How we created a spin-off SaaS from our $10M+ consulting business.

I have a first business that business does very well, which my,

uh, consulting firm and I'm basically building and spinoff SaaS product.

So the first business has, has all the money to fund the second one.

Uh, and that's how I plan to keep doing.

Um, I grew the first business to a level where, um, I am not.

I'm actually doing the work.

I'm just like high level the CEO helping me thinking, uh,

and helping with strategy.

So yeah, the whole funding is gonna be bootstrapped.

hello everyone.

Welcome to the B2B SaaS podcast.

I'm your host.

Today we have Phil Vez with us.

Phil.

Here is the the O of a company called Dev Stats.

Hey, Phil, welcome to the show.

Hey, great to be here.

All right, Phil, so let's try to understand what your company

does and why customers pay you.

And I'm talking about dev stats.

So,

so dev stats, uh, has the goal of helping development

teams get into high performing stage.

So like we have all the tools that we will guide, you understand how your

development team is doing so it can improve things like, uh, planning

accuracy, deploy frequency, code quality.

So it's all about making sure your development team, it's.

Giving the best output they can, uh, and also having data around

how they're performing and be able to mentor them to get better.

Got it.

And talk about your users a bit, right?

So like, who are the primary users of this product?

And maybe you can just pick one developer and how they exactly use

your product on a regular basis.

So the users of our products are VP of Engineers and CTOs.

Those are the people that are usually gonna buy our software, uh, because

those people, they have, what's their job is to make their development team

be better and to mentor their team.

And what our software up being is that tool.

That they can use to mentor, to understand how their teams are

doing and to improve their team.

They end up building, bringing out their development team to the software

so they understand where things are, but the buyer and, and the, the person

that gets the most benefit is the VP of engineering or a C T O, sometimes in

some companies even ahead of product.

Got it.

Let's, let's talk about, I wanna understand your customer base, right?

I mean, developers, like every, every company on the earth do have some sort

of development teams today, right?

So who are you primarily selling this to, right?

As of your, as of today, what's your customer base look like?

Yeah, so, so our customer base are kind of like, uh, small

to medium size development teams.

Uh, they're teams from 10 to a hundred developers.

Uh, those are the teams that are using our product right now.

Um, so.

Most of the times they're not using any solution to solve that kind of

problem because most of the other solutions are targeting bigger

companies, and we are helping them with a tool that's a little bit simpler

and then they can implement quicker.

Uh, so yeah, that's our customer.

It's a, it is a development team of a hundred to.

To 10 developers.

Got it.

And like, how big are these deals?

Right?

So, uh, how do you charge on the, like is it per se basis or

do you have any other metric?

Yeah, it's per se, uh, and it's an annual base, so it's $25 per

month, but end up being, um, on, on an annual base, like two 50 a month.

Two 50 a year, sorry.

Got it.

Uh, so, so

what's, what's your typical deal size look like?

What's your average a c v?

Is it around 10, $15,000?

Is that your I like average number.

I would

say we are close to, yeah, nine, between nine and $15,000.

Got it.

So, and like how many customers do you have on your platform?

As of today, we have

50 customers right now.

50.

Right.

So that, that makes a lot of sense.

And like just, uh, sort of help me understand your growth journey here.

Right?

So what was that number, say 12 months ago?

How many customers we had.

Uh, so we

actually, we were in beta for a long time, so 12 months ago we

had zero, and then we stopped bringing people for free to use the product.

Uh, and they were like the people that kept using, we were like, eventually we

transferred them into paid customers, but we just got out of beta just like.

Three months ago, uh, it's where we start going back to customers and

say, what do you think about the, the product and what do you pay for?

And, and that's kind of like where we are.

So we just left the beta, we had like many cohorts mm-hmm.

Where we bring like 10 people and.

10 companies Right.

Each with like 10 to a hundred developers.

And if people would churn, we're like, what happened?

Why they're not using the software?

And then we did another cohort until we figured out, okay, we have something

that people are using every week.

And, and that's when we, we took the product, uh, out of beta.

So that was the metric.

Can we get good product that people use every week?

Got.

So let me ask you a different question.

So when did you get that first dollar of revenue as a pay?

Like when did that first dollar come in from one of 15 customers?

Oh, it was in January.

It's just been like, what, four months now?

Yes.

And you've, you've got 50 paying customers.

Yes.

Within just four months closing bills.

Like, alright.

That's, that's a wonderful story.

Right.

So I just wanna understand, right, so just, just go back

12 months before, right.

So like, when did you sort of have that first version of your product ready and

just talk about that zero to one journey.

How did you get that first customer?

I think it's, for you, it's beta customer and then converting

them to a paying customer.

Just talk about that, you know, zero to one journey.

So

we just code email a bunch of companies and like,

Hey, you're building a software.

We'd love you to be part of this, of building the software with us.

This is the problem we're trying to solve.

Come on, uh, use it for free and, and give us feedback and we, and you're

gonna be part of like the founding.

Team of customers that help us, uh, steer the soft in the

direction that's gonna serve you.

Uh, and that's how we did it.

And so it was easy to get people to end for free.

Uh, and then from there we convert them into paying customers.

So

like, like it's, it, it just looks so easy,

but I, I know it's not right.

So like, what was the trick there?

Right.

So what, like, were you focusing on any particular niche or like what really

worked for you in terms of cold emailing?

Because you're saying you've got 50 odd customers today.

So I'm assuming your top of funnel must be like way more, right?

Maybe 200, 500.

I'm not sure how much that even is, right?

So like, just talk about that metrics a bit and like what, what was that cold

email strategy that worked for you?

Now we just saw targeting companies using Jira.

They had between 50 and a hundred developers.

Uh, because Jira is great to manage projects, but doesn't give you

enough reports on actually how your development team is doing and

how you can help them be better.

Uh, and that was the first problem we were trying to solve and, and our

strategy was like, Hey, JIRA is not, is leaving you in the dark and is not

helping you, uh, improve your team.

Uh, here's the add-on.

We don't want to replace Jira, but we wanted to fill that gap.

Mm-hmm.

That they're not filling for you.

So

that's this.

And then who did you mail to?

Like were these vp, VP of engineering or who, who

was that request?

Yes.

Yeah, we are going to VP of Engineers and

CTOs.

Got it.

And then you got a bunch of, bunch of people expressed interest

and then you put them into what, like a beatta plan or something?

Yeah.

Then, then I just,

we, we still don't have actually a way for customers to pay

from the platform, which are draft line.

So I just.

Have them now sign up.

I gave like invite code for each one of them and they were

able to get in and start using, and then we track usage to Xpa.

Got,

got it.

Listen, just talk about that first.

So you mentioned right, four months before you sort of had that first

customer paying you something, right?

So how long did it actually take?

Like how long did you had to sort of put them in that beta stage and you know, how

long did you have to nurture them before they actually you managed to convert them?

Like, like how did that, how did that sales cycle look like for

the first few customers at least?

So

like our goal was to, again, get people using the software.

Mm-hmm.

So you're, we are changing.

People are like already the beta, but people are like dropping off why they're

not using, why they're not coming back.

And then as we start seeing people using the software and watching the

metrics, we, that's when we reach out to them, Hey, looks like you're

getting value from our product.

We appreciate you being the beta, would you be willing

to become a paying customer?

So, so that's kind of like how we did it.

First we make sure to get the value.

Mm-hmm.

Uh, and, and for the first many months we had a product.

But people were leaving and so we kept like asking their feedback on

Slack and trying to get people to stay and, and that's kinda like what we

did.

Got it.

And when, when did you onboard that first beta customer?

And I'm asking you specific details because I really wanna

understand that journey, right?

Because it's really a wonderful story.

Getting 50 odd customers in just four months is not an easy thing.

I'm assuming you must have done a lot of things before that.

So when did that first cus like, when was it, when your, when you

onboarded your first beta customer?

I was probably more than a year, a year ago or so, a year ago.

So it

took you around like 10, 12 months to sort of, you know, to back,

go back and forth and figure it out all, and then just kind of converting.

Yeah.

And, and, and again, we, I was not in the rush

because I have another business.

Mm-hmm.

Uh, and the business was funding.

And my, my goal was actually also can we deliver value for

the people using the product.

Mm-hmm.

I wasn't too worried about like, I have to bring revenue.

I want, I just wanted to really deliver value to the people using the

product and, and that was my goal.

Got it.

Like, and how many beta customers you had.

Like, look, just talk to me about that conversion, right?

So you've had a, you must have a bunch of customers, like

how many customers was that?

Right?

So to get these 50 paying customers,

it wasn't, it wasn't too much, like maybe

200.

All right.

So that's, that's a pretty good conversion rate, I guess.

Yeah.

Got it.

Right.

So, yeah, so just, I wanna close the story around the top of Funnel L for you.

Right?

So is it just cold email?

Did you do nothing else?

Was it just a bunch of cold emails?

It is just cold email.

I, I, I, I love cold email because allow us to figure out the messaging.

Uh, and it's, it's not super scalable.

I don't think it's a scalable, but that's how I grew my older

business too, from the beginning.

Now I do zero code my other businesses out inbound, but I, I just like as

the first channel, uh, so you can see what people are responding to and.

You can

speak with people.

So how, how does the re reply rate look like in a niche like this if you're

sending a mail to VP of Engineers?

Right.

So like how does the reply rate look like?

Oh, oh,

they hate get those emails because they get so many emails

and, but it's, most people, often developers for cheap and, and they,

that's the emails that they get.

So like when they're getting an email like, Hey, this is a software and I want

you to be part the, probably weight's a little bit better, but it's too

high, it's still pretty low, you know,

like, like can you just put a number there?

It's, is it 2 5 1 2%?

One

2%.

Yeah.

It's very low.

But that still works, right?

I mean, you've got tons of companies using Jira, so I think you, you, you've

got a lot of females as well there.

Yeah,

it works for a while.

Like you no wanna forever, but it works in the beginning for

sure.

Got it.

And talk about the conversion, right?

So like once somebody is sort of on boards, right?

So how do you convert them to a paying customer, at least What

have you been doing so far?

So is it you talking to them getting on a couple of meetings and closing deals

or do we already have people, you know, sales folks in your team who's doing

No, there's no sales force.

The team is only five of us and the sales out.

Founder lab, which I'm doing all the sales, so, but I, but again,

it's, it's, it's more about making sure they're using the product.

I'm looking how they're using the product.

I'm, I'm making Loom videos and sending them, Hey, how does,

how this is how you can take advantage of report X or report y.

Uh, and it's just, again, making sure that they're using the product.

So, because once they're using, and I have the metric on my hand, I can just go and.

And ask for the money.

So

what you're essentially selling, telling me is that you've managed

to close almost 50 deals single-handedly during the past 12, 15 months.

Is that what you're saying?

Well, yeah.

That's, that's wonderful man.

Yeah, that's, that's, but

well, well, that's fair too.

Like I did give you spa special pricing and special Yeah.

That the use for, for those people being early customers and

so Yeah, I think you must have, yeah, you must

have trick up your sleeves.

Right.

But, but still your ACVs around 10, $12,000 as of today, but I'm

assuming you would ideally want to sell it at, let's say, $50,000 or

a hundred thousand dollars deals.

Is that what you're saying?

Yeah, like for example, a company with like thousands of

developers could still use this.

Yeah.

And, and, and so it could, but I'm just working with the smaller

companies first, making sure we get the product to a good place.

And Cause once you bring a big, a big customer, they want to really,

they want a lot of stuff and you have to build this stuff for them.

And also you increase your risk because now our revenue is in one huge customer.

So I want to be prepared before we go that route.

But it's definitely a product that.

They can have a, a, a bigger a c

v.

Got it.

Like, and what's, what's the future here, right?

So what's, what's your next step?

Right?

So what you're gonna do while you gonna, like, I, I'm gonna

keep growing slowly, to be honest.

You know, like, uh, it's a little bit harder to get customers now that

we are not getting, telling people, Hey, can use a software for free.

Uh, it's a, it's a bootstrap company and I'm hoping to keep a bootstrap,

uh, and just keep growing a pace that's sustainable, uh, that we

can keep our customers happy.

So,

At what, at what stage are you looking to bring in

external sales reps into your team?

I mean, it's, it's primarily founded lead sales so far, right?

So, but you wanna scale it at some

point?

I, I think after we get for to million dollars in revenue, we

might bring outside sales or might also do a product cloud play.

Uh, once I have enough revenue and you understand where the value

is, we can just do a product cloud and let people sell on board.

In the beginning, I don't like to go product cloud because we don't know.

Kind of like what's gonna make people want to use the product.

Mm-hmm.

But once we figure that out, and we can work on a, on the journey, uh,

and, and going by a product like that.

But you, so are you, are you a first time SaaS founder?

Are you, are you not?

Am I what?

Sorry?

So are you a first time SaaS founder?

Are you building a SaaS product for the first time?

Oh,

kind of because you, you

looks like you've got it all figured out and it's

been working wonderfully for you.

I mean, you've got all of these plans, I mean, and you have a very

clear vision of when, when that's gonna work and when it's not.

Like where, where do you have all of, like, where did you get all

gain all of this knowledge from?

Just talk about your experience and background.

Years and years ago, I built a small SaaS

product and I sold that product.

Uh, from there, I, I used the money to move to United States.

I'm from Brazil.

I started consulting firm.

The consultant firm was helping other people building SaaS

products, which I built hundreds of SaaS products for other people.

Grew the consulting firm for over a hundred employees and like really

saw how our customers were doing.

And that's kinda like where my experience come from.

I, I have built a lot of SaaS products.

One for myself, Baah for other people.

So it's definitely not my first time and, and I don't think it should be anyone's

first business assess, to be honest.

It's, it's kind of complex

business.

Yeah, I know, I, I, I, I could get that sense, right, just talking to you.

Right.

I mean, you've got it all figured out.

I mean, you've got plans, you're executing it them wonderfully

Well, that makes a lot.

So let's talk about this consulting business as well, right?

So you, you mentioned you've, you've helped a bunch of, you know, SaaS

companies, you know, grow scale and negative, I guess even ex acquire, right?

So like, how do you help them on a regular basis and do you do it even

today with, with your SaaS product?

Yes, for sure.

Um, I actually, that's still where my, my money's coming from.

The SAS is not profitable yet, so, uh, and the consulting firm is pretty big.

Uh, but basically I work with industry experts.

Let's say you were an expert in driving schools, uh, Or you were a CPA that

knows everything about CPAs and you wanna build a software for CPAs.

Uh, so you hire us and we help you take the product to market, but because you

are the industry expert, you know how to sell, we know the features that, that

we need to do, and those are the people that we work with in the consulting firm.

And that's kind of like the strategy I copy here because I'm an expert in

running development teams and so I'm building a product to help people

better run development teams because basically I'm running 20 plus development

teams for other people, uh, and I have to make sure they're doing good

work in delivering a lot of value.

Got it.

Right.

So I know I would want to ask a lot of questions here, right?

But in the, in the light of time, I'll just ask you one question, right?

So I know you've got a lot of experience working with hundreds of SaaS

companies out there, and you go back and build a company of yours, right?

So why, why this pro, pro, uh, product in particular?

Like why this space that you've just chosen, right?

So what's so special about it?

Like you must have some framework and something must have, you know,

this product must have ticked those.

Can you just talk, like talk, talk about that, those things.

Right.

So that really,

I think that product will allow me to do what I have been

doing, but in a bigger scale because my hope is to help people have

development teams that are performing.

They deliver a lot of value, and the one way that I do that is to my service

offer where there's like a done for you, Hey, here's a team that can do a.

Job very well.

My software solved the same problem, but it is a two.

Here's a guide and use this guide to help you, your team, deliver

a lot of value for yourself.

So it's kind of like solving the same problem that I have been solving

for the last 10 years of my career.

Uh, it's just solving in a bigger scale.

That's what I hope to do.

So with your

consulting firm, you focus primarily on the development,

uh, or the product aspect?

Not really.

The marketing and GTM aspect is that it.

Yes, yes, for sure.

We just developed the product and that's what

we do.

Got it.

So essentially you've just converted your whole consulting

business to a SaaS product, and then you're selling it out, right?

Kind

of, yeah.

The consulting business is still there, and the consulting business

also has a product part where we have people plan their product.

The SaaS is just about making sure developers are doing an amazing

job and they're progressing and getting better at what they do.

Right.

So, so like.

Like, are you able to use some of your credibility that you've built with

your consulting experience, and are you able to use that to grow yourself?

If yes, how are you doing that?

Uh, I haven't done that yet, but like I, in the consulting

firm, I have some very big Fortune 500 companies as a customers.

Mm-hmm.

And I think once the product gets more mat mature, I can go and I

can sell my own product for them.

Uh, so, so there's definitely a synergy and there's a few of our

customers using our product right now.

They were customers of, of the consulting firm.

So, so there's definitely similar there, but

it's just cold emails for now.

You're waiting for it to get matured before you could use that synergy.

Yeah, that makes a lot of sense.

Yeah.

And talk about the funding, right?

So I mean, you mentioned that it's, it's t stamp, the SaaS product, right?

So talk about the process, like what's, like, are you planning

to raise any external funding?

If yes, why?

If not, why not?

Just.

No, I'm not like the whole strategy.

And I saw, again, I saw a lot of my customers doing that very successfully.

It's because I, I have a first business that business does very well, which my,

uh, consulting firm and I'm basically building and spinoff SaaS product.

So the first business has, has all the money to fund the second one.

Uh, and that's how I plan to keep doing.

Um, I grew the first business to a level where, um, I am not.

I'm actually doing the work.

I'm just like high level the CEO helping me thinking, uh,

and helping with strategy.

So yeah, the whole funding is gonna be bootstrapped.

I like that way.

Uh, I, I can control the growth rate.

Like, like I told you right now, we're not focused on, on growth.

We're focusing on keeping our customers happy, improving our product.

Uh, and it's less stressful.

Yeah.

Uh, and you know, and, and I have some friends that had big exits on vc.

Firms or even some of our customers, but at the end of the day, you end

up with like 10% of the company.

So you sell for 300 million and you got 30 million.

Yeah.

Or you can't have a hundred percent of a smaller company and sell for the same

30 million and never have to do with investors and a preferred option B.

Absolutely.

I mean, I'm, I, I'm totally on board with this, right.

So, so a follow up question, so is the plan to maybe just grow it to maybe

10 or 20 million and then just exit?

Is that the plan in the next few five, seven years?

Yeah.

Yeah.

I think I always exit your business one way or another.

Right?

You, you might sell the business, got a business, you might die.

So, uh, I know I'm gonna at some point, but I'm not like just planning,

oh, I have to exit this business.

Yeah.

The, the plan is to build a sustainable business that I could

keep for, for as long as Gotcha.

Does make sense.

And just talk about the team, right?

Is it just five members as you mentioned?

Yes.

It's just me and four developers.

Got it.

And yeah, I think

I play the product.

Row, like, like the product vision, and then there's like the tech

lead and the other developers.

And

just one question here.

So the consulting firm that you have, like how big is it?

So you, you've talked about hundred hundred employees in there, but in

terms of revenue, like where is it?

Is it in tens of millions of revenue dollars?

Yes.

It's a figure here.

Okay.

So yeah, one last question, right.

So why SaaS product when you've got such a brilliant, you know, consulting

firm already, which is bringing you like, you know, like a lot of revenue.

So

what I'm loving about building this SaaS product is I'm

back into like more of the doing.

You know, and, and that being r and d for my consulting firm, because

the things that I'm doing here when I'm planning about the strategy and

how we deliver work for a consulting firm, it, it all comes together.

But basically as the company start growing, you start,

you get further and further.

Probably actually doing, and it doesn't make sense for me as the c e o of the

company to go there and do the work for the customers, but I get to do for myself.

And that gets to be, to be a benefit for my customers and, and for my team.

And I'm training them.

They, Hey, this is how I have to think about it.

It comes from experience.

So it's, it's not just like, Hey, we build SaaS for the product.

We build SaaS for ourselves too, and we understand what building SaaS is.

So, so that's part of like the PO to, to create my own

product.

All right, Phil, thanks for taking the time to talk to me.

Hope you scale.

Dev starts from much, much greater heights.

Okay, no problem.

It was great to to have you here to talk to you.