How TestBox Raised $2.7M and Closed Its First Deal With a Customer-Led Software Buying Platform (Interview with CEO Sam Senior)

Introduction and What TestBox Does

Nathan Latka

00:00Hey, folks. My guest today is Sam Senior. He's the co founder and CEO of testbox. Originally from Regional Australia, he studied software engineering and economics university where he met his co founder, Peter. He left Bain after six years as a senior manager in San Francisco to build the future of software buying. He now lives in Boulder, Colorado. Sam, you ready to take us to the top?

Sam Senior

00:17>> Yeah. Thanks so much for having me, Nathan.

Nathan Latka

00:19You bet, man. So what does this mean, the future of software buying?

Sam Senior

00:23>> Well, I think previously everyone has talked about having an enterprise sales led approach. Now people are talking about a product led approach to growth and selling software. I think the future is actually customer led. So meeting the customer and how they want to buy software, the process they want to take and giving them a true hands on experience. We've basically built an app that allows people to test and compare enterprise software before they buy without needing

00:47>> to talk to a salesperson with a hands on experience with real data in there and all the use case configures, they can do a side by side comparison within minutes instead of doing a month long sales process.

Nathan Latka

00:59Sam, how does that work? It sounds too good to be true. Someone listening right now that wants to try Salesforce. Salesforce is not gonna let you try it unless you're on a sales call and all this stuff. Have you pirated their software or something and give everyone access? How do you do this?

Vendor Partnerships and Market Coverage

Sam Senior

01:09>> So we've been very intentional in starting with just one software category to prove our value. So we started in the customer support help desk space, we've actually gone out and built partnerships with each of the major vendors. So we've got about six on the platform at the moment, three more in discussion, but we've got more than 50% of the market share of the top platforms already partnered and integrated with us.

Nathan Latka

01:31And how do define market share? So otherwise, you wouldn't know how if you have

Sam Senior

01:34>> In terms of revenue or users, really, either is fine. I think if you take revenue, for example, Zendesk and help desk space has 20 plus percent of the market share. They're actually one of our partners that's integrated into testbox.

Nathan Latka

01:46Okay. And what about Freshworks?

Sam Senior

01:47>> Yep. Integrated.

Nathan Latka

01:48Okay.

Sam Senior

01:49>> And so HubSpot Service Hub and and a few others as well.

Nathan Latka

01:53So what do you give Zendesk and Freshworks to let them do this? They want people going through their funnel, obviously.

Business Model and Lead Generation for Partners

Sam Senior

01:57>> Yes and no. I think they understand that people don't always want to go direct to go through an AE BDR process and said they want to go self serve and hands on. We're basically taking that self serve approach and supercharging it in a way that no one else has been able to do by getting it more real life like it's already been implemented for that end user. We're actually a new lead generation source for them.

Why Customer Support Software First

Nathan Latka

02:20Interesting. Yeah, well, it's actually funny. Dicksa's interview is next week. Nice. Girish came on before their IPO with Freshdesk and Brian Halligan came on pre IPO from HubSpot. I've got, you also have HelpScout, Trengo, and that crew as well. So this is cool. So you're gonna, I love how you're gonna sort of focus on a niche here and dominate the niche. Why customer support software though? Why start there?

Sam Senior

02:40>> My co founder and I actually about ten or eleven years ago worked as IT help desk agents. We just understood that space really well having used these types of software before and understand the use cases that really matter. But it all got coalesced around this experience actually, where someone close to me had previously bought help desk software and I watched how painful that experience was. And I basically interviewed her the entire time to understand what the

03:05>> major pain points were and how we could make it better. So those two experiences together said, let's start there. Plus it's a hugely growing market that's like 10,500,000,000 today, growing at 10 plus percent and it's getting more and more important. So it's also a good niche for that reason.

Platform Walkthrough and Sign-Up Flow

Nathan Latka

03:18Tell me more about growth. So you got going, you just raised some capital, we'll come back to that in a second, but you're onboarding. This is three step process. First, just introduce yourself. What are people mainly picking in the industry drop down? Are you seeing concentration around like B2C tech or B2B technology or something? Yeah.

Sam Senior

03:32>> So that that's primarily where we focus is B2B tech and then e commerce, then fintech. Sign ups.

Nathan Latka

03:39Sign ups. What market are they in? Those three? Yes. Oh, okay. Okay. Okay. Got it. Cool. And then, and then, so I'm going through it now. I love asking these questions. I write, so you're basically saying what products do you wanna test? I'm gonna click HubSpot and Zendesk. Yep. Looking for another solution. So you're basically doing user generated content here. People start typing in something and it's like a new customer support tool that's taking off. You

04:00should be aware of it because people will start typing it. Right?

Sam Senior

04:02>> Exactly right. And so we're basically trying to collate all that information so that we can say, great. We've had this many more people asking for this platform. Let me go build that partnership and get them integrated.

Economics: Revenue Share with Vendors

Nathan Latka

04:12Alright. Talk money to me. When you give HubSpot a new customer, it's a hot probably the hottestly they can possibly get. You must have some economic upside here.

Sam Senior

04:20>> Yeah. Exactly. So with with HubSpot, it's about it's 20% of total contract value. So not just first year, but actually the entire contract value that we get paid.

Nathan Latka

04:31What if you help the customer sign up on HubSpot for a $100 a month? HubSpot, the customer success managers work with them for twelve months and expand them to a thousand dollars a month. Do you get the expansion revenue too, 20% on that? Okay. So you have to trust on HubSpot and Zendesk and Freshworks reporting back to you accurate expansion revenue on accounts that you help them land?

Sam Senior

04:48>> Yeah, exactly. But that's part of the partnership terms in terms of terms and conditions, legal, that sort of goodness.

Nathan Latka

04:54Super interesting. Okay. So you're effectively a sales rep for them, but running a different motion?

Sam Senior

04:59>> But, yes. But it's fully productized.

Nathan Latka

05:02Yeah. Yeah. Yeah. Interesting. Okay. So when did you guys launch the business? When did you write the first line of code?

Sam Senior

05:08>> The first line of code was written just over a year ago, but we launched in sort of a public beta in middle of June. So only a few months ago now.

Metrics That Matter: Partnerships and Sign-Ups

Nathan Latka

05:16And what numbers do you care about right now? Like wait list size? Tell me what you care about.

Sam Senior

05:21>> I think there's two major things for us because we're essentially building a marketplace, we need to be building both sides of that. So the big one of just continuing to build partnerships really matters. So I'm trying to pick up a new partnership every month at the moment so we have that supply side of the market. Then on demand side, it really is just like how many signups can we be generating on a weekly, monthly basis? And

05:41>> then once they're in, how quickly can we get them to a decision? Is it gonna take three months like it does today? Or is it gonna be like a recent converted customer, it took them two weeks? And that's a significantly better process than they go through at the moment.

Nathan Latka

05:54So we're not in October yet, so I can't ask you for October numbers. But in September, how many total new sign ups?

Sam Senior

06:00>> So it it's it's less than 10. I think we're at, like, sort of eight. That sort of number. So it's still small, but it it's continuing to grow every single month.

Nathan Latka

06:09Got it. And how many customers have you actually, there are now paying on one of your six, you know, or nine partners?

Sam Senior

06:14>> Yep. So we've closed we've only closed one deal so far, but

Nathan Latka

06:17that's How does that feel? In other months. That must have been amazing. How'd that feel?

Sam Senior

06:21>> Yeah. It felt pretty incredible. There was a lot of jumping up and down. But I think importantly at the moment, it's not just a we've had a 100 person company use our platform, but we've also had a 100,000 person company use our platform. So at the moment, there's a company that's a 100,000 FTEs using testbox to make a decision on a new platform. So we're in this interesting phase where we've just been trying to build awareness

06:43>> and we're just starting to see real elevation on size of company, how quick and number of people coming into testbox.

Paid Ads vs Product SEO

Nathan Latka

06:50What prevents you from arbitraging or basically taking up HubSpot top keyword tools? You'd start basically paying for ad space or running SEO to get those leads before HubSpot does. I imagine there's something in the partial agreement that prevents that.

Sam Senior

07:03>> No. There isn't actually.

Nathan Latka

07:05It's just incredibly expensive.

Sam Senior

07:06>> I think Okay. If you look at the cost for these sorts of ads, you're talking at least a 120, $150 for some of these ads on those keywords. Then that just conversion on that, when you think about the percentage that we're taking, it doesn't really work out economics wise.

Nathan Latka

07:22What about like a product SEO play though, right? HubSpot versus Zendesk. HubSpot's number one, G2's number second, StackShares number three. Mean, you can run playbook there and our Yeah.

Sam Senior

07:30>> That's exactly what we're doing at the moment.

Nathan Latka

07:31So does HubSpot like that? If you start outranking them, are they cool with that?

Sam Senior

07:35>> Yeah. That isn't a competitive term in our agreements with them.

Nathan Latka

07:39Interesting. Do you give them like a row from the partnership agreement where if you ever want to sell or exit, they have like right of first refusal on exit price?

Sam Senior

07:46>> Not at the moment. Well, we'll see how that goes in the future. But I I think like right now, that's focus really is just like, let's keep being that amazingly generation platform for them.

Nathan Latka

07:56Okay. Tell me more about economics. You're just getting going here. How much have you guys spent to date on getting MVP Live?

Funding: $2.7M Raised and MVP Spend

Sam Senior

08:01>> Yeah. So we've probably spent something like $700,000 to get the MVP live, and we raised 2.7. And and that MVP live is so much of it's like really deep infrastructure and orchestration of all these different services and getting them to spin up really quickly. That's, like, the more challenging piece. We haven't really spent any money on marketing yet, which is why the numbers are kind of on the lower side at the moment.

Nathan Latka

08:24Mhmm. With the 2.7 was raised this year?

Sam Senior

08:27>> Yeah. At the start of the year, basically.

Nathan Latka

08:29Pre seed. Okay. And it's two of you guys, right? Do you split equity fifty fifty?

Sam Senior

08:32>> No.

Nathan Latka

08:33It's okay. That's a tough conversation. Tell me about that. How'd you guys how'd you guys sort of work that out?

Sam Senior

08:38>> Yeah. I think so my friend Peter and I have known each other for eleven years now. It was actually a relatively easy conversation for the two of us to go through. We realized that, look, a lot of the drive behind testbox was driven by me when it comes to the idea and the plan. We talked about, is this the ten, fifteen, twenty year company for me? Yeah, probably is. For him, he's obviously committed for the next

09:02>> five years at least, but he's like, I don't know if I want to do this for twenty years. He's like, I don't think I'm going to be the one leading all of our really in-depth engineering stuff long term. I want to be more of the people management piece. As we thought about our roles in the company over time, we saw that they're going to change and develop and realized that actually there was initially anyway,

09:27>> we thought that my sort of level of commitment and the the inputs that I was having into the business at the time were at that high value.

Equity Split Between Co-Founders

Nathan Latka

09:34Alright. Come on. Gotta translate us in the numbers. You're talking like, so you own 60%, 80%? How big is the difference?

Sam Senior

09:39>> It it's sort of two thirds, one third.

Nathan Latka

09:42Okay. Fair. Got it. So call it 66 to you, 33 to him, but now you're both dilute a little bit because you raised some pre-seed. I imagine you did it safe? Yes. Got it. How'd you go obviously, at your stage, it's not like a valuation multiple you're raising at. It's really what story can you tell and do people believe that you can execute on the story. So you tell a great story. It makes clear sense

10:00to me here in just thirteen minutes in. What cap were you able to raise at?

Sam Senior

10:04>> It's a post of 12.

Nathan Latka

10:06Okay. Does that feel fair to you?

Sam Senior

10:07>> It felt reasonable. We could have probably pushed to get to 13, but I think at the time we had a very limited prototype and really great story and a few partnerships basically built out. Honestly, we'd spent two months working on the product at that point or the company. So we're so early in our journey that we're like, okay. That's fine. This is what we need just to move forward to the next stage.

GPT-3 Demo Data Customization

Nathan Latka

10:30Mhmm. Is there a g p t three component of this?

Sam Senior

10:33>> Yes.

Nathan Latka

10:34Tell me about that.

Sam Senior

10:35>> So all of the data that we actually create for our end users, we customize for them. So if you say you're a b two b company or you're an ecommerce or whatever, we'll put different data into the platform based on what you tell us about you. And so we use the GPT three engine to be able to customize that data.

SignalFire as an Investor and Board Member

Nathan Latka

10:51Interesting. Okay. SignalFire and First Minute Capital were the main folks putting up the 2,700,000. How do you make sure they work their butt off for you? I'm sure you had a bunch of term sheets. You wanna make sure they're value add VCs. How do you make sure you activate them to really help you build the business?

Sam Senior

11:05>> Yeah, I've been incredibly impressed by SignalFire actually, and I would say 10 out of 10 recommend to anyone who's interested in raising capital. They turn up whenever we ask them to on absolutely anything. I could text Elaine, our board member, and she'll respond to me in minutes, jump on the phone whenever, and every time we've had a hurdle, they've gone and helped us figure it out. I lean on them pretty aggressively. I think a big thing

11:28>> is that we're very transparent with them and that has allowed us to build a really strong relationship, which I think has been phenomenal. And when it comes to first minute, I reach out to them at least once a month and say, here are the three things I need from you. Go make that happen. And they've they've also been delivering, which has been pretty phenomenal.

Nathan Latka

11:44Tell me last thing that SignalFire did for you, if you can be specific.

Sam Senior

11:47>> Yeah. So we were, having some interesting challenges with, the security protocols that Zendesk has on their platform. Basically, they're just creating some bot detection issues, And so they actually went straight to the chief of security at Zendesk to help us resolve that and work through their machine learning algorithms to basically improve everything we were doing.

Nathan Latka

12:06Unbelievable. There you guys have SignalFire and Elaine doing a nice job here for saying that we love hearing. Okay, cool. So now let me ask you a question. Did you have a Is this sort of your first foray into startups? You came from Bain or have you already sort of gone through the mill already?

Sam Senior

12:20>> No, this is the first full on go. Peter and I dabbled a little bit about ten years ago or so together and made a little bit of money to pay rent, but nothing that was our serious full time thing that we're tackling.

First Customer: ProfitWell Chooses Zendesk

Nathan Latka

12:31I see. Okay. Cool. Well, you've got your first customer landed. And which company did they end up buying from out of your six partners?

Sam Senior

12:38>> It was Zendesk and it was a company called ProfitWell, who I think you've spoken to before in your podcast.

Nathan Latka

12:42Yeah, Pip Pip, that's great. ProfitWell bought Zendesk and so what are they now paying Zendesk per month? Then break me down economics.

Sam Senior

12:50>> Yeah. So we got 15 to 20% of that deal and they bought something like 10 licenses. So if you look at the Zendesk pricing online, that ranges somewhere between 50 to $80 per seat per month.

Nathan Latka

13:03Okay. So let's just assume it's on the low end. So it's $500 per month. You're making 10 to 20% of that. So you get about a $100 per month as long as ProfitWell stays active?

Sam Senior

13:11>> Yeah. Something in that range.

Nathan Latka

13:12Do will Zendesk pay you upfront for the full year? So 1,200 or they pay you as ProfitWell pays?

Sam Senior

13:16>> So they will pay us on with Zendesk, it is on annual contract value plus expansion. So we get the upfront annual contract value, then anything that increases, we get paid later on.

Nathan Latka

13:28Very cool. Okay. So you're making basically out of check from 12 around $1,200 from Zendesk and now you can keep scaling. Yep. Very interesting. Okay. Cool. Yeah. Big big big fans of of PC and probably well and everything they're building up there. So cool. Okay. Got it. So you've had your first $1,200 in ARR. You you're gonna keep scaling here. What's like the thing you're actually building towards? This is a Trojan horse to what in 2024?

Long-Term Vision for TestBox

Sam Senior

13:51>> 2024 is pretty close. I probably got 15 of product in my head at the moment, but if we take the next three to four years, basically to be able to say, Look, if you're trying to buy enterprise software, the first place you go to is testbox.com. You say, I'm looking for these three or four vendors. Let me get my hands on. And it shouldn't just be in customer support, but basically all of the sales ops tools,

14:12>> all the marketing tools, or whatever basically comes to testbox and then you can make the best decision in a few weeks rather than many months.

Nathan Latka

14:19Sam, you guys made your first hire yet or just still you and Peter?

Team Size and Headcount Costs

Sam Senior

14:22>> No. No. We're we're at ten ten people already.

Nathan Latka

14:25Oh, wow. How many engineers?

Sam Senior

14:27>> It is five engineers.

Nathan Latka

14:29Okay. Got it. So if if I ask you like all in headcount expenses right now, how much are you spending just on headcount per month?

Sam Senior

14:34>> About a 100 k.

Nathan Latka

14:35Does that make you nervous or you have plenty of runway? It's not not worried.

Sam Senior

14:38>> Plenty of runway. Not not a problem.

Nathan Latka

14:39Yeah. Interesting. Anything else taking up a bunch of money that wouldn't be obvious in a SaaS business or no, a pretty standard?

Sam Senior

14:45>> Pretty standard at the moment. As I said, we haven't really focused too much on the marketing piece. We're really importantly, we need to buy it by build the supply side of the market with the integrations before we become valuable for people. And so we've just been really focusing there with our dollars.

Famous Five: Books, Sleep, and Therapy

Nathan Latka

15:00Guys, crazy story. If you want to avoid all those marketing calls, sales reps, all that jazz, go test out testbox.com. Sam, before we wrap up here, let's jump into the famous five. Number one, what's your favorite business book?

Sam Senior

15:12>> Oh, I really like Radical Candor.

Nathan Latka

15:16Number two, is there a CEO you're following or studying?

Sam Senior

15:22>> Think Bill HubSpot.

15:24>> Yep.

Nathan Latka

15:25Number three, what's your favorite online tool for building testbox besides GPT-three and besides any of the ones you're partnered with?

Sam Senior

15:31>> GPT-three is the one that I wrote code for specifically.

15:36>> Think the team is loving AWS and writing with Charles apps on AWS.

Nathan Latka

15:43Number four, how many hours of sleep do eat every night?

Sam Senior

15:46>> Eight. Eight.

Nathan Latka

15:47Okay. Situation, married, single, kiddos?

Sam Senior

15:50>> Partnered, not married, no children yet.

Nathan Latka

15:53And how old are you, Sam?

Sam Senior

15:55>> I'm 29.

15:56>> 29. Last question.

Nathan Latka

15:57What's something you wish you knew when you were 20?

Sam Senior

16:00>> The value of therapy.

Nathan Latka

16:02Who are you using now? How did you find your therapist?

Sam Senior

16:06>> I connected with someone I was close to, had phenomenal therapist and she basically helped me find five or six people to go and interview. And then I went through that process and have phenomenal therapist called Andrea Dingda, she's in San Francisco, phenomenal.

Nathan Latka

16:20A lot of founders, hear that this is like, it's really valuable, but they don't even know how to use a therapist. Without being revealing personal stuff, mean, does a conversation with your therapist sound like? What do talk about?

Sam Senior

16:31>> Yeah, so we started really checking in with where I am emotionally and ensuring I use emotional feeling words rather than thinking words, which I do most of the time, and then use that to say, Okay, what are the things that are really affecting me in some way and go deep on that? I think we try to get a balance between acute issues, so what's happening in the moment, and then also chronic issues. What's been the stuff

16:50>> that's I've been challenged on for the last ten, fifteen years? How do we continue to work on those on ongoing basis? I think importantly, a really good therapist will help guide you and create some structure around this rather than allowing you to just flounder your way through.

Nathan Latka

17:05Guys, Sam Senior. With testbox. If you wanna test customer support software without sitting on sales calls, test them out. They just landed their first customer, which means they help someone buy customer service software, Zendesk specifically. They make $1,200 a year on that. They're off to the races, raise 2,700,000 at a 12,000,000 cap as they get going here. Sam with owning, call it two thirds of the equity because he sees really a long term play here into

17:25many other product lines. Team of 10 right now, five engineers as he looks to scale the business. Sam, thanks for taking us to the top.

Sam Senior

17:31>> Thanks, Nathan.

Nathan Latka

17:34One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

17:59Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big

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