SaaS Interviews with CEOs, Startups, Founders
1245 He Used These 3 Channels To Hit $50k in MRR in 7 Months
21 Dec 2018
Chapter 1: What business did Chris Ronzio build before Trainual?
set bigger goals he's had a lot of success in kind of a consulting role said you know what i like the sas model better let me systematize this and that is exactly what trenuel is doing is helping smb systematize their business launched in 2018 they've already hit 57 grand in monthly recurring revenue from 600 customers paying 95 bucks a month for their solution totally bootstrapped today which i love four percent revenue churn per month he's working on bringing that down paid channel just starting to work nicely they're paying 180 bucks to get a new credit card trial
300 bucks to get a new paying customer. That's about a three month payback period. Team of nine in Arizona and remote locations. This is the top entrepreneurs podcast where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines.
We went from a couple of 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. 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 Chris Ronzio. He built a nationwide video production company that sold over 3 million bucks in youth sporting event videos before he was 25 years old. In 2013, he sold that business and founded an operations consulting firm that helped other entrepreneurs create scalable systems and processes.
Over the last five years, the firm Organized Chaos has worked with hundreds of companies and dozens of industries and invested in building six of those businesses to over 30 million bucks in annual revenue. Now, Chris is focused on his third business, Tranual. It's an online platform for business owners and employees to document what they do in simple step-by-step processes.
His goal is really on a mission to systematize 25,000 small businesses through their technology. Chris, are you ready to take us to the top? Yes, let's do it. All right. Very good. So from what I understand, like every small business, as they scale, they like to like document stuff, put process together so you can then go hire the college intern to like come run the playbook.
It sounds like what you're trying to do is help them get those docs in order. Yeah, exactly. Every business gets to a point where they figured out how to do something. And if they want to delegate it effectively to someone else, they've got to document it. So you do it, then you document it, then you delegate it. And that's our system.
And so when I look at the biggest barrier to that thing happening, it's really the small business owner is wearing 10,000 hats. So you're in the business of convincing them to take the time to actually put the process stock together. That is a tough position to be in. Absolutely.
But for running small businesses myself and working with so many, you know that you have to take off a few of those hats if you ever really want to scale the business. So you start doing everything, but then you need to piece by piece start to hand those responsibilities off. Yeah. What's your revenue model? Is it a SaaS company? It is, yes. Interesting.
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Chapter 2: How did Chris transition from consulting to a SaaS model?
That's smart. Okay, so 95 bucks, and then put this on a timeline for me. When'd you launch the company? Launched in January of this year, actually. Oh, January 20. Okay, very good. I love that. And what were you doing before that? You were doing that consulting organized chaos? Yeah.
So before we were helping companies build the systems and we built Trainual actually as an internal tool for ourselves, but hadn't monetized it or commercialized it. And so last January, earlier this year, we split it off as a separate company and tried to bring it to the masses. Interesting. How'd you do that? Did you literally, it's a new cap table, different owners? Yep.
Totally separate entity and broke it out and broke the IP out of our existing consulting business and actually have phased out the consulting business and moved employees over to the new business. How big did you grow the consulting business in terms of revenue before deciding we've got to go all in on the SaaS product? We were just over a million a year in consulting revenue.
So many successful SaaS companies come from an agency, but so many successful agencies get stuck at giving up the agency revenue and going all in on SaaS. How did you have the confidence to make that leap? So we kind of burned the bridge for a few of us. We stopped consulting in September. a couple of our team over into the SaaS business.
And then as our revenue could support the additional people, we moved people in. So we were bootstrapping it and we did little by little move people into the new entity, but we supported ourselves with the old revenue. Okay. And it's bootstrapped today still? Correct. Agencies totally shut down today? Correct. So how many people just on Tranual now? Nine people full time.
Nine folks all out there in Arizona? Yeah. Most in Arizona, six in Arizona, one in Boston, and two in Ukraine. Oh, interesting. Developers in Ukraine? Yes, two of them. Our lead developer's local, and we've got two out there. That's a really smart setup. And what have you scaled to in terms of total customers today? Just under 600 paying customers today. Okay, that's great.
And so did most of those early customers come from your training business, or did you go get new customers elsewhere? No, most were the customers that came from relationships and from the consulting business. And since then, it's been all through growing the SaaS company. Interesting. So 600 customers, $95 price point. You're doing about 57 grand a month right now. Yep. And where were you?
So a year ago on the SaaS product, totally pre-revenue. Do you have any revenue? No, a year ago right now, no. So January, we had $1,800 a month in SaaS revenue. And so now we're approaching $60K, like you mentioned. That's great. I mean, you're modest or you're humble, but that's actually a pretty healthy scale that quickly. So, I mean, how have you added these customers so quickly?
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Chapter 3: What is Trainual and how does it help small businesses?
So at the beginning, it was we did a launch event here in Scottsdale, Arizona, where we are, invited everybody that we knew and tried to scale through our local networks, blasted everyone on LinkedIn, that sort of thing. Then we did a product hunt launch. So we had that experience of getting some press there. We launched an affiliate model.
So we've got just over 300 affiliates that have helped us sell the product. And then we started our paid ads. So in Q2, we started doing testing with different advertising on LinkedIn and Google and Facebook and Instagram. And we got our model down to where we thought it was pretty scalable and then started pumping money in in Q3. Interesting.
I want to talk kind of about each of those models real quick. So let's start with the affiliates. What cut are you paying? So we pay a 20% ongoing commission. Perpetuity? Yes, right now. Dang. Okay, that's a lot. What percent of your 57 grand is tied to an affiliate? About 14%. Okay. So not a, not a huge amount. And then talk to me real quick about the product launch.
So, or sorry, product hunt launch. So it looks like you were, you got out 448 upvotes when you launched. What, what, what did traffic look like on launch day? Traffic was good, but at that time, we had no traffic to the website, so any traffic would have been a huge bump.
So it was exciting, but I think more than anything, we got some influencers and people reaching out that said, I like this, let's talk. It got us a few affiliates, more than customers. One thing we had tried at that time is we took off the credit card gate. So currently and before that, we had a credit card gate up for our trial. You put in a card and then you get the free trial.
At that time, for that two-week span, we took the credit card gate off. And those customers converted extremely poorly. So we we it helped us get the word out, but it wasn't a good acquisition. Just to be clear, once you remove the credit card requirement, you're saying people, a lot of people signed up, but very few converted to paid. Correct.
So is that a function of your onboarding is not good? No, I think it was that people are interested enough, especially that audience. They're interested in trying out the tool, but maybe had no intent on actually using it for their business. So it was just a skewed kind of signup number. So now you have credit card back up front. Correct.
And now the funnel, if a hundred people hit that credit card pop up in a day, how many actually put in the credit card to do the trial? Uh, 8% right now. And then how many, so we'll call it eight people out of a hundred. And of those eight people, how long is the trial? Trials two weeks. Okay. How many convert to paid at the end? Just under 70%. 70%. Okay. So 50% would be four.
So we'll call it maybe five out of the eight. Interesting. And when they put the credit card in up front, is there like a dollar paying to the bank or it's just you're holding the credit card and not billing until 14 days out? Not billing until 14 days out. And you automatically cancel at the end of 14 days or you actually make them opt out?
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Chapter 4: What strategies did Chris use to acquire customers quickly?
That's obviously healthy. Um, how long will that channel work? Could you dump a million bucks in that channel and hold those metrics or no? We'll see. We keep putting a little bit more. But since we're bootstrapped right now, we're you know, that three month, four month payback period is where we're hovering to just be able to support the cash flow ourselves.
And then we're looking at our options for really scaling that. You mean in terms of raising capital? Correct. Yeah. When you look at raising capital at your stage, do you like selling equity, a convertible note? Have you looked at venture debt? How are you thinking? Yeah, we have looked at options like lighter capital and those kind of things. And obviously, debt is the preference.
But if you can get a good strategic partner or someone that, you know, can really help drive the business, introduce us to new channels, then I'm definitely open to the equity conversation. Who would be the perfect strategic for you? I think ultimately the best partner would be someone that could be an acquisition, you know, target down the road. So name one, name one. I'm curious. Uh, let's see.
It would be like a, like a go daddy for, uh, in the small business space or a, um, you know, someone, uh, in the, in the HR space, like a bamboo or a gusto or something like that. Yeah. All those guys have been on the show. All great companies. Um, interesting. Um, if you go, what did you like about lighter cap? Did you actually get a term sheet from lighter?
And if so, would you like or dislike about it? Um, I got a, so the way they do it, I think is a 1.5, 1.6 X payback over a few years. And I do like that model. I think that the, what I didn't like is that they'll only give you a three or four times what your MRR is. And when you're growing at such an early stage like this, they look backwards.
So they look at your last three months of MRR and with how much we've been growing, you Those numbers aren't that impressive. So the cash that I could get from them is similar to the cash I can get through a couple of credit cards. So I think it'll be a more attractive option a few months out as our growth continues. You're saying you're doing 57 today. Last month, you did 47.
The month before that, you did 40. So they're basically taking an average and call it 40K a month times three. They're basically going to say, here's 120 grand, pay it back 1.5X. And you're just saying it's quicker just to use credit card debt. Yeah. Yeah, exactly. Yeah. Interesting. Very good. All right. Let's let's let's wrap up here with the famous five.
Number one, what's your favorite business book? Rework by the Basecamp guys. Good one. Number two, is there a CEO you're following or studying right now? Yes. Clayton Mask with Infusionsoft. He's local and he's been down this path before. Number three, what's your favorite online tool for building your business?
This one's a little counterintuitive, but I would say Strava because building me has really helped build the business. S-T-R-A-V-A? Yep. It's like a personal record kind of fitness app. Interesting. Number four, how many hours of sleep do you get every night? Seven. And what's your situation? Married, single, kiddos? Married, two kids. You didn't have to look at your notes for that, did you?
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