SaaS Interviews with CEOs, Startups, Founders
1191 How Bootstrapped Time Tracking CEO Drives 100% yoy Growth, $3.8m in ARR
28 Oct 2018
Chapter 1: What is the main topic discussed in this episode?
bad value to the world. You get paid back. HubSpot's doing well, growing 100% year over year.
Chapter 2: How did Hubstaff achieve a 100% year-over-year growth?
About 13 months ago, doing 150 grand a month in revenue. Now up to 316 grand a month in revenue, so a $3.8 million run rate. 6% logo turn per month. He's working on bringing that down. Bootstrap, totally Bootstrap, which I love. They're now up to 7,500 paying customers, paying about 43-ish bucks per month.
They've got a team of 40 people, totally remote, getting paid back on their CAC in under three months. Healthy Economics, again, helping with everything related to time tracking, hiring, employee management, things of that nature. This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn.
Chapter 3: What are the benefits of bootstrapping a business?
Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million. I had no money when I started the company. It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers.
Chapter 4: How does Hubstaff manage remote teams effectively?
With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Dave Naveau. He's the co-founder of Hubstaff.com, which helps teams communicate better through automatic time tracking and activity tracking.
He's been running the online business since he was 23 and now manages a team of 40 remote employees. Dave was honored as one of Indianapolis' top 40 under 40 entrepreneurs and focuses on teaching others to manage remote teams. Dave, are you ready to take us to the top? Alrighty. Thank you. All right. So I believe it was, let's see, January, February, March, it was April of 2016.
You were last on the show. And I think you communicated, you had about 2,600 customers at that point, about 1.1 million in AR, 20 employees, no funding. Give us a quick update there and then tell us what the company does for those that are new. Yeah. So still no funding, still bootstrapped. We're at about 3.8 million AR now, a little over 7,000 customers. And
We still are in the world of time tracking. We do a little more. We've got activity tracking. We've got location tracking, that kind of thing. And just for those of you who don't know, it's basically helping managers and business owners reduce waste in their company. So how do you go from, again, about a year and a half ago, 2,600 customers to now 7,500? What's driven most of that growth?
Uh, word of mouth, uh, good SEO. Uh, we, we try to get, uh, we do, we do advertising. We just basically try to put our product in front of, of users that are searching, actively searching and then, uh, drive them to a drop. And if I take obviously the, the 3.8 million in ARR, uh, divided by 12, you're doing about 310, 320 per month right now, something like that. Yep.
And then if I read, yeah, 13. Okay. Yeah, that's perfect. And then if I divide this 7,500 customers into that, it looks like someone can get started with you for about 40 ish bucks a month. That's the average price point. 43. Yeah. 40, 43. That's perfect. Good. And then walk me, I mean, so, so you do, you said you do a lot of SEO, a lot of content, a lot of inbound.
Are you, have you tested any paid channels yet or no? Yeah, we do paid. Uh, we, we have not had a lot of success with that yet. Uh, we've been trying for a long time. Um, tell me about one of the tries. Yeah. Yeah, I mean we've tried everything. It seems like we've tried everything. I've tried about five different consultants. We've tried Facebook. We've tried AdWords.
And it's not like things are terrible. It's just their channel – we have not been able to scale anything. into a significant channel. So a lot of people struggle with this, right? They hear their competitors doing really well. I'm making this up on Google AdWords. So they go, well, I don't know how to do that. Let's go hire a consultant, right?
And then the consultant just takes their money and fails miserably. What have you learned about how to hire, especially a remote consultant for this sort of thing? Yeah. And we also we've also had in house people do this as well. And we're doing it right now. I mean, we you know, right now our CMO is doing it.
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Chapter 5: What marketing strategies contributed to Hubstaff's growth?
Um, can you name one? Yeah, like for instance, like we're just moving a little bit up market regarding like what people, what our customers are looking for, like things like time sheet approvals, time off, you know, that kind of thing. So we're looking, they're looking to do things with the time and basically for that, you know, they need to pay for it basically.
So they can track all the time they want. And if they're only looking to track time, they can get that in the basic plan, but then they need to upgrade in order to do a lot of advanced things with that time data. And has there been one specific additional feature that's driven the majority of that upsell revenue? Like one thing is just killing it for you.
Probably like app tracking, that kind of thing, where locations, that kind of thing. So where like locations would be a good example, like GPS locations, where a construction company, for example, can make sure that one of their subcontractors is on the job. on site versus being in their house or whatever. So that's an example.
And the more companies that you get that are looking for premium type features, the more that that revenue number, average revenue number per customer rises automatically. Tell me about churn. Have these additional products decreased churn at all? Yeah. Uh, not really. Uh, no churn has been churns a little bit of a problem right now.
Churn we're, we're catching up to that, to that level where, you know, for a long time, churn doesn't really have an effect. Um, and then once these customers start to age, it, it, it hits, uh, uh, well, you're getting big. It does matter, you know? Yeah. So what is it right now? Uh, it's like six, 6%. That's not horrible. So 6% logo churn per month. Yeah. Okay.
And is it, is it, if you calculate that on a revenue basis, is it about the same? It is. Okay. And is that something that you think is just, you know, it's inherent in the customer you're going after it's going to happen or you think you can, you think you can bring that down at all or no? I don't think we can bring it down. Yeah.
I don't, I think we need to, I think we need to fight it toward, I think we need to fight it in, in ways that are, uh, because you know, there, there's, there's other things going on. I mean, like for example, like 50% of our customers are out of the U S so you've got that going on. You've got, we, we take, we, we get very good data from our customers when they, uh,
when they leave um it's usually things like for example projects ending or going out of business things that we it's it's not really like hey we decided to leave for a better product or you don't you know we decided that we're just not using the software anymore it's not really like that so it's hard and and then we you know we've done a lot of work um with dunning and things like that you know to to to help with this we have
So I'm not sure. I think we need to fight it in other ways, like getting more trials in the door, finding new areas to grow into. And that would help us more than, you know, continually fighting churn. Yep. What percentage of the churn is due to credit card failure? Oh, quite a bit of it. But I, you know, like. probably if I'm guessing, you know, one and a half percent. Okay.
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Chapter 6: How does Hubstaff handle customer acquisition costs?
Obviously, they did very well. I mean, they had a very good business. They had a good business model. They built it well. And yeah, I mean, congrats to them. When Matt came on the show, I mean, he shared, you know, they're doing about 30 million bucks in AR and Intuit paid essentially a 10x multiple on it. Do you think Intuit overpaid?
Uh, no, I don't think so because they, you know, they've got a great product and a great customer base. And, and I mean, I, I'm not one to judge that, I guess, in the first place, but, you know, look at what, what, you know, QuickBooks can do with the product once it's theirs and, and, and they, and, you know, they've been building that product. It takes, there's a lot to these things.
I mean, we've been building for five years and we're not even close to being done yet. They created that thing that Matt launched in 2006. Yeah. Yeah. And it's a hard, very, it's a very hard technology to build. Um, and so what makes it hard?
Uh, a lot of, well, you know, desktop clients, uh, mobile apps, you know, we've got, we've got, you know, two mobile apps, we've got a Chrome extensions, we've got, you know, uh, window max, Mac Linux, we've got web-based, uh, JavaScript timers. We've got the whole server side. So, you know, we talked to, uh, like, uh, about a, for example, like a, uh,
I don't know, like a web-based only software. I mean, they're doing one piece of code and we've got six. So if Brad from Intuit came and offered you the same 10x multiple, so offered you 38 million bucks to sell, would you sell? That's getting really close. I mean, it's like very close because... you know, we, we think that we're not, we think that we can grow.
So for example, like our goal this year is to double again. So to say, so that's why it gets very close. Did you double year over year? So like 13 months ago you were about one 50. Yeah, it was like 95%. Okay. And we're trying to do that again. We're trying to do that again. So in the next two years, and that's the goal.
And we think we can do that, uh, through some of the, you know, uh, we think we can do that, but, but, um, It's going to be hard, and the point is this would be kind of a bad time to sell if we can't do that. Yeah, of course. I mean, if you believe you can keep doubling, doubling, of course, you should never sell that company. It's a question of what's the risk in execution, right?
Let me ask you another question. So Matt told me when he came on the show against CFT Sheets, you know, he felt like he was cheating. And I said, what do you mean by that, Matt? He's like, well, we're ranked number one in the Intuit app store for this thing. So our ARPUs are higher than normal and people are super sticky because they're in the Intuit ecosystem.
Do you have that kind of relationship with any other tools like Intuit? No. Working on it. I was going to say, is it just... That's just a hard thing to do? It's a hard thing to do. You've got to build... you know, you've got to build for, well, you've got to be, well, they've been there for a long, long time.
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