YouCanBook.me Revenue (2024)

[00:00] No fire, no chairs [00:02] >> No chairs. [00:03] No no fireside chat. [00:04] >> Yeah. But great intro. [00:06] We're gonna [00:06] >> have to [00:06] >> do it, Alex. [00:07] Great intro. Standing up. [00:08] >> Standing fireside chat. [00:09] Stand up fireside sit down chat. [00:12] >> As ever thanks everybody for Friday afternoon sticking with us here. Excited to be on stage. [00:18] We have Bridget Harris. [00:20] >> Bridget Yeah. Fastest note today, we've got to give Bridget a round of applause here. She made it to number 30 in the e two e, female 100 fastest growing, I I guess Entrepreneurs [00:33] female entrepreneurs in [00:34] >> The UK. So well done to [00:35] well done to Just [00:38] >> giving her a bit of credibility, due credibility as to the the subject here, five lessons in bootstrapping to 5,000,000 ARRs. Do we have many bootstrappers here? I think there's a lot of bootstrappers at this conference. I'm gonna say probably about a third of you. So we're two bootstrappers, we can talk about that. I'm at 5,000,000, but not in ARR in dollars. You're at 5,000,000 ARR dollars or pounds? [01:02] Dollars, but we're kind of heading towards the pounds depending on the dollar sterling parity, you know, it kind of changes, but yeah. [01:09] >> Yeah. And I'll be running SAS stock, which, helps SAS companies get to 10,000,000 in revenue throughout conferences, on memberships and media. Bridget running an actual SAS company, so I think more, pearls of wisdom coming from Bridget, today in the next twenty minutes than, than myself. But let's talk about it. Five lessons. We've got seventeen minutes, plus we want to take some questions, as well. So first lesson, is around timing. So, like, who Timing. Who, what, when [01:40] >> to to buy your product. [01:42] Right. Well, yeah, the question about timing is intrinsically connected to whether you raise money. Because if you're gonna go for a kind of product that requires a lot of upfront investment to do with compliance or maybe it's it's got some hardware association, you've got to some manufacturing, or you need to do a huge amount of customer research in order to get the right thing, then your timing is going to be really affected by your choice to [02:05] bootstrap. [02:06] >> Should we take a second? [02:07] >> Cheers. Here we go. [02:08] You see? Thank you. [02:09] >> You see how effective bootstrappers are at getting what we want. So we can we could do any stage, but we can also eventually, things that you need arrive. [02:17] >> We could do what we want because we own the company. [02:19] Exactly. So this is what I would say. Like, my experience of bootstrapping, and I I wanna hear what you think about your timing for for because you were much more in the you need upfront capital, so I wanna know how you did it. Mhmm. It just so happens that with our products, we were doing online scheduling. It's a drip drip. It's a self-service. It's a freemium. So because of that and also we started about fifteen years [02:40] ago. The timing for us to be able to stretch that out over a long time when you're really earning very little. Now for context, to get that 5,000,000, we have over 20,000 customers. So we have a lot of small people, small engines, small amounts of money powering what we're doing. So it takes a long time to build that up. So if you haven't got the time to do it, then that's really helping you to find whether [03:04] you can bootstrap or not. But what about you, Alex? [03:06] >> Yeah. I think for me, I mean, SaaS Doc was a side hustle, obviously, before it was a revenue generating business. I spent twelve months building an audience inadvertently, maybe a bit more sort of credit around that, but twelve months doing that, I think six months of those twelve months I was working full time somewhere else, working from home, so I had the time to work on the side project. And after twelve months of not being revenue [03:35] >> generating, I had an audience that I could then sell tickets and sponsorship into, so we were then customer funded after the next twelve months. [03:44] Yeah. I mean, it it if you if you can't afford a potential five year runway to get up to speed where you're hiring people, you're paying yourself, and you're feeling good about it, then that's the point to take on a financial partner who's gonna give you some of that upfront cash. But right now, you know, the the first the first product that myself and Keith actually launched, my cofounder and CTO, was literally in 2003, and it [04:07] was a survey building tool. It's called tickboxer.com that we sold the domain since then. And it's exactly like SurveyMonkey, but we've just realized in order to get people to use our survey building tool, we needed a lot of upfront capital to invest in the marketing and the awareness and the brand. We couldn't do it because we didn't wanna take on money, and it's as simple as that. We we we we dumped the the product. So as [04:30] soon as we got youcanbookme where we could see that natural viral growth rate essentially, and we had the patience and timing to do it. [04:38] >> Second lesson is around skills. What skills that you have as the cofounders versus what do you need to pay for them Absolutely. To the business. [04:47] So, again, it's the same sort of thing when you're choosing to bootstrap versus upfront funding. If you have the money, you can buy all the skills. Fantastic. If you haven't got the money, you then gotta look at your internally, what skills have you got? And my view is that you've got three core things that you need inside, a product a SaaS product like ours. You need engineering, CTO, somebody who's actually gonna code. You need operations and [05:13] finance, somebody who's basically gonna deliver the business strategy, and then you need some kind of creative designer, product owner, somebody who's going to sort of shape that product over time. Basically, me and Keith had the had the first two. So he was the engineer, and I was the operations person. And you see that today ten years later in the in the company. It's a very engineering and operations led company. It's taken a while for us to [05:36] move across into more product and design led sort of set of priorities. So you can get a lot of people, but I don't I've never met somebody yet who's one person who's all three or two founders. You either get three cofounders with those skills or you have to buy in. Now I would say, actually, nowadays, it's probably easiest to buy in tech, ironically, engineering because there's so many fantastic agencies that do it. As long as you've [06:02] got a very good strong product desire, you can basically hire people to to do that for you. But, again, can you bootstrap without one of those key leading skills? How are you gonna pay for that skill? And whatever you can't pay for, you're gonna create debt. So, essentially, you're gonna create technical debt or customer debt or product debt or some some form of cash debt. How are you gonna do it? So cash debt is borrowing money [06:28] from a from a from an investor to, or any kind of borrowing money, that's cash debt. If you decide not to take cash debt because you want to be customer funded, well, then you're gonna probably take on debt by one of the other pillars. [06:43] >> So let's talk about hiring then. So obviously we talk about the skills, what have you got, what do you need to buy for pay to bring into the company. So when you're hiring, know, I guess kind of like what stage do you know like, what sort of roles and how much you're gonna pay to to bring? [07:02] I mean, point, and I was talking about it with Andy today. So it's huge. Everybody makes mistakes. Loved what Becca was saying about hiring and how to essentially diversify and think about internationally who you can get. There's some incredible models out there now of people who've just decided to not employ anybody directly, and they just go straight to the freelance market and only get freelancers. And they put a, you know, gum road is is based based [07:25] on that model. [07:27] And actually, Angie, this is really what I was trying to capture in what we were talking about earlier today. The minute you start hiring and employing people, you're introducing culture into your company. So you have to decide what that culture is going to be and how that's gonna grow. So what you pay them and how you how much you can afford is is is absolutely embedded and baked into it. So my view is pay as much [07:49] as you can, a sort of sort of minimal acceptable offer for people. Don't pay them the most you can. As soon as you realize that they're gonna offer you value and they're gonna keep helping you build your company, keep paying them internally to keep incentivizing and supporting the people internally who work for you and also to stay market relevant. But you've gotta do it within your bootstrapped boundaries. And don't do and I we have done this [08:16] before. Believe that if you could just afford to pay somebody a 150,000 a year and you sort of bring in some kind of 6 figure superstar, that they will then have this trans transformative effect. I've never experienced that. I've never experienced the idea that by going out and paying, you know, huge salary, I'm gonna get a 10 x person to come in. All my 10 x, if you like, people who work for me now who are [08:39] on good salaries, they all started joining the company of fairly modest rates and basically worked really hard inside the company to get to that point where I realized just how powerful a team we are because of it. But you you have to do that through culture, not just not just direct hiring. [08:55] >> Yeah. I think I mean, slightly the opposite for us. I mean again we're not a SaaS company, but I feel like we over the years and you know we've been running for eight years as a bootstrap business, we haven't really been able to pay like you know competitive, super competitive sort of wages, and we probably not I wouldn't say underpaid, we pay well for all the industry that we're in. [09:21] I'm not applying for a job by [09:22] >> the way. [09:23] Yeah, no, no, no, no. [09:24] >> Fine. It's okay. [09:25] But yeah I think only sort of like recently you know in the eighth year are we now paying top dollar for senior leadership roles, and we are seeing personally like a 10x difference in I guess these expensive sort of folks. But is that that's a disadvantage for bootstrappers generally, would you say? [09:46] So you absolutely. And I think in some ways, you just have to be kind of confident about what it is that you're offering somebody, and it's not the case that every single high performing person wants exactly the same thing. It's relative to all these other other things in their lives. So, you know, you can find people who they actively like. You know, youcanbookme's brand, if you like, as a company is pretty clear. I think it'd be [10:13] pretty clear to anybody who wants to come and work for us what they're gonna get. They're gonna get a small company because we basically you know, we we have we have kept a lot of control over the size of our company deliberately, pretty much to reduce the sort of stress on us as founders. I mean, look at Becca. She's running a company with a 150 people, and she's, you know, she's dressing up as a unicorn. Like, [10:36] there's a kind of you know, you have to find find your strategies through, and and, I personally would find it very stressful to to run a company with a thousand people. So there's that. So we're small. We're remote. Another big differentiator, well, not so much now, but a big differentiator, is to be remote. We're bootstrapped. We're profitable. We pay out profit share. We are very transparent inside the company, and we did we document all of that. [10:59] So we do it very deliberately so that somebody, the aim is for somebody to look at our website and go, ah, those look like my people. I want to go work for those people. Now when you when you get to that situation, you then really want to be able to say, what we offer is fair. It might be above market rate. You might also get some extra in terms of bonus and profit share. It's a package. [11:17] And so I don't know if any of you were watching me last year in Austin. Hands up anybody was that was the right. Hi. Of course. Hi, everybody. But that, you know, I was talking then about profit share. So you end up introducing other parts of your company that you can incentivize people to be a part of. Also, don't underestimate the power of the offer to say you have an opportunity to really change something here. You [11:40] can come in. Here is here is here is the way we've laid it out. Because we've been bootstrapped, we're not under any pressure to kind of deliver to an external person's criteria. We can build something that we really want. So one of our internal cultures culture statements is commitment to excellence. So that's that sometimes does mean we're gonna rewrite something or we're gonna drop it because it's not good enough. And, you know, we have a we [12:03] have a quality control that matters to us. We're not just move fast, break things, hack it, move on. It doesn't matter. Let the customer down. Let's go. Let's go. Let's go. We don't do that. And there's some people where they know they've got an opportunity to make a real impact, and that is just as important as their as their salary. [12:21] >> Lesson number four is cash is king. What does that mean in, I guess, the bootstrapping terms in your experience? [12:26] Cash is king. I mean, my god. If there was anything, that anything anybody that doubted that after last weekend's SVB meltdown, you know, they won't now you it's it's all and, actually, as a bootstrapper and we had money in Silicon Valley Bank, I was I was indignant about the idea that my money that we had earned from customers, customer money basically, hard earned customer money was in a bank account that was potentially going to be lost [12:57] or taken away or gone towards some kind of loss. I was apoplectic about that. So you can't run out of money if you're a bootstrapper. So we didn't raise cash, but we did borrow money. We borrow we have we we got banking overdrafts and credit cards, private loans. We we did it. You have to watch how much money is in your bank account. It doesn't really matter much how much profit you're making, how much you're earning. [13:19] You just can't run out of money. I've never ever not made payroll for the twelve years we've been running the company, and there's only one way to do that, which is financial literacy. So one of the early things that I did when I realized that we were bootstrapping for real, if you like, with people, as soon as you take on people, you're responsible for their financial security as well as your own, your company's. I went on [13:41] a financial literacy course. I basically learned about how profit and loss works, how balance sheet works, how working capital works. So I run my business. It's a business. It isn't it's not necessarily a SaaS company or anything else. It's a you know, you're the same. I mean, your your overheads must be absolutely enormous in terms of being an event organizer. So I can't imagine. You know, our gross margins are very, very good because they're a it's [14:03] a software company, so it's it's pretty simple to run. But you've got to be you've got to be confident about what you're talking about. [14:09] >> One of the you you mentioned actually sort of earlier that a book that you read whilst you're bootstrapping that's helped you was venture deals. [14:16] That's right. Why why was that? So again, I would say to any founder who's thinking about being, you know, bootstrapping sounds sounds hard, maybe maybe great long term, but it sounds hard. Maybe maybe venture capital or taking on investment is easier. I would just say that's fine. That's completely legitimate, but you've got to be educated around the table. If you're gonna take money from a VC, and I read about ten years ago, Venture Deals, whenever it [14:38] came out, read that book because, it will tell you exactly how deals are structured, what the incentive of the VC is, and what business that they're in. And it's a really great business. It's a legitimate business, but it's not necessarily got anything to do with what you've decided to sell as a product. So you just have to educate yourself about what venture capital and corporate finance is about, and they're not your friends. You know, what they're [15:00] doing is they're making money from your decision to go into business as an entrepreneur and make money, And that's a different thing. And you my view would oh, sorry. My view would be, you know, exploit them if you need them. If you need them for upfront capital, if you need them for upfront investment, exploit them because that's what they're for. But don't think that they're doing you a favor, and the only way you're gonna learn that [15:20] is by reading the books. And that's a great book. [15:23] We've got two minutes. The final lesson was around boundaries, so separating your personal boundaries from your business boundaries. [15:29] >> Yes. [15:30] Can you share a bit more around that? [15:31] Well, that again is a reflection of what happens if you're bootstrapped. You don't have this external pressure, which is obviously a good one. Because if you've got you've just taken on £10,000,000 from somebody, they're obviously gonna be hovering around making sure you're not gonna spend that on sweets. So you've got this accountability for your business business that puts you into a different role. Whereas if you're bootstrapped, you can say, well, I don't know if it's my [15:52] expense card or if it's the company expense card. Does it really matter? It's my money. You can you end up falling into patterns potentially around twenty four hour adopt, you know, obsession with your business. And I just think it's gonna take you longer to bootstrap a company. So you're you're you're signing up for ten, fifteen, twenty years of your life. If you don't put in boundaries soon enough, you you know, it could you'll burn out like [16:17] anybody else. There's nothing special about bootstrapping. So my experience is I've always bootstrapped. However, whatever pennies we had, whatever peanuts we had in our bank account for youcanbookme, it was always separate financially separate to my personal expenses. And that way, it just gave me some mental clarity about what I was doing. [16:36] >> Awesome. Any questions from the audience in the time that we have left? Anything for Bridget? [16:43] >> To them. On the right first. [16:47] We use youcanbooking, great product. Yeah. [16:53] I'm just impressed as well. We're similarly sort of, you know, largely bootstrapped, not entirely bootstrapped SaaS. Sometimes the growth is slower than you would like. Yeah. And then you see other competitors in your fields who are well funded and growing very quickly. I'm just curious. Do you ever feel pressure from, like, the Calendlys of the world or whomever else? [17:13] Well, obviously, sometimes, you know, you get when you're a business owner, you you're you never lose that kind of fear that something is all just gonna go wrong and and, you know, you you've gotta take care of it. At the same time, you have to be philosophical. Like, apart from anything else, the perspective, we were in business before Calendly. We've we've been in scheduling for a very long time, and we our goals are different because we're [17:34] bootstrapped. So I don't need to be a £200,000,000 company in order for actually everybody who works for us and our customers to be super happy. So, you know, I'm glad to see obviously, Dingus and Sazir are here in the room as well. Your money that's in our bank account that was in SVB that we're protecting here, like, my relationship is to you guys. It isn't to anybody else. If Calendly comes and, or any other scheduling tool, [17:55] Chili Piper were here like those guys there. They're absolutely fantastic. You know, we're all in the same business to try to serve customers. And our primary relationship is with the customers who currently buy us, and then our marketing and growth opportunities to try to persuade others. And you just have to be self assured, I think. You I don't you can't go into business and be an entrepreneur and be worried that your idea is is not good [18:17] enough or somebody's gonna take take it away from you. You have to basically be a bit of a you know, like, basically be a bit cocky. It's just like, well, I think we could probably do anything if we wanted to. You know, you just have to go in there and say, yeah. They're great, and they've been well funded, and they're doing whatever they wanna do. Why is that why is that got anything to do with my [18:33] ability to ship tomorrow and do the customer feature that somebody wants and to basically run a successful business and and have lots of money in the bank and and keep everybody happy? Like, they don't they don't have to affect me. And I think you that that's another way of grounding, you know, being sort of strong boundaries. I would say that resistance to pressure from competitors is a strong boundary. That doesn't mean to say you don't pay [18:56] attention, but you do need a boundary. I think maybe one more. [19:02] Yep. It's a quick one. [19:03] What what was the name of the book that you mentioned everyone should go to the table, the VC table understanding? [19:09] Oh, Bunch of Deals. By who's the guy that wrote it? [19:11] >> Brad Feld. [19:12] Brad Feld. Bunch of Deals. I mean, it just it kinda lifts the lid on it. It and it's actually I had a lovely chat with a guy. I don't know if he's here, Jim, who's a venture he's a growth equity guy. He was he's a he's a guy, you know, turning up to these events specifically to try to attract companies to invest in. He said, listen. VCs try to give you too much money because they're basically [19:33] trying to run down the fund. They're trying to write big checks. If they tell you they're gonna give you a million, they're gonna try to make you take 5,000,000 because they're just basically you know, their their objectives are different to yours. He said, bootstrap for longer. Don't take as much money. Work out what you're trying to do first. You know, work work out how you're gonna make money from customers before you take money from VCs. Because [19:52] often in this world, people announce funding rounds as if they've just made some money. It's like, no. You haven't. You've just either sold a bit of your company or your customers become your VC, or you've now just, you know, entered into some enormous debt structure and finance structure where if if if you were under pressure, you might have to pay that VC back three times whatever they've given you before anybody else gets a penny. And I [20:14] think you just have to be literate about that because it is it is a perfectly legitimate form of finance. Obviously, Founderpath are here as well and all these other guys that are doing some incredible work to give I mean, if I'd had honestly, if I'd had Founderpath I'm not just saying this because it's Nathan's show, but if I'd had Founderpath ten years ago, I was scraping around for £25,000 from NatWest, you know, like on the high [20:34] street of Bedford. And they were like, oh, I'm not quite sure. I'm like, I'm growing at 2000%. You know, but I just don't understand you're making a loss. I know, but you need to give me money. And it was just such a headache. But I I can believe that if Founderpath had been around ten years ago, I'd have just you know, I would absolutely have floated in, got a million, off we go. But, you know, but [20:56] I want but I mean, I'm not gonna give away my company, you know, to people who sort of feel like or in the when they circle around in that first year, and they and they and they give you those sort of preference shares and the liquidation preferences and all the rest of it. And you read you read up on it in venture deals, and you suddenly realize the game they're playing. Good luck to them. Well done. [21:15] But don't forget, it's not your business. It's their business model. It's not your business model. So I'm actually quite evangelical about this, I realize. I wasn't gonna slag them all off, but, like, you know you know what I'm saying. [21:27] >> Cool. Alright. I think we're done. Let's hear it for Bridget. [21:31] Thank you. Thank you, Alex. Okay.

please help me welcome bridget harris with you can book me to the stage bridgette so my name is bridget harris i run a company called you can book me and as he said i'm here to talk about with my fellow bootstrap founders how we have grown to around 5 million arr using profit sharing and open salaries to motivate the team so you can put with our online scheduling tool um we've got over just a million accounts where where am i looking here there we go million accounts we've got about 22 000 customers and to date over the last 10 years we've got 82 million bookings we do around a million a million and a half bookings a month so that's we're busy um these are the kind of customers we have they use our our tool for team team scheduling the kind of customer success onboarding sales that kind of thing i'm sure you're familiar with it and that first first five years is the the lonely years of uh of uh growing our lungs you know have you ever heard of gail goodman's long slow ramp of sas death that's where we were we didn't have people like nathan and others to talk to us about raising money but we got to about the 1 million pound mark and we made our first 105 000 pounds 791 pounds in profit and like nathan said especially if you're bootstrapped you need to get money from somewhere vcs aren't giving it to you so you need to make it yourself and we've been very very profit motivated ever since so over the next 20 minutes i am here to talk to you about first of all the profit stack so i've put this together especially for this conference so this won't be the last you hear of it because i wanted to start to think about strategically how we have done that because profit doesn't just come from selling um you know selling a five pound product for it for 10 pounds it actually comes from a much more strategic idea about how you build your company metrics that matter nathan mentioned a few of them um the kind of things that will tell you and indicate whether your company is profitable and then how we share that profit uh let's just talk a little bit about profit because as you said vc's don't talk about profit very much um it's only if you're really motivated to make it you really understand what it is because the news is for founders business profit is not how investors intend to get a return on their investment um i don't want to overthink this but hands up if you agree the founder business plan is basically invent something make money you know i mean really that's basically what we're trying to do that's our you know our end goal we see business plan it sounds it feels like it's the same but it's not invest in stock and trade make money so yeah sure we're all aligned to the same goal but it's very very different to be investing in shares basically the value of shares going up versus making profit off a product that you can sell to customers and this has been our mantra as founders for the last 10 15 years so i'm sure you all know this guy jason he talks about it everybody recognizes this whole kind of sas subscription economics which is you absolutely hammer your sales and marketing you grow like you know as far as you possibly can kind of numbers nathan was just talking about and then you basically ipo you exit you bet you you do what you want to do to get to get it up well and that is what they have done this is the this is uh some some data that i found which shows that a lot of uh public sector they've ipo they've done their big exit they're still not making any profit they're still trading in the value of the shares of their company they're not making a business profit it's the value of their shares where they make money and the problem is is that for a lot of people that is not good enough because that vc model is if you were if you're being a little bit mean about it you'd call it a ponzi scheme um because people have to lose and recently in the last couple of years those people who are losing are losing big so over 168 000 people have lost their jobs in the last couple of years from from this spread bet and that's because those guys were didn't realize that they were working for a bet rather than a business plan so good news we're all here nathan's here the whole team is understanding to align against something slightly different even the vcs have woken up to the fact that they have to reinvent some really slightly crazy mathematics which is adding together your profit uh margin with your growth rate and if you come up with more than 40 then you they'll still give you some kind of valuation so okay fine we'll accept that but i have a different way of thinking about it which is jam tomorrow jam yesterday but never jam today and that's essentially the vc message to people like alison wonderland which is why can't we have jam today what is this whole thing about the delayed gratification the ipo tomorrow the exit tomorrow the share options tomorrow wait everybody burn themselves out today for something that's going to happen tomorrow well you can book me we don't believe in in jam tomorrow we believe in jam today or as we put it profit today so yeah this is like a really weird weird face but that is what we're that's what that's the story we're in so we broke even in 2016 we've not we've not um you know looked back basically this was the moment this was a fantastic moment and in a year later as we had always promised our team we paid out seventy five thousand dollars was about fifty thousand pounds to the five eligible team members who've been working with us for all that period of time in fact we hired a lot of them in september 2015. we told them we were going to do it and we did it so i hope you will allow some of this as well into your companies very happy as well to talk a bit more about um how we did it so the profit stack this is it absolutely classic uh you know we talk about tech stacks sales and marketing stacks all the rest of it same principle you get your degrees of foundational um capacity at the bottom and then you build up so in terms of the you can book me p l this is roughly what it is gross margins now i know in america you have you include lots more costs into your gross margins but in the uk we are only required to report on direct costs like aws and stuff so for us we run a 95 gross profit margin um but then on top of that you've got your core management on that you've got your r d your engineering team your product team and then your um your communications support and research and on top of that if you're a sas bootstrapped team um a company around our sort of size you should be expecting to make 25 30 profit which sounds like a lot but as i said nobody's giving this money to you so you need to make it yourself you decide on your cost you decide what you want to spend on it's not exactly a tap that you switch on and off but you decide when you want to spend it recently we've just decided to double size of the company so but what we're doing is we're investing and we're eating into our profit margin we're not trying to um spend money that we didn't have so we make out of our monthly arr if you like business stack same sort of thing you'll recognize cost of acquisition for customers how much you're going to spend on the product itself to retain and give them a good experience their lifetime value whether you can expand them and then essentially what how much money you can make off the top of what they give you now um the name of the game here is i'm not talking about sales and marketing what i'm talking about is product-led growth because that is what's going to lead you to profitability and if you listen to nathan a couple of years ago he did an absolutely fantastic 20-minute talk on how you should be expanding your customers how you should be making more money from them people giving you more rather than trying to expand through growth through sales and marketing and that is the best economics you can you can put into your company and then the final one is people hr so what i talk about is high performing problem solvers which sounds completely obvious obviously you want to get high performing problem solvers but what it doesn't say is what you don't want to hire is low performing problem creators because they're going to be very expensive inside your company so how do you do that where you invest in your recruitment you invest in your turnover and culture you look at what the experience is like for somebody working for your company you want to um you want to incentivize somebody working for your company for as long as possible you therefore have to work out how you're going to give them some career paths and promote them and so on and so forth and at the end of the day you've got a profit margin there which what i would call is essentially their ability to impact your uh your growth so who you hire will have a direct impact on that so here it is uh the profit stack of your classic p l or income statement what you're doing in terms of people and team and then how you're actually going to build a product together to make some money so in terms of metrics people metrics this is ithne and kelly two of the high performing problem solvers that worked for us in in um in lisbon earlier this year what we're trying to do is to maximize the opportunity for high performers to hit their stride that is where you're going to get true value out of anybody who works for you is to get them to work for you for at least two if not three years and to hit their stride over that time so you have to have a view about what their best work is going to look like and so for them for the metrics that matter you need to understand what is your te your average tenure what is your turnover and what is yours nathan would say your ar per employee and you will get you will be able to scale profitability in your company if you do it now metric tenure sas benchmarks now this all comes from sas capital so i am going to come with a slight contradiction of what nathan said but you can certainly all of these sources i hope that they're going to be shared in the in the documentation that you've got so sas capital will do metrics about uh bootstrap companies vc funded companies for different sizes so i've taken them for a company you can put me size benchmark is two years you can book me 3.3 years and it's only 3.3 because we've just doubled the size of the company recently normally it was about four years four and a half years people stay for you can book me for a long time which means that we get a lot of value out of what they do for us turnover this is the voluntary last 12 months of turnover at 9.2 percent how many people are just deciding to resign and move on instead of you know other more negative things and you can put me at 3.6 and then this is what nathan was saying they are ar per employee so the benchmark is actually 125 000 depending on who what size of company so it can be 250 it just depends you have to look for your own your own equivalent and you can book me as two hundred thousand so you can just see with that you can see why you can book me as profitable salary metrics so everybody loves talking about salaries nobody likes talking about salaries but i do an awful lot of work on salaries inside you can book me and that's because a labor market works the same as any other market it's supply and demand so you have to basically pick your price point and pick um what you're how you're going to pitch your salary rates to other people i was talking about this with rory this morning over breakfast it is really hard to get it right you have to do a lot of work on it it's not some of those things where you can just basically pluck a number out of thin air so we do one of the things that we do we have an open transparent um open salary scheme inside you can book me and have done for a long time now my one bit of advice about other than the other things that can help you decide what your rates are going to be is that um reward performance with high wages i.e hire somebody on a moderate conservative salary rate if they do really well for you by all means double their salary if you want to don't do it the other way around a six-figure salary does not necessarily bring in a six-figure performance from anybody so um uh yeah the two don't follow in reverse but this was an example of our first open salary um scheme so we just basically put people within about two thousand dollars or euros or or uh sterling within each other so they could see roughly speaking where they were and it kind of broke down because of the size of our company now but basically you don't have to you don't have to overthink it it's not that difficult you just have to let people know you advertise what salary you're going to pay somebody and then they come in and they know what everybody else gets paid so in terms of the metrics market rates people the the kind of comparisons that we make we use glassdoor um you can vote me pays up to double market rates we look at pay ratios which is the gap between the lowest and the highest paid incredible some incredible ratios coming out of public publicly listed companies in america but 201 times is is essentially the average you can book me 4.3 and i'm going to come on to that it's not because we're massively socialist or weird it's because it's actually a very good uh logic to why we keep our wage ratio low and then costs of living in different regions number indexes tells you where how much it costs to live anywhere and we basically split it into four pay regions inside you can book me anybody recognize this place anybody live there six people live there no none of nobody else lives there and that's because it's incredibly expensive to live there um so i just i mean i'm this i just i just put this out as a kind of a general academic question who thinks it's good economics to fix uh salary costs and tech companies to living in san francisco i make a lot of money running a software company i do not intend to spend my profit on propping up san francisco housing and landlord rates i just don't i'm not going to not going to do it and that's because of this so these are all the countries that we hire in america is just this is actually pitched to new york cost of living not even west coast but it shows you that and i actually think frankly and i know i'm a european basically talking about capitalism to a north american audience but i mean i think it is anti-competitive frankly to say to people in romanian morocco and south africa you have to compete with people working on the west coast you need to pay a whole lot of stuff in terms of rent um the one the one bit of leverage you have which is your price you you're we're going to fix it to some kind of insane six figure salary that's just my little mini pitch if you disagree please say but anyway i just think it's a bit like the yoga everybody's saying oh we pay every you know we pay the same san francisco why why do you do that um that's because cost of employment matters this is a really um this is proper data that's been based on all of all of our analysis of where we hire this is what it costs us to employ somebody um in france versus uh the uk which means that not all salaries are equal as far as the employer is concerned taxes vary widely benefits uh vary widely but also what what it costs to the employee so this again compound of income tax and social security contributions for our employees so um it's very expensive somebody who live in portugal but i love portugal have you ever been it's beautiful so i'm not saying that they don't have a good life but it does it does definitely cost them the point about all of that is that you can still be above market rate in terms of your salaries and compare it to glassdoor even if you're not going to do the sort of the six-figure you know massive facebook style airbnb style salaries so this is you can book me rates of pay so we do pretty well we're not saying that um you know you're going to get rich by working for a salary for you can book me but we are saying that there is some logic here which means that people should be able to benefit and that's to do with that pay ratio so that's the same data but put into a slightly different context this is you can book me team and the grit and the ratios of the salaries that we pay so you can see here that in terms of the sticker price of salaries there's a 331 spread between the lowest and the highest paid but if you compare it to the actual cost of employment that spreads much higher and if you look at the take home that spread is much lower which means that i have a team 4.3 ratio 4.3 times if you like the whole company as we get richer as we get more successful we can move the whole team along so we hunt for profit like a pack so we're not putting some big outliers at one end or the other end because what i can say is if you stick with you can book me and you and if you're a high performing problem solver and you stick with us for over a long time you will get renumerated via profit and that is my that's my logic so let's talk a little bit about how we share the profit in my last few minutes so the scheme um this is quite heavy in terms of content so i think it is all printed out you've got you've got copies of this so i'm very happy to talk about this in detail but basically our logic is you've got to be employed you can't be on a disciplinary and you have to have worked for us for at least a year and a half we then look at our net profit excluding any um you know out sort of extraordinary costs like foreign exchange currency stuff happens a lot and um i know it's like one-off donations or something but otherwise we just take a quarterly three-month p l and we take 10 of our profit and we redistribute it and then what we do is we do reward 10 years so you get a higher percentage of your eligibility for a share if you uh for the longer you stay and then we basically invest that at about at four years and we just pay it into people's paychecks um somebody asked me this morning why didn't we do share options and actually i mean sure options are quite good and tax efficient for um for people in one country but for us we had to look at a scheme that was going to apply in multiple countries so this is what it looks like in terms of the employee you start up 0.25 points by a year and a half you've got 1.5 points and that's when you become eligible you then get that payment we will then work out how much profit we've made in that quarter and we pay out at the in arrears so at the end of the seventh quarter we'd pay it out then it keeps on going up and then after four years you as i said you'll be making the maximum percentage so this is an illustration so let's say you've got seven employees the guys there over on the right have just started just become eligible the guys on the left have been here for a while so on a 25 000 profit um so it would be 250 000 of actual profit and you're paying 10 percent out if you've been with us for the longest you'd be getting just under 5 000 if you've just become eligible you'll be getting just under 2 000 so anybody inside our company can do the maths they can work out the more we grow the more we more money we make their number just goes up the more cash they have and as nathan was saying that spreadsheet is here this is how it literally gets done um it's it's scalable probably up to about 20 people after that i probably need a new spreadsheet nathan has lovingly recreated all the formulas based on the screenshot as well so it is it's he knows it as much as i do now about about this spreadsheet but you also have a copy saved to your fob and i'm happy to answer any questions at all about it because the point about it is that once you have got your quarterly p l agreed you then basically fill in what your turnover is this is what we do what your turnover is what your profit is it then does all the calculations and then it will literally list how much money you need to pay out in people's pay does that make sense for everybody yeah so so so my final question to you guys and we're kicking off the conference here it's been really exciting to to share all this with all you i really look forward to um to answering any more questions going to the brain dates listening to all of your stories and learning from all of you as well um but my real question to you is what business are you in this is the p l from that moment when we made profit and basically the year before we were not in business we made a twenty eight thousand pound six hundred twenty one pound loss and as i was saying to rory this morning at that point you shouldn't really be worried about that you should be worried about cash in your bank that's why people like nathan and founderpath exist is keep your cash flow going because as the expression goes cash is king but ultimately after a while you need to work out whether you are actually in business and that's what we've been ever since and we have a fantastic business and lots to look forward to but at the end of the day it is about making money so in the last 20 minutes i have talked through my profit stack how to build a profit mentality into how you design and sell your products not just about product vision and yoga it's actually about making money what metrics will help inform you with that hiring as i said most of those benchmarks are publicly available you can look for yourself how much or how well you guys are doing talk to anybody they like about the impacts of the open salary structure inside you can put me i'm a massive fan of it and we just wouldn't go back now and our profit share matrix and how we pay out every quarter thank you very much [Music] you