Andrew: Hey there, freedom fighters. My name is Andrew Warner and this is Mixergy, home of the ambitious upstart. And this interview is part of my 10 K series, in which I want to interview founders about their first $10,000 in sales.
Today’s guest is Alex Ghiculescu. He is the co-founder of Tanda, which wants to replace the old time clock system, where employees come into work, punch in, and when they leave, they punch out. Tanda wants to replace it with a new, more modern system that uses new hardware and the Cloud.
In this interview, I want to find out how he built up his company, and I want to especially pay attention to how the idea came from their ability to find their customers’ pain. And it’s all sponsored by Scott Edward Walker of Walker Corporate Law. I’m holding up his mug because he’s the sponsor. Scott is the startup’s lawyer. If you’re an entrepreneur, you need to check out Walker Corporate Law whenever you need a lawyer. Alex, welcome.
Alex: Hi. Thank you.
Andrew: So, the pain. It was actually felt by your co-founders. Can you describe what they were going through when you realized the problem?
Alex: Yes. So, for the context, we all lived together.
Andrew: Okay.
Alex: Which was great. And about, a few years ago now, the rest of the guys on the team were at university and they were running a student organization there, so kind of like a student union sort of thing. And they were running three bars, three news agencies across at multiple locations.
Andrew: Wait. They were, as part of the student union, they were running bars?
Alex: So, in Australia, or certainly in Queensland where we are, the actual student union owns all the bars on campus, the news agencies, all the retails as well. [??] shops, which is my favorite. So they were running all these commercial outlets there. It was a pretty big responsibility.
And the biggest issue that they had was that they’d get a report every three months saying how much they spent on their start. So they’d come home every three months and say, ‘Gee, this is shit. We have no idea how much we’re actually spending. Like, we’re just throwing money out the window as far as we know.’
Andrew: Because they didn’t know how much time their employees were working and . . .
Alex: Yes.
Andrew: . . . as a result, they didn’t know how much money they owed them for. . .
Alex: Yes.
Andrew: . . . all those hours.
Alex: They couldn’t really be in ten places at once, given that there were so many [??] to actually cover. So they came home and we talked about it, and we said, well, maybe there’s a better way of doing this. And we sort of started looking around, and I guess they looked around and tried to look at the competition, and there’s definitely a very crowded market, as I’m sure anyone that’s looked [??].
There are just so many people out there trying to do something along the lines of what we do. But for an organization to distribute [??] all over the place, well, you can’t have just one person out looking at all of them. Nothing really worked. And we thought, well, there’s no reason why there’s nothing that will solve this problem. Like, it’s not like it’s impossible to fix. So let’s give it a go.
Andrew: Okay.
Alex: So they came home one day and they said, ‘We’ve got to do this ourselves. There’s no other way.’ Which was, obviously, the perfect solution. So I started writing it. And we worked it out for a few months, sort of going back and forth, going to test it in these organizations, trying to get people in these bars and [??] shops and so forth actually clocking into the thing.
And eventually we came up with something, over the course of maybe six months or so, we came up with something that we thought, well, this actually might be really useful and it’s working quite well for us. We’re figuring out where this time [??], we’re figuring out where people are late for work or just not showing up. Maybe we can give this to other people who hopefully will find it useful as well.
Andrew: I see.
Alex: [??] in the sense that once we realized it was quite useful, we sort of tried to push it to other people [??].
Andrew: Let me break that down. I want to really get to understand this process. When you say that you look to see what was around, what did you see that you weren’t happy with? It seems to me like this is a solved problem. Time clocks have been around since the Flintstones, right?
Alex: Quite a while.
Andrew: Yeah. So what did you see that was so troubling?
Alex: The [??] clock actually had been around since 1908, [??] so it’s certainly not a new thing. But what we found on the market in terms of, I guess, a big focus in the organization at the time was they were also trying to get everything into the Cloud. So, for example, moving Office onto Google Docs and stuff like that.
So the first priority was, let’s get something that works in the Cloud. Let’s not install any more stuff in our business more than we have to. So that ruled out a whole bunch of competitors straight away.
Andrew: I see. And the Cloud was important because you wanted an easy way to get things into, get the data into Google spreadsheets. I have that right?
Alex: Just have the data online in general, and have it accessible. Because again, this organization is spread across so many places, and if I’m managing from here today, managing from there tomorrow, there’s no point in having the data here, and, like, it kind of limits my ability to do anything.
Andrew: Okay.
Alex: So we have the flexibility of people being able to, I guess, see how their staff are working and see people working in real time from anywhere. That was, I guess, quite an important point for it. So, we’ll keep around. We’re going to have the ones that did work in the Cloud, and all of them just seem to target small operations. Like, if you’re a coffee shop with five people, then it’s not about competitive [??] well.
And that would [??] the market now. But if you had 150 staff across seven [??], it was, I guess, a bit less easy to find something [??] towards that. And it did collect us a bit of a niche in the market. So if you’ve got a 1,000 or 10,000 staff and the [??] don’t help, you’ve probably already got your own custom built viral system.
Andrew: Okay.
Alex: But if you go with a five-star, you can probably got a [??]. But there was a definitely a point between there where there was nothing really designed for it.
Andrew: Hey, Alex. Would you tap your mic a second? I just want to make sure that the audio is coming in from the mike. Yeah, it looks like it’s not.
Alex: Okay.
Andrew: Why don’t we fix it? You’re on a Mac, right?
Alex: Mm-hmm.
Andrew: I can show you how to fix it. So what you do is click on my face in Skype and hit command comma. That’s going to bring up the preferences. And in there, you’re going to see something for audio in, and if you select your mike, we should be okay. Yeah.
Alex: How’s that? Awesome.
Andrew: Okay.
Alex: And I’ve been the whole time with that. Just drop out now.
Andrew: Oh boy, now your audio is a little bit lower, but it was going the whole time off of your computer and I didn’t realize that it was going off your computer, except every time you tapped the desk, I picked it up.
Alex: Oh, okay.
Andrew: All right. I think we’re good now.
Alex: I’ll turn it up a bit.
Andrew: Okay.
Alex: Is that better?
Andrew: That’s fine.
Alex: All right. Sorry.
Andrew: No, I get it. Frankly, this whole thing is supposed to be so much easier. You and I should just have a clear, crisp conversation. We are now in 2014. We’re still not there.
Alex: Yeah.
Andrew: But that’s okay. We’re pioneers. At some point, this will be solved. What won’t be solved or won’t easily be solved is the ability to understand other people’s businesses. The ability to communicate what worked for others to a big audience. And that’s what I think is worth me spending my time on.
Someone’s going to solve the technology and we’ll keep working on it here. But no one except for me is going to figure out how to really dissect how an entrepreneur built up his business. I’m going to do it every day. What do you think of that, Alex? I know you’re not a big fan of Mixergy, so I figured I’d just lay a little bit of my mission on you.
Alex: Oh, I’m trying to become a fan. I hadn’t heard about it, actually, until the series came up. But now that I know about it, I have been actually watching quite a few interviews trying to catch up on things.
Andrew: All right.
Alex: So I’m slowly understanding what it’s all about.
Andrew: You don’t seem to me like someone who loves business. You love more IT than business. Based on the conversation we had before we started where you said, I’m not really a part of the Mixergy demographic. You said.
Alex: Yeah. No, that’s true. I think one thing that we all talk about here is that it’s like there’s people who are involved in startups [??] startups [??] we get. And I guess we’re quite far from I guess the center in Brisbane in Australia because it’s just a small town in the grand scope of things. We’re really interested, I guess, in solving business problems. But business to us is your mom and dad, IGA and [??] groceries for a living.
Andrew: Right.
Alex: Or your shipping company that puts things into shipping containers 24 hours a day. So it’s a different perspective on business . . . [??] . . .
Andrew: You’re saying it’s either the small mom and pop shop or it’s the giant company that I can’t relate to, but you don’t identify with that in that slice in between. More than a slice. That big hunk of business opportunity in between.
Alex: Well, we try to. That’s who we’re trying to sell to ultimately.
Andrew: Okay.
Alex: I’m not [??] in between. It’s the other ones who perhaps aren’t being catered to by the current market that well. They are the ones that we really ought to try and give them an even a better perspective of their staffing. And they’re the ones who are the most useful to us because that’s where we came from.
Andrew: Okay.
Alex: This generalization or this medium-size business that had quite a potential to grow, but had a very bad reporting because there was nothing built for it yet.
Andrew: Alright. I want to continue with your story. Right now I understand the opportunity that you saw. You said, look, there’s nothing that works in the cloud that will allow my data to be accessible to me. And that works for companies that aren’t so big that they could create their own stuff.
Alex: Yeah.
Andrew: And aren’t so small that everybody is in the same room. You want something that works for many locations. I get that. What about you? I’m looking at you and I’m trying to get a sense of your motivation. I tend to feel like a lot of entrepreneurs are like me.
Maybe it’s because I project. Feel like there’s some big mission that we have to accomplish. Maybe it’s a mission to change the world. Maybe it’s a fricking mission to just change our own personal lives. I’m looking at you. You don’t seem to have that. If I’m reading you right, you just want to solve a puzzle? Is that it?
Alex: Hmm? No, ultimately the reason we did even started it was because we had to solve that puzzle. That puzzle was hard . . . [??] . . .
Andrew: It’s not I’ve got to rich. It’s not I’ve got to show that guy in high school that he’s the real loser.
Alex: No.
Andrew: No, it’s none of that. It’s not I’ve got to buy a jet. Nothing.
Alex: It’s not worth that. But . . .
Andrew: But . . .
Alex: So the reason we started was to figure out, I guess, how to solve this puzzle here. And then from there we realized well, we can get rich off this.
Andrew: Okay.
Alex: There is a huge, huge market out there. There’s hundreds of thousands of businesses that could benefit from this. So we can get rich. But it’s not because there’s some inner reasoning we have to do it. It’s just that we felt that well, we could do this or we could finish early and get shitty grad jobs.
Andrew: Nobody wants that. You’re an immigrant, came from Romania. Did you feel like maybe you couldn’t speak the language or didn’t get the culture in Australia and felt like an outsider?
Alex: I came here when I was three so.
Andrew: So, you never felt like an outsider.
Alex: Not really no. I mean Australia has been very, very welcoming, from what I remember twenty odd years ago.
Andrew: Okay.
Alex: No honestly like the biggest thing was just that we didn’t want to get real jobs.
Andrew: I see.
Alex: And now that we have, I guess real jobs doing this. It’s a lot more fun. It’s definitely a lot more rewarding.
Andrew: Your dad is a doctor. How does he feel about you going and starting your own business and taking a risk?
Alex: Well he was scared, at first. He’s probably getting more on board now that’s it’s actually making money and not just a complete pie in the sky sort of idea. But he was certainly pretty cautious about it, because he’s just gone through so much running his own practice. It’s been such a hassle for us, that’s a nightmare for him. That he was really wary of us I guess wasting our time and ultimately not getting anything out of it.
Andrew: Yeah.
Alex: But now that we are actually making this first [??] so forth, it’s really starting to come together as more than just a crazy idea, and more actually a crazy thing that we’re doing. He’s really starting to come on board, and really a big fan now. He carries his business cards around and like has twenty of these in his pocket and goes and gives them to everyone he can find.
Andrew: Oh, your business cards along with his as he walks around?
Alex: Well, he’s lost all his; he just has mine now.
Andrew: Oh cool, and you do more than ten thousand dollars but we’ll get to your revenue in a moment. Let’s continue first with the story. So I see the opportunity, you told me something earlier that I want to expand on. Which is you talked to other users or other potential customers right? And I think you even said that you were starting to sell them. At what point did you go beyond your student union needs and talk to other people and see if this is something they cared about?
Alex: I think once we started building it, and once we started actually using it within the student union. We figured pretty quickly that this isn’t just going to be a custom built solution, let me try to make it general as possible so it could work for us…
Andrew: Move the mic up a little bit more.
Alex: Yeah, so as soon as we realized that it was probably a few months in we figured well, maybe we should try and [??] it, to [??] lots of people. So it would have been maybe as early as three months after we started building it. We really started talking to networks, friends, people we knew who ran businesses, or were involved in businesses. And saying, “Hey, we’re building this thing, your business would probably benefit from it, can we show it to you?” and go from there. And people were really supportive.
They like the fact that we are young, we’re having a go at it, we’re not just sitting around playing video games all day. And people were definitely willing to check it out, and we were lucky enough have one friend of ours actually say, “Yep, I want to use that.” Once he said that we realized that it didn’t really do anything that he needed. That was a fun time there actually building a whole bunch of features, that weren’t particular useful to a student union but were useful to a logistics company.
Andrew: For example?
Alex: For example, at the guild union we had of course a casual staff but they didn’t particularly have very set rosters in certain areas, we didn’t really care that much because people in certain areas that did have rosters had a manager. We didn’t really need to know who was at work at a particular time. When you run logistics, there’s massive work by self…
…regulations in place. So you need to know exactly across the entire hundred odd staff you need to know who’s at work right now, and who is at work at 9:00 today and so forth. So it’s like when you’re in school, the teacher marks the roll at the start at the start of the day, and you kind of need to know who’s coned up so there’s a fire you can evacuate everyone. The same thing happened here, so we had to build lots of I guess workplace management features to give you an idea of who’s actually clocking into work and that sort of stuff. Which they found really useful anytime there is an emergency. Which happens probably not too often which is good, but it does happen, and it’s always good that there.
Andrew: Alright, and for my American audience. A roster is a time clock. I had to look this up myself. Right, that’s were in the old days people would take that little punch card, they’d stick it in the clock. That’s what you guys call a roster.
Alex: Yeah, we realized like a massive use of terminology that’s different here and the states. So here a roster is a schedule, as in your scheduled to work nine to five today. And the time-sheet is the hours you actually did work. So I worked nine to five yesterday and I’ve written that in. Our product which is a time-clock records the hours that you’ve worked and generates that time-sheet and compares that to your roster, the times that you were supposed to work.
Andrew: I see, okay I get it. Did you feel a little embarrassed going to your friends and saying “would you use this?” was there any hesitation about showing what you were building?
Alex: Yeah, I mean anytime you got something new and it’s not quite perfect yet. It’s always a bit awkward being like “Hey we’ve got this thing, it’ll be good one day. But in the meantime do you mind looking at it anyway? “Like we were definitely hesitant but then we looked back and we thought well, especially once we got a couple people using it. Every time we got someone on board, we just got more confident about how either it did work for a new business or we could make it work.
And really, for the first year or so, it was just making it work for each new customer that we talked to. So we slowly got more confident and less afraid of the idea that we actually had this product. To the point where now, we just talk to everyone about it. I’m not really scared to mention it anymore, which is probably a good thing for our marketing.
Andrew: When you’re talking to customers early on, there’s an incentive to really please them because you want that customer. And they’re asking for features, and you’re tempted, aren’t you, to keep giving them whatever feature they want because you just have to win them over. Did you do that?
Alex: Yeah.
Andrew: You did.
Alex: Absolutely. Yeah. If I went back and did it again, I’d do it exactly the same. There’s the whole perspective of trying to have a really well designed product that doesn’t do too much, that’s really only good at one or two things. At the same time, in the industry that we’re in, I’m not going to speak for everyone, if you do that you’ll probably end up with very few customers.
Because, certainly in Australia, paying people is such a complex task and the reward structure is so terrible that you need a big product to actually do something like this. And if you’ve just got a half-baked system then you’re stuck with three person cafes, which we didn’t really care about targeting.
Andrew: Okay. Why not?
Alex: Why not? We don’t know them.
Andrew: I see.
Alex: None of us had ever worked in a cafe. Certainly not very good at making coffee. We just felt that if we were going to target this industry we didn’t know, it would be bad for us because it would dishonest almost. And it’s bad for them as well because we’d be selling a product that’s probably not as good as someone who actually does know cafes.
Andrew: I see.
Alex: But the area that we did know was, again, distributed organizations and bars and restaurants and [??] shops. So we figured let’s talk to people of whom we speak the language and are actually trying to do and how they’re suffering. And hopefully we can help them in that way as well.
Andrew: Okay. And you still had that laboratory, so to speak, of your own student union, or your co-founders.
Alex: Yeah.
Andrew: How often were you experimenting, tweaking, trying things out?
Alex: Very often. The way we looked at it, because we were running it for a while, was that we used it for testing and so forth and they were really supportive. We’ve long since moved on and we don’t charge them anymore, it’s basically a gift to them. But we do still have friends who are there still and we ask them sometimes, “Hey, we’re doing this new thing, would you mind testing it out for us.”
And it’s really good to have people who test it, because now that we’re salaried, we don’t really need to clock into work every day. It’s not that much a necessity. So it’s good to have people who are actually in the system as it’s intended to help us keep grounded and not have all these crazy ideas that aren’t particularly useful to people. So definitely having a test bed or a customer who’s willing and able to work with you, even if it’s free, just to help you test new ideas and make sure it’s all working stably is just so, so valuable.
Andrew: Do you remember an idea that you tested that, back in the early days seemed like a good one, but in retrospect it was just kind of dopey?
Alex: Yeah. We’ve got one that’s still ongoing that we’re sort of on the fence about.
Andrew: What’s that?
Alex: What we have in time clocking design is, you put a thing like this, I’ve got one here. You put a little time clock thing in your business and your staff clock in and out of work. This one’s broken, which is why it’s on my desk. And people clock in and out of work. That’s great if you can put something on your wall. But a lot of industries will have people who are going all over the place.
For example, plumbers, electricians, lawnmowers, stuff like that. And they don’t want to have one of these at every house they visit because it’s going to be really expensive, obviously. So one thing that we’re tossing up the idea and trying to figure out the best way of doing is how to have it on their phones. So they clock in here instead. It’s one of the few features which we’d thought of, rather than having someone come to us and say, “Hey, I need this.” We’ve come out and said, “Okay, we think people will need this. Let’s start building it.”
I’m not saying that’s why, but it hasn’t really gone that well. We’re still not really sure of the best way to do it. We’re still figuring out exactly how the logistics of it will work. We’re pretty confident that we’ve figured it out, and we’re hoping to actually start pushing it as a product stream over the next month or so. But still, it’s a bit of a different ballgame to when someone says to you, “I want your product, but it has to do X, and once it does X I’ll start paying.”
Andrew: And no one has said that to you yet, you just believe that they need this.
Alex: Yeah. We think, or I think personally, that in the next few years’ time, that the majority of people in the workforce will be clocking in via their phones and the need for a time clock will be probably diminished. But that’s maybe five, ten years away, we’re not quite there yet.
Andrew: Okay.
Alex: So we’re trying to sell to what people want now, but also trying to think towards the future and what people will want so we can be ready when that happens as well, and fully able to move towards that, too.
Andrew: I kind of feel like it’s going to happen even sooner than that. I don’t know why I can’t just log in with my phone, right? There’s location, it’s location aware anyway.
Alex: If internet worked in Australia, it would be a bit better. We’re still catching up with the U. S.
Andrew: I see.
Alex: We’ll get there one day.
Andrew: Okay. Believe me we have problems over here with the internet too. Everyone says the South Koreans are the one to really emulate. The rest of the countries are behind them. So you said that there are customers that said to you specifically, “Build this feature, then I will start paying.” Give me an example.
Alex: I was big things like, “You don’t have roistering. We need to have roistering.” Sorry, scheduling. It was even smaller things like with the rosters, “I need a way of estimating my costs for a particular department on a particular day. Can you do that?” And then we’re like, “Oh, yeah we can. We’ll get back to you next week with a quote.” Next week we pulled that feature and then give them a quote.
Andrew: I see. You charge them extra for that customization.
Alex: A quote as in, “Here’s how much it costs per month.”
Andrew: Got you. Okay.
Alex: We’ll set you up over the next week and then we’ll get you on board. It was a lot of like, I guess building it based on the demand. With the idea that if we do this, we’re definitely going to lock this person in. We may as well do it as quickly as possible.
Andrew: Who was the first customer that you got?
Alex: The first one was that friend of ours who runs [??] company and he’s still using it now. He’s been using it for almost, for over a year now, I should say. And they’re really happy. Like, it’s great for them. The staff all love cooking it. They upload their photo and post it up on the wall. It’s just saving them a lot of time.
They used to have to, if there was ever a fire drill, for example, it would be such a mess going on paper and figuring out who’s actually at work today. And now they just print out a report from the system. And it’s there. That was the biggest feeling going into it. It’s just saving them a lot of time in processing payroll and figuring out who’s actually at work.
Andrew: How long did it take you to get him to say yes?
Alex: A long, long time. We started talking about it , as I said, quite early on. And we kept talking about how good it was and how it was a great system and how it’s going to be really good once it’s all built at the same time. And slowly after lots of persuading, he eventually said, “Yeah, I’ll give it a go in my business. It sounds interesting. I trust you guys. I’ve worked with you before. I figure it’s probably worth giving it a go.”
Once it was in there, it was really smooth. We said, “There’s a 30 day free trial.” They said, “Yep.” We ran it for 30 days, they started paying. That was really good, but by just talking to people, we found is certainly like the business success, there is certainly a slow selling process. You can’t just say, “Hey, here’s this product. Oh cool, you’re on board. Start paying tomorrow.” It’s more, “Hey, here’s this thing. Okay, pass. Talk to him. Talk to your CFO. Talk to the board if you need to. Talk to everyone involved. Talk to you payroll people.”
And then two months later they’ll make a decision on it. So one issue that we’re always working to improve on is how to make these turn around a bit quicker or at least more efficient. Rather than just being a complete ad hock process of talking to lots of people.
Andrew: Okay. So it did start all talking to people. And I’m going to find out about it afterwards. That’s the first customer. How’d you get your second customer?
Alex: Actually, second customer we did a mail out. So Subway, the restaurant chain, we went on their website and we found all the Subway’s in our area and we sent them all a letter. We’ve got this thing that’s great for Subway’s. And we spent a lot of money on those letters and one of them replied back. One of them called us up and were like, “Ah, I’ve never heard of this thing. Is it any good? Do lots of Subway’s use them?” We were like, “No Subway, but it’s pretty good. You’ll probably like it. Let’s come around and talk to you about it.”
Anyway, we went over there and talked to them and they were really keen. It’s just a small Subway store and they said, “Yep. Let’s start tomorrow.” And we said, “Yeah, okay. We’ll start in a week or so, maybe.” Because we had no hardware. We weren’t really ready for them just yet. So we went back, we thought, “Okay, shit. What do we do now?” We need to buy some of these immediately. Got some, went there a week later and said, “Okay, we’re ready to go. Let’s set it up for you.” And then…
Andrew: That thing you keep holding up, what kind of tablet is it that you put into the location?
Alex: This one’s a Nexus 7. This is a really old one. It’s used in testing. It’s broken at the moment. It’s not very good for testing.
Andrew: So you just use an Android tablet?
Alex: Yeah. So we’re running our software all on that. This is actually an old one with our old logo on it. We went through a rebrand at the start of the year. Which is why we can’t use that one anymore. Basically it’s just consumer hardware. We figure there’s no point in trying to pay for [??] hardware or really expensive stuff because these things work quite well. And they’re just a very good piece of hardware overall. It’s much easier for us to build for as well. All we need is a bit of a running app that runs on Android software. It’s not particularly hard to build.
Andrew: What do those things costs? I think it’s like $250 to get a Nexus 7? Right?
Alex: It’s a bit more here. Plus they’re under the 3G models as well. So we put a SIM card in each one and then if you run a farm and you’ve got no internet connection at all on your farm, it’ll still work, I think.
Andrew: I see. Well how much is that? Roughly, $300?
Alex: Yeah, about $400. [??]
Andrew: Okay, so you pay $400 for the hardware . . .
Alex: Yeah.
Andrew: . . . and I’m looking at your site. It’s $1 per employee per week plus $25 per location.
Alex: Mm-hmm.
Andrew: Typically, how long does it take you to make that money back? That’s not an insignificant amount of money when you’re starting up.
Alex: No, that’s a few months on each customer that we’re basically in the red. That depends how many employees they have, like if they’ve have got 20 on staff, it’s probably three months.
Andrew: Okay.
Alex: If you got a hundred staff it’s a bit quicker. Yes, the biggest issue that we have there for us is always trying to be on top of that cash flow and that’s good because the rest of the guys out at IT University, two of them did finance, and one did accounting as well. So, we’re really quite on top of managing our cash flows and knowing exactly how much money we have and how much we can play around with, how much we need to borrow before we can play around with any more.
It’s just a constant challenge of trying to figure out, we have this much money now, we can bring on this many people before we need to borrow more. [??]
Andrew: Why don’t you charge your customers up front, say they need to pay you for the Nexus in order to get started?
Alex: We try that, with via customers we often do require that because it is an investment on our part to buy like fifty of them, for example. Thinking back to when we were in business, we wanted to run something in the cloud, and conventionally with cloud cell phone you play by the month, and we didn’t have thousands of dollars to throw away on this new potential system.
All our competitors did charge upfront cost so we figured well, we wouldn’t want to pay an upfront cost, presume the people we sell to won’t want to for the same reason. For the smaller size let’s not charge that. We try and get their trust and winner on a month to month basis, and that’s worked a lot for us.
Andrew: Right, and you know what? It’s not just one, they have multiple locations, they need to have multiple devices, so we’re talking about a considerable amount of money.
Alex: Yeah, it’s definitely tough.
Andrew: After that mail out, first it was talking to people, then you did mail out, what was the next thing?
Alex: We did that one mail out. I’m pretty sure we lost money on that as well because we sent so many out and got one person back, so we stopped doing mail outs for a while.
Andrew: Okay.
Alex: The next one we’re talking about, one of the guys posted on Facebook and he said we’re looking for people who fill out time sheets every day, who here fills out time sheets and one guy replies, said yeah, the pizza shop I work at does. Based on that, we called the pizza shop, we talked to their manager, and then talked to his boss.
Over the course of like two months or so, we slowly worked our way up through this chain of pizza stores until we managed to get fifteen of them on board which is pretty exciting. Again, through talking to people and slowly working up the chain of command, we got to someone who said yep, we trust you guys.
After again, two months of talking to him and convincing him and toying a game of thrones to him until he liked us enough. Then, he was like, yep, I trust you guys. We’ll give it a go and are in our chain of pizza stores.
Andrew: Now you’re fifteen stores.
Alex: Fifteen stores, that was a lot of money up front. That was quite tough, but it worked out really well, and again they’re really happy now. They’ve been using it for near on nine months, I think.
Andrew: Wow, where did you get the money to get started, to invest in all these Android devices?
Alex: From our pockets. I was a programmer at a desk job before this. The rest of the guys worked at the student union. They worked at other places as well, so we had some savings. We figured we’ll each put in a few hundred dollars each week, whenever we get paid, while we’re still getting paid, and then once we got up to actually starting to earn [??] money for these, we said well, when we need to buy more we’ll just put money in there until we actually start paying for them just with the money we’re making.
That took much longer than we would have liked. For the first six, eight months we were just paying for it out of our own pockets.
Andrew: The thing is that when you’re at this stage, you still haven’t gotten your rhythm yet, you’re still at the point where you’re still trying to figure things out. Will it be cold calling into companies, will it be Facebook. Will it be mail outs, will it be AdWords, right?
Alex: Yeah.
Andrew: And usually I talk to entrepreneurs after they’ve gone through this period where they’ve tried everything, it’s been tough, and then they finally figured it out and that’s the channel that they explode with and then they continue from there. When you’re still going through it, talk to me a little about the insecurity, about the mindset that you have to have?
Alex: Not great. We tell these success stories, we tried a mail out, we got a customer out of it, but we also sent 99 letters that didn’t do anything.
Andrew: Mm-hmm.
Alex: We posted on Facebook, we got a customer out of it. We also spent a lot of time on Facebook that wasn’t very productive.
Andrew: Mm-hmm.
Alex: That’s a separate issue, of course. Yeah, we really had to keep reminding ourselves that each customer we do get is quite a substantial amount of money we’re bringing in, ultimately over the course of a year or three years, however long we keep them for, hopefully, for quite a long time. We do need to keep going at it. We were lucky that one of the guys on the team is just really good at AdWords. And we’ve managed to really improve our AdWords [??] and slowly get more people that way.
But for the first six, nine months it was really a tough slog [sp], trying everything we can and getting occasionally small successes but a lot of just talking to a brick wall. We still do. We still talk to lots of brick walls now. [??] trying to figure out our rhythm, these ads, but we’re trying to open up to markets now as well. I guess we’re not putting our eggs in one basket. That doesn’t seem like a very smart move, I think.
Andrew: One of the other entrepreneurs who we’re going to have on for this series said, at the end of the pre-interview with April, he said, “Maybe someone in your audience can give me advice on what I can do. I figured it out this far, but I can use some ideas on what else to do.” And April suggested that I ask all the other entrepreneurs in this series that. Is there some kind of advice, Alex, that you would like from the audience or some kind of help at this point to help you get to the next stage?
Alex: I’ll come back to that one.
Andrew: Okay.
Alex: I think there is, but I’m trying to think of the best way of phrasing it.
Andrew: We’ll keep talking. We’ll see what comes out. What about this? I remember saying to the audience that when I graduated and I started my own company, every penny was precious. I would go into the Chinese near my house and buy the 99 cent vegetable fried rice because I thought I was going to fill up and get vegetables.
It was just at that point, and meanwhile my friends who went to the same school that I did, who got lower grades than I did ended up often on Wall Street jobs or consulting jobs where they were not just paid well but they were given meals, given [??] car ride home if, God forbid, it would be after 6:00. They shouldn’t take the subway. And that comparison was really tough for me. You’re going through that, right?
Alex: Yeah. All of my friends are graduating now and the ones that aren’t are certainly doing well. That’s quite right. I’m really happy for them. What we’re trying to not feel like is sort of starving artists or anything like that because we are living off this now but eventually… It is quite a different perspective than some of your friends who are working at quite good jobs. It’s a different lifestyle is what we’re doing.
Again, we started this because we didn’t want to work in certain kinds of jobs. We’re still here because we want to stay and keep this lifestyle which we really like. Ultimately, that’s what we have to remember every now and then.
Andrew: What about the lifestyle that you like?
Alex: Well, I think we like the fact that we are ultimately controlling our destiny, not fully. It all depends on if the market likes what we do and likes our product, but we have some control over that as well.
I think personally I like the idea that we are able to, I guess, it’s not someone else’s decision, how much we can succeed or how far we can get with this. It’s just up to how hard we work, how much effort we put into the product, how much the customers like it. And that’s really inspiring for us, I think.
Andrew: How long did it take you to hit 10,000 in sales, in totally realized sales?
Alex: It was about three, four months, I think.
Andrew: Wow. Okay.
Alex: Yeah. It was good. But again, remember it’s not your two dollars a month consumer software product. It’s quite an expensive thing relatively speaking.
Andrew: Yeah. So when you get lots of… Sorry. You go on.
Alex: It’s still very much a bit of a wash at that point. Speaking of that, we had to buy a lot of tablets. It was quite good when we realized that we were actually starting to do something worthwhile, not just fucking around.
Andrew: Okay. Today, where’s your revenue?
Alex: So our revenue right now is about 150K. And again that’s not some people on annual contracts. Some are on monthly ones. So it’s a bit all over the place, and we just figure it out basically. We try and get bigger customers. We try to get them to pay upfront, to pay for a few months at a time with a discount. It’s good for them, and it’s good for our cash flow as well. Our biggest issue is always and it’s always going to be for a business like this, just having that cash available so you can always afford to bring on new customers.
It’s especially hard for us because we didn’t raise any capital. It’s all been out of our pocket and now out of our bank account. It’s always been tough to try and keep people and have money to spend on bringing customers onboard.
Andrew: Are you open to investment, or are you one of these guys who is a bootstrapper, who will never take money because it means that… I don’t know what it means.
Alex: No. We’re not stopping. We’re open to it. We haven’t quite found the right fit yet. We’ve met a lot of people who have been interested in it and really have helped us quite a lot. And we just haven’t quite decided on, I guess, we haven’t decided on the best way to do it because the investment is getting a big line from the bank. It’s getting a private line.
There are lots of different ways of getting money in here, and we’re not quite sure of the best way for our business in two or three years’ time. We’re not really sure where we’ll be. Time are hard, you know.
Andrew: Let me do a quick plug here for my man, Scott Edward Walker of Walker Corporate Law. What did you guys do about, I guess it wouldn’t be incorporating, or it is right? What’s your formal structure?
Alex: It’s four of us and we have a 25% share. One of the guys on the team did law at SUNY so that qualifies him to do a lot of law forever, even though he’s not actually a lawyer yet. We incorporated that way and we own an equal share in it. We all live together and we’re all really good friends so that makes it a lot easier as well.
It’s kind of hard to have four guys when you have to go sleep in the same house later on. So we’ve always all managed to keep really grounded and not get too crazy about the whole thing at the same time.
Andrew: Well if you happen, I’m saying this to the audience, if you’re in the audience and happen not to have a lawyer who’s a co-founder and frankly, even if you do and you want to watch his ass. (inaudible) You might want to email after this interview is over scott@walkercorporatelaw.com. If you need a lawyer go to walkercorporatelaw.com.
You can check out, actually I don’t even know if their rates are on there. Very low prices. Something like, what is this, like an all you can eat. I got to read this. Why would a lawyer have an all you can eat price that’s this low? Maybe because he just wants to get entrepreneurs in the door. See all you can eat.
I’m doing a search on my own Evernote here. How much is this thing? All for the low, low price of, come on Evernote. That’s my problem with Evernote. It’s so hard to find. Do you use Evernote to store data?
Alex: I used to. I don’t use it a lot lately because of their issues with storing data.
Andrew: Because they’re not secure enough, right?
Alex: Yeah. I personally didn’t like it that much.
Andrew: $2,900, two-thousand, nine-hundred dollars, all you can eat start up package. Unreal.
Alex: That’s cheap.
Andrew: Walkercorporatelaw.com. Actually, here let me even give you Scott’s phone number: 415-979-9998. Boom, there you go. Are you going to call them up and ask about your partner. Say, listen what happens if you have a partner who’s a lawyer. What do I need to do to watch out.
Alex: I’ll Skype him.
Andrew: Skype him. Yes. Alright. So have you thought about the kind of advice or feedback or anything that you’d want from the audience?
Alex: Yeah. Look, as I said, our biggest issue is cash flow and because we’re in the (inaudible) the customer how we can get out of the red and back into making money as quickly as possible. So we’re always open to any suggestion on how best to do that or how if you want to give us some money it always helps. We do need better ways I guess of matching our funds, and getting better bang for a buck in attempts of bringing people onboard, and not wasting too much time and money catching up to how much we spend.
One thing that we try doing is getting hardware and paying by the month rather than buying it, because that (inaudible). So I’m really trying to talk to a lot of hardware vendors right now and figure out the best way of doing that. So any hardware vendors out there? We need to buy a lot of tablets. Come talk to us.
Andrew: Alright. I really like talking to companies at this stage where you’re figuring things out, and I hope you’ll come back and do an interview when you hit bigger milestones, $1 million, $10 million, sell for $100 plus million dollars. Will you come or will you at that point say I’m too good for Andrew, I’ve got to move on?
Alex: We’ll come back.
Andrew: You’ll come back. I’m looking forward to having you on here. What’s a good way for people to connect with you if they want to?
Alex: Our website’s tanda.co. www.tanda.co. The Tanda stands for time and attendance which is what we do.
Andrew: I see everything’s on there. Your phone number, your email address, your everything is there.
Alex: Our address used to be there as well, but it was our house so we got rid of it.
Andrew: That’s a good idea.
Alex: Probably just our email is better.
Andrew: Alright. Tanda.com, and for the audience, one of the reasons why I do this is to expose you to successful entrepreneurs so you can learn from them and from their stories. If you want to go beyond stories and maybe get a little bit of how-to, there’s another part of Mixergy, it’s the courses. We have over a hundred courses where I invite entrepreneurs on to teach specifically what they do best, and walk you through how they do it step by step.
Let me give you an example: Rob Walling created a software company called Drip. Well one of the things that he wanted to do was make sure that since he was putting in all this time to develop the software Drip, was he said I got to make sure I make money off of this idea. It’s not just a hobby, it’s not just a passion project, it’s a business and he went through a process that helped him get his first customers. Because of that process he did $7,000 in sales. He’s a good friend of mine.
I said, “Rob, would you please come and walk us through how you did it. What’s the process? Show us the email. Show us the way you do it.” And the reason I asked Rob to come do it is because he’s not a one hit wonder. Rob Walling is an entrepreneur who has done this several times with companies like HitTail, and others that aren’t coming to me right now. You all know him frankly, Rob Walling, or you can Google him.
There’s a reason why I pick the people I do. In Rob’s case it’s because he’s done it multiple times and he’s taught his friends how to do it, and I said he is the guy to teach and he’s just one of over a hundred entrepreneurs who teach courses on Mixergy Premium. They often do it as a favor to me and as a way of giving back by teaching other entrepreneurs. I urge you to try it out.
You’re hearing stories over and over on Mixergy of people who are succeeding who are building companies, who are learning and growing, and learning and growing. You should be doing the exact same thing. It’s one of the most fun things that you can do to be an entrepreneur and one of also the most hellish. I can’t get rid of all the nightmares. You agree?
Alex: It’s great.
Andrew: I can’t eliminate that hellish period. Frankly maybe we just have to go through it to prove that we’re worthy of the other end. But I can tell you that the other end is exciting and it’s worth the pursuit, and if you’re a warrior it you’re in this like me go check out Mixergypremium.com. Sign up, join. I guarantee you’ll love it and I’m looking forward to seeing you in there. Mixergypremium.com. Alex, thank you so much for doing this.
Alex: Thank you.
Andrew: Thank you all for being a part of it. Go kick butt. Bye.
