka
12:30One dog, good. And how old are you?
Hewitt Tomlin
12:3328.
Nathan Latka
12:3328. Last question.
12:35What do wish your 20 year old self knew?
Hewitt Tomlin
12:40Be more confident than you think you are.
Nathan Latka
12:43Guys, there you have it. Be more confident teambuildr launched four years ago, call it twenty thirteen ish, 2014. Now 10 people doing a million bucks in ARR. That's doubled year over year from October 2017 when they're doing about $500,000 a year. They've done this all bootstrap, serving about a thousand customers. Their ideal customer is kind of, you know, the one strength coach that a high school might have that has to work with 300, you know, athletes,
13:04you know, who are highly competitive. So scaling nicely 90% net... Sorry, 90 revenue retention annually. Too early to look at CAC and LTV and things like that, but generally speaking, growing in a healthy manner. Hewitt, thanks for taking us to the top.
Hewitt Tomlin
13:16Thanks for having me.