How Wpbuffs CEO Nick Adams grew to $1.2M revenue and 500 customers in 2020.

hello everyone my guest today is joe howard he's building a very cool business called wpbuffs.com uh he's also co-host at the wp mrr wordpress podcast which you should all check out joe you're ready to take us to the top yes sir thanks for having me it's gonna be fun you bet so you described wp buffs on indie hackers as 24 7 wordpress site management now is this consulting or sas uh it's not really consulting it's not really sass it's more like i i put it under the category productized service so we're really a services company at core uh we're managing wordpress websites for entrepreneurs small businesses but also for agencies and freelancers we have a white label program as well we do white label support but it's kind of more productive service or pretty much packaging uh services together uh and selling that uh to folks who need ongoing support when it comes to wordpress what can you be specific so i have a wordpress blog what's something i would pay you to do with that wordpress blog yeah cool uh a lot of people people need all sorts of help with wordpress people use wordpress they build the site they install everything they get the theme set up they get all the content on the images and then they realize oh goodness there's so much ongoing stuff i have to do i gotta manage all the updates for the plugins i gotta manage backups uh how do what happens if the website goes out on a on a friday night uh and i'm like out for the weekend what happens to the website then um there's a speed of the website which also of course like influences like you're doing like seo and other marketing stuff you want to use experience to be good security for the website uh making adjustments on wordpress all these things are they're easy for someone who really knows wordpress but if you're a business owner and you you know nathan want to run your blog instead of worrying about oh where do i edit this wordpress thing then that would be something you could grab a subscription for and our team would just help you out with our you know website edit speed and security optimization all that stuff and let's not bury the lead here you've talked about this what have you grown revenue to and then let's get the backstory yeah uh revenue right now uh it's every month it's like a little bit up or a little bit down but we're around 90 to 100 k monthly recurring revenue right now so like just over a million dollars annual revenue for the business um and that's through again direct customers website owners small businesses paying us to manage our website then also a larger agency and freelancer partner is paying for white label kind of reseller 24 7 support so a couple questions there what's the average customer paying you per month of the hundred grand a month yeah lifetime value also actually differs significantly based on if you're a direct customer if you're a white label partner are direct customers most have one site but a good amount probably 20 or 30 percent of those direct customers have two sites three sites five sites those can add to lifetime value uh of those customers anywhere from like 1500 to 2 000 usually that lifetime value white label partners are a little bigger they're coming on with more sites they're making 24 7 support a core piece of their business and so they're really scaling reselling of our care plans um so their lifetime value can go anywhere from four thousand five thousand six thousand seven thousand i mean i think probably our longest serving customers who have been with us for you know five six years they're they're up there around five six thousand dollars um i think our average customer stays with us for about 29 months last time i checked lifetime value um so yeah people tend to stick around so five six years is your longest customers that mean you launched the company about 2014 2015 yeah 2015 uh like beginning of 2015. uh so and yeah and how many customers are you working with today oh good question um probably a number of customers is different than a number of websites managed so probably number of customers are probably around like 500 uh and how many websites websites we're probably approaching about a thousand websites right now uh maybe you've reached that i don't know and and of the 1k customers are sorry the 500 customers how many of them are direct versus white label partners the majority of our business is white label websites managed under the white label program probably about 70 percent of the website 60 to 70 of the websites we manage are white label support meaning an agency works with us and resells our care plan to their clients we manage that client's website do all the speed security optimization website edits updates backups we do all that under that white label agency kind of partner we send emails out on their behalf and do email support on their behalf we send out reports with their logo on it that kind of stuff um so yeah 60 to 70 white label and the rest direct customer so this white label model is an interesting one i want to dive deeper on it for a second so so if someone is going to sign up direct to you on your website what would they pay you per month to help like for you to manage two of their sites let's say they have two websites yeah we have different tiered plans so folks can pick and choose what plan they go under we have certain requirements like um websites with advanced functionality like e-commerce on the site or like membership sites that's kind of advanced functionality we put that under our perform plan it's 197 a month for that care plan for that description uh if someone has a custom built website uh like custom plugins they're going on you know custom plan pro which is like 500 a month so to have a custom website it's going to be more expensive because our team is relied on to manage all that code we don't have a theme developer plug-in developers to help update the plugins we manage all of the all the pure code on those websites but people can pick and choose what they want on different sites if someone just needs they just like don't want to deal with like pressing the update button on a like simple site for the most complex things you know contact form then that can go under our maintain plan sixty seven dollars a month um so two per form plans two websites under perform plans about 400 a month uh but if someone say one website they really want to optimize speed of the site but one website's a little less uh important and maybe they just need to maintain plan you can mix and match and go you know anywhere from i don't know 150 for two sites up to you know a thousand or two thousand dollars a month per for two sites really depends on functionality it depends on what people need on the site uh what kind of management people need do they need all the nuts and bolts and uh all the all the goodies or do they just need something simple if you're doing a straight average right if you're doing a hundred thousand dollars a month right now in revenue across 500 customers you know obviously 200 bucks a month is about average which kind of coincides with your 197 a month plan um talk talk talk to me though so let's take that 197 a month plan that's what it is direct if you sold that through a white label partner what would they sell that usually to their customers for like what markup do they build in yeah we give all of our white label partners 20 discount on all of our care plans so it actually allows them to have a better profit margin on all the plans they resell um so it allows us to manage more websites uh in a model that's still solid for us and also allows our white label partners to uh make a little bit more profit on each care plan they resell and it's good great for our end customers as well because they get great support we've systemized everything we do a great job what we do so what will they sell that for though joe so if you're giving them your 200 a month plan for 160 a month so there's 40 a month of margin built in but they do they mark that up even more higher than 200 a month yeah folks can mark it up if they want to um a lot of it's going to depend right on their relationship with their customers uh some people have great relationships and some people sell that for our perform plan you know for let's say 300 a month we usually recommend people start selling the uh care plans at our direct customer base rate so if someone gets 20 off 197 dollars a month about 157 a month they're paying us for that white label care plan we recommend they start uh by selling that care plan for 197 dollars so it's about 500 a year in profit for that care plan if you sell it at that rate but we also say once you've done that for a little while you can always adjust pricing moving forward if you feel like you have good relationships you can always increase pricing a little bit if you want to that's fine too what prevents a white label partner coming in and undercutting your own website's pricing this is the biggest issue that i talk to when people have this kind of value-added reseller go to market strategy yeah we vet all of our white label partners very carefully anybody who wants to sign up for a white label program has to jump on a call with us part of that is yes to sell the white label program and we want to educate people and make sure that you know what we're doing is going to fit well into their business model but it's also really focused on making sure that those partners are people who want to really uh add care plan reselling to their business model they're serious about that that they know our price points that they understand the pricing that they need to sell that in order for our program to work for them and to benefit their business and to help them you know make care plans profit center for the business and to grow that piece of business so what if they that's what i'm asking right is let's assume it's a good culture fit it's all perfect fit except the white little partner says like let's say i'm a partner i'm on a first call joe i love what you're doing um i'm also selling the like content writing services and i know if i can just sell them your tool to get a relationship i can make all my profits selling my content writing services so i'd love to sell your plan at my at cost for me 160 bucks a month you obviously can't have that joe as a business because then they're undercutting your own pricing on your own site how do you prevent that from happening is it in the contract um i don't well we give all of our white label partners a twenty percent discount so all of our wealthier partners are paying us 160 a month for those care plans so if they want to sell it at cost it just means that they're not making a profit on those care plans that they're reselling um which we have no problem with um we prefer foreign partners to make a profit on each care plan that they sell but if they're we actually have a few very successful white little partners who work with us on 20 30 websites they sell the plans at cost for them they don't make profit on that but it allows them to make profits on some of the other things they do for clients so like a marketing uh agency they work with us on 30 sites don't make profit on those but it allows them to get in the door and sell great seo services so you're not concerned about one of those partners really going all in launching google ads that say hey get wp buffs at 20 off pay you know 160 bucks a month instead of on their website it's 190 a month or 200 a month oh i see um no we're not really worried about that it's never really happened before if it happens we'll probably we'll probably figure out something but again we've met all our white label partners pretty hard uh and we make sure that they're just good fits to work with us and they're they're never the kind of people who would do that um so if the day comes where someone slips through the cracks then we'll take care of it well you you sort of just sort of the way you just described it one of those kinds of people and slips through their cracks makes it seem like they're doing it with bad intent this is a perfectly viable a good person with great intentions that wants to help people and so i could do this exact same strategy because they want to keep costs low for the customers on the end so it's not just about like a bad person or someone slipping the cracks it's a business model decision for you yeah i think that's true i wouldn't argue with that i don't i don't think i was meaning it as a negative thing i think someone can slip through the cracks and still have positive intent and that's fine we have really good relationships with all of our white label partners they're they're that they're partners for us um it's our goal to make sure that their business what we do for them as their white label partner is making their business uh more successful and if it's not then that's something we want to fix and we want to improve so yeah good relationships with whatever partners makes everything easier and never had an issue and hopefully you never have that kind of issue talk to me again that's what you use as like you use the word like issue right this is a thing that is like a great people do this all the time it's a really good strategy so it's just it's interesting to sort of hear you talk about that in the in the frame that you're talking about it but just be clear you're not saying it's a negative or positive you're just sort of saying it hasn't happened before if it does happen we'll deal with it yeah yeah okay maybe i say issue and it sounds negative to you i'm not i'm i guess i'm not meaning in this negative i mean it's like something that we could do better so i'm always for improving if we can do one percent better every day then everybody wins so if that's something that's uh if that ever presented itself like maybe we'd have to look at it but it's it's never happened so let's get more of the backstory here so you launched in 2015 um have you bootstrapped the company today or have you raised yes bootstrapped bootstrap that's great and what's a team look like today how many folks um i think we're at about 25 right now um probably be around 30 by the end of the year we're did a big round of hiring just in the last couple months and that seems to become like more of less of a we hire every little while and we're kind of always hiring so if anybody want wordpress people out there feel free to come talk to me how many engineers are on the team um probably about half to two-thirds of our team are engineers um we've got a solid solid engineering team uh and then we've got a small customer success team we've got a community team that we're building wordpress is open source software so the community aspect's really important um so we're starting a uh team to really make sure we're doing all the important work in the open source community that's necessary um to be a good company that works in open source any quota carrying reps or is it is it is the price point sort of too low to give commission to a sales rep uh yeah we've got our sales uh structures not like we don't do any outbound sales all of our sales is inbound um most of our marketing strategy revolves around uh seo content marketing um we just started a youtube channel but all of it is to drive inbound leads to us we have great systems in place so that people get booked and then our sales team is someone we have uh someone who does sales works on our sales team and directs our sales team but also our one of our customer success folks also does sales dean he just happens to be really good at it so we have him doing some sales as well but he really just jumps on calls just get booked into his calendar are there quota carrying reps though or no no quota say it again do yours two something give two sales folks do they have a quota or is there no quota uh no quota no quota got it so two folks on sales and they're just kind of the the demo the trial the demo the close and then onboarding is sort of what they focus yeah i really do i wouldn't call it a demo we just kind of have discovery calls um and for white lao partners it's to make sure they're good fits and to explain the program to them and to get them started on things for direct customers it's yeah also educational uh and to make sure that they uh they are our subscriptions gonna be a good fit for them we're not a good fit for everybody some people just need a freelancer to do an hour work for them and that's fine but we're an ongoing partner for people we got to make sure we are adding that value to focus and yeah we don't have like a quota for our sales team but yeah we review our numbers every month and say like oh like here's our closing rate and you know oh where could we have done better and we'd discuss things so we're not super formal about sales but we try to be formal enough that we have at least like some things in place to try and improve and you mentioned revenue stores sometimes it's up sometimes it's down when you look at monthly revenue on average what would you put that at yeah dean is head of customer success and he has done a great job with churn um churn is earlier this year was probably at about five six seven percent um now it's four to five percent pretty consistently over the past two or three months um so yeah under five is a big number to hit and stay consistent so if we can uh continue to do better there that's great dean's big uh aim this quarter is net negative churn so we want all of our upgrades um from white label partners adding new sites or current direct customers adding new sites or upgrading from a maintained plan to protect or protect to perform we want that revenue to eclipse the revenue that is churned out of the business called net negative churn and that's like yeah holy grail for for uh subscription businesses so we're trying to hit that this quarter we'll see how do you do that i mean that's extremely extremely i actually don't think i'm i'm sorting through my database right now from like the you know two thousand sas ceos by arpu there's nobody at this price point that has that negative churn because of the economics of like there's no opportunity to upsell and add three grand to the same customer because your max plan is getting at another site and then you know that up bumps them up 50 bucks a month are you going to bring on a new product that's a higher price point um we have some things in the work for that but i'd actually challenge you on that i think it's possible at a lower price point hitting that negative churn our model with white label partners means if we bring on significant white label partners that bring on you know 40 50 60 sites at a time that's an easy way to add um a good amount of revenue to the business um all in one chunk um so the bigger amounts you're saying so um just because we don't work with people on like two thousand dollars a month or three thousand dollar a month retainers like some like enterprise level companies doesn't mean we still can't add big chunks of revenue so um yeah i think it's possible in our model and yeah i mean it's by the way it's not just big chunks i mean the problem is they're 60 there's they're 60 annual churn so before you can get close to net negative you have to make up the 60 gap you have to fill that with expansion first and then still expand further than that and usually the model people do to do that is they find a utility-based metric like number of sites like you've identified with your white label partners and that's exactly right they drive upsells that way um i i don't know how many white little partners you have out of the 500 i just know you have 500 customers using the platform sure yeah how many white label partners do you have um i mean i guess like i said before i think like 60 to 70 percent of customer or websites are on white label so yeah that that still doesn't mean okay got it yeah yeah so you have 60 or 70 of the of your 500 total customers paying you 60 to 70 are white label partners but those partners make up the majority of the number of websites you manage correct i see i see interesting okay last question before we wrap up what does cac look like to get a new 200 a month customer say again what does customer acquisition costs look like to get a new 200 a month customer um yeah this is a hard metric for us to uh for for us to nail down i don't think we have an exact number for customer acquisition um we try to look at it the way we think about it is more customer or what's the lifetime value of a customer of a specific customer uh and then what are our marketing activities uh in terms of uh trying to obviously like undercut that number pretty significantly um so we don't have a specific number for what customer acquisition cost is um but we're always trying to you know for sponsoring an event we'll say well one new white label partners has a lifetime value of you know five thousand dollars so you know we can afford to spend you know easily spend five thousand dollars on the sponsorship for this because you know we expect to get maybe two new white label partners from you know appearing in front of these 5000 people or whatever so yeah that's how we think about it so you're comfortable paying for up to half of lifetime value for a new customer five grand for two new white label partners um i don't know if i don't know i don't know i would feel comfortable doing that i'd also feel comfortable paying more probably off the top of my head um i think that there's we're always finding ways to increase customer lifetime value that's actually increased like over the lifespan of the company we're always lifetime value continues to increase for customers so yeah i mean i probably feel comfortable spending a little more as well all right great rapid fire famous five here number one favorite business book favorite business book um ooh i have two that i really like but i'll just go with uh with essentialism um number number two is there a ceo you're following or studying is there a what ceo you're following or studying um yeah i usually like its folks around the wordpress space are the people i keep closest with um so like corey miller he's probably not someone you know but he he ran i themes uh and uh that guy was acquired by liquid web big hosting companies so corey miller someone i followed pretty closely i'm actually pretty close with number two is there a see a tool you're using a lot to build the company besides any wordpress tools uh yeah we're big hubspot users um so that's a big piece of our house it's hubspot sales crm so the sales crm is this big piece where we keep all of our leads and push them through the cycle number four how many hours of sleep are you getting every night ooh i like to get a lot of sleep uh i'm usually around uh at least seven but i really try to get like eight or nine but it's tough these days i've got a seven month old baby boy here so uh but he's sleeping pretty well the first three months were a little tough but again so a situation where i sort of married one kiddo yes all right and how old are you joe 31 just turned 31. congrats last question what do you wish your 20 year old self knew i wish that i knew that [Music] life's going to be a little crazy and you don't have to know what you want to do when you grow up it's ok not to know guys wpbuffs.com helping folks both directly via their 200 a month plan and via a lot of white label partners which they hope to scale over time to drive up uh to net negative revenue churn or positive above 100 net revenue retention uh launch is coming back in 2015 all bootstrapped today about 21 folks on the team again doing about a hundred thousand dollars a month in revenue joe thanks for taking us to the top hey thanks for having me man