Abstrakt Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Greg Reffner. He's one of the very first power users of conversional intelligence as an account executive. He fell in love with how technology enabled his success. As Abstrakt leader, his vision and why is to help every sales rep and leader avoid the pain of missing their number. You can follow along at his website. It's Abstrakt, spelled abstrakt,.ai. Greg, you ready to take us to the top? [00:22] >> Yes, sir. Absolutely. Thanks for having me, Nathan. [00:24] Alright. Who who were you working for? Were you were you were selling these you know, using these conversational intelligence tools? [00:29] >> Yeah. So I was working for a company called Acton Software back when marketing automation first kinda took off, back when HubSpot was becoming that thing. And Acton was a very a company that was known for being early adopter of technology. And so we we started using Gong actually back when they had, like, a football player on their website, on their homepage. I think we were one of the first handful users of Gong, like, seven years ago. [00:56] Wow. Yeah. No. No. Act On well. It makes tons of sense there. So you were using Gong. So, I guess, help me understand now what you're building today as it relates to what you learned from using Gong at Act On. [01:06] >> Yeah. So with Gong, it's an amazing tool. They've obviously done very well for themselves. As one of my first customers described it, Gong is like finding the black box after the plane's already gone down. Tells you what went wrong, tells you what happened, but it does nothing to actually kind of stop losing the opportunity. And I wanted to do something about that. And so with Abstrakt, we're a real time conversational intelligence software where based upon what [01:33] >> you're telling me, Nathan, as my customer or prospect, Abstrakt is in real time telling me what I should be saying, what questions I should be asking, how to handle those objections so that I don't lose the opportunity. And we do all that through natural language processing, a little bit of machine learning, and some some fancy algorithms. [01:53] Anytime someone comes on and mentions machine learning algorithms, my follow-up question is always the same. Both of those tools are useless unless you spend a lot of time training them and you have a very large dataset to feed into them, which usually requires someone to do a lot of freaking work. Have you figured out a way to have someone be able to get value from this and avoid having to do all that upfront work? If so, [02:11] what is it? [02:12] >> Yeah. So no secret. We just found a creative way to tap into Google's library and data already. And so typically, the way most companies tap into Google's library and natural language processing capabilities results in the capabilities not being able to be used in real time. And so we, as one of my engineers would say, stumbled into a creative way to tap into that and access that data in real time. [02:45] Yeah. You're talking about, like, the natural language AI from from Google. Right? [02:48] >> Yep. Correct. [02:49] But but the question still is the same. Right? For every company let me just be very specific for a second. If you're trying to sell mode.com, which competes with Looker, maybe Mode knows that because they're selling to developers, don't say the word pricing until at least minute twenty five. But if you're selling to a CMO, maybe you're a company like HubSpot selling to someone, you need to say pricing in the first three minutes. Who's training the [03:13] system to know twenty five minutes versus three minutes? [03:16] >> Got it. Great. Okay. Thank you for clarifying, Nathan. So candidly, we're too early in our dataset to have that information. We suspect in about two years, we'll be able to start making those recommendations to our customers based upon the data that we have. But right now, the system is configurable per customer. So if you're a Looker, you're configuring the system to say what you want a rep to say when it hears x y z objection or [03:43] >> question. [03:44] I see. [03:44] >> And so as our customers are configuring the system, it's helping us build that dataset to then be able to, here in the future, kinda start to make those recommendations. [03:54] Oh, 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 [04:17] your 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 [04:42] get 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 [05:03] not 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 [05:29] going 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 [05:51] if 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 [06:17] the interview. Okay. That makes complete sense to me. So what are companies paying you on average per month to use your technology? [06:23] >> $100 per user per month, and our average customer has about fifteen, sixteen number 16 seats in the in the product. [06:30] Okay. Got it. So that's about $1,500 a month on average. [06:33] >> Yes, sir. [06:33] Interesting. When did you start building this? What year? [06:36] >> So we started almost two years ago to the week. So early March of twenty twenty. [06:44] Okay. 2020. Got it. And how did you fund the MVP? [06:50] >> Great question. So convinced my wife to let me take a decent chunk of our savings account out and kind of get a proof of concept built. And with that proof of concept, I went and raised a small kind of friends and family angel round from local investors here in Arizona. And that got me to my MVP that we launched on 04/01/2021. [07:15] Okay. Get real with me here because everyone goes through this. Right? It's the conversation with the spouse going, baby, how much are we gonna put into this startup? And and they're going, honey, I'm working a full time gig to support this crazy idea you're working on. Like, if it doesn't work, I'm gonna be pissed. How what how much was it? Are we talking, like, 10 k or, like, 1,000? [07:32] >> $60,000. [07:33] 60. Okay. Interesting. Yeah. [07:34] >> And was that [07:35] meaningful for you guys? Like, was it gonna be stressful if you lost $60,000, or is that like play money for you? [07:41] >> So we so what's funny is at the time, my wife was pregnant with our first son, [07:48] >> we knew we wanted to have a second child, and so she's now pregnant with our second child. [07:54] Congratulations. [07:55] >> Thank you. And so she's a full time mom. And so, yeah, it wasn't insignificant for us to make that investment because if I lost it, that lost our cushion, that lost that risk potentially having my wife go back to work and not be able to take care of our children. So it's super stressful. I mean, it's but the [08:16] >> way I kind of explained it to her, was like, hey, you spent $60,000 on your college education that you don't use anymore, so I get to use $60,000 for Abstrakt. [08:23] That's so funny. Okay. And how many how many weeks or months did it take you to get the MVP to a point where you could sell it? [08:30] >> So what's crazy is we got v one of our product out on April 1, and we weren't expecting revenue until, like, October, November 2021. [08:40] Clear. [08:41] >> That's, like, five weeks from start from first line of code to launch. [08:44] >> No. So we spent about a year. So March 2020 next April. To to next April 2021. So it took us about a year to get the product to the place where we were like, let's go get give it to customers. And on April 1, we got, you know, production ready product, and our plan was to go out and just give it to, like, beta users. Like, give it to people. Hey. Go use this. See what you [09:07] >> think about it. We weren't expecting revenue for at least a handful of months. Ended up closing our first customer and getting our first dollar of revenue three weeks after launching the product. And it was kinda crazy when we weren't expecting it, and we actually kinda grew it at a nice organic pace that allowed us to bring our customers last year while still hardening the product, developing our roadmap before we went out and closed our real seed [09:29] >> round of funding last year and then one startup showdown a couple weeks ago. [09:33] Interesting. Okay. So hold on. 60 k personal money, you raised a pre seed in 2020. How much was the pre for? [09:40] >> A $130,000. [09:42] Okay. And was that sort of typical 3 or $4,000,000 cap? [09:46] >> So we had a 4,000,000 value cap on that from defensive value round. Yep. [09:50] Yeah. That makes tons of sense. And then you did the seed round in 2021. How much did you raise there? [09:55] >> So we raised with the winnings that we just won three weeks ago in Atlanta. So we raised $620,000 total. [10:04] Okay. When before the prize money, when was the other money closed? [10:08] >> December of last year. [10:10] Okay. Okay. Got it. And and the if the prize money was $120,000, that means you raised about 500 k. Now was that at, like, the higher was that, what, $67,000,000 valuation? Or [10:19] >> So we actually did a little bit less. I wanted we were still kinda risky in my mind, and I felt like it wasn't really fair to go out and try to raise that valuation on the value cap. So we did a we kept it at $4,000,000. I essentially just decreased the interest rate a little bit and kept the value cap the same. [10:37] That makes a lot of sense. Okay. Then you just won this competition, which is great. You give up no equity, I assume. Right? [10:43] >> So they take a small percentage of equity. [10:45] Just how much? [10:47] >> So I can't discuss the the details of it with you, Nathan. [10:51] What's the name what was the name of the competition? [10:54] >> Startup Showdown hosted by Panoramic Ventures. [10:57] Oh, interesting. So there's base, like, if you do they only take equity if you win, or even if you enter and don't win, they still take equity? Just if you win. Okay. Panoramic Ventures. Okay. Interesting. And why did you decide to enter and spend your time on that? Obviously, time is very valuable as a startup founder. [11:15] >> Honestly, I I entered that competition in May of last year. I got told that two things. One, they didn't think we could actually build a stable product that people would buy. And two, they didn't think we could go out and get customers. And so I had this kind of, I guess, chip on my shoulder, and so I was like, you know what? I saw a LinkedIn thing post about it. Was like, I'm gonna go apply to [11:38] >> this. Let's see if I can kinda prove these guys wrong. And so the only reason I entered it was honestly to, I guess, prove them wrong. [11:47] So what so what sport did you play in college? [11:50] >> So soccer, baseball, and snowboarding. [11:52] There you go. This guy's competitive as hell, and that explains that dynamic. [11:57] >> Yes. Don't don't tell me I can't do something. [12:00] Yeah. That's exactly right. Okay. Interesting. Alright. Now you you got your first customers then. How many customers are you serving now today? [12:07] >> A 113. [12:08] That's a 113 seats or logos? [12:10] >> 113 logos. [12:12] Wow. Okay. I mean, so then I mean, can I take a 113 times $1,500 a month? You're doing a $170,000 a month in revenue? [12:19] >> Simple math. Well done, Nathan. [12:22] I mean, that that's pretty incredible growth. [12:24] >> Yeah. I mean, it's been fun. Right? Like, it's what's crazy is most people don't know this technology exists. And so when they see it, there it's we have seven day sales cycle. So it's generally like, okay. Let's let's get started because they no one else is solving this problem. [12:43] Mhmm. But just to be clear, mean, that's really rapid growth. Right? What did you do what was your run rate in like like, what did you finish 2021 with? [12:50] >> 60,000 in ARR. [12:52] Yeah. So, like, your monthly recurring revenue in December. So this would have been four or five months ago is what? [12:57] >> $5,500, $5,000. [13:01] Four months ago. So you've basically added all your revenue in the past four or five months? [13:05] >> Yes, sir. [13:06] Well, okay. This is crazy. So how did you I guess, how did you land those first 113 customers? At at a pretty high price point, I would say, for a start up. [13:14] >> Yeah. So ultimately, myself, my founding team, our background is in sales and marketing, so we did what we knew how to do. We generated an inbound marketing machine. We spent a year and a half building content so we could rank organically when people are searching for competition. Name name [13:33] name two or three of those. What are the search terms in Google? [13:37] >> So real time call coaching software, call coaching software, conversational intelligence software, sales coaching software. I think we just got to page one on that. I think, yeah, conversational intelligence software, we just passed Gong in our rankings for that keyword. And so it was just building out kind of a steady generate an inbound marketing machine, and we knew I knew two years ago that I needed to start that process then in order to have it impact us [14:07] >> today. [14:08] Yeah, Greg. Sorry. You have some sort of genius here that I have to dig to find out because you're above HubSpot, Gong, and a lot of people for conversational intelligence software. So how are you so good at SEO? What what's the secret sauce here? [14:21] >> I can't take any credit for it, Nathan. I found people that are better than me and got out of their way. And I think if I could give anybody starting a company a piece of advice, it would be, as a founder, you've got to put your ego aside, and you have to understand where your gaps are. And I couldn't tell you the secret sauce in terms of how we got there. I was just told, hey. Go [14:43] >> write the content. We'll tweak it. We'll edit it. We'll put in the meta tags. We'll do the keyword saturation. And I was like, cool. So I built a team that knew what they were doing, I got out of their way. [14:54] Where did you find those people? And was it one person or how many or an agency or what? [14:58] >> Yeah, so there's a couple different people. [15:02] >> Kind of a mix between knowing people. So Claire Dobson, our director of marketing, she worked at an agency. She's the wife of one of my best friends, and so I just kind of spent time talking with her about what she knew and what she had done, and when she explained what she was capable of, brought her on board. And then I met a couple people actually through some connections out in India that kind of self proclaimed [15:26] >> nerds and geeks around Google and SEO and brought them on board on a contracting basis. And like I said, [15:32] got out of the India up did you find them on Upwork or Fiverr or what? [15:36] >> Through LinkedIn, just kind of reaching out to people and was like, hey. Do you know anybody that does this, this, and this? [15:42] What were those? What were the this is? [15:44] >> Who's who who do you know that lives and breathes paying attention to Google search algorithm changes? Google makes hundreds of those changes a year, about 13 major changes a year. Who do you know that could tell you tell me every single time Google makes an impactful change to their algorithm? I wanna talk to that person, and I wanna bring them on board, and I wanna hire them. [16:07] Yep. So you hired these two folks in India full time? [16:11] >> Yep. Correct. [16:12] Oh, wow. How big is the team today? [16:14] >> So we have just two people here in United States, two people in India, and then I have my offshore, I guess, yeah, offshore development team in in Indonesia is nine people. [16:27] I love how you're building this. This is so cool. Okay. Tell me about the the offshore dev team. How did you find them? [16:34] >> So I'm not a technical person, Nathan. I've become a maybe an elementary level technical person over the past two years. But when I started Abstrakt, I was trying to find a technical co founder. And everybody I talked to told me one of two things, like, no, this can't be built. The technology doesn't exist. Or two, I can't build it with the amount of money you want to build it for. And so I went to this website [16:59] >> called Co Founder's Lab, where I ended up finding a gentleman by the name of John Bunting out of Omaha, Nebraska, of all places. And he started a startup studio called Beeso Studio. I [17:10] purchased What was it called? [17:12] >> Beeso Studio. [17:13] Okay. [17:15] >> So started talking with him, and he was like, Screw it. Let's try it. And so kinda pulled together the team. [17:24] I'm making 50%? [17:26] >> No. No. Just I mean, single digit equity percentage to come on and build the product. [17:32] Oh, so he's full time now? [17:34] >> Yep. Yeah. [17:35] He's the second one in The US. [17:37] >> No. So that's Claire. So he's John's kind of moved out of the picture, and now we're just working with the development team in Indonesia. [17:43] But he still but John still has equity? [17:46] >> He still has his company, Beeso, still has equity for getting us to this point. [17:50] Oh, so they sort of help with MVP as a startup studio and then help to basically transfer your work onto this firm in Indonesia? [17:57] >> Correct. Yes, sir. [17:58] Ah, super smart. I love this part. Okay. And what what's the can we look at the website of the firm in Indonesia? [18:05] >> So it's called Beeso Studio. So it's [18:07] called He his people are in Indonesia. [18:11] >> Yeah. Correct. [18:12] Oh, I see. So he's okay. Got it. So you're still paying Beeso Studio for work for their talent that they're onboarding or or or not based off needs in Indonesia. [18:23] >> Correct. Yeah. So ultimately, we're, I guess, contracting them in a little bit of ways. I see. I mean, what I'm able to get out of them for the dollars that I put into it is so much more than if I, you know, went here in The United States or hired just a single technical cofounder here in The United States. [18:42] Makes a lot of sense. Can I ask what do you pay them per month? Like, a range is fine. [18:47] >> Anywhere between, like, 12 and $25,000 a month. [18:51] Yeah. Yeah. But again, cheap because of all the equity preserved if you grow this big. Right? I mean, makes a ton you have to take a risk upfront, but, right, if it works, it works. So this is super cool. And then and then sorry. Real quick on the two SEOs in India. What what's their website, or do they not have a website? [19:05] >> They they don't have a website. Yeah. [19:07] Because they're just with you. [19:08] >> Yeah. And I I mean, I combined pay them a thousand dollars a month. [19:12] That's crazy. Okay. Interesting. [19:15] I'd love to interview one of them if you're open to it to ask them exactly what strings they pulled to help you rank for these things to be I mean, I want I see a headline of small Phoenix startup outranks $10,000,000,000 gong for the word conversational intelligence. And I want the and I want the playbook. [19:34] >> Yeah. That's amazing. It's been it's been a fun ride. Think ultimately, like, [19:42] >> I was fortunate, Nathan, where I saw I was part of Acton Software, then went to a company called Allbound. And I saw what Allbound did, where they invested in inbound content and creating the optics of looking bigger than you actually are. [19:58] Mhmm. [19:59] >> And that's a playbook that I wanted to follow where if you look at our company, if you look at our product, you would never know that, like, it's mainly been just a handful of us over the past couple years. And, you know, it's just [20:14] You're targeted though too. Like, see, if someone was just looking at, like, Alexa rank and unique views per month, you would never come on their radar because you don't rank high. But you rank really high for the keywords that matter. You've picked three or four and you really rank high for those. Because like when I click on the thing that what you rank for conversational intelligence software and go to the page, it's not a long blog [20:31] post. It's a it's a landing page with great images, smart h one tags, a video built in the middle, and then some stuff at the bottom. So your team it's not like you're spending hundreds of hours writing blog content. They they just needed to write headlines and little descriptions for the design, and they did all the optimization. [20:48] >> Correct. I mean, we've written, I think, close to 60 blog posts. We have 40 plus podcasts built or recorded. So we are generating a significant amount of content, Nathan, to help kind of bolster all of that. [21:02] I I love this story. So you have two there's two full time employees right now effectively? [21:07] >> Correct. [21:08] Million dollars in revenue per employee, folks. Love this. Greg, I say one day, I think very soon there's gonna be someone that takes a company public with less than 10 FTE, the SaaS company. You could be one of those. John at SmartSuite is another one I'm watching very closely, but I'd love it for I'd for it to be you. [21:22] >> That would be that wouldn't be a bad day. [21:26] Alright. Cool. Let's wrap up here with the famous five. Number one, favorite business book. [21:30] >> Favorite oh, Simon Sinek, Start With Why. [21:33] Number two, is there a CEO you're following or studying? [21:40] >> I I like Steve Jobs. I can't go wrong with Steve Jobs. [21:44] Nice. Good one. Number three, what's your favorite online tool for building Abstrakt besides your own? [21:50] >> For online tool for building Abstrakt? I gotta give I gotta give HubSpot a shout. Free tools. I mean, we've been free CRM, free marketing tools for a while now. [22:02] Hey. Real quick. If Amit from Gong comes and offers to buy over 25,000,000 all cash up front, do you sell today? [22:07] >> Oh, yeah. [22:09] Oh, yeah. Everyone always says, no. I have to talk to the board or no. I have to talk to my wife. You're like, no. If that happens, 10 x multiple. I'm [22:18] >> I'll take it. I'll I mean, just come bring me on board for three years and let me run the product. [22:23] I I I it would not shock me, Greg, seriously, because of the quality people we have listening to the show. If you get some inbound from this, we'll see what happens. So here number four, how many hours of sleep do get every night? [22:34] >> I'm very fortunate to have a wife that takes very good care of me, and so I usually get, like, seven, eight hours of sleep a night. [22:40] Okay. Yeah. So seven, married, one kid already, and another one, what, due in three months? [22:46] >> In July. Yeah. So three months ish. Yeah. [22:48] It weird that I knew that? I just I feel like a July baby. [22:53] Alright. Well, the last last how how old are you, Greg? [22:56] >> I'll be 35 in June. [22:58] Last question. Something you wish you knew when you were 20. [23:03] >> I wish I would have known to listen to my dad every time he told me that something would happen or I would feel a certain way, and I fought him every step of the way. I wish I would have known to listen to my dad. [23:13] Guys, Abstrakt.ai launched in 2020. He was one of the first users of Gong at a company called Acton when he was doing sales. He said, you know what? I need to make this stuff real time. He's done it with a laser focused SEO strategy. They've gone from basically nothing to a $170,000 a month in revenue over the past five months, a $2,000,000 run rate and get this to full time employees. He's very smartly used contractors to [23:33] preserve equity and preserve his cash and have a really healthy balance sheet. And also has done this pretty cash effectively. He's only raised about $630,000 to drive 2,000,000 revenue, very healthy capital efficiency. We'll see what happens next. Greg, thanks for taking us to the top. [23:47] >> Thanks, Nathan. Enjoy the rest of your day. Thanks for having us. [23:51] One 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 one [24:16] p. M. Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two p. M. 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 [24:37] an acquisition, a big fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what [24:59] people are saying. Sign up for 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, I do it so that we can all learn. We have to [25:19] counter those people. We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.