Agilence Inc. Revenue & Funding (2023)

agilence was launched way back in the day called 2006 Russ came in in 2008 and moved it from a hardware company servicing called the restaurant retail grocery Industries moved into more of a SAS plane 2013 and today is really vertically integrated into those three sectors doing things like Incident Management uh human Capital Management that's what they're looking to expand and are they already do operational analytics merchandising Etc they're doing 35 million books in arj or right around there up 17 to year over year the first 10 million year was 2018 first million dollar year 2014. he's doing this in a capital efficient way powered by the war trust that is the private Equity form cordera Capital as he looks to scale potentially inorganically with Acquisitions moving forward hey folks my guest today is Russ Hawkins He is building agilents that's agilinsinc.com which helps reduce shrink and improve margins across retailers restaurant operators and Grocers to increase their margin by producing preventable loss across the business Russ you ready to take us to the top here I am now what are you NX grocer did you own your own grocery chain before this or what how did you learn no not at all no no actually um kind of a serial uh startup guy but not a Founder I've been in most cases uh uh the first uh outside manager to come in uh working with the original founder so this is my third company prior to that I was 15 years with what came to be known as Lucent Technologies of the Telecom business of course of course now this particular company agilents give us the backstory what year did it launch so the company was founded way back in 2006 and originally had a completely different uh approach and a completely different uh technology that that we were using I got recruited in around 2008 and um basically changed the model of the company to be a recurring Revenue model and then in 2013 Major made a major pivot to strictly a data SAS company SAS software company sorry what was it between 20 between 2008 and 2013 if it wasn't SAS already so it was the company was originally in the loss prevention business but it was uh about visually verifying uh suspect transactions so uh the way the product was deployed is uh was in a server and we were largely focused focused on Grocers at the time so basically the the the companies would use uh a printout or a file out of their POS system or their exception based reporting system and then they would turn to agilents to visually verify so a very video Centric company and the idea was to enable an analyst sitting in headquarters to be able to review transactions across a chain of grocery stores essentially visually determining whether there was something amiss in those transactions but it was a hardware oriented business I tried to make it a recurring model by providing wait restaurant that's a big deal it started off as hard there was an upfront Hardware installation required originally yeah oh wow interesting okay got it and and you came in and said now did you come in because you know current investors weren't happy with the founders and they said we got to bring in Russ or how'd that happen yeah so my uh my prior company was a high performance Computing company and my controller was married to a venture capitalist in the Philadelphia area so I had gotten to know him and when I sold that company successfully uh he asked me if I would consider running one of his portfolio companies I actually looked at three of them and this was the one that I thought had the most interesting technology and to me it was a great technology with with poor go to market and poor marketing and so that's what attracted me there it also was the value was in the software but it was delivered in a in a piece of Hardware that we put servers out at each grocery store essentially I want to flesh out all the years between 2008 and 2013 and 2013 to 2023 but before we go fill that backstory you know tease us a little bit with where you're at today give us a story of how a customer is currently using you here in 2023 yeah so we the the major shift that we made in 2013 was to focus really more on data analytics and be less video Centric we thought we could do a better job than what was being done uh in the marketplace at the time with a technology called exception based reporting which was being used by many many large retailers uh and uh right now we're proven that we we came out with a minimum viable product in 2013 and uh We've evolved pretty significantly since then originally the use cases were all around uh loss prevention but now uh 80 percent of my customers use it for operational analytics merchandising marketing even the finance organizations use it for a variety of things so today it's all about data management and making the data exhaust that all the systems that are operating in these businesses we pull them all together and we we make create value or give the users the ability to create value out of all all of that data oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different evaluations inside of your founder path dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to 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 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 not built off random data again you guys hear these interviews on YouTube all these datas are built from real-time valuation data points Founders share with us on the show so traction 1.2 million seed round 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to 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 going out right now and you're raising your seed round well 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 data set of SAS valuation than what you can get now inside of founder path 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 if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your evaluation 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 all right let's jump back into the interview Russ with that idea you know the operational analytics merchandising organizing excuse all the data exhaust managed under your platform today what's the average gross you're going to pay you per month or per year to use your technology well it really depends on the the size of the grocer and the and there's differences in in the Grocers versus retailers versus restaurants so we today we have a couple hundred customers more than more than a couple hundred customers across those three uh groups in in the US on average they pay us around 125 000 a year but we have some that are close to a million and some that are smaller interesting Ed do you have anyone paying your biggest customer don't name them obviously but anyone paying more than a million per year All In uh no we have three right close to that but not uh nobody nobody yet well although most likely through expansion sales all three of them will be uh over that threshold uh within the next year it's one of my favorite metrics when you read all the s1s from the SAS companies going public is go down to the customer section borrow it on page 60 and see how many million dollar plus customers they have that's always a nice metrics to see if you have helping that dollar retention Etc yeah originally we were focused more on the mid Market uh and we were we we kind of worked our way up to supporting larger companies and and along the way we've learned a lot and now we're now we're uh we're really considered the leader in this space when you sorry just to put it put a sort of a tighter range on this when you say a couple hundred customers today we're talking like four or 500 or closer to a thousand no we've got uh closer to 300 and uh 300 okay they're uh they're across all three markets and but all in the U.S well U.S and Canada today so we've we've avoided for now uh bringing the the platform uh outside the U.S mainly because I've done that before and I Know It uh it takes a lot of energy and uh you really need to have patience to make that work uh one of the things where we're considering now uh we sold the company to a private Equity Firm about 18 months ago and one of the things that they've enabled is potential Acquisitions and so I'm looking at a couple of Acquisitions right now that would give us a a structural platform to to bring our our solution uh to other geographies it's great to have someone like that behind you especially in a world where evaluations are tighter you can maybe get better deals than you did a year ago so let's talk more about that here in a second I do want to try and get a general sort of size in the company how many folks are full-time today at the business uh we're 70 people 70. okay and how heavy on engineering how many engineers uh about 27 28 okay 27 28 and you must have a well uh trained sales team if you've got accounts that are paying up towards a million how many are like you know csms or A's or bdrs Etc uh so the the sales organization today is around 10 folks uh and that's a combination of bad carrying sales people uh bdrs and uh uh we have technical leads people that you know do Solutions uh they basically do architecture and solution selling yeah interest of the ten how many are carrying the bag you're using your words how many are quota carrying five of them are better carriers interesting how do you split up the deal flow is it geo-based is it industry based how do you split that up a little bit of both so we make a a delineation between uh retail and restaurants the use cases are are significantly different in restaurants and even this Sub sub segments in there right in restaurants as quick service restaurants but there's also table service restaurants so the use cases can vary significantly on the retail side um we have a we have a segmentation around uh um grocery specialty drug stores those are the three three I would do something to do more with convenience stores now as well uh but basically we break it down uh the the sales people are assigned uh there it's a count assigned so we we spend our energy today with the largest accounts in terms of account Executives and then outside of the sales organization we have a you know marketing team that uh looks to get people to self-identify in the mid in the mid-range and we do a little bit at the low end but but most of it is in mid-range size can I ask you for one of those five fully ramped AES with a quota what is that quota you want them to hit annually is it a million ARR right around a millionaire are you yeah yeah interesting okay very cool all right more on the backstory here because you you know when you look at actually the the funding history of the business you're actually fairly unique and I say unique it's a compliment it looks like you've been very Capital efficient because you've smartly use debt you joined in 2008 I think only maybe a million coming to the company at that point maybe a little more but how have you thought about building the capital structure over the past 10 years 15 years so we started with with Venture Capital you know I mentioned that we we sold the company about 18 months ago I'd think of that as kind of a graduation we graduated from The Venture world to the private Equity world uh but prior to that uh we raised uh several rounds of uh of venture capital um and and peppered in you know put in debt also as we went along when we can you say Russ can you sum those just so people understand how you're thinking what was the total equity in versus the total debt in the business uh so the debt varied uh you know we we paid things off and paid things down out of cash flow over time but you know probably at the at the height of it it's probably only five million in in uh in uh debt and about okay well just a little short of 30 million total Equity rates okay so you still I mean one thing I always ask especially operators like you coming in you're managing a cap table obviously you're managing an ESOP pool for employees I imagine obviously the founders on the majority before you came in in 2008 how did you just make sure to keep good control of your of your cap table so there was always room for you to go recruit a great new Revenue leader like you just did well you mentioned earlier about being Capital efficient so I'm a little bit different I think than than some uh people running small startup companies in that I've always been very conservative I don't like to get ahead of my skis in terms of hiring even though I am chasing growth uh I try to keep a balance and you know I never want to be in a desperate situation where I have to raise money because I have to so we've tried to take a very methodical approach over time raising money really before we need it on an incremental basis I you know I made mistakes people do but um you know we lately so the last 18 months we we had more debt we've leveraged up with debt because that's kind of uh the part of the PE pellet Playbook but uh and so the equity the debt ratio right now is about 60 40 in the plan in the business yeah yeah okay that's helpful understand um the uh I guess going back in the backstory here a little bit so again good good use of debt uh good use of equity you then engage with Excel KKR I believe before uh before the deal with the private Equity Firm is that accurate it is so I pitched uh pitch akkr at one point uh out on out on the did the you know Silicon Valley Road yeah uh and uh uh they remembered me and actually uh akkr decided to enter into the debt business and I think I might have been the first deal that they did uh in the debt business so I worked with was that out of their public trade at BDC the FSK rbdc uh no I don't believe so hey what okay so it's a private it was a private debt fund that they managed it was yeah interesting can you are you able to share like a lot of Founders don't even know that debt is an option so anytime I get someone like you that is experienced that's done it I try and get as much information as possible how do these debt deals work what can you share well they've changed over time I mean there's a there's a wide wide uh kind of uh census of of debt providers in there and they're they're all over the place from you know from Banks to private uh debt providers uh you know early on we were paying uh fairly fairly Hefty rates so they're getting good returns usually what's Hefty Ross you're talking like 17 18 teams no teams low teens and you know a little bit of a little bit of equity in there as well as like like two to three percent warrants yeah smaller actually in most cases one or two has been been my experience and okay um and uh as we've you know as our revenues have begotten more predictable uh we're able to do better on the interest rates and uh uh you know now we have uh uh basically a bank as the as the lead debt provider and then the subordinating it to some of the historical uh uh you know debt financing companies they're they're not really Banks they're they're just more risky providers I guess they're and who line that facility up was it you are quadrilla capital so just be clear it was not a unitron deal there was an APS and a b piece and the eight piece was like the PNC Bank and the B piece was Hercules on top of that something like that something like that yeah okay interesting yeah but guys this is a huge model you know no one talks about it but it's a great way to preserve Equity over time so Russ is clearly doing that which we love now Russ why was the right time to sell last year to quadrillo Capital what made it the right time well it wasn't I guess it's 2021 2021 it wasn't the right time to sell uh I don't think you should have sold to be honest with you but uh why'd you do it then uh because the investors and the owners of the business decided that they wanted to do it for their own reasons which is you know which is a problem it's it's it's a problem from my perspective with the with uh you know multiple Venture investors that have you know conflicting objectives within their own funds um I think we sold the company short to be honest and uh I mean when you say short can you quantify that like that you sold for example like a five to ten X multiple and you thought it should have been 15x something like that that's right it was more well maybe not 15x but yeah we sold sub five and I think we should have gotten more like eight interesting and the investors you had on the equity side just weren't being patient enough to wait it out well so you know we they were they weren't all equal right the the the the initial money that I raised back in 2008 uh that that particular investor was very supportive and very very interested in continuing to do what um what needed to get done and then in subsequent rounds uh we brought in additional voices and Edition we got to give them credit by the way Russ anytime you say good things about you see what even credit that was granted and next stage back in 2008 correct so next stage was the the original investor in the business before me the other guys that basically hired me and then I brought next day I brought uh granite in I see but they're the ones you're getting credit for being patient good long-term founder-friendly supportive and and so forth and then um you know the the later the later people one was a kind of a family office had a different different set of perspectives and then uh and then uh the last one to learn to join was the uh the one that uh wanted to move more quickly in terms of an exit fair enough we won't put them on the spot here but it's good to understand the patterns now yeah with them anyway so I'd rather not much okay well I mean are we talking about are we talking about Wellington no no no Wellington was a debt provider so we're talking about arrowroot or Aster error root arrowroot okay yeah we we you know I'm very familiar with their capital structure and you're right it's a family office they have a short-term fun life typically why didn't you surface some of these risks with their capital structure ahead of time before taking their money uh well I because I uh I guess I just blew it I mean I didn't do it I I uh I misinterpreted what they were at the time and they told a good story about what they were and what their what their whole period was and what they wanted to do and you know maybe they just grew tired of it as I said I don't really know all I know is that uh uh they forced our hand and uh it was not uh not what we wanted to do all right let's end with the last two minutes here looking forward so the company today you told us about 300 customers you mentioned earlier average ACV something like 125k Russ is it appropriate to multiply those together to back into sort of your Revenue range or that math not be accurate that's reasonably close Okay so that would put you at about 37 million bucks of AR today is it accurate a little bit less than that today okay and where were you one year ago so we can calculate growth rate uh we we the last year we grew in at 17.3 okay got it so you're at like uh something like uh 31 million AR one year ago something in that range yeah okay okay so this isn't this is I mean look this is good uh controlled growth you mentioned inorganic growth of the private Equity Fund behind you today what kind of Acquisitions are you looking for well we're looking for adjacent Technologies uh we're we're we're all about data analytics as I mentioned in the primarily in the retail space this is Enterprise customers you know my average customer has 600 locations so we're not talking about small businesses here uh there's uh I have an interest in a couple of different areas uh I'm very very interested in Incident Management and task management I'm interested in Frontline human resource human Capital Management uh in in retail environments uh we've got we do some uh good things around Ecom but I'd like to get more real time where we're forensic in that you know we we basically can tell you what happened up until yesterday uh so I'm interested in going in that area we've got uh some interest and already some use cases in the Supply Chain management the distribution management so there's some things in in there uh what else uh the on the restaurant side that's a smaller part of our business I think there's uh some interesting uh add-ons we could do in the restaurant Tech area uh so I think and oh and then one other thing would be that just general geography picking up competitors that can give us uh uh a foothold in in additional geographies uh I've tried to do it on a Greenfield basis and it's just expensive it takes a long time so I'd like to like to look at some of those things how do you manage concentration risk in terms of your concentration at quadrilla from what I can tell they've only bought three companies you're one of them maybe one of the bigger ones in addition to chartbeat and info desk is there any risk for you being such a large position in their fund um well I think they're pretty well funded first of all and I think they've got is that public how much have they raised that I don't know about that I'm not and I'm not if I did know I wouldn't be able to share it not fair enough uh there but you know we were there we were actually their first investment uh they've been extremely supportive I I love these guys they're they're doing a they're doing a great job with me because you know they're transparent they tell me what they want and we talk about it and and then I execute on it and they're essentially investing in my vision of where I want to go here so which is and this is Jonah still look and Vikram Abraham just to give them credit that's correct yep yep dick is not the point on the deal but Jonah Jonah and Vic work very closely together Marlin equity in their blood that that is the tree they came from so good good group of guys there now what's the process Russ you find a great deal in The Incident Management space that you want to buy let's say it's doing 5 million in Revenue you have negotiated high level with the founder you're gonna pay a 2X multiple for 10 million bucks of which 8 million is cash up front 2 million earn out in stock what do you need from that group you're gonna buy to take to quadrilla to get the deal approved and unlock the capital it's a little more it's a little more interactive and collaborative in terms of what we do I I've produced uh uh you know kind of a road map of Acquisitions of directions that I want to go um and you know my initial list of names has been uh there's been some of them that fall into the category that you described where I've had developed a relationship with these things but with these companies but uh uh there's a team of people quadria has a team of people that helped me they they do nice they do Outreach and they help me and and uh and then as far as the actual details of the acquisition I'm using primarily using their money so uh the divisional labor is I come up with the Strategic ideas and run the companies and they work the the details on the financing interesting interesting well that makes a lot of sense um as we wrap up here Russ give us we didn't get a lot of the backstory in terms of other Revenue Milestones what year was your 10 million year when did you pass 10 million uh uh that was uh oh I don't know six years six years ago five years ago okay so call it 2018 and what was your first million dollar year if you remember good boy [Laughter] um well in the new platform it was uh uh probably 2014. we we the the older we stopped selling the older platform as soon as I made the the the the pivot in 2013 uh but uh we had hit a million dollars with that product back in uh let's see 2009 I guess yeah 2009. all right very good let's wrap up with the famous five quick answers number one favorite book my favorite book yep uh of Confederacy of Dunces by uh tool number two is there a CEO you're following or studying um no number three what's your favorite online tool for building agilents my favorite I like tools for building agilents yes uh well uh I've got a lot of ones that I'm not happy with let's see maybe that's a better question Salesforce I mean I I mean it's our CRM and we get a lot of value out of it I should start asking that question what's the last software contract uh you churned from you terminated yeah in terms of what what is it you're looking for I'm just joking you're saying ones you're not happy with I'm saying I'm not happy with oh no I'm not definitely not mentioning that yeah number number four Russ how many hours of sleep do you get every night uh uh about uh I get five in two in two tranches I guess all right fair enough I'm looking for the bathroom in between what's your situation married single kids married four kids just had my first grandchild oh congratulations that's so fun uh how old are you Russ I'm uh 64. last question something you wish you knew when you were 20. oh uh how important the decisions that you're making every day are guys there I have it agilence was launched way back in the day called 2006 Russ came in in 2008 and moved it from a hardware company servicing called the restaurant retail grocery Industries moved into more of a SAS plane 2013 and today is really vertically integrated into those three sectors doing things like Incident Management uh human Capital Management that's what they looking to expand and are they already do operational analytics merchandising Etc they're doing 35 million bucks in Arch they are right around there up 17 to year over year the first 10 million year was 2018 first million dollar year 2014. he's doing this in a capital efficient way powered by the war trust that is the private Equity form cordera Capital as he looks to scale potentially inorganically with Acquisitions moving forward Russ thank you for taking us to the top all right well thank you Nathan one more thing before you go we have a brand new show every Thursday at 1 pm Central it's called Shark Tank for SAS we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the found shares back-end dashboards their expenses their revenue our poo CAC LTV you name it they share it and the buyers try and make a deal live it is fun to watch every Thursday 1 p.m Central additionally remember these recorded founder interviews go live we release them here on YouTube every day at 2 p.m Central to make sure you don't miss any of that make sure you click the Subscribe button below here on YouTube their 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 SAS World whether it's 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 SAS 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 people are saying sign up for that at nathanlacka.com forward slash slash in the meantime I'm hanging out with you here on YouTube I'll be in the comments for the next 30 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 got to push them away click the thumbs up below to counter them and know that I appreciate your guys's support all right I'll be in the comments see ya