TestBox lets customers test drive software without the sales pitch. The company, which launched beta testing in June, is currently focusing on the customer support software niche. However, plans over the next three years are to continue to expand in this niche and offer customers the opportunity to test drive software from other niches, such as sales and marketing. CEO and Co-Founder Sam Senior sat down with Nathan Latka to talk about the company’s launch and progress so far.
- The company has ten employees so far, including five engineers
- The company is spending $100,000 a month on employee salaries and feels it has plenty of runway without worries
- Its first customer gave the company $1,200 in annual revenue
How TestBox Has Built Partnerships with 6 Companies
So far, TestBox has six customer support software vendors on its platform now and is in discussions with three additional companies. The company has built partnerships with these six companies in which TestBox provides leads and sales in exchange for a percentage of the contract value, including extensions. The contracts typically give TestBox 15 percent to 20 percent of the deal. The first six vendors are Zendesk, Hubspot, Freshdesk, Help Scout, Dixa, and Trengo.
The partners view TestBox as an additional source of lead generation and sales for their software, Senior, says. “They understand that some customers want to go self-service and hands-on. We are supercharging that process for them.”
TestBox chose to begin with the customer support software niche because of the potential revenue there. Also, Senior and partner CTO Peter Holland were both familiar with that niche, having worked in it previously. Currently, the company is adding one new integration partner monthly. Expansion in the future will develop partnerships with SaaS companies in additional niches.
How First Customer Generated ARR of $1.2 K
TestBox has had eight customers sign up so far and has closed one deal. The first customer chose Zendesk, after a two-week sales cycle. A typical software purchase cycle is about three months. The customer bought ten licenses at $50 to $80 a seat. TestBox received $1,200 for the contract’s first year and will receive payment for any expansion sales from that customer.
TestBox hopes to grow through closing other deals between customers and partners. It uses GPT-3 to customize the data it shows potential customers, based on customer co-design feedback sessions, our own internal software expertise, and customer feedback as you use the product.
What TestBox Is Doing with the $2.7M Raised in Its Seed Round
TestBox raised $2.7 M in seed capital in a round led by SignalFire and including LifeLine Financial Group, Basecamp Alumni Ventures Group, and Firstminute Capital. The company spent $700K on the technology to go live and is spending $1.2 million a year on salaries. The company hasn’t spent any money so far on marketing. It is focusing primarily on building partnerships with additional SaaS vendors that will be needed to attract potential customers before undertaking an extensive marketing campaign.
“Right now, we’re just trying to build awareness,” says Senior. He adds that the company is seeing an increase in the size of companies that are signing up for the service.
Elaine Zelby, a partner at SignalFire, sits on the board of directors at TestBox. SignalFire has been extremely helpful, says Senior. “They turn up whenever we’ve asked them to and have helped us figure out hurdles when they happen,” he says. TestBox is transparent with SignalFire and sends out a monthly update and list of tasks they need help with, he says. “We’ve built a good relationship with them,” Senior says.
One example of how SignalFire has helped is with security protocols with Zendesk. “We were having challenges with their protocols, and SignalFire went directly to their chief of security to help us resolve them,” Senior says.
How TestBox Views Their $12M Valuation
TestBox was valued at $12 million post-funding. Senior says he feels the valuation was “reasonable” at that time when the company only had three partners. It was “very early in our journey,” he says. The company looks forward to increasing its value as it adds partners, customers, and closed deals. By 2024, the company’s goals are to solidify contracts with three or four additional vendors and have customers make a good decision on which software to buy within a few weeks. Typically, buying software requires an excruciating 27 steps, Senior says.
How TestBox Founders Decided to Split Ownership 66% to 33%
Senior and Holland have been friends for more than 11 years. They started a company together once as a hobby, but this is their first ongoing venture. They decided that Senior would own 66 percent and Holland 33 percent through having an “easy conversation,” Senior says.
“A lot of the idea and plan has been and will continue to be driven by me,” he says. “Also, this is a 10 to 15-year company for me, but he’s committed to five years and probably won’t lead the in-depth engineering over the long term.”
Senior is originally from Australia and studies software engineering and economics at the Queensland University of Technology, where he met Holland. He also has a master’s degree in economics and finance from EDHEC, one of Europe’s top business schools. He previously served as senior manager of Bain and Co. before leaving to build the future of software buying and now lives in Boulder, Colorado.
Holland also received a bachelor’s degree from the Queensland University of Technology. He served as a senior software engineer at Guidewire Software for three years and as a software engineer at Thales for almost three years. He currently lives in San Francisco, California.
TestBox, founded in 2020 and launching just a few months ago, is just beginning its journey. The company aims to change the way enterprises buy software for good. Watching its future activities and its road to growth and profitability will be interesting.