From A Cartridge World Franchise To a $30B. Software Enterprise?

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From A Cartridge World Franchise To a $30B. Software Enterprise?

 news 2016-01-26 at 11:14:24 am Views: 201
  • #44977
    From A Cartridge World Franchise To a $30B. Software Enterprise?
    By Susan Adams, Forbes Staff 

    TSheets is a thriving tech company in the nontech hotbed of Eagle, Idaho, just outside Boise. It makes an unsexy product, time-sheet software, which it sells to small businesses. Cofounder and CEO Matt Rissell stumbled on the need for the product when he realized his previous venture, a printer cartridge franchise, was struggling to keep track of his employees’ hours. That led to TSheets, which has become the leading time sheet software for small businesses, taking on $15 million in outside investment in September and planning to add more than 50 people to its 100-person staff in 2016. Revenues are approaching $20 million. In this edited and condensed interview, Rissell describes his rocky start and why he thinks he has the chance to turn TSheets into a very big company.

    Susan Adams: How did you get the idea to start TSheets?

    Matt Rissell: I owned a store franchise called Cartridge World with three locations and a warehouse. We had 35 employees. I had never checked a single employee’s time card and one night in 2005 I happened to look at the card for one of my most honest employees. She had given herself 15 minutes extra on the clock. We were a small business with tight margins so it made a difference.

    Adams: You were using paper time sheets?

    Rissell: I looked and I couldn’t find any cloud-based software designed for multiple locations. I called my buddy, a software architect named Brandon Zehm, and asked him if he could build a program for me. He built a basic version of TSheets. My bookkeeper said this is absolutely amazing. She used it and said we saved $2,300 on our total payroll for that one month.

    Adams: How did you get from that point to starting a company?

    Rissell: This was before software as a service was a word. I called Brandon and I said, “Can we sell this?” He said, “Oh yeah!” And that was the beginning of TSheets. I sold Cartridge World in 2007.

    Adams: You struggled to launch the product. What happened?

    Rissell: We used a marketing company on contract that said, “We’ll make time-tracking and TSheets sexy, and we’ll make you go viral.” That turned out to be an absolutely miserable flop. We worked on it for three months but not only did the rocket not take off, the damn engines didn’t turn on.

    Adams: How were they going to make your product go viral?

    Rissell: There was this news channel for digital media called They thought they could get us to the front page of, which at the time had millions of users. They were going to create content and brand and image and press releases. They said, “You’ll be on Fox and CNN.” It turned out they had no idea what they were talking about. That was failure No. 1.

    Adams: How much startup capital did you have?

    Rissell: It was $600,000. We took money from seed investors and I funded the company myself. I used to own 51%. Then I owned 40%. Now my cofounder and I together own the majority.

    Adams: How much did the failed viral launch cost you?

    Rissell: Between hard costs, soft costs and lost opportunity costs, I’d say millions.

    Adams: How many employees did you have at that stage?

    Rissell: Five or six, mostly developers, myself and one support person.

    Adams: Did you have any customers?

    Rissell: We had a couple hundred. But we were dirt cheap. The viral marketers basically said, give it away. We’ll get millions of small businesses overnight.

    Adams: You must have been bleeding cash.

    Rissell: Hemorrhaging, gushing.

    Adams: What was your next failure?

    Rissell: Since my background was in business-to-business sales and building sales teams, I said, I’m going to hire a stable full of thoroughbred salesmen and give them phones and call lists and dial for dollars. That worked a little bit. We got some traction. But it was never going to work with our model and pricing. Sales people are expensive and they have to do one of two things, huge volume or huge sales tickets per product. They weren’t able to create the volume proactively and we were priced very inexpensively. After three or four months, I realized we couldn’t scale. We were running out of money. It was 2009.

    Adams: How did you survive?

    Rissell: We got rid of six or seven sales guys and we were down to four and a half employees. A buddy loaned me some free office space. We didn’t have to pay for wifi and they even let us drink their beer.

    It helped that a customer would come to us and say, “We’ll use TSheets if you build feature X or feature Y. And we’d say OK, you have to pay us $1,000 to build that feature. That extended the runway to let us get the plane up in the air.

    Adams: Did you change your pricing?

    Rissell: At that point we raised our prices. It’s a $16 base fee annually and $4 per user per month. That was 2009. We haven’t raised the price since.

    Adams: When did you start to become successful?

    Rissell: In 2010 one of my business mentors recommended the book, The Lean Startup by Eric Ries. I read that in about two or three days. I was only halfway through the book and I realized all of our mistakes, what happened, why they happened and how to correct them. I forced everyone in the entire company to read the book. The premise was, you don’t make decisions based on your gut. You make decisions based on data analytics. We were making all these decisions based on sales people. The book also says, find a way to fail quickly and fail small.

    Adams: What’s the benefit of failing?

    Rissell: When you fail quickly, you can take your lesson learned and pivot. The whole premise was to find what the hell works and what doesn’t work. I know it sounds crazy but that book changed TSheets forever.

    Adams: How did you get clients?

    Rissell: We started testing what our customers wanted and what they were using. We started testing marketing channels. That’s how we started a relationship with Intuit. We did it with one little flat file integration. It’s a spreadsheet where you could push download and you could download all of your time sheets into a spreadsheet. Then you go to QuickBooks and press upload and it would go into QuickBooks. It turns out our customers absolutely love the connection between QuickBooks and TSheets We are the No. 1 app in the QuickBooks ecosystem globally. No one is even close.

    Adams: How was your cash flow?

    Rissell: My cofounder and I put ourselves on a ridiculously low salary. It was just enough that we could live off our personal savings and have a little bit of income from the company. As our revenues started to grow, we stayed profitable.

    Adams: How much were you paying yourselves, $40,000?

    Rissell: It was even less than that. Prior to Cartridge World, I was a major account manager for Verizon Wireless and I was making $200,000 a year as a sales person. At Cartridge World my personal income was more than that. At TSheets we got lean and mean. I took all the money I’d made, and reinvested it in TSheets. I went all in, which is hard to do. People always say it’s your first million that’s the hard million. I say bulls—. It’s the second million that hurts.

    Adams: You took an outside investment of $15 million in September. Why?

    Rissell: We had offers to get acquired. We have just under 20,000 customers in 53 countries. In the U.S. alone there are currently 2.5 million small businesses using a spreadsheet or paper time cards to track their workers. It’s horrific for the companies and for the workers. We see a huge market opportunity. There are 2 million businesses just in America that are low-hanging fruit that truly need TSheets. There are close to 15 million small businesses across the world that need TSheets. If we captured the market leadership position on a global level, we could be a $30 billion company.

    Adams: Do you think you can get there?

    Rissell: We’re working our faces off to try to do it. There are two things I’m absolutely clear on: I’m not so delusional that I forget how big we are. We’re tiny. If an elephant had a trunk and on a trunk there was a hair and on the hair there was a gnat and on the back of the gnat’s leg he had an itch, that’s how big we are. We are freakin’ tiny and I know it. But the other part is I am delusional enough to think we can become the global market leader and help millions of small businesses across the world. I do believe that!