How Time Control Reached $280K MRR and 280 Customers While Staying Bootstrapped and Profitable (Interview with CEO Chris Vandersluis)

Introduction and Company Overview

Nathan Latka

00:00Hey folks, my guest today is Chris Vandersluis. He's the Founder, President, and CEO of HMS Software founded five years before I was born, 1984. He's a prolific spokesperson on enterprise time sheet and project management systems. And his writing has appeared in a number of publications, including Fortune, the MA's handbook, and Microsoft TechNet. Chris, you ready to take us to the top?

Chris Vandersluis

00:19>> Absolutely.

Nathan Latka

00:20All right. I aged the company a little bit there, but tell us what HMS is selling today. What are people paying you for?

What TimeControl Does and How It Works

Chris Vandersluis

00:25>> Yeah, so our fundamental product is called timecontrol. It's an enterprise timesheet system, and it's a little different than some of the timesheet systems on the market. We make a multipurpose timesheet system, which can be used not just for time and attendance, but also for project oriented time, for R and D tax credits. So an auditable timesheet system that can be used for billing, for attendance, and for tracking people's time. We've also added to that now, because

00:52>> we were so strong working on historical time, we've added to that the ability to look forward and do project scheduling and project planning in something we call timecontrolprojects. So that's a premium version of our online system.

Nathan Latka

01:06Very interesting. Now, are folks paying on average per month or per year for this?

Chris Vandersluis

01:10>> Yeah. So the the average per user is somewhere in the 50 to $60 range.

Nathan Latka

01:17Per month?

Chris Vandersluis

01:17>> And and we charge it annually. So so it can come down to as little as, you know, $3, $4, $5 a month per user, depending on what people are, what number of people are subscribing for.

Nathan Latka

01:32And what are the team size usually signing up? Are we talking 10 people or 10,000 people?

Chris Vandersluis

01:35>> 10, well, yeah, 10,000 would be at our higher range. We have a couple of 10,000 plus clients, but probably the average is in the 300 to 600 range.

Pricing Model and Annual Subscription Structure

Nathan Latka

01:46Okay. So 300 folks at $50 a year, that's an ACV average of like, what, $15 k is a sweet spot for you?

Chris Vandersluis

01:52>> Yeah. Yeah.

Nathan Latka

01:53That's amazing. Okay. So you get going back, you said in 1984, right?

Chris Vandersluis

01:57>> Indeed. Yes. Back in the day. Wow. I was That's younger than Nathan. I was like your age.

Nathan Latka

02:01Yeah. Yeah. That's that's incredible. What what were you back then? I assume you've pivoted a couple times.

Typical Customer Size and ACV

Chris Vandersluis

02:06>> Yeah, we've pivoted, it's a very good question. We've pivoted several times. We started off as a couple of guys doing custom programming. We were in the project management space by luck of the draw, I guess, because we started working for companies that needed project management software. Then we became a distributor for a project management product in Canada. And in 1994, pivoted again. I bought my partner out of the business, pivoted into being a publisher and timecontrol

Company History and Pivots Since 1984

Chris Vandersluis

02:35>> was the result. And I'll be honest, timecontrol was the result because it was for me low hanging fruit at the time. We had written several timesheets, I knew what that was about, I was sure I could sell it and we did as an on prem solution in 'ninety four.

Nathan Latka

02:50That's incredible. And so do you own 100% of the business today?

Chris Vandersluis

02:53>> Yes.

Nathan Latka

02:54Wow. Okay. So you bought back your co founders, there's no outside investors?

Chris Vandersluis

02:57>> Bought back

02:58>> the co founder way back in 'ninety four, you know, a deal we were both happy with. And then we had some investors in 'ninety nine, bought them out in 2006. And so now you're just stuck with me.

Nathan Latka

03:11That's amazing. Okay. And what's the team size today? How many folks full time?

Chris Vandersluis

03:14>> Yeah, we're just under 25. So it's a, you know, so it's a very tight team, mostly located in Canada. But now, you know, with things being remote, people are a little further afield, depending a little bit on how you count the size. If we're talking about staff size, so yeah, between twenty and twenty five, if we're talking about people who may be doing consulting or implementations or other things, they may be almost anywhere in the world

03:39>> and the numbers probably double that.

Nathan Latka

03:41Interesting. So, 25 people. How many are engineers?

Chris Vandersluis

03:45>> Yeah, third. Eight.

Nathan Latka

03:47Eight. Okay. Very interesting. Okay. Eight or nine. Okay, got it. And how many customers do you have today?

Chris Vandersluis

03:53>> Yeah, we have just under 300, so about two eighty at last count. So that's up a little bit from the last time we talked.

Nathan Latka

04:02Yeah, good memory.

Ownership Structure and Bootstrap Journey

Chris Vandersluis

04:03>> Our growth in terms of customer numbers is slower, right? We're growing organically by design and by intent, and we're selling an enterprise system. And so we don't really expect, it's not like we expect to have hundreds of new clients every month.

Nathan Latka

04:19Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

04:43your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

Team Size and Engineering Headcount

Nathan Latka

05:07get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here, Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is

05:29not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple. Maybe you're

05:54going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, We're gonna go back to the YouTube video here in a second, but

06:16if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into

MRR Today vs. a Year Ago

Nathan Latka

06:43the interview. Yeah.

06:44I mean, two eighty customers paying $15,000 a year on average would mean your MRR today is what? About 300, $350,000?

Chris Vandersluis

06:51>> Yeah. Just under that, actually. About two eighty.

Nathan Latka

06:53Two eighty. Okay. That's this is a great business. A two eighty, obviously, times 12 puts you at a run rate of about what is that? 3.3 Yeah. Million, Yeah. This is great. Now, how do you grow bigger? Are you going to keep expanding seats in the 280 or are thinking you add a bunch more customers?

Chris Vandersluis

07:06>> Well, we're going to add a bunch more customers, but by a bunch, some people would think it's kind of at a slow number. I mean, some of those clients are smaller, some of them are larger. It's been an interesting change over the last three years, of course, because of the pandemic and the shutdown. We have found ourselves spending a lot of time converting our old on prem clients to online clients. And so that's been good for

Acquisition Offers and Why Chris Is Not Selling

Chris Vandersluis

07:28>> us, and I guess good for the clients. But for us, you know, it's better for support, better for cash flow, better for total revs, so.

Nathan Latka

07:35Mhmm. And what does that growth look like? If you're doing $280,000 a month today, what were you doing a year ago?

Chris Vandersluis

07:40>> Yeah. About 240.

Nathan Latka

07:43240. Interesting. Now, I imagine folks have approached you to try and buy the business many times. What's the largest acquisition offer?

Chris Vandersluis

07:48>> All of your friends keep calling me, Nathan.

Nathan Latka

07:50I know you're coming on the show. This doesn't help. You're gonna get a bunch more calls. But but what's the largest acquisition offer you've turned down?

Chris Vandersluis

07:57>> I haven't I've refused to hear acquisition offers. I do talk to people on a regular basis. I mean, we're currently not for sale. I'm not shopping for money and I'm not shopping for an exit. So it's not that somebody couldn't come along and say, Oh, I have a huge box of non sequential unmarked bills here. Would you take it? There's obviously some offer at which anybody would sell. But at the moment, I mean, I've got a

08:22>> pretty good deal, right? And we're making good profits. I get to take the money home.

Profit Margins and Dividend Strategy

Nathan Latka

08:26What's good? Like 10%, 20%?

Chris Vandersluis

08:28>> Yeah, over 20%. It was just under 30 last year. Which is best every year for profits and we don't take it all. But, you know, we took, you know That's by the

Nathan Latka

08:39way, Chris, that's approaching a million, that's approaching a million dollars in profits, right?

Chris Vandersluis

08:43>> Yes, it's under actually. But yeah, it was like under, wasn't 30%. It was like between about 20, by the time we paid out dividends and paid out bonuses and stuff for the staff, you know, we ended up with 22 unrequired monies. So

Nathan Latka

08:57Wait, Chris, tell me about that. I have so many bootstrap founders that say, Nathan, I wanna do dividends and bonuses, but I don't know how to structure it. How do you structure your dividend program?

Chris Vandersluis

09:03>> Well, dividend, I mean, dividend program is what Chris wants. So the program is how much is left at the end of the day? What do we need to do for taking care of the staff and staff retention in terms of bonuses, things like that. And then, you know, for me, the calculation at the end of the year is, well, this is what's left over. What should I leave in the company for growth, for, you know, healthy

How Bonuses Are Structured for the Team

Chris Vandersluis

09:27>> cash flow, for working capital, and let's get the rest out. And so, you know, so yeah, for me last year, it was, you know, it was a nice amount of money.

Nathan Latka

09:36Is there a math formula though, you follow for your team of 25 that says, okay, there's, you know, dollars 600,000 of profits. You've been here for three years, you're getting 1%. You've been here for four years, that kind of thing.

Chris Vandersluis

09:47>> Yeah, it works. I mean, I allocate of the profits about 20% for bonuses. So 20% of the money, I mean, that's, that's not a promise, but I mean, if we, like last year, that was about the number. And so the staff shared that based on, like you say, based on longevity and their role in the company.

Nathan Latka

10:05Yeah. So it sounds like you had about 800,000 of total EBITDA, right? 20% of that would be 200,000 that you'd split between the employees.

Chris Vandersluis

10:11>> That's

Nathan Latka

10:12about 600,000 bottom line. And you say that's the Chris plan. What do I want to do with this?

Chris Vandersluis

10:16>> Basically, yeah. Yeah. And so, you know, about half of it stayed in the company and, you know, the rest, you know, we carefully took care of to make sure both the IRS and Revenue Canada were taken care of. And then, yeah, and then kind of put it aside.

Nathan Latka

10:30Are you married?

Chris Vandersluis

10:32>> I am. Married here in Tampa, Florida. Two growing stepsons, one in high school, one in middle school. I've got a daughter in Canada who's a quite a successful influencer. So, yeah.

Nathan Latka

10:46That's amazing. So the real question on your, so the reason I asked, the real question on your sales price is if someone says, Chris, today, I wanna buy the company for 30,000,000 all cash upfront. When you tell your spouse tonight at the dinner table, what's the number where they go, Chris, you said no to that? That's crazy.

Notable Enterprise Customers

Chris Vandersluis

11:00>> Yeah, probably $30,000,000 would be the answer. So if somebody went to say, you know, 10 times rev, 15 times rev, 12 times rev, five times rev, no, because I can take that out of the company myself. Right? And then, I mean, for me, the life decision would be, okay, and so now I'll have a big box of money and what? I mean, you know, I have, I've got a great job. I really love my work. You

11:24>> know, today, you're the most stressful part of my day. So, you

11:28>> know That's a compliment.

Nathan Latka

11:29I thought was a good compliment.

Chris Vandersluis

11:31>> I better get my numbers together. But, but, you know, I get to, take care of companies like Interpol and General Electric and AMD. I mean, these people are doing things. And we get, I mean, it's not like we're running those companies, but we get to be a small part of what they're building. That's pretty cool.

Nathan Latka

11:47It's very cool. That's very cool. All right. Well, Chris, on that note, I guess one last question. You ever use profits to go buy another company, do a little roll up strategy?

Chris Vandersluis

11:55>> I get offered every once in a while. I was offered actually just this month from somebody who has been in contact with me about, you know, trying to find me a buyer, which I keep telling them, thanks, I'm not currently looking for a buyer, you know, I appreciate the company. And I actually did look, but it wasn't for us. So would I? Maybe. You know, it would have to be it would have to be a great

12:15>> mix. We've seen many examples of people who try to put companies together usually because there's something wrong. And that's of not great interest to me. I mean, it would have to be some kind of a strategic fit.

Roll-Up Strategy and M&A Appetite

Nathan Latka

12:28Yep. Makes a lot of sense. Chris, on that note, let's wrap up here with the famous five. I should say,

Chris Vandersluis

12:32>> by the way, I'm never ready, so go ahead.

Nathan Latka

12:34No, you're gonna be ready. I will say we're very excited. You're taking the stage at Founder500 September first in Austin, Texas. I'm very excited for your keynote. I hope you go deeper into what do I wanna celebrate, which are boot strap founders that keep a 100% control, that have dividends, they pay their team out, you build a great life. I can't wait to hear the keynote.

Chris Vandersluis

12:51>> I've got my flights booked already, so I'm ready to go.

Nathan Latka

12:54We're excited for that. Alright. Famous Five. Number one, favorite book.

Chris Vandersluis

12:58>> I'm reading You know, I I pulled it out just for you last night. I'm currently reading AI 2041 by Kai-Fu Lee, which is Twenty forty one?

Nathan Latka

13:082041?

Chris Vandersluis

13:09>> Yep.

Nathan Latka

13:10Ah, very good. Okay. Number two, is there a CEO you're following or studying?

Famous Five Rapid Fire

Chris Vandersluis

13:13>> I'm really not. I mean, I hear about a lot of people, but there's no one in particular that I'm following.

Nathan Latka

13:18Number three, what's your favorite online tool for building timecontrol?

Chris Vandersluis

13:21>> LinkedIn. Still is. I listened to my podcast from 2018. Still LinkedIn.

Nathan Latka

13:25Yes. So you did your research. Number four, how many hours of sleep do you get every night?

Chris Vandersluis

13:30>> Yeah. Five, six.

Nathan Latka

13:32Okay. And situate well, we already said this. Married with, you said, three kids?

Chris Vandersluis

13:36>> Yeah. One one is mine up in Canada and two step sons here who keep me plenty busy. One just started driving.

Nathan Latka

13:43A terrifying That

Chris Vandersluis

13:45>> is terrifying.

Nathan Latka

13:46And Chris, how old are you?

Chris Vandersluis

13:48>> I am 64.

13:49>> 64 years young.

13:51>> Last I'm getting older now, Nathan.

Nathan Latka

13:52Nah, you're young. You got plenty of time. Last question. Something you wish you knew when you were 20.

Advice for Younger Founders

Chris Vandersluis

13:58>> Something I wish I knew. Yeah, to be more patient. I take the long view.

Nathan Latka

14:04Coming from a guy that's been building a company

Chris Vandersluis

14:05>> for thirty years, that's a surprising answer. But you have to take the long view. I mean, if I was just looking at things week by week, I don't I mean, I don't know. Would be a different kind of company, but not one that would be, you know, as exciting to me.

Nathan Latka

14:16Guys, timecontrol.com, auditable or audit proof timesheets, but it didn't start that way. Back in 1984, got launched, pivoted many times, bought out his co founder. Now he owns 100% of the business. They're doing $240,000 a month a year ago, now doing $280,000 a month for a 3,300,000 run rate. Last year though, they took about 800 ks to the bottom line and paid out 200 k in dividends and rewards out to his team of 25. The rest,

14:38600 k says, you know what? It's a great life being a bootstrap founder that's profitable.

Chris Vandersluis

14:41>> What should

Nathan Latka

14:41I do with the money? Good problem to have. We're rooting for him. Chris, thanks for taking us to the top.

Chris Vandersluis

14:45>> Thanks, Nathan.

Nathan Latka

14:47One 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

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