Negative Churn: The Secret Sauce Behind a $4m-Per-Year B2B SaaS - Ep#10 with Tim Cool

Women want it. Men want to be it. SaaS founders want to achieve it.

I'm talking about Negative Churn of course... ;) That nirvana-like state where lost customers and downgrades are offset by upgrades and expansion revenue, so that your revenue is growing even without having to add more customers.

Tim Cool from Smart Church Solutions had negative churn for 6 out of the past 12 months on his way to building a $4m+ ARR SaaS business.

The crazy part? He's got a specific formula for engineering this.

Recently I interviewed him on the StartupSauce SaaS podcast (Episode #10) and asked him to unpack the secret sauce behind this winning strategy.

Watch the full interview here:

The SaaS That NO ONE Cancels - What's Their Secret?

Tim has a clever way of structuring his pricing tiers - but this strategy extends well beyond this, into the stickiness of the product itself, as well as the way they support and onboard customers.

You can check it out at https://www.smartchurchsolutions.com/

In this episode you can expect to learn about:

• Structuring a business to achieve negative churn
• Increasing the lifetime value of customers
• Moving from a credit card safeguard to an actual financial safeguard
• Getting the pricing and onboarding fees right
• Using blog posts effectively

Here's a short 5-minute clip from our conversation.

 

Also you might be interested in these: 

• 11 Key Metrics for SaaS You Need To Be Tracking
• 10 Clever Tactics To Reduce Churn in Your SaaS
• How To Compete Against Google (And WIN) - Ep #9 with Luke Seelenbinder

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[00:00:00] Ryan Wardell: Tim Cool , welcome to the show. 

[00:00:02] Tim Cool: Great. Thank you, Ryan. Great to be here. 

[00:00:04] Ryan Wardell: Let's start off with something pretty spicy. So your product is super sticky. I think you said you keep a customer for about 53 months on average. So that's like four and a half years. Teach me your ways. What is the secret sauce? 

[00:00:19] Tim Cool: So yeah, it's interesting because your typical B2B company that's going after that medium to small customers is about 24 months.

[00:00:27] Tim Cool: So, so we're more than double, you know, the typical B2B, um, lifetime. For us, it really boils down to, we're in a really tight niche. I won't say that it's mission critical, except for those that see the value in it. And at that point in time, it is truly mission critical for how they use it. And the real secret for us is, The more that they add on, the more that they have a unit attachment rate increase, they start getting more of the modules, particularly our IoT modules, our software becomes almost irreplaceable.

[00:01:04] Tim Cool: And so that keeps them for a long time, keeps them really sticky. And we're fortunately at a price point that, you know, it's not like they're paying a million dollars a month. Although I, I would, I'd be okay at that if they wanted to pay a million a 

[00:01:18] Ryan Wardell: month. When, when, when you say the, the, the module, can you just kind of unpack how, how your business is structured?

[00:01:24] Ryan Wardell: So, so there is, are there two modules? Are there three or there four? Like how, how does that work? 

[00:01:28] Tim Cool: Yeah. So there's, there's two primary modules within an IOT component that can work in both models. So the, the first is an event management component. So you think, Hey, I want to have an event. Um, I need, you know, 50 chairs.

[00:01:41] Tim Cool: I need 30 tables. I need someone to watch the children or whatever. Uh, and then there's a full blown facility management component. So, uh, I've got a spill on aisle five. Someone's got to go clean up that I got a busted toilet. Um, I need to know when to replace the air conditioning filters in my air conditioning units and that kind of thing.

[00:02:01] Tim Cool: But then we went a step further and we built IOT integrations that when I schedule that room that event, we can actually turn on your hair conditioning unit at the same time. And so someone doesn't have to run around all day turning thermostats up and down. So we have Operational efficiency as well as energy efficiency.

[00:02:21] Tim Cool: So the organizations that utilize that get a double win on saving money that in most cases offsets the subscription costs in the first place. 

[00:02:31] Ryan Wardell: Ah, okay. That's clever. That's clever. And once it's kind of baked into the business process, then it's really difficult for them to go anywhere else. 

[00:02:39] Tim Cool: Yeah. I was just, uh, in, um, Kentucky here in the States at a conference and, uh, one of our customers was there and, uh, we were talking.

[00:02:47] Tim Cool: And he goes, excuse me, I need to pull up my app. Uh, someone forgot to schedule the event in, in your software, in our software. He goes, I need to get it scheduled real quick. So it'll turn the air conditioning on for them for their event. He, it's, he, he can't leave the software because if he left it, Who's going to try on the air conditioning unit then?

[00:03:08] Ryan Wardell: Right, right. Okay. Okay. That makes perfect sense. Um, you recently did a 45 day sabbatical away from your business. Um, what was the reason for that and what came out of it for you? 

[00:03:24] Tim Cool: Man. Um, did you say we had five hours to take this? So what came with the, the reason for it is I started the business in 2009.

[00:03:34] Tim Cool: So we're 15 years old. I don't think I've ever taken more than five or six days off at a time in that 15 year. Um, you know, and generally not more than one or two weeks in a whole year. It just, I'm just not wired that way. Um, I'm, I'm hard driven and, uh, I was getting to the point where I felt I was starting to have question myself.

[00:03:56] Tim Cool: Am I really cut out to do this? Can I, can I make a go? Can I, can I take it to the next level? Am I, you know, there was a book written, what got you here? Won't get you there. Yeah. And so I'm asking myself those questions, partially because I was tired, um, and we had grown a operations team that really was handling almost all the day to day stuff without me.

[00:04:18] Tim Cool: Um, and so I needed to step away for two reasons. One, I wanted to see how the company would run without me. 

[00:04:24] Ryan Wardell: Hmm. Okay. 

[00:04:25] Tim Cool: And then I wanted a break so that I could evaluate what it did. What does Timmy want to do when he comes back from sabbatic? You know, when I finally grow up, what, what, what do I want to do, you know, with the rest of my life?

[00:04:38] Tim Cool: And, um, you know, the number one thing I walked away with Ryan is, um, I'm not ready to retire and I'm not ready to step away. I'm, you know, we're still having way too much fun. Another big thing is that I've got a phenomenal team and the things that our team's supposed to do, they did while I was gone. The one missing piece that was told to me by a couple of my leaders was there wasn't that cultural evangelist pushing the culture every day.

[00:05:10] Tim Cool: Like I, you know, they're, they're focused on their tasks. And their tactics, which is the overall culture and strategy of the company. And so there wasn't anything that fell between the cracks as far as the day to day operation, but there wasn't this overarching kind of sense that someone's looking at everything on the big picture size.

[00:05:31] Tim Cool: The other big thing for me, Ryan, was, um, uh, a couple of year, a year and a half ago, I started thinking, well, maybe my only exit strategy is to sell the company. And so I became enormously fixated on, okay, am I using the right SaaS metrics? And. Do I needed the CPA to go from cash to accrual, uh, because you know, any private equity firm has got to want it to be accrual based accounting.

[00:05:53] Tim Cool: It, it, I had a whole slew of things. I went out and hired a fractional CFO, you know, I hired a fractional VP of sales. I did all these things thinking that I needed to get sassified and get it ready, you know, for that. Even our QuickBooks, uh, accounting. We'll set up like a consulting firm because that's how we started.

[00:06:14] Tim Cool: Yep. So it didn't have, it didn't have things in the right place. And so see if I was helping us get all that well, walking away from the sabbatical, I was really struck with the fact, you know what, Tim, you're spending way too much time focused on the destination instead of enjoying the journey right now.

[00:06:33] Tim Cool: And that has really taken a burden and a pressure off of me to enjoy what I'm doing instead of. Driving so hard to have to sell. I don't need to sell. Um, selling is, is merely to get that, that, uh, kind of pot of gold at the end of the rainbow kind of thing. I don't need it to make a living. I don't need to sell in order to buy a new home.

[00:06:55] Tim Cool: I don't need to sell to get a new car or, or to do whatever. Don't, don't tell any of your listeners, but I'll be 63 this year. Oh, did I just tell the listeners? Okay. Good thing I'm not a woman, huh? So I'll be 63. And so there's a little bit of that. Okay. How much longer do I want to do? And reality is I don't think I'll ever retire.

[00:07:18] Tim Cool: I'll, I'll probably, you know, die before I retire. Uh, now I think my roles will change over the next 20 years. Um, and there may still be a liquidation during that period of time, but I'm not going to make that my chiefing. The chief thing right now is having fun, growing people, growing the business, watching other people support their families with what we're doing.

[00:07:42] Tim Cool: And I'm getting a lot of joy out of that. 

[00:07:45] Ryan Wardell: Well, I think, I think that's the difference, isn't it? So you're, you're, you haven't taken on any debt. You never gave up any equity. You bootstrapped solo non technical founder too, which I want to dive into in just a moment. But I think that for a lot of companies, once they go on that kind of VC backed path, You know, it's sort of an exit in, you know, three to seven years.

[00:08:04] Ryan Wardell: That's what they're looking at. It kind of puts you on this, this railroad and you end up getting, that's where you have to end up. Um, if you don't go down that path, you've got a few more options. And if, if you've built a great business and it's profitable and you love your team and you're doing great work and you like doing what you're doing, then you don't have to sell it unless, you know, I mean, there's, If someone came and parked a giant truckload of money at your door, like there's probably an amount of money where you'd say, okay, it's time to, I'd be happy with an exit now.

[00:08:30] Ryan Wardell: Um, but 

[00:08:31] Tim Cool: there is, there's a number out there. 

[00:08:36] Ryan Wardell: One, one thing that fascinates me. So sometimes I ask a lot of entrepreneurs, um, you know, what, what, what's, what's next? What would you do after this? You know, are you going to. Do this. Are you going to hand it over to a family member? Are you going to sell or are you just going to go and sit on a beach somewhere sipping margaritas and what blows, you know, the last one's a bit of a joke, obviously, but what blows my mind is that how, how many people say, you know what, I'd last about two days before I went insane sitting on a beach somewhere.

[00:09:00] Ryan Wardell: I just, I'm not built that way. I'd be coming up with ideas for the next thing. Or doing something else or just, you know, driving my wife crazy because you know, I can't just sit still and do nothing for the rest of my life. That's just not in my DNA. Um, but I suppose that begs a question that, you know, if you've had some time to think about this, you know, with a bit more clarity and a bit more strategically long term, um, how much is enough or more specifically, like, how do you think about how much is enough?

[00:09:26] Ryan Wardell: And, and has your, your, your opinion on that changed over the last 45 days? 

[00:09:31] Tim Cool: It, it has changed. I had, I had gone through the numbers. I'm, I'm the quintessential visionary when it comes to, if you, if you read any of Gino Wickman's book on rocket fuel and traction and those kinds of things, and you take a test, I'm at the top of the chart on visionary.

[00:09:47] Tim Cool: But I'm wired really weird because I love my spreadsheets. Okay, so it's just kind of a dichotomy. Um, those two don't usually go 

[00:09:55] Ryan Wardell: together. 

[00:09:56] Tim Cool: Yeah, I fight myself constantly. It's not pretty. Um, so I, I've already done a full analysis that at my current standard of living with what I have to pay in housing and vehicles and And, um, all the other things that we've got going on.

[00:10:13] Tim Cool: And, uh, I, I've got a number of what I need to 

[00:10:16] Ryan Wardell: earn 

[00:10:17] Tim Cool: wealth. I can put that money in X percent interest account. Great. I need X amount of dollars. Well, then I said, well, that's fine for living, but what am I going to do for fun? And, and so I came up with another number. So my hobby for 30 plus years has been real estate.

[00:10:37] Tim Cool: So I like to buy and sell real estate. I like to build things. I've got a general contractor's license. And so, you know, build things and then sell them and make a profit on them. And so that's fun for me. So I was like, okay, well, how much money would I need to play in that arena for a while without impacting my lifestyle over 

[00:10:55] Ryan Wardell: here?

[00:10:57] Tim Cool: And that number started getting pretty big. Um, and then I, my boyfriend, I went through a, a kind of exercise and well, how much money do we want to leave the kids? Is that too much money to leave the kids? You know, do you want to leave them spoiled or do you want them, you know, You know, to still earn their way, uh, none of them are destitute right now.

[00:11:16] Tim Cool: They all have good jobs. I've got great spouses, except for my son, who's not married and you know, they, they're doing okay. It's not like they need a bailout from dad. And so how do you, how do you pay it forward and, and bless your kids? And not spoil them at the same time. Um, you know, I, I don't want a, a trust fund, you know, kid that, that isn't willing to roll up his sleeves and work for, for a little bit of what he's got.

[00:11:44] Tim Cool: Uh, we don't mind blessing them along the way. We've been able to do some things every year. Uh, to, to help them, you know, hit some, some big targets for themselves. Um, so the number got a little bit bigger than I think was reasonable, which then drove me to say, okay, I need to get to X amount of ARR in order to get X percent of, uh, you know, the multiplier, you know, five, six, seven times, you know, what's that number going to be.

[00:12:10] Tim Cool: And if I don't get that, then, you know, my whole plane falls apart. I thought, man, you know, We actually had an offer made to us about a month ago, uh, from a PE firm that's in our space. And it was a number that it was immediate. No, in fact, it wasn't just a heck. It was a heck. No. Um, but he was, um, he, he was, he was still a big number.

[00:12:34] Tim Cool: Uh, he was pushing, he was on the low side of big figures and, um, which, which for a lot of guys who are just starting out eight figures sounds like a really big number. But when you've been in business, you know, 15 years and you've grown a business to, you know, almost 4 million a year in revenue, um, eight figures is not all that great.

[00:12:56] Tim Cool: And at least here in the States, by the time I paid 28 to 30 percent tax on it. And, you know, all the other stuff, it's like, okay, yeah, that wasn't quite enough, 

[00:13:06] Ryan Wardell: but 

[00:13:06] Tim Cool: I've got a number in mind that I think now would allow me to play in real estate, still generate the level of income and leave what my wife and I would like to leave the kids.

[00:13:16] Ryan Wardell: I think, don't, don't they say the first generation earns it, the second generation spend it, the third generation starts from scratch all over again. I've heard that. A few times, because I've talked to a few people that are on in a similar boat and they're like, well, you know, exactly the same thing. I want to, I want to give my, my kids a leg up if I can.

[00:13:33] Ryan Wardell: Um, but how much is a leg up and how much is a bailout? Um, because you still want your kids to, you know, Want to work for it, still have the drive to succeed and, and, and all of that that goes with it as well. But, um, one, one, one other question then I do want to dive into your business and the way that works in, in a little bit more depth, but, but one question is, um, uh, as you've grown once, so you said you're about, uh, about 4 million a year in revenue.

[00:13:59] Ryan Wardell: Do you also have to factor in like a reserve in your business? Like just for a rainy day fund for. something, if it, if an opportunity comes up or, you know, if there's another, what if there's like another 2020, you know, COVID shutdown or some unforeseen disaster that comes along, like do you have a cushion or a padding or like how, how do you think about that?

[00:14:20] Ryan Wardell: Hey, it's Ryan here. I'm glad you're enjoying the video. Listen, if you want to meet me or some of the people that I interview, you should really join the Startup Source SaaS Founder Community. It's a private Slack group for SaaS founders based outside of Silicon Valley who are past the idea stage and want to focus on growth.

[00:14:35] Ryan Wardell: About 30 percent of our members are doing over a million dollars a year in revenue, so it's a pretty high caliber group. You'll get access to regular mastermind calls and workshops, and every week we share exclusive marketing tactics and resources that you can use to grow your business faster. So, if you want to give yourself an unfair advantage and learn from other SaaS founders who are one or two steps ahead of you, head over to startupsource.

[00:14:57] Ryan Wardell: com and sign up. I think there's a link in the description down below as well. Anyway, I'll see you in there. 

[00:15:03] Tim Cool: Yeah, we, we definitely, uh, obviously our first three years, we had no padding. Um, I had credit card. And that was my padding. And, uh, but, uh, but over the last three or four years, as we've been more profitable, we put money away.

[00:15:18] Tim Cool: So instead of taking big distributions, you know, for myself and put it back into the company. And, and so we've got, I think, two money market accounts that, that we split the money in and put some of it in some us treasury bills. So not terribly speculative, but enough to earn some little bit of revenue on it.

[00:15:35] Tim Cool: Yep. And originally I came up with this thought of, Hey, what would be my expenses for six months if every subscriber canceled at one time and I didn't want to fire anybody. Well then as I thought about it, I thought, you know, our business, particularly as a sticky as it is. They're not all going to leave at one time.

[00:15:57] Tim Cool: So what if half of them left at one time, what would I need over six months, which is basically three months worth of record or of expenses. So that was our initial goal. But now that we've grown, what I've done is as I'm using the equation where I take my projected. Expense budget for the year. What do I think my total expenses are going to be?

[00:16:20] Tim Cool: So we, we, we didn't do this at first, but now we, we managed to a budget every year. Um, I look at what is my, uh, projected ARR for Marie Curie. Not my new ARR, but my, my book ARR already. I back out about 10%, um, for, for churn. And then I say, okay, what's the Delta between my expenses for the year and what my ARR guaranteed is, and what's that number.

[00:16:55] Tim Cool: And that's what I try to have, uh, in sayings. So I at least can make up the Delta. If, if things start going south. 

[00:17:02] Ryan Wardell: Okay. Okay. Cause I've heard, you know, six months of expenses on hand. I've heard three months. You've got a bit of a more sophisticated way of, uh, of figuring that out. But, um, that's, that's, that's, that's super interesting.

[00:17:14] Ryan Wardell: And I think, uh, a lot of people, uh, watching this or listening to this. Probably ask themselves that question. How much should I keep in reserve just in case, or am I being too conservative for that? I'm keeping way too much powder dry. Um, when I could be using that to grow the business, how do you, you know, there's, there's always trade offs to be, to be made with this stuff.

[00:17:30] Ryan Wardell: Um, we might, we might actually backtrack a little bit and, uh, talk a bit about, uh, what you actually do. So, so Tim, what is smart church solutions and who is it for? 

[00:17:39] Tim Cool: Yes. A smart church solutions. Um, we, we, we consider ourselves a platform and not soft, um, because of. One leg of the platform is software. It's our product called e space, uh, which is facility management software.

[00:17:55] Tim Cool: But the second leg of our platform is technology. So our IOT devices and, um, AI and things that aren't baked into our software that we utilize when we talk back and forth with each other. The third leg is education and professional services. So we provide professional services, not just training on the software, we do, we go out on site.

[00:18:21] Tim Cool: I've got two gentlemen that fly all over the country every week and they assess physical facilities. What's their condition? What's their life cycle expectancy? Where's their deferred maintenance? And all that kind of stuff. It was, it was an 80, 90 page report that we give them. And we're in the midst right now of developing our own, um, educational certification program for people committed and involved in church facility management.

[00:18:48] Tim Cool: Cool. So that's what we do. Um, now we are, we're, we are house of worship facing. So all of our direct marketing goes predominantly there. We have You know, being a SaaS company, we've got all the one offs, you know, the city of Orlando, thank you, Mickey Mouse has used us for 10 years. They talk about a sticky customer.

[00:19:12] Tim Cool: They, they need me year over year for 10 years. We used to have a company, I cannot remember the name, but they were the largest producer of walnuts in Australia. They were as big as Dole. And this hemisphere is in that hemisphere and they used it to manage all their conveyor belts to know where they needed maintenance.

[00:19:34] Tim Cool: Our current largest client is in Poland and they're at a hospitality company. And so we, we've got all these really weird one offs. The other thing we did, um, probably much to Rob Walling's, um, chagrin, uh, the author of, um, The sass playbook, uh, he talks about don't do white labels. Well, we've got three white label partners as well that take our product.

[00:19:58] Tim Cool: We let them sell it under their label and uh, they take it up. All three of them are in the public school markets here in the States. And um, so it's interesting to have three different companies all in the same space that all needed. A part, a piece of our product to go to market. 

[00:20:17] Ryan Wardell: Is that like a territorial thing?

[00:20:19] Ryan Wardell: They operate in different, different parts of the country or like, cause, cause if there's three different players all using your software for exactly the same thing, and that's a space that, you know, you're happy to just white label it rather than tackling it directly. Um, yeah, that's, that must be a massive market.

[00:20:33] Ryan Wardell: Then if you've got three different players all white labeling your, your, your product. 

[00:20:36] Tim Cool: There's 95, 000 school districts in America. So it's a massive, um, You know, market and majority of those school districts have anywhere from 10 to 30 schools per district. 

[00:20:51] Ryan Wardell: Oh, wow. Okay, 

[00:20:52] Tim Cool: it was exponentially large. And so there's no way that they're stepping on each other's toes.

[00:20:58] Tim Cool: Um, and because it's a white label, it's got their logo on it. It's got their 800 number. Our name's on it. No way. And so no one would know, um, if she was from one or the other, unless they, I mean functionality would be the same, but You We even changed the, uh, we did some, um, Change in the UI for the, to match their brands.

[00:21:21] Tim Cool: So, so we, we were able to put new wrappers on it so that it would match their product brand. 

[00:21:27] Ryan Wardell: And when you mentioned the professional services, uh, leg of, you know, the three legs of your platform, I was talking to Andy Andy Allen from hike the other day. Um, and, and part of our conversation was about how much service to offer alongside the software.

[00:21:45] Ryan Wardell: Um, is that all baked into the pricing that you offer? Is that a separate service that you charge for, you know, in addition to the software and the technology piece? 

[00:21:54] Tim Cool: Yeah. So the assessments that we do is a, is a standalone fee. Hmm. I mean, that ranges anywhere from 7, 500 to 30, 000. So there it's big. It still only makes about 10 percent of our total revenue.

[00:22:09] Ryan Wardell: Okay. 

[00:22:11] Tim Cool: Now some people include their software training as being professional services. We don't, uh, it's an onboarding fee for us. We just roll it into the first year subscription. And then the second, third year, you know, and so on and so forth goes, goes back. 

[00:22:27] Ryan Wardell: That makes perfect sense. Okay. Okay. The reason I'm asking is just, um, yeah, the, one of the big things in that conversation was about, um, where to draw the line, because sometimes the services can become a distraction, but if you're just a pure play software business, you're kind of missing an opportunity a for revenue and be an opportunity to Um, kind of closed the loop a little bit.

[00:22:48] Ryan Wardell: You know, like you were saying, the software is a piece of the solution, but there's other stuff that that also kind of factors into that. And that's how you become a more, you know, comprehensive platform rather than just a software tool. 

[00:22:59] Tim Cool: Professional services for us does a couple of things. One, Is it reinforces subject matter experts?

[00:23:05] Tim Cool: Uh, because most of the clients that we have our houses of worship and those are who we're doing assessments for Which then allows us we take the information we gather from those reports and we create national benchmarking reports That then go out to our customers and everybody else so reinforces And we're not selling just software, but we are experts in church facility management and we understand the ins and outs of it.

[00:23:29] Tim Cool: So we're church facility managers who build it for church facility man. 

[00:23:34] Ryan Wardell: So 

[00:23:35] Tim Cool: that's a piece of it. The other piece of it is when we sell them an assessment, we have priced it in such a way. That they get one year of our work order management for free. Well, it's basically not free. I mean, but it to them is free.

[00:23:50] Tim Cool: Yep And we do the training the whole onboarding with them with the hopes that they will continue to renew year after year after year So it's it's almost a feeder To the recurring revenue models as well. Right. 

[00:24:04] Ryan Wardell: Okay. That makes perfect sense. Cool. Okay. So they are complimentary. They're not, it's not a distraction.

[00:24:09] Ryan Wardell: It feeds into the, the, the software subscription side of things anyway. Yeah, cool. That's, that's awesome. How did you get the business off the ground? I know you said before that, uh, you were a solo non technical founder. So you go completely against the grain of, you know, the conventional wisdom. Um, talk me through that.

[00:24:26] Tim Cool: So I spent, um, the first 24, 25 years of my career. In physical construction. Um, so I worked for a company that built church facilities in the U S coast to coast. So for, for, for those not in the U S this, this was going to be maybe a hard number to grasp, but year over year, new religious construction industry is about 8 billion a year.

[00:24:54] Ryan Wardell: Whoa. 

[00:24:56] Tim Cool: Okay. It's, it's a massive market. Wow. There's 375, 000 churches in America. So it's, it's a huge market. You know, Canada has like 18, 000 churches. Australia has 13, 000 churches and you know, us has 375, 000. 

[00:25:15] Ryan Wardell: Okay. 

[00:25:15] Tim Cool: Um, so I was, I came from the world of building, you know, Not maintaining 

[00:25:22] Ryan Wardell: that 

[00:25:23] Tim Cool: well, I found myself in an awkward position between being unemployed and having a non compete, uh, with that company, but I couldn't go back into construction with church.

[00:25:33] Tim Cool: Well, and yet my whole entire adult career had been working in that industry. All my contacts were in that industry. All my, you know, influencers and whatnot were in that industry. So I, I decided to create this facility management, uh, Um, kind of outsourcing company, we would provide facility management for churches.

[00:25:54] Tim Cool: So I could still stay involved with the market. I knew I could still stay involved with the facilities and it failed miserable. It was awful. Um, and it was in 2008 and nine and there was this little thing called the recession here in the U S you know, kind of thing. Yep. Here I am trying to start a business.

[00:26:09] Tim Cool: I'm using my 401k that I rolled into a self directed IRA to fund the business with my number one investor who was my only investor, uh, to which I just about bankrupted that investor. My wife's like, what are you doing with our retirement account? Um, what came out of that was people were asking me cause I was selling it as we'll provide facility management services and we'll have the software to help manage it for you.

[00:26:39] Tim Cool: They said, yeah, we're not interested in your services, but the software, I'd be interested. And at the time I was white labeling somebody else's product, uh, and, and trying to use it myself. And so I said, you know what, how hard can this business be? Come on. It's only software. 

[00:26:56] Ryan Wardell: Famous last words. 

[00:26:59] Tim Cool: The only thing I know about software is that Microsoft put something on my computer in 1997 when I bought my first Acer computer.

[00:27:06] Tim Cool: Um, and that's all I know. Um, it's kind of like a friend of mine who does engineering for HVAC. He goes, There's only two things you need to know about HVAC, it sucks and it blows. And so, um, software is somewhat the same thing. So I hired, I hired a, um, development shop, was doing great work. I, I knew their clients and, and so I hired them.

[00:27:33] Tim Cool: Well, I didn't know the difference between SAS and, um, on prem has a, they were on prem developers. So they did all of Krispy Kreme Donuts corporate stuff. They did all the Barnes and Nobles kiosks around the United States. So that's the type of stuff they were developing for. And they can, you built me this and, um, we took it to market when it sucked really bad.

[00:27:57] Tim Cool: And I got like 60 people to buy it in the first two years. And so we're generating. Revenue before we ever went to beta, right? Because I didn't know any better I didn't know that there was an alpha and there was a you know, any um minimal viable products, you know I went to market with an mvp is what I did And try to sell it.

[00:28:18] Tim Cool: Um, and um, man, I bounced around between two three different development Agencies to try to get it done, try to use some offshore, you know, all you blokes are hard to work with, but we are, I use some, some, some Eastern European folks for a while and, and they did better work than some of the other countries that I tried, but the language difference was so arcane.

[00:28:47] Tim Cool: Yeah, particularly, I don't know anything about software. 

[00:28:49] Ryan Wardell: Yeah. 

[00:28:50] Tim Cool: So 2014, I looked at my wife and I said, we've been, we've been doing this now for five years and got 60, 70 subscribers. I was do consulting work myself to pay the bills because the company wasn't able to pay them either. We're going to make a go of it or we're not.

[00:29:09] Tim Cool: And so we both agree. We're going to make a go of it. I hired my first full time. net developer here in the States. Paid him more than I was paying myself. And, um, and we totally rewrote the software, uh, at that time I made all the customer service calls. I did all the sales demos. I did you name, I did bookkeeping.

[00:29:31] Tim Cool: Um, I did the banking. Um, I tried to fire myself three or four times and that didn't work out. Um, but you know, I, I did everything to for develop and, um, Up until about five years ago, we got up to about five, six people and. Adams, she, you know, salesperson, my son, Lin came on board and took over sales. And, um, hired a couple of customers, support people to take over that piece of that, because that just drives me bat crap.

[00:30:02] Tim Cool: Um, and so, uh, that, that's how we got started. Um, and, uh, man, it's been a ride. It's hard to believe it's been 15 years now. 

[00:30:13] Ryan Wardell: I'm, I'm really impressed that you took a kind of, well, not, not a, not a hack together MVP, but certainly, you know, something that was very, very, very early. And we're able to go out and sell it.

[00:30:22] Ryan Wardell: I, I, um, I had a mentor once, so I'm a non technical founder too. And I had a non tech, I had a mentor who said, look, Ryan, like you're not a coder. Um, so, so what you need to do is treat coding as a last resort. Go out, get customers, get people to give you money. And then once you've sold it a few times, then you've got to go and actually figure out how to build it.

[00:30:40] Ryan Wardell: And you probably need some late nights and weekends to be able to pull that together and get it done. Um, but. You know, as stressful as that was, I actually think that's a much better way of doing things than a lot of technical founders will go and build something and then say, how do I get customers for it?

[00:30:55] Ryan Wardell: And you see that question asked so many times. So yeah. 

[00:30:59] Tim Cool: If you read Ash's book, and this is the third edition. Uh, he's added some, uh, a, a kind of a, a narrative story about a founder who tries to build something and then go find, uh, buyers for it. And he's coached, no, go out and find buyers and then build what they want.

[00:31:20] Tim Cool: Instead of you trying to build something you think that they want without knowing if it's something that they want and and we We didn't do it to that extent, but I I had the website built out first. I started writing ebooks and blogs We have blogged every Tuesday since 2009. Wow. We're consistent with blogs and And I started blogging on the topic of of taking care of your, your church building.

[00:31:46] Tim Cool: And then I started getting momentum on people saying, Oh, oh, that's interesting. You know, tell me more about, you know, you have this theory of this philosophy, uh, then you're trying to push here. And then it opened the door. Cause now all of a sudden I had some names that I could go after and say, Hey, by the way, You've now created this piece of software you are, right.

[00:32:07] Tim Cool: It was so inexpensive in 2009, which started at 39 a month, that it was low risk. And we had no contracts and they could pay month to month and cancel whatever they want. Um, and so you, it was easy for people to dip their toe into it because I had built up. A persona at least of being the subject matter expert in all things church facility man, whatever your market is, you know How do you make yourself?

[00:32:35] Tim Cool: Uh at least appear to be the subject matter expert and the reality is you probably are I mean, I I had a manager tell me once when when when I was selling Uh construction projects. He goes. I know you feel like you don't know Everything you need to know, particularly when you're sitting in a room and there's an architect across from you and that general contractor and electrician, and you're supposed to be telling them how to build a building.

[00:33:00] Tim Cool: You know, and, and Tim, you were a music major in college. How are you going to tell them how to build a building? Um, because the reality is, is you probably still know more about the process of doing it than any of them do. So don't minimize yourself. Realize you probably are the smartest guy in the room on that individual topic at that particular moment in time.

[00:33:20] Ryan Wardell: I had my, my old business partner, Sam, um, did something really smart. And, uh, and I'd recommend this. So he had a job once where he was working, he was the first marketing hire, and this was for a nootropics company. So basically they made this, this smart pill, you know, you take this pill and you can think more clearly.

[00:33:35] Ryan Wardell: Um, that was, that was the idea behind it anyway. Uh, but he had. Almost no marketing budget, and they didn't even have a product for the first 12 months. And he was like, what on earth do I do? But what he came up with was really, really clever. So, uh, he, he started doing a whole lot of content marketing. Same as you, uh, started blogging regularly.

[00:33:49] Ryan Wardell: Um, the idea being that at least he could build up an email list or he could build up an audience ahead of time so that when they had a product, they could launch it. But what he did was he went one step further. And when he was running these blog posts, he would go out and find, um, academics who, uh, have a lot of credibility, but they don't have a lot of, uh, Um, you know, nobody really goes and ask them for their opinion.

[00:34:10] Ryan Wardell: So they were very, very reachable. So he would just send them an email and you get a really high response rate. Hey, we're writing this article, you know, about sleep or about productivity or about stress or whatever. Um, would you mind contributing to it? I'd say, yeah, yeah, sure. All right. I'll, I'll, I'll contribute.

[00:34:22] Ryan Wardell: That sounds fine. Then what he would go and do is get all the influences, all the people that had a massive audience, but didn't necessarily have the credibility. And he'd say, Hey, we're putting this article together. We've got, you know, three world class academics who are talking about this stuff. They've already agreed to contribute it.

[00:34:37] Ryan Wardell: Would you like to put in your two cents as well? Um, now if he'd just gone after the influencers directly, they probably would have said, no, who are you? We've never heard of you before. What do I care about your tiny little insignificant blog, but because he was borrowing the credibility of the academics, suddenly he got all these guys.

[00:34:50] Ryan Wardell: Yeah, sure. I'll, I'll, I'll contribute to it. So by the time he launched, not only did he have a massive email list, he had all these academics that were willing to endorse it. And he had all of these influencers who had a much, much, much larger audience than he had. Um, and he had relationships, he built relationships with these guys.

[00:35:06] Ryan Wardell: So he could do all this sort of affiliate stuff on, on, on the back of it. I thought that was, that was genius, but it, it, it goes, it all, it all comes back to, um, rather than building the product first and then trying to figure out how to sell it. Um, Start creating the content, start building a name for yourself and start getting out there and talking to customers and selling it because I think that, you know, what that forces you to do or the discipline that gives you is, um, yeah, you're not going to build anything that people don't want.

[00:35:29] Ryan Wardell: Um, and as tough as that is, I'm sure that when you were pounding the pavement trying to sell it the first time around, that was way harder than it is to sell it now. Um, but it does force you to be a lot more disciplined about making sure you're building the right thing. I think that's really smart. Um, What is the aha moment for your business?

[00:35:45] Ryan Wardell: Like, what is the moment where people go, ah, I get it. I understand what this is about. 

[00:35:50] Tim Cool: Um, so it's different for different modules. So for, for the event met management module versus our work order management module, they both, they both correlate kind of the same. It's when they finally see that there's an efficiency gain by using.

[00:36:10] Tim Cool: And and in most cases the first efficiency is an operational efficiency They don't have room in your double book, which means people aren't ticked off that, you know Two groups are trying to use the same room at the same time or their staff Has organized work orders now and they can see when their equipment was maintained They can go back in history and see when it was maintained And when's it scheduled next time to be maintained?

[00:36:33] Tim Cool: So by getting everything in one platform, it allows them to stay more organized and be more efficient. Then the, the huge aha is if they add the IoT devices. And they realize that from our software, they're basically creating, this is going to sound like a disparagement, a poor man's version of a building automation system.

[00:36:58] Ryan Wardell: Aha. Okay. Okay. Well, I even just said, aha. Yeah. Caught myself doing it. 

[00:37:03] Tim Cool: So it's, you know, you think about this, you can, you know, most building automation systems that at least here in the States. Um, you put into a, a large facility, you're going to spend 30 to 50 to 60, 000 to put it in your building. Well, we can, we have a way for you to buy a certain brand thermostat.

[00:37:22] Tim Cool: That's about 300 per thermostat. You put it in your building yourself because your maintenance man should be able to just unhook one, hook a new one up. You hook it to a gateway that creates a Zigbee ish type mesh in your building and it talks to us. And so, you know, you could spend maybe. Five grand in thermostats and so eight hours of somebody's time, get it connected to our software and boom, you now have a building automation system for a fraction of the cost at that moment.

[00:37:57] Tim Cool: Not only did they see the efficiency, because we have one client that wrote me a letter just a couple of months ago, said you have saved me over six hours a week in man time. Not having to run around our 100, 000 square foot building and change thermostats for every event throughout the day. Oh wow, that's huge.

[00:38:16] Tim Cool: In our, it more than pays for the building, but in our industry where that has the greatest impact is because churches are sporadic use buildings. It's not like an office building where eight to five it's open. No, it's, it's got a meeting in 10 in the morning. It's got one in three of the afternoon. It's got one at seven at night.

[00:38:35] Tim Cool: It's, you know, it's got something on Saturday morning, but then not again until Sunday morning. And so too often people just leave their thermostats on all the time. They waste all this energy and the writing term on their units just about kills them because they have to replace them sooner. Um, with this or someone, or you hire a training monkey to run around and turn the thermostats up and down all day long.

[00:38:57] Tim Cool: And if you didn't say six hours a week, you know, 24 hours a month, plus at 20, 25 an hour, you're talking real dollars now, plus that facility manager now has an extra six hours to do something that only a human being can do. Only a human being can get up out of the roof and inspect the 

[00:39:19] Ryan Wardell: roof only 

[00:39:21] Tim Cool: can walk around and see what part of the building needs painted.

[00:39:25] Tim Cool: So trying to automate the church world as a whole, this is, this is one of our benefits and struggles is about 10 years behind the rest of society around us when it comes to technology because they're slow adopters. Very slow. They're not. I mean, they are the laggards of most things technological.

[00:39:46] Tim Cool: Because they have the same, it's always been, we've always done it that way, you know, or that's church world. That's human beings in general. 

[00:39:53] Ryan Wardell: Yeah. 

[00:39:54] Tim Cool: And so once we're able to help them flip that switch to see, Oh, look at now I can go do other things. I, and I don't need to hire more people because I spent five, six, 7, 000 upfront.

[00:40:10] Ryan Wardell: Now 

[00:40:10] Tim Cool: it's, now I don't have to worry about it anymore. And if somebody has an event, and it's hot or cold in their room, it's because they didn't put it on the calendar. And if it's not on the calendar, then sorry bucko, you know, you're out of luck. Um, it's not going to get hot or cold for you in that regard.

[00:40:27] Tim Cool: Um, and so it also drives behavioral change in the organization on top of the other efficiencies. 

[00:40:34] Ryan Wardell: So that's really clever. So you've got, so anytime, you know, if, if someone leaves the air conditioning running or they, whatever, and they get a, they get a higher than expected power bill, there's almost like this internal feedback loop saying, Hey, you've got to use the product more because you know, this can't keep on happening because you didn't, you didn't put in the calendar.

[00:40:49] Ryan Wardell: Yeah. Okay. Great. That's really clever. Yeah. Wow. Um, I know when we were talking before, you know, we were talking, you said you had a, uh, you made some pricing changes a while back and I want to dive into that a little bit, but you actually mentioned that you had negative churn for the last two months. Um, how, how does that happen?

[00:41:11] Tim Cool: It's a, it's magic. I have this wand and I just wave it over the computer. And it magically makes it negative churn. 

[00:41:18] Ryan Wardell: There you go. That was the answer I expected. 

[00:41:21] Tim Cool: Last year, matter of fact, uh, six months out of last year was negative churn. Which is just exciting. So two years ago we hired a customer support person.

[00:41:33] Tim Cool: We call them customer stewardship people because they're stewarding our customers and whatnot and taking care of not just supporting them. They're actually coming along. Um, and she had great leadership, has great leadership experience. And so I asked her if she'd be willing to serve at least half time In customer support, but halftime in a CX role with the idea of with a customer experience person.

[00:42:03] Tim Cool: How could they intentionally be looking at flight risk? And so we created a spreadsheet and a score of utilization, particularly of our product to determine what was the last time they were there. Has it been more than 30 days? When was the last time they created a work order in our system? When was the last time they had an abet in our work order?

[00:42:23] Tim Cool: And it creates a, a score for them and a low score. It means high churn risk. Part of our role is to reach out to those people and say, do you need more training? Is there something else that we can help you do? We, we noticed you haven't been in this system for three or four months, which for some people, that's kind of creepy.

[00:42:42] Tim Cool: Um, you know, big brother looking over your shoulder, but the other thing that we'd started doing intentionally was what can we do to get expansion? Rather than who we do to upgrade. And so, um, you know, the last two months we've, we've generated almost as much New expansion revenue as we have net new revenue from new customer.

[00:43:06] Ryan Wardell: Wow. 

[00:43:06] Tim Cool: And, and so our, our expansion revenue has exceeded churn, which is what negative churn is. And so when we calculate churn, churn is a, is a math equation. It's not just. People that dropped you is people that change their subscription downward as well because that's a form of turn to you've lost revenue They're still there, but you've lost revenue.

[00:43:30] Tim Cool: So we take actual loss customers plus the downgrades and Then divide it against the amount of upgrades and expansion and we're in negative church a negative chart, which means our um, net retention rate is like 100. 25. So we're retaining more than we started the month with.

[00:43:56] Ryan Wardell: The idea of negative churn was, was wild the first time someone explained it to me, but when you actually sit down and go through the numbers, it does make perfect sense, especially when you've got. You know, multiple tiers for them to upgrade into. You've got other stuff for them to buy. That makes, you know, that, that expansion revenue is what makes it possible.

[00:44:09] Ryan Wardell: That's, that's, that's fascinating. Um, how, how have you changed your pricing in, in the last couple of months? Like how, how do you structure it now? And what have you changed about. The way that you bucket the different pricing tiers. 

[00:44:22] Tim Cool: So prior to three months ago, the only differentiations between our three different tiers, we had a, a basic, a premium, what we call an ultimate tier.

[00:44:31] Tim Cool: What, how many physical rooms might you be managing in a facility? How many potential locations might you have? So do you, you know, are, are you in a city, um, like Sydney where Hillsong churches and they've got, you know, 10 locations all around. So, uh, so, you know, so we, we see a lot of that here in the States where we're.

[00:44:53] Tim Cool: Those larger churches have multiple locations. How many locations do you have and how many, uh, pieces of equipment do you want to, uh, catalog in the, in the system? Those were easy things to track and, and monitor, but then all three tiers, everybody else got the same features and our product manager that I hired about a year and a half ago, which was a phenomenal hire for us.

[00:45:17] Tim Cool: I was convinced I'd never need a product manager because I had all the great ideas. I was clearly wrong. Um, uh, cause he, he came on board. He said, Oh, the pricing's all wrong. We got, we, we got to create value based pricing, not just metric based. We have to be able to show people that there's a value beyond just a numeric number to go from one to the next.

[00:45:39] Tim Cool: So he went through and we looked at all the feature sets we had and said, okay, that really should be a premium feature or that needs to go to our ultimate tier only. You can't get that feature now anymore unless you alt. And then we created a fourth tier for enterprise, which allows, uh, our sales team to pull levers differently if they need to, to customize a supersized package for some.

[00:46:06] Tim Cool: And so we, we did things like, um, You now can create X number of events in a month, different per tier. We never had done that before. It was just unlimited number of events you can create. Now we've put a limiter and we're going to, it's kind of a soft limiter. It's not like when you reach it, we shove your account up, uh, our new, uh, T's and C's in our terms of service now state that we will do an annual audit 

[00:46:36] Ryan Wardell: of 

[00:46:37] Tim Cool: your account.

[00:46:38] Tim Cool: And so we've built some automation that will do that for us to determine, do we need to force them up to here or not? So we've added some limiters there that's really going to help. We've moved, um, things like SSO only to our enterprise level customer. We took some of our Google integrations and Outlook integrations, only moved them upstream.

[00:47:01] Tim Cool: Uh, but the smaller ones don't have it. Uh, at the same time that we did this change, we didn't change pricing. Our pricing stayed the same. But what you got for it changed significantly. 

[00:47:14] Ryan Wardell: Hmm. Okay. 

[00:47:15] Tim Cool: So it says, no, I can't afford any more than, than that basic package. It's fine. You can stay there. You just give up these features.

[00:47:22] Tim Cool: And so it becomes truly a value based decision for that. You know, if you truly have to have that feature, then you're going to have to up, up to you. But at the same time that we're doing this, Ryan, we also rolled out the largest single enhancement we've ever rolled out. We, we added an interactive floor plan where you can create floor plans of your building in our software are interactive in such a way that you pull up a floor plan.

[00:47:50] Tim Cool: I'll put it next to it. Thursday's date and it will show me by color code Which of those rooms are already occupied during that time which rooms are going to be Available which rooms are going to be set up or teardown so I can visually see it Oh, but I want to create a layer that I can see where's all my wireless aps in that?

[00:48:08] Tim Cool: Where are all my fire extinguishers? Where's the evacuation plan to get in and out of the building? And then you added the ability and don't tell Any any folks in australia that have this event planning software that we almost White label for them. Um, but, uh, we created a way to create your own floor plan configurations.

[00:48:32] Tim Cool: How many tables and chairs do you want? So the floor plans that go into our system, we're all done to scale.

[00:48:40] Tim Cool: And so then whatever size you've created your floor plan. And what we represent as a four foot table matches that sizing so that when you drag and drop it onto your floor plan, it's the right size for that room. And so you people can now create, Hey, I want 10 chairs and four tables, but I want it set up different than normal.

[00:48:58] Tim Cool: And so they can drag and drop their configurations, however they want and save it to the, to the system. And then it goes to their setup crew when it's time to set up the room. And so that is a, that was a year long project that it took to build that out. And we rolled at the same time we did the pricing change.

[00:49:19] Tim Cool: And we gave it to people at no extra cost, which helps buffer the fact that almost 70 percent of our customers had to go upstream. But we limited how much they could get per tier. So if you're on our basic tier, you get one floor plan optional, only, only one late. You move to the next, you get it up to 10 late.

[00:49:39] Tim Cool: You move up to ultimate you get, you know, more layers. And so we still build it as value based, but we didn't charge extra for it. 

[00:49:47] Ryan Wardell: Mm. Okay. Because I think, I think there's, there's two big fears that, that, that people have when, uh, when they're thinking about changing their pricing. One of them is, um, if I increase my prices, are people just going to go, Oh, you, You're charging me a whole lot more money for nothing extra.

[00:50:02] Ryan Wardell: Why would I pay that? I'm just gonna leave on principle. Um, and, and, and the second thing is, okay, well, you know, if I, if I change the pricing around, we'll hang on, what am I getting for this again? And it makes them go through everything with fine tooth comb. But if you roll out a massive new feature that's going to be really valuable at the same time and give it to them for free, and you don't change the actual amounts, um, They're not feeling like they're going to have to go into their pocket again.

[00:50:26] Ryan Wardell: Um, they can, they're still getting something they can afford. Um, but you're baking the value in a lot more. That's a really clever way of doing it. 

[00:50:32] Tim Cool: We had our two basic mind goes, then we had like four or five add ons that people could pay extra for. Well, we eliminated the add ons all together and we baked them into our upper tier zone.

[00:50:44] Ryan Wardell: So we 

[00:50:44] Tim Cool: give it away at our upper tiers, which forces those lower tier people, if they still want those add ons to move up tier again, but it simplified the sales process because now it's like, it's not like, Oh, we have this, but you could add on this and you could add on this. No, it's here's the tier. If you want these features, here's the tier for these years, the tiers for this.

[00:51:02] Tim Cool: It made the pricing modeling within our code base much, much easier to have built out. Um, and it gives us the ability to have, um, some self checkout capability if we need to as well. Particularly if they want to test our other module. So you're on only our event management module, but you know, you grab this other module over here.

[00:51:26] Tim Cool: Hey, why don't you try it for 14 days? Click this button. Now you can try it for 14 days. And then our sales team, you know, picks it up from there and tries to get them to stick with it after that 14 days. 

[00:51:37] Ryan Wardell: And you said that was the trigger point. If they're using both of IOT stuff as well to turn on the lights and turn on off the air conditioning and all that kind of stuff, that's really when things start to become really sticky.

[00:51:48] Ryan Wardell: So it all kind of feeds into, um, yeah, that's really clever. Really clever. Did you, did you get a bunch of, you know, that's like, that's probably a dumb question to ask. I was going to ask you. Did you get much pushback from customers? But if you've had negative churn for six months last year, probably not.

[00:52:03] Ryan Wardell: Well, we, yeah, no, that's, this is 

[00:52:05] Tim Cool: interesting. So, uh, we've had higher. So in the last three months, we've added three net new subscribers. We've sold over 35 gross new subscribers, but the new subscribers are coming in buying more product and they're buying at the higher tier right from the get go. Because they want the extra features and we've had so much expansion revenue That we have continued to grow our revenue by about one, one and a half percent a month revenue increase with only adding one net new client a month for three months.

[00:52:49] Tim Cool: Wow. 

[00:52:50] Ryan Wardell: And that's, that's off a base of, you know, nearly 4 1%, if you, if you're doing a hundred bucks a month, there's not a lot of money, but when you're doing nearly 4 million or 4 1 percent is quite a bit. 

[00:52:59] Tim Cool: Yeah. So you've run out of money. What we found though, there were, there were, um, So we did a churn analysis on the last three years.

[00:53:08] Tim Cool: I wanted to know why did people churn and what's the commonality. And in this, particularly since we did the pricing change, we we've had, we've had more than our share of churn, but again, charge irrelevant if you've got expansion revenue, that's making up for it. Because the churn that we've had. has three common factors.

[00:53:30] Tim Cool: Most of them were our lowest tiered customers, and so they were cheap to begin with, and one dollar increase would have sent them over the edge, let alone having to go from 60 to 120 dollars. The second was there's a high preponderance of those that were paying monthly. We charge a 20 percent premium if you want to pay monthly, so our pricing on the website is x dollars per month paid annual, um, which was a big change for us a few years ago.

[00:53:58] Tim Cool: We were all always monthly. We've gone to the To the annual as being our, our bottom price, as you will, uh, which is really helps cash flow when you get that annual payment. And you, so I know some of the folks in, in, uh, startup sauce do an annual contract with the collective monthly. We get them to pay annually upfront.

[00:54:18] Ryan Wardell: So you get the cash upfront and you, so rather than discounting the annual, you actually charge a premium for the, the monthly correct. 

[00:54:24] Tim Cool: Yeah. Yeah. So. So, again, bottom tier, a lot of them were paying monthly, and the majority of them abandoned our onboarding process. 

[00:54:35] Ryan Wardell: Mmm, okay. 

[00:54:38] Tim Cool: That's one of the other things that got really sticky for us, Ryan, is when we moved to a mandatory onboarding process and made them pay for it, which blows my mind that people abandon an onboarding process when they've paid anywhere from 500 to 1, 000 for it.

[00:54:54] Tim Cool: Upfront. Wow. Even if they're paying, even if they're paying monthly, they have to pay the onboarding fee upfront. 

[00:55:00] Ryan Wardell: And they don't get a refund for that money either. No. It's gone. And they didn't show up to the onboarding. Okay. That's weird. Yeah. 

[00:55:06] Tim Cool: Like I, so our onboarding is broken up into two or three different sessions.

[00:55:10] Tim Cool: And they might show up for one, but then they just ghost us and all the others. At that point in time, there are high churners. We know that they're not going to survive. And that, of the, of the high churn that we've had the last three months, they almost all fit into that bucket. But, we've had such an increase, If people are going from 60 a month to 360 a month, because they saw the value in it and they wanted the added features that it's more than offset.

[00:55:37] Ryan Wardell: And if you're filtering out a lot of the high churn risk customers at the very beginning. So I was talking to Aaron Cassover from agent methods. I interviewed him the other day and he was saying they came up with this kind of, this, this model where, you know, they look at a whole bunch of different factors to figure out the churn risk of a customer, you know, there's something in there, like how long have they been in business, you know, how big are they?

[00:55:57] Ryan Wardell: Few few different factors. They look in. He does mandatory on mandatory paid onboarding as well. And he said that when they implemented that, that was a big mover of the needle for them because, um, people are going to need the onboarding one way or the other. Um, at least if it's mandatory, they do it at the beginning.

[00:56:13] Ryan Wardell: They're going to be more successful using the product. You still need to. Cover the cost of that because if they don't do it at the beginning, they're going to be going back to your support team all the time asking for help because they didn't learn how to use the product properly from the beginning.

[00:56:26] Ryan Wardell: So, you know, you're going to wear that cost either way. You might as well charge it to them upfront. And then that sort of serves as a good filter to get rid of anybody that's not serious about using your product or, or isn't a good fit for it. Um, that's really smart, man. I, I like that. a really, really good way to do things.

[00:56:39] Tim Cool: The other thing that we did that it's maybe a little different than what he's done is, um, we also put a. Uh, after 90 days, if they haven't completed their onboarding, we let them know that their onboarding period's over. There's no refund. Yep. And if they want to have paid training after that, they can pay extra.

[00:56:57] Tim Cool: So we don't absorb that cost after that first 90 days. Now, case by case basis, we always make exceptions. You know, someone goes, Hey, I was on vacation. I couldn't do it. So, you know, I know it's a day, 120. Can I still get the, the, okay, sure. Yeah, we'll do it for it. But if they come back a year later, we also have started charging a premium for a, um, upgraded support, um, tier.

[00:57:21] Tim Cool: Okay. We, we offer free for all our customers, free, um, support through tickets, knowledge base. Um, and any electronic communication kind of thing. So we use Zendet and we've got, you know, if you want to submit a ticket and you're happy with customer support through tickets and then going in and doing some self serve through um, our knowledge base, there's no cost.

[00:57:47] Tim Cool: If you want to have a phone conversation with us, it's an extra 49 a month. And, um, and so what we find is what we're finding early on is we did, we had done that before we did the mandatory onboard. Hey, I didn't get trade and I didn't hire, I didn't do the training with you guys. And now I need help.

[00:58:06] Tim Cool: Let's take, but you're on a basic customer support tier. So, you know, 150, 200 a month for training. We can do that for our, if you want. And. Oh, why aren't you helping me? Well, you didn't pay for it And and that sounds cold because you know, they'll likely turn but they're also the customers that will be the pain in the butt for their whole lifetime so We i'd rather get rid of them now You think about if we've only grown three actual subscribers Even though we've grown in almost 1 percent a month in revenue, what does that mean as far as the potential number of tickets that we may have?

[00:58:47] Tim Cool: There's not as many subscribers per dollar, so we're likely going to have less tickets come in. And so many of the tickets come from those lower tiers. They're the ones that are less sophisticated. They're the ones that don't have an IT person on their staff. You know, there's, there are mom and pop, if you will, and they just handle.

[00:59:07] Ryan Wardell: So, so does that mean then that you can either, you don't need as much in terms of support resources, or you can, the support resources that you, the resources that you do have can spend more time on each customer and provide a high level of, of support and keep the customers that are, you know, kind of have their act together a little bit more and, you know, more likely to stick around and probably on a higher pricing tier anyway.

[00:59:29] Tim Cool: It really, for me, it's more. Um, it reduces how soon I need to hire the next customer support person Because we've got a formula as to how many tickets each one of our customer support people can do It needs to take them about 16 17 minutes per ticket. So we've got all that down To, to formulas. So we know based on our subscribership, when we're, where we're gonna exceed the number of tickets our current staff can handle.

[00:59:56] Tim Cool: And we're run to that. I, 

[00:59:58] Ryan Wardell: Hmm. And just backtracking a little bit to the, the paid training. So let's say someone goes through 90 days, they don't take you up on the, on the paid onboarding, and then that, that 90 day period is expired and you say, oh, well, you know, if they come back to you a year later and you say, okay, well it's up now, you've gotta pay for the for, for the training.

[01:00:15] Ryan Wardell: Do you get many people who actually pay for the training or is that more about. Sort of providing a forcing function so that people do the onboarding within the first 90 days. 

[01:00:24] Tim Cool: We have a lot of people that pay for the train. 

[01:00:26] Ryan Wardell: Really? 

[01:00:26] Tim Cool: Because in the church world, uh, there's enormous turnover. 

[01:00:30] Ryan Wardell: Mm. 

[01:00:30] Tim Cool: Uh, and so, you know, there, there may be a, a C suite person, champions that they don't know how to use it.

[01:00:38] Tim Cool: They've got people underneath them that use it and those people leave. Well, they're going to need to have, Uh, the new person trained on. And so we find it's more about training new staff members that have come on board with the organization. Um, or they bought a new module. Now they need trained on how that correlates with the old.

[01:00:59] Ryan Wardell: Let's, let's change that a little bit. You mentioned before that you hired your son, um, and, and, and you work together. I think, uh, so, so I, uh, I used to work with my now ex girlfriend and a few people told me at the time, that's a terrible idea, Ryan. It's going to go horrifically wrong. It didn't fortunately.

[01:01:18] Ryan Wardell: Um, but what, what's it like working with a family member and how do you navigate that so that, you know, what stays at work stays at work You know, it doesn't affect you, your personal relationship. 

[01:01:27] Tim Cool: Yeah. So, um, working with Lee, Lee's a great kid. Um, it's, it's kind of this double edged sword. It is phenomenal to have a family member, someone that you trust, someone that thinks like an owner, you know, defined employees will think like an owner is rare.

[01:01:46] Tim Cool: And, uh, and so he thinks like an owner, um, and frankly, he is part owner. We, we, we, we, we gifted him some stock last year because he was doing such a phenomenal job. And so, uh, we just blessed him with that. And, um, so he does have ownership, but even before that, he, he thought like an owner at the same time, because he and I are uniquely wired, very similar.

[01:02:11] Tim Cool: We're both high drivers. Um, we both are very opinionated. If you haven't picked up on that, um, 

[01:02:19] Ryan Wardell: once or twice, it came through. 

[01:02:22] Tim Cool: I don't know if you've ever done strength finders. Uh, the, uh, it's an assessment that the Gallup company here in the U S do, uh, that, that basically says what your strengths are. And he and I have a couple of the same strengths, um, and in the archetypes of that assessment, we're both considered forces of nature.

[01:02:45] Tim Cool: So there are times that heads, but, and, um, and I have to remember that my relationship with my son. Is more important than my relationship with him and his role as an employee. Yep. Um, and, and that, that is something that I constantly have to keep in the forefront. And so, I guess a year and a half ago, we were, we were having some issues where we were both triggering each other's emotions and it got fairly heated more times than I'd like to remember.

[01:03:18] Tim Cool: And so we hired a coach to come in that, that sat with both of us individually, uh, and then collectively. And helped us identify what those triggers were. And we started to be able to say, okay, hey, Lee, this is, this conversation is starting to go into red zone. I need to step away for a minute and then we'll, we'll come back.

[01:03:38] Tim Cool: And, and that was enormously helpful, uh, for he and I, we also then came, came up with kind of a code language where if it's personal, Lee texts me. And he calls me dad. 

[01:03:55] Ryan Wardell: Mm hmm. 

[01:03:56] Tim Cool: If it is business, he either slacks me or emails me and he calls me Tim. 

[01:04:01] Ryan Wardell: Okay. 

[01:04:02] Tim Cool: So just tell you that little nuance it helps us know which hat am I wearing right now?

[01:04:07] Tim Cool: Is this the son hat, the dad hat, or is it the boss, the employee? And it helps kind of change your mindset as to how you're approaching things. 

[01:04:18] Ryan Wardell: And, and do you personally, do you find that like you can, you can separate those two fairly cleanly if they're sort of in that, you know, the context is the right context.

[01:04:27] Tim Cool: I struggle with it. I have to admit, I struggle with it cause he's still my son. And as a, as a dad, you want the best for your kids regardless. So I think it helps him maybe more than it does me. When he texts me and he says, Hey dad, there is kind of this warm feeling that comes over me. It's like, okay, now I'm going to have a conversation with my son.

[01:04:49] Tim Cool: But, um, it's still, it's a work in progress for us. We still got, you know, as we continue to grow and, and I stepped, I was founder. Obviously I stepped into the real CTO role about two years ago, where I've become less of a tactician and more of a strategist. So up until two years ago, I was doing consulting.

[01:05:10] Tim Cool: That was the, my own private equity firm, self funded bootstrap that, that paid the company's bills. And, um, I was obviously CEO by title and whatnot, but, but I was spending 80 percent of my time on the consulting work that I did yet. 80 percent of the revenue was coming from our software side of the business.

[01:05:35] Tim Cool: Um, I wasn't having to take a salary from the software because I was doing the consulting and so So, uh, we got to a point a couple of years ago and Lee looked at me, he goes, dad, I think you should fire yourself from consulting and become a real CEO. And that's what I did. I fired all my consulting customers two years ago.

[01:05:54] Tim Cool: We gave up a half a million dollars in revenue that I was generating, um, and that will make your butt pucker. Um, but the, the, that next year, the company was still profitable. And the amount of revenue growth in software exceeded the amount that I'd given up in consulting. Okay, not because I won't say that it had anything to do with me, but I was able to focus more on the business During that period of time we went from six people to over 20 people We started hiring more people in the roles and we needed to strategically go after the market the way we needed to go after It instead of Uh, me just, you know, swinging for the fences all the time.

[01:06:40] Tim Cool: We took more of a strategic approach to how we were going to grow. Uh, we were able to get a couple of more white label partners to generate revenue for us. Uh, we were able to negotiate a deal where a company that was getting ready to sunset their product, roll all their customers into our, you know, if I'd have been busy out consulting all the time, I'm not sure that all those things would have happened.

[01:07:02] Tim Cool: Um, but by being able to focus. on the business and not just working in the consulting side of the business. It gives you a clearer head. 

[01:07:10] Ryan Wardell: If you had your time over again, would you have pulled the trigger on that earlier? Or was that was the right time? If you'd done it earlier, it would have been too soon to step back.

[01:07:19] Tim Cool: I probably should have done it at least a year early. It would not have been five or 10 years over because there was too much cash flow coming out of the consulting and the software hadn't hit critical mass. Uh, you have so many founders and we were in the same boat. You're scraping to get by, to pay your bills.

[01:07:39] Tim Cool: Your own grocery bills, let alone pay anybody else's grocery. And because of that mindset, which is somewhat of scarcity mindset, although reality is you, you aren't able to think about how to actually grow the business. You're just trying to survive the business. And, um, once we were able to get to a point where, okay, I can keep pulling a salary here, even if I don't bring.

[01:08:04] Tim Cool: Consulting work in, okay, this, this is, this is like a real company all of a sudden. And, um, and, and, and so now I can start thinking about things that are just a little more strategic. 

[01:08:15] Ryan Wardell: I think that's a, that's a difficult thing to navigate. So we've had a few people in, in the startup source group. I was talking to Shana recently about this and yeah, she said she, she finally managed to give up the consulting side of things.

[01:08:24] Ryan Wardell: Cause she took a similar path, started off with the consulting business to bootstrap the software business. And then eventually she got to a point where, Hey, actually I can, I can step out of the. The consulting side of things and go full time on, on the software side of side of the business. But I think that's a really difficult thing to navigate and it, you know, it depends on personal circumstances and everything else as well.

[01:08:42] Ryan Wardell: But is, is there any advice that you would give to a founder that is, um, either transitioning from consulting into going full time on the software side of things, or is, is navigating that transition from being a, just a founder kind of, you know, juggling everything to bring a legitimate CEO, What advice would you give to someone going through either of those phases right now?

[01:09:12] Tim Cool: Yeah. So for me, Ryan, one of the first things was you got to hire the right people. Hire smart people. Hire part of the new. Um, the, the, the paradigm shifts for me was, it's no longer about me. It's about the organization. It's about my staff. And, and you're no longer the hero in the story, you're on the story.

[01:09:35] Tim Cool: It needs to be your customer and your staff. And, um, if you're going to actually lead people and not just be a dictator, uh, to them, they need to know that you care about them and that you're doing things, you know, for them. Um, the, the other thing I would tell somebody is man, culture, culture, culture. If, if you can't build a culture that people want to work for And want to stay with you.

[01:10:03] Tim Cool: Um, I mean, in our 13 years, I think I've only had to fire one, no, two people and two people left. 

[01:10:11] Ryan Wardell: That's a really good strike rate. Like what do you do in terms of culture to, to get that kind of retention? 

[01:10:17] Tim Cool: So we're a hundred percent remote. So we're, we're on each of the coasts. of the United States and everything in between.

[01:10:24] Tim Cool: We're in 10 states. And so we have to be very intentional about our culture because you don't have water cooler conversations like you would in an office building. So like in our Slack channel, we have a wins channel that every, we we've got automated, uh, with make that every time we get a new subscriber, it pops it up and celebrates it.

[01:10:43] Tim Cool: And so the whole team gets it and sees it. And people chime in, um, that, that's one way to build the culture. Uh, we, we actually created what we call a water cooler channel in Slack, where if you've got funny pictures of your dog or your cat or your kids, you post it there. It's, it's that area that, you know, if you walk somebody's by someone's cubicle in an office, you might see their kids or their pet or whatnot.

[01:11:07] Tim Cool: And so we've created an avenue for that. Uh, we have one called thoughts. So, you know, if you read something that really was kind of, um, um, You know, impactful on you. You put it there and, and people can, can comment on, um, uh, we'd be in a faith based organization. We have a prayer channel where someone say, I'm going through a tough time.

[01:11:26] Tim Cool: Can someone, you know, pray for me? And, uh, it was interesting, uh, you know, 45 days sabbatical, 42 days, not on Slack. Um, I checked Slack the last three days to try to undo the inbox and it are in the Slack channels that were available to everybody on the team, because you can have private channels and then the public channel of those channels on Slack, the two that had the most interaction in the 42 days I was gone was the wins channel.

[01:11:59] Tim Cool: In the prayer request channel, which means that our people are caring for each other. We actually went to the, we, we've got a vision statement, a purpose statement and four core values. So I had them engraved on solid wooden blocks with every, you know, all that's all that's right there. And everyone on the team gets one of these.

[01:12:22] Tim Cool: And when I get a new employee, I send them one of these as well. We have had people take these with them on vacation. We had a lady on a cruise ship, set it on the size of the side of a cruise ship to take a picture of it. I've had guys airplanes put it in the window of the airplane. So it's in, it's becoming ingrained in them.

[01:12:43] Tim Cool: And one of the biggest things, Ryan, that we do. Is Every Friday we do an alt hands on deck team. It's the only time that everybody is together. Teams have their own standups during the week, but once a week I lead that Friday meeting and we start the meeting off. Um, with, we have a corporate chaplain that comes in and says a prayer to start off, but then we move into, give me, give me your highlight of the week.

[01:13:09] Tim Cool: I call it my lightning round. Give me one house. What was, what was great. That way it goes around. I do some business stuff that at the end we do a cultural moment and I'll tell them, what did you see your teammates live out our culture this week? And I have people that come to the meeting already written out lists of the things they want to share that they saw their teammates live out that we care or that we're agile or that we're going to connect it.

[01:13:37] Tim Cool: Or one of them is we get her done. Um, you know, so they're already saying, Hey, I saw Ben do this and man, he jumped in and just did it and it builds that culture, um, amongst the team of enormous appreciation for everyone. 

[01:13:51] Ryan Wardell: Wow. It's gotta be, it's gotta make you feel happy to, to go away for 45 days. Come back.

[01:13:57] Ryan Wardell: Not only are things. Not on fire, um, but to see the, the, the winds channel and the, and the water cool channel, you know, people, uh, sorry, you said the prayer channel was the other really active one. Um, people care about each other. People are, you know, actively engaging, you know, helping each other out.

[01:14:12] Ryan Wardell: That's, that's gotta make you feel really proud of what you've built. Um, 

[01:14:16] Tim Cool: it's exciting for me. It's a, it's really encouraging. I asked my operations team, who's basically my functional leaders in the company, uh, while I was gone, what stayed the same? What was different? What surprised you? What big rocks did you get down?

[01:14:32] Tim Cool: What silly stuff? And a couple of the people said, you know, a lot of things stay the same. We didn't notice a big difference while you were gone, except that particularly from our operations team, one of the comments was, Everybody in the operations team just focused on their areas of possibility, but there wasn't that over arching of where we're going as a unified team that was missing.

[01:14:58] Tim Cool: And so as a CEO and culture, uh, again, if they don't know where you're going, no one's going to follow you. Uh, otherwise you're just, you're just on a walk about if, if you, if you don't tell them where you're going. And so, um, the whole idea of that's part of my role as CEO is, uh, I don't know if you're familiar with Herman Miller.

[01:15:22] Tim Cool: Um, he was, you know, I'm sorry, of, uh, Max, uh, Dupree, who was the CEO of Herman Miller, the high end furniture company, 

[01:15:31] Ryan Wardell: you 

[01:15:31] Tim Cool: know, the thousand dollar chairs for your office. Um, nope, not one of his, um, but he made the comment though. The role of a leader is basically two things face reality and say, thank you.

[01:15:49] Tim Cool: You know, face the reality of what's going on in your business. Is it good? Is it bad? Does decisions need to be made? Do people need to change? Do they need to be moved on? Uh, do you need to cut budgets? Do you need to spend more money? Whatever, face reality. Don't, don't sugarcoat that, but then say thank you to your team.

[01:16:08] Tim Cool: Cause as a CEO, you're not doing the work anymore. And if you are still doing the work, you're probably not a CEO. You may have the title CEO, but if you're still being the tactician, And you're performing everything. Um, there's a 1950s motivational speaker by the name of Earl Nightingale here in the States.

[01:16:27] Tim Cool: Um, who made the comment that as a CEO, you need to determine what needs to be done and then find somebody to do it. Not you, because if you're the CEO and every time there's something to get done, you go do it. You'll never build a team and you got to let them know. And you know, there's, you know, there's, there's somebody that you and I both know in the SAS world that I'll go unmentioned, but it is, it was one book, uh, that he talks about is if somebody else could do it, 80 percent of you as good as you, that's freaking awesome.

[01:17:03] Tim Cool: And so as the CEO, you've got to get comfortable with, they're not going to do it as good as you. You know, if you're a tech founder, they're never going to code as good as you. If you're a business founder, they're never going to run the books as good as you. They're not going to sell as good as you. If they can sell 80 percent and you can go do other things.

[01:17:23] Tim Cool: That's freaking awesome. But if you don't empower them to do it, how are you ever going to know that they can do it? 

[01:17:29] Ryan Wardell: And that's where a lot of, a lot of founders get stuck at that kind of doing everything and they just can't hire a team to, to take the load off their plate. Um, Tim, one, one final question.

[01:17:39] Ryan Wardell: Is there, are there any other books or tools or resources that you would recommend for, for other founders? 

[01:17:44] Tim Cool: So the, um, the SAS playbook by Rob Walling, in my opinion, is a must. Must read. Uh, so I would, the last couple of years I've gotten really big in audio books. And so I listened to it and was so taken by it.

[01:17:59] Tim Cool: I bought it, bought the hard copy, read, listened to it and just highlighted the crap out of it. And then I had my operations team read it and we spent an hour and a half to unpack one day. I wrote cliff notes out of it for the team. And, and got it to him. So to me, that's also a must have for anybody. Uh, one of the books I share with you before is a book called before you exit by Dan Andrews.

[01:18:23] Tim Cool: And he was one of the impetuses for me to take the sabbatical. Cause he talked about, he had sold his SAS business and he wishes he would have taken a 30 day sabbatical before he did it. To realize the company could run without him and he could still make a profit and make a living without having sold the asset And 

[01:18:44] Ryan Wardell: and that really 

[01:18:46] Tim Cool: kind of struck a chord with um other books.

[01:18:51] Tim Cool: There's one here. Um, a ceo Does three things it's a really good book It basically talks about culture people and numbers And so again for those founders that are trying to move into a ceo role Uh, that's a great book Um any of the the geno wickman books rocket fuel traction Those are good books. And then if you haven't gotten the third edition Running lane, um, because my product manager recommended it to me, but he only had the second edition I said, hey, do you remember this from from the book?

[01:19:24] Tim Cool: He goes. No, that wasn't in my edition So make sure you get the third edition if you get so Those are those are the books and some of those were my um sabbatical reading journey, if you will. 

[01:19:36] Ryan Wardell: Fantastic. That's, that's, that's a lot of really good advice. Um, uh, Tim, we, we are just about out of time, but if anyone is interested in working with you or is interested in finding out a bit more about, uh, smart church solutions or in getting in contact with you, what's the best way to get in touch?

[01:19:52] Tim Cool: So if you're a, if you're a saucer, You can obviously reach me on the Slack channel. And, uh, for those of you who aren't a member, uh, unabashed, uh, promotion to, uh, to sign up for it, not for Ryan's benefit, but for yours, uh, because I get an enormous amount out of it. Uh, with many of the founders, uh, that are on that.

[01:20:14] Tim Cool: So thank you, Ryan, for, for setting it up. 

[01:20:16] Ryan Wardell: Appreciate the kind words. 

[01:20:18] Tim Cool: The other way is you can reach me at 10. Uh, at smart church solutions. com. Uh, and you can find me on LinkedIn as well. I have no idea what my handle is, but it should put Tim cool at LinkedIn. It'll come up there somewhere. Um, but those are probably the best ways to reach me.

[01:20:36] Ryan Wardell: Fantastic. Tim mate, it's been a pleasure. Thank you so much. There was so much value in that. And I think anyone reading, uh, anyone watching this, anyone listening to this is going to be scribbling down notes, you know, as, as fast as, as you could talk. So thank you so much for coming on. That was, that was amazing.

[01:20:49] Ryan Wardell: That was, that was great. Thanks a lot. 

[01:20:52] Tim Cool: Thanks Ryan.