SaaS Interviews with CEOs, Startups, Founders
1491 $1k/mo Scheduling Tool Turns Down $5m Offer, would you do the same?
24 Aug 2019
Chapter 1: What is the main topic discussed in this episode?
founded shedwool.com. 50 customers now paying about 40 bucks a month. They're doing two grand a month right now in revenue. Raised 40 grand, 45 grand from friends and family about to raise another 50 grand right now. It's a convertible note. I think he set a $5 million cap on that. I've got a team of 12 people, again, founded back in 2015. Hello, everyone. My guest today is Corey Warfield.
After 20 years working in restaurants, he started his company Shedwool to solve the pain point of scheduling, making every day working in restaurants suck. He's focused again on making that much easier with his SmartShift scheduling software. Corey, are you ready to take us to the top? 100%. All right. Tell us about this tool. How does it work and how do you make money? Absolutely.
So we're a SaaS-based company. We have our web mobile responsive suite of softwares, and then we're on the iOS and the Android Google Play Store. And so I created the company about three years ago out of need.
Chapter 2: What inspired Cory to create ShedWool?
I spent decades in the restaurant industry where every day is a problem scheduling from management to servers and bartenders. And if there's too many people, you don't make enough money. If there's not enough people, you work way harder and somehow still don't make enough money. And so
Basically, we'd been using some softwares for some years that really did help kind of solve for the on-call, figuring out when you worked and getting your optimal schedule, and that was taken away due to price. So I did a little poking around, saw that there wasn't really anything available on the market that was affordable and robust.
And over the years of using some of the other tools, we would always say like, I wish it did this, or I wish it did this, or if it did this, that would be so much better. So I put together a team and I created the tool that I wished I would have had at my disposal for about 20 years in the industry. And it's kind of taken its own life.
We're now live in hospitals, fire departments, police departments. We have a handful of hotel chains, restaurants, universities, sports teams using the application. So we really feel as we've kind of cracked the code on how to schedule shifts, you know, as they pertain to different industries, anything kind of from athletics to the medical and health industries. Yeah, very interesting.
And when you say shifts, is this typically a manager putting a shift like planner together? It's the actual employees, like they use it to check in and check out and things like that. Absolutely. So we're almost live with our geofence.
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Chapter 3: How does ShedWool's scheduling tool work?
We'll actually be able to clock in and out through the app as well. Right now we track all their time and it's really, it's a connectivity and communication platform. So employees can go on and see when they're working, request time off, swap shifts with one another. Management has that oversight and insight into who's working to make sure that they're properly staffed.
And we're leveraging several partnerships to actually let managers hire both full-time and temporary qualified workers through the platform. So we're getting into the payroll space, we're getting into the hiring space, and then we find that kind of time management and shift scheduling is the linchpin that all of these things kind of revolve around.
So that's really what we're solving from the ground up. Okay, so without going down every kind of customer cohort, on average, what's the customer pay per month for this? So our price point currently is $39 per month per location. So if you're a mom and pop store, you're paying $39 a month. We also offer $390 a year pricing. So you kind of get two months free when you pay up front.
That said, we're moving more into a licensing model in Q1 of next year where it'll be $29 per manager that needs access to the tool. And it's always going to be free for the employees. We've seen some of our competitors charge the employees for the download of the app and usage, and we don't think that's right. Yep.
So just to be clear though, if you look at your base today, is it fair to say, you know, the average is paying 39 bucks a month? Yep. Okay. Very good. So most of them are kind of one location mom and pop shops. No. So actually our average user has about 10 locations. So they're paying closer to $400 a month. Okay. Yeah. So then 39 a month is not your average. 400 a month is your average. Yeah.
I see. I see. Okay, good. I want to learn more about the sales cycle and how you're landing. It sounds like you came from this industry, but tell us kind of how successful you've been landing these customers. Where do you at today in terms of total customers? So we have about 50 paying customers on the platform. We're really trying to grow out of a freemium model.
So we've had dozens and dozens of companies using us for free. That's kind of coming out of an open beta where we really wanted user feedback. And we're really just looking to get more eyeballs on the platform. So we just started charging the middle of this year. And so we've grown to about 50 paying customers. That said, I brought on a sales team. My director of sales is phenomenal.
He spent almost 10 years at LinkedIn before joining our team. And so he's kind of got us set up in HubSpot with the CRM. He's talking kind of to some of the higher level people. And we have three international companies. One's a Fortune 50 company that's reached out. They want to figure out not only how to get us live on their B2B SaaS platform, but also to use us company-wide.
They'd be our first seven-figure client. Okay. So just be clear though, today, 50 customers, 400 bucks a month while you're doing about 20 grand a month right now. No. So that, that, that multi-unit concept is not every user. Uh, we definitely do have users that only have one location. Well, that's why I asked an average. Uh huh.
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Chapter 4: What is the pricing model for ShedWool's service?
Yeah. Yeah. And you had a buyout offer for 5 million and you didn't take it? Yeah. No offense, but why on earth would you not take that deal when you look at you're doing two grand a month right now in revenue or 24 grand a year? I mean, that's like a massive multiple. So we have companies in our pipeline right now that will be $10 million a year clients. Yeah, but Corey, come on.
That takes time to close those things. I mean, that's $5 million today versus the risk of building a business, the risk of closing those clients. It was a no-brainer. I found out that company was authorized to go up to $10 million, and I still wouldn't have taken it. No way in the world. I've spent three years of my savings to get here. This isn't a quick payout for me. Yeah, that's interesting.
I mean, I'm curious what listeners right now are thinking because I believe most of them are going, this guy's absolutely insane. Momentum is king. Take a $10 million check when you're only doing 2K a month in revenue and then reinvest that in your next new big idea. I'm sure you have many. Yeah, we're working on a few. But you didn't take the check? No, no way in the world.
Yeah, I don't understand. I mean, people would say maybe that's irrational. So earlier this year, a very close competitor of ours was bought by Intuit for $346 million. This space is just heating up and we have some opportunity. Yeah, but he was, listen, TSheets was doing 35 million bucks a year in ARR. We had him on the show and it took him 10 years to get there, right?
I bet you, if you gave him in year one or six months in, if you gave Matt 10 million bucks, he would have taken it immediately and started a brand new company with that win. Yeah, I mean, for me, I didn't even think about that offer. I literally countered with $100 million. We know where we're taking this.
My original co-founder raised $20 million for his company, brought their valuation to about $150 million. And that was kind of a sad story where they keep taking down round after down round, so they're not- Yeah, because you take a valuation that's irrealistic. That's not realistic. Everyone brags about valuation when you raise capital. It's baloney.
I mean, any good negotiator can get a high valuation. It's just a question of like, how charming are you, right? And how do you point to like a little bit of business success to grow the valuation? But yeah, VCs know they're going to backfill terms and you're going to have down rounds if you fuck things up. Yeah, I think that's why we've been super calculated not to take any kind of dumb money.
We've had a couple investment offers that we've passed on as well. I think we're really trying to build something of value. And we're really taking the time to do that right. So I now have 14 employees. My director of sales came from LinkedIn, who was doing a $2 million a year quota. But how are you paying if you're bootstrapping on 14 employees, and you're doing two grand a month?
How are you paying them? Yeah, I mean, like I said, I've just been kind of trailing with what I've had in savings, putting what I can into the company. You know, we have a couple. Right now, a lot of my team members, some of them are getting paid, some of them are commission only. A lot of them are filling their pipeline. Our HubSpot's gotten pretty robust.
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Chapter 5: How has ShedWool gained its initial customer base?
So, I mean, we really feel as though we're on the brink of MRR that it's going to justify a much bigger valuation than we want to next year. Look, I like the confidence. You should come back on in a year and say, Nathan, look, I told you, man. I made your arguments look weak. Look where we're at now. I would love that. That would make me feel very good. Yeah, I had, who was it?
Oh, he started AppSumo. Noah Kagan. Noah Kagan was kind of telling me the same thing about a year ago, telling me how this idea had no legs and we had 100 competitors. No, by the way, I didn't say that. I didn't say he didn't have legs.
But if you had a real, an actual real, if you actually believe that that $5 or $10 million offer was real and it was going to be money in your bank, I would, I mean, I would have quick, I don't care how good of an idea I thought I had. If it was only at $2K a month in revenue, I would have sold instantly because I know I could take that money and go put it in the next big idea.
We were under 1K a month in MRR when that offer was made about three months ago. Yes, that just underscores my point. I mean, you're saying it like you're proud of it, like you're bragging about it. I'm saying I think it's even crazier. No, I mean, I think I more so bring that up to say that that's the potential that other people in our space have seen in the product as well.
We have a much more current tech stack than a lot of people in our space. We have a lot. We just launched with the first Amazon integration in our space. We have a Google Calendar integration, drag and drop media upload, a lot of things we've taken time to build. are going to at least have our competitors looking at their model and their product. And we're really just getting started.
I mean, I just brought on the chief strategist that's had some huge successes in his life. We've got a team of people that really believe in this. Yeah, no, look, that's fine. The belief is good. The team is good, all that. It's just like, well, revenue has to start showing some of this, right? Otherwise it's like, okay, well, what's going on?
And by the way, like Matt got to what he got to, 30 million bucks in ARR by only focusing on ranking number one in the Intuit App Exchange. That was the only thing he focused on. No, none other distractions, none other like, you know, whatever. He just went all in on that and it took him a decade, but look, he got a great result from it.
So maybe we'll see if you find an integration like that, you can do the same thing. Corey, let's wrap up here with the famous five. Number one, what's your favorite business book? Uh, lean startup by far. Okay, good. And, uh, number two, is there a CEO you're following or studying right now?
Um, you know, there, there are quite a few, I'm really bullish on the Malala fund and they have a, they, they just launched that fund with a CEO that I think is doing some really cool things. Other than that, I'm always watching Elon Musk, although, uh, more and more, you know, I don't agree with some of the things he does, but I've got a lot of respect for him.
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