How Trainual CEO Chris Ronzio grew to $32.6M revenue and 8K customers in 2024.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is chris ranzio he's the founder and ceo of tranual a sas platform for entrepreneurs and employees to get their business out of their brain by documenting and delegating the processes in their company chris you're ready to take us to the top yeah let's do it so i thought about you earlier this week because we put out a big piece on git lab and we had sid on the show and one of the things that he credits to so much of his success for scaling his remote team is his employee handbook 700 pages worth of stuff this is this kind of what you're helping companies do document this stuff yeah policies processes procedures best practices like all everything that the company knows collectively we want to put that in one place so you can access it as you scale and so for people that missed your first episode give us the quick update here when did you launch the company what year january 2018. so it's been almost two years 2018 that's great now boots dropped or raised bootstrapped even today totally bootstrapped so we did a convertible note round just after my last episode last year so december 2018 we bootstrapped the whole first year and then this year the convertible notes have uh grown us to this point okay how much did you raise on convertible notes hey chris how about 50 750. oh 750. okay do you looking back i mean did you need that capital or was it more like a cushion a fluffy thing we did if we wanted to keep scaling our advertising so that it had you know scaling our ads on my credit cards it got us to where we were and we wanted to keep it going so i mean how aggressive are you being like last month you're talking like 30 grand a month spent on ads no last month we were probably 120 000 oh wow okay so is this your main growth channel it has been to date but it's starting to flip where we're getting more of our signups from organic now just based on how much content and marketing we've done okay so let's dive into that so you launch in 2018 um people are buying who is buying this typically is it head of hr it could be hr it could be operations could be sales managers so it's anyone with a team that they want to train or get up to speed faster people use us for onboarding their new employees and then for just keeping everybody consistently up to speed on the newest stuff okay and so what are they paying on average per month for this or per year on average they're a little over a hundred dollars a month okay so are you like a 1300 a year are you upselling against like number of seats or feature based upselling how do you upsell we have two packages that are split based on features so the premium one has like built-in screen recording and and animation giffy and stuff like that um the base plan just doesn't have that but then it's based on 25 user increments of seats 25 user increments of seats so it's essentially staged buckets basically yeah so the big utility of our app is it's tracking everyone individually being trained up to speed up to date and so we didn't want to sell per license per user and have people share logins and kind of game the system so 25 user buckets kind of match with the stage of a company yeah yeah very interesting now you have really invested in your seo game since the last time you came on so according to ahrefs you've added almost 400 referring domains over to 2 300 backlinks over the past 12 months how are you doing that is it internal or do you hire an agency or what no we do all of our marketing internal so it's been just a lot of outbound pr efforts we've started doing a lot of content on our website guest posts we've sponsored events we've sponsored podcasts so we've gotten a lot of traffic from those things okay interesting so what is the team size today and what's the title of the person managing kind of the backlink the seo growth so team size 24 today and my brother actually is our cmo and he's still managing all the the marketing content oh very cool okay who owns more the company you were him me oh nice how are you older too i am going to come along for the ride yeah i love that all right so 24 folks full time how many engineers uh six six okay any quota carrying sales reps at this price point or is it too low for field sealed sales no we've got two sales reps but they're 100 inbound so it's more about just talking to customers that need extra help interesting okay so ad spend scaling like a lot of people have this thing where if i just raise i can just spend 100 grand a month and it'll work you're actually are now spending that much per month but imagine it wasn't just a flick of a switch right talk to me about some of the learning curves on that yeah so the ramp went up pretty consistently when i was on here last year i think we were spending 30 or 40 000 a month and we went up to 50 and then 55 and then 60 and as we were doing it we're constantly measuring our acquisition cost how many signups per week we have and then making sure that a huge swath of those customers aren't canceling as soon as they get in the app um because that's the challenge that we saw last fall we brought in a huge wave where we like doubled our customer account in a month and then we saw our churn spike because we got a lot of bad customers so we were a little more careful about how we ramped up but it's just been swapping out better creative and saying what messaging resonates with the customers that are staying the longest and what case studies do we have from you know we've got 200 customers doing this particular thing let's make a case study out of it and target our marketing a little more so it's just gotten a little more sophisticated i'd say in the last year and so how many customers are you now working with today uh we're just over 2500 now okay that's the end this year yeah i mean you're at 600 last time you came on the show right it's been a big year yeah it's great i mean congratulations so 2500 at 100 bucks a month i mean that's 250 grand a month in nmr is that about right yeah that's it we hit that last month that's great and that's all i mean that's up from again about 60 000 exactly a year ago right it's almost three well no four or five x year over year growth yeah so we should end this year at the about 3.5 arr yeah that's i mean this is this is like the kind of story you love hearing now let me ask you a question would you ever get to the point and kind of pull a pull a zapier where you essentially actually pay back that convertible note instead of converting and doing an equity round no so we had an interesting trigger in our convertible note where once we hit a certain revenue threshold the ability for me to pay back went away so it was investor friendly but but i was good with it because i didn't want to be in a position where we're spending all the investor money and then i don't have the money to pay them back if they demand it so it was it was kind of like they took a flyer and and they get the reward for that that's interesting so it sounded something like we'll give you 750 at like a six percent interest rate and like a 20 discount but once you hit like i'm making this up 2 million bucks in arr we get 10 of the company yeah it was like that so interesting yeah so so it's kind of creative but so is everything we do i guess why did you choose to use convertible notes instead of actual just regular debt so at the time we didn't really have many options for regular debt so i was looking at you know the revenue based lending and what i could get from them as a multiple of our trailing 90 days mrr and and uh the convertible debt i could get a lot more of so and for and it was also a few close uh contacts so it was kind of like these had been advisors that helped on the business and they wanted to come in and be a part of it yeah would you consider if you wanted to raise more so to avoid equity would you consider going on raising debt today traditional debt yeah absolutely i think uh i think yeah that's a great view if you've got a marketing vehicle that's working like we do i think that's a absolutely a good option what would be enough where it's worthwhile to actually take it like is 500 grand you know three four months of ads been meaningful to you or would you try and raise more uh i'd have to be more i would say interesting because what yeah because it depends on the debt structure you know if you're only taking a few months of of ad spend then a few months you blow through it and now you've got some multiple of that debt or at least some fraction of the debt that you've got to pay back and you're servicing debt it doesn't keep working for you so i feel like it would have to be a um a longer term amount of money when you say longer term if someone offered you i'm gonna make this up you know 700 grand on a three-year term right flat line so it's not an rbf it's not percent of revenue flatline interest rate caught somewhere between like 14 and 20 percent is that kind of structure more interesting to you because you can use that to drive mrr today yes i would say if the interest rate was low enough and you can model it where our payback period is you know called four months today if i can bring in all those customers with some accelerated ad spend and have new cash flow to service that debt over the next window of time it could make sense um it would just depend on the the structure interesting all right i might be sending you a term sheet after this just to get the juices going um so churn was 48 percent gross revenue internationally about last year but your cohort size was smoke so you just launched what was gross revenue over the past 12 months so it's gone down a bit but it's still in the high 30s low 40s so it's what we've saw though is that the customers we bring in if they if we can get them activated which means that they've added a few users create a few things inside tranul they stick wait wait hold on be specific what does create a few things inside okay so four users and four subjects is our metric four by four we've got posters of like a jeep driving up a hill all over the office so if they do four by four churn is under one percent monthly it's like a like point seven percent monthly which which is really where we want to see overall churn trending toward and so our game is how do we invest enough in customer success to ramp those customers up quickly guarantee their success now not all of them that sign up or are ready for the tool so part of ramping up our customer success is identifying hey this probably isn't a good fit for you yet um let's not convert you um so we're so we're evaluating that and what does cac look like today to get a new hundred dollar a month customer uh 350 to 400 okay so that's about the same as what it was last year about three to four month payback period yes which i mean which is by the way like there are so many companies madwire is a great example of this playing almost at this exact same price point in the smb space where their churn is high caught even higher than yours but their their payback period is so fast and they're spent and they're adding so much new they know that two customers are going to 10x their price point five years from now from a new cohort of 100 and that's all they need to make the cohort profitable so it works right right and you get so much great knowledge from the cohort and the the ones that are churning like i think one of the things we've done well in the last year is we've gotten scientific about why people cancel and calling customers and having conversations and it's like free market study research you know they signed up gave us a month or two or three months of of revenue covered their acquisition cost and we learned how to get better in the future so i think it's healthy if the economics work it makes total sense now are you guys burning cash today to drive growth surprisingly we just crested the profitability cash flow profitable mark um the the and that's due to annual sales so annual sales coming in the cash flow from those um you know keeps our keeps us right about break even um whether we we start to burn take on new debt take on equity it's kind of up in the air right now but um that's that's where we're at and i feel like it's a good place to be would you do a big equity round right now or no what was that would you look at equity right now if a vc cam you and said here's x for x percent of the company would you look at it yes and the reason would be if it was strategic and if they've done the small business scaling uh path before if they you know they've got connections for us they've got you know there's i think more reasons to take equity than beyond just the financial side of it so open to anything who's your dream vc oh um the the the one with the best terms that's the best answer i've ever heard of that question all right let's wrap up chris with the famous five number one favorite business book uh we i just read radical candor and i would listen to it i listened twice and it was so helpful for where we're at in our team size number two is there a ceo you're following or studying i'm in uh i'm in this group called sas academy with 75 other ceos and so i'd say all of them like my peers are who i'm studying number uh are you close with david at jetpack workflow yeah he's great okay good number three what's your favorite online tool for building your company profit well number uh four how many hours of sleep are you getting every night about seven okay and what's your situation married single kiddos married two kids okay good busy guy uh last question what do you wish your actually how old are you uh 34 34 okay what do you wish your 20 year old self knew um i would say like do it my dad always said do it now growing up like and he meant carry my shoes up the stairs or whatever but i feel like when i go to a conference and i get a good idea and my brother and i go back to the hotel room and execute that night that's when we see the biggest results so i would say just do do things now tranual guys helping brand small businesses document processes that ultimately are what drive the business growth launched the company in 2018 over 2500 customers today they're doing 250 000 a month in revenue up from 60 000 a month just a year ago so over 300 year-over-year growth their number one engine ad spend 120 000 bucks spent last month getting new customers spending about 300 bucks to get a new customer or 400 so about a three to four month payback period they did raise 750 grand on a convertible note to drive some of that growth now 24 folks on the team six engineers two quota carrying sales rep still about 40 gross revenue churn come down a little bit but look it works with the other unit economics chris man we're rooting for you thanks for taking us to the top thanks nathan you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data points from the world's leading sas ceos click and watch one of them right now