Bill Revenue, Valuation & Funding (2024)

this is a nut top where I interview entrepreneurs through our number one our number two in their industry in terms of revenue or customer base you learned how much revenue they're making what their marketing funnel looks like and how many customers they have now it's $20,000 per Tov I haven't experienced kids have bent on global domination we just bloke on a hundred thousand ship full mark and I'm your host Nathan Laska when I do webinar interviews or I give big speeches at thousands of people all over the world I usually will talk about data and sometimes fill my dashboard like my staff dashboard as I'm growing my staff company to top them box for my website dashboard which shows how I take impressions they can recommend to email leads and convert them into customers for Nathan Walker calm the funny thing is guys I build these dashboards with myself no developer and it's basically free and I use one tool to do it you can see the tool at noon a slacker com4 slash analytics I'll tell you more later in the show this is episode 668 and coming up tomorrow morning we learn from demon where the owl Steve how to do it first real estate dealers just 18 years old now he shares with me how much money is doing in total rental income here's a hint it's way above 200 grams per month tune in if you're interested in real estate good morning everybody my guest this morning is rene Lacerte he's the founder and CEO of bill.com the leading business payments company he's a fin tech industry veteran who's been working to simplify business payments since 1999 when he founded pay cycle which was later acquired by Intuit in 2009 bill comm is now working to help bridge the digital divide between banks and businesses partnering with three of the top ten US banks and 45% of the top 100 accounting firms he believes that banks play a critical role in the advancements of spin tech now while technology advancements in Silicon Valley startups are divided or driving much of the industry's change Rene believes that banks are and will remain squarely at the center of the financial universe for quite some time Rene are you ready to take us to the top you bet you bet no gravity I'm glad you're on Andy from the CEO of wealth front would disagree with that statement that he believes banks will remain square we have to send to the financial universe you know he told me his models basically look at traditional banks are doing figure out how to do it with robots and put them out of business you know I think when it comes to people's money especially this is it's just not the case I mean the average transaction we do we do close to forty billion dollars a year in money movement in the average transaction seventeen hundred to two thousand dollars and that amount of money is just the amount of money for both parties being involved and the bank's a significant factor in helping businesses actually transact in this are going to go to banks for loans and these there's ways to help thanks for choices disintermediate I think for the most part when it comes to the size of the volume that we're talking about thanks you're going to be involved now I'm going to want to go back guys in this interview and ranae and I going to talk about his first success his pay cycle 1999 woody what you still doing to it but first I want to just tease you a little bit more that's what he's currently working on so Rene describe kind of a business model at Bill comm what do you do you mentioned transaction volume and how do you make money so we we make doing business really easy so we automated back-office for businesses we automate their payables we automate their receivables and the way we do that is we kind of take all the paper we take all the workflow we take all the payment and we take all the integration with the accounting software when we put that into a simple seamless app that accessible on your phone or obviously for any web device so and what that means is we have a subscription model for businesses so depending on how many users to have their todays subscription fee and then the day's transaction fees for whether it's a date or a man because believe it or not they're still you know customer comes us 95 percent repayments our caterer base and we're able to move that you know our li thirty five to forty percent over the course of the first six to twelve months so electronically a mr. keeper that we do build later electronic payments and a securities and if i if i split out your revenue model here which one of those are bigger in terms of is it as a small making more money or the the fees yeah this description models the kind of the core revenue is all the drivers okay and just for curiosity because it will be easy compared to others in terms of fees that you take on money processed what do you take on average so the thing that's really nice about what we do and pretty helpful for businesses potala master so largest we charge 49 cents for an electronic payment period that's it is it interesting okay good so euro and we charge a dollar 49 for a major so it just kind of depends on you know whether the governor is able to get their vendors to join our network we have over two million entities that are in our network now they use us today today now when you see two million entities in your network of those two million sat keeping the excess subscribers paying you might get as customers or just users or those are probably the best way to detectives users or you know all of our businesses invite their businesses in to collaborate so it's not the paying customers it's the entities that are paying yep no I one of the things I love about thin tech space that I'm very jealous of and I'm jealous of you is that you have kind of a natural viral coefficient built in and that if someone says you know is using Bill and they're sending an invoice or whatever a check to somebody else it doesn't use you at the natural viral coefficient exactly yeah I know that grows every year and it grows very quickly settled it's nice nice part of Islam well good well let's dive and real quick actually before I dive back to more on your history is the company bootstrap every raise capital today it is not we I mean each come of the ended it started probably for the first year with money in my back pocket but then we moved to raising capital so this one we have about 110 million in venture capital in the building over the last 10 years that's a teaser let's go back now take me to 1999 how old are you 1999 I went to visit dirty - okay and that's your first shot you're stepping up to the plate that's your first swing at doing your own thing or what you know I were going into the poor hands I were there for five years I lost a couple of products and and this is there the Delinda business to carve is business that we had and available is so I had some experience of innovating products for into it which the can in and of themselves for you know businesses for company but they did what it was saying is kind of managing and running all of it on your own and doing all the waste and all the the you know the responsibility to make something happen so I grew up in a family of entrepreneurs daddy granddaddy she had multiple many businesses in their life so I grew up around that bit tell me about one of them so you know the one that the last one my grandfather had was a company that did magic data processing which district sold affected processing ATP they did things like a good landing spot which is the general Ledger's and did payroll they did a lot of the things that I've actually done in my career so I kind of grew up around that and back tonight I was born my mom was sorting much cars for the largest defense contractor in DC that was doing a payroll job so fascinating it's something I mean that the ATP stuff that your grandfather was doing was that digitized and if so he must been right at the beginning I mean because the internet was just being born yeah yeah well I say was it would have been 1960 that he started investing my grandfather you know he had a lot of businesses from farming the stores the car dealerships and the last one was really around you know this data processing so he took his frogs from doing citrus in Central Florida and threw it into data processing and in my dad opened up an account was a physicist form up in DC and that was you know the birth of what I was born into in the fifties did you go to college I did interesting I asked that because you come from a family of entrepreneurs I was curious if they kind of supported that or if you kind of just skip that entirely you know that was pretty yes Lee and then going back to college so you wouldn't work her his dad started this business in DC and eventually really developing if you did that experience say when that always got his undergraduate and got his MBA from morning and at night and so I think he always felt like we should just get education because there's just a lot of anticipation so and then proven drew yeah when you fast forward now to pay cycle there's a lot of folks that listen into this show who are in a corporate environment and are looking at spinning something out and many times they say Nathan I know the company just needs this I can't get the research to do it I should go build it myself and then flip it to him is that how you came up with the idea of pay cycle how'd it work you know it was we had there was no concept of floating attend to it when we started it was an idea was there's got to be a better way to advance a technology to make payroll easier you know there was some comments that we knew how to build and develop solutions and customers you know I would enjoy and like and find value in so it was more just looking at it landscape and seeing what was possible and knowing that in to add another capacity again I wanted to invest the way I wanted just for my human perspective or financial perspective or what it just wasn't in focus yet got it so what worked a cycle what I do is it all on a roll that's it online payroll yeah and so we you know feel calm we I would say are defining helping define a category around automating the back Oz pay cycle was not defined a category a role ADP engage us to that we were just doing online payroll and we started with household a rules which into did not want to do at all and then we moved into serving accounts and small businesses which didn't want to do but it took them you know they didn't start doing anything on the internet really until 2007 I think when it came to payroll so you know it just it wasn't into the camera priority for them for a long time and I just was anxious to try something and and by the way it was 1999 if you were going to go and leave a very nice that was a time that seemed like a good time to do it yeah it was out because it was a hard time I didn't have raised a lot of cattle kratos's how much we've raised just under fifty okay and what did you I'm curious what what soured you give up at Intuit to say you know what I'm going to apart from this and go take a risk you know if you were looking at any of the options and everything that was kind of outstanding my career was growing and accelerating you know easily you know three to four thousand dollars a year yeah I would I and when you when you see give up you do pay cycle you grow your race fifty million dollars you build it over a decade into it comes to you decide to sell it what do you sell it for we sold was around seventy million and was that like you want to earn earn out and there was orbital cash or cash flow stocking on out or what yeah it was all cash and you know we sold in 2009 which was kind of the bottom of the recession and so that's impressive so yeah it was a very very strong outcome financially for the investors and it would company of the customers community you know it was it was a good compromise already left a day-to-day basis I will start with a lock on 2006 I was a board member and I was an actual board member but it really was kind of up to the mansion team and and you know the board is 40 they're sisters that's great that's really great so let's fast for now in the bill calm and go back to where we kind of start the conversation so you say you've raised of us 820 million bucks you focus on automating really digitizing the back end of business in general help us understand you have two million users how many how many folks are paying you how many customers are you serving so we actually don't disclose that never lots of reasons so come on Renee give me a range a big range the mid the more vague you want to be the bigger the range you give yeah I did is the filter so so yeah or not it just goes that's okay so but we can go from it say that we had a very very large customer base that let us see what's going on in the economy at large and we we know you know based on the data we have a you know a lot of most customers in every state and every second in their industry we've just met a lot about small business and yeah it makes a lot of sense I mean we can kind of use the two million a user number and assume some portion of that it obviously makes up your paying customer base pulling that forward though you have an interesting insight because you have such a large data set into the SMB space how do you deal with things like gross customer churn every month you know for us we get a customer active and get it in using in they alter define active no Renee because that's a really critical tipping point yeah so it would be they've actually pays build a load of the document they've done I think of them accounting balance if they do any of those three things for the most part they don't leave us interesting I'm going to say to those part of me like well over 90 percent right if they sign up and then they don't do any of those things and particularly don't get this thing done or don't get a payment done you know then within 90 days you know we might lose 20% of them and what are those give me a give me a sense of the commitment they're making to you financially what do they like you mentioned your your out-of-state monthly the kind of payment what's the average customer paying you per month the average customer is sending us $400 love okay so not a huge commitment no and actually they start off smaller than that because they're just behaviour efficient piece and then transactions we just kind of hang out card okay so in the first month you can try it risk-free if you don't sign up if you don't want to continue always anything and what is the by the way I want to pull this lesson out for a second because there's a lot of stats folks I talked to who just focus on churn and they assume a sign-up occurs just when someone puts their information in a website form versus saying no they're not really a customer until they do these activation steps and so to really encourage you guys to do obviously Renee is didn't understand what steps you need to get users to take to make them very very sticky grenade you handle folks like name one or two tactics you're using from sign updates to activation date to get them to do the things you know they need to do to stick well yeah I think it's amazing with tassels from the bill right but you know the marketing the sales team have a ton of automation tools to engage customers to let them know what they need to do next specifically we have you know obviously the sales team is reaching out to their leads to make sure that they got everything they need you know we do a bunch of stuff a bunch of a/b testing on how we onboard customers every month we're learning how to get more customers actually engaged and so it's just you know people assume a lot of times people will assume it's going to be so much work and when they find out that it's like less than 15 minutes to actually get a-goin and sync with your accounting software and just start paying all your bills and they no longer a franchise may no longer have to you know worry about how to communicate with their vendors and their worries about it there's a small way right but instead of get them believing that and so engaging is so keeping them and are you adding call more or less than 2,000 new active businesses every month oh yeah yeah are we talking like tens of thousand to get a general idea grows like tens of thousands hundreds of thousands 10,000 well also in the kind of depends on you know our customer versus those knows you know there's an order of magnitude difference between the two and we if we talk about active users that's a good term B's right you guys II said intern okay so tens of thousands yeah again excellent question I wish you guys your innate space I'm trying guys I'm pushing him I'm trying but I will say this what he said definitely yes - mm so they're adding more than 2,000 new active businesses per month we'll leave it at that let's move forward Greg in terms of in terms of a siren a in terms of activation and acquiring new customers that you think have a good chance of activating what are you spending on paid acquisition each month and then back into CAC that way if you can yeah anything that we track it you know how many months is to pay back and so you know gotta give you you know our targets around hundred dollars in revenue and you know our baby backs depending on the channel and we had a three different ways we go to market we go to the markets your accounts were going to work through banks we go to market correct and also in addition to banks we have the greater partnership with the two where we are just in the process of becoming embedded inside of this a lot oh great so anyways our payback target is you know somewhere between ten and fifteen months then generally we had that so call it khakis between a grand and fifteen hundred depending on the channel now to go higher or lower yeah yeah a lot of people miss this there's a lot of people I hear they'll talk about or LTP the CAC ratio is great and I say well what's it what's the time though on that ratio and they say well it takes twenty four months and I'm going yeah gonna have a huge cash gap problem right exactly yeah yeah the other you gotta watch gas and you got it yet it's one a Native American dad and granddad is - skiing and stretch out available for materials and if you don't really understand how to do that then you will be at a disadvantage to grow your business in looking at some of your cohort analysis what do you assume the average lifetime value one of your customers are well the thing is is you know we assume you know well over five years we don't actually know because you know the data is just grown so fast and you know we expected you know customers a lot longer so we got someone else was obviously the market out for maybe eight years and you know I said word is very very strong and so just it was very small right so so we don't we don't know you know totally five years yep talking about cash so your last round I think if my research team did this properly back was April 2015 a 30 million dollar venture round which was actually followed super close to your Series F I think 450 million in February that same er those both accurate not exactly okay though the we raised thirty plus twenty of debt which is that's why it gets to be and don't call a bank yeah so the thirty was was was actually in mid-april a little bit late is actually a few months early death God is that 30 was actually part of the series of 50 and 20 of it was the defender death correct got it okay so here's my question to you this was 2015 and you look at funding cycles you're right now as if you look at me through your skype video you are either raising another round or you're selling your company to intuit for a lot of money which one is it yeah yeah and so I actually don't think about access and so you know from raising around inspected I love you my strategy has always been to just maintain strong relationships with the venture community and if I need countable you know I do the job and get it done so I'm not raising around right now that I have the connections and if any more capital I'm not worried about raising it awesome good stuff team sides where you guys that right now we're at 225 boys where you guys based on you and we've gotten we have people there's some support teams that they'll seems across country that's great and then remind everyone again timeline wise what your geological comment we've lost in 2008 probably June it was when we put our first customers on it it kind of acknowledge to the next six months seven at the end of 2008 right when the recession was getting in great time to start a business time money at Martha Thea's friend Renee 1999-2008 you like downturns not bad last question I've got for you before we wrap up you have something interesting here and that you have a massive data set of financial technology data specifically tied to SMBs a lot of banks this the dodd-frank etc are very tight in terms of credit and they miss a lot of opportunities because they're so risk-averse do you have any product that because of the data set you have where you can lend to people because you feel good about the again the data you have that other banks might pass over lending to that same small business so we do not sell anything today we've not heard of anybody today but I'd look at our data we have plenty of lending partners that would like to get access to our data a plenty of banks that would like it and our focus is on building out in solving the pain point that we know how to solve which is really kind of the back office and really helping people automated their payments and name tables and tables really really simple so that said we will I would imagine Sunday in addition we will do something with that and all the other people didn't want me do they want to be able to do like I suppose you get to the top of this episode I have amazing data and you guys know from my interview style I love data but one of more than data is making it actionable via beautiful dashboards that I can view on my phone on my TVs in my living room for even on my laptop as I'm traveling and the company that I used to create these dashboards which close and data from my list and back-end my Google Analytics back-end Salesforce and other data sources it's called cliff folio you can see an example executive dashboard or my social media command center or my web metrics dashboard and Mathematica comm forward slash analytic that's Mintaka comm forward slash analytics and you can try it there for free for three months its folio you can try it free for three months everybody else not to pay so you get it free for three months Alan's a good friend he's the CEO of the company he came on the show I said I love your product can I beat Rick so nathan like accom for Josh analytics go check it out now all right there you guys have it from Rene Rene let's wrap up here with the famous five number one what's your favorite business book yeah I'd say the combination of the four obsessions of extraordinary executives and the advantage of by the same guy Patrick Jimmy number two is their CEO that you're following or studying currently you know I'm pretty fortunate of one of our investors is the founder CEO it's a creepy guy so Dean I've gotten to be pretty good friends but he's advised me what's his name Rene his name is p-type Pete kite yeah so he sold Jeffrey divisor for am close to four million dollars and wonderful somebody was a TM being a famous guy and just you know grew it over 30 years he just had that an outer long-term CEO and that's actually when the David started to find opposed to somebody that's been from day one all the way to the last day well and we lost a good one with Bill what was a big lesson you took from him you know just being direct you know he he could tell you very clearly that you that you up and you went and you wouldn't feel bad about it you would feel like man I guess I did I'll do better next time and and he just had a way of doing that and that's one that I've tried to learn from and they are still trying to learn how to give people that effective direct feedback in a way that is not personal that is your the other area struggle so number three is their favorite online tool you have obviously beside your own yeah so obviously John would be the thing that I would say just from a time-saving it does actually only save a lot of time but you know the whole thing that Google is doing with box was really helpful we use it across the company and it's just great for iterating and you know doing all the work that we need to do that yeah you do actually want accounting number for how many hours of sleep to get every night service to say okay so not bad and what's your situation married single yep kiddos I got married and at 2j is 14 and 12 we have their own businesses yet they don't though they do ask questions all the time see I keep given whatever learning is he has a dinner table MBA in distress it's none of those that's a book holy you need a trademark dad holy mackerel that is a book it's true though it's like you learned so much and I learned a lot of kid and that's something that that you know I try to do as a kid so over there learning as well and how old are you today I'll be sitting this year that's great so take us back 30 years or nay what he was your 20 year old self now you know I would say don't stress over the hard decisions you know they in the end they all pale in comparison to everything that you do like every day there's the reasons the stress and you know as you get older you learn to have that perspective that especially around our decisions like it you feel like you need to make a minute or you feel like you need to change some of the out the organization or you feel like you know you want to go and just something different you don't stress about it you know we're humans of that and they got very well so just move on and make a decision stress is not a finger issue there there you guys have it from Renee CEO of bill.com don't stress over the hard decisions eventually they all pale he started back in again I went is 32 years old 1999 with pay cycle raise fifty million bucks in 2009 so that's 170 million dollars in cash to intuit then ended up launching on the back of that new company build calm over 120 million dollars raised about two hundred and thirty employees there in Palo Alto focused on saving businesses small businesses time their average RP was about a hundred bucks per month saving them time on their back end related items 2016 over forty billion dollars in purcha in I guess money process average volume is seventeen hundred bucks to two thousand per transaction over two thousand users Rene you have your have your pause from a small business market thank you for taking us to the top if you enjoyed Rene today go back and listen yesterday to launch dim walled I asked him how to start up was able to work him away from PayPal now his company that started he joined to come pay you they passed one hundred eighty million dollars in revenue and he's now growing their financial services arm tune in to find out how to recruit rock stars like Lorentz to your startup it would mean the world to me if you guys got any value from this episode if he would go leave a review on iTunes right now and then subscribe you know I hustle like have to get these episodes out every freakin day for you guys and trust me I love it I would do with no listeners but boy oh boy makes my day and makes my team's day when we see great reviews and get your feedback - thanks so much okay top drive I love giving away free money I feel like for giving away cars and I have something special for you today how many of you have heard our super sharp guests talk about success they've had with Facebook and Google as well all of you listening right now we have if you're listening you get a hundred dollars in free AdWords here's how you get it nice again thanks for listening it's a free her dollars from Google right when you sign up with my website post provider Hostgator go sign up now to get your free money hostgator.com forward slash Nathan again that's hostgator.com forward slash Nathan