How 8Base Closed a $10.6M Series A Led by Foundry Group and Grew to 60 People (Interview with CEO Albert Santalo)

Introduction and Founder500 Event Announcement

Nathan Latka

00:00Hey guys, recording this here on what is it? Friday the nineteenth. Maybe you're seeing this on Monday at the latest, but wanna let you know we are almost sold out for Foundercomp Sorry, Founder500 in Austin, Texas here in about a week. It's gonna be an amazing event. 500 B2B SaaS founders. I'm looking at the attendee list. There's almost 60 founders with more than $67,000,000 in ARR. It's an incredible group of group. There's over one and fifty

00:27with more than 1,000,000, more than a million revenue. It's an incredible group. You don't wanna miss it. Grab your hotel, grab your flight, grab a ticket right now. I'll put the link in the bio, in the description here on YouTube. And I think there's only about three tickets left. Okay, about three tickets left. I'd love to see you guys there. Don't be bashful. Grab your ticket now. Hey, folks. My guest today is Albert Santalo. He's a

Introducing Albert Santalo and 8Base

Nathan Latka

00:48computer scientist and internet entrepreneur with experience in high growth venture backed technology companies. He's now building a low code development platform called 8base, recently made a nice pivot and looking forward to catching up today. Albert, you ready to take us to top?

Albert Santalo

01:00>> Absolutely. Great to see you, Nathan.

Competitive Landscape for Low-Code Platforms

Nathan Latka

01:02Great to see you too. So my gosh, first off, this is a very competitive space. There's a ton of free tools. How are you positioning yourself?

Albert Santalo

01:10>> Yeah, I mean, it's competitive and it's not. I mean, if you look at the real competition is people building things from scratch. So, I would say in some areas, yeah, there's been solutions that have come out and made a difference, but there's still a lot of greenfield opportunity here. I'd say we're in the first or second inning still.

Recap of 2021 Metrics: ARR, Customers, and ARPU

Nathan Latka

01:28Yep. Now you, when we last spoke, this would have been back in early twenty twenty one actually. You told me your largest customer was $240,000 a year. You had 1,200 customers paying on a $100 a month on average. You're doing about 1,500,000 in total ARR. I believe you were basically bootstrapped outside of a small seed round. How have things changed?

How 8Base Has Changed: Product and Business Model Pivot

Albert Santalo

01:51>> Oh my God, there's been a lot of change. So at the time we had, you know, 8base has always had the intention of being full stack low code, but we had essentially half the product stood up. So we started with the backend. We had a backend as a service product and we had a professional services offering that would help people use that backend. And so part of our bootstrapping and dogfooding strategy was to bring services to

02:19>> the table, do large engagements that implement 8base while we were building out the rest of the product. So that rest of the product, which is all the front end tools, is now in the market. In the process of all this, we raised venture capital. So we closed the $10,600,000 round earlier this year. And, you know, we're in the process of shifting the business model. So taking the services side of what we do and instead of us

02:48>> doing it ourselves, creating an ecosystem of external providers that do it on behalf of our customers. We've already got a seed, a bunch of those in place and we're building out more. And then really focusing our efforts on product led growth. So really implementing a product led growth flywheel and then a B2B sales effort that goes on top of that.

Series A Raise and Shifting to Product-Led Growth

Nathan Latka

03:10What's that mean? PLG flywheel. What's the free plan look like? And if so, where's the, where do people run into the paywall on the free plan? How do you decide what activation metric to use?

Free Plan, Paywall, and Reverse Trial Structure

Albert Santalo

03:17>> Yeah. And so the paywall that's up right now is only for the backend. So the front end tools are still free. We are going to combine that so that it's full stack pricing in the next few months. But for now we just want adoption of the front end tools. And so the free plan is pretty ample, but the way to think about it is it's going to give you a base level of backend capacity on AWS.

03:43>> It's going to let you try out almost all.

Nathan Latka

03:45That's literally storage, amount of storage or something.

Albert Santalo

03:48>> Storage and computing capacity primarily. Yeah. So it's the full blown, all of it available through an API that exposes the backend. So if you're just using 8base for the backend, you'll have the ability to use our free tier with ample capacity. If you're using the full stack, the paywall will really start there with the deploy button. So we'll use a reverse trial where you get put into our professional plan for the first fourteen days, and then

04:16>> you'll convert off of that. So you'll be able to use the deploy button for fourteen days, hopefully fall in love with the tool. And after that, you'll begin to pay at $25 a month.

Positioning for JavaScript Developers

Nathan Latka

04:27You're using some interesting positioning words on your website. You know, things like the best, not just the best way to build like applications, the best way to build JavaScript applications. And there's niching down in a hyper competitive space can really work. So why JavaScript applications and what are other examples of how you're trying to focus on a specific niche?

Albert Santalo

04:46>> It's interesting that you call it a niche and I love that because it's actually the biggest niche there is. So if you think about low code tools in general, they've all made people learn a new language, visual language, combination of visual and scripting languages, whatever. What we're trying to say is when you get into 8base, you should already know what to do if you're a JavaScript developer, of which there are about 14,000,000 in the world. So

05:15>> it's the largest pool of developers around a language in the world. So if you're a customer, think about the benefits of using a low code tool that also brings with it fungibility from the developer side rather than train up developers on our stack at a high price point.

Nathan Latka

05:37Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually saves you a lot of time. Well, we've done this, we've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second. But you log in, you connect

06:00your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

06:25get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity And red is if you sold the whole thing outright. Now what's cool about this is this is

06:46not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're

07:12going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, we're gonna go back to the YouTube video here in a second, but

07:34if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into

8Base Academy and Content Strategy

Nathan Latka

08:00the interview. Talk to me a little bit about go to market in sort of the non traditional sense. You have 8base Academy, which I believe is new. A lot of founders struggle with content, especially a formal academy program where there's coaches coming in, there's recordings happening and how do you get eyeballs on it? So how have you structured this academy and is it working?

Albert Santalo

08:20>> Yeah, academy is a great resource and we're probably in the third inning of building that out. Most of the emphasis on academy has been on the backend so far. So what you're gonna see come online is the front end tools as well, Plus, you know, nontechnical resource type education as well. Because when you're using 8base, you have to be at least quasi technical, but there'll be resources around nontechnical people and how to access our ecosystem to

08:51>> get what they need built?

Organic SEO Through Video Transcription

Nathan Latka

08:52This can be a very specific question, but I think a lot of people like this. People love programmatic SEO where you can sort of do one thing, record a YouTube video, then it goes out a thousand places. You then push or put it back into an academy program. Something that looks like you've done well that frankly we're struggling with at Founderpath. You have taxonomy here. I can see 8base console or GraphQL or Resolver functions. Was that

09:11a manual did you have someone manually go in and tag every piece of content with the right taxonomy so that your users can sort quickly?

Albert Santalo

09:20>> Yeah. One of the things we did was transcribe every video so that the transcription is out there on the web and crawlable by Google, etcetera.

Nathan Latka

09:30Is it working?

Albert Santalo

09:32>> That's really Yeah. Yeah. I mean, it's helping with the keywords for sure.

Nathan Latka

09:35Yeah. You're seeing more organic traffic that would be working. Yeah. Yeah. That's cool. That's very cool. Okay. Talk to me a little bit more about, you know, ARPU. Obviously, you raise a series A and by the way, you've had like amazing timing on a series that you closed it in March, right?

Series A Timing and Term Sheet Negotiation

Albert Santalo

09:50>> We did the first closing in February and the final closing in April. You know, look, I've been around for a while and I am a big believer in windows and this window felt like it was just open too long. And so given the nature of what we do, you need real money behind it. So I felt like we had proved out our model. We had gotten enough R and D done that it was time to like

10:19>> step on the gas, augment the team. And so around mid last year, I started preparing and late in the year, got the term sheet that we wanted to see and then did the deal.

Nathan Latka

10:31And most founders, they're doing sort of a series A like that, they're selling 10 to 15% of the business. Were you sort of in that same range?

Albert Santalo

10:43>> Yeah. We were.

Nathan Latka

10:45Yeah. Yeah. So that would have been something, you know, between like an 80 and 100,000,000 valuation. Something in there.

Albert Santalo

10:50>> You're in you're in the range.

Nathan Latka

10:52Okay. Fair enough. Was it a fair Do you feel like it was a Looking now, valuations have contracted. Do you go, oh, shit, how do I grow into this valuation now that the multiples are contracting so much?

Albert Santalo

11:01>> Yeah. I didn't feel like it was a crazy valuation and I didn't, I didn't really want a crazy route valuation. What I was more interested in was who was the partner. And I'm just incredibly happy around that. So I never, I didn't, when we Who got was it? Who'd you pick? Yeah. So look, before I tell you, I didn't negotiate valuation on the term sheet. So I negotiated other things, but the valuation was something I didn't

Foundry Group Partnership and Board Structure

Albert Santalo

11:28>> touch. The partners, Foundry Group, and Chris Moody led the round. And I just, I have the utmost respect for them and Chris. And you know, the experience with them has just been phenomenal every step of the way.

Nathan Latka

11:46Where'd you focus your negotiation power if it wasn't on valuation during the term sheet process? Were there sort of like board structure you were optimizing, ratchet clauses, liquidation, like what were you focused on?

Albert Santalo

11:57>> It wasn't a little bit of board structure.

12:02>> It was the cleanest best term sheet I've ever seen. And I've seen, I've seen at least a dozen in my day. And don't take it from me. Our lawyers said the same. They're like, wow, right? These are lawyers. So the negotiation was minor, minor stuff. I mean, was, it's probably not even worth talking about here. It's just like there was no ratchet provisions. There was no liquidation preference. There was no, none Yeah. Of

Nathan Latka

12:28There's a lot of friction I hear around the series A negotiations on this stuff is, you know, the board structure is typically moving to either a three or five person board at the series A because you've got the seed with one seat, the series A with a seat, the founder or founders with the seat. But obviously, a founder doesn't wanna be in a position where there's two investors and then just the founder. So you typically create

12:50two other seats for common to hold. Yeah. And sometimes the language around that board structure is such that it doesn't say Albert controls the three seats. It says the majority of common or whoever is currently the CEO controls a seat. But if those investors can change who the CEO is or do something to change your ability to keep the majority of common, you effectively lose control of the board. Did you like Maybe not on your term

13:15sheet, maybe in the other ones you've seen in your past, like how do you think about board structure over time?

Albert Santalo

13:20>> Yeah, so this is how founders lose control of their ventures. And you're probably going to eventually lose control of the venture unless you just have some, you know, something that's just off the charts. But you want to delay that as for as long as possible. So, and, you know, I've seen VCs come in that don't control the board, still control the board. So you got to be really, the more important thing is who your partner is.

13:47>> It's not what the documents say.

Nathan Latka

13:49How do they do that? How can an investor control a board, but it doesn't look like they control a board?

Albert Santalo

13:53>> One example is number one, they're the most accomplished person at the table and they have the big war chest. They can keep doubling down in rounds and other people are running out of money for instance. And they're just, you know, they'll side with that investor because that investor is dominant, you know, so that that'll be one example, but there's probably a zillion examples. So, yeah, so in terms of board structure, we ended up with a three

14:20>> person board with two independent seats. We're in the process of looking for one of those independents.

Nathan Latka

14:26Wow. Foundry didn't require for them to protect their preferred shares with their own seat,

Albert Santalo

14:32>> No, Foundry has their own seat. They have a Series A seat. Then there's a, we call it a Series C seat, but it's really controlled by Common and Series C voting together, which means that I control it. Yep. Then there's a CEO seat, which I sit in.

Nathan Latka

14:51What are the two independent ones? And I thought you said you guys had two independents.

Albert Santalo

14:54>> The two independent are just independent board members. Like we'll do a search and find people that we think are relevant within

Nathan Latka

15:01Oh, so you're moving to five?

Albert Santalo

15:02>> Yeah, we're moving to five.

Nathan Latka

15:04Oh, okay. I misunderstood. I thought you said it was three today.

Albert Santalo

15:08>> It's three today and then two more that will be approved once at least the fourth person's found.

Team Size, Engineering Headcount, and Colombia Office

Nathan Latka

15:17Yeah, that makes a ton of sense. Going back to product velocity. So last time we spoke, I think you said you had about 38 folks on the team. How many are on the team today?

Albert Santalo

15:26>> Right now it's about 60 or so.

Nathan Latka

15:29Wow. And how many engineers?

Albert Santalo

15:36>> Core engineering is

15:40>> 40 or so.

Nathan Latka

15:41Why do you use the word core?

Albert Santalo

15:43>> Well, because I'm in that, you know, we've got product management, we've got our CTO, he's not in that number. You know, we're all involved in product.

Nathan Latka

15:53Have you done anything to try and control burn over there, but still get the engineering resources you need like outsource?

Albert Santalo

15:58>> We have a little bit of outsourcing going on. The outsourcing usually increases the burn. And then we we now have 30 people in Medellin, Colombia that that's that's recent news as well. So we

Nathan Latka

16:11Why do you say outsourcing to Colombia increases the burn? Wouldn't it be more expensive to hire a full timer in New York or San Francisco?

Albert Santalo

16:18>> Well, I think of that as offshoring versus outsourcing because it's our own company.

Nathan Latka

16:22Ah, got it.

Albert Santalo

16:23>> Outsourcing, we also have some consulting firms that help us as well.

Nathan Latka

16:28I see. Yeah. So just to be clear, you consider the group in Colombia offshoring, not outsourcing.

Albert Santalo

16:34>> Totally. Yeah. And it's a wholly owned sub of 8base. That we sell Yeah. From

Nathan Latka

16:39It's not like a dev shop that you're getting a hundred hours per month in. I see. No, no, no.

Albert Santalo

16:45>> We have a but few of that's not the mainstream.

Nathan Latka

16:48So why would you put certain engineering specs or tasks into outsourcing versus your team that is wholly owned by you offshoring in Colombia?

Product Roadmap: Full-Stack Unification

Albert Santalo

16:59>> It for a number of different reasons, but think of one of them just ramping up engineers fast. Some of these are like, know, hire temp to perm and things like that. And some of them are handling specific things.

Nathan Latka

17:13Yeah, interesting.

17:15Very cool. Okay. Talking about product, what's coming up next? Anything you can share?

Albert Santalo

17:20>> Oh my God, there's a lot going on in product. So, as I mentioned, we had the back end. It's still, you know, it's very mature and going really well. We're beefing up the R and D as it relates to the back end, going to add more core services to help applications run. And then the front end tools are evolving super quickly. I think if you dug into those, what you would see is a very powerful low

17:46>> code platform that operates with the flexibility of a framework. And that is a very, very hard thing to do. So like a web developer, React developer, Vue JS developer can come into an 8base and still feel like they're developing and they're not limited by the low code environment because of that flexibility in the way we've architected it. And then what you're going to see is that we're going to start bringing this whole product experience to be

18:13>> full stack. Whereas today you can use the backend or use the frontend or use them together. The product experience is a little bifurcated. And so it's going to become one, even though you can still use the back end as a headless back end, or you can use the front end talking to other back ends. But the product experience will be more unified.

Closing Thoughts and MVP to Hyperscale

Nathan Latka

18:36Guys, heck of a story here. Check it out at 8base.com if you want to again, no code your way to your SaaS MVP. It's a good way to go. Albert Santalo, thanks for taking us to the top man.

Albert Santalo

18:46>> And Nathan, one quick thing. MVP and beyond. Like we've got clients now that that are are hyperscaling. So that's one of the big benefits of the product is just, you can start with MVP, but you keep going. You never have to replatform.

Nathan Latka

19:00Guys, 8base.com. It's free to check it out. Go, go take a drive. Albert, thanks again, man.

Albert Santalo

19:04>> Thank you, Nathan. Always a pleasure.

Nathan Latka

19:08One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

19:33Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big

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20:17for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We

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