Distro

Distro: From MVP To $2M ARR In 8 Months

October 28th, 2022

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Chad Ingram

Founder, Distro

$140K

revenue/mo

Founders

Employees

Distro

distro.io

from Lehi, UT, USA

started November 2021

$140,000

revenue/mo

Founders

Employees

Discover what tools recommends to grow your business!

payments

Payoneer

Stripe

Discover what books Chad recommends to grow your business!

Mindset: The New Psychology of Success Carol S. Dweck

Built to Last: Successful Habits of Visionary Companies (... Jim Collins

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Hello! Who are you and what business did you start?

My name is Chad Ingram, I’m the founder and CEO of Distro. Distro is a marketplace for companies to find, hire and pay software developers.

Our customers are growing technology and tech-enabled businesses that are trying to scale their engineering teams. These businesses generally already have a product, product leadership, and funding to grow their business.

We hit the market with our MVP 8 months ago and have surpassed $2 million in ARR.

What's your backstory and how did you come up with the idea?

Before starting Distro, I started and scaled two businesses to the point they were acquired. I learned a lot about running those businesses. We had about 80 people at our largest point and about ⅓ of those team members were on our product and engineering team. Our payroll was enormous just on this group of team members. The market was so competitive that we’d have to issue raises, time off, etc., and still, we’d lose some valuable people to other companies who either were more desperate than us or simply had more funding. This was 4-6 years ago. It is much much worse today. What options exist for tech leadership to fight this problem? They can either pay much more per developer or contract a dev shop.

We came up with the idea to be another alternative. Leadership wants to pay less, find people quickly, and control all aspects of creative culture around product development. Dev shops require you to sign a lengthy contract. You never really know who you are hiring and what they are doing daily. You just set up the scope of work and hope they deliver. This doesn't work long term. There had to be a better way. Distro is the best way to find, hire, and pay your remote development team around the globe. With Distro, you control who you hire, how much you’re willing to pay, and most importantly how to manage the work itself.

Distro takes a fee each time payroll is processed for developers once per month. There’s no cost to use the platform itself so it makes it very easy for users to join. This idea made sense because it was a large growing market that seems to be underserved. It also seemed like there was a lot of opportunity since using off-shore and remote people have recently become so normal. Also, my experience as a tech leader in my prior businesses, helped me see what the perspective might be as a customer. Our team has had a lot of confidence going into this since each one of us is not a first-time, both our founding team and our first few employees.

Take us through the process of designing and prototyping the MVP.

The first thing I found that is helpful to do when building a product is to first define what the problem is that we’re trying to solve and get clear on that problem. Otherwise, you find yourself going down a lot of different tangents and sub-problems to solve. The second thing that we do is write user stories. We then make sure we have identified the user stories of each type of user. In our case, we have a user for developers and we have a user for customers. Once the user stories are written in a format that’s easy for both designers and engineers to understand, then we can start a design prototype.

We then looked at it in two different ways. We started designing the prototype of what the interface would look like and then we started designing a process that we could test and prototype. We put together a process to begin selling and prototyping to learn at the same time we were building the product. The idea was that we could get to market faster by selling the product based on a simple process prototype at the same time we were building the application itself. This saved us a ton of time and money. It also helped us get to market faster.

Describe the process of launching the business.

The process of launching a business is different for everybody. For us, it was important to find the first group of customers that would be willing to test with us. Fortunately, given the landscape of the competitive labor market, it wasn’t very difficult to find people that would be willing to look for alternatives to what they were doing in recruiting developer talent. We identified a group of potential customers from our network that would be willing to work with us and then we set target dates to get them started. Then it was a matter of building our team and having people that were moonlighting, join full-time.

I created an entire list of all the little details that we needed to execute. We divided and conquered. Within a few weeks, we had Articles of Incorporation, EIN, bank accounts, domain, payment processor, website design, listings, phone number (which we don’t use), and all the creative assets like our logo and style guide. We had to finance the business to get it started… I put up about $250,000 to get us started. Fortunately, we have been a little profitable since starting because our sales have been so strong.

I learned again here that it's important to get started by planning and executing. No one will do it for you. Just keep moving forward. It’s not that hard to do most of these things… just do them.

Since launch, what has worked to attract and retain customers?

I don’t think that there is any super right answer here. I think that in a lot of ways our product-market-fit has done the most work. Because we are solving a real problem for a specific customer, we’re not having to implement a lot of tactics to keep and retain customers. As far as a marketing strategy goes, most of what we have done so far has been through word-of-mouth and some basic networking. We have not started any very intricate or tactical marketing strategies yet. So for the most part, our customers are coming via word of mouth.

Very soon we will implement a good social media and localled billboard strategy. We are working on this as we speak. Sorry, I don’t have much to comment on here at this point. But make no mistake, we will do what it takes to get our product and marketplace to the world.

Sometimes when you spend money it forces you to figure out how to make it back. Go make a list of things your idea requires to become real and then go put money on it.

How are you doing today and what does the future look like?

We’re doing great! We are over $2 million of ARR today in less than a year and growing quickly. We have a team here in the U.S. 5 and then 5 overseas. The next step for us is to focus on building a scalable marketing system and product implementation over and over again. We need to reach the right customer profile as well as build the right product. We are focused on the iteration of products and implementing marketing strategies.

Given the current state of the economy and how the VC market has stalled flat recently, we are focused on growing carefully through capital efficiency and focusing on product and sales. Actual sales. I think businesses right now need to focus on sales to prove product-market fit and gather attention from acquirers and investors. Currently, we are profitable and are targeting a $3.5 million ARR by December 2022. We plan to remain profitable while aggressively growing. The good news is that all of the customers we are gaining quickly will give us great product feedback to improve the user experience along the way.

We don't have any data on our customer acquisition costs at this point because it’s mostly via word-of-mouth. But we have no logo churn so far and our customers are super happy. They are filling roles faster than ever before using Distro. But it’s also too early to know our true LTV. That said, it’s going to be high.

Through starting the business, have you learned anything particularly helpful or advantageous?

Yes, it’s become very obvious that taking a slow approach to building a product is not necessary. The faster that we can go in getting feedback, the quicker we can build a better experience. Going to market sooner than later has been helpful.

I've also learned that it’s important to get the most clarity possible and then communicate that clarity to your team… very clearly. This will help all team members get going very quickly. Clarity minimizes the risk of missing expectations and misalignment.

Another lesson learned is that selling to a specific customer who is having a real problem is a lot easier to sell. We don't have to sell anything. It’s more about timing for our customers. In the past, I spent too much time selling to “everyone” because it’s a bigger TAM. This is deceiving. It’s better to be specific and clear.

Another thing is that you absolutely can do more with less. You dont need to spend money on dumb things early on. Regardless of whether you raised capital or not, you should be prepared to run your business lien. Put your CFO cap on every single day and ask the hard questions… is this necessary? How can we do this another way? How else can we look at this problem? Do we need to add one person to make t-shirts and post them to social media? This is different from being cheap. Don't be cheap. No one likes cheap people. Get lien, not cheap.

What platform/tools do you use for your business?

Docusign, Zoho CRM, Google Suite, Payoneer, Stripe, QuickBooks, Blip Billboards, LinkedIn, Form Crafts, Semrush, AWS.

What have been the most influential books, podcasts, or other resources?

As a Man Thinketh by James Allen
Radical Candor by Kim Scott
Mindset by Carol Dweck
Built To Last by Jim Collins
The How I Built This podcast

Advice for other entrepreneurs who want to get started or are just starting out?

Those who want to get started, need to first spend money. Without actually getting any skin in the game, you often won’t have the motivation to get to the next step. Sometimes when you spend money it forces you to figure out how to make it back. Go make a list of things your idea requires to become real and then go put money on it. Doesn't matter if you have to use a credit card. Go spend some money if you want this thing to get off the ground.

Are you looking to hire for certain positions right now?

Yes! We are looking to hire a product manager, a marketing manager, and an account manager. You can apply by sending your resume to [email protected].