The "Software Finder" Cash Machine

Speaker A: The company is bootstrapped. That's another good thing. We haven't raised even a single dime to date. We've been seeing 100% CAGR for last five years. Last year we hit 110%. This year we are trying another 110, 120%.

Speaker B: Hello and welcome to this episode of Cash Machines. And we have a banger on today. We have Adnan Malik, who's the founder CEO of uh, Software Finder. And this company is doing roughly 20 million in revenue, 15 to 20% margins, fully bootstrapped, launched in 2019. So we can I guess safely assume they're doing between 3 and 4 million in revenue, though most of that is going back into the company to ensure that roughly 100% year on year revenue growth they ah, are experiencing. So in this episode we tried to understand exactly how they're able to do that. So let's jump into this episode with Adnan right now. Adnan, welcome to the show.

Speaker A: It's good to be here.

Speaker B: So, Software Finder, I've been digging into the business over the past 24 hours and I am super interested in the model and how you're able to make money essentially. But it would be great for the audience to understand at like a high level how you guys can make money.

Speaker A: Great question. So Software Finder is basically uh, a B2B software marketplace. We connect buyers and sellers in the B2B software space. So in a nutshell, if Tom, your company is looking for HR software, we'll connect you to top three or top five software options that are best suitable for your needs. And all of this is done through a human consultation. So we'll spend about 10 minutes with you. Our team member will spend time on an average about 10 minutes asking all the right questions in terms of what you're looking for, why you're looking to switch, how much budget you have and you know, read between the lines to better understand your requirements. And then out of the hundreds of HR software options out there, we recommend you the top three and top five that you should be looking at. So basically we saved maybe months of your research time that you probably do online through ChatGPT, Google and so many different places and still you might not end up choosing the top three or top five that are best suitable for your needs. So that's the service for the buyer. The service is absolutely free for the buyer. We do not charge anything to the buyer. The top three or top five software options that we would recommend you will share vendor your information and then their team will Reach out to you next. And hence we charge a vendor for the service because they're the one who's going to end up making money from the buyer anyway. So it makes more sense to charge vendors for the service. So yeah, in a nutshell, absolutely free for the buyer and we charge vendors for the service.

Speaker B: Makes sense. And so you get to sell the lead between three and five times. And roughly, like if I was a HR vendor, how much would I pay for a lead? Like roughly they're like $50 or $500.

Speaker A: So it ranges depending on the size of the organization. The bigger the size, more the licenses that you will be selling as a, um, as a vendor. So the lead cost starts from anywhere from 80 to $100 per lead and goes all the way up to about $900 a lead, depending on the size of the organization.

Speaker B: Yeah, it makes sense. If I have like 5,000 employees and I need 5,000 seats on the HR software, then obviously I'm more valuable. But makes total sense. And just to give the audience a sense of like the size of the company, could you give us a range on the revenue?

Speaker A: So this year we expecting anywhere from 20 to 25 million.

Speaker B: Fantastic. And roughly like rough profit margin because I understand you guys are profitable, right?

Speaker A: We are. So, uh, the company is bootstrapped. That's another good thing. We haven't raised even a single dime to date. Our profit margin anywhere from 15 to 20%.

Speaker B: That's excellent because I was thinking there might have been some capital invested at some point externally, but no, it was just any initial capital came from you and any co founders.

Speaker A: That is correct. So we started with the uh, you know, our own funds that we saved in our previous lives. Bootstrapped the company. And uh, the good thing is that, you know, we were profitable from not profitable. I mean the revenue stream started generating good revenue stream from year one. So we never looked back and we never thought about raising capital.

Speaker B: Absolutely. Fantastic. And what was that first year? Which year was it?

Speaker A: 2019, right before COVID Cool.

Speaker B: Okay. Has the revenue growth gone up in like a straight line? Like maybe as 1 million in the second year and then maybe like 4 million, 8 million or did it spike in any of those years?

Speaker A: Yeah, so we, we've been seeing a hundred percent CAGR for last five years. Uh, last year we hit 110%. This year we are trying another 110, 120%, but almost every year we were 90 to anywhere from 90 to 110% growth year on year.

Speaker B: Great. So it could have been like uh, 1, 2, 4, 8, 16 roughly.

Speaker A: Yeah. So we, we started with about first year was really, really slow and then in 2020 it was I think about 04 million or something like that. 2019, most of the things were happening, building the product and it was middle of the 2019. So revenue started generating towards the end of 2019. But our first major year was 2020.

Speaker B: Fantastic. So now I'd like to try and understand like how you guys have been able to grow and remain profitable over these years. And from my research I think I have a couple of them. So I'll run the past you and then you can tell me if I'm right or wrong. But maybe the first one is getting the leads cheaply, primarily through SEO. I think that's going to be one. Is that right? Would you say top three?

Speaker A: That is one. But SEO is not the biggest play out there for us because SEO takes a lot of time. As you would know, it took, you know, anywhere from three to four years for SEO to really kick in. And in this business if you're only selling leads, you're not going to wait for SEO to kick and then you're going to start making revenue. So we do a lot of outbound, uh, we do a lot of advertisement in order to generate ah, leads. So it's not only organic, I mean it sounds like it would be huge organic but it is not interesting.

Speaker B: So the paid ads presumably that's, that would be Google.

Speaker A: A lot of it goes to Google, Microsoft, some social media. But yes, I would say 70, 80% is Google.

Speaker B: Makes sense. And then on the outbound would you just go to a company and be like, hey, are you looking to buy any types of software? Would you like know they're looking for HR software and then jump in and see if you can advise them?

Speaker A: Yeah, so it's backed by a lot of signals. So we, we do some email marketing. We also do you know like your white paper campaigns, your webinars. We, we try to generate a lot of signals at the backend where you know, we get some sort of a knowledge that there might be some buying intent and then we reach out. We also do a lot of phone campaigns as you said. But it's a lot of this is backed by a lot of good signals that we, we generate and we buy from you know, many different partners and

Speaker B: I assume like the best customer is a procurement lead at a large company that will just keep coming back to you quarter after quarter with new requirements.

Speaker A: That is right. But the funny thing is if you're looking for HR software, it will be your HR manager. If you're looking for, uh, you know, new email marketing software, it'll be someone in your marketing team. If you're looking for project management software, it'll be someone who's, you know, leading your projects. So it's not one person, it's always someone different because these domains are very different. B2B software domains are totally different. I mean I wish it was one person and they keep coming back to us. Person comes later.

Speaker B: Yes, makes sense because on the cost side obviously a core competency for you guys is getting the leads cheap. And you're saying it's not just SEO, but it's these other activities as well. Before we move on to the next thing that I think is one of your competitive advantages, can we talk about the FTO strategy? Because from my research it seems like a lot of your traffic comes from the names of the software companies that you represent.

Speaker A: That is correct.

Speaker B: And so you're essentially potentially even ranking higher than their homepage, collecting the lead and then selling it to them. Is that uh, happening?

Speaker A: Yes, at times we do so SEO. We invested heavily since day one. The entire project was you know, SEO driven project. So I would say the first four years there were not many fruits but we were very patient, we were doing all the right things and then slowly it started to pick up. Now we have about a hundred thousand pages on our website, maybe more. Now we have about 1200 software categories and uh, we do a lot of comparisons and alternatives and those sort of articles as well. The biggest traffic that we generate is they come from the brand searches. So for example Salesforce pricing or Salesforce demo or your HubSpot pricing or demo. So you know, but having said that we were also seeing in the last last 12 months we, we get a lot of traffic for when people are comparing, uh, so you know you're a HubSpot versus Salesforce sort of keywords. And then we also do very well when it comes to your generic keywords like top 10 legal management software or top 10 medical software or HR software. So every keyword is totally different strategy that we have to place on ROM um, in order to grow and I would say in the last few years we also getting a lot of traffic from LLMs now as well. We were ready when LLMs and the whole AI came in. They're consuming a lot of our content. So we got that early advantage that many other open ends engine have because LLMs love content. We are all about content. So it worked really to our advantage.

Speaker B: Yeah, I can see here I have AHREFS open and I see Gemini has. We have 16000 citations from Gemini, 1.1000 from ChatGPT. Was there anything that you did on the content of your pages that you thought was going to help with AI search and then you found that it has helped with AI search?

Speaker A: I drucky does not manage this. Our CMO is um, more hands on onto those things. But we hired the right talent a couple of years ago in order to ensure that our website is technically well placed and our content strategy is in place in order for us to appear on LLMs. Uh, I know there were many changes and uh, seems like those changes work to our advantage and now we're getting traffic from LLMs.

Speaker B: Yeah, I'm on one of the pages for a SaaS company I won't mention but it's very like content rich. We have reviews here, we have like your guys opinion. I've got the lead form scrolling down the side. It's interactive. I can click on something to watch a demo. So yeah I make like the content here is excellent. Let's move on then. So obviously getting cheap leads is a key factor for you guys. The other cost presumably is significant is going to be the cost of the advisors. So these are the people that are having the calls with the buyers. I understand you're essentially not paying, I don't think you're paying like Westing people loads of money to do those calls. Was that conscious decision to manage the cost of the business?

Speaker A: I mean it is obviously there is a lot of training, a lot of great talent that we need who can quickly understand buyers requirements and then recommend them top three to top father they should be looking at. So yes, it was a uh, conscious effort to in order that you know we need to develop a big pool of talent who understand these markets very well and can recommend as per buyer's demand. The biggest challenge that we face is as we keep on growing category to category. These categories are so vast. I mean their entire world within each category from HR to project management to ERP to medical A. I mean you can't find one person who can understand all of these categories. So you rightly pointed out that you know this is probably our biggest, one of the biggest expense centers while we are. But that's the mission of the company. The gap we were trying to fulfill was that when we started there were hardly any company out there who can provide you a phone consult without any cost and Recommend you top 3 to 5 in 10 minutes. And it is such an important decision in uh, any buyer's journey to choose the right vendor because a lot of your growth and company's momentum depended on the software these days. And most people didn't realize this, but Studies show that 70 to 80% of B2B software buyers are dissatisfied after purchasing. So three out of four people that dissatisfied after purchasing, what really happens is you, they're not only losing cost in terms of license costs, but there's a huge cost associated at the back end, you know, training the users, implementation, your implementation consultants, who gets involved doing integrations and there's so many hidden costs. And plus if implement the wrong technology, you lose. Company can easily lose momentum and growth. And I've seen company end up going bankrupt because they chose the wrong software.

Speaker B: It's a very important decision for sure, especially like HR software CRMs. And I think we're in agreement that the skill set of the advisors is important for you guys. My question was more about whether you purposefully didn't hire these people in the UK to manage the costs. Is that accurate?

Speaker A: We are not a, uh, very heavy UK driven organization. We are more US anyway. So we have people in US who are doing this and we also have people in South Asia who are trained. So depend on where we find the talent. As I said, because every category is unique, it's not easy to find talented consultants if we just restrict geographically to

Speaker B: one location makes sense. So we have ability to get leads cheaply. Having an excellent group of advisors at the right cost. Is there uh, anything else that you think you guys do that has enabled this growth?

Speaker A: A lot. First of all, I think growing from one category to another to another was the biggest decision which I think we took at the right time. Because every category has a certain amount of growth that you can take. So the good thing is that we are continue to grow, I would say five to 10 major categories every year. We couldn't have achieved a hundred percent growth rate if we were not following this pattern. So that's one of the biggest drivers.

Speaker B: So you didn't strategically try to approach every category of B2B software at the start. You pick, let's uh, say 10 and then you've expanded every year and that's how you can find the growth. Presumably because you have to train advisors on the category, you have to work out how to get those leads, et cetera. Is that right? Yeah.

Speaker A: And the vendors as well?

Speaker B: Oh yeah, of course.

Speaker A: Because if we have leads and vendors not buying, then you know, it's such

Speaker B: a Wastage, obviously there's a cost there to get the vendors on presumably is relatively low because every vendor wants to want more customers or they want a flat cost for a lead.

Speaker A: Correct. So getting vendors is the easiest bit. Getting buyers is more charging because we have to produce in volume in order to serve the vendors. So but having said that, now the brand established, so getting vendors are easier. A lot of buyers are coming to us organically or through branding as well that you know now the word is going out there that there is a company called Software Finder. If I'm looking for software, let's just go there. They're going to help you make a decision in 10 minutes where I'm going to end up spending months researching and booking all these demos. And maybe I'm not even picking the top five that I should be picking.

Speaker B: Makes total sense. Anything else you think has helped with the growth?

Speaker A: I would say getting the right team is, is very important. Whenever anyone is developing marketplace, it's a difficult business to venture into. There's a lot of industries that you have to learn. There's a lot of moving parts. You rely on a lot of external factors in order to produce these leads. So I think one of the major growth factor is we were able to build a very uh, talented team, especially in the last two to three years when we were seeing a lot of growth getting to your 5 to 10 million easier, but doubling from that point is always very difficult. So now that we know we have surpassed that, the process has matured, we have the right teams in place. I think strategy is the key that, you know, how are we going to buy leads from where we're going to buy leads and for every industry is different from one to other industries. It's not the same play. Like you don't have a playbook for every industry. The playbook keeps on changing because the different buyers that think differently, they go to different places because the way doctors think when they're buying software is totally different to how your HR manageable think when they, when they're buying HR software. So the playbook on rn, uh, how to generate fleets needs to redevelop for every industry. So yeah, in terms of growth, we've been blessed to have a really uh, great team with the excellent leadership that we have developed in the last five, six years. And I think now the next a hundred percent growth seems more easier than in previous years. And we are trying another 100% growth this year and the next year. So let's see how it does.

Speaker B: So aiming to double from roughly 20 to up to 40 next year.

Speaker A: Correct.

Speaker B: Fantastic. So to summarize, then get good low cost leads, have great advisors, build a team that can help you keep doing 100% per year, and then strategically approach different categories as to help with the scale, which obviously comes with working out how to find leads fully for each category as well. Final question is what are you doing with the cash that's produced from the business to keep it growing?

Speaker A: So we reinvest almost everything that we save or we make and if we don't do it, then next a hundred percent is not going to be easier. So we invest a lot in terms of building teams, in terms of hiring more people for newer categories that we want to target next year. So it's a lot of spend that we have to make. If you're not growing at a hundred percent, then, you know, maybe we can do something about from the cash that we will save every year. And they, I mean we, we were also thinking of acquiring few companies this year or next, uh, year. So we are in the market, we're looking for companies that, you know, maybe doing something similar at a smaller scale. And you know, we are always looking for partners, but we are also looking to acquire companies this year.

Speaker B: Yeah. Especially if they've worked out how to get leads in specific sectors and you just buy them, send all the leads and that's like immediate revenue. They're also knowledge as well.

Speaker A: Yeah. Or they have an excellent SEO team or knowledge.

Speaker B: Exactly. Yeah. That would really shortcut revenue growth. Makes a lot of sense. I mean, it's a fantastic story. My favorite business story is bootstrapped, high growth, profitable and everything here is exactly that. So Adnan, I want to thank you for coming on and being so honest and open with the numbers, et cetera and the business. And I'm looking forward to seeing you guys double again next year.

Speaker A: Thank you for having me. I thoroughly enjoyed the conversation. Thank you, Tao.

Speaker B: Okay, team, what do we think? Epic story. An epic piece of business. SEO is very important. Having a great advisor pool is also very important. Super interesting and massive shout out to Adnan for coming on and being so honest with all those numbers. I want to give a big shout out to Fame for promoting and producing this show and then a massive shout out to you for listening.