How Xfusion CEO David Tran grew Xfusion to $1.5M revenue and 4 customers in 2024.

hello everyone my guest today is david tran and his partner jim they decided to start a technical support agency after they realized how difficult it was to hire and find competent agents for their own businesses once they cracked the code per se they realized many sas founders and owners have not figured this out and they want to solve that problem for everyone david you ready to take us to the top yep all right so bring jim in here are you guys with co-founders yes we are uh we met almost about two years ago and we really hit it off jim who had the idea uh you know actually i said david i guess you could say it was my first client so i consulted with david my background was in sas and uh you know i worked for i own a sas now so does david and i also worked for um private equity fund operating sas businesses so david acquired a business and i started working from him for him on the side and we hit it off and became fast friends and really saw the need for better technical support so that's kind of the launching point for exfusion and we rarely get two founders on at once so i'm going to use this and take advantage of it one of the hardest questions and also it's usually the most dilutive event in a company's history is debating with your founder on how you're going to split the company at the start so how did you guys approach that conversation uh yeah you know i i've been married for 15 years and i feel like i've learned something about like building a a good relationship with with my partner um so we you know dave and i i feel like are well aligned we're not we're not the same which is a beautiful thing we've really been embracing our differences and had a lot of conversations about that so we have a straight up just 50 50 split uh and that's gone really well we kind of you know right now we like to say that that we operate with a mentality of that we're swiss army knives like as founders we have to do so many different things uh um but we also understand each of our strengths and we we split up responsibilities in line with our strengths and it's worked out really well so you guys are really scratching your own issue with the product and just there's no ambiguity what is the product name that you guys are building today you want to take it with david um i don't think we actually have a specific name for it excusion dial is the company brand for now and the the direction when i take the companies to be the source of all premium outsourcing offerings for startups and companies uh and right now we're starting off with support because we think it's the easiest and stickiest product i think when you get someone on with support they usually stick around based on the like industry metrics three plus years and that's some that's a pretty like the length of pretty good ltvs which helps us to fund other expansions to new verticals you're saying if you can use x fusion and x fusion's first brand is to help software companies or any company hire support people that support person will stick at that company for three years giving you time to then upsell other additional products you build under ex fusion brand correct interesting just being in the position where we hear people's pains helps us develop a mindset and unique um i guess knowledge set based on uh industry needs at a given moment for specific people so you guys have done this how do people currently jim maybe take this one how do how do people currently hire their support folks where do they look where they go where they pay uh yeah so i mean just just to i guess i'll talk to the last one we've decided to scratch our own edge here and i know our experience working with other outsourced companies they just didn't do an effective job and they didn't understand us they didn't understand sas so with our background we we know the unique needs of sas with my experience in private equity working with tons of different sas founders we wanted to create something that was really beneficial for them so our team is is based overseas and the cost is twenty five hundred dollars for one full-time resource i know that answers your your question just now nathan or not you know so the question is how do other people right now find support people on high like who are you going to replace if you do this well yeah a lot of our our clients are technical founders that are providing support themselves and one of the clear value propositions we help them get back to their highest and best use of time so they're overstretched they're technical founders many of them don't enjoy providing front-end customer support so they're either doing it themselves or they've experienced experimented with hiring outsourcers that maybe they're managing directly another layer that we provide is managed services so maybe they've hired somebody that they manage themselves and it's just they're not getting an effective roi uh or in some cases they've hired full-time us-based employees or maybe they're paying 60 000 a year um and they just can't afford to bring on more or to offer a weekend supporter that sort of thing so how what's your model going to look like how are you guys going to make money yeah basically we charge 2 500 per agent and we pay our our team less than that although we do pay among the the top um we pay about 30 higher than our competitors so effectively we make money off of the difference so if i am listening right now as a software founder and i reach out and go to x fusion and i use you guys i and you find me a support person that i like and i hire i will pay you 2500 what monthly and you're paying out less than that correct yeah absolutely yeah so what margin margin will you build in for yourself yeah we pay 800 per month for our full-time agents okay which is about 200 per month higher than our competitors so we have a decent margin on that uh we also have like part of my my background is in customer success so we're also able to offer customer success services as well which is a bit of a different model and something we need to kind of think through the best way to present but there's often sas founders that need customer success but don't necessarily need a full-time 80 000 a year team member in the us to do that so how many companies have hired through you guys today in other words how many support people do you guys have employed today yeah we have eight people employed across four different clients and we're just getting started we're just we just officially launched uh in may so may was our first month got it got it so okay and maybe explain how you guys separate roles so david what do you do that jim doesn't i think uh i i come from a background so i'm a former engineer at uber and i think one of the things that uber did really well is scale really really fast really really aggressively and just being in that space and seeing how it was done i think that's where my personal interest and ability lies the best so just finding all the different ways to scale upwards a lot of things are still in the pipeline but we're really targeting the scale pretty aggressively our competitors usually hit the five to ten million mark within five-ish years i'd really like to see us get it there within two to three i mean the margins are compelling right if you guys have have four companies they've helped hire eight people and all those eight and they're paying 2500 per eight of the people right that's twenty thousand dollars a month in top line revenue of which you guys have to pay out uh what is that about six thousand four hundred for eight people at eight hundred bucks yeah industry norm is around 30 to 50 and profit margin so if we're somewhere in that ballpark and we're able to aggressively grow and reinvest those profits for further growth through paid ads or through hiring uh either sales persons or sdrs i think it scales very aggressively and pretty linearly pretty well it's not exactly exact levels of efficiency but it's pretty darn close it's pretty close i mean you're making 13 what you're so so net revenue after paying your your people you hire overseas your net revenue is like 13 13 600 something like that something around there yeah yeah and then you can do whatever you want to do with that to drive future growth what are you testing right now uh we're currently going to different agencies to figure out who was the best pitch for helping us develop either a paid ad campaign uh outreach campaigns or full end to end sales i know a lot of people and the fiber people are going to hate me for saying this but i know a lot of people that build these networks but just going on fiverr searching support and then bringing like the fiber people on the fiber network under their own brand and paying them more than they can make through fiber uh just smile if you're doing that i don't want fiber to come after you but uh you know thanks for the idea but no not yet um yeah uh interesting and then how are you i mean what do you think the opportunity is here so in a year do you think you can get up to you know 500 employees that you've placed and just the support function i'd love to get to that level i mean can you yeah a year super so i think uh so there's two sides of the marketplace we're effectively a marketplace uh matcher in the sense there's a supply side and demand side there's people who either they want indirectly or they just don't know if they need customer support and there's people who want to provide that job uh we're noticing that...