2018-Q1 Report

2018 Starts with a Bang!

2018 has started off with amazing traction. Increased client implementations, speaking engagements, and a chance to prove we can operate at a revenue neutral level so we know regardless of funding, we will survive. Also, Steven started his immersion as co-founder and is learning about funding, capital growth, and selling stuff. A good start to the year!

The Highs

Sales Growth

We ended Q1 with outstanding revenue; almost topping all of last year in the first 3 months of 2018. This was bolstered by Dave Needham's regional speaking engagements and consulting with a few companies. We also realized that we were not tracking sales and client growth very well. We fixed that so we could get a baseline on traditional sales and growth metrics. Here is where we stand:

Q1 Platform Revenue = $11.331

Q1 Consulting Revenue = $4325

Q1 Total Revenue =$15,656

MRR as of March 31, 2018 = $4703

Total Users = 866 

Average MRR per user = $5.43

Platform Growth

In Q1 we added additional security to our Single Single-On protocol with Google and repaired a number of bug with our reminder system and Slack integration. Essentially we had to rebuild the entire email and reminder protocol. Better now that later. 

We ended the quarter with release of v0.36. We plan to announce version 1 which would be widely marketable and bug free very soon! 

Corporate Development

We learned we can survive on our existing revenue alone! Which is HUGE!  We are not reliant on funding to operate! Granted, we want to THRIVE not just survive. We have big growth plans and sooner or later, we need to get paid and we want this company to change the way more companies look at talent. We also want to grow to hlep out investors realize a good return on their money. That would be difficult without some additional investment but it good to know that with a little fiscal responsibility, continued sales, and slower development efforts, we can subsist on our revenue alone. 

The Look Ahead

Marketing & Sales

Historically we have grown with very little outbound marketing, which is great. Referrals are the cheapest way to grab new customers. Our new user acquisition costs are about $25/user with an average lifetime value of $162 (at this point.) Which is pretty stellar. But again, you've got to spend money to make money. As a result we are starting to grow our outbound marketing channel and testing a few options. We are also upping out inbound game with some website modifications in the works and working to capitalize on Dave's speaking engagements. We will also be engaging our existing investors a bit more to help us stay present of mind.  Additionally, we recognize that no one on our team is a business development expert, so we are interviewing a few possible individuals who can bolster the team. We hope to make an introduction soon! 

Platform Development & Service Pilot

Version 1 is in sight and we plan to announce it very soon. We have a few small bugs to work through and a few enhancements we think are crucial to the platform based on feedback. The significance of version 1 is two fold. 1) It is a psychological milestone not only for us but also for clients (and potential clients) that we are offering a full solution that works, and 2) it makes it easier to sell and create some press around. 

We want to do a better job announcing and demonstrating releasing new releases and feature updates on our website as well. So stay tuned for a release notes section and feature demo videos. 

In May, we plan to launch a service pilot of our possible consulting model. Again, we do not want to create a divergent business model and a consulting services model is certainly different than a SaaS model. We will be launching a decentralized consulting offering at our current co-working space. Essentially, we can offer consulting and vetted subject matter experts and little to no overhead costs for us by contracting out to a 1099 consultant networks. Clients get their needs met, consultants increase their business flow, and we get a little slice off the top - every one wins. Something that, if we wanted, we could later spin off as a separate operating arm if it shows growth potential. 

Investment Strategy

As a team we have decided that crowdfunding fits who we are. We believe in inclusivity. It's one of our fundamental tenants. And the VC market is about exclusivity and widening the gap between the "haves" and the "have nots." Also, as smart as some VCs are, the investor market seems to increasingly reward unsustainable ,"flash in the pan" companies and cultures that offer themselves for free and then sell user data to the highest bidder. While we believe we are creating meaningful data that has value to a large market, we very much want users to truly "opt in" to sharing that data (via a paid personal subscription and participation in a talent marketplace - think LinkedIn endorsements that is not bullshit) as opposed to obscuring terms and treating user like a product. We want to solve real problems, provide real inclusion, and create company that can survive a public offering (or acquisition) and pay dividends to our investors beyond.

All that to say, we are putting things in place for another crowdfunding launch. Wefunder has hired a new team to focus on user/client experience to hopefully plug some of the holes we encountered with our first raise and we are targeting late May-early June as a campaign launch.

We are currently planning two possible rounds. The first through Wefunder with a priced round at $3.5m pre-money valuation and a target of a $500k raise. For existing investors, the first round represents an estimated 52% return on your initial investment as the shares convert. This $500k will hire our initial team plus a sales & marketing lead and provide the necessary capital to launch a second funding round for more explosive growth. With additional traction and a new valuation, our second round (with a 4.25m premoney valuation and target raise of $1.5m) would possibly represent an estimated 201% return on an initial investment for our original investors. With planned growth only accelerating your investment from there.

These will both be crowdfunded rounds available for participation to accredited and non-accredited investors. So existing investors will have the opportunity to deepen their positions and increase their potential returns. These two rounds help us hit our next 18 month milestone which is - $80k/mo in revenue and over 100 clients. Stay tuned!

Conclusion

Q1 was awesome! With more public visibility and increased client traction. We are maturing both the business model, our marketing and sales process, and our clarity of the how we want to grow the company. Please stay aboard the train and keep an eye out for that new opportunity to invest in a growing company who is dedicated to make a difference, be good stewards of our investors money, and operate an inclusive and open culture.

As always, you can reach out to me with any questions you might have! 

With love,
Dave Needham, CEO (dave@myohos.com)

2017 Annual Report

The First Full Year!

Out first full year has come and gone! WHOOSH! There was a lot of learning, excitement, growth, and as will happen, a few let downs. But all in all, we are psyched at how the year ended. From a business standpoint, we couldn't be prouder!

The Highs

Revenue Growth

We were hoping to both increase our platform price as well as the size organization we could capture. We did both! Much of ourt growth was from existing client referral and network referrals. We attended one conference and landed two clients as a result with a number of others showing interest in possible adoption in the future. We experienced a lull in the mid year as the leadership team focused on investor networking more than sales (more on that later.) The end of the year picked up nicely and we ended the year in a strong position. 

Total Revenue = $22,390 (up 526%!)

Total Users = 565 (up 594%!)

Client Retention = 80%

Platform Growth

In our final sprint for 2017,  we launched version 0.28. That's 28 sprints worth of updates, enhancements, bug fixes, and features since our launch in Oct of 2016. Average of 1.9 sprints per month! We built a lot of what we planned and a lot of features our clients were asking for. They have contributed to our success by helping us build a better platform and remind us to make fewer assumptions about how we design some elements. The great thing is, from a core perspective, the methodology TOTALLY works and managers are reporting easier performance conversations about the things that matter. We've also had some clients find leaders in places they weren't looking which provided them an opportunity to recognize and promote a few people they had previously overlooked.

Corporate Development

In June of 2017, Co-founders Dave Needham and Alicia Yanik, were invited to attend the Rockies Venture Club HyperAccelerator. We learned a lot about capital structure, investor value levers, and some business levers. It was an intense week of pitch-feedback-refine-repeat. And we learned a lot about valuations, financial modeling, and a few other important areas. We also met some great mentors and potential advisors for us moving forward.

The Lows & Learnings

Sales Focus & Lost Clients

While overall things went well, we realized we need to focus on sales more. The latter half of the year was good and we could have done better. We also realized that when you don't focus on sales...the pipeline dries up. Also, we lost 4 clients total; some were doing pilots (Comcast/Noodles&Co) that we structured poorly, which resulted in unsuccessful pilots at those companies. We also lost our very first client (CloudElements). While they remain an advocate for us, they did not know how to have conversations around the data in a meaningful way, which was an implementation and client support error for us. Lastly, CacheMatrix was purchased right after we implemented and we did not get introduced to the buying entity so we lost them. We learned from it, but it still sucked.

From those experiences we learned a few things. We learned how to better structure pilots (small group of people receiving feedback with a larger group of "outside" employees able to provide it.) And we learned that without leader support (like at Comcast) usage is DOA. We also learned how to provide better support for managers and leaders to use the data for conversations. We created an implementation guide and coaching follow up process to ensure clients are getting immediate value from the platform.

Platform Hiccups

We had a minor security breach in January of 2017 (along with most every other MongoDB client - https://www.darknet.org.uk/2017/01/mongodb-ransack-33000-databases-hacked/.) The good thing was, we had sufficient backups to restore everything with a very minimal impact on clients. The system was shut down for 3-days while we added security measures, test, and restored the system. Huge kudos to our Team Member, Steven Easter, on his hard work. On the upside - we added sufficient security upgrades to prevent us falling victim to a similar hack that occurred in September of 2017. We had a few bugs in the system that ended up being client facing. It wasn't anything overly troublesome but it is still something we want to have an increased focus on. None of them compromised anonymity or data integrity, both of which could compromise trust in the system, something that is paramount for us.

VC Fishing

We were hoping to secure a higher level of interest after the RVC HyperAccelerator. We spent a lot of time and energy working to present what we thought was a great pitch with very complete and favorable financials and walked away with lukewarm interest at best. Which, to be honest, took the wind out of our sales for a god month. It wasn't that they said "no thanks" it was that they said it after we worked with advisors to provide the information they most cared about. It felt like a gut punch. It re-energized our focus on sales however which fueled a good deal of out impetus in the latter half of the year.

As the year finished, we started to realize that VCs are not a panacea. We also learned Denver and Boulder area VCs and Angels typically do not lead deals. In retrospect, we were naive to think that the typical VC path is the right one for a disrupting technology like Ohos. Most shy away from HR software unless they know the founder or the companies are much further along.

Leadership Team

The investor response in late June it's toll on Alicia the most. In September she decided to leave Ohos at the close the year to return to a more stable career path. I am personally grateful to the efforts she made as co-founder to get the technology team together and guide us towards a successful launch. Founding a company can take it's toll on your energy levels and it takes longer than the stories might have you believe. When you are splitting your focus on Ohos and trying to earn enough money to pay your mortgage through other channels, eventually a founder may find themselves having to pick one or the other. We wish her the best.

The Year Ahead

Leadership Team

With the departure of Alicia, Steven Easter, our lead developer from the start has stepped up in to the co-founder role! We couldn't be more thrilled to see his dedication and passion for Ohos. He is in this for the long haul and is learning at an incredible rate. Steven brings a wealth of knowledge of building software at startups and we are excited he wanted to take the leap. We are also courting possible Sales and Marketing focused individuals as an addition to the Leadership Team knowing that is an area we need more focus and energy around.

Marketing and Sales

We are working hard to formalize our sales process. We've been very conversational with out clients up to this point which is great for network sales, not so great for a repeatable and scalable process. We reached out to a number of people in that area and have gotten some good guidance on building a more formal process. While we were doing things according to most of the guidance we received, we've been able to tighten it up. 

We're also focusing hard on client specificity, particularly as it relates to the basic questions. Who is our ideal client? Who is the ideal buyer in that client? And where can we find them? While we have proven Ohos can benefit a wide variety of clients in pretty much any industry, we learned a lot about who our perfect client is. Most share the following characteristics:

  • Tech savvy (tech-based company)
  • flatter organization or dispersed teams
  • progressive mindset
  • 50-250 employees
  • data geeks
  • small HR teams (spread thin)

We're doing some additional research and plan to form a Client Advisory Board that will hopefully provide some additional insight (as well as some testimonial videos :-)

Investment Strategy

The VCs get all the flash. So much so that it often makes you think that is the best way to find the capital you need to grow your business, advisors who can help you grow, and build a sustainable company. Well, we've come to the early conclusion that at this point in Ohos's (Oho's? Ohos'? whatever) evolution that the majority of people who call themselves VCs don't really align with the type of advisors we might want (and therefore the type of company we want to build,) they may not be interested in a sustainable company (they'd are professional investors who want you to get the most money back for them possible and fast - that is their #1 goal, which is fine for them) and therefore probably aren't the source of capital we are looking for since we want to be sustainable NOT just a flash in the pan. We are dedicated to changing how companies think about performance management. 

There are a few VCs that prove to be exceptions and we welcome talking with them of course. AND we realized that the entire ethos of Ohos is to decentralize a historically top-down model (where the people in power get to make decisions that increase their power that often doesn't serve the company in the long run) The majority of large VC firms are in business to make the richest people even richer, so again, a top-down model that mostly serves the people at the top. We want everyone to have a chance to profit from our success. SO...

We will be launching another crowdfunding campaign top help us hit our next 18 month milestone which is - $80k/mo in revenue and 100 clients. Stay tuned.

Conclusion

Our first year was a success in so many ways and we are excited to keep moving forward with all the things we learned! We are stoked to have Steven in the co-founder seat and still directing our development efforts. We are also excited at the new clients we have in the pipeline for Q1 of 2018.

Please stay aboard the train and keep an eye out for that new opportunity to invest in a growing company who is dedicated to make a difference (AND be good stewards of our investors money.) 

As always, you can reach out to me with any questions you might have! 

Sincerely,
Dave Needham, CEO (dave@myohos.com)