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Apr 18, 2019 · 23m · top-founders

1363 Test IO CEO: We'll Pass $10m in ARR Soon

Philip Soffer · 12m spoken Nathan Latka · 8m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this interview, Test.io CEO Philip Soffer discusses how his crowd-testing company achieved near $10M in ARR with 60-65% annual growth, capital-efficient unit economics, and an outbound go-to-market strategy.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 39.5% of the talking time here. How this is scored →

Nathan as informed peer 5.2 Guest teaching 2.8 Guest disagreement 2.5 Nathan pushing back 3.5
05100:0010:0020:000:01–2:31 · Nathan as informed peer 0/10 Book Promotion: How to Be a Capitalist Without Any Capital Host monologue featuring book promotion and an introductory summary teaser. No guest interaction.2:32–7:05 · Nathan as informed peer 6/10 Introduction of Philip Soffer and Test.io's Value Proposition Nathan probes Test.io's product model and challenges Philip on whether $3k/month qualifies as SMB, prompting Philip to clarify his definition of SMB.7:05–10:11 · Nathan as informed peer 6/10 Company Origins, Funding History, and CEO Recruitment Nathan digs into the founder dynamics and asks if the funding was contingent on hiring a new CEO, leading Philip to recount his Plumtree background.10:12–12:32 · Nathan as informed peer 7/10 Revenue Growth, ARR Run Rate, and Capital Efficiency Nathan calculates an ARR run rate of $9M to $10M from customer count and ARPU metrics, which Philip confirms while highlighting capital efficiency.12:32–16:46 · Nathan as informed peer 7/10 Retention Dynamics and Cohort-Based Net Revenue Retention Nathan pushes Philip for churn figures and questions whether customer success headcount should be included in CAC, while Philip explains cohort-based NRR.16:46–22:04 · Nathan as informed peer 5/10 Growth Strategy, Capital Allocation, and Acquisition Perspectives Nathan explores capital allocation and hypothetical M&A scenarios before concluding with the standard Famous Five questions.0:01–2:31 · Guest teaching 0/10 Book Promotion: How to Be a Capitalist Without Any Capital Host monologue featuring book promotion and an introductory summary teaser. No guest interaction.2:32–7:05 · Guest teaching 4/10 Introduction of Philip Soffer and Test.io's Value Proposition Nathan probes Test.io's product model and challenges Philip on whether $3k/month qualifies as SMB, prompting Philip to clarify his definition of SMB.7:05–10:11 · Guest teaching 3/10 Company Origins, Funding History, and CEO Recruitment Nathan digs into the founder dynamics and asks if the funding was contingent on hiring a new CEO, leading Philip to recount his Plumtree background.10:12–12:32 · Guest teaching 2/10 Revenue Growth, ARR Run Rate, and Capital Efficiency Nathan calculates an ARR run rate of $9M to $10M from customer count and ARPU metrics, which Philip confirms while highlighting capital efficiency.12:32–16:46 · Guest teaching 5/10 Retention Dynamics and Cohort-Based Net Revenue Retention Nathan pushes Philip for churn figures and questions whether customer success headcount should be included in CAC, while Philip explains cohort-based NRR.16:46–22:04 · Guest teaching 3/10 Growth Strategy, Capital Allocation, and Acquisition Perspectives Nathan explores capital allocation and hypothetical M&A scenarios before concluding with the standard Famous Five questions.0:01–2:31 · Guest disagreement 0/10 Book Promotion: How to Be a Capitalist Without Any Capital Host monologue featuring book promotion and an introductory summary teaser. No guest interaction.2:32–7:05 · Guest disagreement 4/10 Introduction of Philip Soffer and Test.io's Value Proposition Nathan probes Test.io's product model and challenges Philip on whether $3k/month qualifies as SMB, prompting Philip to clarify his definition of SMB.7:05–10:11 · Guest disagreement 2/10 Company Origins, Funding History, and CEO Recruitment Nathan digs into the founder dynamics and asks if the funding was contingent on hiring a new CEO, leading Philip to recount his Plumtree background.10:12–12:32 · Guest disagreement 3/10 Revenue Growth, ARR Run Rate, and Capital Efficiency Nathan calculates an ARR run rate of $9M to $10M from customer count and ARPU metrics, which Philip confirms while highlighting capital efficiency.12:32–16:46 · Guest disagreement 4/10 Retention Dynamics and Cohort-Based Net Revenue Retention Nathan pushes Philip for churn figures and questions whether customer success headcount should be included in CAC, while Philip explains cohort-based NRR.16:46–22:04 · Guest disagreement 2/10 Growth Strategy, Capital Allocation, and Acquisition Perspectives Nathan explores capital allocation and hypothetical M&A scenarios before concluding with the standard Famous Five questions.0:01–2:31 · Nathan pushing back 0/10 Book Promotion: How to Be a Capitalist Without Any Capital Host monologue featuring book promotion and an introductory summary teaser. No guest interaction.2:32–7:05 · Nathan pushing back 5/10 Introduction of Philip Soffer and Test.io's Value Proposition Nathan probes Test.io's product model and challenges Philip on whether $3k/month qualifies as SMB, prompting Philip to clarify his definition of SMB.7:05–10:11 · Nathan pushing back 4/10 Company Origins, Funding History, and CEO Recruitment Nathan digs into the founder dynamics and asks if the funding was contingent on hiring a new CEO, leading Philip to recount his Plumtree background.10:12–12:32 · Nathan pushing back 4/10 Revenue Growth, ARR Run Rate, and Capital Efficiency Nathan calculates an ARR run rate of $9M to $10M from customer count and ARPU metrics, which Philip confirms while highlighting capital efficiency.12:32–16:46 · Nathan pushing back 5/10 Retention Dynamics and Cohort-Based Net Revenue Retention Nathan pushes Philip for churn figures and questions whether customer success headcount should be included in CAC, while Philip explains cohort-based NRR.16:46–22:04 · Nathan pushing back 3/10 Growth Strategy, Capital Allocation, and Acquisition Perspectives Nathan explores capital allocation and hypothetical M&A scenarios before concluding with the standard Famous Five questions.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 99.8% · guest 0.2%0:00 · Nathan 99.8% · guest 0.2%3:00 · Nathan 33.5% · guest 66.5%3:00 · Nathan 33.5% · guest 66.5%6:00 · Nathan 27.2% · guest 72.8%6:00 · Nathan 27.2% · guest 72.8%9:00 · Nathan 30.8% · guest 69.2%9:00 · Nathan 30.8% · guest 69.2%12:00 · Nathan 18.2% · guest 81.8%12:00 · Nathan 18.2% · guest 81.8%15:00 · Nathan 37.9% · guest 62.1%15:00 · Nathan 37.9% · guest 62.1%18:00 · Nathan 11.6% · guest 88.4%18:00 · Nathan 11.6% · guest 88.4%21:00 · Nathan 62.6% · guest 37.4%21:00 · Nathan 62.6% · guest 37.4%
Sharpest disagreement ▶ 4:28 Pushing back on the definition of small business

Philip firmly rejects Nathan's suggestion that $3,000 per month is enterprise-only pricing, clarifying Test.io's specific definition of mid-market SMBs.

 Hardest push from Nathan ▶ 16:15 Challenging the exclusion of onboarding from CAC

Nathan directly challenges Philip's accounting logic, arguing that customer activation teams are essential for payback targets and should be factored into CAC.

 Biggest teaching moment ▶ 13:03 Explaining utility versus system of record retention dynamics

Philip explains how churn dynamics differ between SaaS systems of record and on-demand testing utilities, reframing the metric context for Nathan.

 Nathan holds their own ▶ 10:14 Deriving ARR from customer count and average contract value

Nathan leverages earlier metrics to accurately deduce Test.io's $9M to $10M ARR run rate before Philip officially confirms it.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Book Promotion: How to Be a Capitalist Without Any Capital 0000 Host monologue featuring book promotion and an introductory summary teaser. No guest interaction.
Introduction of Philip Soffer and Test.io's Value Proposition 6445 Nathan probes Test.io's product model and challenges Philip on whether $3k/month qualifies as SMB, prompting Philip to clarify his definition of SMB.
Company Origins, Funding History, and CEO Recruitment 6324 Nathan digs into the founder dynamics and asks if the funding was contingent on hiring a new CEO, leading Philip to recount his Plumtree background.
Revenue Growth, ARR Run Rate, and Capital Efficiency 7234 Nathan calculates an ARR run rate of $9M to $10M from customer count and ARPU metrics, which Philip confirms while highlighting capital efficiency.
Retention Dynamics and Cohort-Based Net Revenue Retention 7545 Nathan pushes Philip for churn figures and questions whether customer success headcount should be included in CAC, while Philip explains cohort-based NRR.
Growth Strategy, Capital Allocation, and Acquisition Perspectives 5323 Nathan explores capital allocation and hypothetical M&A scenarios before concluding with the standard Famous Five questions.

Statements from this episode (12)

Disclosure
Test.io Base Subscription Price Is $3,000 Per Month for Unlimited Testing
“The base price is 3000 dollars a month for a subscription for a product that we test, and when you pay for that subscription, you can test as many times as you want”
Philip Soffer Apr 18, 2019 ▶ 3:50
Assertion Not checkable as stated
Test.io Averages $4,500 in Monthly Revenue Per New Customer
“I'd say the average is probably for new customers that we sign now. It's probably in the four and a half range.”
Philip Soffer Apr 18, 2019 ▶ 5:32
Assertion Not checkable as stated
Test.io Serves Roughly 180 Customers
“It's somewhere in the neighborhood of a 180 customers.”
Philip Soffer Apr 18, 2019 ▶ 7:12
Assertion Not checkable as stated
Philip Soffer Confirms Test.io Generates Roughly $9M to $10M ARR
“It's, you know, I don't want to quote specific numbers, but it's broadly accurate.”
Philip Soffer Apr 18, 2019 ▶ 10:30
Assertion Not checkable as stated
Soffer: Test.io grew 60% to 65% annually while achieving profitability
“I generally, you know, we grow 60, 65, somewhere in there year over year, which is, you know, which is, I think been fairly consistent over the last two or three years that that's been the level of growth. But what's interesting is that we did that while achie…”
Philip Soffer Apr 18, 2019 ▶ 11:45
Assertion Not checkable as stated
Test.io Approaches 100% Net Revenue Retention in Latest Cohorts
“But anyway, we're in our latest cohorts, we're close to a hundred percent net revenue retention.”
Philip Soffer Apr 18, 2019 ▶ 13:52
Assertion Not checkable as stated
Soffer: Test.io has a total headcount of 40 people
“I'd say the team totally in both geographies is 40 at this point.”
Philip Soffer Apr 18, 2019 ▶ 14:36
Assertion Not checkable as stated
Soffer: Test.io operates with 20 sales staff and one marketer
“Well, sales is sales, I would say, is about half of those people. Marketing is, is one full-time person. And then we have a customer success team as well, which is you know, not sales and not marketing you know, more on the onboarding side, I guess you'd say, …”
Philip Soffer Apr 18, 2019 ▶ 14:54
Disclosure
Test.io Achieves an Elite Three-to-Four-Month CAC Payback Period
“Three to four months.”
Philip Soffer Apr 18, 2019 ▶ 15:30
Insight
Soffer: Customer success and onboarding costs do not belong in CAC
“Where we've gotten better, we've gotten a lot better at sort of the onboarding process, the customer success process. I don't, Put those folks as part of CAC. I put them as, because they do they're not just about acquisition of the revenue. They're really abou…”
Philip Soffer Apr 18, 2019 ▶ 15:59
Assertion Not checkable as stated
Latka: QA Symphony Combined Entity Has $80M-$85M in ARR
“QA Symphony just went through an interesting merger. The combined company is probably going to be caught between 80, eighty five million bucks in ARR.”
Nathan Latka Apr 18, 2019 ▶ 17:34
Opinion
Soffer: The Making of the Atomic Bomb Is the Greatest Startup Story
“It's the making of the atomic bomb by Richard Rhodes which is in my mind, the greatest startup story of all time.”
Philip Soffer Apr 18, 2019 ▶ 19:03
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