The Exchanges

Q Well, just to be clear, Adam, sorry, just to give everyone a number. So you said, I think you were about ten million dollar run rate last time we spoke. That would put you at about 12, 13 today, is that right?

A That's right, that's right, that's right. Um, so we were hoping for a little bit higher, but I think what we found is that the sales cycles this last, this year, particularly a little bit less than last year have extended. Typically our sales cycle is 60 to 90 days. A lot of deals are taking 30 to 60 days longer than that. And mostly it's not in the, the, the, uh, the, the buyers. It's the procurement. It's the legal and the compliance. Uh, a lot of those stages are taking just incredible amounts of time. Um, The client says, yes, we want to buy the tool. We've, we've, you know, the CTO, the CIO, the VP of engineering, whoever the stakeholders has said, yes, all the bureaucracy now takes another 60 days longer than it did a year ago. A lot of it's budget. A lot of it's also compliance, security, cyber, uh, GDPR and privacy. Um, a lot of things just seem to be taking longer and it's hard to move those wheels of bureaucracy. Also as I, you know, we're dealing with these large regulated industries where it's much harder to exert pressure on them because they have a cadence For buying software and validating it and doing all the, the compliance stuff that you can't really accelerate.

AI assessment note: “That's right, that's right, that's right. Um, so we were hoping for a little bit higher”

Q Adam, teach me about that. So many bootstrappers go, Nathan, how do I set up a bonus for my employees? And I go, I don't know. I I've never done it. What, how do you do it? What's the calculation?

A Uh, what we do is we put, every year we look at the profit target for the year for the company. We divide it by the number of employees. We obviously allow how much we want to retain, and then we say that funds the bonus pool. Look at the number of employees, give everyone based on their role, uh, a allocation of the bonus pool, and then at the end of the, each six month period, we say, if, if say we were going to make X, X thousand dollars in revenue, sorry, in profit, uh, and we made it, everyone gets their full bonus for six months that they had in their pool. If we made 50% of our target, everyone gets 50%. But we have actually, and one thing, we have no sales commission. So everyone, even salespeople are all on salary, and everything is, is a team bonus that the company makes as a whole. That, and for us, that's really important. It encourages that we work together as a team or sync to the team.

AI assessment note: “every year we look at the profit target for the year for the company.”

Q how you thought about product. Obviously, we're in a very different economic climate today than we were in May of twenty-twenty-two. Curious how you've changed or pivoted, I guess. But first, um, have you decided to sort of expand with the current customers you had back a year and a half ago? You had about 5000. What did you tell me? Or have you focused on expanding into new accounts?

A Uh, that's a great question. And we've done a bit of both, but a lot of it has been expanding into adjacent buying points in the same customer, as well as referrals and partnerships. So finding, working with partners that brought us deals and finding more deals with them. Uh, and then obviously looking at larger customers and finding adjacent buying points or following referrals where, you know, oftentimes people are consultants, they move from organization to organization and they bring us in, into those organizations. Uh, and that's been a large part of the, you know, direct sort of sales as well as the partnership sales. And then of course, we're still looking for new buying points that fit our ideal target client. One thing I think we've done a better job of in the last 18 months has been defining our ideal client. We, we spent a lot of work this year on messaging and message development, and our website is still in the midst of that transition if you go to it. So it's, you'll see it's an evolving state, but really trying to hone down what is our ideal customer, what is our USP at a much more, at a much more deep level, not just The technology that sells, you know, quality software, but what is our client trying to do? Which clients do we find resonate the most? And then putting our resources into those clients rather than chasing everyone under the sun. So I think when it …

AI assessment note: “we've done a bit of both, but a lot of it has been expanding into adjacent buying points”

Q right now listening, sitting on a customer base of a 1002 thousand, but they want less customers that pay more. What process did you go through to figure out what customers you want to serve? A lot of people would say, I just download from Stripe. I sort from which customers have paid me the most of the lease, and then I go find more that pay me the most.

A Uh, so we, what we've done, we did, we've done a two factors, two factors. One is we have some older clients that were on older pricing that we've been ratcheting up, and that by natural attrition will do that. The second thing is we found that we wanted clients that would have a longer LTV with us, customers that are going to be with us for five to 10 years. Because of the onboarding, time takes time, the training, it's a wealthy complex suite, and that we find that customers after the first year will stay with us for five to six years, but if the first one or two years are rocky, they'll leave. So we want to find customers that really align with the, with the, with the, with the product and not just the product they might buy, but the product suites they can upgrade. And what we found is if we look at the sectors and the types of customer is customers that have a degree of compliance needs, but yet also need to be agile. So we, we looked at the world in two lenses, which is the agile DevOps, fast paced technology companies. We look at these industries that are very traditional with lots of compliance needs. And we find the cases where the clients are trying to make it move to a digitized future, but they have these regulations. These are our most qualified clients. So think of a life science company that's got a, a relatively new medical device that They wanted to deliver in …

AI assessment note: “we looked at the world in two lenses, which is the agile DevOps”

Q That's hysterical. Okay, very interesting, and take me back. You launched in 2006, first customer in 2007. What year was your first million in revenue?

A Um, was it being around my goodness, 2000, uh, 1011, something around that. I have to go back in the records. And it was very hard to break that million. I mean, that was, I say the hardest, the hardest thing is to break the first million. Uh, I think then five is probably the next, but it's, it's that, that I think that breaking the one million mark is the hardest of all, because I think what happens is you have to change everything you're doing. Um, you can go from, you know, everything can be online. It can all be self-service. You can have online trials. Once you get to a certain point, your customers will expect more handholding, and as a founder, you're used to doing everything, but, you know, being kind of the jack of all trades, you've got to start specializing. So hiring a customer success person, a partner person, people who do demos that aren't me, you know, that was a big change, and you're going from basically the brains of the builder to being the manager and the coach.

AI assessment note: “2000, uh, 1011, something around that. I have to go back in the records.”

Q which is the name of the game, less dilution. Check it out today at founderpath.com forward slash products. That's plural forward slash valuations. Again, both plural founderpath.com forward slash products forward slash valuations. Very interesting. Did you, how long did it take you for you to go? Oh man. Cause at two million spending five grand a month, you might be like, Oh, well, we didn't know that was it.

A That was it. That was the, that was the paid search. The paid search was only 10% of the lower range of your range. I'm just kidding. Uh, yeah. 10% of the, the outward spend also has gone up. So back then we were already spending about four to 5000 in AdWords spend. They were managing that. And then we've now grown up to, I get a decision for him where I said a thousand in an SEO and AdWords spend. So, And that's a vendor like that is great because you can scale your spend with them as you, your, your I was built up. And then once we hit a certain size, when I was afford, you know, an SEO service that really was out of reach back then.

AI assessment note: “back then we were already spending about four to 5000 in AdWords spend”

Q Yeah. So what, what do you need? How low have you kept your living expenses?

A Uh, we, you know, we have a we have a, a,,,, we have a have a, we, have we have a, a, we have a, a we have a, we have a, we we we we, we a we, a, a we have a, we have have a we we have a, we have a, we have have a, we a, we have a, we have a Oh, to buy the, for us to buy, uh, to buy us? Um, we, honestly, we haven't, we've, we've, we haven't pursued any, any, we've had a couple people come close to talk to us about, you know, generally buying the company. The problem is that, uh, we don't really want to sell the company at the moment. And so we haven't gotten, just to, just to avoid distracting us, we haven't gone too far down that path. So we've talked to some people, but nothing's gone to the point where we're, we're on the table really.

AI assessment note: “Oh, to buy the, for us to buy, uh, to buy us?”