Accucoderevenue

hello everyone my guest today is kevin price he's a unique character in oklahoma farm boy that bought a commodore 64 when he was nine and taught himself basic he's been immersed in technology and the sciences that underlie it since really his entire life electrical engineering chemistry physics and material science is now building accu code where he's helping simple scalable and repeatable business solutions get launched at scale kevin you're ready to take us to the top i am all right so talk to me uh when did you first when you launched the company how's the company 24 years ago this month wow okay so 19 was that 95 yep 1995. that is pretty incredible okay so you launched in 95 and what was the company back then i assume it's pivoted since uh we originally started out as a value-added reseller of barcode scanning equipment and mobile and wireless technology back when they were all very new barcode scanners were two thousand bucks a piece okay and then so fast forward to today are you more of a pure play sas company no um we've got three software as a service products today uh we're also one of the according to computer reseller news one of the largest uh resellers and managed service providers of i.t infrastructure in north america what is that what's it infrastructure um network infrastructure mobile computing barcode scanning at this point self-proliferating across most businesses and um help me understand today how many i mean how do you how do you measure the businesses right do you separate them all out or do you get kind of weighted averages across the entire business there are eight separate lines of business inside of the platform that is the original parent company now um they are all separate llc's they're all set up with the intention of you know being able to take on investment of ultimately building up and exiting and they're run from the beginning with audited financials and all of the things that are necessary in order to be ready to go sell a business when when the right buyer shows up are you bootstrapped today or did you choose to raise capital we're still bootstrapped i love the company i love that i love my you're my kind of founder man that's good stuff all right what does growth look like so uh inc reported in 2017 total revenue was about 63.3 million what'd you finish 2018 at uh actually we were pretty flat last year we finished right at 63 million but we're on track this year it looks like we're gonna have our first hundred million dollar a year why were you flat um there was a lot of you know from an industry standpoint the uh the tariffs and some of the other things caused a lot of capital purchasing and big enterprises uh they were waiting to see what was going to happen and uh to some degree we're still dealing with some of that but pent-up demand is you know can only wait so long yeah i couldn't make the argue the opposite point which is people you know if you saw trump and said this is going to be very all over the place we're going to pre-buy a bunch in 2018 so you should have seen a huge spike in 2018. i'm sure i'm sure there was some of that we didn't see that interesting okay so you think this year will be your first hundred million dollar a year we got six months left in the year what are you at today uh we're sitting at a little over 50 already okay good so i mean you're it's not like a unrealistic goal that feels pretty accurate yeah and where's most of so kind of break down let's just use 100 million that's easy so break down 100 million you think you'll do this year what percent of that will be sas um not enough so the two the two software the service products the enterprise offerings we've got out today one we've got rapid inventory which is a cloud-based warehouse management system for quickbooks users so if you're on quickbooks pro premier enterprise you can go license that product for 60 bucks a month per concurrent user that product's been running uninterrupted since 2007. it originally was launched uh as intuit warehouse management uh they branded it as their own product and took it out to market for the first three years okay and what will that do this year it's still the only multi-tenant cloud-based solution in that market well what do you think that'll do this year yeah so that's gonna do about a half a million dollars this year um it's been running for a long time but uh that quickbooks market is shrinking yeah they've shifted most of their customers that online quickbooks online and uh other competitors like zebra we're starting to take a lot more customers to the cloud yep um we've got jellyfish which is a brand new product just launched in january this year we've got our first commercial customers on that it's going to do less than a million dollars this year but it is a unified order management platform that can really be applied to any wholesale buying sector we originally targeted for the food and beverage industry we had a product called ao bar that we put out in the android and ios markets about uh five years ago that was free software that basically allowed you to order beer wine and liquor from all of your different your distributor beers as a restaurant and you do all your inventory for your bar there's the oklahoma boy yep so the point we learned a lot from that piece of free software and the several thousand bars that use it to order from their suppliers and we built that base jellyfish on the as a next generation version of that and it really in you can use it to order from any wholesale market or supplier a single screen allows you to scan barcodes and quantities in order from all your different suppliers and then the system breaks it up into electronic orders and transmits it to all of the different vendors kevin it sounds like your software revenue this year might be something like one or two million bucks right yeah okay so you have as well we stole the software as a service company last year called velocity mail that was doing about 5.5 million and that was we sold it to descartes which is a publicly traded uh company out of canada um that was it was a 26 million dollar cash exit and my first is accu code i helped an employee start a business and we exited that several years ago that was another software as a service startup that we did internally okay so you sell velocity mail last year you bring it that brings in uh it was doing 5.5 in terms of annual revenue you sold it for 5x 26 million all cash uh you you pile that back into accu code how as a founder do you make the decision between using that capital to keep building the company versus taking out and paying like a dividend to yourself and maybe you know you know some employees as a bonus um we pulled out between the team that that went with that business and what management took out we took out about five million okay in cash and then the rest is staying in the company and sitting on my balance sheet right now i bought some land in colorado springs we've got six and a half acres we're about to build a new uh start building our first facilities down there um why do you need facilities do you actually take hold of things you're reselling you need inventory space out of our logistics facility in louisville kentucky we shipped over 300 000 shipments last year wow why do you actually i mean why do you actually take control of the inventory why can't you just be a reseller right in the middle um part of my one of the things that makes accu code unique in the enterprise id space is that we are one of the only literally only guys in the distributed device population space that can take ownership of daily operational service and support for tens of thousands of devices at thousands of locations and make sure they keep showing up every day and work and we've got customers like kroger and discount tire and uh lots of grocery and retail type businesses and manufacturing companies that we are basically their i.t support and service every day we're the guys who answer the phone we we do the updates we run the spare pool and we make sure that they have equipment that works yeah now if you're putting uh products is what allows us to do that we have a product called for work that's another software as a service platform we're launching this year that has been our own internal project management workflow automation platform for four or five years now and now we're launching it out as a gig economy platform for running these same kind of projects at other companies so kevin if you take so again two or three million bucks it sounds like in software revenue this year you've had some success with software in the past as you just articulated with velocity mail you've got the distribution centers that you're opening up of the call at 98 million that is essentially coming that you're reselling right through your platform obviously you have a significant other that is cost of goods sold you have to buy the product and then you mark it up when you sell it to somebody average gross margins on that stuff is you know we'll call it 10 to 20 points okay got it so you're well not basis points hopefully percentage points right gross gross margin yeah but i'm saying i sold it for a thousand dollars i'm making a hundred and two hundred bucks you got it i'm just saying 10 points in finance terms is 0.1 percent 10 points in terms of if you're talking percentages is 10 it's very different things very different things yeah yeah so on 100 million going through your platform you might again you know margin gross margin would be something like you know 10 million through the platform yes okay very cool um talk to me about your team today how many people a little over 130 right now between the different locations and where are the different locations uh denver louisville kentucky dallas and limerick ireland okay now are you burning cash right now are you casual positive uh i i'm always cash for posi i got two years out of 24 that i was not profitable mm-hmm well i mean by the way i'm being unprofitable if you since a big opportunity might not be a bad thing right so it's just that from a discipline standpoint being a bootstrapper i'm i'm used to running you know i've used a business that was very very uh bootstrappable being a bar that had relatively low barriers to entry and i've used technology to scale that business in a way that allows me to take profits off of that and the opportunities that it presents because it puts me into the customer supply chain all of these software products are a result of customers on my i.t side that came to us asked us to solve business process automation problems and we ended up building a product out of them usually i have a customer before i build it yeah no that's good now now when you say profitable you talking 10 i'm up to the bottom line 20 what's that look like on software as a service you're on the var business no no you're totally your car business it's not our business it's more like four okay so if a thousand if you sell 100 million right you're taking 10 to 10 million and then four percent of the 10 million hits the bottom line yep so about 400 grand no 4 million okay well so that that would be 40 percent no you're not no i'm taking i'm talking no no we're talking about different things i'm not yeah i'm not talking basis points i'm talking i'm talking percentages so i'm netting out on a we'll call it a 100 million dollars worth of hardware business uh about four months yeah which is four percent yes four percent correct what i was saying that's what i thought it's what i said yeah kevin we're talking past each other if you give me a second to explain you will be on the same page what i'm saying is you told me you take 10 of the 100 million right that's your gross margin that's 10 million what you're then saying is of the 10 million you're taking 40 percent not more yes to ask well i know it's because my net profits my my net profits are around four percent correct which again would be about it sounds like four four million it's actually more imp in my opinion you should say that the other way it's way more impressive right of the 10 million after cost of goods sold you're taking 40 percent of the bottom line 4 million yes um so very good so you list that sit on the balance sheet i mean that's not a great use of capital what what do you do with it you just let it sit there well i've got right now i'm funding uh jellyfish for work i've got a 3d division that this year is going to be its first cash flow positive year that's a four year i've got a couple million bucks invested into cutting edge 3d technology and and being a market developer in that space um i just did my first acquisition in that sector i just bought a company called 3d print store for how much accucode 3d um and i've got an ai r d project going on in ireland where we're developing some some really cutting edge ip on using neural networks and we've got some grant money from the irish government and the university of limerick to build that kevin we're running out of time here last few questions over the past 12 months how many customers have you essentially resold at least one product to resold one product too correct repeat that yeah so i'm curious basically how many customers you're working with over the past 12 months oh an average customer this year we're doing with over a thousand companies a year okay and those are companies that you're buying a product from and then marking it up and selling it to somebody else right oh you're talking on the vendor side that's why i'm asking yeah the suppliers side uh probably less than 20. okay okay then you have over a thousand buyers thousand buyers thousand corporate customers yes okay great so again supply side there's less than 20 folks companies supplying the products that you are then selling to across a thousand different corporate uh companies and most of those are come from vendors like zebra and honeywell cisco uh panasonic relatively large names in our sector yep no that's great so you can just be clear do you consider your customer the 20 or the thousand uh the thousand okay the thousand the the vendors are you know that's my tool set the technologies that i can you know bring to bear on anybody's process yep very good all right let's wrap up here with the famous five number one what's your favorite business book my favorite business book uh built to last number two is there a ceo you're following or studying uh no number three what's your favorite online tool for building your company besides any of your own my favorite what online tool um probably google docs number four how many hours collaboration tool how many hours of sleep to get every night oh i probably get over eight and which situation married single kids twice divorced uh three kids 19 25 26 okay and um okay and how old are you 50. last question what do you wish your 20 year old self knew oh patience seems like you have that you're 25 years in the making uh yeah but i didn't start out that way uh i i acquired it along the path i started out pretty angry i was really good at bludgeoning my moment into submission guys accu code launched 25 years ago they'll break 100 million dollars in terms of products sold resold through their platform this year of which they take on average call it 10 percent of that so 10 million bucks and then it's super casual positive 4 million to the bottom line each year now inside of this they are building many many sas products software products having a lot of success they built one called velocity male up to five million dollars in revenue sold it last year for 26 million dollars to descartes which is obviously a public company there so a lot of success there is these scales and invest in new r d new software products new ai stuff around the globe kevin thank you for taking us to the top thank you