How Tenon CEO Karl Groves grew to $660K revenue and 110 customers in 2019.

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 carl groves he's the founder of a company called tenon.io their web access accessibility testing has a platform they're testing after the fact they seek to solve that tenant is a one-of-a-kind accessibility testing tool that is aimed at offering unprecedented flexibility and tooling for designers developers testers and content authors carl you ready to take us to the top yeah let's do it so what category do i put this in i mean it's like kind of a rainforest qa kind of concept or is it different so the idea is basically to do specialized testing uh especially functional testing in a way that can be added to other qa platforms uh and things like that things like cypress things like selenium testing automated tests to build scenarios like jenkins bamboo travis all that sort of stuff okay so who's buying this though is it the designer the developer well in our case because we're the first sas platform to do this we do have a variety of customers from small design agencies to uh small and mid-sized companies to even massive companies uh that are that are in the uh enterprise software space okay can you give me a general sense what's the average customer going to pay you per month to use your technology so we have sas plans that range from uh from 90 a month to a couple hundred dollars a month so we we do try to target people for whatever their needs are high volume customers they're gonna pay about uh eight thousand dollars a year for the sas plans up to for enterprise sales 36 000 a year for the license plus uh fees for hosting and stuff like that okay when you look at just the sas component of your business what do you think at fair averages for an annual contract value are we talking like a grand or 10 grand or 100 grand now for those for annual we're talking somewhere in that four to eight thousand dollars a year ring okay got it so 4 000 divided by 12 that's like caught 300 400 bucks a month something like that yeah exactly that one i think that mid-tier plan is like 450 or something like that okay and so when you say that people pay more based off volume what do you define volume as give help me understand the usage metrics right so we char the the fee that we charge is basically for the api calls that run the testing all the other stuff platform access reporting data archival access all that sort of stuff is free even the add-ons so we do but we are charging per api call so that would be a request for us to test a web page or even part of a page in those cases and can you give me a sense of scale so last month how many total api costs through your platform all together well a couple hundred thousand okay uh per month usually okay i mean when you how do you get up to you know 10 million 100 million apis called api calls per month uh so those would be those would be uh platform providers and stuff like that so for instance one of our customers is a company called hanon hill hannah hill has a content management system massive massive amounts of customers and so what they do is they literally test every single page every single day and those and those calls are we're talking about uh several hundred thousand uh a month just for that one customer so the idea being uh really in terms of scaling for a customer and of course scaling and business-wise for us it would be to have uh more of those customers who uh autumn automate their builds automate their qa with like nightly runs for everything or spidering their entire sites especially if they have a lot of content and okay so you mentioned hanon hill that's one customer how many customers are you serving now today uh so we have 10 000 users on the platform today uh a lot of our revenue comes from enterprise sales so those are going to be so we have about 110 paying customers uh right now yep that's great and put it on a timeline for me when did you launch the company 2014. okay 2014. that's good and do you remember i mean do you remember uh how much money you spent building the code before you had your first dollar of revenue i don't and here's why because i'm i'm not only a founder but i'm also a technologist so a lot of the code that went into this was was really code that i've been playing around for a long time and eventually i said you know what i should turn this into a product so many many many hundreds of hours that i have no way to account for right now when we went to uh when we went to the paid model well let me ask a different question when did you write your first line of code uh that would be 2012 or so okay and when did you have your first dollar of revenue 2014. okay so about two years two years of kind of tinkering coding developing yeah yeah now today have you bootstrapped the company or did you decide to raise capital 100 bootstrapped every single piece of money uh that that we make goes right back in uh and we're cash positive business that's great what's the team size look like today how many people 14 14 folks that's good how many engineers about five five okay what are the rest uh so we also offer services around the product so it's almost like uh one of the things that we end up seeing is customers say your tool found a whole bunch of problems we don't know how to fix them and so we have services around consulting training uh and even development services for those customers who need that help okay if you looked it though just last month on a pure sas basis how much revenue would you tribute to just your sas business model last month probably we're almost at a 50 50 split uh it depends on especially with the sas kind of stuff the sas is not as as uh revenue generating as the enterprise sales are so i would say all in we're probably about 50 50 maybe a little bit closer to 60 on the uh on the product side okay and it was total last month something around 30 thousand dollars so about 15 grand that was maybe sas and the other 15 services well total was a lot more than that but yeah so i would say uh i would say that we're talking about like i said about 50 to 60 percent being product yeah what i the percentages are great but you know 50 percent of a dollar is way different than 50 of 10 million a month so i'm trying to understand the math i'm doing there as you mentioned so we're talking about yeah we're talking more along the lines of 100 150 000 okay got it so if so you're saying 50 of that so about 50 000 per month you're saying it's coming in from just the pure sas business yeah that's good that's healthy so so 110 customers at 300 bucks a month is only you know 33 000 a month in terms of sas so it sounds like your your price point your average price money is probably higher than 300 bucks per month yes absolutely because like i said because of the uh because of some of the higher purchases the higher usage purchases the balance actually ends up going towards those higher price points for the specific plan so just to be clear if your last month you're talking 100 grand uh in revenue uh and you said 50 50 split between sas and professional services that would mean you've got again 110 customers paying more like an average of 500 bucks a month for 55 000 a month in about in sas revenue does that sound better yeah yeah yeah that's good where are you so where are you getting these customers from so a lot of it is word of mouth um a large amount of it is is word of mouth at this point for years before i founded the company i was a recognized thought leader in the in the uh in the field so a lot of that comes from reputation not just for me but also that that that initial uh attention to the product because of my reputation helped sort of push that snowball down how did you build that reputation though was it inside another company or how did you do it blogging and speaking appearances really um so i did i i've put out a couple hundred blog posts on the topic i've spoken on uh about four continents on the topic and so what's like the key your keynote title what if i see you speak at a conference what's your keynote likely to be called uh everything we know uh which is uh which is a breakdown of a lot of the data that we've gathered through at this point millions of api calls and and the assessment of that data uh i break that down to show what the common problems are that people have that people commit and the patterns that we see based on certain platforms and things like that okay and how did you get your first customer do you remember my first well we went into it so we went into a private beta phase uh where we had just a handful of people using it we went into a and then there was an open beta phase we let anybody play with it and then there's a large conference in our industry called csun uh california state university northridge has a conference on disabilities and we went live the day uh the first day that that conference opened back in 2015 with that's when we went live for for paying customers and literally uh started having sign ups as soon as the mail spell spell the name of that conference s-e-c-s-u-n s-e-c-s-u-n no it's c-sun c-s-u-n california state university oh oh oh oh got it got it got it just csun okay good so so season conference you spoke there you went live so how did you convert audience members to like get on your list and actually convert into paid plans well the cool thing about that is because during the during that beta period that we had we had a large mailing list get built up ahead of time how large so we had uh we had about a thousand people on the mailing list before we even had had the open beta so we had a large mailing list built up ahead of time we did have a free demo page which is a single page thing you go there you demo the product you see whether it does what it's supposed to do and then there from there we had a mailing list sign up just said hey sign up for our mailing list if you like what you saw and so so in advance of the conference then we put out a big blast you know i have i have uh several thousand twitter followers so we had my twitter you know my twitter feed was filled with the announcements all that sort of stuff the mailing list went out and yeah we just had had started paying uh sas customers right there within an hour of the announcement and do these folks stick what's your churn over the past 12 months churn's been kind of high because of the we've we've made a shift to the pricing model we had a very very tiny uh very very tiny plan that has been sunsetted so a lot of those people turned out how much was that 20 plan uh nine bucks a month okay yeah we called it the micro plan those people churned out when we raised all the prices so churns not turns uh turn was pretty bad over the last 12 months however a vast majority of those early customers are still with us today yeah well but carl just to be clear so your your logo churn might have been bad because you were churning low priced logos but your revenue churn should have been hopefully healthier right what was your revenue churn over the past 12 months uh you know i don't have that i don't have that number ahead of me but you're exactly right you know when with the change of the pricing we didn't actually lose any money yeah well so do you know what i mean can you say maybe churn is definitely less than x what do you think it's definitely better than i just had no idea of that isn't that like a critical metric in sas i mean you have to know that number or at least a range yeah it is i mean uh you know we we pay more attention to overall revenue and and uh lifetime value and stuff like that in terms of instead of the uh okay well what do you put lifetime value at then look and tell me how you calculate it sounds like you're looking at something i'd love to learn how you calculate this i'm just getting it from strike okay so the strike the stripe data uh has been really great for us the the stripe data is um is uh immensely useful we've been with them for a long time that's great wow have you used any of their debt products i know they're trying to get into crest you know stripe credit card and stripe merchant advances and yeah we did that we did uh so we did do a stripe advance that was extremely convenient for us we did a stripe advance uh because i wanted to pay down some credit card debt and and the rate that they gave was way better than credit cards what was the rate so how much did you take from them and what was what it cost you took 15 and i paid it off so long ago i don't remember what it was you took fifteen thousand dollars yeah yeah yeah took that just transparent and what's convenient about it is it just comes out of the the money that they would otherwise be sending you so yep yep so what do you think lifetime values at uh that is not i'm having a hard time finding that that's okay i mean i guess the reason i'm asking this is because like ultimately this impacts like everything else in your business in other words if you churn all your customers every month then you have to hustle every month to get a bunch of new customers and you end up on this wheel that never ends no yeah you're right it is it's that's that's one of the things you have to pay closest attention to is making sure that you're in touch with people that they have an avenue to communicate with you that to communicate any concerns they have any problems they have with the product or something like that to keep them from from from turning especially in this uh in this industry because accessibility is the kind of thing that people spend a brief period of time on right right to your point though this is really important but you don't know what the i mean you don't know what the number is so how do you know if you're doing good or not good because you're putting me on the spot really uh i don't i just don't have access to the data that you're that you're asking me about and i guess i should have that uh in front of me well no no it's okay i mean but most people i mean right behind revenue churn is like the maybe the second most critical sas metric to building a sas company so usually i mean most folks generally know hey we have less than 10 revenue churn annually or it's less than 50 or something like that when i asked you for a range you said you really have no idea yeah yeah and part of that is because we don't pay as much attention to those metrics as we do for other things i'll give you a great example right so the top the top sas plan is 82.50 a year right 8 250 yes per year however the the the starting point for our enterprise sales is 36 000 so obviously winning those deals getting the getting that money in the door is going to be a lot more critical for for us than than selling sas stuff the sas is obviously a focus we're the very first sas company to do what we do but money wise uh you know one one sale of a of an enterprise install is far more money yeah but not maybe in the short term but you have to go make those one times you have to go make those one-time sales every single month the churn stuff the sas stuff should stick that's the point of a sas business model it revenue compounds over time yes and as a matter of fact every single one of our enterprise customers are still with us some of them have been with us since since 2015. okay i mean so that's a good back of the napkin metric in terms of churn right now do you have any sales people yes yes we have two sales people quota carrying uh yes okay so when you look at i mean do you have payback data in other words if you're going to go sign up a customer at 500 bucks a month do you know what it costs you to get that customer fully weighted no okay okay i mean do you have a typical salesperson kind of comp plan where there's kind of 30 40 commission plus some base yes okay yeah okay so your biggest cost you would say as a salesperson commission you're not doing a lot of paid ads or facebook ads or travel or stuff we do uh we do highly highly targeted ads on linkedin uh that's usually and then a lot of the other stuff is called outreach we do have some we we do have a sales assistant who does cold outreach tries to bring in some some interest from uh from people we've identified as as key targets what are we talking about per month are you talking like 5 000 in paid spend a month 10 000 and paid spend a month uh right now we're talking about 2 000. okay good okay so fairly fairly small two percent of your total revenue yeah that's great okay and help me understand growth so if you're doing 50 000 a month today on the sas platform what were you doing exactly a year ago do you remember we were doing i have overall numbers for the for the company itself what was that exactly a year ago do you remember that was that was uh our our income our revenue last year was 780 000. and what do you think you'll hit this year now we're already passed to 2 million that's great okay some maybe you know 3x year over year growth it's pretty darn healthy yeah yeah that's great congrats all right carl let's wrap up here with the famous five number one what's your favorite business book my favorite business book uh okay let's get that one you said skip that one okay number two is there a ceo you're following or studying um no number three what's your favorite online tool for building your company uh we have just switched everything over to hubspot we had previously had a pile of other tools here and there and we switched it all to hubspot number four how many hours of sleep to get every night eight okay and what's your situation married single kids married two kids two kiddos okay and how old are you i am 46. last question what do you wish your 20 year old self knew uh what do i wish my 20 year old self knew so keep in mind that my 20 year old self uh you know there was no such thing as any of this stuff the internet the sas all that sort of stuff um and i wish i had known uh to uh to latch into that the the technology earlier than i did i was going down an entirely different path at that time and uh and i think being earlier in the technology would have been would have been a big benefit guys there you have it tenon helping folks with accessibility testing training and tooling they'll do over two million dollars in revenue this year across 110 customers paying anywhere between 500 up to cost three four thousand dollars per month 14 people on the team totally bootstrapped five engineers two sales reps as they look to continue to scale carl thanks for taking us to the top all right thanks 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