SaaS Interviews with CEOs, Startups, Founders
1524 He Helps High School Coaches Manage Workout Plans, $1m in ARR
26 Sep 2019
Chapter 1: What is TeamBuilder.com and how did it start?
team builder launched four years ago call it 2013 ish 2014 now 10 people doing a million bucks in arr that's doubled year over year from october 2017 when they're doing about half a million bucks a year they've done this all bootstrap serving about a thousand customers their ideal customer is kind of you know the one strength coach that a high school might have that has to work with 300 uh you know athletes you know who are highly competitive so scaling nicely 90 net sorry 90 revenue retention annually
Too early to look at CAC and LTV and things like that, but generally speaking, growing in a healthy manner. Hello, everyone. My guest today is Hewitt Tomlin. Having worked in sales and marketing for three software startups for many years, he decided to launch a software company with his college roommate with the decision to bootstrap without any outside capital.
They've got a strong passion for sales and athletic performance, and the company has grown to nearly 10 employees and over a million bucks in ARR. The company is called TeamBuilder.com. Hewitt, are you ready to take us to the top?
That's right. Yeah.
Chapter 2: How did Hewitt Tomlin bootstrap his software company?
All right. What's the company? Okay. So it's teambuilder.com. What's the company doing and how do you make money?
Well, we're a software as a service company, which there are a lot of those out there. But at the time when we built it, software as a service wasn't as popular of a model. And as former collegiate athletes, we actually saw that our strength coaches, you know, performance coach was writing our workout programs on Excel, printing out paper packets and handing it to us.
And when we did a little bit of digging, we found out that the entire industry used Excel and printed paper because at that point it was just like an industry standard. Well, my roommate and teammate at the time was programming and I was interested in business. So we just kind of put our heads together and said, this would be a fun project.
And like a lot of companies that you see today, the project evolved into a product and the product evolves into a company.
That's great. I love that. And you just passed, you said 10 employees and a million bucks in ARR.
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Chapter 3: What challenges do high school strength coaches face?
That's right. Yeah, we've been in existence for about five years now. And we just reached that threshold. But as a bootstrap company, we did not seek any outside capital to date. We have not raised a cent in outside capital or any kind of capital. We've been bootstrapped the whole time.
And launched in 2013, you said five years ago?
Yeah, five years ago.
That's great. So walk me through and sorry, so a million bucks in AR and how many customers today?
We're probably reaching close to a thousand.
About a thousand. Okay, so break down like one of their stories for me. What are they paying you for specifically?
Well, let's take our average customer. This is a high school, a high school strength coach. And this high school is probably certified and has a master's degree in kinesiology. But that coach, nonetheless, is in charge of training competitively 300 athletes. So anytime you have a 300 to 1 ratio, there's going to be some inefficiency there.
And by principle, my workout programs are more effective for someone if they're individualized for that person. But if you think about individualizing 300 programs, that's just not a possible task.
Our software helps that coach write more individualized programming by basically saving them time and effort in the actual process of assigning and prescribing training programs, but also collecting data through our digital interface so that data is not written on paper or on a whiteboard. It's collected on an app, really simple.
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Chapter 4: How does TeamBuilder.com help coaches manage workout plans?
Okay. And is that kind of the high school use case a really strong use case for you? That's your main demographic?
Massively, because high schools typically, if they're able to afford a strength coach, they can only afford one. And they have typically dozens, if not hundreds of athletes. So that's a very typical use case. You see the same thing in small colleges. And then you think of a bad use case. Think about a well-endowed collegiate program like in Alabama.
When you're that well-endowed, you have the money and resources to just fix those problems with brute force. You could just hire a lot of people and throw a lot of bodies at
that's where we come in that's great now what about churn so when someone starts paying you is it pretty sticky what's your revenue turn over the past year
That's the name of the game for any SaaS company, and we're no different. So churn for us means that we have to constantly provide new value. That's where we believe that a SaaS product is not something you build once and sell over and over again. Our product team is in-house. It's not outsourced, and we have to deliver on new features, take customer feedback.
If a customer is not being listened to, it's hard for them to shell out the same amount of money year after year.
So what is the churn, though? How good are you doing at this? What's the retention today?
If no one touched customer retention, meaning if no one was in that role, then we would churn out 20% of our customers. With a fully dedicated customer success manager, someone whose role is retention, we actually reduce that churn to 10% per year. So we retain 90% of customers year over year.
That's good.
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Chapter 5: What is the customer retention rate for TeamBuilder.com?
So 90% and that's on a logo basis and a revenue basis?
Yes.
that's on a revenue basis.
Okay, that's great. That's really great. So 90% revenue retention. And then talk to me about getting these new customers. So what's the sales process look like?
We're purely inbound. And that stems from the fact that we're bootstrapped. We don't purchase a lot in terms of web ads. We don't acquire a lot of leads in terms of web ads. We try to stay away from that rabbit hole. So we focus on customer or content generation, bringing people to our top of funnel. And then basically building a large audience that way.
So a lot of our content generation is done in-house, but also by our customers. A lot of our customers are happy to write blogs. They're happy to do interviews and share their expertise. And then we brand it and then leverage it into content that attracts people to our website.
And so, I mean, if you ignore paid spending, because it looks like you're not doing a ton of paid spend, but if you look at your fully weighted customer acquisition costs to include any salespeople, marketing people, onboarding people, et cetera, what are you spending to get one of these new high schools paying?
That's our sales demo. It's an online demo. It's not different from what we're doing now. If we can get a coach to spend 30 minutes with us on the phone and to do an online screen share demo, that's the number one tool in our toolbox that creates the highest conversion.
So when a lead kind of reaches the part of the funnel where we feel like sales can maybe schedule a demo with this person, that's what we zero in on.
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Chapter 6: How does TeamBuilder.com acquire new customers?
And then once we get that person on the demo, typically we've sold them, but the sale is not over. They then have to go to someone on their end and get
funds approved and we've been through that process so some of our sales collateral that we hand our prospects after the demo it's actually sales collateral that doesn't directly speak to them per se but it speaks to the person above them usually an administrator and it talks to them in business language return on investment cost savings efficiency so it's kind of a two-pronged sales process one up front for the prospect and then for the decision maker in the background
Yeah, no, Hugh, I understand that. So when you look at that salesperson, right, and that function that you're repping every single month, right? So if one sales rep is doing 20 demos and they're closing 50%, you can back in, you know, you've got the salesperson's salary, you can back into what your CAC is based off the efficiency of that person.
So I'm trying to get a sense of how efficient are you guys?
We're probably dialing in at with sales qualified leads, converting about 25 to 30% of them.
Okay, so do you have one, you have 10 people right now, how many of them are sales?
We only have one salesperson.
Okay. And so how many new customers are you adding per month?
We're probably adding, I'd say we're probably adding somewhere between 40 and 50 new customers a month.
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Chapter 7: What are the growth plans for TeamBuilder.com moving forward?
No, I do look at those. But if we interpret those things, literally, if we search for ROI on every decision and try to quantify it, I think sometimes you lose the forest for the trees. I can tell sometimes when we're acquiring customers at a really, really high clip and it's not worth it. And we test those things out and then we back off really quickly and then we know when we do it efficiently.
So your figure is not far off, but there is a lot of stuff that goes into lead generation before then. And then every sales process is not that easy. Some are longer than others. So there are some things that kind of distort that CAC. But around the same ballpark, we always stay conscious.
of it we have no choice we're a bootstrap company we can't you know acquire customers really expensively no no i get i mean i get that that's why i'm asking right so the only way for you to accelerate growth without raising additional capital is for you to fine tune this this cat it's get your payback period really low it's but first you have to know what the cac is it sounds like to me though like like i've asked for a number of couple times it's not something you look at you don't know what your dollar cac is no no we don't we don't i ballpark it i i don't write it down
Yeah, it's just too early. Okay, very good. And then where's the whole team based? You guys, there's 10 of you guys.
We're all based here in Landover. And then some freelancers are based in Denver.
Okay, good. Maryland and Denver and give me a sense of growth rate. So a year ago today, you're at a million bucks in AR today, a year ago today, where we're at? Probably half a million. Oh, good. Okay. So about that's, look, that's still pretty good. You know, your rear growth has most that come from just adding new customers or expanding old customers?
mostly from adding new customers.
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Chapter 8: What insights does Hewitt share about venture capital and growth?
We expand, but expanding customers is not a significant portion of our growth.
That's great. So what's the next move? How do you get to $5 million a year?
Well, we're getting in the business of helping trainers sell programming online. So there's a market for people who want to purchase training programs over the web. You see it on Instagram a lot, but there's a sub-market for more traditional strength and conditioning style programming. We have the media them to help people deliver programming.
And then if we can efficiently help people actually set up the logistics of transacting those programs, that's our new market for us. And we see other people doing it too, because there's a lot of promise in that business.
Yeah. Have you guys looked at using something like venture debt to fuel growth? So you're not having to take dilution, but it's still friendly?
i've looked at some of those things not not that one per se but i have seen um models out there that do operate like that i would do it but i look at my company's size and we doubled in the past year without it and i'm not unhappy with that so i don't necessarily see i see the benefits of throwing fuel on the fire um but the fire hasn't stopped growing so for me it's like um
So to loop that in, yeah.
Well, yeah, look, it's always hard to quantify what could have happened if you had X, right? So like, sure, you doubled without money, but what if you would have 4X with it, right? Like you have no, you just have no idea, right? So like, I mean, I'm not advocating you take it or not. I'm just curious if it's something you'd considered.
always consider it. I always keep an open mind. Um, and at some point I have, my intuition tells me that my intuition then would tell me that it is the right thing to do when there's so much opportunity and that's what we've gone with so far. So at the moment, you know, there's a lot of work to be done. And then at the point where we feel like it's right, I'd be open to it.
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