Timedoctor Revenue (2024)

quick context this was recorded March 28th and 29th so a couple weeks ago at my live event SAS open.com we had a thousand software CEOs there if you missed it we hope to see at the next one September 5th and 6th in New York City SAS open.com but for now let's jump into the recording SEO has a 202% return on ad spend paid ads has 155% return on ad spend and email has 127 bootstrap companies grow faster than their Venture back counter s past 10 million [Music] AR hey folks if we haven't met yet my name is Nathan lka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software Founders so far we've invested in over 400 software Founders totaling $150 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer all right let's jump into the interview I want to start out my talk with a question because I always like to start out my talks with questions and usually these questions are something that I talk about around a couple other founders and this question the more that I thought about it the more that I realized it was actually a lot more complicated to answer than initially when I asked it and that question is how do we build billion dooll bootstrapped SAS companies how many of you guys are bootstrapped right now just to raise of hands perfect and how many are venture-backed okay cool you guys are going to be pissed off but don't worry about it it you're going to learn something from this as well so here's some interesting statistics bootstrap SAS medium growth rate is 28.5% from 3 to 20 million ARR that's pretty good another statistic that I saw was SAS median growth rate over 10 million ARR is 24% so growth goes down obviously a little bit as you're scaling the organization however if you split out venture-backed companies bootstrapped actually grows 6.7% faster than venture-backed companies Now isn't that very counterintuitive don't you usually have a bunch of people that are at conferences like this and say no no you need to raise money because that's going to allow you to grow faster but no bootstrap companies grow faster than their venture-backed counterparts past 10 million ARR they actually grow faster than their venture-backed counterparts there is a lot more failure rate on the smaller ones but once you get past that 10 million AR Mark bootstrap actually grows faster so this was really weird for me cuz I thought to myself okay so if we want to build more billion dooll bootstrap SAS companies we have to start to think differently because to be completely honest with you the information is different the conflicts are different the economics are are different the culture is different the business is different but in my opinion it is better and that's not just my opinion that's a fact so how do we build billion dooll bootstrapped SAS companies well my answer is that bootstrapped SAS needs a different Playbook than venture-backed companies we need a different methodology in order to be able to build those types of companies and I would also add on that bootstrapped companies learning from venture-backed companies is counterproductive to their overall growth so we've seen a lot of bootstrap companies we've seen lot of venture back companies that have talked over the last two days at SAS open but what I really wanted to do was Focus specifically on the 13 counterintuitive insights that I had bootstrapping an 8 figure sess now this is the slide to say please don't leave the room I know what I'm talking about my name is leam Martin I'm the co-founder and chief Innovation officer at time doctor which is just a really great way of saying I basically just get to play around with the research and development team all day long which I've been loving by the way over the last year I'm also the co-organizer of running remote which is the largest conference on remote work I also co-wrote the same titled book Running remote which became a Wall Street Journal bestseller last year teaching you everything you need to know on building and scaling remote teams and I'm really passionate on focusing on understanding how work works and my second passion is actually working with SAS businesses we have team members in 46 different countries all over the world and they all work seamlessly because we've understood remote work at scale and when I was working on this talk about a month ago I was actually in this little coffee shop in the Fifi islands does everyone know where the Fifi islands are one person okay it's in Thailand and I just realized in this moment as I was writing out this talk if I had raised Venture money I would have never been able to do the cool and fun stuff that I currently do now me and my co-founder because we can't just go off to you know thiefy Islands for 2 months um so it's also a lot more fun so first Insight that I have is if you can't measure it you can't manage it and probably a lot of people know this quote it comes from Peter Ducker but probably a lot of you don't know that Peter Ducker actually stole this from this guy Lord Kelvin and I actually like this one more if you can't measure it you can't improve it and I stole it from this guy David SC who actually did a really great talk at websummit last year about SAS metrics if you're interested in checking that one out it is amazing but in our organization everyone has a number and if you don't have a number you can't work here that's very simple so when you start working inside of time doctor you need to be able to have some type of quantifiable trackable goal to work towards and this is our version and again I'm going to give everyone access to this at the end if you're interested in downloading all of these reports so this is our top level executive dashboard we have leading indicators and we have lagging indicators we have three different colors which is red yellow and green green means everything's doing great don't worry about it maybe we should have actually set a more aggressive goal previous quarter yellow means maybe this person is not going to actually hit their target we should probably pay attention and red means there's a 50-50 shot of this person not hitting or this department not hitting their goals or not just from looking at this dashboard where were our problems for this quarter any ideas it is pqls mqls deals pipeline uh we totally miffed uh we totally whiffed this particular quarter on our improved targets so we work on that obviously and we spend 90% of our time on the Reds we spend 10% of our time on the yellows and we spend none of the time on the greens we basically just set a more aggressive Target for next year next one camels not unicorns reduced resources eliminates optionality when you have a ton of cash it's really easy to be able to work on crazy new things and go in directions that you wouldn't necessarily be interested in pursuing in the first place you kind of solve problems with money and we see a lot of this with a lot of venture-backed companies but I actually almost wanted to make this one of my counterintuitive insights which is make eida for everyone that's here right now who has some net profit some I in their books how many have like 5% keep your hands up 10% 20% 30% whoa you're buying the drinks okay thank you very much uh so in my opinion one of the things that my my financial adviser actually sat me down about six years ago and he said Liam you have 94.5% of your net worth in a private company that you can't sell you need to start taking some risk off the table and so we did and and that's very counter to grow at all costs reinvest everything you possibly can inside of this business and in my opinion that was the that was the right move to make which was start to make some profit and it completely protected us against a lot of problems that we had uh down the line I would say 10% is good is a rule of thumb minimum 20% is where I would really put the target at and 30% is if you think that there are going to be some rough Economic Times in the next couple quarters boost yourself up to 30% Eid to protect yourself in terms of that downside next one large Tams equals bad for bootstrapped companies again this is probably something that people are not going to like very much when I say this but these three books how many of you have read crossing the chasm Blitz scaling or scaling up almost everybody right and what they teach is that and I'm just using crossing the chasm as an example you should be focusing on your early Market segment not the big mainstream market so when we started time doctor we had a probably a billion doll total addressable market now postco with everyone using remote work our industry became a lot bigger it's probably worth 20 to 30 billion at this point and so we recognized that if we wanted to start the same business today we would never do it because we just don't have the resources to be able to do it and there are lots of competitors right now that are raising 50100 $200 million to be able to compete against us but they've got to overcome the entrenched brand that we've built which is very very difficult for them and we actually were terrified around 20121 because we had like seven companies that raised over $100 million to come directly after our market and so far none of them have really penetrated the market that badly because we already had that early Market segment so focus on the market that are early I would say below 10 billion is where I would really go but if you can get it lower to a billion dollar total adjustable Market that you think is going to grow in the future that's where you should go another honorable mention here is a lot of people talk about Innovation but you should really just talk about the dollars and cents this is a great book traction has anyone read this book before couple people it's amazing um stop focing focusing about how to get from 0 to one and just focus how to do that particular thing next one remote is the best option which obviously is going to come for me but I'll give you a couple statistics to be able to reinforce that uh remote workers are 35 to 40% more productive than their office workers they have a higher engagement than on-site employees on average they save 72 minutes of their day just on commuting so if you have in office employees and your remote employees and you let your remote employees sleep for 72 more minutes per day you will have more productive employees they save between $600 and $6,000 yearly they have a 93% of working professionals believe that remote work positively impacts their mental health 51% of working professionals prefer fully remote 46 prefer hybrid 4% for some reason want to be in the office 24/7 I don't really know why that is uh and then lastly there's a 50% higher retention rate in in compared to their in office counterparts and lastly it's more fun as I said I get to go to the Fifi Islands um I get to travel around the world with my co-founder and all the other employees that work inside of the company so it's a lot more fun and one other statistic which I'll push to you guys is pre-co why commentator saw that 16% of their startups were started remotely today this cohort 82% are partially or fully remote so if you want to be able to build products for the remote Tech platforms and Future remote is definitely the direction to go if you want to learn more go to running remote that's my conference that we run end of this month actually in lisb in Portugal it is a lot of fun talk to me afterwards if you want to go next there's one to three ways to get customers that's it very very few companies if you look at their user acquisition funnels actually do more than three four five significant sources of user acquisition as you see them scale here's a a survey to be able to prove that out this is a survey of $18 hundred million plus companies this is where they've deployed all of their revenue b or basically all of their marketing channel Revenue you can see there's a lot in organic social media and then you can see the absolute horrific return on investment for organic social media tweeting is not a strategy for anyone that's interested uh what you need to focus on is SEO has a 202% return on ad spend paid ads has 155% return on ad spend and email has 127% return on ad spend do SEO paid ads and email in that order if your CMO tells you to do anything different they don't know what they're talking about next build product number two at 10 million ARR or below 40% year-over-year growth when we first started time doctor about a year and a half into it we decided to build this other company which is called staff.com and we thought that in the two-sided Marketplace space everyone was doing it wrong and we would do it right so we ended up building this URL uh we we bought this URL which was very expensive it was like 550 Grand and we built this two-sided Market Place year one we were doing 86,000 Mr year two we were doing 112,000 Mr so the business completely collaps in on itself and while that was happening time doctor was growing at 60% year-over-year no problem whatsoever and we were applying no marketing no engineering resources into it it was just running so focus on your winners don't start losers before you actually scale up your winners if you have something that's working just keep doing it I know that Founders hate that but keep doing it next more than 10 million ARR you are a retention company you are not a customer acquisition company I don't know if anyone uses chartmogul here we use it a couple people so these are our numbers in 2019 you can see that new Revenue which is the dark blue section was about 40% of our overall Revenue breakdown in 2023 it was about 15% of our overall Revenue breakdown we are an expansion company now we are not a user acquisition company so we've deployed a lot more resources to CS making sure that we retain our customers making sure that they're happy as we just talked about in the previous talk what to measure cessat MPS net retention referral rate we actually have an MPS of over 56 right now so we're doing quite a bit better than uh alvero which is obviously something else that I could talk to you about um next one brand is the most important thing PL past 10 million ARR I really do believe this so when covid happened a lot of companies just went and bought our product because they were like well we don't really have a remote team but we identify what you guys do which is time tracking remote workers and then when covid happened we just saw a massive massive influx of Revenue coming in and we didn't really know where it was coming from but we recognized longterm that it was from our brand impression and if you have a company that's worth more than 10 million R particularly if you have a large customer base let's say more than 10,000 customers they're going to talk and that referral engine is something that's going to feed you to 100 million in my opinion how do you test this well you increase prices and you see if they stay that's one of the best ways to test that uh we did that through experimentation and we actually was one of those things that we should have done it 10 years ago and we didn't do it we realized that there was almost no impact on conversion in churn by raising our prices by 20% Which just automatically raised Revenue by 20% next product Le first sales Le later so this is a bit of a story of March of 2020 and everyone kind of knows what happened in March of 20 the entire econ completely imploded exploded exploded for remote work imploded for everything else so February of 2020 we were doing about 20,000 in new business Mr by um March we were doing 115,000 in new business mrr and by April we were doing 212,000 in mrr we literally took the sales team that was working on about 10% of all deals and we said if you're working on an $100,000 AR deal would be important to that sales team and we all of a sudden said only work on million dollar deals so the product Le engine actually converted all of those customers 98% of our customers were converting through our product LE model where a lot of our competitors didn't have that and they basically wasted all of those leads where we ended up actually being able to get them funny story we had um a G20 country literally Deploy on our software um through a plg model I don't know how the credit card worked but they deployed 500,000 employees on the system and we went down for like an hour and a half it was absolutely insane and then we called them and we were like stop stop doing this we're going to shut down your account we'll try to onboard you properly and that resulted in 202% growth in 2020 but again by focusing on the actual plg base we could have our sales team focus on the cream on the top and a sales team is going to cost you a couple million dollars to really deploy at scale so it's incredibly important that you keep those costs small you build the product so it can sell itself and then you add the sales team on top next pay less attention to competitors here's a couple slides to be able to reinforce this this is um forb statista top reasons why startups fail there's also something from fractal again this is just stuff that I Googled get out competed is the fourth and eth e top reason um why startups fail Rano to cash is the second most important one if you're bootstrapped you don't run out of cash because you live within your means and you don't have to actually invest in time in raising capital and going after all of these I mean you guys know that of raised Capital it sucks up a ton of energy and time and so by removing that and focusing on just building and servicing customers that don't even know that your solution exists particularly if you're an early side of the um crossing the chasm process you're going to be much more successful than focusing on your competitors that maybe own 2% of the overall Market when you own 1% of the overall Market next and this is the most important one Founders will try to self sabotage if things are going well in the business you're going to do stupid stuff to screw it up and I think the reason why is because Founders really like chaos the company was born out of chaos it was a very chaotic process to be able to say we're going to do this thing that no one's ever done before and I'm going to do absolutely every job inside of the organization you're going to do stupid stuff like you're going to build a product that has no correlation to your original customer base you're going to not answer emails properly you're not going to work on Partnerships the way that you should have been you're just not going to focus on the things that matter because either consciously or subconsciously you want to be able to sabotage the business because when you sabotage the business there's more chaos and then you are in a state of chaos which makes you unhappy consciously but very unhappy subconsciously and it breaks down into two big categories either number one you believe subconsciously that you don't deserve to build a billion dooll business or number two you have limiting beliefs so your friends your your your cousins um your parents whoever it is they don't want you to succeed and that intrinsically becomes a problem for you I had to work on this actually for years I was scared of telling people that I'm rich and it's one of those things that even triggers me right now because I think to myself oh rich people are lazy that just kind of sit around all day and don't do anything but the reality is that that was subconsciously holding me back from actually saying well I want to build a billion doll company and I want to be able to execute on that strategy and not become something that I hate and that took a lot of therapy to be able to solve it one last story I'll leave you with I had a friend of mine and I went to his office and literally in his office he had a little sticky note that read your mother truly believes you deserve this you to put it up there just to be able to get past that mental block if you're having that type of mental block right now talk to me off stage I'm happy to be able to help you spent hundreds of thousands of dollars on therapy to hopefully change that type of mindset in my own head but it's so important to be able to get past that self-sabotage because you will not succeed otherwise um the books didn't get here unfortunately I was supposed to do a book signing but they were not shipped in time but if you have any other questions that QR code has all of the documentation that I just went through and including this talk and uh if anyone wants to chat with me I'll be around thanks a lot [Music]